1
As filed with the Securities and Exchange Commission on June 25, 1999
Securities Act Registration No. 333-_______
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ]Pre-Effective Amendment No. __ [ ]Post Effective Amendment No. __
(Check appropriate box or boxes)
AIM Variable Insurance Funds, Inc.
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza
Suite 100
Houston, Texas 77046
(Address of Principal Executive Offices)
Registrant's Telephone Number: (713) 214-1456
Name and Address of Agent for Service: Copy to:
NANCY L. MARTIN, ESQUIRE GARY O. COHEN, ESQUIRE
AIM Variable Insurance Funds, Inc. RICHARD T. CHOI, ESQUIRE
11 Greenway Plaza Freedman, Levy, Kroll & Simonds
Suite 100 1050 Connecticut Avenue, N.W.
Houston, Texas 77046 Suite 825
Washington, D.C. 20036-5366
Approximate Date of Proposed Public Offering: As soon as practicable after the
Registration Statement becomes effective under the Securities Act of 1933.
It is proposed that this filing will become effective on July 25, 1999
pursuant to Rule 488.
The title of the securities being registered is common stock. No filing
fee is due in reliance on Section 24(f) of the Securities Act of 1933.
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GT GLOBAL VARIABLE INVESTMENT SERIES
GT GLOBAL VARIABLE INVESTMENT TRUST
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046
___________, 1999
Dear Shareholder:
Enclosed is a combined proxy statement and prospectus seeking your approval of a
proposed combination of:
o all five investment portfolios of GT Global Variable Investment Series
("GT Series"), and
o all nine investment portfolios of GT Global Variable Investment Trust
("GT Trust"), with
o seven of the various investment portfolios of AIM Variable Insurance
Funds, Inc. ("AVIF").
GT Series and GT Trust are each a Delaware business trust. AVIF is a Maryland
corporation. The investment portfolios ("funds") of GT Series and of GT Trust
are referred to as the "Acquired Funds." The AVIF funds with which the Acquired
Funds will be combined are referred to as the "Acquiring Funds."
The investment objective of each Acquired Fund is generally similar to the
investment objective of the Acquiring Fund with which the Acquired Fund will
combine, with certain exceptions noted in the accompanying document. A I M
Advisors, Inc. ("AIM") serves as the investment adviser to the Acquired Funds
and to the Acquiring Funds. As discussed in the accompanying document, the
Acquiring Funds that have operating histories generally have (1) substantially
larger assets, (2) lower operating expense ratios, and (3) better performance
histories than the Acquired Funds. The accompanying document describes the
proposed transactions and compares the investment objectives and policies, net
assets, operating expenses, performance histories and risks of the Acquired
Funds and the Acquiring Funds.
Shareholders of GT Series and of GT Trust are being asked to approve an
Agreement and Plan of Reorganization by and among GT Series, GT Trust, AVIF and
AIM that will govern the reorganization of the Acquired Funds into the Acquiring
Funds. After careful consideration, the Boards of Trustees of GT Series and of
GT Trust have unanimously approved the proposals and recommend that you read the
enclosed materials carefully and then vote FOR the proposals.
Your vote is important. Please take a moment now to sign and return your proxy
cards in the enclosed postage paid return envelope. If we do not hear from you
after a reasonable amount of
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time you may receive a telephone call from our proxy solicitor, Shareholder
Communications Corporation, reminding you to vote your shares. You may also vote
your shares on the web at http://www.aimfunds.com by following the instructions
that appear on the enclosed proxy insert.
Sincerely,
Robert H. Graham
Chairman of the Boards and President
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GT GLOBAL VARIABLE INVESTMENT SERIES
GT GLOBAL VARIABLE INVESTMENT TRUST
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON
AUGUST 25, 1999
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the
"Special Meeting") of GT Global Variable Investment Series and of GT Global
Variable Investment Trust will be held at 11 Greenway Plaza, Suite 100, Houston,
Texas, on Wednesday, August 25, 1999, at 3:00 p.m. local time, for the following
purposes:
(1) To approve an Agreement and Plan of Reorganization (the
"Agreement") by and among GT Global Variable Investment Series
("GT Series"), GT Global Variable Investment Trust ("GT Trust"),
AIM Variable Insurance Funds, Inc. ("AVIF") and A I M Advisors,
Inc. and the consummation of the transactions that the Agreement
contemplates. The Agreement contemplates the acquisition of all
of the assets and the assumption of all of the liabilities of the
following investment portfolios ("funds") of GT Series and GT
Trust (collectively, the "GT funds") by AVIF in exchange for
shares of certain investment portfolios of AVIF, as indicated
(the "AVIF funds"), which shares will be issued directly by the
AVIF funds to the shareholders of GT Series funds and the GT
Trust funds:
GT Series and GT Trust
Funds (Acquired Funds) AVIF Funds (Acquiring Funds)
- ---------------------- ----------------------------
GT Global Variable Growth & Income Fund AIM V.I. Global Growth and Income Fund
GT Global Variable America Fund AIM V.I. Capital Appreciation Fund
GT Global Variable International Fund
GT Global Variable Europe Fund
GT Global Variable Natural Resources Fund
GT Global Variable Infrastructure Fund AIM V.I. International Equity Fund
GT Global Variable New Pacific Fund
GT Global Variable Latin America Fund
GT Global Variable Emerging Markets Fund
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GT Global Variable Telecommunications AIM V.I. Telecommunications Fund
Fund
GT Global Variable Strategic Income Fund
GT Global Variable Global Government AIM V.I. Diversified Income Fund
Income Fund
GT Global Variable U.S. Government AIM V.I. Government Securities Fund
Income Fund
GT Global Money Market Fund AIM V.I. Money Market Fund
Each shareholder of a GT Series fund or a GT Trust fund will
receive that number of the applicable AVIF fund shares
representing interests with an aggregate net asset value equal to
the aggregate net asset value of his or her shares of the GT
Series fund or GT Trust fund.
(2) To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
Shareholders of record at the close of business on June 21, 1999, are
entitled to notice of, and to vote at, the Special Meeting. Your attention is
called to the accompanying Combined Proxy Statement and Prospectus. Whether or
not you attend the Special Meeting, we urge you to PROMPTLY COMPLETE, SIGN AND
RETURN THE ENCLOSED PROXY CARD, so that a quorum will be present and a maximum
number of shares may be voted. Variable annuity or variable life insurance
contractowners who are entitled to instruct the voting of shares attributable to
their contracts may do so by returning the accompanying voting instruction form
in the enclosed envelope.
By Order of the Boards,
SAMUEL D. SIRKO
Secretary
Houston, Texas
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GT GLOBAL VARIABLE INVESTMENT SERIES
GT GLOBAL VARIABLE INVESTMENT TRUST
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046
TOLL FREE: (800) 454-0327
AIM VARIABLE INSURANCE FUNDS, INC.
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
TOLL FREE: (800) 454-0327
COMBINED PROXY STATEMENT AND PROSPECTUS
DATED: JULY 23, 1999
This document is being furnished in connection with a special meeting of
Shareholders of GT GLOBAL VARIABLE INVESTMENT SERIES ("GT Series") and GT GLOBAL
VARIABLE INVESTMENT TRUST ("GT Trust"), Delaware business trusts, to be held on
August 25, 1999 (the "Special Meeting"). (The individual investment portfolios
of GT Series and GT Trust collectively are called the "Acquired Funds.") At the
Special Meeting, the shareholders of the Acquired Funds are being asked to
consider and approve an Agreement and Plan of Reorganization (the "Agreement")
by and among GT Series, acting on behalf of five of the Acquired Funds, GT
Trust, acting on behalf of nine of the Acquired Funds, AIM Variable Insurance
Funds, Inc. ("AVIF"), a Maryland corporation, acting on behalf of seven of its
investment portfolios (collectively, the "Acquiring Funds"), and A I M Advisors,
Inc. ("AIM"). The Agreement provides for the reorganization of each Acquired
Fund into a corresponding Acquiring Fund (the "Reorganizations"). THE BOARDS OF
TRUSTEES OF GT SERIES AND OF GT TRUST HAVE UNANIMOUSLY APPROVED THE AGREEMENT
AND REORGANIZATIONS AS BEING IN THE BEST INTEREST OF EACH OF THE ACQUIRED FUNDS.
The Agreement provides as follows. All of the assets of an Acquired Fund will be
transferred to the Acquiring Fund with which it will combine. The Acquiring Fund
will assume all of the liabilities of the Acquired Fund. Each Acquiring Fund
will issue its shares to the shareholders of the Acquired Fund. The value of
each Acquired Fund shareholder's account with the Acquiring Fund immediately
after the Reorganization will be the same as the value of such shareholder's
account with the Acquired Fund immediately prior to the Reorganization. The
Reorganizations have been structured as tax-free transactions. No sales charge
will be imposed in connection with the Reorganizations.
The Acquiring Funds are investment portfolios of AVIF, an open-end, series
management investment company. The investment objective of each Acquiring Fund
is similar to that of the
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Acquired Fund with which it will combine. AIM serves as the investment adviser
to the Acquired Funds and the Acquiring Funds.
This Combined Proxy Statement and Prospectus ("Proxy Statement/Prospectus") sets
forth the information that a shareholder of the Acquired Funds should know
before voting on the Agreement. It should be read and retained for future
reference.
AVIF has also filed a Statement of Additional Information dated July 25, 1999,
with the SEC relating to the Agreement. The Statement of Additional Information
is incorporated by reference into this Proxy Statement/Prospectus.
The combined Prospectus of the Acquired Funds, dated May 3, 1999 (the "Acquired
Funds Prospectuses"), together with the related Statement of Additional
Information also dated May 3, 1999, are on file with the Securities and Exchange
Commission (the "SEC") and are incorporated into this Proxy Statement/Prospectus
by reference. The Prospectuses of the Acquiring Funds, dated May 3, 1999 (the
"Acquiring Funds Prospectuses") are attached as Appendix II to this Proxy
Statement/Prospectus. The related Statement of Additional Information, also
dated May 3, 1999, is on file with the SEC. The Acquiring Funds Prospectuses and
the related Statement of Additional Information are incorporated into this Proxy
Statement/Prospectus by reference. A copy of portions of the annual report of
each Acquiring Fund in existence on December 31, 1998, is attached as Appendices
III through VII of this Proxy Statement/Prospectus. You can get a free copy of
any of these documents by writing to A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739 or by calling (800) 347-4246.
The SEC maintains a Web site at http://www.sec.gov that contains the
prospectuses and statements of additional information described above, material
incorporated by reference, and other information about GT Series, GT Trust and
AVIF.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
SECURITIES DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS, AND HAS NOT PASSED ON
THE ACCURACY OR THE ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME.
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TABLE OF CONTENTS
PAGE
----
INTRODUCTION..................................................................................... 1
REASONS FOR THE REORGANIZATIONS.................................................................. 2
Background and Reasons for the Reorganizations.............................................. 2
Board Considerations........................................................................ 4
SYNOPSIS......................................................................................... 12
The Reorganizations......................................................................... 12
Comparison of the Acquiring Funds and the Acquired Funds.................................... 12
PRINCIPAL RISK FACTORS........................................................................... 22
INFORMATION ABOUT THE ACQUIRING FUNDS AND THE ACQUIRED
FUNDS....................................................................................... 26
ADDITIONAL INFORMATION ABOUT THE AGREEMENT....................................................... 26
Terms of the Reorganizations................................................................ 26
The Reorganizations......................................................................... 26
Other Terms................................................................................. 27
Federal Tax Consequences.................................................................... 28
Accounting Treatment........................................................................ 32
RIGHTS OF SHAREHOLDERS........................................................................... 32
Liability of Shareholders................................................................... 33
Election of Trustees/Directors; Terms....................................................... 33
Removal of Directors/Trustees............................................................... 34
Meetings of Shareholders.................................................................... 34
Liability of Trustees/Directors and Officers; Indemnification............................... 34
Termination................................................................................. 35
Voting Rights of Shareholders............................................................... 35
Dissenters' Rights.......................................................................... 35
Amendments to Organization Documents........................................................ 36
OWNERSHIP OF THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
SHARES...................................................................................... 36
5% Holders.................................................................................. 36
Ownership of Officers and Trustees/Directors................................................ 41
CAPITALIZATION................................................................................... 41
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LEGAL
MATTERS....................................................................................43
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.................................................................................43
APPENDICES
Agreement and Plan of Reorganization.................................................Appendix I
Prospectuses of the Acquiring Funds..................................................Appendix II
AIM V.I. Capital Appreciation Fund Discussion and Analysis...........................Appendix III
AIM V.I. International Equity Fund Discussion and Analysis...........................Appendix IV
AIM V.I. Diversified Income Fund Discussion and Analysis.............................Appendix V
AIM V.I. Government Securities Fund Discussion and Analysis..........................Appendix VI
AIM V.I. Money Market Fund Discussion and Analysis...................................Appendix VII
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Link, AIM Institutional Funds, aimfunds.com,
Invest With Discipline, La Familia AIM de Fondos and La Familia AIM de Fondos
and Design are registered service marks, and AIM Bank Connection, AIM Funds, AIM
Funds and Design and AIM Investor are service marks, of A I M Management Group
Inc.
ii
10
INTRODUCTION
- --------------------------------------------------------------------------------
This Proxy Statement/Prospectus relates to the solicitation of proxies by the
Boards of Trustees of GT Series and GT Trust from the shareholders of the
Acquired Funds for use at the Special Meeting of Shareholders to be held at 11
Greenway Plaza, Suite 100, Houston, TX 77046 on August 25, 1999, at 3:00 p.m.,
Central time (such meetings and any adjournments thereof are referred to as the
"Special Meeting").
All properly executed and unrevoked proxies received in time for the Special
Meeting will be voted in accordance with the instructions contained therein. If
no instructions are given, shares represented by proxies will be voted FOR the
proposal to approve the Agreement and in accordance with management's
recommendation on other matters. The presence in person or by proxy of one-third
of the outstanding shares of beneficial interest in an Acquired Fund at the
Special Meeting will constitute a quorum ("Quorum") with respect to the shares.
Approval of the Agreement by an Acquired Fund requires the affirmative vote of a
majority of the shares cast by shareholders of that Acquired Fund. The Agreement
may be approved by one of the Acquired Funds and the Reorganization of that
Acquired Fund may be completed even though the Agreement is not approved by
shareholders of any other Acquired Fund. Abstentions will be counted as shares
present at the Special Meeting for quorum purposes, but will not be considered
votes cast at the Special Meeting. Any person giving a proxy has the power to
revoke it at any time prior to its exercise by executing a superseding proxy or
by submitting a notice of revocation to the Secretary of GT Series or of GT
Trust. In addition, although mere attendance at the Special Meeting will not
revoke a proxy, a shareholder present at the Special Meeting may withdraw his
proxy and vote in person. Shareholders may also transact any other business not
currently contemplated that may properly come before the Special Meeting in the
discretion of the proxies or their substitutes.
In accordance with current law, life insurance company shareholders of GT Series
and GT Trust, in effect, pass along their voting rights to owners of variable
annuity and variable life insurance contracts issued by the companies.
Essentially, the life insurance companies seek instructions as to how contract
owners wish the companies to vote the GT Series and GT Trust shares (1)
technically owned by the companies but (2) beneficially owned by the contract
owners. The life insurance companies communicate directly with contract owners
about the procedures that the companies follow in seeking instructions and
voting shares under the particular variable annuity and variable life insurance
contracts.
Shareholders of record as of the close of business on June 21, 1999 (the "Record
Date") are entitled to vote at the Special Meeting. Each share is entitled to
one vote for each full share held, and a fractional vote for a fractional share
held. On the Record Date, there were shares outstanding for the Acquired Funds
as follows:
GT Global Variable Growth & Income Fund 2,212,382 shares
GT Global Variable America Fund 1,631,544 shares
GT Global Variable International Fund 549,192 shares
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GT Global Variable Europe Fund 1,027,535 shares
GT Global Variable Natural Resources Fund 598,902 shares
GT Global Variable Infrastructure Fund 298,533 shares
GT Global Variable New Pacific Fund 2,152,858 shares
GT Global Variable Latin America Fund 933,212 shares
GT Global Variable Emerging Markets Fund 933,237 shares
GT Global Variable Telecommunications Fund 2,858,306 shares
GT Global Variable Strategic Income Fund 1,544,863 shares
GT Global Variable Global Government Income Fund 595,233 shares
GT Global Variable U.S. Government Income Fund 502,473 shares
GT Global Money Market Fund 27,806,313 shares
GT Series and GT Trust have each engaged the services of Shareholder
Communications Corporation ("SCC") to assist it in the solicitation of proxies
for the Special Meeting. GT Series and GT Trust each expect to solicit proxies
principally by mail, but they or SCC may also solicit proxies by telephone,
facsimile, telegraph or personal interview. The officers of GT Series and of GT
Trust will not receive any additional or special compensation for any such
solicitation. The cost of shareholder solicitation is anticipated to be
approximately $20,000. The Agreement and Plan of Reorganization provides that
each of the Acquired Funds will bear its costs and expenses incurred in
connection with its Reorganization. However, since all but three of the Acquired
Funds is subject to subsidization by AIM pursuant to an agreement to limit fund
expenses, AIM will effectively bear such costs of all but three of the Acquired
Funds.
GT Series and GT Trust intend to mail this Proxy Statement/Prospectus and the
accompanying proxy on or about July 26, 1999.
REASONS FOR THE REORGANIZATIONS
- --------------------------------------------------------------------------------
BACKGROUND AND REASONS FOR THE REORGANIZATIONS
GT Series and GT Trust were each originally organized as Massachusetts business
trusts in 1992. Each was reorganized into a Delaware business trust on May 7,
1998. Prior to May 29, 1998, Chancellor LGT Asset Management, Inc., an indirect
subsidiary of Liechtenstein Global Trust AG ("LGT"), provided investment
advisory services to GT Series and GT Trust.
On May 29, 1998, LGT consummated a purchase agreement with AMVESCAP PLC pursuant
to which AMVESCAP PLC acquired LGT's Asset Management Division, including
Chancellor LGT Asset Management, Inc., which then changed its name to INVESCO
(NY), Inc. In connection with that transaction, the Boards of Trustees of GT
Series and GT Trust determined that it would be advisable to engage AIM to
provide investment advisory and other services to GT Series and GT Trust, with
INVESCO (NY), Inc. continuing to provide sub-advisory services. AIM and its
affiliates are indirect subsidiaries of AMVESCAP PLC that provide investment
advisory, marketing, administration, fund accounting and distribution services
to The AIM
2
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Family of Funds--Registered Trademark--. The shareholders of GT Series and of GT
Trust approved the change in service providers, which took effect on May 29,
1998. AIM now serves as investment adviser to the investment portfolios of GT
Series and of GT Trust. Other affiliated subsidiaries of AMVESCAP PLC now serve
as sub-advisers to certain investment portfolios of GT Series and of GT Trust.
GT Series, GT Trust and AVIF each sells its shares exclusively to separate
accounts of life insurance companies to fund variable annuity contracts and
variable life insurance contracts issued by the companies. Under the contracts,
a separate account buys or redeems shares of GT Series, GT Trust or AVIF based
on (1) a contract owner's instruction to invest or receive back monies under a
contract (such as making a premium payment or surrendering a contract) and (2)
the operation of a contract (such as deduction of contract fees and charges).
Contracts may permit contract owners to transfer monies among investment
portfolios of a single mutual fund or of two or more mutual funds. Separate
accounts generally buy additional shares with dividend and capital gains
distributions declared by GT Series, GT Trust and AVIF.
The life insurance companies, on behalf of their separate accounts, are the
shareholders of GT Series, GT Trust and AVIF. The owners of the variable annuity
contracts and the variable life insurance contracts are, through the separate
accounts, the beneficial owners of the shares of GT Series, GT Trust and AVIF.
AIM evaluated the Acquired Funds of GT Series and of GT Trust and the Acquiring
Funds of AVIF and recommended the Reorganizations of all five Acquired Funds of
GT Series and all nine Acquired Funds of GT Trust into of seven Acquiring Funds
of AVIF. AIM serves as investment adviser for the Acquired Funds and the
Acquiring Funds. AIM recommended the reorganization of the Acquired Funds into
the Acquiring Funds, because the Acquiring Funds have, for the most part,
similar investment objectives, generally better performance records and
generally lower operating expense ratios than the Acquired Funds. The Acquiring
Funds are also generally substantially larger than the Acquired Funds and have a
more stable base of assets.
AIM recommended the Reorganization of GT Global Variable Growth & Income Fund
into AIM V.I. Global Growth and Income Fund and the Reorganization of GT Global
Variable Telecommunications Fund into AIM V.I. Telecommunications Fund, where
the two AVIF Funds are newly organized and have no operating histories. AIM
based these recommendations on the reasons that: efficiencies could be achieved
by having AVIF as the one entity dedicated as an underlying fund for life
insurance company separate accounts; administrative efforts could be simplified
in terms of negotiating participation agreements between a single underlying
fund and various life insurance companies wishing to invest their separate
account assets in the fund; and AVIF has participation agreements with over 40
life insurance companies currently offering variable annuity and variable life
insurance contracts funded through AVIF, while GT Series and GT Trust each has
no participation agreement with a life insurance company currently offering
contracts funded through it.
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BOARD CONSIDERATIONS
The Boards of Trustees of GT Series and GT Trust have determined that the
Reorganizations of the Acquired Funds are in the best interests of each of the
Acquired Funds, and each Board of Trustees recommends approval of the Agreement
by the shareholders of the Acquired Funds at the Special Meeting. A summary of
the information that was presented to, and considered by, each Board of Trustees
in making their determination is provided below.
At a meeting of each Board of Trustees held on June 15, 1999, AIM proposed that
the Board of Trustees approve the Reorganizations of the Acquired Funds into the
Acquiring Funds. The Boards of Trustees received from AIM written materials that
described the structure and tax consequences of the Reorganizations and
contained information concerning the Acquired Funds and the Acquiring Funds,
including comparative total return and fee and expense information, a comparison
of the investment objectives and policies of the Acquired Funds and the
Acquiring Funds, pro forma expense ratios and biographical information on the
portfolio managers of the Acquiring Funds.
In considering the Reorganizations, each Board of Trustees noted that the
Acquired Funds and Acquiring Funds have, for the most part, similar investment
objectives. Each Board of Trustees also noted that as of May 10, 1999, the
expense ratios of the Acquired Funds for the fiscal year ended December 31, 1998
were generally higher than the expense ratios of the Acquiring Funds for the
same period and that the net assets of the Acquired Funds were generally lower
than the net assets of the Acquiring Funds, as shown below.
ACQUIRED FUNDS ACQUIRING FUNDS
- ---------------------------------------------------------------- ----------------------------------------------------------
NET NET
NET GROSS ASSETS NET GROSS ASSETS
GT GLOBAL FUND NAME RATIO RATIO $(000'S) AIM V.I. FUND NAME RATIO RATIO $(000'S)
- ------------------- ----- ----- -------- ------------------ ----- ----- --------
Variable Growth & Income Fund 1.25 1.25 48,969 Global Growth and Income
Fund(1) 1.25 1.32 n/a
Variable America Fund .98 .98 37,710 Capital Appreciation Fund .67 .67 731,160
Variable International Fund 1.25 1.65 5,349
Variable Europe Fund 1.25 1.30 24,764
Variable Natural Resources Fund 1.25 1.78 6,791
Variable Infrastructure Fund 1.25 1.65 5,447 International Equity Fund .90 .90 244,607
Variable New Pacific Fund 1.25 1.99 20,216
Variable Latin America Fund 1.25 1.53 13,426
Variable Emerging Markets Fund 1.25 2.25 9,585
Variable Telecommunications Fund 1.13 1.13 72,919 Telecommunications Fund(1) 1.25 1.26 n/a
Variable Strategic Income Fund 1.00 1.21 18,078 Diversified Income Fund .77 .77 91,957
Variable Global Government
Income Fund 1.00 1.55 6,908
Variable U.S. Government Income Government Securities Fund .79 .79 59,915
Fund 1.00 1.43 6,515
Money Market Fund .75 .75 30,674 Money Market Fund .58 .58 76,093
(1) Has not commenced operations. Expense ratios are estimates for 1999.
4
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Each Board of Trustees also considered the performance of the Acquired Funds in
relation to the performance of the Acquiring Funds, both on the basis of (1)
total returns and (2) industry rankings. As of December 31, 1998, the average
annual total returns since inception, since inception of the younger of the
Acquired Fund or the Acquiring Fund, and for the past five-year and one-year
periods for each of the Acquired Funds and the Acquiring Funds were as set out
below. Past performance cannot guarantee future results. Average annual total
return figures do not reflect life insurance company charges. If average annual
total return figures reflected life insurance company charges, the figures shown
would be lower.
ACQUIRED FUNDS ACQUIRING FUNDS
- ------------------------------------------------------------------- ----------------------------------------------------------------
SINCE SINCE
INCEPTION OF INCEPTION OF
YOUNGER OF YOUNGER OF
ACQUIRED OR ACQUIRED OR
GT GLOBAL ONE FIVE SINCE ACQUIRING AIM V.I. ONE FIVE SINCE ACQUIRING
FUND NAME YEAR YEARS INCEPTION FUND FUND NAME YEAR YEARS INCEPTION FUND
- --------- ---- ----- --------- ------------ --------- ---- ----- --------- ------------
Variable Growth 19.62% 12.65% 13.76% n/a Global Growth and n/a n/a n/a n/a
& Income Fund 2/10/93 Income Fund(1)
Variable America Fund 8.09% 17.02% 16.96% 18.01% Capital Appreciation 19.30% 17.23% 18.77% 18.77%
2/10/93 5/5/93 Fund 5/5/93 5/5/93
Variable International -0.69% n/a 1.60% 1.60% 13.16%
Fund 7/5/94 7/5/94 7/5/94
Variable Europe Fund 15.48% 13.65% 16.21% 15.76% 13.36%
2/10/93 5/5/93 5/5/93
Variable Natural -33.01% n/a 5.94% 5.94% 13.16%
Resources Fund 7/5/94 7/5/94 7/5/94
Variable Infrastructure 6.34% n/a 11.69% 11.69% International Equity 15.49% 11.33% 13.36% 13.16%
Fund 7/5/94 7/5/94 Fund 5/5/93 7/5/94
Variable New Pacific -14.54% -10.46% -4.32% -5.86% 13.36%
Fund 2/10/93 5/5/93 5/5/93
Variable Latin America -41.70% -7.51% 0.04% 0.10% 13.36%
Fund 2/10/93 5/5/93 5/5/93
Variable Emerging -36.90% n/a -8.83% -8.83% 13.16%
Markets Fund 7/5/94 7/5/94 7/5/94
Variable 22.11% 17.21% 18.41% n/a Telecommunications n/a n/a n/a n/a
Telecommunications 10/18/93 Fund (1)
Fund
Variable Strategic 0.61% 5.11% 8.72% 8.92% 7.38%
Income Fund 2/10/93 5/5/93 5/5/93
Variable Global 12.69% 5.72% 6.43% 6.71% Diversified Income 3.58% 7.12% 7.38% 7.38%
Government Income 2/10/93 5/5/93 Fund 5/5/93 5/5/93
Fund
Variable U.S. 9.06% 6.48% 5.36% 5.77% Government Securities 7.73% 5.80% 5.76% 5.76%
Government Income 2/10/93 5/5/93 Fund 5/5/93 5/5/93
Fund
Money Market Fund 5.22% 4.82% 4.52% 4.61% Money Market Fund 5.06% 4.90% 4.59% 4.59%
2/10/93 5/5/93 5/5/93 5/5/93
(1) Has not commenced operations.
As of May 31, 1999, the Morningstar ratings and Lipper Analytical Services
rankings for the Acquired Funds and Acquiring Funds were as follows:
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REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE GROWTH & INCOME FUND
o Morningstar Rating (1)
CATEGORY OVERALL 3 YEAR 5 YEAR
-------- ------- ------ ------
GT Global Variable Growth & Income Fund................ Int'l.Hybrid 4 4 4
AIM V.I. Global Growth and Income Fund................. n/a n/a n/a n/a
(Has not commenced operations.)
o Lipper Rank (Percentile)(2)
CATEGORY YTD 1 YEAR 3 YEAR 5 YEAR
-------- --- ------ ------ ------
GT Global Variable Growth & Income Fund................ Global 100% 66% 31% 35%
AIM V.I. Global Growth and Income Fund................. n/a n/a n/a n/a n/a
(Has not commenced operations.)
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE AMERICA FUND
o Morningstar Rating (1)
CATEGORY OVERALL 3 YEAR 5 YEAR
-------- ------- ------ ------
GT Global Variable America Fund....................... Small Blend 2 2 2
AIM V.I. Capital Appreciation Fund.................... Mid Cap Growth 2 2 2
o Lipper Rank (Percentile)(2)
CATEGORY YTD 1 YEAR 3 YEAR 5 YEAR
-------- --- ------ ------ ------
GT Global Variable America Fund................ Growth 11% 69% 90% 86%
AIM V.I. Capital Appreciation Fund............. Mid Cap 68% 52% 58% 27%
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE INTERNATIONAL FUND, GT GLOBAL
VARIABLE EUROPE FUND, GT GLOBAL VARIABLE NATURAL RESOURCES FUND, GT GLOBAL
VARIABLE INFRASTRUCTURE FUND, GT GLOBAL VARIABLE NEW PACIFIC FUND, GT GLOBAL
VARIABLE LATIN AMERICA FUND, AND GT GLOBAL VARIABLE EMERGING MARKETS FUND
o Morningstar Rating (1)
CATEGORY OVERALL 3 YEAR 5 YEAR
-------- ------- ------ ------
GT Global Variable International Fund............ Foreign Stock 2 2 n/a
GT Global Variable Europe Fund................... Foreign Stock 3 3 3
GT Global Variable Natural Resources Fund........ Specialty - Nat. Recs. 1 1 n/a
GT Global Variable Infrastructure Fund........... World Stock 2 2 n/a
GT Global Variable New Pacific Fund.............. Diversified Emg. Markets 1 1 1
GT Global Variable Latin America Fund............ Diversified Emg. Markets 1 1 1
GT Global Variable Emerging Markets Fund......... Diversified Emg. Markets 1 1 n/a
AIM V.I. International Equity Fund............... Foreign Stock 3 3 3
(1) Under the Morningstar rating system, the top 10% of funds in a category
receive 5 stars, the next 22.5% receive 4 stars, the middle 35% receive 3
stars, the next 22.5% receive 2 stars and the bottom 10% receive a single
star.
(2) Under the Lipper ranking system, the lower the percentile rank the better
the performance.
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o Lipper Rank (Percentile)(2)
CATEGORY YTD 1 YEAR 3 YEAR 5 YEAR
-------- --- ------ ------ ------
GT Global Variable International Fund............ International 61% 90% 87% n/a
GT Global Variable Europe Fund................... International 100% 100% 29% 11%
GT Global Variable Natural Resources Fund........ Natural Resources 99% 100% 65% n/a
GT Global Variable Infrastructure Fund........... Global 84% 91% 92% n/a
GT Global Variable New Pacific Fund.............. Pacific Region 99% 99% 97% 72%
GT Global Variable Latin America Fund............ Emerging Mkt. 31% 96% 15% 28%
GT Global Variable Emerging Markets Fund......... Emerging Mkt. 69% 97% 96% n/a
AIM V.I. International Equity Fund............... International 89% 78% 38% 19%
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
o Morningstar Rating (1)
CATEGORY OVERALL 3 YEAR 5 YEAR
-------- ------- ------ ------
GT Global Variable Telecommunications Fund........ Mid Cap Growth 2 2 2
AIM V.I. Telecommunications Fund.................. n/a n/a n/a n/a
(Has not commenced operations.)
o Lipper Rank (Percentile)(2)
CATEGORY YTD 1 YEAR 3 YEAR 5 YEAR
-------- --- ------ ------ ------
GT Global Variable Telecommunications Fund................ Global 2% 5% 22% 3%
AIM V.I. Telecommunications Fund........................... n/a n/a n/a n/a n/a
(Has not commenced operations.)
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE STRATEGIC INCOME FUND AND GT
GLOBAL VARIABLE GOVERNMENT INCOME FUND
o Morningstar Rating (1)
CATEGORY OVERALL 3 YEAR 5 YEAR
-------- ------- ------ ------
GT Global Variable Strategic Income Fund.............. International Bond 1 2 1
GT Global Variable Global Government Income Fund...... International Bond 2 2 2
AIM V.I. Diversified Income Fund...................... Intermediate Term
Bond 3 2 3
o Lipper Rank (Percentile)(2)
CATEGORY YTD 1 YEAR 3 YEAR 5 YEAR
-------- --- ------ ------ ------
GT Global Variable Strategic Income Fund......... Global Income 46% 87% 13% 6%
GT Global Variable Global Government
Income Fund................................. Global Income 69% 39% 12% 23%
AIM V.I. Diversified Income Fund................. Global Income 34% 76% 9% 13%
(1) Under the Morningstar rating system, the top 10% of funds in a category
receive 5 stars, the next 22.5% receive 4 stars, the middle 35% receive 3
stars, the next 22.5% receive 2 stars and the bottom 10% receive a single
star.
(2) Under the Lipper ranking system, the lower the percentile rank the better
the performance.
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REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
o Morningstar Rating(1)
CATEGORY OVERALL 3 YEAR 5 YEAR
-------- ------- ------ ------
GT Global Variable U.S. Government Income Fund............ Intermediate 2 3 2
Government
AIM V.I. Government Securities Fund....................... Intermediate 2 3 2
Government
o Lipper Rank (Percentile)(2)
CATEGORY YTD 1 YEAR 3 YEAR 5 YEAR
-------- --- ------ ------ ------
GT Global Variable U.S. Government Income General US Government
Fund....................................... Funds 84% 26% 27% 57%
AIM V.I. Government Securities Fund............. General US Government
Funds 30% 35% 30% 52%
REORGANIZATION INVOLVING THE GT GLOBAL MONEY MARKET FUND
o Morningstar Rating(1)
CATEGORY OVERALL 3 YEAR 5 YEAR
-------- ------- ------ ------
GT Global Money Market Fund............................ Money Market n/a n/a n/a
AIM V.I. Money Market Fund............................. Money Market n/a n/a n/a
o Lipper Rank (Percentile)(2)
CATEGORY YTD 1 YEAR 3 YEAR 5 YEAR
-------- --- ------ ------ ------
GT Global Money Market Fund........................ Money Market 23% 24% 26% 27%
AIM V.I. Money Market Fund......................... Money Market 14% 16% 17% 16%
(1) Under the Morningstar rating system, the top 10% of funds in a category
receive 5 stars, the next 22.5% receive 4 stars, the middle 35% receive 3 stars,
the next 22.5% receive 2 stars and the bottom 10% receive a single star.
(2) Under the Lipper ranking system, the lower the percentile rank the better
the performance.
Each Board of Trustees considered a report to it that: (1) General
American Life Insurance Company, the largest life insurance company shareholder
of GT Series and of GT Trust, had developed a line-up of Acquiring Funds to be
substituted for Acquired Funds in contemplated transactions that would have
required a prior order of approval of the SEC, and (2) while the substitution
procedure would not be followed, the line-up of the Acquired Funds and the
Acquiring Funds in each Reorganization generally (with the exception of three
funds) reflected the line-up contemplated by General American Life Insurance
Company.
In addition, the Board of Trustees of GT Series noted that each of GT
Series' Acquired Funds, except GT Global Variable America Fund and GT Global
Money Market Fund, had expenses that exceeded maximum limits voluntarily set by
AIM. The Board of Trustees of GT Trust noted that each of GT Trust's Acquired
Funds, except GT Global Variable Telecommunications Fund, had expenses that
exceeded maximum limits voluntarily set by AIM. Consequently, AIM is
8
18
bearing the portion of expenses of all but three of the Acquired Funds that
exceeds the limits and, therefore, subsidizing each of these GT Series' Acquired
Funds. The expense ratios of the Acquiring Funds are generally lower than the
expense ratios of the corresponding Acquired Funds.
Each Board of Trustees further noted that the Acquired Funds will have been
provided with an opinion of counsel that the Reorganizations will be tax-free as
to each Acquired Fund and its shareholders and that there will be no adverse tax
consequences for owners of variable annuity and variable life insurance
contracts.
AIM provided each Board of Trustees with an analysis of each of the
Reorganizations, including, as applicable: comparisons of operating expenses and
net assets as of May 10, 1999; performance histories as of December 31, 1998;
and management fee rates for the year ended December 31, 1998. A summary of
AIM's comparisons regarding each Reorganization is set out below.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE GROWTH & INCOME FUND
The estimated expense ratios of AIM V.I. Global Growth and Income Fund would be
the same on a net basis and higher on a gross basis than those of GT Global
Variable Growth & Income Fund. The 1.00% annual management fee rate for AIM V.I.
Global Growth and Income Fund will be the same as the 1.00% rate for GT Global
Variable Growth & Income Fund. GT Global Variable Growth & Income Fund and AIM
V.I. Global Growth and Income Fund are each sub-advised by INVESCO Asset
Management Ltd. (London). Consequently, shareholders of GT Global Variable
Growth & Income Fund will continue to have the same sub-adviser after the
Reorganization.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE AMERICA FUND
GT Global Variable America Fund had about $38 million in net assets, compared
with about $731 million in net assets for AIM V.I. Capital Appreciation Fund.
AIM V.I. Capital Appreciation Fund's greater asset base and lower expense
ratios, together with its generally superior performance history, make it a
potentially better investment for shareholders than GT Global Variable America
Fund. The 0.62% annual management fee rate for AIM V.I. Capital Appreciation
Fund will be lower than the 0.75% rate for GT Global Variable America Fund.
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REORGANIZATION TRANSACTION INVOLVING THE GT GLOBAL VARIABLE INTERNATIONAL FUND,
GT GLOBAL VARIABLE EUROPE FUND, GT GLOBAL VARIABLE NATURAL RESOURCES FUND, GT
GLOBAL VARIABLE INFRASTRUCTURE FUND, GT GLOBAL VARIABLE NEW PACIFIC FUND, GT
GLOBAL VARIABLE LATIN AMERICA FUND, AND GT GLOBAL VARIABLE EMERGING MARKETS FUND
GT Global Variable International Fund had about $5 million in net assets, GT
Global Variable Europe Fund, $25 million, GT Global Variable Natural Resources
Fund, $7 million, GT Global Variable Infrastructure Fund, $5 million, GT Global
Variable New Pacific Fund, $20 million, GT Global Variable Latin America Fund,
$13 million, and GT Global Variable Emerging Markets Fund, $10 million, compared
with about $245 million in net assets for AIM V.I. International Equity Fund.
AIM V.I. International Equity Fund's greater asset base and lower expense ratios
makes it a potentially better investment for shareholders than any of these GT
funds. The 0.75% annual management fee rate for AIM V.I. International Equity
Fund also will be lower than the 1.00% fee rate for these GT Funds. Furthermore,
AIM V.I. International Equity Fund has generally outperformed each of these GT
Funds (except for GT Global Variable Europe Fund) for the past one-year,
five-year, and since inception periods. AIM V.I. International Equity Fund
outperformed GT Global Variable Europe Fund for the past one-year period, but
not since inception or for the past five-year period.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
The estimated expense ratios of AIM V.I. Telecommunications Fund would be higher
than those of GT Global Variable Telecommunications Fund. The 1.00% annual
management fee rate for AIM V.I. Telecommunications Fund will be the same as the
1.00% rate for GT Global Variable Telecommunications Fund.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE STRATEGIC INCOME FUND AND GT
GLOBAL VARIABLE GOVERNMENT INCOME FUND
GT Global Variable Strategic Income Fund had about $18 million in net assets and
GT Global Variable Global Government Income Fund had about $7 million in net
assets, compared with about $92 million in net assets for AIM V.I. Diversified
Income Fund. AIM V.I. Diversified Income Fund's greater asset base and lower
expense ratios makes it a potentially better investment for shareholders than
either GT Global Variable Strategic Income Fund or GT Global Variable Global
Government Income Fund. The 0.60% annual management fee rate for AIM V.I.
Diversified Income Fund will be lower than the 0.75% rate for GT Global Variable
Strategic Income Fund and for GT Global Variable Global Government Income Fund.
The performance of AIM V.I. Diversified Income Fund has been superior to that of
GT Global Variable Strategic Income Fund for the past five-year and one-year
periods, but not since inception. The performance of AIM V.I. Diversified Income
Fund has been superior to that of GT Global Variable Global Government Income
Fund since inception and for the past five-year period, but not for the past
one-year period.
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REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
GT Global Variable U.S. Government Income Fund had about $7 million in net
assets, compared with about $60 million in net assets for AIM V.I. Government
Securities Fund. AIM V.I. Government Securities Fund's greater asset base and
lower expense ratios make it a potentially better investment for shareholders
than GT Global Variable U.S. Government Income Fund. The 0.50% annual management
fee rate for AIM V.I. Government Securities Fund will be lower than the 0.75%
rate for GT Global Variable U.S. Government Income Fund. The performance of AIM
V.I. Government Securities Fund has been comparable to that of GT Global
Variable U.S. Government Income Fund since inception, but not for the past
five-year and one-year periods.
REORGANIZATION INVOLVING THE GT GLOBAL MONEY MARKET FUND
GT Global Money Market Fund had about $31 million in net assets, compared with
about $76 million in net assets for AIM V.I. Money Market Fund. AIM V.I. Money
Market Fund's greater asset base and lower expense ratios make it a potentially
better investment for shareholders than GT Global Money Market Fund. The 0.40%
annual management fee rate for AIM V.I. Money Market Fund will be lower than the
0.50% rate for GT Global Money Market Fund. The performance of AIM V.I. Money
Market Fund has been comparable to that of GT Global Variable Money Market Fund
since inception and for the past five-year period, but not for the past one-year
period.
AIM pointed out that the management fee rate that it will receive on the assets
subject to the Reorganization will be lower after each Reorganization than
before the Reorganization, except for the Reorganizations involving the GT
Global Variable Growth & Income Fund and the GT Global Variable
Telecommunications Fund, where the management fee rate will remain the same
after the Reorganizations.
Each Board of Trustees, based upon its evaluation of the information presented
to it, determined that the proposed Reorganizations will not dilute the
interests of the shareholders of any of the Acquired Funds and are in the best
interest of the Acquired Funds. Therefore, each Board of Trustees recommended
the approval of the Agreement by the shareholders of each respective Acquired
Fund at a special meeting.
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SYNOPSIS
- --------------------------------------------------------------------------------
This synopsis is qualified by reference to the more complete information
contained elsewhere in this Proxy Statement/Prospectus, the Prospectuses for the
Acquiring Funds and Acquired Funds, and the Agreement.
THE REORGANIZATIONS
The Reorganizations will result in the combination of all five funds of GT
Series and all nine funds of GT Trust with seven funds of AVIF. GT Series
and GT Trust are each a Delaware business trust. AVIF is a Maryland
corporation.
If shareholders of an Acquired Fund approve the Agreement and other closing
conditions are satisfied, all of the assets of that Acquired Fund will be
transferred to the Acquiring Fund with which it will combine, the Acquiring Fund
will assume all of the liabilities of the Acquired Fund, and AVIF will issue
shares of the Acquiring Fund to the Acquired Fund's shareholders. The shares of
an Acquiring Fund issued in a Reorganization will have an aggregate net asset
value equal to the value of the Acquired Fund's net assets transferred to the
Acquiring Fund. The value of each shareholder's account with an Acquiring Fund
immediately after a Reorganization will be the same as the value of such
shareholder's account with the Acquired Fund immediately prior to the
Reorganization. A copy of the Agreement is attached as Appendix I to this Proxy
Statement/Prospectus. See "Additional Information About the Agreement" below.
The Acquired Funds have received an opinion of Freedman, Levy, Kroll & Simonds,
to the effect that the Reorganizations will constitute tax-free reorganizations
for Federal income tax purposes. Thus, shareholders will not have to pay Federal
income taxes as a result of the Reorganizations, and owners of variable annuity
and variable life insurance contracts will not bear any adverse tax
consequences. See "Additional Information About the Agreement -- Federal Tax
Consequences" below.
COMPARISON OF THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
INVESTMENT OBJECTIVES AND POLICIES
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE GROWTH & INCOME FUND
ACQUIRING FUND Investment Objective and Policies
---------------------------------
AIM V.I. Global Growth and Income Fund Growth of capital together with current income; invests at
least 65% of its total assets in a combination of blue-chip
equity securities and high-quality government bonds of U.S.
and foreign issuers; may invest up to 35% of its total assets
in other equity securities and government and corporate debt
securities that are investment grade.
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ACQUIRED FUND
GT Global Variable Growth & Income Fund Long-term capital appreciation together with current income;
invests at least 65% of its total assets in a combination of
blue-chip equity securities and high-quality government bonds
of U.S. and foreign issuers; may invest up to 35% of its
total assets in other equity securities and government and
corporate debt securities that are investment grade.
Comparison
The investment objective and policies for the Acquiring Fund and Acquired Fund
described above are substantially identical. The Acquiring Fund will invest
primarily in the same types of securities as the Acquired Fund.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE AMERICA FUND
ACQUIRING FUND Investment Objective and Policies
---------------------------------
AIM V.I. Capital Appreciation Fund Growth of capital through investment in common stocks, with
emphasis on medium- and small-sized growth companies; may also
invest up to 20% of its total assets in foreign securities.
ACQUIRED FUND
GT Global Variable America Fund Long-term growth of capital; invests, normally, at least 65%
of its total assets in the equity securities of U.S. issuers
that have market capitalizations within the range of market
capitalizations of companies included in the Russell Midcap(TM)
Index; may invest up to 35% of its total assets in equity
securities of other U.S. issuers or in investment-grade debt
securities of U.S. issuers; may also invest up to 25% of its
total assets in foreign securities.
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Comparison
The investment objective for the Acquiring Fund and Acquired Fund described
above are substantially identical. The investment policies of the Acquiring Fund
and Acquired Fund are not identical, but are similar in many respects. Both
Funds invest in medium- and small-sized U.S. companies, and both have the
flexibility to invest in larger U.S. companies and in foreign securities. Note,
however, that the Acquired Fund also has the flexibility to invest in
investment-grade debt securities, but that the Acquiring Fund will only invest
in debt securities temporarily in response to adverse market conditions, for
cash management purposes, or for defensive purposes.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE INTERNATIONAL FUND, GT GLOBAL
VARIABLE EUROPE FUND, GT GLOBAL VARIABLE NATURAL RESOURCES FUND, GT GLOBAL
VARIABLE INFRASTRUCTURE FUND, GT GLOBAL VARIABLE NEW PACIFIC FUND, GT GLOBAL
VARIABLE LATIN AMERICA FUND, AND GT GLOBAL VARIABLE EMERGING MARKETS FUND
ACQUIRING FUND Investment Objective and Policies
---------------------------------
AIM V.I. International Equity Fund Long-term growth of capital by investing in a diversified
portfolio of international equity securities whose issuers
are considered to have strong earnings momentum; invests at
least 70% of its total assets in marketable equity securities
of foreign companies that are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter
market; may invest up to 20% of its total assets in
securities of issuers located in developing countries.
ACQUIRED FUNDS
GT Global Variable International Fund Long-term growth of capital; invests, normally, at least 65%
of its total assets in the securities of companies domiciled
in the following countries: Argentina, Australia, Austria,
Belgium, Brazil, Canada, Chile, Colombia, Denmark, Finland,
France, Germany, Greece, Hong Kong, India, Indonesia,
Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico,
the Netherlands, New Zealand, Norway, Pakistan, Peru, the
Philippines, Portugal, Singapore, South Korea, Spain, Sweden,
Switzerland, Taiwan, Thailand, Turkey, the United Kingdom,
and Venezuela; may invest up to 35% of its total assets in
equity securities of companies domiciled outside its
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primary investment area, including developing countries; may
also invest up to 35% of its total assets in U.S. and foreign
Investment-Grade Debt securities, or securities deemed by the
portfolio managers to be of comparable quality.
GT Global Variable Europe Fund Long-term growth of capital; invests, normally, at least 65%
of its total assets in equity securities of companies
domiciled in eighteen countries located in Europe; may invest
up to 35% of its total assets in equity securities of issuers
domiciled outside of its primary investment area or in U.S.
and foreign investment-grade debt securities deemed by the
fund's portfolio managers to be of comparable quality; may
invest in securities of issuers located in Developing
countries.
GT Global Variable Natural Resources Fund Long-term capital growth; invests, normally, at least 65% of
its total assets in equity securities of domestic and foreign
natural resources companies; may invest up to 35% of its
total assets in debt securities issued by natural resources
companies, or in equity and debt securities of other
companies the portfolio manager believes will benefit from
developments in the natural resources industries; may invest
in companies located in developing countries; may invest up
to 20% of its total assets in lower-quality debt securities,
i.e., "junk bonds."
GT Global Variable Infrastructure Fund Long-term capital growth; invests, normally, at least 65% of
its total assets in equity securities of domestic and foreign
infrastructure companies; may invest up to 35% of its assets
in debt securities issue by infrastructure companies, or in
equity and debt securities of other companies the portfolio
manager believes will benefit from developments in the
infrastructure industry; may invest in companies located in
developing countries; may also invest up to 20% of its total
assets in lower-quality debt securities, i.e., "junk bonds."
GT Global Variable New Pacific Fund Long-term capital growth; invests, normally, at least 65% of
its total assets in the securities of companies domiciled in
twelve countries, other than Japan, located in the Pacific
region, including developing countries, i.e., those that are
in the
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initial stages of their industrial cycles; may invest up to
35% of its total assets in equity securities of issuers
domiciled outside of its primary investment area, including
Developing countries; may also invest up to 35% of its total
assets in U.S. and foreign investment-grade debt securities,
or securities deemed by the portfolio managers to be of
comparable quality.
GT Global Variable Latin America Fund Capital appreciation; invests at least 65% of its total
assets in equity and debt securities of Latin American
issuers, including those in developing countries; invests a
majority of its assets in equity securities; may invest up to
35% of its total assets in a combination of equity and debt
securities of U.S. issuers; may also invest up to 50% of its
total assets in debt securities, which may consist of
lower-quality debt securities, i.e., "junk bonds" and "Brady
Bonds."
GT Global Variable Emerging Markets Fund Long-term growth of capital; invests at least 65% of its
total assets in equity securities of companies in emerging
markets, which consist of all countries determined by the
portfolio managers to be developing or emerging economies and
markets, generally including every country in the world
except the United States, Canada, Japan, Australia, New
Zealand, and most countries located in Western Europe. Most
countries are developing countries; may also invest up to 35%
of its assets in debt securities of government or corporate
issuers in emerging markets, in equity and debt securities of
issuers in developed countries, including the United States,
and in cash and money market instruments; normally invests a
majority of its assets in equity securities; may invest up to
20% of its total assets in high-yield debt securities rated
below investment grade, i.e., "junk bonds."
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Comparison
The Acquiring Fund and each of the Acquired Funds described above have
substantially identical investment objectives. The investment policies for the
Acquiring Fund and each Acquired Fund are not identical, but are similar in many
respects. All of the Acquired Funds invest primarily in equity securities of
U.S. and foreign issuers, while the Acquiring Fund invests primarily in equity
securities of foreign issuers. However, because each of the Acquired Funds,
except one, is a "sector" fund, the investment policies of most of the Acquired
Funds are narrower than the investment policy of the Acquiring Fund. (A "sector"
fund is a fund that invests in a specific narrow portion or sector of the
securities markets or in a specific geographic region.) The GT Global Variable
International Fund is not a sector fund because it, like the Acquiring Fund,
invests primarily in foreign issuers located throughout the world.
Each of the remaining Acquired Funds invests, normally, at least 65% of its
assets in equity securities of a specific type, as described in the Fund's name:
the GT Global Variable Europe Fund invests in the equity securities of companies
domiciled in Europe; the GT Global Variable Natural Resources Fund invests in
equity securities of natural resources companies, and so on. Accordingly, the
performance of each of these Acquired Funds is likely to be more closely tied to
the specific circumstances of the sector in which the Fund invests, while the
performance of the Acquiring Fund is likely to be more closely tied to the
performance of foreign equity securities in general. Further, each of the
Acquired Funds also reserves the right to invest up to 35% (50% for the GT
Global Variable Latin America Fund) of its total assets in debt securities,
while the Acquiring Fund will only invest in debt securities temporarily in
response to adverse market conditions, for cash management purposes, or for
defensive purposes. Finally, each of the Acquired Funds may invest at least 35%
of its total assets in companies located in developing countries, while the
Acquiring Fund can invest at most 20% of its total assets in such securities.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
ACQUIRING FUND Investment Objective and Policies
---------------------------------
AIM V.I. Telecommunications Fund Long-term growth of capital; invests primarily in equity
securities of companies throughout the world engaged in the
development, manufacture or sale of telecommunications
services or equipment; may invest up to 35% of its assets in
debt securities issued by telecommunications companies and/or
equity and debt securities of other companies the portfolio
mangers believe will benefit from developments in the
telecommunications industry; may also invest in lower quality
debt securities, i.e., "junk bonds."
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ACQUIRED FUND
GT Global Variable Telecommunications Fund Long-term growth of capital; invests at least 65% of its
total assets in equity securities of domestic and foreign
telecommunications companies; may invest up to 35% of its
assets in debt securities issued by telecommunications
companies, or in equity and debt securities of other
companies the portfolio managers believe will benefit from
developments in the telecommunications industries; may invest
in companies located in developing countries; may also invest
up to 5% of its total assets in lower quality debt
securities, i.e., "junk bonds."
Comparison
The investment objective for the Acquiring Fund and Acquired Fund described
above are substantially identical. The investment policies of the Acquiring Fund
and the Acquired Fund are not identical, but are similar in many respects. The
Acquiring Fund generally will invest in the same types of securities as the
Acquired Fund, which include the equity securities of U.S. and foreign
telecommunications companies or companies expected to benefit from developments
in the telecommunications industry.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE STRATEGIC INCOME FUND AND GT
GLOBAL VARIABLE GOVERNMENT INCOME FUND
ACQUIRING FUND Investment Objective and Policies
---------------------------------
AIM V.I. Diversified Income Fund A high level of current income; invests primarily in (1)
domestic and foreign corporate debt securities; (2) U.S.
Government securities, including U.S. Government agency
mortgage-backed securities; (3) securities issued by foreign
governments, their agencies or instrumentalities; and (4)
lower-quality debt securities, i.e., "junk bonds," of U.S.
and foreign companies; may invest up to 50% of its total
assets in foreign securities, including securities of issuers
located in developing countries.
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ACQUIRED FUNDS
GT Global Variable Strategic Income Fund High current income and, secondarily, capital appreciation;
invests primarily in debt securities, including
mortgage-backed and asset-backed securities, of issuers in
the United States and developed and developing countries;
normally invests at least 35% of its total assets in U.S. and
foreign debt and other fixed-income securities that are rated
at least investment grade, or that the fund's portfolio
managers believe to be of comparable quality; may invest up
to 50% of its assets in lower quality debt securities, i.e.,
"junk bonds."
GT Global Variable Government Income Fund High current income and, secondarily, capital appreciation
and protection of capital; invests at least 65% of its total
assets in debt securities (including mortgage-backed
securities) issued or guaranteed by U.S. and foreign
governments or by their agencies, authorities, and
instrumentalities; primarily invests in high quality
government debt securities; may invest in lower-quality debt
securities, i.e., "junk bonds"; may invest up to 35% of its
total assets in other types of securities.
Comparison
The investment objective(s) for the Acquiring Fund and each Acquired Fund
described above are substantially similar. The investment policies for the
Acquiring Fund and each Acquired Fund are not identical, but are similar in many
respects. Each of the Funds invests in similar types of debt securities,
although (1) the GT Global Variable Government Income Fund invests a greater
portion of its assets in higher-quality U.S. and foreign government securities;
and (2) the Acquiring Fund may invest only up to 50% of its assets in foreign
securities, while each of the Acquired Funds may invest up to 65% of its assets
in such securities.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
ACQUIRING FUND Investment Objective and Policies
---------------------------------
AIM V.I. Government Securities Fund A high level of current income consistent with reasonable concern for
safety of principal; invests in debt securities issued,
guaranteed or otherwise backed by the United States
Government; may invest up to 20% of its total assets in
foreign securities.
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ACQUIRED FUND
GT Global Variable U.S. Government Income Fund High level of current income, consistent with preservation of
capital; invests at least 65% of its total assets in U.S.
Government securities, including direct obligations of U.S.
Treasury and obligations issued or guaranteed by U.S.
government agencies and instrumentalities (including
mortgage-backed securities); may invest up to 35% of its
total assets in other types of debt securities, including
foreign government securities and privately issued
mortgage-backed or asset-backed securities, rated in the four
highest credit rating categories or determined to be of
comparable quality.
Comparison
The investment objective for the Acquiring Fund and Acquired Fund described
above are substantially identical. The investment policies for the Acquiring
Fund and the Acquired Fund are not identical, but are similar in many respects.
Each Fund primarily invests in U.S. Government securities, although each
reserves the right to also invest in foreign securities. The Acquired Fund also
reserves the right to invest in investment grade non-government securities, but
the Acquiring Fund will only invest in other types of debt securities
temporarily in response to adverse market conditions, for cash management
purposes, or for defensive purposes.
REORGANIZATION INVOLVING THE GT GLOBAL MONEY MARKET FUND
ACQUIRING FUND Investment Objective and Policies
---------------------------------
AIM V.I. Money Market Fund Maximum current income consistent with liquidity and
conservation of capital; invests in high-quality, U.S. dollar
denominated short-term obligations.
ACQUIRED FUND
GT Global Money Market Fund Maximum current income consistent with liquidity and
conservation of capital; invests in high-quality, U.S. dollar
denominated money market instruments.
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Comparison
The investment objective and policies for the Acquiring Fund and Acquired Fund
described above are substantially identical.
PERFORMANCE AND FEES
A comparison of the performance and fees of each of the Acquiring Funds and
Acquired Funds is provided under "Reasons for the Reorganizations - Board
Considerations," above.
INVESTMENT ADVISORY SERVICES
AIM serves as investment adviser to all of the Acquired Funds, and each of
INVESCO Asset Management Limited (London), INVESCO Asia, Limited, and INVESCO
(NY), Inc., serves as sub-adviser to certain of the Acquired Funds, as shown in
the following table:
ACQUIRED FUND SUB-ADVISER
- ------------- -----------
GT Global Variable Europe Fund INVESCO Asset Management Limited (London)
GT Global Variable International Fund INVESCO Asset Management Limited (London)
GT Global Variable Emerging Markets INVESCO Asset Management Limited (London)
Fund
GT Global Variable Growth & Income INVESCO Asset Management Limited (London)
Fund
GT Global Variable Global Government INVESCO Asset Management Limited (London)
Income Fund
GT Global Variable Global Latin America INVESCO Asset Management Limited (London)
Fund
GT Global Variable New Pacific Fund INVESCO Asia, Limited
GT Global Money Market Fund INVESCO (NY), Inc.
GT Global Variable Strategic Income Fund INVESCO (NY), Inc.
GT Global Variable U.S. Government INVESCO (NY), Inc.
Income Fund
AIM also serves as investment adviser to the Acquiring Funds. There are no
sub-advisers to any of the Acquiring Funds, except for AIM V.I. Global Growth
and Income Fund, for which INVESCO Asset Management Ltd. (London) serves as
sub-adviser.
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PRINCIPAL RISK FACTORS
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The principal risks of investing in the Acquiring Funds are set out below.
AIM V.I. GLOBAL GROWTH AND INCOME FUND
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors, including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions and market liquidity. Debt securities are
particularly vulnerable to credit risk and interest rate fluctuations. Interest
rate increases may cause the price of a debt security to decrease. The longer a
debt security's duration, the more sensitive it is to this risk.
AIM V.I. CAPITAL APPRECIATION FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity. This is
especially true with respect to common stocks of smaller companies, whose prices
may go up and down more than common stocks of larger, more-established
companies. Also, since common stocks of smaller companies may not be traded as
often as common stocks of larger, more-established companies, it may be
difficult or impossible for the fund to sell securities at a desirable price.
AIM V.I. INTERNATIONAL EQUITY FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
AIM V.I. TELECOMMUNICATIONS FUND
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
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The value of the fund's shares is particularly vulnerable to factors affecting
the telecommunications industry, such as substantial government regulation.
Because the fund focuses its investments in the telecommunications industries,
the value of your fund shares may rise and fall more than the value of shares of
a fund that invests more broadly.
AIM V.I. DIVERSIFIED INCOME FUND
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Debt securities are particularly
vulnerable to credit risk and interest rate fluctuations. Interest rate
increases may cause the price of a debt security to decrease. The longer a debt
security's duration, the more sensitive it is to this risk. Junk bonds are less
sensitive to this risk than are higher-quality bonds. Some of the securities
purchased by the fund are not guaranteed by the U.S. Government. The agency or
instrumentality issuing such security may default or otherwise be unable to
honor a financial obligation.
Compared to higher-quality debt securities, junk bonds involve greater risk of
default or price changes due to changes in the credit quality of the issuer
because they are generally unsecured and may be subordinated to other creditors'
claims. The value of junk bonds often fluctuates in response to company,
political or economic developments and can decline significantly over short
periods of time or during periods of general or regional economic difficulty.
During those times the bonds could be difficult to value or sell at a fair
price. Credit ratings on junk bonds do not necessarily reflect their actual
market risk.
U.S. Government agency mortgage-backed securities provide a higher coupon at the
time of purchase than current prevailing market interest rates. The fund may
purchase such securities at a premium, which means that a faster principal
prepayment rate than expected will reduce both the market value of and income
from such securities.
The prices of equity securities fluctuates in response to many factors,
including the historical and prospective earnings of the issuer, the value of
its assets, general economic conditions, interest rates, investor perceptions
and market liquidity.
AIM V.I. GOVERNMENT SECURITIES FUND
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Debt securities are particularly
vulnerable to credit risk and interest rate fluctuations. Interest rate
increases can cause the price of a debt security to decrease. The longer a debt
security's duration, the more sensitive it is to this risk. The prices of
high-coupon U.S. Government agency mortgage-backed securities fall more slowly
when interest rates rise than do prices of other fixed-rate securities. Some of
the securities purchased by the fund are not guaranteed by the U.S. Government.
The agency or instrumentality issuing such security may default or otherwise be
unable to honor a financial obligation.
High-coupon U.S. Government agency mortgage-backed securities provide a higher
coupon at the time of purchase than current prevailing market interest rates.
The fund may purchase such
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securities at a premium. If the securities experience a faster principal
prepayment rate than expected, both the market value of, and income from, such
securities will decrease.
AIM V.I. MONEY MARKET FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o interest rates could rise sharply, causing the value of the fund's
securities, and share price, to drop;
o any of the fund's holdings could have its credit rating downgraded or
could default;
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries; and
o the risks generally associated with dollar-denominated foreign
investments, including political and economic upheaval, seizure or
nationalization of deposits, imposition of taxes or other restrictions on the
payment of principal and interest.
ALL ACQUIRED FUNDS
The prices of foreign securities may be further affected by other factors,
including:
o Currency exchange rates--The dollar value of the fund's foreign
investments will be affected by changes in the exchange rates between the dollar
and the currencies in which those investments are traded.
o Political and economic conditions--The value of the fund's foreign
investments may be adversely affected by political and social instability in
their home countries and by changes in economic or taxation policies in those
countries.
o Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
o Markets--The securities markets of other countries are smaller than
U.S. securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many
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developing countries have, in the past, experienced high rates of inflation
or sharply devaluated their currencies against the U.S. dollar, thereby causing
the value of investments in companies located in those countries to decline.
Transaction costs are often higher in developing countries and there may be
delays in settlement procedures.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the funds' investment advisor and the funds' other service providers are
unable to distinguish the year 2000 from the year 1900.
The funds' investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the funds invests.
COMPARISON OF RISKS OF THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
Each Acquiring Fund presents many, and in some cases all, of the same principal
risks of investing as does the corresponding Acquired Fund. There are, however,
certain differences between the principal risks of investing in the Acquiring
and Acquired Funds.
For example, certain of the Acquired Funds, including the GT Global Variable
Latin America, Growth & Income, Strategic Income, and Global Government Income
Funds, are non-diversified, which means that they may invest in fewer issuers
than if they were diversified. As a result, the value of these funds' shares may
vary more widely and the funds may be subject to greater investment and credit
risk than if they were invested more broadly. By contrast, all of the Acquiring
Funds are diversified.
In addition, as discussed under "Investment Objectives and Policies" above,
certain of the Acquired Funds, including the GT Global Variable Europe, Natural
Resources, Infrastructure, New Pacific, Latin America, and Emerging Markets
Funds, are "sector" funds, which means that they invest primarily in equity
securities of the type described in the fund's name. The value of these funds'
shares generally are vulnerable to the particular factors affecting the sector
in which they invest, e.g., the Pacific Basin countries in the case of the GT
Global Variable New Pacific Fund, the infrastructure industry in the case of the
GT Global Infrastructure Fund, etc. As a result, the value of these funds'
shares may rise and fall more than the value of shares of a fund that invests
more broadly. By contrast, the AIM V.I. International Equity Fund, into which
these Acquired Funds will be reorganized, is not a sector fund and, thus, does
not present the same risk associated with such sectors. The AIM V.I.
International Equity Fund, of course, has greater exposure to the risks of
investing in securities of foreign companies than do the GT Global Variable
Infrastructure and Natural Resources Funds, but generally has less exposure to
developing countries than the GT Global Variable Europe, New Pacific,
International, Latin America, and Emerging Markets Funds.
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The GT Global Variable Latin America and Emerging Markets Funds also may invest
up to 50% and 20% respectively of their total assets in "junk bonds," which,
compared to higher quality debt securities, may involve greater risk of default
or prices due to changes in the credit quality of the issuer. The AIM V.I.
International Equity Fund, by contrast, does not invest in junk bonds.
PLEASE REFER TO THE PROSPECTUS FOR THE ACQUIRED FUNDS AND THE ACCOMPANYING
PROSPECTUS FOR THE ACQUIRING FUNDS FOR MORE DETAILS.
INFORMATION ABOUT THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
- --------------------------------------------------------------------------------
The Synopsis included in this Proxy Statement/Prospectus briefly compares each
Acquired Fund to the Acquiring Fund into which it would be reorganized,
highlighting certain key features of the Funds and certain additional
information about the differences between the Funds.
The Acquiring Funds' Prospectuses, included in Appendix II, provide additional
information about the Acquiring Funds. A portion of the most recent Annual
Report for each Acquiring Fund, included in Appendices III through VII, also
provides information about the Acquiring Funds.
Additional information about the Acquired Funds is incorporated into this Proxy
Statement/Prospectus by reference to the Acquired Funds' Prospectuses. If you
want more information about the Acquired Funds, you can request a free copy of
the Acquired Funds' Prospectuses by calling 1-800-347-4246.
ADDITIONAL INFORMATION ABOUT THE AGREEMENT
- --------------------------------------------------------------------------------
TERMS OF THE REORGANIZATIONS
The terms and conditions under which the Reorganizations may be consummated are
set forth in the Agreement. Significant provisions of the Agreement are
summarized below; however, this summary is qualified in its entirety by
reference to the Agreement, a copy of which is attached as Appendix I to this
Proxy Statement/Prospectus.
THE REORGANIZATIONS
Each Acquiring Fund will acquire all of the assets of the Acquired Fund with
which it will combine in exchange for shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the liabilities of the Acquired Fund.
Consummation of each Reorganization (the "Closing") is expected to occur on
September 24, 1999 (October 1, 1999 in the case of GT funds reorganizing into
the AIM V.I. International Equity Fund) (the applicable date of each closing
is hereinafter referred to as "Closing Date"), at 5:00 p.m. Central Time
(the "Effective
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Time") on the basis of values calculated as of the close of regular trading on
the NYSE on that business day.
At the Effective Time, GT Series and GT Trust shall deliver all of the assets of
each Acquired Fund to the Custodian for the account of the corresponding
Acquiring Fund in exchange for (1) the assumption by the Acquiring Fund of all
of the liabilities of any kind of the Acquired Fund, and (2) delivery by AVIF
directly to the Acquired Fund shareholders of a number of Acquiring Fund shares
(including, if applicable, fractional shares rounded to the nearest thousandth)
having an aggregate net asset value equal to the net value of the assets of the
Acquired Fund so transferred, assigned and delivered.
Consummation of the Reorganization of any Acquired Fund is not conditioned upon
consummation of the Reorganization of any other Acquired Fund.
OTHER TERMS
The Agreement may be amended without shareholder approval by mutual agreement of
AVIF, AIM, GT Series and GT Trust. If any amendment is made to the Agreement
that effects a material change to the Agreement and the Reorganizations, such
change will be submitted to the affected shareholders for their approval.
Each of AVIF, GT Series and GT Trust has made representations and warranties in
the Agreement that are customary in matters such as the Reorganizations. The
obligations of AVIF, GT Series and GT Trust pursuant to the Agreement with
respect to a particular Acquired Fund or Acquiring Fund are subject to various
conditions, including the following:
(a) the assets of the Acquired Fund to be acquired by the Acquiring
Fund with which it will be combined shall constitute at least 90%
of the fair market value of the net assets and at least 70% of the
fair market value of the gross assets held by each of the Acquired
Funds immediately prior to the Reorganizations;
(b):
o AVIF shall have filed with the SEC its Registration Statement
on Form N-14 under the Securities Act of 1933 (the "1933 Act")
pertaining to the Reorganization;
o such Registration Statement shall have become effective; and
o no stop-order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceeding for that
purpose shall have been initiated or threatened by the SEC
(and not withdrawn or terminated);
(c) the shareholders of each Acquired Fund shall have approved the
Agreement; and
(d) AVIF, GT Series and GT Trust shall each have received an opinion
from Freedman, Levy, Kroll & Simonds that the Reorganizations will
not result in the recognition of
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gain or loss for United States Federal income tax purposes for any
Acquired Fund, any Acquiring Fund or their respective
shareholders.
Each of the Acquired Funds and the Acquiring Funds has agreed to bear its own
expenses in connection with the Reorganizations.
The Board of Directors of AVIF may waive without shareholder approval any
failure by GT Series or GT Trust to satisfy (1) any of the conditions to AVIF's
obligations under Section 6.1 of the Agreement, and (2) any of the mutual
conditions under Section 6.2 of the Agreement that GT Series and GT Trust also
waive. The Agreement may be terminated entirely or with respect to a
Reorganization and one or more of the Reorganizations may be abandoned by AVIF,
GT Series, or GT Trust at any time by mutual agreement of the parties to the
Agreement, or by any party in the event that the relevant Acquired Fund's
shareholders do not approve the Agreement or in the event the Closing does not
occur on or before the Closing Date.
FEDERAL TAX CONSEQUENCES
The following is a general summary of the material Federal income tax
consequences of the Reorganizations and is based upon the current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the existing
Treasury regulations thereunder, current administrative rulings of the Internal
Revenue Service ("IRS") and judicial decisions, all of which are subject to
change.
The principal Federal income tax consequences that are expected to result from
the Reorganizations, under currently applicable law, are as follows:
(1) The transfer of the assets of each Acquired Fund to
each corresponding Acquiring Fund in exchange for shares of
voting stock of the Acquiring Fund ("voting stock")
distributed directly to the shareholders of the Acquired Fund,
as provided in the Agreement, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of
the Code, and each Acquired Fund and each Acquiring Fund will
be a "party to a reorganization" within the meaning of Section
368(b) of the Code.
(2) In accordance with Section 361(a) and Section 361(c)(1)
of the Code, no gain or loss will be recognized by
an Acquired Fund on the transfer of its assets to the
corresponding Acquiring Fund solely in exchange for the voting
stock of the Acquiring Fund and the Acquiring Fund's
assumption of the Acquired Fund's liabilities, or on the
distribution of the voting stock to the Acquired Fund's
shareholders.
(3) In accordance with Section 1032 of the Code, no gain or loss
will be recognized by any Acquiring Fund on the receipt of
assets of its corresponding Acquired Fund in exchange for
the voting stock of Acquiring Fund and the Acquiring
Fund's assumption of the Acquired Fund's liabilities.
(4) In accordance with Section 354(a)(1) of the Code, no gain or
loss will be recognized by shareholders of any Acquired Fund
on the receipt of the voting stock of the corresponding
Acquiring Fund in constructive exchange for their Acquired
Fund shares.
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(5) In accordance with Section 362(b) of the Code, the basis to
each Acquiring Fund of the assets of each corresponding
Acquired Fund transferred to it will be the same as the basis
of those assets in the hands of such Acquired Fund immediately
before the Reorganization.
(6) In accordance with Section 358(a) of the Code, an Acquired
Fund shareholder's basis for the voting stock of the
corresponding Acquiring Fund received by the Acquired Fund
shareholder will be the same as the Acquired Fund
shareholder's basis for Acquired Fund shares constructively
exchanged therefor.
(7) In accordance with Section 1223(1) of the Code, an Acquired
Fund shareholder's holding period for the voting stock of a
corresponding Acquiring Fund will include the Acquired Fund
shareholder's holding period for the Acquired Fund shares
constructively exchanged therefor, provided that the Acquired
Fund shareholder held the Acquired Fund shares as a capital
asset.
(8) In accordance with Section 1223(2) of the Code, the holding
period for assets of an Acquired Fund transferred to its
corresponding Acquiring Fund in the Reorganizations will
include the holding period for those assets in the hands of
the Acquired Fund.
(9) For purposes of Section 381 of the Code, AIM V.I.
Global Growth and Income Fund and AIM V.I. Telecommunications
Fund will each be treated as if there had been no
Reorganization, if, in the case of each such Fund, the Fund
has not commenced operations or issued voting stock (other
than to its investment adviser in connection with its
creation) prior to the Closing Date.
(10) Each Acquired Fund and each corresponding Acquiring Fund will
be a RIC under Subchapter M and will comply with the
investment diversification requirements of Section 817(h) of
the Code. Accordingly, the Reorganizations will not produce
adverse Federal income tax consequences by reason of income or
gain for any Contract Owner.
As a condition to Closing, Freedman, Levy, Kroll & Simonds will render a
favorable opinion to AVIF, GT Series and GT Trust as to the foregoing Federal
income tax consequences of the Reorganizations, which opinion will be
conditioned upon the accuracy, as of the Closing Date, of certain
representations of AVIF, GT Series and GT Trust upon which Freedman, Levy, Kroll
& Simonds will rely in rendering its opinion, which representations include, but
are not limited to, the following (taking into account for purposes thereof any
events that are part of the plan of reorganization):
(A) The fair market value of the voting stock of each Acquiring Fund
received by each shareholder of a corresponding Acquired Fund
will be approximately equal to the fair market value of the
shares of the Acquired Fund that such shareholder held before
the Reorganization.
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(B) There is no plan or intention by the shareholders of any of the
Acquired Funds to redeem a number of shares of the voting stock
of a corresponding Acquiring Fund received in the Reorganization
that would reduce an Acquired Fund shareholder's ownership of
the shares to a number of shares having a value, as of the
Closing Date, of less than 50% of the value of all of the
formerly outstanding shares of the Acquired Fund as of the
Closing Date. In the case of GT Global Variable Growth & Income
Fund and GT Global Variable Telecommunications Fund, "100
percent" shall be substituted for "50 percent" if the
corresponding Acquiring Fund has not commenced operations or
issued voting stock (other than to its investment adviser in
connection with its creation) prior to the Closing Date.
(C) Following the Reorganizations, each Acquiring Fund will continue
the historic business of the corresponding Acquired Fund or use
a significant portion of such Acquired Fund's historic business
assets in its business.
(D) At the direction of each of the Acquired Funds, each
corresponding Acquiring Fund will issue directly to each
Acquired Fund's shareholders pro rata the voting stock that each
Acquired Fund constructively receives in the Reorganization, and
each Acquired Fund will distribute its other properties (if any)
to its shareholders, on or as promptly as practicable after the
Closing Date.
(E) No Acquiring Fund has any plan or intention to reacquire any
of its voting stock issued in the Reorganization, except to the
extent that the Acquiring Fund is required by the Investment
Company Act of 1940 ("1940 Act") to redeem any of its shares of
voting stock presented for redemption.
(F) No Acquiring Fund plans or intends to sell or otherwise dispose
of any of the assets of the corresponding Acquired Fund acquired
in the Reorganization, except for dispositions made in the
ordinary course of its business or dispositions necessary to
maintain its status as a RIC under the Code.
(G) Each Acquiring Fund, each Acquired Fund, and each shareholder of
each Acquired Fund will pay its respective expenses, if any,
incurred in connection with the Reorganization.
(H) Each Acquiring Fund will acquire at least 90 percent of the fair
market value of the net assets, and at least 70 percent of the
fair market value of the gross assets, held by each
corresponding Acquired Fund immediately before the
Reorganization, including for this purpose any amounts used by
the Acquired Fund to pay its Reorganization expenses and all
redemptions and distributions made by the Acquired Fund
immediately before the Reorganization (other than redemptions
pursuant to a demand of a shareholder in the ordinary course of
the Acquired Fund's business as a series of an open-end
management investment company under the 1940 Act and regular,
normal dividends not in excess of the requirements of Section
852 of the Code). This representation does not apply to AIM V.I.
Global Growth and Income Fund or AIM V.I. Telecommunications
Fund, if, in the case of each such Fund, the Fund has not
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commenced operations or issued voting stock (other than to its
investment adviser in connection with its creation) prior to the
Closing Date.
(I) Each Acquiring Fund (except for either AIM V.I. Global Growth
and Income Fund or AIM V.I. Telecommunications Fund if, in the
case of such Fund, the Fund has not commenced operations or
issued shares (other than to its investment adviser in
connection with its creation) prior to the Closing Date) and
each Acquired Fund has elected to be taxed as a RIC under
Section 851 of the Code and will each have qualified for the
special Federal tax treatment afforded RICs under the Code for
all taxable periods. These taxable periods include the taxable
year of each Acquiring Fund that includes the Closing Date and
the last short taxable period of each Acquired Fund ending on
the Closing Date (except for GT Global Variable Growth & Income
Fund or GT Global Variable Telecommunications Fund, if, in the
case of such Fund, the corresponding Acquiring Fund has not
commenced operations or issued voting stock (other than to its
investment adviser in connection with its creation prior to the
Closing Date)).
(J) The liabilities of each Acquired Fund assumed by the
corresponding Acquiring Fund and the liabilities to which the
transferred assets of each Acquired Fund are subject were
incurred by the Acquired Fund in the ordinary course of its
business.
(K) There is no intercorporate indebtedness existing between any
Acquiring Fund and a corresponding Acquired Fund that was
issued, acquired, or will be settled at a discount.
(L) No Acquiring Fund owns, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any shares
of an Acquired Fund from which it is receiving assets in the
Reorganization.
(M) The fair market value of the assets of each Acquired Fund
transferred to the corresponding Acquiring Fund will equal or
exceed the sum of the liabilities assumed by the corresponding
Acquiring Fund, plus the amount of liabilities, if any, to which
the transferred assets are subject.
(N) No Acquired Fund is under the jurisdiction of a court in a
United States Code Title 11 or similar case within the meaning
of Section 368(a)(3)(A) of the Code.
(O) Not more than 25 percent of the value of the total assets of any
Acquiring Fund or any Acquired Fund or any Acquired Fund has
been, is, or will be invested in the stock or securities of any
one issuer, and not more than 50 percent of the value of the
total assets of any Acquiring Fund or any Acquired Fund has
been, is, or will be invested in the stock or securities of five
or fewer issuers.
(P) Each Acquiring Fund and each Acquired Fund will have satisfied
the investment diversification requirements of Section 817(h) of
the Code for all taxable quarters since its inception, including
the last short taxable period of each Acquired Fund ending on
the Closing Date and taxable quarter of each Acquiring Fund that
includes the Closing Date. In the case of GT Global Variable
Growth & Income Fund and GT
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Global Variable Telecommunications Fund, if the corresponding
Acquiring Fund has not commenced operations or issued voting
stock (other than to its investment adviser in connection with
its creation) prior to the Closing Date, "last short taxable
period" shall read "taxable quarter."
(Q) Immediately following the Reorganizations, the shareholders
of GT Global Variable Growth & Income Fund and GT Global
Variable Telecommunications Fund will own all of the outstanding
voting stock of the corresponding Acquiring Funds and will own
such stock solely by reason of their ownership of GT Global
Variable Growth & Income Fund and GT Global Variable
Telecommunications Fund, where the corresponding Acquiring Fund
has not commenced operations or issued voting stock (other than
to its investment adviser in connection with its creation) prior
to the Closing Date.
(R) Immediately following the Reorganizations, either AIM V.I.
Global Growth and Income Fund or AIM V.I. Telecommunications
Fund will, if it has not commenced operations or issued voting
stock (other than to its investment adviser in connection with
its creation) prior to the Closing Date, possess the same assets
and liabilities, except for assets used to pay expenses incurred
in the Reorganizations, as those possessed by the corresponding
Acquired Funds immediately prior to the Reorganizations.
THE FOREGOING DESCRIPTION OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
REORGANIZATIONS IS MADE WITHOUT REGARD TO THE PARTICULAR FACTS AND CIRCUMSTANCES
OF ANY SHAREHOLDER OF THE ACQUIRED FUNDS. THE ACQUIRED FUNDS' SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM
OF THE REORGANIZATIONS, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.
ACCOUNTING TREATMENT
The Reorganizations will be accounted for on a tax-free combined basis.
Accordingly, the book cost basis to the Acquiring Funds of the assets of the
Acquired Funds will be the same as the book cost basis of such assets to the
Acquired Funds.
RIGHTS OF SHAREHOLDERS
- --------------------------------------------------------------------------------
AVIF is a Maryland corporation, and each of GT Series and GT Trust is a Delaware
business trust. There is much that is similar between the two forms of
organization. For example, the responsibilities, powers and fiduciary duties of
the trustees of GT Series and GT Trust are substantially the same as those of
the directors of AVIF.
There are, however, certain differences between the two forms of organization.
The operations of AVIF, as a Maryland corporation, are governed by its Articles
of Incorporation, and amendments and supplements thereto, Bylaws, and applicable
Maryland law. The operations of each of GT
32
42
Series and GT Trust, as Delaware business trusts, are governed by its Agreement
and Declaration of Trust, as amended (a "Declaration of Trust"), Bylaws, and
Delaware law.
LIABILITY OF SHAREHOLDERS
The Delaware Business Trust Act provides that shareholders of a Delaware
business trust shall be entitled to the same limitations of liability extended
to shareholders of private for-profit corporations. There is, however, a remote
possibility that, under certain circumstances, shareholders of a Delaware
business trust might be held personally liable for the trust's obligations to
the extent the courts of another state that does not recognize such limited
liability were to apply the laws of such state to a controversy involving such
obligations. The Declaration of Trust for each of GT Series and GT Trust
provides that shareholders of the pertinent Acquired Funds shall not be subject
to any personal liability for acts or obligations of the Acquired Funds and that
every written agreement, obligation or other undertaking made or issued by the
Acquired Funds shall contain a provision to the effect that shareholders are not
personally liable thereunder. In addition, the Declaration of Trust provides for
indemnification out of the Acquired Funds' property for any shareholder held
personally liable solely by reason of his or her being or having been a
shareholder. Therefore, the risk of any shareholder incurring financial loss
beyond his investment due to shareholder liability is limited to circumstances
in which the Acquired Funds themselves are unable to meet their obligations and
the express disclaimer of shareholder liabilities is determined not to be
effective. Given the nature of the assets and operations of the Acquired Funds,
GT Series and GT Trust believe that the possibility of the Acquired Funds being
unable to meet their obligations is remote, and that even if a claim were
brought against the Acquired Funds and a court determined that such Funds'
shareholders were personally liable, the court would likely not impose a
material obligation on a shareholder.
Shareholders of a Maryland corporation generally do not have personal liability
for the corporation's obligations, except that a shareholder may be liable to
the extent that he receives any distribution that exceeds the amount which he
could properly receive under Maryland law or where such liability is necessary
to prevent fraud.
ELECTION OF TRUSTEES/DIRECTORS; TERMS
The shareholders of either GT Series or GT Trust are entitled to vote on the
election of the trustees of that respective entity. Such trustees serve for the
life of the entity, subject to their earlier death, incapacitation, resignation,
retirement or removal (see below). Shareholders may elect successors to such
trustees only at annual or special meetings of shareholders.
The shareholders of AVIF are entitled to vote on the election of the directors
of AVIF. Each director serves until a successor is elected, subject to earlier
death, incapacitation, resignation, retirement or removal (see below).
Shareholders may elect successors to such directors only at annual or special
meetings of shareholders.
33
43
REMOVAL OF DIRECTORS/TRUSTEES
A trustee of either GT Series or GT Trust may be removed at any time by vote of
at least two-thirds of the trustees or by vote of two-thirds of its outstanding
shares. The Declarations of Trust provide that vacancies may be filled by
appointment by the remaining trustees.
A director of AVIF may be removed by the affirmative vote of a majority of the
Board of Directors, a committee of the Board of Directors appointed for such
purpose, or the holders of a majority of the outstanding shares of AVIF.
MEETINGS OF SHAREHOLDERS
Neither of GT Series or GT Trust is required to hold annual meetings of
shareholders unless required by the 1940 Act, and they do not presently intend
to do so unless required. The Bylaws of each of GT Series and GT Trust provide
that a majority of the trustees may call special meetings of shareholders and
the trustees shall call a special meeting of the shareholders upon written
request of the holders of not less than 10% of an Acquired Fund's shares.
Special meetings may be called for the purpose of electing trustees or for any
other action requiring shareholder approval, or for any matter deemed by the
trustees to be necessary or desirable.
AVIF is not required to hold annual meetings of shareholders and does not
presently intend to do so unless required by the 1940 Act. AVIF's Bylaws provide
that a special meeting of shareholders may be called by the Chairman of the
Board of Directors, if any, by the President, or by a majority of the Board of
Directors. In addition, such special meetings shall be called by the Secretary
upon receipt of a proper written request signed by holders of shares entitled to
cast at least 10% of the votes entitled to be cast at the special meeting.
Requests for special meetings must, among other things, state the purpose of
such meeting and the matters to be voted upon. A special meeting need not be
called to consider any matter previously voted upon at a special meeting called
by the shareholders during the preceding twelve months, unless requested by a
majority of all shares entitled to vote at such meeting.
LIABILITY OF TRUSTEES/DIRECTORS AND OFFICERS; INDEMNIFICATION
Delaware law provides that trustees of a business trust shall not be liable to
the business trust or its shareholders for acting in good faith reliance on the
provisions of its governing instrument and that the trustees' liabilities may be
expanded or restricted by such instrument. Under the Declaration of Trust of
each of GT Series and GT Trust, its trustees and officers are not liable for any
act or omission or any conduct whatsoever in their capacity as trustees, except
for liability to the trust or shareholders due to willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of trustee. Delaware law allows a business trust to
indemnify and hold harmless any trustee or other person against any and all
claims and demands. The Declaration of Trust of each of GT Series and GT Trust
requires the indemnification of its trustees and officers to the fullest extent
permitted by Delaware law, except with respect to any matter in which it has
been determined that a trustee or officer acted with willful misfeasance, bad
faith, gross negligence or reckless disregard of his or her duties.
34
44
Maryland law permits a corporation to eliminate liability of its directors and
officers to the corporation or its stockholders, except for liability arising
from receipt of an improper benefit or profit or from active and deliberate
dishonesty material to the matter giving rise to the proceeding. AVIF's Articles
of Incorporation eliminate director and officer liability to the fullest extent
permitted under Maryland law. Under Maryland law, indemnification of a
corporation's directors and officers is mandatory if a director or officer has
been successful on the merits or otherwise in the defense of certain
proceedings. Maryland law permits indemnification for other matters unless it is
established that the act or omission material to the matter giving rise to the
proceeding was committed in bad faith, a result of active and deliberate
dishonesty, or one in which a director or officer actually received an improper
personal benefit.
TERMINATION
Each of GT Series and GT Trust, or any series or class of shares of beneficial
interest thereof, may be terminated by a majority shareholder vote of that Trust
or of the affected series or class, respectively, or if there are fewer than 100
shareholders of record of the Trust or of such terminating series or class, by
the Board of Trustees of that Trust pursuant to written notice to the
shareholders of such Trust or to the shareholders of the affected series or
class.
Maryland law provides that AVIF may be dissolved by the vote of a majority of
the Board of Directors and two-thirds of the shares entitled to vote on the
dissolution
VOTING RIGHTS OF SHAREHOLDERS
The Declaration of Trust of each of GT Series and GT Trust grants shareholders
power to vote only with respect to the following: (i) election of trustees; (ii)
removal of trustees, (iii) approval of investment advisory contracts, as
required by the 1940 Act; (iv) termination of that Trust or a series or class of
its shares of beneficial interest, (v) certain amendments of the Declaration of
Trust, (vi) sale of all or substantially all of the assets of that Trust or one
of its series, (vii) merger or consolidation of that Trust or any of its series,
with certain exceptions, and (viii) approval of such additional matters as may
be required by law or as the trustees, in their sole discretion, shall
determine.
Shareholders of a Maryland corporation such as AVIF are entitled to vote on,
among other things, those matters which effect fundamental changes in the
corporate structure (such as a merger, consolidation or sale of substantially
all of the assets of the corporation) as provided by Maryland corporation law.
DISSENTERS' RIGHTS
Neither Delaware law nor either Declaration of Trust confers upon shareholders
of GT Series or GT Trust appraisal or dissenters' rights.
35
45
Under Maryland law, AVIF's shareholders may not demand the fair value of their
shares from the successor company in a transaction involving the transfer of the
Acquiring Funds' assets, and are bound by the terms of the transaction.
AMENDMENTS TO ORGANIZATION DOCUMENTS
Consistent with Delaware law, the Boards of Trustees of GT Series or of GT Trust
may, without shareholder approval, amend their respective Declaration of Trust
at any time, except that no amendment may be made which reduces the
indemnification provided to shareholders or former shareholders or which changes
the preferences, voting powers, rights, and privileges of outstanding shares in
a manner materially adverse to the shareholders of such shares, without approval
of the affected shareholders. In addition, the Boards of Trustees of GT Series
and of GT Trust may, without shareholder approval, alter, amend or repeal the
Bylaws of the Trust or adopt new Bylaws at any time.
Consistent with Maryland law, AVIF reserves the right to make any amendment to
its Articles of Incorporation in the manner now or hereafter prescribed by
statute, including any amendment that alters the contract rights, as expressly
set forth in the Articles of Incorporation, of any outstanding stock, and all
rights conferred on shareholders are granted subject to this reservation. The
Board of Directors of AVIF may approve amendments to the Articles of
Incorporation to classify or reclassify unissued shares of a class of stock
without shareholder approval. Other amendments to the AVIF Articles of
Incorporation may be adopted if approved by a vote of a majority of the shares
at any meeting at which a quorum is present. The Board of Directors of AVIF may,
without shareholder approval, alter, amend or repeal the Bylaws.
OWNERSHIP OF THE ACQUIRED FUNDS AND THE ACQUIRING FUNDS SHARES
- --------------------------------------------------------------------------------
5% OWNERS
Listed below is the name, address and percent ownership of each person who as of
June 21, 1999, to the knowledge of GT Series and of GT Trust, owned of record 5%
or more of the outstanding shares of an Acquired Fund. To the knowledge of GT
Series and of GT Trust, as of June 21, 1999, no contract owner beneficially
owned 5% or more of the outstanding shares of an Acquired Fund.
PERCENT OWNED
NAME AND ADDRESS OF RECORD
---------------- ---------
GT GLOBAL MONEY MARKET FUND
General American Insurance Co............................ 99.87%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
* A shareholder who beneficially owns more than 25% of the voting
securities of a Fund may be presumed to "control" the Fund. The Funds
understand that insurance company separate accounts owning shares of
the Funds will vote their shares in accordance with instructions
received from Contract owners, annuitants and beneficiaries. If an
insurance company determines, however, that it is permitted to vote any
such shares of the funds in its own right, it may elect to do so,
subject to the then current interpretation of the 1940 Act and the
rules thereunder.
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46
PERCENT OWNED
NAME AND ADDRESS OF RECORD
---------------- ---------
GT GLOBAL VARIABLE AMERICA FUND
General American Insurance Co............................ 99.69%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE EMERGING MARKETS FUND
General American Insurance Co............................ 98.19*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE EUROPE FUND
General American Insurance Co............................ 99.60%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE GLOBAL GOVERNMENT
INCOME FUND
General American Insurance Co............................ 99.60%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE GROWTH & INCOME FUND
General American Insurance Co............................ 99.87%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
General American Insurance Co............................ 97.00%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE INTERNATIONAL FUND
General American Insurance Co............................ 95.97%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE LATIN AMERICA FUND
General American Insurance Co............................ 88.60%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
* A shareholder who beneficially owns more than 25% of the voting
securities of a Fund may be presumed to "control" the Fund. The Funds
understand that insurance company separate accounts owning shares of
the Funds will vote their shares in accordance with instructions
received from Contract owners, annuitants and beneficiaries. If an
insurance company determines, however, that it is permitted to vote any
such shares of the funds in its own right, it may elect to do so,
subject to the then current interpretation of the 1940 Act and the
rules thereunder.
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47
PERCENT OWNED
NAME AND ADDRESS OF RECORD
---------------- ---------
American Enterprise Life Insurance Company............... 10.91%
IDS Tower 10
Minneapolis, MN 55440-0010
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
General American Insurance Co............................ 98.08%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE NEW PACIFIC FUND
General American Insurance Co............................ 94.52%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
American Enterprise Life Insurance Company............... 5.32%
IDS Tower 10
Minneapolis, MN 55440-0010
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
General American Insurance Co............................ 99.80%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
General American Insurance Co............................ 100%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
General American Insurance Co............................ 99.54%*
50 California Street, 27th Floor
San Francisco, CA 94111-4624
- --------------------------
* A shareholder who beneficially owns more than 25% of the voting
securities of a Fund may be presumed to "control" the Fund. The Funds
understand that insurance company separate accounts owning shares of
the Funds will vote their shares in accordance with instructions
received from Contract owners, annuitants and beneficiaries. If an
insurance company determines, however, that it is permitted to vote any
such shares of the funds in its own right, it may elect to do so,
subject to the then current interpretation of the 1940 Act and the
rules thereunder.
38
48
Listed below is the name, address and percent ownership of each person who as of
June 21, 1999, to the knowledge of AVIF, owned of record 5% or more of the
outstanding shares of an Acquiring Fund. To the knowledge of AVIF, as of June
21, 1999, no contract owner beneficially owned 5% or more of the outstanding
shares of any Acquiring Fund.
PERCENT OWNED
NAME AND ADDRESS OF RECORD
---------------- ---------
AIM V.I. CAPITAL APPRECIATION FUND
Connecticut General Life Insurance Company 43.20% *
900 Cottage Grove Road
Hartford, CT 06152-2321
Glenbrook Life and Annuity Company 19.50%
3100 Sanders Road, N4C
Northbrook, IL 60062
Merrill Lynch Life Insurance Company 15.49%
800 Scudders Mill Road
Plainsboro, NJ 08536
AETNA Life Insurance and Annuity Company 11.56%
151 Farmington Avenue
Hartford, CT 06156
AIM V.I. DIVERSIFIED INCOME FUND
Connecticut General Life Insurance Company 61.02% *
900 Cottage Grove Road
Hartford, CT 06152-2321
Glenbrook Life and Annuity Company 31.93% *
3100 Sanders Road, N4C
Northbrook, IL 60062
AIM V.I. GOVERNMENT SECURITIES FUND
Connecticut General Life Insurance Company 38.08% *
900 Cottage Grove Road
Hartford, CT 06152-2321
* A shareholder who beneficially owns more than 25% of the voting
securities of a Fund may be presumed to "control" the Fund. The Funds
understand that insurance company separate accounts owning shares of
the Funds will vote their shares in accordance with instructions
received from Contract owners, annuitants and beneficiaries. If an
insurance company determines, however, that it is permitted to vote any
such shares of the funds in its own right, it may elect to do so,
subject to the then current interpretation of the 1940 Act and the
rules thereunder.
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49
NAME AND ADDRESS PERCENT OWNED
---------------- OF RECORD
--------------
First Citicorp Life Insurance Company 22.52%
One Court Square
Long Island City, NY 11120
Glenbrook Life and Annuity Company 21.66%
3100 Sanders Road, N4C
Northbrook, IL 60062
Security Life of Denver Insurance Company 9.13%
1290 Broadway
Denver, CO 80203
AIM V.I. INTERNATIONAL EQUITY FUND
Connecticut General Life Insurance Company 56.83% *
900 Cottage Grove Road
Hartford, CT 06152-2321
Glenbrook Life and Annuity Company 22.98%
3100 Sanders Road, N4C
Northbrook, IL 60062
First Citicorp Life Insurance Company 6.72%
One Court Square
Long Island City, NY 11120
AIM V.I. MONEY MARKET FUND
Connecticut General Life Insurance Company 66.52% *
900 Cottage Grove Road
Hartford, CT 06152-2321
Glenbrook Life and Annuity Company 31.75% *
3100 Sanders Road, N4C
Northbrook, IL 60062
* A shareholder who beneficially owns more than 25% of the voting securities
of a Fund may be presumed to "control" the Fund. The Funds understand that
insurance company separate accounts owning shares of the Funds will vote
their shares in accordance with instructions received from Contract
owners, annuitants and beneficiaries. If an insurance company determines,
however, that it is permitted to vote any such shares of the Funds in its
own right, it may elect to do so, subject to the then current
interpretation of the 1940 Act and the rules thereunder.
40
50
AIM provided the initial capitalization of the AIM V.I. Global Growth and Income
Fund and AIM V.I. Telecommunications Fund and, accordingly, as of June 21, 1999,
owned all the outstanding shares of common stock of the Funds. Although each
Fund expects that the sale of its shares pursuant to its prospectus will
promptly reduce the percentage of such shares owned by AIM to less than 1% of
the total shares outstanding, as long as AIM owns over 25% of the shares of the
Fund that are outstanding, it may be presumed to be in "control" of the Fund, as
defined in the 1940 Act. AIM, a Delaware corporation, is a wholly owned
subsidiary of A I M Management Group Inc. The address of AIM is 11 Greenway
Plaza, Suite 100, Houston, Texas 77048-1173.
OWNERSHIP OF OFFICERS AND TRUSTEES/DIRECTORS
To the best of the knowledge of AVIF, the beneficial ownership of shares of the
Acquiring Funds by officers and directors of AVIF as a group constituted less
than 1% of the outstanding shares of each such Fund as of June 21, 1999. To the
best of the knowledge of GT Series and GT Trust, the beneficial ownership of
shares of the Acquired Funds by officers or trustees of GT
Series and of GT Trust as a group constituted less than 1% of the outstanding
shares of such Funds as of June 21, 1999.
CAPITALIZATION
- --------------------------------------------------------------------------------
The following table sets forth as of December 31, 1998: (i) the capitalization
of the Acquiring Funds' shares, (ii) the capitalization of the Acquired Funds
shares, and (iii) the pro forma capitalization of the Acquiring Funds shares as
adjusted to give effect to the transactions contemplated by the Agreement.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE GROWTH & INCOME FUND
PRO FORMA
AIM V.I. GLOBAL GROWTH AND GT GLOBAL VARIABLE GROWTH AIM V.I. GLOBAL
INCOME FUND* & INCOME FUND GROWTH AND INCOME FUND
------------ ------------- ----------------------
Net Assets n/a $46,083,927 $46,083,927
Shares Outstanding n/a 2,212,382 n/a
Net Asset Value Per Share n/a $20.83 n/a
- --------------
*Has not commenced operations.
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE AMERICA FUND
PRO FORMA
AIM V.I. CAPITAL GT GLOBAL VARIABLE AMERICA AIM V.I. CAPITAL
APPRECIATION FUND FUND APPRECIATION FUND
----------------- ---- -----------------
Net Assets $769,317,412 $37,966,031 $807,283,443
Shares Outstanding 28,356,705 1,631,544 29,756,116
Net Asset Value Per Share $27.13 $23.27 $27.13
41
51
REORGANIZATIONS INVOLVING THE GT GLOBAL VARIABLE INTERNATIONAL FUND; GT GLOBAL
VARIABLE EUROPE FUND; GT GLOBAL VARIABLE NATURAL RESOURCES FUND; GT GLOBAL
VARIABLE INFRASTRUCTURE FUND; GT GLOBAL NEW PACIFIC FUND; GT GLOBAL VARIABLE
LATIN AMERICA FUND; AND GT GLOBAL VARIABLE EMERGING MARKETS FUND
AIM V.I. INTERNATIONAL GT GLOBAL VARIABLE GT GLOBAL VARIABLE EUROPE
EQUITY FUND INTERNATIONAL FUND FUND
----------- ------------------ ----
Net Assets $256,824,308 $6,947,282 $22,852,385
Shares Outstanding 12,359,206 549,192 1,027,535
Net Asset Value Per Share $20.78 $12.65 $22.24
GT GLOBAL VARIABLE NATURAL GT GLOBAL VARIABLE GT GLOBAL NEW
RESOURCES FUND INFRASTRUCTURE FUND PACIFIC FUND
-------------- ------------------- ------------
Net Assets $7,504,243 $5,525,852 $21,873,040
Shares Outstanding 598,902 298,533 2,152,858
Net Asset Value Per Share $12.53 $18.51 $10.16
PRO FORMA
GT GLOBAL VARIABLE LATIN GT GLOBAL VARIABLE AIM V.I. INTERNATIONAL
AMERICA FUND EMERGING MARKETS FUND EQUITY FUND
------------ --------------------- -----------
Net Assets $11,954,448 $8,710,691 $342,192,249
Shares Outstanding 933,212 993,237 16,467,381
Net Asset Value Per Share $12.81 $8.77 $20.78
REORGANIZATION INVOLVING THE GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
AIM V.I. PRO FORMA
TELECOMMUNICATIONS GT GLOBAL VARIABLE AIM V.I. TELECOMMUNICATIONS
FUND* TELECOMMUNICATIONS FUND FUND
----- ----------------------- ----
Net Assets n/a $74,544,620 $74,544,620
Shares Outstanding n/a 2,858,306 n/a
Net Asset Value Per Share n/a $26.08 n/a
- ------------------
*Has not commenced operations.
REORGANIZATIONS INVOLVING THE GT GLOBAL VARIABLE STRATEGIC INCOME FUND AND GT
GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
PRO FORMA
AIM V.I. GT GLOBAL VARIABLE GT GLOBAL VARIABLE AIM V.I.
DIVERSIFIED STRATEGIC INCOME GLOBAL GOVERNMENT DIVERSIFIED
INCOME FUND FUND INCOME FUND INCOME FUND
----------- ---- ------------------ -----------
Net Assets $88,199,926 $18,043,997 $6,482,091 $112,726,014
Shares Outstanding 8,235,287 1,544,863 595,233 10,525,305
Net Asset Value Per Share $10.71 $11.68 $10.89 $10.71
42
52
REORGANIZATION INVOLVING THE GT GLOBAL U.S. GOVERNMENT INCOME FUND
AIM V.I. GT GLOBAL U.S. PRO FORMA
GOVERNMENT GOVERNMENT AIM V.I. GOVERNMENT
SECURITIES FUND INCOME FUND SECURITIES FUND
--------------- ----------- ---------------
Net Assets $62,243,733 $5,713,120 $67,956,853
Shares Outstanding 5,699,976 502,473 6,223,155
Net Asset Value Per Share $10.92 $11.37 $10.92
REORGANIZATION INVOLVING THE GT GLOBAL MONEY MARKET FUND
AIM V.I. GT GLOBAL PRO FORMA
MONEY MARKET MONEY MARKET AIM V.I. MONEY
FUND FUND MARKET FUND
---- ---- -----------
Net Assets $78,731,830 $27,806,313 $106,538,143
Shares Outstanding 78,731,830 27,806,313 106,538,143
Net Asset Value Per Share $1.00 $1.00 $1.00
LEGAL MATTERS
- --------------------------------------------------------------------------------
Certain legal matters concerning AVIF and its participation in the
Reorganizations, the issuance of shares of the Acquiring Funds in connection
with the Reorganizations and the Federal income tax consequences of the
Reorganizations will be passed upon by Freedman, Levy, Kroll & Simonds, 1050
Connecticut Avenue, N.W., Washington, D.C. 20036-5366. Certain legal matters
concerning GT Series and of GT Trust and their participation in the
Reorganizations will be passed upon by Kirkpatrick & Lockhart LLP, 1800
Massachusetts Avenue, N.W., Washington, D.C. 20036-1800.
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
- --------------------------------------------------------------------------------
This Proxy Statement/Prospectus and the related Statement of Additional
Information do not contain all the information set forth in the registration
statements and the exhibits relating thereto and annual reports which GT Series,
GT Trust and AVIF have filed with the SEC pursuant to the requirements of the
1933 Act and the 1940 Act, to which reference is hereby made. The SEC file
numbers for the registration statements of GT Series and of GT Trust containing
the Prospectuses and Statements of Additional Information relating to the
Acquired Funds are Registration Nos. 33-52036 and 33-52038. The SEC file number
for AVIF's registration statement containing the Prospectuses and Statement of
Additional Information relating to the Acquiring Funds is Registration No.
33-57340.
AVIF, GT Series and GT Trust are subject to the informational requirements of
the 1940 Act and in accordance therewith file reports and other information with
the SEC. Reports, proxy statements, registration statements and other
information filed by those companies (including the Registration Statement of
AVIF relating to the Acquiring Funds on Form N-14 of which this Proxy
Statement/Prospectus is a part and which is hereby incorporated by reference)
may be
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53
inspected without charge and copied at the prescribed rates at the public
reference facilities maintained by the SEC at Room 1014, Judiciary Plaza, 450
Fifth Street, NW, Washington, DC 20549, and at the following regional offices of
the SEC: 7 World Trade Center, New York, New York 10048; and 500 West Madison
Street, 14th Floor, Chicago, Illinois 60661. The SEC maintains a Web site at
http://www.sec.gov that contains information regarding GT Series, GT Trust,
AVIF and other registrants that file electronically with the SEC.
APPENDICES
- --------------------------------------------------------------------------------
Appendices I through VII follow.
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54
APPENDIX I
AGREEMENT
AND
PLAN OF REORGANIZATION
FOR
EACH PORTFOLIO OF
GT GLOBAL VARIABLE INVESTMENT SERIES
AND
GT GLOBAL VARIABLE INVESTMENT TRUST
JUNE 24, 1999
55
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS............................................................... 2
SECTION 1.1 Definitions............................................................... 2
ARTICLE 2 TRANSFER OF ASSETS........................................................ 5
SECTION 2.1 Reorganizations........................................................... 5
SECTION 2.2 Computation of Net Asset Value............................................ 6
SECTION 2.3 Valuation................................................................. 6
SECTION 2.4 Delivery.................................................................. 6
SECTION 2.5 Termination of Series..................................................... 7
SECTION 2.6 Issuance of Acquiring Fund Shares......................................... 7
SECTION 2.7 Investment Securities..................................................... 7
SECTION 2.8 Liabilities............................................................... 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
OF GT FUNDS............................................................... 8
SECTION 3.1 Organization; Authority................................................... 8
SECTION 3.2 Registration and Regulation of GT Funds................................... 8
SECTION 3.3 Financial Statements...................................................... 8
SECTION 3.4 No Material Adverse Changes; Contingent Liabilities....................... 9
SECTION 3.5 Acquired Fund Shares; Liabilities; Business Operations.................... 9
SECTION 3.6 Accountants............................................................... 10
SECTION 3.7 Binding Obligation........................................................ 10
SECTION 3.8 No Breaches or Defaults................................................... 10
SECTION 3.9 Authorizations or Consents................................................ 11
SECTION 3.10 Permits................................................................... 11
SECTION 3.11 No Actions, Suits or Proceedings.......................................... 11
SECTION 3.12 Contracts................................................................. 12
SECTION 3.13 Properties and Assets..................................................... 12
SECTION 3.14 Taxes..................................................................... 12
SECTION 3.15 Benefit and Employment Obligations........................................ 13
SECTION 3.16 Brokers................................................................... 13
SECTION 3.17 Voting Requirements....................................................... 14
SECTION 3.18 State Takeover Statutes................................................... 14
SECTION 3.19 Books and Records......................................................... 14
SECTION 3.20 Prospectus and Statement of Additional Information........................ 14
SECTION 3.21 No Distribution........................................................... 14
SECTION 3.22 Liabilities of the Acquired Funds......................................... 14
SECTION 3.23 Value of Shares........................................................... 15
SECTION 3.24 Shareholder Expenses...................................................... 15
SECTION 3.25 Intercompany Indebtedness................................................. 15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
OF AVIF................................................................... 15
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PAGE
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SECTION 4.1 Organization; Authority................................................... 15
SECTION 4.2 Registration and Regulation of AVIF....................................... 15
SECTION 4.3 Financial Statements...................................................... 15
SECTION 4.4 No Material Adverse Changes; Contingent Liabilities....................... 16
SECTION 4.5 Registration of Acquiring Fund Shares..................................... 16
SECTION 4.6 Accountants............................................................... 17
SECTION 4.7 Binding Obligation........................................................ 17
SECTION 4.8 No Breaches or Defaults................................................... 17
SECTION 4.9 Authorizations or Consents................................................ 18
SECTION 4.10 Permits................................................................... 18
SECTION 4.11 No Actions, Suits or Proceedings.......................................... 18
SECTION 4.12 Taxes..................................................................... 19
SECTION 4.13 Brokers................................................................... 19
SECTION 4.14 Representations Concerning the Reorganization............................. 19
SECTION 4.15 Prospectus and Statement of Additional Information........................ 20
SECTION 4.16 Value of Shares........................................................... 20
SECTION 4.17 Intercompany Indebtedness; Consideration.................................. 20
ARTICLE 5 COVENANTS................................................................. 21
SECTION 5.1 Conduct of Business....................................................... 21
SECTION 5.2 Announcements............................................................. 22
SECTION 5.3 Expenses.................................................................. 22
SECTION 5.4 Further Assurances........................................................ 22
SECTION 5.5 Notice of Events.......................................................... 23
SECTION 5.6 Access to Information..................................................... 23
SECTION 5.7 Consents, Approvals and Filings........................................... 23
SECTION 5.8 Submission of Agreement to Shareholders................................... 24
ARTICLE 6 CONDITIONS PRECEDENT TO THE REORGANIZATION................................ 24
SECTION 6.1 Conditions Precedent of AVIF.............................................. 24
SECTION 6.2 Mutual Conditions......................................................... 25
SECTION 6.3 Conditions Precedent of GT Funds.......................................... 26
SECTION 6.4 Transactions Independent.................................................. 26
ARTICLE 7 TERMINATION OF AGREEMENT.................................................. 27
SECTION 7.1 Termination............................................................... 27
SECTION 7.2 Survival After Termination................................................ 27
ARTICLE 8 MISCELLANEOUS............................................................. 28
SECTION 8.1 Survival of Representations and Warranties................................ 28
SECTION 8.2 Governing Law............................................................. 28
SECTION 8.3 Binding Effect, Persons Benefiting, No Assignment......................... 28
SECTION 8.4 Obligations of AVIF and GT Funds.......................................... 28
SECTION 8.5 Amendments................................................................ 29
SECTION 8.6 Enforcement............................................................... 29
SECTION 8.7 Interpretation............................................................ 29
SECTION 8.8 Counterparts.............................................................. 29
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PAGE
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SECTION 8.9 Entire Agreement; Schedules............................................... 29
SECTION 8.10 Notices................................................................... 29
SECTION 8.11 Representations by AIM.................................................... 30
Schedule 6.1(d) Opinion of Counsel to AVIF
Schedule 6.2(f) Tax Opinions
Schedule 6.3(d) Opinion of Counsel to GT Funds
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of June 24, 1999 (this
"Agreement"), by and among GT Global Variable Investment Series and GT Global
Variable Investment Trust, each a Delaware business trust (collectively, "GT
Funds"), acting on behalf of each of their respective and separate series
(collectively, the "Acquired Funds"), AIM Variable Insurance Funds, Inc., a
Maryland corporation ("AVIF"), acting on behalf of AIM V.I. Capital
Appreciation Fund, AIM V.I. International Equity Fund, AIM V.I. Diversified
Income Fund, AIM V.I. Government Securities Fund, AIM V.I. Money Market Fund,
AIM V.I. Global Growth and Income Fund, and AIM V.I. Telecommunications Fund,
each a separate series of AVIF (collectively, the "Acquiring Funds"), and A I M
Advisors, Inc. ("AIM"), a Delaware corporation.
WITNESSETH
WHEREAS, each of the GT Funds is an investment company registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
(as defined below) that offers separate series of its shares representing
interests in its investment portfolios for sale to separate accounts of life
insurance companies to support investments under variable annuities and variable
life insurance contracts issued by such companies; and
WHEREAS, AVIF is an investment company registered with the SEC under the
Investment Company Act that offers separate series of its shares representing
interests in separate investment portfolios for sale to separate accounts of
life insurance companies to support investments under variable annuities and
variable life insurance contracts issued by such companies; and
WHEREAS, AIM provides investment advisory services to both GT Funds and AVIF;
and
WHEREAS, each Acquired Fund desires to provide for its reorganization through
the transfer of all of its assets to the Acquiring Fund with which it will
combine in exchange for the assumption by the Acquiring Fund of all of the
liabilities of such Acquired Fund and the issuance by AVIF of shares of such
Acquiring Fund in the manner set forth in this Agreement; and
WHEREAS, this Agreement is intended to be and is adopted by the parties hereto
as a Plan of Reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and the agreements
and undertakings contained in this Agreement, GT Funds, AVIF and AIM agree as
follows:
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ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions.
For all purposes in this Agreement, the following terms shall have the
respective meanings set forth in this Section 1.1 (such definitions to be
equally applicable to both the singular and plural forms of the terms herein
defined):
"Acquired Fund" means each separate series of the GT Funds.
"Acquired Fund Financial Statements" shall have the meaning set forth
in Section 3.3 of this Agreement.
"Acquired Fund Shareholders" means the holders of record as of the
Effective Time of the issued and outstanding shares of beneficial
interest in an Acquired Fund.
"Acquired Fund Shareholders Meeting" means a meeting of the shareholders
of an Acquired Fund convened in accordance with applicable law and the
Agreement and Declaration of Trust of each GT Fund to consider and vote
upon the approval of this Agreement and the Reorganization of such
Acquired Fund contemplated by this Agreement.
"Acquired Fund Shares" means the issued and outstanding shares of
beneficial interest in an Acquired Fund.
"Acquiring Fund" means AIM V.I. Capital Appreciation Fund, AIM V.I.
International Equity Fund, AIM V.I. Diversified Income Fund, AIM V.I.
Government Securities Fund, AIM V.I. Money Market Fund, AIM V.I. Global
Growth and Income Fund, and AIM V.I. Telecommunications Fund, each a
separate series of AVIF.
"Acquiring Fund Financial Statements" shall have the meaning set forth
in Section 4.3 of this Agreement.
"Acquiring Fund Shares" means shares of the capital stock of AVIF issued
pursuant to Section 2.6 of this Agreement.
"Advisers Act" means the Investment Advisers Act of 1940, as amended,
and all rules and regulations of the SEC adopted pursuant thereto.
"Affiliated Person" means an affiliated person as defined in Section
2(a)(3) of the Investment Company Act.
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"Agreement" means this Agreement and Plan of Reorganization, together
with all schedules and exhibits attached hereto and all amendments
hereto and thereof.
"GT Funds" means GT Global Variable Investment Series and GT Global
Variable Investment Trust, each a Delaware business trust.
"GT Funds Registration Statement" means the registration statement on
Form N-1A, as amended, of GT Global Variable Investment Series (File
Nos. 33-52038- and 811-6671) and GT Global Variable Investment Trust
(File Nos. 33-52036 and 811-7164).
"AVIF" means AIM Variable Insurance Funds, Inc., a Maryland corporation.
"AVIF Registration Statement" means the registration statement on Form
N-1A, as amended, of AVIF (File Nos. 33-57340 and 811-7452).
"Benefit Plan" means any material "employee benefit plan" (as defined in
Section 3(3) of ERISA) and any material bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option,
phantom stock, vacation, retirement, profit sharing, welfare plans or
other plan, arrangement or understanding maintained or contributed to by
AVIF on behalf of an Acquired Fund, or otherwise providing benefits to
any current or former employee, officer or trustee of AVIF.
"Closing" means the transfer of the assets of an Acquired Fund to the
Acquiring Fund with which it will combine, the assumption of all of such
Acquired Fund's liabilities by the Acquiring Fund and the issuance of
the Acquiring Fund Shares directly to the Acquired Fund Shareholders as
described in Section 2.1 of this Agreement.
"Closing Date" means September 24, 1999 (October 1, 1999 in the case of
the GT Funds reorganizing into the AIM V.I. International Equity Fund),
or such other dates as the parties may mutually determine. All
references to "Closing Date" shall mean the Closing Date applicable to
each Reorganization, unless the context otherwise requires.
"Code" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations adopted pursuant thereto.
"Custodian" means State Street Bank and Trust Company acting in its
capacity as custodian for the assets of the Acquiring Funds and the
Acquired Funds.
"Effective Time" means 5:00 p.m. Central Time on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules or regulations adopted pursuant thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations adopted pursuant thereto.
"Governmental Authority" means any foreign, United States or state
government, government agency, department, board, commission (including
the SEC) or
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instrumentality, and any court, tribunal or arbitrator of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including without limitation the
National Association of Securities Dealers, Inc., the Commodity Futures
Trading Commission, the National Futures Association, the Investment
Management Regulatory Organization Limited and the Office of Fair
Trading).
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and all rules and regulations adopted pursuant thereto.
"Lien" means any pledge, lien, security interest, charge, claim or
encumbrance of any kind.
"Material Adverse Effect" means an effect that would cause a change in
the condition (financial or otherwise), properties, assets or prospects
of an entity having an adverse monetary effect in an amount equal to or
greater than $50,000.
"Person" means an individual or a corporation, partnership, joint
venture, association, trust, unincorporated organization or other
entity.
"Reorganization" means the acquisition of the assets of an Acquired Fund
by the Acquiring Fund with which it will combine in consideration of the
assumption by such Acquiring Fund of all of the liabilities of the
Acquired Fund and the issuance by AVIF of Acquiring Fund Shares directly
to Acquired Fund Shareholders as described in this Agreement, and the
termination of such Acquired Fund's status as a designated series of
shares of GT Funds.
"Required Shareholder Vote" shall have the meaning set forth in Section
3.17 of this Agreement.
"Return" means any return, report or form or any attachment thereto
required to be filed with any taxing authority.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted pursuant thereto.
"Tax" means any tax or similar governmental charge, impost or levy
(including income taxes (including alternative minimum tax and estimated
tax), franchise taxes, transfer taxes or fees, sales taxes, use taxes,
gross receipts taxes, value added taxes, employment taxes, excise taxes,
ad valorem taxes, property taxes, withholding taxes, payroll taxes,
minimum taxes, or windfall profit taxes), together with any related
penalties, fines, additions to tax or interest, imposed by the United
States or any state, county, local or foreign government or subdivision
or agency thereof.
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ARTICLE 2
TRANSFER OF ASSETS
SECTION 2.1 Reorganizations.
At the Effective Time, all of the assets of each Acquired Fund listed below
shall be delivered to the Custodian for the account of the corresponding
Acquiring Fund listed below in exchange for the assumption by the corresponding
Acquiring Fund of all of the liabilities of any kind of the Acquired Fund and
delivery by AVIF directly to the holders of record as of the Effective Time of
the issued and outstanding shares of the Acquired Funds (including, if
applicable, fractional shares rounded to the nearest thousandth) of a number of
corresponding Acquiring Fund shares (including, if applicable, fractional shares
rounded to the nearest thousandth), having an aggregate net asset value equal to
the net value of the assets of the Acquired Fund so transferred, assigned and
delivered, all determined and adjusted as provided in Section 2.2 below. Upon
delivery of such assets, the Acquiring Fund will receive good and marketable
title to such assets free and clear of all Liens.
GT Funds (Acquired Funds) AVIF Funds (Acquiring Funds)
------------------------- ----------------------------
GT Global Variable Growth & Income Fund AIM V.I. Global Growth and Income Fund
GT Global Variable America Fund AIM V.I. Capital Appreciation Fund
GT Global Variable International Fund
GT Global Variable Europe Fund
GT Global Variable Natural Resources Fund
GT Global Variable Infrastructure Fund AIM V.I. International Equity Fund
GT Global Variable New Pacific Fund
GT Global Variable Latin America Fund
GT Global Variable Emerging Markets
Fund
GT Global Variable Telecommunications AIM V.I. Telecommunications Fund
Fund
GT Global Variable Strategic Income Fund
GT Global Variable Global Government AIM V.I. Diversified Income Fund
Income Fund
GT Global Variable U.S. Government AIM V.I. Government Securities Fund
Income Fund
GT Global Money Market Fund AIM V.I. Money Market Fund
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SECTION 2.2 Computation of Net Asset Value.
(a) The net asset value of the Acquiring Fund Shares, and the net value
of the assets of an Acquired Fund, shall, in each case, be determined
as of the close of regular trading on the NYSE on the Closing Date.
(b) The net asset value of the Acquiring Fund Shares shall be computed
in accordance with the policies and procedures of the Acquiring Fund as
described in the AVIF Registration Statement.
(c) The net value of the assets of an Acquired Fund to be transferred
to an Acquiring Fund pursuant to this Agreement shall be computed in
accordance with the policies and procedures of the Acquired Fund as
described in the GT Funds Registration Statement.
(d) All computations of value regarding the net assets of an Acquired
Fund and the net asset value of the Acquiring Fund Shares to be issued
pursuant to this Agreement shall be made by agreement of GT Funds and
AVIF. The parties agree to use commercially reasonable efforts to
resolve any material pricing differences between the prices of
portfolio securities determined in accordance with their respective
pricing policies and procedures.
SECTION 2.3 Valuation.
The assets of an Acquired Fund and the net asset value per share of the
Acquiring Fund Shares shall be valued as of the close of regular trading on the
NYSE on the Closing Date. The share transfer books of the Acquired Funds will be
permanently closed as of the close of business on the Closing Date and only
requests for the redemption of shares of the Acquired Funds received in proper
form prior to the close of regular trading on the NYSE on the Closing Date shall
be accepted by the Acquired Funds. Redemption requests thereafter received by an
Acquired Fund shall be deemed to be redemption requests for Acquiring Fund
Shares as applicable (assuming that the transactions contemplated by this
Agreement have been consummated), to be distributed to the Acquired Fund
Shareholders under this Agreement.
SECTION 2.4 Delivery.
(a) Assets held by an Acquired Fund shall be delivered by GT Funds to
the Custodian on the Closing Date. No later than three (3) business
days preceding the Closing Date, GT Funds shall instruct the Custodian
to transfer such assets to the account of the respective Acquiring
Fund. The assets so delivered shall be duly endorsed in proper form for
transfer in such condition as to constitute a good delivery thereof, in
accordance with the custom of brokers, and shall be accompanied by all
necessary state stock transfer stamps, if any, or a check for the
appropriate purchase price thereof. Cash held by an Acquired Fund shall
be delivered on the Closing Date and shall be in the form of currency
or wire
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transfer in Federal funds, payable to the order of the account of the
respective Acquiring Fund at the Custodian.
(b) If, on the Closing Date, an Acquired Fund is unable to make
delivery in the manner contemplated by Section 2.4(a) of securities
held by the Acquired Fund for the reason that any of such securities
purchased prior to the Closing Date have not yet been delivered to the
Acquired Fund or its broker, then AVIF shall waive the delivery
requirements of Section 2.4(a) with respect to said undelivered
securities if the Acquired Fund has delivered to the Custodian by or on
the Closing Date, and with respect to said undelivered securities,
executed copies of an agreement of assignment and escrow agreement and
due bills executed on behalf of said broker or brokers, together with
such other documents as may be required by AVIF or the Custodian,
including brokers' confirmation slips.
SECTION 2.5 Termination of Series.
As soon as reasonably practicable after the Closing Date, the status of each
Acquired Fund as designated series of shares of GT Funds shall be terminated;
provided, however, that the termination of the status of an Acquired Fund as a
series of shares of GT Funds shall not be required if the Reorganization of such
Acquired Fund shall not have been consummated.
SECTION 2.6 Issuance of Acquiring Fund Shares.
At the Effective Time, each Acquired Fund Shareholder of record as of the close
of regular trading on the NYSE on the Closing Date holding such Acquired Fund
Shares shall be issued that number of full and fractional shares of the
Acquiring Fund with which the Acquired Fund will combine having a net asset
value equal to the net asset value of such Acquired Fund Shares held by such
Acquired Fund Shareholder on the Closing Date. All issued and outstanding shares
of beneficial interest in each Acquired Fund shall thereupon be canceled on the
books of GT Funds. GT Funds shall provide instructions to the transfer agent of
AVIF with respect to the Acquiring Fund Shares to be issued to Acquired Fund
Shareholders. AVIF shall have no obligation to inquire as to the validity,
propriety or correctness of any such instruction, but shall, in each case,
assume that such instruction is valid, proper and correct. AVIF shall record on
its books the ownership of Acquiring Fund Shares by Acquired Fund Shareholders
and shall forward a confirmation of such ownership to the Acquired Fund
Shareholders. No redemption or repurchase of such shares credited to former
Acquired Fund Shareholders in respect of the Acquired Fund shares represented by
unsurrendered shares certificates shall be permitted until such certificates
have been surrendered to AVIF for cancellation, or if such certificates are lost
or misplaced, until lost certificate affidavits have been executed and delivered
to AVIF.
SECTION 2.7 Investment Securities.
On or prior to the Closing Date, GT Funds shall deliver a list setting forth the
securities each Acquired Fund then owns together with the respective Federal
income tax bases thereof. GT Funds shall provide to AVIF on or before the
Closing Date, detailed tax basis accounting records for each security to be
transferred to it pursuant to this Agreement. Such records shall be
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65
prepared in accordance with the requirements for specific identification tax lot
accounting and clearly reflect the bases used for determination of gain and loss
realized on the sale of any security transferred to an Acquiring Fund hereunder.
Such records shall be made available by GT Funds prior to the Closing Date for
inspection by the Treasurer (or his designee) or the auditors of AVIF upon
reasonable request.
SECTION 2.8 Liabilities.
Each Acquired Fund shall use reasonable best efforts to discharge all of its
known liabilities, so far as may be possible, prior to the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF GT FUNDS
GT Funds, on behalf of the Acquired Funds, represents and warrants to AVIF that:
SECTION 3.1 Organization; Authority.
Each of the GT Funds is duly organized, validly existing and in good standing
under the Delaware Business Trust Act, with all requisite trust power and
authority to enter into this Agreement and perform its obligations hereunder.
SECTION 3.2 Registration and Regulation of GT Funds.
Each of the GT Funds is duly registered with the SEC as an investment company
under the Investment Company Act and all Acquired Fund Shares which have been or
are being offered for sale have been duly registered under the Securities Act
and have been duly registered, qualified or are exempt from registration or
qualification under the securities laws of each state or other jurisdiction in
which such shares have been or are being offered for sale, and no action has
been taken by GT Funds to revoke or rescind any such registration or
qualification. Each Acquired Fund is in compliance in all material respects with
all applicable laws, rules and regulations, including, without limitation, the
Investment Company Act, the Securities Act, the Exchange Act and all applicable
state securities laws. Each Acquired Fund is in compliance in all material
respects with the investment policies and restrictions applicable to it set
forth in the GT Funds Registration Statement currently in effect. The value of
the net assets of each Acquired Fund is determined using portfolio valuation
methods that comply in all material respects with the requirements of the
Investment Company Act and the policies of such Acquired Fund and all purchases
and redemptions of Acquired Fund Shares have been effected at the net asset
value per share calculated in such manner.
SECTION 3.3 Financial Statements.
The books of account and related records of each Acquired Fund fairly reflect in
reasonable detail its assets, liabilities and transactions in accordance with
generally accepted accounting
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66
principles applied on a consistent basis. The audited financial statements for
the fiscal year ended December 31, 1998 of each Acquired Fund previously
delivered to AVIF (the "Acquired Fund Financial Statements") present fairly in
all material respects the financial position of such Acquired Fund as at the
dates indicated and the results of operations and changes in net assets for the
periods then ended in accordance with generally accepted accounting principles
applied on a consistent basis for the periods then ended.
SECTION 3.4 No Material Adverse Changes; Contingent Liabilities.
Since December 31, 1998, no material adverse change has occurred in the
financial condition, results of operations, business, assets or liabilities of
an Acquired Fund or the status of an Acquired Fund as a regulated investment
company under the Code, other than changes resulting from any change in general
conditions in the financial or securities markets or the performance of any
investments made by an Acquired Fund or occurring in the ordinary course of
business of the Acquired Fund or GT Funds. There are no contingent liabilities
of an Acquired Fund not disclosed in the Acquired Fund Financial Statements
which are required to be disclosed in accordance with generally accepted
accounting principles.
SECTION 3.5 Acquired Fund Shares; Liabilities; Business Operations.
(a) The Acquired Fund Shares have been duly authorized and validly
issued and are fully paid and non-assessable.
(b) There is no plan or intention by the shareholders of an Acquired
Fund to redeem or otherwise dispose of a number of the Acquiring Fund
Shares received by them in connection with a Reorganization that would
reduce such Acquired Fund Shareholder's ownership of voting stock of a
corresponding Acquiring Fund to a number of shares having a value, as
of the Closing Date, of less than fifty percent (50%) (one hundred
percent (100%) in the case of shareholders of GT Variable Growth &
Income Fund and GT Global Variable Telecommunications Fund) of the
value of all of the formerly outstanding shares of such Acquired Fund
as of the same date. For purposes of this representation, Acquired Fund
Shares exchanged for cash or other property or exchanged for cash in
lieu of fractional shares of the Acquiring Fund will be treated as
outstanding Acquired Fund Shares on the date of the Reorganization.
Moreover, Acquired Fund Shares and Acquiring Fund Shares held by
Acquired Fund Shareholders and otherwise sold, redeemed or disposed of
prior or subsequent to the Reorganization will be considered in making
this representation, except for Acquired Fund Shares or Acquiring Fund
Shares which have been, or will be, redeemed by an Acquired Fund or an
Acquiring Fund in the ordinary course of its business as a series of an
open-end, management investment company under the Investment Company
Act.
(c) At the time of its Reorganization, an Acquired Fund shall not have
outstanding any warrants, options, convertible securities or any other
type of right pursuant to which any Person could acquire Acquired Fund
Shares, except for the right of investors to acquire such Acquired Fund
Shares at net asset value in the normal course of its business as a
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67
series of an open-end management investment company operating under the
Investment Company Act.
(d) From the date it commenced operations and ending on the Closing
Date, each Acquired Fund will have conducted its historic business
within the meaning of Section 1.368-1(d)(2) of the Income Tax
Regulations under the Code in a substantially unchanged manner. In
anticipation of its Reorganization, an Acquired Fund will not dispose
of assets that, in the aggregate, will result in less than fifty
percent (50%) of its historic business assets (within the meaning of
Section 1.368-1(d) of those regulations) being transferred to the
Acquiring Fund.
(e) GT Funds does not have, and has not had during the six (6) months
prior to the date of this Agreement, any employees, and shall not hire
any employees from and after the date of this Agreement through the
Closing Date.
SECTION 3.6 Accountants.
PricewaterhouseCoopers, LLP, which has reported upon the Acquired Fund Financial
Statements for the period ended December 31, 1998, are independent public
accountants as required by the Securities Act and the Exchange Act.
SECTION 3.7 Binding Obligation.
This Agreement has been duly authorized, executed and delivered by GT Funds on
behalf of each Acquired Fund and, assuming this Agreement has been duly executed
and delivered by AVIF and approved by Acquired Fund Shareholders, constitutes
the legal, valid and binding obligation of GT Funds enforceable against GT Funds
in accordance with its terms from and with respect to the revenues and assets of
the respective Acquired Fund, except as the enforceability hereof may be limited
by bankruptcy, insolvency, reorganization or similar laws relating to or
affecting creditors' rights generally, or by general equity principles (whether
applied in a court of law or a court of equity and including limitations on the
availability of specific performance or other equitable remedies).
SECTION 3.8 No Breaches or Defaults.
The execution and delivery of this Agreement by GT Funds on behalf of the
Acquired Funds and performance by GT Funds of its obligations hereunder has been
duly authorized by all necessary trust action on the part of GT Funds, other
than Acquired Fund Shareholders approval, and (i) do not, and on the Closing
Date will not, result in any violation of the Agreement and Declaration of Trust
or by-laws of GT Funds and (ii) do not, and on the Closing Date will not, result
in a breach of any of the terms or provisions of, or constitute (with or without
the giving of notice or the lapse of time or both) a default under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of a material benefit under, or result in the creation or imposition of
any Lien upon any property or assets of an Acquired Fund (except for such
breaches or defaults or Liens that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect) under (A)
any indenture, mortgage or loan
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68
agreement or any other material agreement or instrument to which GT Funds is a
party or by which it may be bound and which relates to the assets of an Acquired
Fund or to which any property of an Acquired Fund may be subject; (B) any Permit
(as defined below); or (C) any existing applicable law, rule, regulation,
judgment, order or decree of any Governmental Authority having jurisdiction over
GT Funds or any property of an Acquired Fund. GT Funds is not under the
jurisdiction of a court in a proceeding under Title 11 of the United States Code
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
SECTION 3.9 Authorizations or Consents.
Other than those which shall have been obtained or made on or prior to the
Closing Date and those that must be made after the Closing Date to comply with
Section 2.5 of this Agreement, no authorization or approval or other action by,
and no notice to or filing with, any Governmental Authority will be required to
be obtained or made by GT Funds in connection with the due execution and
delivery by GT Funds of this Agreement and the consummation by GT Funds of the
transactions contemplated hereby.
SECTION 3.10 Permits.
GT Funds has in full force and effect all approvals, consents, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights of
Governmental Authorities (collectively, "Permits") necessary for it to conduct
its business as presently conducted as it relates to the Acquired Funds, and
there has occurred no default under any Permit, except for the absence of
Permits and for defaults under Permits the absence or default of which would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. To the knowledge of GT Funds there are no proceedings relating
to the suspension, revocation or modification of any Permit, except for such
that would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect.
SECTION 3.11 No Actions, Suits or Proceedings.
(a) There is no pending action, litigation or proceeding, nor, to the
knowledge of GT Funds, has any litigation been overtly threatened in
writing or, if probable of assertion, orally, against GT Funds before
any Governmental Authority which questions the validity or legality of
this Agreement or of the actions contemplated hereby or which seeks to
prevent the consummation of the transactions contemplated hereby,
including the Reorganization.
(b) There are no judicial, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the knowledge of GT
Funds, threatened in writing or, if probable of assertion, orally,
against GT Funds affecting any property, asset, interest or right of an
Acquired Fund, that could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect with respect to such
Acquired Fund. There are not in existence on the date hereof any plea
agreements, judgments, injunctions, consents, decrees, exceptions or
orders that were entered by, filed with or issued by Governmental
Authority relating to GT Funds' conduct of the business of an Acquired
Fund affecting in
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any significant respect the conduct of such business. GT Funds is not,
and has not been to the knowledge of GT Funds, the target of any
investigation by the SEC or any state securities administrator with
respect to its conduct of the business of an Acquired Fund.
SECTION 3.12 Contracts.
GT Funds is not in default under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a party
and which involves or affects the assets of an Acquired Fund, by which the
assets, business, or operations of an Acquired Fund may be bound or affected, or
under which it or the assets, business or operations of an Acquired Fund
receives benefits, and which default could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect, and, to the knowledge of
GT Funds there has not occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a default.
SECTION 3.13 Properties and Assets.
Each Acquired Fund has good and marketable title to all properties and assets
reflected in the Acquired Fund Financial Statements as owned by it, free and
clear of all Liens, except as described in the Acquired Fund Financial
Statements.
SECTION 3.14 Taxes.
(a) Each Acquired Fund has elected to be a regulated investment company
under Subchapter M of the Code. Each Acquired Fund has qualified as
such for each taxable year since inception and that has ended prior to
the Closing Date and will have satisfied the requirements of Part I of
Subchapter M of the Code to maintain such qualification for the period
beginning on the first day of its current taxable year and ending on
the Closing Date. Each Acquired Fund has no earnings and profits
accumulated in any taxable year in which the provisions of Subchapter M
of the Code did not apply to it. In order to (i) insure continued
qualification of each Acquired Fund as a "regulated investment company"
for tax purposes and (ii) eliminate any tax liability of an Acquired
Fund arising by reason of undistributed investment company taxable
income or net capital gain, GT Funds will declare on or prior to the
Closing Date to the shareholders of each Acquired Fund (except for GT
Global Variable Growth & Income Fund or GT Global Variable
Telecommunications Fund, if AIM V.I. Global Growth and Income Fund or
AIM V.I. Telecommunications Fund, respectively, has not commenced
operations or issued voting stock (other than to its investment adviser
in connection with its creation)) a dividend or dividends that,
together with all previous such dividends, shall have the effect of
distributing (A) all of such Acquired Fund's investment company taxable
income (determined without regard to any deductions for dividends paid)
for the taxable year ended December 31, 1998 and for the short taxable
year beginning on January 1, 1999 and ending on the Closing Date and
(B) all of such Acquired Fund's net capital gain reorganized in its
taxable year ended December 31, 1998 and in such short taxable year
(after reduction for any capital loss carryover).
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(b) Each Acquired Fund has timely filed all Returns required to be
filed by it and all Taxes with respect thereto have been paid, except
where the failure so to file or so to pay, would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect. Adequate provision has been made in the Acquired Fund Financial
Statements for all Taxes in respect of all periods ended on or before
the date of such financial statements, except where the failure to make
such provisions would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. No deficiencies for
any Taxes have been proposed, assessed or asserted in writing by any
taxing authority against any Acquired Fund, and no deficiency has been
proposed, assessed or asserted, in writing, where such deficiency would
reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. No waivers of the time to assess any such
Taxes are outstanding nor are any written requests for such waivers
pending and no Returns of any Acquired Fund are currently being or have
been audited with respect to income taxes or other Taxes by any
Federal, state, local or foreign Tax authority.
(c) To the best knowledge of GT Funds, the fiscal year of each Acquired
Fund has not been changed for tax purposes since the date on which it
commenced operations.
(d) There is no intercorporate indebtedness existing between any
Acquiring Fund and a corresponding Acquired Fund that was issued,
acquired, or will be settled at a discount.
(e) The fair market value of the assets of each Acquired Fund
transferred to a corresponding Acquiring Fund will equal or exceed the
sum of the liabilities assumed by the corresponding Acquiring Fund,
plus the amount of liabilities, if any, to which the transferred assets
are subject.
(f) No Acquired Fund is under the jurisdiction of a court in a United
States Code Title 11 or similar case within the meaning of Section
368(a)(3)(A) of the Code.
(g) Not more than 25 percent of the value of the total assets of any
Acquired Fund has been, is, or will be invested in the stock or
securities of any one issuer, and not more than 50 percent of the value
of any Acquired Fund has, is, or will be invested in the stock or
securities of five or fewer issuers.
SECTION 3.15 Benefit and Employment Obligations.
On or prior to the Closing Date, an Acquired Fund will have no obligation to
provide any post-retirement or post-employment benefit to any Person, including
but not limited to under any Benefit Plan, and have no obligation to provide
unfunded deferred compensation or other unfunded or self-funded benefits to any
Person.
SECTION 3.16 Brokers.
No broker, finder or similar intermediary has acted for or on behalf of GT Funds
in connection with this Agreement or the transactions contemplated hereby, and
no broker, finder, agent or
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similar intermediary is entitled to any broker's, finder's or similar fee or
other commission in connection therewith based on any agreement, arrangement or
understanding with GT Funds or any action taken by it.
SECTION 3.17 Voting Requirements.
The vote of a majority of the shares of an Acquired Fund cast at a meeting at
which a quorum is present (the "Required Shareholder Vote") is the only vote of
the holders of any class or series of shares of beneficial interest in an
Acquired Fund necessary to approve this Agreement and the Reorganization of such
Acquired Fund contemplated by this Agreement.
SECTION 3.18 State Takeover Statutes.
No state takeover statute or similar statute or regulation applies or purports
to apply to the Reorganizations, this Agreement or any of the transactions
contemplated by this Agreement.
SECTION 3.19 Books and Records.
The books and records of GT Funds relating to each Acquired Fund, reflecting,
among other things, the purchase and sale of Acquired Fund Shares, the number of
issued and outstanding shares owned by each Acquired Fund Shareholder and the
state or other jurisdiction in which such shares were offered and sold, are
complete and accurate in all material respects.
SECTION 3.20 Prospectus and Statement of Additional Information.
The current prospectus and statement of additional information for each Acquired
Fund as of the date on which they were issued did not contain, and as
supplemented by any supplement thereto dated prior to or on the Closing Date do
not contain, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
SECTION 3.21 No Distribution.
The Acquiring Fund Shares are not being acquired for the purpose of any
distribution thereof, other than in accordance with the terms of this Agreement.
SECTION 3.22 Liabilities of the Acquired Funds.
The liabilities of each Acquired Fund that are to be assumed by an Acquiring
Fund in connection with a Reorganization, or which the assets of the Acquired
Fund to be transferred in the Reorganizations are subject, were incurred by such
Acquired Fund in the ordinary course of its business. The fair market value of
the assets of each Acquired Fund to be transferred to an Acquiring Fund in a
Reorganization will equal or exceed the sum of the liabilities to be assumed by
such Acquiring Fund plus the amount of liabilities, if any, to which such
transferred assets will be subject.
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SECTION 3.23 Value of Shares.
The fair market value of the Acquiring Fund Shares received by Acquired Fund
Shareholders in each Reorganization will be approximately equal to the fair
market value of the Acquired Fund Shares constructively surrendered in exchange
therefor.
SECTION 3.24 Shareholder Expenses.
The Acquired Fund Shareholders will pay their own expenses, if any, incurred in
connection with the Reorganizations.
SECTION 3.25 Intercompany Indebtedness.
There is no intercompany indebtedness between GT Funds and AVIF that was issued
or acquired, or will be settled, at a discount.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AVIF
AVIF, on behalf of the Acquiring Funds, represents and warrants to GT Funds as
follows:
SECTION 4.1 Organization; Authority.
AVIF is duly organized, validly existing and in good standing under the Maryland
General Corporation Law, with all requisite corporate power and authority to
enter into this Agreement and perform its obligations hereunder.
SECTION 4.2 Registration and Regulation of AVIF.
AVIF is duly registered with the SEC as an investment company under the
Investment Company Act. Each Acquiring Fund is in compliance in all material
respects with all applicable laws, rules and regulations, including, without
limitation, the Investment Company Act, the Securities Act, the Exchange Act and
all applicable state securities laws. Each Acquiring Fund is in compliance in
all material respects with the applicable investment policies and restrictions
set forth in the AVIF Registration Statement. The value of the net assets of
each Acquiring Fund is determined using portfolio valuation methods that comply
in all material respects with the requirements of the Investment Company Act and
the policies of such Acquired Fund and all purchases and redemptions of Acquired
Fund Shares have been effected at the net asset value per share calculated in
such manner.
SECTION 4.3 Financial Statements.
The books of account and related records of each Acquiring Fund fairly reflect
in reasonable detail its assets, liabilities and transactions in accordance with
generally accepted accounting
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principles applied on a consistent basis. The audited financial statements for
the fiscal year ended December 31, 1998 of each Acquiring Fund previously
delivered to GT Funds (the "Acquiring Fund Financial Statements") present fairly
in all material respects the financial position of such Acquiring Fund as at the
dates indicated and the results of operations and changes in net assets for the
periods then ended in accordance with generally accepted accounting principles
applied on a consistent basis for the periods then ended.
SECTION 4.4 No Material Adverse Changes; Contingent Liabilities.
Since December 31, 1998, no material adverse change has occurred in the
financial condition, results of operations, business, assets or liabilities of
an Acquiring Fund or the status of an Acquiring Fund as a regulated investment
company under the Code, other than changes resulting from any change in general
conditions in the financial or securities markets or the performance of any
investments made by an Acquiring Fund or occurring in the ordinary course of
business of the Acquiring Fund or AVIF. There are no contingent liabilities of
an Acquiring Fund not disclosed in the Acquiring Fund Financial Statements which
are required to be disclosed in accordance with generally accepted accounting
principles.
SECTION 4.5 Registration of Acquiring Fund Shares.
(a) The capital stock of AVIF is divided into 15 portfolios, including
the Acquiring Funds. Under its Charter, AVIF is authorized to issue
250,000,000 shares of each Acquiring Fund.
(b) The Acquiring Fund Shares to be issued pursuant to Section 2.6
shall on the Closing Date be duly registered under the Securities Act
by a Registration Statement on Form N-14 of AVIF then in effect.
(c) The Acquiring Fund Shares to be issued pursuant to Section 2.6 are
duly authorized and on the Closing Date will be validly issued and
fully paid and non-assessable and will conform to the description
thereof contained in the Registration Statement on Form N-14 then in
effect. At the time of its Reorganization, an Acquiring Fund shall not
have outstanding any warrants, options, convertible securities or any
other type of right pursuant to which any Person could acquire
Acquiring Fund Shares, except for the right of investors to acquire
Acquiring Fund Shares at net asset value in the normal course of its
business as a series of an open-end management investment company
operating under the Investment Company Act.
(d) The combined proxy statement/prospectus (the "Combined Proxy
Statement/Prospectus") which forms a part of AVIF's Registration
Statement on Form N-14 shall be furnished to GT Funds and the Acquired
Fund Shareholders entitled to vote at the Acquired Fund Shareholders
Meeting. The Combined Proxy Statement/Prospectus and related Statement
of Additional Information of the Acquiring Funds, when they become
effective, shall conform to the applicable requirements of the
Securities Act and the Investment Company Act and shall not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the
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statements therein, in light of the circumstances under which they were
made, not materially misleading, provided, however, that no
representation or warranty is made with respect to written information
provided by GT Funds for inclusion in the Combined Proxy
Statement/Prospectus.
(e) The shares of an Acquiring Fund which have been or are being
offered for sale (other than Acquiring Fund Shares to be issued in
connection with the Reorganizations) have been duly registered under
the Securities Act by the AVIF Registration Statement and have been
duly registered, qualified or are exempt from registration or
qualification under the securities laws of each state or other
jurisdiction in which such shares have been or are being offered for
sale, and no action has been taken by AVIF to revoke or rescind any
such registration or qualification.
SECTION 4.6 Accountants.
Tait, Weller & Baker, which has reported upon the Acquiring Fund Financial
Statements for the period ended December 31, 1998, are independent public
accountants as required by the Securities Act and the Exchange Act.
SECTION 4.7 Binding Obligation.
This Agreement has been duly authorized, executed and delivered by AVIF on
behalf of each Acquiring Fund and, assuming this Agreement has been duly
executed and delivered by GT Funds, constitutes the legal, valid and binding
obligation of AVIF, enforceable against AVIF in accordance with its terms from
and with respect to the revenues and assets of the respective Acquiring Fund,
except as the enforceability hereof may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting creditors' rights
generally, or by general equity principles (whether applied in a court or law or
a court of equity and including limitations on the availability of specific
performance or other equitable remedies).
SECTION 4.8 No Breaches or Defaults.
The execution and delivery of this Agreement by AVIF on behalf of the Acquiring
Funds and performance by AVIF of its obligations hereunder have been duly
authorized by all necessary corporate action on the part of AVIF and (i) do not,
and on the Closing Date will not, result in any violation of the Charter or
by-laws of AVIF and (ii) do not, and on the Closing Date will not, result in a
breach of any of the terms or provisions of, or constitute (with or without the
giving of notice or the lapse of time or both) a default under, or give rise to
a right of termination, cancellation or acceleration of any obligation or to the
loss of a material benefit under, or result in the creation or imposition of any
Lien upon any property or assets of an Acquiring Fund (except for such breaches
or defaults or Liens that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect) under (A) any indenture,
mortgage or loan agreement or any other material agreement or instrument to
which AVIF is a party or by which it may be bound and which relates to the
assets of an Acquiring Fund or to which any properties of an Acquiring Fund may
be subject; (B) any Permit; or (C) any existing applicable law, rule,
regulation, judgment, order or decree of any Governmental Authority
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having jurisdiction over AVIF or any property of an Acquiring Funds. AVIF is not
under the jurisdiction of a court in a proceeding under Title 11 of the United
States Code or similar case within the meaning of Section 368(a)(3)(A) of the
Code.
SECTION 4.9 Authorizations or Consents.
Other than those which shall have been obtained or made on or prior to the
Closing Date, no authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority will be required to be obtained or
made by AVIF in connection with the due execution and delivery by AVIF of this
Agreement and the consummation by AVIF of the transactions contemplated hereby.
SECTION 4.10 Permits.
AVIF has in full force and effect all Permits necessary for it to conduct its
business as presently conducted as it relates to the Acquiring Funds, and there
has occurred no default under any Permit, except for the absence of Permits and
for defaults under Permits the absence or default of which would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect. To the knowledge of AVIF there are no proceedings relating to the
suspension, revocation or modification of any Permit, except for such that would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
SECTION 4.11 No Actions, Suits or Proceedings.
(a) There is no pending action, suit or proceeding, nor, to the
knowledge of AVIF, has any litigation been overtly threatened in
writing or, if probable of assertion, orally, against AVIF before any
Governmental Authority which questions the validity or legality of this
Agreement or of the transactions contemplated hereby, or which seeks to
prevent the consummation of the transactions contemplated hereby,
including the Reorganization.
(b) There are no judicial, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the knowledge of
AVIF, threatened in writing or, if probable of assertion, orally,
against AVIF, affecting any property, asset, interest or right of an
Acquiring Fund, that could reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect with respect to such
Acquiring Fund. There are not in existence on the date hereof any plea
agreements, judgments, injunctions, consents, decrees, exceptions or
orders that were entered by, filed with or issued by Governmental
Authority relating to AVIF's conduct of the business of an Acquiring
Fund affecting in any significant respect the conduct of such business.
AVIF is not, and has not been, to the knowledge of AVIF, the target of
any investigation by the SEC or any state securities administrator with
respect to its conduct of the business of an Acquiring Fund.
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SECTION 4.12 Taxes.
(a) Except for AIM V.I. Global Growth and Income Fund and AIM V.I.
Telecommunications Fund, each Acquiring Fund has elected to be treated
as a regulated investment company under Subchapter M of the Code.
Except for AIM V.I. Global Growth and Income Fund and AIM V.I.
Telecommunications Fund, each Acquiring Fund has qualified as such for
each taxable year since inception that has ended prior to the Closing
Date and will satisfy the requirements of Part I of Subchapter M of the
Code to maintain such qualification for its current taxable year. Each
Acquired Fund has no earnings or profits accumulated in any taxable
year in which the provisions of Subchapter M of the Code did not apply
to it.
(b) Except for AIM V.I. Global Growth and Income Fund and AIM V.I.
Telecommunications Fund, each Acquiring Fund has timely filed all
Returns required to be filed by it and all Taxes with respect thereto
have been paid, except where the failure so to file or so to pay, would
not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. Adequate provision has been made in the
Acquiring Fund Financial Statements for all Taxes in respect of all
periods ending on or before the date of such financial statements,
except where the failure to make such provisions would not reasonably
be expected, individually or in the aggregate, to have a Material
Adverse Effect. No deficiencies for any Taxes have been proposed,
assessed or asserted in writing by any taxing authority against any
Acquiring Fund, and no deficiency has been proposed, assessed or
asserted, in writing, where such deficiency would reasonably be
expected, individually or in the aggregate, to have a Material Adverse
Effect. No waivers of the time to assess any such Taxes are outstanding
nor are any written requests for such waivers pending and no Return of
any Acquiring Fund is currently being or has been audited with respect
to income taxes or other Taxes by any Federal, state, local or foreign
Tax authority.
(c) The fiscal year of each Acquiring Fund has not been changed for tax
purposes since the date on which it commenced operations.
SECTION 4.13 Brokers.
No broker, finder or similar intermediary has acted for or on behalf of AVIF in
connection with this Agreement or the transactions contemplated hereby, and no
broker, finder, agent or similar intermediary is entitled to any broker's,
finder's or similar fee or other commission in connection therewith based on any
agreement, arrangement or understanding with AVIF or any action taken by it.
SECTION 4.14 Representations Concerning the Reorganization.
(a) No Acquiring Fund owns directly or indirectly, nor has it owned at
any time during the five-year period ending on the Closing Date, any
shares of its corresponding Acquired Fund.
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(b) AVIF has no plan or intention to reacquire any of the Acquiring
Fund Shares issued in the Reorganization, except to the extent that
each Acquiring Fund is required by the Investment Company Act to redeem
any of its shares presented for redemption at net asset value in the
ordinary course of its business as an open-end, management investment
company.
(c) Each Acquiring Fund has no plan or intention to sell or otherwise
dispose of any of the assets of the Acquired Fund acquired in the
Reorganization, other than in the ordinary course of its business and
to the extent necessary to maintain its status as a "regulated
investment company" under the Code.
(d) Following the Reorganization, each Acquiring Fund will continue the
"historic business" (within the meaning of Section 1.368-1(d) of the
Income Tax Regulations under the Code) of the Acquired Fund from which
such Acquiring Fund acquired assets in the Reorganization or use a
significant portion of such Acquired Fund's historic business assets in
a business.
(e) Not more than 25 percent of the value of the total assets of any
Acquiring Fund has been, is, or will be invested in the stock or
securities of any one issuer, and not more than 50 percent of the value
of the total assets of any Acquiring Fund has, is, or will be invested
in the stock or securities of five or fewer issuers.
SECTION 4.15 Prospectus and Statement of Additional Information.
The current prospectus and statement of additional information for each
Acquiring Fund as of the date on which they were issued did not contain, and as
supplemented by any supplement thereto dated prior to or on the Closing Date do
not contain, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
SECTION 4.16 Value of Shares.
The fair market value of the Acquiring Fund Shares received by Acquired Fund
Shareholders in each Reorganization will be approximately equal to the fair
market value of the Acquired Fund Shares constructively surrendered in exchange
therefor.
SECTION 4.17 Intercompany Indebtedness; Consideration.
There is no intercompany indebtedness between GT Funds and AVIF that was issued
or acquired, or will be settled, at a discount. No consideration other than the
Acquiring Fund Shares (and each Acquiring Fund's assumption of an Acquired
Fund's liabilities, including for this purpose all liabilities to which the
assets of each respective Acquired Fund are subject) will be issued in exchange
for the assets of an Acquired Fund acquired by an Acquiring Fund in connection
with a Reorganization. The fair market value of the assets of each Acquired Fund
transferred to an Acquiring Fund in a Reorganization will equal or exceed the
sum of the
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liabilities assumed by such Acquiring Fund, plus the amount of liabilities, if
any, to which such transferred assets are subject.
ARTICLE 5
COVENANTS
SECTION 5.1 Conduct of Business.
(a) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated
pursuant to Article 7), GT Funds shall conduct the business of each
Acquired Fund only in the ordinary course and substantially in
accordance with past practices, and shall use its reasonable best
efforts to preserve intact its business organization and material
assets and maintain the rights, franchises and business and customer
relations necessary to conduct the business of each Acquired Fund in
the ordinary course in all material respects. Without limiting the
generality of the foregoing, GT Funds shall not do any of the following
with respect to an Acquired Fund without the prior written consent of
AVIF, which consent shall not be unreasonably withheld:
(i) split, combine or reclassify any of its shares of beneficial
interest or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for its shares of
beneficial interest;
(ii) amend its Agreement and Declaration of Trust or by-laws;
(iii) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint
venture, association or other business organization or series or
division thereof or any assets that are material, individually or
in the aggregate, to an Acquired Fund taken as a whole, except
purchases of assets in the ordinary course of business consistent
with past practice;
(iv) sell, lease or otherwise dispose of any of its material
properties or assets, or mortgage or otherwise encumber or subject
to any Lien any of its material properties or assets, other than in
the ordinary course of business;
(v) incur any indebtedness for borrowed money or guarantee any
indebtedness of another Person, issue or sell any debt securities
or warrants or other rights to acquire any debt securities of an
Acquired Fund, guarantee any debt securities of another Person,
enter into any "keep well" or other agreement to maintain any
financial statement condition of another Person, or enter into any
arrangement having the economic effect of any of the foregoing;
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(vi) settle or compromise any material income tax liability or make
any material tax election;
(vii) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than in the ordinary course of business;
(viii) change its method of accounting, except as required by
changes in generally accepted accounting principles as concurred in
by its independent auditors, or change its fiscal year;
(ix) make or agree to make any material severance, termination,
indemnification or similar payments except pursuant to existing
agreements; or
(x) adopt any Benefit Plan.
(b) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated
pursuant to Article 7), AVIF shall conduct the business of each
Acquiring Fund only in the ordinary course and substantially in
accordance with past practices, and shall use its reasonable best
efforts to preserve intact its business organization and material
assets and maintain the rights, franchises and business relations
necessary to conduct the business operations of the Acquiring Funds in
the ordinary course in all material respects.
SECTION 5.2 Announcements.
GT Funds and AVIF shall consult with each other before issuing any press release
or otherwise making any public statements with respect to this Agreement and the
transactions contemplated by this Agreement, and neither GT Funds nor AVIF shall
issue any such press release or make any public statement without the prior
written approval of the other party to this Agreement, such approval not to be
unreasonably withheld, except as may be required by law.
SECTION 5.3 Expenses.
Each Acquired Fund and each Acquiring Fund shall each bear the expenses it
incurs in connection with this Agreement and the Reorganization and other
transactions contemplated hereby.
SECTION 5.4 Further Assurances.
Each of the parties hereto shall execute such documents and other papers and
perform such further acts as may be reasonably required to carry out the
provisions hereof and the transactions contemplated hereby. Each such party
shall, on or prior to the Closing Date, use its reasonable best efforts to
fulfill or obtain the fulfillment of the conditions precedent to the
consummation of the Reorganizations, including the execution and delivery of any
documents, certificates,
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instruments or other papers that are reasonably required for the consummation of
the Reorganizations.
SECTION 5.5 Notice of Events.
AVIF shall give prompt notice to GT Funds, and GT Funds shall give prompt notice
to AVIF, of (a) the occurrence or nonoccurrence of any event which to the
knowledge of AVIF or to the knowledge of GT Funds, the occurrence or
non-occurrence of which would be likely to result in any of the conditions
specified in (i) in the case of GT Funds, Sections 6.1 and 6.2 or (ii) in the
case of AVIF, Sections 6.2 and 6.3, not being satisfied so as to permit the
consummation of the Reorganizations and (b) any material failure on its part, or
on the part of the other party hereto of which it has knowledge, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.5 shall not limit or otherwise affect the remedies available
hereunder to any party.
SECTION 5.6 Access to Information.
(a) GT Funds will, during regular business hours and on reasonable
prior notice, allow AVIF and its authorized representatives reasonable
access to the books and records of GT Funds pertaining to the assets of
the Acquired Funds and to officers of GT Funds knowledgeable thereof;
provided, however, that any such access shall not significantly
interfere with the business or operations of GT Funds.
(b) AVIF will, during regular business hours and on reasonable prior
notice, allow GT Funds and its authorized representatives reasonable
access to the books and records of AVIF pertaining to the assets of the
Acquiring Funds and to officers of AVIF knowledgeable thereof;
provided, however, that any such access shall not significantly
interfere with the business or operations of AVIF.
SECTION 5.7 Consents, Approvals and Filings.
Each of GT Funds and AVIF shall make all necessary filings, as soon as
reasonably practicable, including, without limitation, those required under the
Securities Act, the Exchange Act, the Investment Company Act and the Advisers
Act, in order to facilitate prompt consummation of the Reorganizations and the
other transactions contemplated by this Agreement. In addition, each of GT Funds
and AVIF shall use its reasonable best efforts, and shall cooperate fully with
each other (i) to comply as promptly as reasonably practicable with all
requirements of Governmental Authorities applicable to the Reorganizations and
the other transactions contemplated herein and (ii) to obtain as promptly as
reasonably practicable all necessary permits, orders or other consents of
Governmental Authorities and consents of all third parties necessary for the
consummation of the Reorganizations and the other transactions contemplated
herein. Each of GT Funds and AVIF shall use reasonable efforts to provide such
information and communications to Governmental Authorities as such Governmental
Authorities may request.
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SECTION 5.8 Submission of Agreement to Shareholders.
GT Funds shall take all action necessary in accordance with applicable law and
its Agreement and Declaration of Trust and by-laws to convene each Acquired Fund
Shareholders Meeting. GT Funds shall, through its Board of Trustees, recommend
to the Acquired Fund Shareholders approval of this Agreement and the
transactions contemplated by this Agreement. GT Funds shall use its reasonable
best efforts to hold each Acquired Fund Shareholders Meeting as soon as
practicable after the date hereof.
ARTICLE 6
CONDITIONS PRECEDENT TO THE REORGANIZATION
SECTION 6.1 Conditions Precedent of AVIF.
The obligation of AVIF to consummate a Reorganization is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions, any one or more of which may be waived in writing by AVIF.
(a) The representations and warranties of GT Funds on behalf of the
Acquired Fund participating in the Reorganization set forth in this
Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date with the same effect
as though all such representations and warranties had been made as of
the Closing Date.
(b) GT Funds shall have complied with and satisfied in all material
respects all agreements and conditions relating to the Acquired Fund
participating in the Reorganization set forth herein on its part to be
performed or satisfied at or prior to the Closing Date.
(c) AVIF shall have received at the Closing Date (i) a certificate,
dated as of the Closing Date, from an officer of GT Funds, in such
individual's capacity as an officer of GT Funds and not as an
individual, to the effect that the conditions specified in Section
6.1(a) and (b) have been satisfied and (ii) a certificate, dated as of
the Closing Date, from the Secretary or Assistant Secretary of GT Funds
certifying as to the accuracy and completeness of the attached
Agreement and Declaration of Trust and by-laws of GT Funds, and
resolutions, consents and authorizations of or regarding GT Funds with
respect to the execution and delivery of this Agreement and the
transactions contemplated hereby.
(d) AVIF shall have received the signed opinion of Kirkpatrick &
Lockhart LLP, counsel to GT Funds, or other counsel reasonably
acceptable to AVIF, in form and substance reasonably acceptable to
counsel for AVIF, as to the matters set forth in Schedule 6.1(d).
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82
(e) The dividend or dividends described in the last sentence of Section
3.14(a) shall have been declared.
SECTION 6.2 Mutual Conditions.
The obligations of GT Funds and AVIF to consummate a Reorganization is subject
to the satisfaction, at or prior to the Closing Date, of all of the following
further conditions, any one or more may be waived in writing by GT Funds and
AVIF, but only if and to the extent that such waiver is mutual.
(a) All filings required to be made prior to the Closing Date with, and
all consents, approvals, permits and authorizations required to be
obtained on or prior to the Closing Date from Governmental Authorities
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein by GT Funds and
AVIF shall have been made or obtained, as the case may be; provided,
however, that such consents, approvals, permits and authorizations may
be subject to conditions that would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(b) This Agreement, the Reorganization of the Acquired Funds and
related matters shall have been approved and adopted at the Acquired
Fund Shareholders Meeting by the shareholders of the Acquired Funds on
the record date by the Required Shareholder Vote.
(c) The assets of each Acquired Fund to be acquired by the respective
Acquiring Fund shall constitute at least 90% of the fair market value
of the net assets and at least 70% of the fair market value of the
gross assets held by such Acquired Fund immediately prior to the
Reorganization. For purposes of this Section 6.2(c), assets used by an
Acquired Fund to pay the expenses it incurs in connection with this
Agreement and the Reorganization and to effect all shareholder
redemptions and distributions (other than regular, normal dividends and
regular, normal redemptions pursuant to the Investment Company Act, and
not in excess of the requirements of Section 852 of the Code, occurring
in the ordinary course of such Acquired Fund's business as a series of
an open-end management investment company) after the date of this
Agreement shall be included as assets of such Acquired Fund held
immediately prior to the Reorganization.
(d) No temporary restraining order, preliminary or permanent injunction
or other order issued by any Governmental Authority preventing the
consummation of the Reorganization on the Closing Date shall be in
effect; provided, however, that the party or parties invoking this
condition shall use reasonable efforts to have any such order or
injunction vacated.
(e) The Registration Statement on Form N-14 filed by AVIF with respect
to the Acquiring Fund Shares to be issued to Acquired Fund Shareholders
in connection with the Reorganization shall have become effective under
the Securities Act and no stop order suspending the effectiveness
thereof shall have been issued and, to the best
25
83
knowledge of the parties hereto, no investigation or proceeding
for that purpose shall have been instituted or be pending, threatened
or contemplated under the Securities Act.
(f) GT Funds and AVIF shall have received on or before the Closing Date
an opinion of Freedman, Levy, Kroll & Simonds in form and substance
reasonably acceptable to GT Funds and AVIF, as to the matters set forth
on Schedule 6.2(f).
(g) The dividend or dividends described in the last sentence of Section
3.14(a) shall have been declared.
SECTION 6.3 Conditions Precedent of GT Funds.
The obligation of GT Funds to consummate a Reorganization is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions, any one or more of which may be waived in writing by GT Funds.
(a) The representations and warranties of AVIF on behalf of the
Acquiring Fund participating in the Reorganization set forth in this
Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date with the same effect
as though all such representations and warranties had been made as of
the Closing Date.
(b) AVIF shall have complied with and satisfied in all material
respects all agreements and conditions relating to the Acquiring Fund
participating in the Reorganization set forth herein on its part to be
performed or satisfied at or prior to the Closing Date.
(c) GT Funds shall have received on the Closing Date (i) a certificate,
dated as of the Closing Date, from an officer of AVIF, in such
individual's capacity as an officer of AVIF and not as an individual,
to the effect that the conditions specified in Sections 6.3(a) and (b)
have been satisfied and (ii) a certificate, dated as of the Closing
Date, from the Secretary or Assistant Secretary of AVIF certifying as
to the accuracy and completeness of the attached Charter and by-laws,
as amended, of AVIF and resolutions, consents and authorizations of or
regarding AVIF with respect to the execution and delivery of this
Agreement and the transactions contemplated hereby.
(d) GT Funds shall have received the signed opinion of Freedman, Levy,
Kroll & Simonds, counsel to AVIF, or other counsel reasonably
acceptable to GT Funds, in form and substance reasonably acceptable to
counsel for AVIF, as to the matters set forth on Schedule 6.3(d).
SECTION 6.4 Transactions Independent.
AVIF and GT Funds agree that consummation of the Reorganization of any Acquired
Fund is not conditioned upon consummation of the Reorganization of any other
Acquired Fund. Accordingly, the occurrence or non-occurrence of an event that
would result in any of the conditions precedent to the Reorganization of any one
Acquired Fund not being satisfied will not
26
84
absolve the parties of their obligation under this Agreement to consummate the
Reorganization of the other Acquired Funds (assuming that all of the conditions
precedent to such Reorganization have been satisfied).
ARTICLE 7
TERMINATION OF AGREEMENT
SECTION 7.1 Termination.
(a) This Agreement may be terminated in whole or with respect to a
Reorganization described herein on or prior to the Closing Date as
follows:
(i) by mutual written consent of GT Funds and AVIF; or
(ii) at the election of GT Funds or AVIF:
(A) if the applicable Closing Date shall not be on or before
the date set out under "Closing Date" in Section 1.1,
or such later date as the parties hereto may agree upon,
unless the failure to consummate the Reorganization is the
result of a willful and material breach of this Agreement
by the party seeking to terminate this Agreement;
(B) if, upon a vote at an Acquired Fund Shareholders Meeting
or any adjournment thereof, the Required Shareholder Vote
shall not have been obtained as contemplated by Section
5.8; or
(C) if any Governmental Authority shall have issued an order,
decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the
Reorganization and such order, decree, ruling or other
action shall have become final and nonappealable.
(b) The termination of this Agreement shall be effectuated by the
delivery by the terminating party to the other party of a written
notice of such termination. If the circumstances described in
Section 7.1(a) above are applicable to only one Acquired Fund,
this Agreement may be terminated only as to the effected Acquired
Fund.
SECTION 7.2 Survival After Termination.
If this Agreement is terminated in accordance with Section 7.1 hereof and the
Reorganization of an Acquired Fund is not consummated, this Agreement shall
become void and of no further force and effect with respect to such
Reorganization and the respective Acquired Fund, except for the provisions of
Section 5.3.
27
85
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Survival of Representations and Warranties.
The representations, warranties and covenants in this Agreement or in any
certificate or instrument delivered pursuant to this Agreement shall survive the
consummation of the transactions contemplated hereunder for a period of one (1)
year following the Closing Date.
SECTION 8.2 Governing Law.
This Agreement shall be construed and interpreted according to the laws of the
State of Delaware applicable to contracts made and to be performed wholly within
such state.
SECTION 8.3 Binding Effect, Persons Benefiting, No Assignment.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and the respective successors and assigns of the parties and such
Persons. Nothing in this Agreement is intended or shall be construed to confer
upon any entity or Person other than the parties hereto and their respective
successors and permitted assigns any right, remedy or claim under or by reason
of this Agreement or any part hereof. Without the prior written consent of the
parties hereto, this Agreement may not be assigned by any of the parties hereto.
SECTION 8.4 Obligations of AVIF and GT Funds.
(a) GT Funds and AVIF hereby acknowledge and agree that the
Acquiring Funds are separate investment portfolios of AVIF, that
AVIF is executing this Agreement on behalf of each of the
Acquiring Funds, and that any amounts payable by AVIF under or in
connection with this Agreement shall be payable solely from the
revenues and assets of the respective Acquiring Fund. GT Funds
further acknowledges and agrees that this Agreement has been
executed by a duly authorized officer of AVIF in his or her
capacity as an officer of AVIF intending to bind AVIF as provided
herein, and that no officer, director or shareholder of AVIF shall
be personally liable for the liabilities or obligations of AVIF
incurred hereunder.
(b) GT Funds and AVIF hereby acknowledge and agree that the
Acquired Funds are separate investment portfolios of GT Funds,
that GT Funds is executing this Agreement on behalf of each of the
Acquired Funds and that any amounts payable by GT Funds under or
in connection with this Agreement shall be payable solely from the
revenues and assets of the respective Acquired Fund. AVIF further
acknowledges and agrees that this Agreement has been executed by a
duly authorized officer of GT Funds in his or her capacity as an
officer of GT Funds intending to bind GT Funds as provided herein,
and that no officer, trustee or shareholder of GT Funds shall be
personally liable for the liabilities of GT Funds incurred
hereunder.
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86
SECTION 8.5 Amendments.
This Agreement may not be amended, altered or modified except by a written
instrument executed by GT Funds and AVIF.
SECTION 8.6 Enforcement.
The parties agree irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States or any state having jurisdiction, in
addition to any other remedy to which they are entitled at law or in equity.
SECTION 8.7 Interpretation.
When a reference is made in this Agreement to a Section or Schedule, such
reference shall be to a Section of, or a Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." Each representation and warranty
contained in Article 3 or 4 that relates to a general category of a subject
matter shall be deemed superseded by a specific representation and warranty
relating to a subcategory thereof to the extent of such specific representation
or warranty.
SECTION 8.8 Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an
original and each of which shall constitute one and the same instrument.
SECTION 8.9 Entire Agreement; Schedules.
This Agreement, including the Schedules, certificates and lists referred to
herein, and any documents executed by the parties simultaneously herewith or
pursuant thereto, constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, written or oral, between the parties
with respect to such subject matter.
SECTION 8.10 Notices.
All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered by hand or by
overnight courier, two days after being sent by registered mail, return receipt
requested, or when sent by telecopier (with receipt confirmed), provided, in the
case of a telecopied notice, a copy is also sent by registered
29
87
mail, return receipt requested, or by courier, addressed as follows (or to such
other address as a party may designate by notice to the other):
(a) If to GT Funds:
GT Global Variable Investment Series or GT Global Variable
Investment Trust 11 Greenway Plaza, Suite 100 Houston, Texas
77046-1173 Attn: Carol F. Relihan, Esq. Fax: (713) 993-9185
with a copy to:
Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800 Attn: Arthur J. Brown, Esq. Fax:
(202) 778-9100
(b) If to AVIF:
AIM Variable Insurance Funds, Inc. 11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173 Attn: Carol F. Relihan, Esq. Fax: (713)
993-9185
with a copy to:
Freedman, Levy, Kroll & Simonds, 1050 Connecticut Avenue, N.W.,
Suite 825, Washington, D.C. 20036 Attn: Gary O. Cohen, Esq. Fax:
(202) 457-5151.
SECTION 8.11 Representations by AIM.
In its capacity as investment adviser to GT Funds, AIM represents to AVIF that
to the best of its knowledge the representations and warranties of GT Funds and
the Acquired Funds contained in this Agreement are true and correct as of the
date of this Agreement. In its capacity as investment adviser to AVIF, AIM
represents to GT Funds that to the best of its knowledge the representations and
warranties of AVIF and the Acquiring Funds contained in this Agreement are true
and correct as of the date of this Agreement. For purposes of this Section 8.11,
the best knowledge standard shall be deemed to mean that the officers of AIM who
have substantive responsibility for the provision of investment advisory
services to GT Funds and AVIF do not have actual knowledge to the contrary after
due inquiry.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
30
88
GT GLOBAL VARIABLE INVESTMENT
SERIES, acting on behalf of each of
its respective and separate series
By: /s/ ROBERT H. GRAHAM
--------------------------------
Robert H. Graham
GT GLOBAL VARIABLE INVESTMENT
TRUST, acting on behalf of each of
its respective and separate series
By: /s/ ROBERT H. GRAHAM
--------------------------------
Robert H. Graham
AIM VARIABLE INSURANCE FUNDS, INC.
acting on behalf of AIM V.I.
Capital Appreciation Fund, AIM V.I.
International Equity Fund, AIM V.I.
Diversified Income Fund, AIM V.I.
Government Securities Fund, AIM
V.I. Money Market Fund, AIM V.I.
Global Growth and Income Fund, and
AIM V.I. Telecommunications Fund
A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
--------------------------------
Robert H. Graham
31
89
SCHEDULE 6.1(d)
OPINION OF COUNSEL TO GT FUNDS
1. Each of the GT Funds is duly organized and validly existing as a business
trust under the Delaware Business Trust Act.
2. Each of the GT Funds is an open-end, management investment company registered
under the Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by GT Funds have
been duly authorized and approved by all requisite trust action on the part of
GT Funds. The Agreement has been duly executed and delivered by GT Funds and
constitutes the valid and binding obligation of GT Funds.
4. The Acquired Fund Shares outstanding on the date hereof have been duly
authorized and validly issued, are fully paid and are non-assessable.
5. To the best of our knowledge, GT Funds is not required to submit any notice,
report or other filing with or obtain any authorization, consent or approval
from any governmental authority or self regulatory organization prior to the
consummation of the transactions contemplated by the Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer who is the
current primary contact for GT Funds or who has devoted substantive attention on
behalf of GT Funds during the preceding twelve months and who is still currently
employed by or is currently a member of this firm, no litigation or governmental
proceeding is pending or threatened in writing against the Acquiring Fund (i)
with respect to the Agreement or (ii) which involves in excess of $500,000 in
damages.
90
SCHEDULE 6.2(f)
TAX OPINION
(1) The transfer of the assets of each Acquired Fund to each corresponding
Acquiring Fund in exchange for voting stock of the Acquiring Fund
distributed directly to the shareholders of the Acquired Fund, as
provided in the Agreement, will constitute a "reorganization" within
the meaning of Section 368(a)(1) of the Code, and each Acquired Fund
and each Acquiring Fund will be a "party to a reorganization" within
the meaning of Section 368(b) of the Code.
(2) In accordance with Section 361(a) and Section 361(c)(1) of the Code,
no gain or loss will be recognized by an Acquired Fund on the transfer
of its assets to the corresponding Acquiring Fund solely in exchange
for voting stock of the Acquiring Fund and the Acquiring Fund's
assumption of the Acquired Fund's liabilities, or on the distribution
of the voting stock to the Acquired Fund's shareholders.
(3) In accordance with Section 1032 of the Code, no gain or loss will be
recognized by any Acquiring Fund on the receipt of assets of its
corresponding Acquired Fund in exchange for Acquiring Fund voting
stock and the Acquiring Fund's assumption of the Acquired Fund's
liabilities.
(4) In accordance with Section 354(a)(1) of the Code, no gain or loss will
be recognized by shareholders of any Acquired Fund on the receipt of
voting stock of the corresponding Acquiring Fund in constructive
exchange for their Acquired Fund shares.
(5) In accordance with Section 362(b) of the Code, the basis to each
Acquiring Fund of the assets of each corresponding Acquired Fund
transferred to it will be the same as the basis of those assets in the
hands of such Acquired Fund immediately before the Reorganization.
(6) In accordance with Section 358(a) of the Code, an Acquired Fund
shareholder's basis for voting stock of the corresponding Acquiring
Fund received by the Acquired Fund shareholder will be the same as the
Acquired Fund shareholder's basis for Acquired Fund shares
constructively exchanged therefor.
(7) In accordance with Section 1223(1) of the Code, an Acquired Fund
shareholder's holding period for voting stock of a corresponding
Acquiring Fund will include the Acquired Fund shareholder's holding
period for the Acquired Fund shares constructively exchanged therefor,
provided that the Acquired Fund shareholder held the Acquired Fund
shares as a capital asset.
91
(8) In accordance with Section 1223(2) of the Code, the holding period for
assets of an Acquired Fund transferred to its corresponding Acquiring
Fund in the Reorganizations will include the holding period for those
assets in the hands of the Acquired Fund.
(9) For purposes of Section 381 of the Code, AIM V.I. Global Growth and
Income Fund and AIM V.I. Telecommunications Fund will each be treated
as if there had been no Reorganization, if, in the case of each such
Fund, the Fund has not commenced operations or issued voting stock
(other than to its investment adviser in connection with its creation)
prior to the date of the Closing ("Closing Date").
(9) Each Acquired Fund and each corresponding Acquiring Fund will be a RIC
under Subchapter M and will comply with the investment diversification
requirements of Section 817(h) of the Code. Accordingly, the
Reorganizations will not produce adverse Federal income tax
consequences by reason of income or gain for any Contract Owner.
92
SCHEDULE 6.3(d)
OPINION OF COUNSEL TO AVIF
1. AVIF is a corporation validly existing and in good standing under the
Maryland General Corporation Law.
2. AVIF is an open-end, management investment company registered under the
Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by AVIF have been
duly authorized and approved by all requisite corporate action on the part of
AVIF. The Agreement has been duly executed and delivered by AVIF and constitutes
the valid and binding obligation of AVIF.
4. The Acquiring Fund Shares outstanding on the date hereof have been duly
authorized and validly issued, are fully paid and are non-assessable.
5. To the best of our knowledge, AVIF is not required to submit any notice,
report or other filing with or obtain any authorization, consent or approval
from any governmental authority or self regulatory organization prior to the
consummation of the transactions contemplated by the Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer who is the
current primary contact for AVIF or who has devoted substantive attention on
behalf of AVIF during the preceding twelve months and who is still currently
employed by or is currently a member of this firm, no litigation or
governmental proceeding is pending or threatened in writing against an
Acquiring Fund (i) with respect to the Agreement or (ii) which involves in
excess of $500,000 in damages.
93
APPENDIX II
AIM V.I. CAPITAL
APPRECIATION FUND
- -------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund seeks to provide growth of capital
through investments in common stocks, with emphasis on medium- and
small-sized growth companies.
PROSPECTUS
MAY 3, 1999
This prospectus contains important
information. Please read it before
investing and keep it for future
reference.
An investment in the fund is not a
deposit of a bank and is not insured
or guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency. There is a risk
that you could lose a portion or all
of your money.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
94
----------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
----------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FUND MANAGEMENT 3
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 3
Advisor Compensation 3
Portfolio Managers 3
OTHER INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Purchase and Redemption of Shares 3
Pricing of Shares 3
Taxes 3
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 4
- - - - - - - - - - - - - - - - - - - - - - - - -
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
95
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AIM V.I. CAPITAL APPRECIATION FUND
----------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is growth of capital through investment in
common stocks, with emphasis on medium- and small-sized growth companies.
The fund may also invest up to 20% of its total assets in foreign securities.
The portfolio managers focus on companies they believe are likely to benefit
from new or innovative products, services or processes as well as those that
have experienced above-average, long-term growth in earnings and have excellent
prospects for future growth. The portfolio managers consider whether to sell a
particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity. This is
especially true with respect to common stocks of smaller companies, whose prices
may go up and down more than common stocks of larger, more-established
companies. Also, since common stocks of smaller companies may not be traded as
often as common stocks of larger, more-established companies, it may be
difficult or impossible for the fund to sell securities at a desirable price.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devaluated their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are
working to avoid year 2000-related problems in its systems and to obtain
assurances that other service providers are taking similar steps. Year 2000
problems may also affect issuers in whose securities the fund invests.
1
96
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AIM V.I. CAPITAL APPRECIATION FUND
----------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. The bar chart and performance table shown
do not reflect charges at the separate account level. If they did, the
performance shown would be lower.
ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
During the periods shown in the bar chart, the highest quarterly return was
24.04% (quarter ended December 31, 1998) and the lowest quarterly return was
- -14.75% (quarter ended September 30, 1998.)
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
DECEMBER 31, 1998) 1 YEAR 5 YEARS INCEPTION DATE
- ----------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 19.30% 17.23% 18.77% 05/05/93
Standard & Poor's 500 Index(1) 28.60% 24.05% 22.60%(2) 04/30/93(2)
- ----------------------------------------------------------------------------------------
(1) The Standard & Poor's 500 Index is an unmanaged index of common stocks
frequently used as a general measure of U.S. stock market performance.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
2
97
----------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
----------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The advisor supervises all aspects of the fund's operations and provides
investment advisory services to the fund, including obtaining and evaluating
economic, statistical and financial information to formulate and implement
investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 110
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fund's last fiscal year ended December 31, 1998, the advisor received
compensation of 0.62% of average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the
fund since 1993 and has been associated with the advisor and/or its affiliates
since 1989.
- - Charles D. Scavone, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1996. From 1994 to 1996 Mr. Scavone was an Associate Portfolio Manager
for Van Kampen American Capital Management, Inc.
- - David P. Barnard, Senior Portfolio Manager, who has been responsible for the
fund since 1993 and has been associated with the advisor and/or its affiliates
since 1982.
- - Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for
the fund since 1995 and has been associated with the advisor and/or its
affiliates since 1990.
OTHER INFORMATION
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Life insurance
companies participating in the fund serve as the fund's designee for receiving
orders of separate accounts that invest in the fund.
PRICING OF SHARES
The fund prices its shares based on its net asset value. The fund values
portfolio securities for which market quotations are readily available at market
value. The fund values short-term investments maturing within 60 days at
amortized cost, which approximates market value. The fund values all other
securities and assets at their fair value. Securities and other assets quoted in
foreign currencies are valued in U.S. dollars based on the prevailing exchange
rates on that day. In addition, if, between the time trading ends on a
particular security and the close of the New York Stock Exchange (NYSE), events
occur that materially affect the value of the security, the fund may value the
security at its fair value as determined in good faith by or under the
supervision of the Board of Directors. The effect of using fair value pricing is
that the fund's net asset value will be subject to the judgment of the Board of
Directors or its designee instead of being determined by the market. Because the
fund may invest in securities that are primarily listed on foreign exchanges,
the value of the fund's shares may change on days when the separate account will
not be able to purchase or redeem shares. The fund determines the net asset
value of its shares as of the close of the NYSE on each day the NYSE is open for
business.
TAXES
The amount, timing and character of distributions to the separate account may be
affected by special tax rules applicable to certain investments purchased by the
fund. Holders of variable contracts should refer to the prospectus for their
contracts for information regarding the tax consequences of owning such
contracts and should consult their tax advisors before investing.
3
98
----------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
----------------------------------
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate
accounts of participating life insurance companies.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually to separate
accounts of participating life insurance companies.
At the election of participating life insurance companies, dividends and
distributions are automatically reinvested at net asset value in shares of the
fund.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years (or periods) indicated.
This information has been audited by Tait, Weller & Baker, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
YEAR ENDED
YEAR ENDED DECEMBER 31, JANUARY 31,
1998 1997 1996 1995 1995 1994
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 21.75 $ 19.43 $ 16.55 $ 12.05 $ 12.58 $ 10.00
Income from investment operations:
Net investment income 0.02 0.03 0.02 0.04 0.05 --
Net gains (losses) on securities (both
realized and unrealized) 4.12 2.58 2.89 4.46 (0.54) 2.59
Total from investment operations 4.14 2.61 2.91 4.50 (0.49) 2.59
Less distributions:
Dividends from net investment income (0.04) (0.02) (0.03) -- (0.04) (0.01)
Distributions from net realized gains (0.65) (0.27) -- -- -- --
Total distributions (0.69) (0.29) (0.03) -- (0.04) (0.01)
Net asset value, end of period $ 25.20 $ 21.75 $ 19.43 $ 16.55 $ 12.05 $ 12.58
Total return(a) 19.30% 13.51% 17.58% 37.38% (3.91)% 25.90%
- ---------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------
Net assets, end of period (000s omitted) $647,248 $522,642 $370,063 $212,152 $88,177 $35,354
Ratio of expenses to average net assets 0.67%(b) 0.68% 0.73% 0.75%(c) 0.84% 1.06%(c)
Ratio of net investment income to average net
assets 0.11%(b) 0.18% 0.18% 0.39%(c) 0.46% 0.07%(c)
Portfolio turnover rate 83% 65% 59% 37% 81% 34%
- ---------------------------------------------------------
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $566,139,574.
(c) Annualized.
4
99
----------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
----------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you wish to obtain free copies of the fund's current SAI, please send a
written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173 or call (800) 410-4246.
You also can obtain copies of the fund's SAI and other information at the
SEC's Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
- -----------------------------------
AIM V.I. Capital Appreciation Fund
SEC 1940 Act file number: 811-7452
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
--Registered Trademark--
100
AIM V.I. INTERNATIONAL
EQUITY FUND
- -------------------------------------------------------------------------------
AIM V.I. International Equity Fund seeks to provide long-term growth of
capital by investing in a diversified portfolio of international equity
securities whose issuers are considered to have strong earnings
momentum.
PROSPECTUS
MAY 3, 1999
This prospectus contains important
information. Please read it before
investing and keep it for future
reference.
An investment in the fund is not a
deposit of a bank and is not insured
or guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency. There is a risk
that you could lose a portion or all
of your money.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
101
----------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
----------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FUND MANAGEMENT 3
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 3
Advisor Compensation 3
Portfolio Managers 3
OTHER INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Purchase and Redemption of Shares 3
Pricing of Shares 3
Taxes 3
Dividends and Distributions 3
FINANCIAL HIGHLIGHTS 4
- - - - - - - - - - - - - - - - - - - - - - - - -
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
102
----------------------------------
AIM V.I. INTERNATIONAL EQUITY FUND
----------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to provide long-term growth of capital by
investing in a diversified portfolio of international equity securities whose
issuers are considered to have strong earnings momentum.
The fund seeks to meet this objective by investing at least 70% of its total
assets in marketable equity securities of foreign companies that are listed on a
recognized foreign securities exchange or traded in a foreign over-the-counter
market. The fund will normally invest in companies located in at least four
countries outside of the United States, emphasizing investment in companies in
the developed countries of Western Europe and the Pacific Basin. The fund may
invest up to 20% of its total assets in securities of issuers located in
developing countries, i.e., those that are in the initial stages of their
industrial cycles. The fund may invest up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of foreign
companies.
The portfolio managers focus on companies that have experienced above-average,
long-term growth in earnings and have strong prospects for future growth. In
selecting countries in which the fund will invest, the portfolio managers also
consider such factors as the prospect for relative economic growth among
countries or regions, economic or political conditions, currency exchange
fluctuations, tax considerations and the liquidity of a particular security. The
portfolio managers consider whether to sell a particular security when any of
those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investment
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devaluated their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are
working to avoid year 2000-related problems in its systems and to obtain
assurances that other service providers are taking similar steps. Year 2000
problems may also affect issuers in whose securities the fund invests.
1
103
----------------------------------
AIM V.I. INTERNATIONAL EQUITY FUND
----------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. The bar chart and performance table shown
do not reflect charges at the separate account level. If they did, the
performance shown would be lower.
ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
During the periods shown in the bar chart, the highest quarterly return was
14.36% (quarter ended March 31, 1998 and the lowest quarterly return was -13.81%
(quarter ended September 30, 1998.)
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods SINCE INCEPTION
ENDED DECEMBER 31, 1998) 1 YEAR 5 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------
AIM V.I. International Equity Fund 15.49% 11.33% 13.36% 05/05/93
Morgan Stanley Capital International EAFE Index(1) 20.00% 9.19% 9.56%(2) 04/30/93(2)
- ------------------------------------------------------------------------------------------------------
(1) The Morgan Stanley Capital International Europe, Australasia and Far East
Index measures performance of global stock markets in 20 developed
countries.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
2
104
----------------------------------
AIM V.I. INTERNATIONAL EQUITY FUND
----------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The advisor supervises all aspects of the fund's operations and provides
investment advisory services to the fund, including obtaining and evaluating
economic, statistical and financial information to formulate and implement
investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 110
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fund's last fiscal year ended December 31, 1998, the advisor received
compensation of 0.75% of average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for
the fund since 1992 and has been associated with the advisor and/or its
affiliates since 1989.
- - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the
fund since 1997 and has been associated with the advisor and/or its affiliates
since 1994.
- - Barrett K. Sides, Senior Portfolio Manager, who has been responsible for the
fund since 1995 and has been associated with the advisor and/or its affiliates
since 1990.
- - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1996. From 1994 to 1996 he was an associate with JMB Realty.
OTHER INFORMATION
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Life insurance
companies participating in the fund serve as the fund's designee for receiving
orders of separate accounts that invest in the fund.
PRICING OF SHARES
The fund prices its shares based on its net asset value. The fund values
portfolio securities for which market quotations are readily available at market
value. The fund values short-term investments maturing within 60 days at
amortized cost, which approximates market value. The fund values all other
securities and assets at their fair value. Securities and other assets quoted in
foreign currencies are valued in U.S. dollars based on the prevailing exchange
rates on that day. In addition, if, between the time trading ends on a
particular security and the close of the New York Stock Exchange (NYSE), events
occur that materially affect the value of the security, the fund may value the
security at its fair value as determined in good faith by or under the
supervision of the Board of Directors. The effect of using fair value pricing is
that the fund's net asset value will be subject to the judgment of the Board of
Directors or its designee instead of being determined by the market. Because the
fund may invest in securities that are primarily listed on foreign exchanges,
the value of the fund's shares may change on days when the separate account will
not be able to purchase or redeem shares. The fund determines the net asset
value of its shares as of the close of the NYSE on each day the NYSE is open for
business.
TAXES
The amount, timing and character of distributions to the separate account may be
affected by special tax rules applicable to certain investments purchased by the
fund. Holders of variable contracts should refer to the prospectus for their
contracts for information regarding the tax consequences of owning such
contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate
accounts of participating life insurance companies.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually to separate
accounts or participating life insurance companies.
At the election of participating life insurance companies, dividends and
distributions are automatically reinvested at net asset value in shares of the
fund.
3
105
----------------------------------
AIM V.I. INTERNATIONAL EQUITY FUND
----------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years (or periods) indicated.
This information has been audited by Tait, Weller & Baker, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
YEAR ENDED
YEAR ENDED DECEMBER 31, JANUARY 31,
1998 1997 1996 1995 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.15 $ 16.36 $ 13.66 $ 11.03 $ 12.49 $ 10.00
Income from investment operations:
Net investment income (loss) 0.15 0.10 0.07 0.07 0.06 --
Net gains (losses) on securities (both
realized and unrealized) 2.50 1.03 2.67 2.58 (1.49) 2.49
Total from investment operations 2.65 1.13 2.74 2.65 (1.45) 2.49
Less distributions:
Dividends from net Investment Income (0.16) (0.08) (0.04) (0.02) (0.03) --
Distributions from net realized gains -- (0.28) -- -- -- --
Total distributions (0.16) (0.36) (0.04) (0.02) (0.03) --
Net asset value, end of period $ 19.62 $ 17.13 $ 16.36 $ 13.66 $ 11.03 $ 12.49
Total return(a) 15.49% 6.94% 20.05% 20.04% (11.48)% (24.90)%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $240,314 $211,023 $165,738 $ 82,257 $55,019 $23,533
Ratio of expenses to average net assets(b) 0.91%(b) 0.93% 0.96% 1.15%(c) 1.27%(d) 1.98%(c)(d)
Ratio of net investment income (loss) to average
net assets 0.80%(b) 0.68% 0.78% 0.75%(c) 0.60%(e) (0.15)%(c)(e)
Portfolio turnover rate 76% 57% 59% 67% 64% 26%
- ----------------------------------------------------------------------------------------------------------------------------------
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $232,550,286.
(c) Annualized.
(d) After fee waivers and/or expense reimbursements, Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.28% and 3.06% (annualized), for January 1995 and 1994 respectively.
(e) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursement were 0.59% and (1.23)% for 1995 and 1994, respectively.
4
106
----------------------------------
AIM V.I. INTERNATIONAL EQUITY FUND
----------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you wish to obtain free copies of the fund's current SAI, please send a
written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173 or call (800) 410-4246.
You also can obtain copies of the fund's SAI and other information at the
SEC's Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
- -----------------------------------
AIM V.I. International Equity Fund
SEC 1940 Act file number: 811-7452
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
--Registered Trademark--
107
AIM V.I. DIVERSIFIED
INCOME FUND
- -------------------------------------------------------------------------------
AIM V.I. Diversified Income Fund seeks to achieve a high level of
current income.
PROSPECTUS
MAY 3, 1999
This prospectus contains important
information. Please read it before
investing and keep it for future
reference.
An investment in the fund is not a
deposit of a bank and is not insured
or guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency. There is a risk
that you could lose a portion or all
of your money.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
108
----------------------------------
AIM V.I. INTERNATIONAL EQUITY FUND
----------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FUND MANAGEMENT 3
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 3
Advisor Compensation 3
Portfolio Managers 3
OTHER INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Purchase and Redemption of Shares 3
Pricing of Shares 3
Taxes 3
Dividends and Distributions 3
FINANCIAL HIGHLIGHTS 4
- - - - - - - - - - - - - - - - - - - - - - - - -
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
109
--------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
--------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high level of current income.
The fund seeks to meet this objective by investing primarily in (1) domestic
and foreign corporate debt securities; (2) U.S. Government securities, including
U.S. Government agency mortgage-backed securities; (3) securities issued by
foreign governments, their agencies or instrumentalities, and (4) lower-quality
debt securities, i.e., "junk bonds," of U.S. and foreign companies. The fund's
assets will normally be invested in each of these four sectors, however the fund
may invest up to 100% of its total assets in U.S. Government securities.
The fund may invest up to 50% of its total assets in foreign securities,
including securities of issuers located in developing countries. The fund may
invest up to 25% of its total assets in government securities of any one foreign
country. The fund may also invest up to 10% of its total assets in equity
securities and convertible debt securities of U.S. and foreign companies. The
fund may invest in debt obligations issued by certain supranational entities,
such as the World Bank.
The portfolio managers focus on securities that they believe have favorable
prospects for current income, whether denominated in the U.S. dollar or in other
currencies. The portfolio managers consider whether to sell a particular
security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Debt securities are particularly
vulnerable to credit risk and interest rate fluctuations. Interest rate
increases may cause the price of a debt security to decrease. The longer a debt
security's duration, the more sensitive it is to this risk. Junk bonds are less
sensitive to risk than are higher-quality bonds. Some of the securities
purchased by the fund are not guaranteed by the U.S. Government. The agency or
instrumentality issuing such security may default or otherwise be unable to
honor a financial obligation.
Compared to higher-quality debt securities, junk bonds involve greater risk of
default or price changes due to changes in the credit quality of the issuer
because they are generally unsecured and may be subordinated to other creditors'
claims. The value of junk bonds often fluctuates in response to company,
political or economic developments and can decline significantly over short
periods of time or during periods of general or regional economic difficulty.
During those times the bonds could be difficult to value or sell at a fair
price. Credit ratings on junk bonds do not necessarily reflect their actual
market risk.
The prices of foreign securities may be further affected by other factors
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devaluated their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
U.S. Government agency mortgage-backed securities provide a higher coupon at
the time of purchase than current prevailing market interest rates. The fund may
purchase such securities at a premium, which means that a faster principal
prepayment rate than expected will reduce both the market value of and income
from such securities.
The prices of equity securities fluctuates in response to many factors,
including the historical and prospective earnings of the issuer, the value of
its assets, general economic conditions, interest rates, investor perceptions
and market liquidity.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are
working to avoid year 2000-related problems in its systems and to obtain
assurances that other service providers are taking similar steps. Year 2000
problems may also affect issuers in whose securities the fund invests.
1
110
--------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
--------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. The bar chart and performance table shown
do not reflect charges at the separate account level. If they did, the
performance shown would be lower.
ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The following chart shows changes in the performance of the fund's shares from
year to year.
[GRAPH]
During the periods shown in the bar chart, the highest quarterly return was
5.54% (quarter ended June 30, 1995) and the lowest quarterly return was -3.16%
(quarter ended March 31, 1994.)
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
DECEMBER 31, 1998) 1 YEAR 5 YEARS INCEPTION DATE
- ---------------------------------------------------------------------------------------------------------
AIM V.I. Diversified Income Fund 3.58% 7.12% 7.38% 05/05/93
Lehman Aggregate Bond Index(1) 8.69% 7.27% 7.25%(2) 04/30/93(2)
- ---------------------------------------------------------------------------------------------------------
(1) The Lehman Aggregate Bond Index is an unmanaged index generally considered
representative of treasury issues, agency issues, corporate bond issues and
mortgage-backed securities.
(2) The average annual total return given is since the date closest to the
inception of the fund.
2
111
--------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
--------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The advisor supervises all aspects of the fund's operations and provides
investment advisory services to the fund, including obtaining and evaluating
economic, statistical and financial information to formulate and implement
investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 110
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fund's last fiscal year ended December 31, 1998, the advisor received
compensation of 0.60% of average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Robert G. Alley, Senior Portfolio Manager, who has been responsible for the
fund since 1993 and has been associated with the advisor and/or its affiliates
since 1992.
- - John L. Pessarra, Senior Portfolio Manager, who has been responsible for the
fund since 1993 and has been associated with the advisor and/or its affiliates
since 1990.
- - Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the
fund since 1995 and has been associated with the advisor and/or its affiliates
since 1992.
- - Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1999. From 1997 to 1999, he was global fixed-income portfolio manager for
Nicholas-Applegate Capital Management. From 1994 to 1997, he was international
fixed-income trader and analyst for Strong Capital Management.
OTHER INFORMATION
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares received at the
fund's next computed net asset value after it receives an order. Life insurance
companies participating in the fund serve as the fund's designee for receiving
orders of separate accounts that invest in the fund.
PRICING OF SHARES
The fund prices its shares based on its net asset value. The fund values
portfolio securities for which market quotations are readily available at market
value. The fund values short-term investments maturing within 60 days at
amortized cost, which approximates market value. The fund values all other
securities and assets at their fair value. Securities and other assets quoted in
foreign currencies are valued in U.S. dollars based on the prevailing exchange
rates on that day. In addition, if, between the time trading ends on a
particular security and the close of the New York Stock Exchange (NYSE), events
occur that materially affect the value of the security, the fund may value the
security at its fair value as determined in good faith by or under the
supervision of the Board of Directors. The effect of using fair value pricing is
that the fund's net asset value will be subject to the judgment of the Board of
Directors or its designee instead of being determined by the market. Because the
fund may invest in securities that are primarily listed on foreign exchanges,
the value of the fund's shares may change on days when the separate account will
not be able to purchase or redeem shares. The fund determines the net asset
value of its shares as of the close of the NYSE on each day the NYSE is open for
business.
TAXES
The amount, timing and character of distributions to the separate account may be
affected by special tax rules applicable to certain investments purchased by the
fund. Holders of variable contracts should refer to the prospectus for their
contracts for information regarding the tax consequences of owning such
contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate
accounts of participating life insurance companies.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually to separate
accounts of participating life insurance companies.
At the election of participating life insurance companies, dividends and
distributions are automatically reinvested at net asset value in shares of the
fund.
3
112
--------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
--------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years (or periods) indicated.
This information has been audited by Tait, Weller & Baker, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
YEAR ENDED
YEAR ENDED DECEMBER 31, JANUARY 31,
1998 1997 1996 1995 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.29 $ 10.33 $ 10.00 $ 9.12 $ 10.46 $ 10.00
Income from investment operations:
Net investment income 0.75 0.73 0.73 0.69 0.76 0.54
Net gains (losses) on securities (both
realized and unrealized) (0.35) 0.24 0.28 0.94 (1.42) 0.29
Total from investment operations 0.40 0.97 1.01 1.63 (0.66) 0.83
Less distributions:
Dividends from net investment income (0.57) (0.01) (0.68) (0.75) (0.68) (0.35)
Distributions from net realized capital gains (0.18) -- -- -- -- (0.02)
Total distributions (0.75) (0.01) (0.68) (0.75) (0.68) (0.37)
Net asset value, end of period $ 10.94 $ 11.29 $ 10.33 $ 10.00 $ 9.12 $ 10.46
Total return(a) 3.58% 9.39% 10.19% 18.11% (6.35)% 8.33%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $96,445 $89,319 $63,624 $44,630 $25,271 $14,530
Ratio of expenses to average net assets 0.77%(b) 0.80% 0.86% 0.88%(c) 0.91%(d) 1.05%(c)(d)
Ratio of net investment income to average net
assets 6.99%(b) 6.90% 7.09% 7.65%(c) 8.07%(e) 6.78%(c)(e)
Portfolio turnover rate 50% 52% 76% 72% 100% 57%
- ------------------------------------------------------------------------------------------------------------------------
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $96,686,554.
(c) Annualized.
(d) After fee waivers and/or expense reimbursement. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.03% and 1.69% (annualized) for January 31, 1995 and 1994, respectively.
(e) After fee waivers and/or expense reimbursement. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 7.95% and 6.14% (annualized) for January 31, 1995 and
1994, respectively.
4
113
--------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
--------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you wish to obtain free copies of the fund's current SAI, please send a
written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173 or call (800) 410-4246.
You also can obtain copies of the fund's SAI and other information at the
SEC's Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
- -----------------------------------
AIM V.I. Diversified Income Fund
SEC 1940 Act file number: 811-7452
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
--Registered Trademark--
114
AIM V.I. GOVERNMENT
SECURITIES FUND
- -------------------------------------------------------------------------------
AIM V.I. Government Securities Fund seeks to achieve a high level of
current income consistent with reasonable concern for safety of
principal by investing in debt securities issued, guaranteed or
otherwise backed by the United States Government.
PROSPECTUS
MAY 3, 1999
This prospectus contains important
information. Please read it before
investing and keep it for future
reference.
An investment in the fund is not a
deposit of a bank and is not insured
or guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency. There is a risk
that you could lose a portion or all
of your money.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
115
--------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
--------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FUND MANAGEMENT 3
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 3
Advisor Compensation 3
Portfolio Managers 3
OTHER INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Purchase and Redemption of Shares 3
Pricing of Shares 3
Taxes 3
Dividends and Distributions 3
FINANCIAL HIGHLIGHTS 4
- - - - - - - - - - - - - - - - - - - - - - - - -
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
116
-----------------------------------
AIM V.I. GOVERNMENT SECURITIES FUND
-----------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to achieve a high level of current income
consistent with reasonable concern for safety of principal by investing in debt
securities issued, guaranteed or otherwise backed by the United States
Government.
The fund may invest in securities of all maturities issued or guaranteed by
the U.S. Government or its agencies and instrumentalities, including: (1) U.S.
Treasury obligations, and (2) obligations issued or guaranteed by U.S.
Government agencies and instrumentalities and supported by (a) the full faith
and credit of the U.S. Treasury, (b) the right of the issuer to borrow from the
U.S. Treasury, or (c) the credit of the agency or instrumentality. The fund
intends to maintain a dollar-weighted average portfolio maturity of between
three and ten years. The fund may invest in high-coupon U.S. Government agency
mortgage-backed securities, which consist of interests in underlying mortgages
with maturities of up to thirty years. The fund may also invest up to 20% of its
assets in foreign securities.
The portfolio managers focus on securities that they believe have favorable
prospects for current income, consistent with their concern for safety of
principal. The portfolio managers consider whether to sell a particular security
when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Debt securities are particularly
vulnerable to credit risk and interest rate fluctuations. Interest rate
increases can cause the price of a debt security to decrease. The longer a debt
security's duration, the more sensitive it is to this risk. The prices of
high-coupon U.S. Government agency mortgage-backed securities fall more slowly
when interest rates rise than do prices of other fixed-rate securities. Some of
the securities purchased by the fund are not guaranteed by the U.S. Government.
The agency or instrumentality issuing such security may default or otherwise be
unable to honor a financial obligation.
High-coupon U.S. Government agency mortgage-backed securities provide a higher
coupon at the time of purchase than current prevailing market interest rates.
The fund may purchase such securities at a premium. If the securities experience
a faster principal prepayment rate than expected, both the market value of, and
income from, such securities will decrease.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devaluated their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are
working to avoid year 2000-related problems in its systems and to obtain
assurances that other service providers are taking similar steps. Year 2000
problems may also affect issuers in whose securities the fund invests.
1
117
-----------------------------------
AIM V.I. GOVERNMENT SECURITIES FUND
-----------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance. The bar chart and performance table shown
do not reflect charges at the separate account level. If they did, the
performance shown would be lower.
ANNUAL TOTAL RETURNS
The following chart shows changes in the performance of the fund's shares from
year to year.
[GRAPH]
During the periods shown in the bar chart, the highest quarterly return was
5.48% (quarter ended June 30, 1995) and the lowest quarterly return was -2.82%
(quarter ended March 31, 1994.)
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index.
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1998) 1 YEAR 5 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------
AIM V.I. Government Securities
Fund 7.73% 5.80% 5.76% 05/05/93
Lehman Intermediate Government
Bond Index(1) 8.49% 6.45% 6.31%(2) 04/30/93(2)
- ------------------------------------------------------------------------------------------------------
(1) The Lehman Intermediate Government Bond Index is an unmanaged composite
generally considered representative of intermediate publicly issued debt of
U.S. Government agencies and quasi-federal corporations, and corporate debt
guaranteed by the U.S. Government.
(2) The average annual total return given is since the date closest to the
inception date of the fund.
2
118
-----------------------------------
AIM V.I. GOVERNMENT SECURITIES FUND
-----------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The advisor supervises all aspects of the fund's operations and provides
investment advisory services to the fund, including obtaining and evaluating
economic, statistical and financial information to formulate and implement
investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 110
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fund's last fiscal year ended December 31, 1998, the advisor received
compensation of 0.50% of the fund's average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Karen Dunn Kelley, Senior Portfolio Manager, who has been responsible for the
fund since 1993 and has been associated with the advisor and/or its affiliates
since 1989.
- - Marcel S. Theriot, Portfolio Manager, who has been responsible for the fund
since 1998 and has been associated with the advisor and/or its affiliates
since 1994.
- - Scot W. Johnson, Senior Portfolio Manager, who has been responsible for the
fund since 1998 and has been associated with the advisor and/or its affiliates
since 1994.
OTHER INFORMATION
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Life insurance
companies participating in the fund serve as the fund's designee for receiving
orders of separate accounts that invest in the fund.
PRICING OF SHARES
The fund prices its shares based on its net asset value. The fund values
portfolio securities for which market quotations are readily available at market
value. The fund values short-term investments maturing within 60 days at
amortized cost, which approximates market value. The fund values all other
securities and assets at their fair value. Securities and other assets quoted in
foreign currencies are valued in U.S. dollars based on the prevailing exchange
rates on that day. In addition, if, between the time trading ends on a
particular security and the close of the New York Stock Exchange (NYSE), events
occur that materially affect the value of the security, the fund may value the
security at its fair value as determined in good faith by or under the
supervision of the Board of Directors. The effect of using fair value pricing is
that the fund's net asset value will be subject to the judgment of the Board of
Directors or its designee instead of being determined by the market. Because the
fund may invest in securities that are primarily listed on foreign exchanges,
the value of the fund's shares may change on days when the separate account will
not be able to purchase or redeem shares. The fund determines the net asset
value of its shares as of the close of the NYSE on each day the NYSE is open for
business.
TAXES
The amount, timing and character of distributions to the separate account may be
affected by special tax rules applicable to certain investments purchased by the
fund. Holders of variable contracts should refer to the prospectus for their
contracts for information regarding the tax consequences of owning such
contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate
accounts of participating life insurance companies.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually to separate
accounts of participating life insurance companies.
At the election of participating life insurance companies, dividends and
distributions are automatically reinvested at net asset value in shares of the
fund.
3
119
-----------------------------------
AIM V.I. GOVERNMENT SECURITIES FUND
-----------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years (or periods) indicated.
This information has been audited by Tait, Weller & Baker, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
YEAR ENDED
YEAR ENDED DECEMBER 31, JANUARY 31,
1998 1997 1996 1995 1995 1994
- ----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.67 $ 9.87 $ 10.17 $ 9.39 $ 10.24 $ 10.00
Income from investment operations:
Net investment income 0.63(a) 0.59 0.58 0.54 0.53 0.38
Net gains (losses) on securities (both
realized and unrealized) 0.20 0.22 (0.35) 0.74 (0.88) 0.10
Total from investment operations 0.83 0.81 0.23 1.28 (0.35) 0.48
Less distributions:
Dividends from net investment income (0.32) (0.01) (0.53) (0.50) (0.50) (0.24)
Net asset value, end of period $ 11.18 $ 10.67 $ 9.87 $ 10.17 $ 9.39 $ 10.24
Total return(b) 7.73% 8.16% 2.29% 13.84% (3.42)% 4.78%
- ----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $58,185 $33,800 $24,527 $19,545 $12,887 $10,643
Ratio of expenses (exclusive of interest
expense) to average net assets 0.76%(c) 0.87% 0.91% 1.19%(d) 0.95%(e) 1.00%(d)(e)
Ratio of net investment income to average net
assets 5.70%(c) 5.85% 5.80% 5.78%(d) 5.51%(f) 4.74%(d)(f)
Portfolio turnover rate 78% 66% 32% 41% 29% 0%
- ----------------------------------------------------------------------------------------------------------------
Borrowings for the period:
Amount of debt outstanding at end of period
(000s omitted) -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Average amount of debt outstanding during the
period (000s omitted)(g) $ 940 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Average number of shares outstanding during the
period (000s omitted)(g) 3,992 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
Average amount of debt per share during the
period $0.2355 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are based on average net assets of $44,391,219.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.10% and 1.80% (annualized) for January 1995 and 1994, respectively.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.35% and 3.94% (annualized) for January 1995 and 1994,
respectively.
(g) Averages computed on a daily basis.
4
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-----------------------------------
AIM V.I. GOVERNMENT SECURITIES FUND
-----------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you wish to obtain free copies of the fund's current SAI, please send a
written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173 or call (800) 410-4246.
You also can obtain copies of the fund's SAI and other information at the
SEC's Public Reference Room in Washington, D.C., on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
- -------------------------------------
AIM V.I. Government Securities Fund
SEC 1940 Act file number: 811-7452
- -------------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
--Registered Trademark--
121
AIM V.I. MONEY MARKET FUND
------------------------------------------------------------------------
AIM V.I. Money Market Fund seeks to provide as high a level of current
income as is consistent with the preservation of capital and liquidity.
PROSPECTUS
MAY 3, 1999
This prospectus contains important
information. Please read it before
investing and keep it for future
reference.
An investment in the fund is not a
deposit of a bank and is not insured
or guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency. There is a risk
that you could lose a portion or all
of your money.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the
fund will be able to maintain a
stable net asset value of $1.00 per
share.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
-- Registered Trademark --
122
--------------------------
AIM V.I. MONEY MARKET FUND
--------------------------
Table of Contents
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE
FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 3
Performance Table 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Pricing of Shares 4
Taxes 4
Dividends and Distributions 4
Purchase and Redemption of Shares 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
123
--------------------------
AIM V.I. MONEY MARKET FUND
--------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital and liquidity.
The fund seeks to meet this objective by investing only in high-quality U.S.
dollar-denominated short-term obligations, including
- - securities issued by the U.S. Government or its agencies
- - foreign government obligations
- - bankers' acceptances, certificates of deposit, and time deposits from U.S. or
foreign banks
- - repurchase agreements
- - commercial paper
- - taxable municipal securities
- - master notes
- - cash equivalents
The fund may invest up to 100% of its total assets in obligations issued by
banks. The fund may invest up to 25% of its total assets in foreign bank
obligations, limited to Eurodollar obligations (U.S. dollar-denominated
obligations issued by a foreign branch of a domestic bank), Yankee dollar
obligations (U.S. dollar-denominated obligations issued by a domestic branch of
a foreign bank), and obligations of foreign branches of foreign banks. No limit
applies to Eurodollar obligations unconditionally guaranteed by the domestic
parent of the foreign branch, or Yankee dollar obligations, if the U.S. branch
of the foreign bank is subject to the same regulations as U.S. banks.
The portfolio managers focus on securities that they believe have favorable
prospects for current income, consistent with their concerns for preservation of
capital and liquidity. The portfolio managers usually hold portfolio securities
to maturity, but may sell a particular security when they deem it advisable,
such as when any of the factors above materially changes.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
- - interest rates could rise sharply, causing the value of the fund's securities,
and share price, to drop
- - any of the fund's holdings could have its credit rating downgraded or could
default
- - the risks generally associated with concentrating investments in the banking
industry, such as interest rate risk, credit risk and regulatory developments
relating to the banking and financial services industries
- - the risks generally associated with dollar-denominated foreign investments,
including political and economic upheaval, seizure or nationalization of
deposits, imposition of taxes or other restrictions on the payment of
principal and interest.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devaluated their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses
1
124
--------------------------
AIM V.I. MONEY MARKET FUND
--------------------------
arising from decline in the value of those securities, reduced levels of income
and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are
working to avoid year 2000-related problems in its systems and to obtain
assurances that other service providers are taking similar steps. Year 2000
problems may also affect issuers in whose securities the fund invests.
2
125
--------------------------
AIM V.I. MONEY MARKET FUND
--------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart shown below provides an indication of the risks of investing in
the fund. The fund's past performance is not necessarily an indication of its
future performance. The bar chart and performance table shown do not reflect
charges at the separate account level. If they did, the performance shown would
be lower.
ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The following bar chart shows changes in the performance of the fund's shares
from year to year.
[GRAPH]
Annual
Year Ended Total
December 31 Return
- ----------- ------
1994 ....................................... 3.64%
1995 ....................................... 5.70%
1996 ....................................... 4.97%
1997 ....................................... 5.14%
1998 ....................................... 5.06%
During the periods shown in the bar chart, the highest quarterly return was
1.45% (quarter ended September 30, 1995) and the lowest quarterly return was
0.60% (quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table reflects the fund's performance over the periods
indicated.
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1998) 1 YEAR 5 YEARS INCEPTION DATE
- ----------------------------------------------------------------------
AIM V.I. Money Market Fund 5.06% 4.90% 4.59% 05/05/93
- ----------------------------------------------------------------------
The AIM V.I. Money Market Fund's seven day yield on December 31, 1998 was
4.61%. For the current seven day yield, call (800) 347-4246.
3
126
--------------------------
AIM V.I. MONEY MARKET FUND
--------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The advisor supervises all aspects of the fund's operations and provides
investment advisory services to the fund, including obtaining and evaluating
economic, statistical and financial information to formulate and implement
investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 110
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended December 31, 1998, the advisor received
compensation of 0.40% of average daily net assets.
OTHER INFORMATION
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Life insurance
companies participating in the fund serve as the fund's designee for receiving
orders of separate accounts that invest in the fund.
PRICING OF SHARES
The fund prices its shares based on its net asset value. The fund values
short-term investments maturing within 60 days at amortized cost, which
approximates market value. The fund values all of its securities based on the
amortized cost method. Securities and other assets quoted in foreign currencies
are valued in U.S. dollars based on the prevailing exchange rates on that day.
In addition, if, between the time trading ends on a particular security and the
close of the New York Stock Exchange (NYSE), events occur that materially affect
the value of the security, the fund may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors.
The effect of using fair value pricing is that the fund's net asset value will
be subject to the judgment of the Board of Directors or its designee instead of
being determined by the market. The fund determines the net asset value of its
shares as of the close of the NYSE on each day the NYSE is open for business.
TAXES
The amount, timing and character of distributions to the separate account may be
affected by special tax rules applicable to certain investments purchased by the
fund. Holders of variable contracts should refer to the prospectus for their
contracts for information regarding the tax consequences of owning such
contracts and should consult their tax advisers before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, daily to separate
accounts of participating life insurance companies.
CAPITAL GAINS DISTRIBUTIONS
The fund may distribute net realized short-term gains, if any, frequently to
separate accounts of participating life insurance companies.
At the election of participating life insurance companies, dividends and
distributions are automatically reinvested at net asset value in shares of the
fund.
4
127
--------------------------
AIM V.I. MONEY MARKET FUND
--------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
The table shows the financial highlights for a share of the fund outstanding
during each of the fiscal years (or periods) indicated.
This information has been audited by Tait, Weller & Baker, whose report, along
with the fund's financial statements, is included in the fund's annual report,
which is available upon request.
YEAR ENDED
YEAR ENDED DECEMBER 31, JANUARY 31,
1998 1997 1996 1995 1995 1994
- -------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.05 0.05 0.05 0.05 0.04 0.02
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.04) (0.02)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total return 5.06% 5.14% 4.97% 5.69%(a) 3.98% 2.27%(a)
- -------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $64,090 $58,635 $63,529 $65,506 $31,017 $13,891
Ratio of expenses to average net assets 0.58%(b) 0.59% 0.55% 0.53%(a) 0.63%(c) 0.95%(a)(d)
Ratio of net investment income to average net
assets 4.94%(b) 5.01% 4.84% 5.40%(a) 4.14%(c) 2.29%(a)(d)
- -------------------------------------------------------------------------------------------------------------------
(a) Annualized.
(b) Ratios are based on average net assets of $63,101,740.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average daily net assets prior to fee waivers and/or
expense reimbursements were 0.70% and 4.07%, respectively.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average daily net assets prior to fee waivers and/or
expense reimbursements were 1.53% (annualized) and 1.70% (annualized),
respectively.
5
128
--------------------------
AIM V.I. MONEY MARKET FUND
--------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you wish to obtain free copies of the fund's current SAI, please send a
written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173 or call (800) 410-4246.
You also can obtain copies of the fund's SAI and other information at the SEC's
Public Reference Room in Washington, DC, on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, DC 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
- -----------------------------------
AIM V.I. Money Market Fund
SEC 1940 Act file number: 811-7452
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
--Registered Trademark--
129
AIM V.I. GLOBAL GROWTH
AND INCOME FUND
- --------------------------------------------------------------------------------
Shares of the fund are currently offered only to insurance company
separate accounts.
AIM V.I. Global Growth and Income Fund seeks to provide long-term growth
of capital together with current income.
PROSPECTUS
MAY 3, 1999
This prospectus contains important
information. Please read it before
investing and keep it for future
reference.
An investment in the fund is not a
deposit of a bank and is not insured
or guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency. There is a risk
that you could lose a portion or all
of your money.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
130
Table of Contents
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
FUND MANAGEMENT 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Advisor Arrangements 2
Advisor Compensation 2
Portfolio Managers 2
OTHER INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Purchase and Redemption of Shares 3
Pricing of Shares 3
Taxes 3
Dividends and Distributions 3
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
131
--------------------------------------
AIM V.I. GLOBAL GROWTH AND INCOME FUND
--------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objectives are long-term growth of capital together with
current income.
The fund seeks to meet this objectives by investing at least 65% of its total
assets in a combination of blue-chip equity securities and high-quality
government bonds of U.S. and foreign issuers. "Blue chip" equity securities are
those which (1) offered, during the issuer's most recent fiscal year, an above
average dividend yield relative to the latest reported dividend yield on the
Morgan Stanley Capital International World Index, and (2) are issued by a
company with total equity market capitalization of at least $1 billion.
High-quality government bonds are rated within one of the two highest ratings
categories of Moody's Investors Service, Inc. or Standard & Poor's Ratings
Services, or are deemed by the portfolio managers to be of comparable quality.
The fund may invest up to 35% of its total assets in other equity securities,
convertible securities and government and corporate debt securities that are
investment grade, i.e., rated within one of the four highest ratings categories
of Moody's or S&P. The fund may purchase debt obligations issued or guaranteed
by the U.S. or foreign governments, including foreign states, provinces or
municipalities, or their agencies, authorities or instrumentalities and debt
obligations of supranational organizations, such as the World Bank. The fund
will normally invest in securities of issuers in at least three countries,
including the United States. However, the fund may not invest more than 40% of
its assets in securities of issuers in any one country, other than the U.S. The
fund may invest in the securities of issuers located in developing countries,
i.e., those that are in the initial stages of their industrial cycles. The fund
may invest up to 100% of its total assets in either equity or debt securities in
response to general economic changes and market conditions around the world.
The portfolio managers allocate assets among securities of countries and in
currency denominations where opportunities for meeting the fund's investment
objectives are expected to be the most attractive. The portfolio managers
consider whether to sell a particular security when opportunities for meeting
the fund's investment objectives are no longer considered attractive.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors, including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions, and market liquidity. Debt securities are
particularly vulnerable to credit risk and interest rate fluctuations. Interest
rate increases may cause the price of a debt security to decrease. The longer a
debt security's duration, the more sensitive it is to this risk.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing or emerging market countries more than those in countries
with mature economies. For example, many developing countries have, in the past,
experienced high rates of inflation or sharply devalued their currencies against
the U.S. dollar, thereby causing the value of investments in companies located
in those countries to decline. Transaction costs are often higher in developing
countries and there may be delays in settlement procedures.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are
working to avoid year 2000-related problems in its systems and to obtain
assurances that other service providers are taking similar steps. Year 2000
problems may also affect issuers in whose securities the fund invests.
1
132
--------------------------------------
AIM V.I. GLOBAL GROWTH AND INCOME FUND
--------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
SEC Rules do not allow us to provide a bar chart and performance table for funds
that do not have at least a full calendar year of performance.
FUND MANAGEMENT
- --------------------------------------------------------------------------------
ADVISOR ARRANGEMENTS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management including the fund's investment
decisions and the execution of securities transactions. The advisor is located
at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. INVESCO Asset
Management Limited (the subadvisor), serves as the fund's subadvisor, is located
at 11 Devonshire Square, London, England EC2M4YR. The subadvisor is responsible
for providing the advisor with economic and market research, securities analysis
and investment recommendations with respect to the fund. Both entities are
affiliated.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 110
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
The advisor is to receive compensation from the fund calculated at the annual
rate of 1.00% of the fund's daily average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, are
- - Paul Griffiths, Portfolio Manager, who has been responsible for the fund since
1998 and has been associated with the advisor and/or its affiliates since
1994.
- - Michael Lindsell, Portfolio Manager, who has been responsible for the fund
since 1998 and has been associated with the advisor and/or its affiliates
since 1992.
- - John Nadell, Portfolio Manager, who has been responsible for the fund since
1998 and has been associated with the advisor and/or its affiliates since
1994.
2
133
--------------------------------------
AIM V.I. GLOBAL GROWTH AND INCOME FUND
--------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Life insurance
companies participating in the fund serve as the fund's designee for receiving
orders of separate accounts that invest in the fund.
The fund currently offers shares only to insurance company separate accounts.
In the future, the fund may offer them to pension and retirement plans that
qualify for special federal income tax treatment.
The Board of Directors monitors for possible conflicts among separate accounts
(and will do so for plans) buying shares of the fund. A fund's net asset value
could decrease if it had to sell investment securities to pay redemption
proceeds to a separate account (or plan) withdrawing because of a conflict.
PRICING OF SHARES
The fund prices its shares based on its net asset value. The fund values
portfolio securities for which market quotations are readily available at market
value. The fund values short-term investments maturing within 60 days at
amortized cost, which approximates market value. The fund values all other
securities and assets at their fair value. Securities and other assets quoted in
foreign currencies are valued in U.S. dollars based on the prevailing exchange
rates on that day. In addition, if, between the time trading ends on a
particular security and the close of the New York Stock Exchange (NYSE), events
occur that materially affect the value of the security, the fund may value the
security at its fair value as determined in good faith by or under the
supervision of the Board of Directors. The effect of using fair value pricing is
that the fund's net asset value will be subject to the judgment of the Board of
Directors or its designee instead of being determined by the market. Because the
fund may invest in securities that are primarily listed on foreign exchanges,
the value of the fund's shares may change on days when the separate account will
not be able to purchase or redeem shares. The fund determines the net asset
value of its shares as of the close of the NYSE on each day the NYSE is open for
business.
TAXES
The amount, timing and character of distributions to the separate account may be
affected by special tax rules applicable to certain investments purchased by the
fund. Holders of variable contracts should refer to the prospectus for their
contracts for information regarding the tax consequences of owning such
contracts and should consult their tax advisers before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate
accounts of participating life insurance companies.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually to separate
accounts of participating life insurance companies.
At the election of participating life insurance companies, dividends and
distributions are automatically reinvested at net asset value in shares of that
fund.
3
134
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AIM V.I. GLOBAL GROWTH AND INCOME FUND
--------------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Semiannual reports to shareholders contain additional information
about the fund's investments.
If you wish to obtain free copies of the fund's current SAI, please send a
written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173 or call (800) 410-4246.
You also can obtain copies of the fund's SAI and other information at the
SEC's Public Reference Room in Washington, DC, on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, DC 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
AIM V.I. Global Growth and Income Fund
SEC 1940 Act file number: 811-7452
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
--Registered Trademark--
135
AIM V.I.
TELECOMMUNICATIONS FUND
- -------------------------------------------------------------------------------
Shares of the fund are currently offered only to insurance company
separate accounts.
AIM V.I. Telecommunications Fund seeks to provide long-term growth of
capital.
PROSPECTUS
MAY 3, 1999
This prospectus contains important
information. Please read it before
investing and keep it for future
reference.
An investment in the fund is not a
deposit of a bank and is not insured
or guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency. There is a risk
that you could lose a portion or all
of your money.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
136
Table of Contents
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
FUND MANAGEMENT 2
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 2
Advisor Compensation 2
Portfolio Managers 2
OTHER INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Purchase and Redemption of Shares 3
Pricing of Shares 3
Taxes 3
Dividends and Distributions 3
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - -- - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
137
--------------------------------
AIM V.I. TELECOMMUNICATIONS FUND
--------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing primarily in equity
securities of companies throughout the world engaged in the development,
manufacture or sale of telecommunications services or equipment. The fund will
invest, normally, at least 65% of its total assets in common and preferred
stocks and warrants to acquire such stocks issued by telecommunications
companies. The fund considers a "telecommunications company" to be one that (1)
derives at least 50% of its revenues or earnings from telecommunications
activities, or (2) devotes at least 50% of its assets to such activities, based
on its most recent fiscal year. Such companies include those that develop,
manufacture, or sell communications services and equipment, computer and
electronic components and equipment, mobile communications, and broadcasting.
The fund may invest up to 35% of its assets in debt securities issued by
telecommunications companies and/or equity and debt securities of other
companies the portfolio managers believe will benefit from developments in the
telecommunications industry. The fund may also invest up to 5% of its total
assets in lower-quality debt securities, i.e., "junk bonds."
The fund will normally invest in the equity securities of companies located in
at least three different countries, including the United States, and may invest
a significant portion of its assets in the securities of U.S. issuers. However,
the fund will not invest more than 40% of its total assets in the securities of
issuers in any one country, other than the U.S. The fund may invest
substantially in securities denominated in one or more currencies.
The portfolio managers allocate the fund's assets among countries, sectors and
in currency denominations that are expected to provide the best opportunities
for long-term growth of capital. The portfolio managers consider whether to sell
a particular security when any of those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, bonds or other
debt securities. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the common stocks in which the fund invests. The prices of equity
securities change in response to many factors, including the historical and
prospective earnings of the issuer of the stock, the value of its assets,
general economic conditions, interest rates, investor perceptions, and market
liquidity.
The value of the fund's shares is particularly vulnerable to factors affecting
the telecommunications industry, such as substantial government regulation.
Because the fund focuses its investments in the telecommunications industry, the
value of your fund shares may rise and fall more than the value of shares of a
fund that invests more broadly.
In addition, the prices of securities issued by foreign issuers may be further
affected by other factors, including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are
working to avoid year 2000-related problems in its systems and to obtain
assurances that other service providers are taking similar steps. Year 2000
problems may also affect issuers in whose securities the fund invests.
1
138
--------------------------------
AIM V.I. TELECOMMUNICATIONS FUND
--------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
SEC Rules do not allow us to provide a bar chart and performance table for funds
that do not have at least a full calendar year of performance.
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 110
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
The advisor is to receive compensation from the fund calculated at the annual
rate of 1.00% of the fund's daily average net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for
the fund since 1999 and has been associated with the advisor and/or its
affiliates since 1986.
- - Claude C. Cody IV, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1992.
- - Paul A. Rogge, Senior Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1991.
- - David P. Barnard, Senior Portfolio Manager, who has been responsible for the
fund since 1999 and has been associated with the advisor and/or its affiliates
since 1982.
- - Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for
the fund since 1999 and has been associated with the advisor and/or its
affiliates since 1990.
- - Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the
fund since 1999 and has been associated with the advisor and/or its affiliates
since 1989.
- - Bradley T. Conger, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1997. From 1993 to 1997, Mr. Conger was a member of the Goldman Sachs
international equity sales team.
2
139
--------------------------------
AIM V.I. TELECOMMUNICATIONS FUND
--------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Life insurance
companies participating in the fund serve as the fund's designee for receiving
orders of separate accounts that invest in the fund.
PRICING OF SHARES
The fund prices its shares based on its net asset value. The fund values
portfolio securities for which market quotations are readily available at market
value. The fund values short-term investments maturing within 60 days at
amortized cost, which approximates market value. The fund values all other
securities and assets at their fair value. Securities and other assets quoted in
foreign currencies are valued in U.S. dollars based on the prevailing exchange
rates on that day. In addition, if, between the time trading ends on a
particular security and the close of the New York Stock Exchange (NYSE), events
occur that materially affect the value of the security, the fund may value the
security at its fair value as determined in good faith by or under the
supervision of the Board of Directors. The effect of using fair value pricing is
that the fund's net asset value will be subject to the judgment of the Board of
Directors or its designee instead of being determined by the market. Because the
fund may invest in securities that are primarily listed on foreign exchanges,
the value of the fund's shares may change on days when the separate account will
not be able to purchase or redeem shares. The fund determines the net asset
value of its shares as of the close of the NYSE on each day the NYSE is open for
business.
TAXES
The amount, timing and character of distributions to the separate account may be
affected by special tax rules applicable to certain investments purchased by the
fund. Holders of variable contracts should refer to the prospectus for their
contracts for information regarding the tax consequences of owning such
contracts and should consult their tax advisers before investing.
DIVIDENDS AND DISTRIBUTIONS
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate
accounts of participating life insurance companies.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains (including
any net gains from foreign currency transactions), if any, annually to separate
accounts of participating life insurance companies.
At the election of participating life insurance companies, dividends and
distributions are automatically reinvested at net asset value in shares of that
fund.
3
140
--------------------------------
AIM V.I. TELECOMMUNICATIONS FUND
--------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Semiannual reports to shareholders contain additional information
about the fund's investments.
If you wish to obtain free copies of the fund's current SAI, please send a
written request to A I M Distributors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173 or call (800) 410-4246.
You also can obtain copies of the fund's SAI and other information at the
SEC's Public Reference Room in Washington, DC, on the SEC's website
(http://www.sec.gov) or by sending a letter, including a duplicating fee, to the
SEC's Public Reference Section, Washington, DC 20549-6009. Please call the SEC
at 1-800-SEC-0330 for information about the Public Reference Room.
- ----------------------------------
AIM V.I. Telecommunications Fund
SEC 1940 Act file number: 811-7452
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
141
APPENDIX III
AIM V.I. CAPITAL APPRECIATION FUND DISCUSSION AND ANALYSIS
Reproduced below is a discussion of the performance of AIM V.I. Capital
Appreciation Fund for the fiscal year ended December 31, 1998, that was
prepared by its officers and A I M Advisors, Inc. and included in its Annual
Report dated December 31, 1998.
The Managers' Overview
FUND POSTS STRONG
RETURN IN VOLATILE MARKET
A roundtable discussion with the Fund management team for AIM V.I. Capital
Appreciation Fund for the fiscal year ended December 31, 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM DURING Top 10 Equity Holdings individual companies, not the overall
THE FISCAL YEAR? As of 12/31/98, based on total net assets market. This discipline led us to
A. Fund performance fluctuated 1. Compuware 1.37% significant holdings in technology,
considerably during a very volatile fiscal 2. EMC Corp. 1.35 retail and health care.
year. Like the entire mid-cap stock 3. Guidant Corp. 1.35
market, the Fund was hard hit during a 4. Ascend Communications, Inc. 1.30 Q. WHY IS TECHNOLOGY ATTRACTIVE?
deep sell-off in August, but it later 5. Concord EFS, Inc. 1.28 A. The "millennium bug" that requires
rallied strongly, finishing the fiscal 6. 3Com Corp. 1.21 reprogramming older computers and software
year with total return of 19.30%. That 7. Cardinal Health, Inc. 1.17 to recognize the year 2000 continues to
outperformed the Standard & Poor's 400 8. Staples, Inc. 1.16 provide opportunity for the computer
Midcap Index, which produced a total 9. BMC Software, Inc. 1.15 software and services industry. The
return of 18.25%. Large-cap stocks in the 10. Becton, Dickinson & Co. 1.12 worldwide cost of fixing the bug could
Standard & Poor's 500 posted a total total between $300 billion and $600
return of 28.60% during the year. Please keep in mind that the Fund's billion, according to the Gartner Group,
portfolio composition is subject to change Inc., a technology research firm.
Q. WHY WERE MARKETS VOLATILE? and there is no assurance the Fund will Computer know-how is also crucial to
A. As the fiscal year opened, concern continue to hold any particular security. the gradual conversion of European
about Asia's financial difficulties was currencies to the euro starting in 1999.
widespread. The smaller and mid-size multiple: the seemingly intractable Asian Among the portfolio's software and
company stocks in which the Fund invests downturn, a default on Russian government services holdings is Citrix Systems, Inc.
were especially out of favor as investors debt, the collapse of some highly which for three years running has been
sought the relative safety of blue-chip leveraged hedge funds, and recognition cited by Deloitte & Touche as one of the
stocks. Markets rallied in the spring as that domestic corporate profit growth was fastest-growing technology companies in
investors seemed to shrug off Asian slipping after several years of robust the country.
worries. growth.
In August, another wave of concern Late in the fiscal year, amid evidence Q. AND RETAILERS--WHY DO THEY REMAIN
washed over markets. Its causes were of a worldwide credit crunch, the Federal WELL-REPRESENTED IN THE PORTFOLIO?
Reserve Board (the Fed) shifted its focus A. Retailers did a brisk Christmas
--------------- from fighting inflation to providing business--and the week after Christmas was
liquidity and supporting markets. In three very strong. Same-store sales rose 5.2% in
Because U.S. drug manufacturers steps, it lowered the short-term target December over the same month in 1997. And
federal funds rate from 5.50% to 4.75%, it was a good year for specialty apparel
and distributors are not heavily and equity markets rallied in response. In retailers in the Fund's portfolio, such as
the short run at least, the Fed appeared Abercrombie & Fitch Co., whose 1998 sales
dependent on the Asian and to have assured investors that it would grew more than 50% over 1997. As always,
intervene to forestall a recession. we seek out the best earnings stories we
Latin American markets, can find. One of our major holdings is in
Q. HOW DID YOU MANAGE THE FUND IN A the retail industry: the office-products
they may be relatively immune to CHANGEABLE ENVIRONMENT? specialist Staples, Inc. This company
A. We stuck with our disciplined, earnings- recently announced its 17th consecutive
foreign turmoil and provide driven stock selection process, looking at quarter of earnings per share growth of
the underlying fundamentals of more than 30%.
a safe haven in the months ahead.
---------------
AIM V.I. CAPITAL APPRECIATION FUND 27
142
--------------- companies in the portfolio averaged more when the Fed eases monetary policy, and
than 25% over the same period in 1997, and we were encouraged to note that this was
Historically, smaller company stocks such double-digit growth is projected for true after the Fed began lowering interest
the next year. By contrast, average rates. Though this is much too short a
do better than large-company stocks earnings growth for the large-cap stocks period in which to identify a market
in the S&P 500 was negative for the trend, from the Fed's first interest rate
when the Fed eases monetary policy, September 30 quarter end. cut September 29 through the December 31
. Valuations of the stocks in the close of the fiscal year, midcaps did
and we were encouraged to note that mid-cap sector are significantly lower outperform large caps. The S&P 400
than in the large-cap sector. These mid- advanced 25.00% while the large-cap S&P
this was true after the Fed began cap stocks also offer some refuge from 500 rose 17.60%. Of course, a favorable
Asian woes because they tend to have less environment for smaller-company stocks
lower interest rates. international exposure. should be good for the Fund.
. Historically, smaller-company stocks
--------------- do better than large-company stocks
Q. AND WHAT ARE SOME POSITIVE TRENDS IN GROWTH OF $10,000 INVESTMENT
THE HEALTH-CARE SECTOR? From 5/5/93-12/31/98 AVERAGE ANNUAL TOTAL RETURN
A. Many of our health-care holdings are in Lipper As of 12/31/98
the medical products and pharmaceuticals Capital Inception (5/5/93) 18.77%
industries, which are not heavily AIM V.I. Capital S&P 500 Appreciation 5 Years 17.23
dependent on the Asian and Latin American Appreciation Fund Stock Index Fund Index 1 Year 19.30
markets. Therefore, they may be relatively (In thousands)
immune to foreign turmoil. Their strong 5/5/93 $10,000 $10,000 $10,000
earnings growth also is expected to 12/93 11,949 10,794 11,534
continue. 12/94 12,248 10,936 11,250
Holdings in this area include Becton, 12/95 16,618 15,042 14,805
Dickinson & Co., whose products include 12/96 19,540 18,495 17,019
drug injection and blood collection 12/97 22,179 24,663 20,417
devices; and Guidant Corp., maker of 12/98 26,460 31,711 24,497
cardiovascular devices such as stents and
defibrillators. Past performance cannot guarantee comparable future results.
Q. WHAT IS YOUR NEAR-TERM OUTLOOK ON MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF
THE ECONOMY? AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
A. We are optimistic that the U.S. will PERFORMANCE SHOWN.
avoid a recession in 1999. The economy
will likely experience annual gross The performance figures shown represent the AIM V.I. Capital Appreciation Fund,
domestic product growth in the 1.5% to are not intended to reflect actual annuity values, and do not reflect charges at
2.00% range, so low inflation and low the separate account level, which, if applied, would lower the performance
interest rates should continue. The results. The Fund's performance figures are historical and reflect reinvestment
challenge will be earnings. With many of all distributions and changes in the net asset value. The Fund's investment
global markets in or near recession and return and principal value will fluctuate so that the Fund's shares, when
the U.S. economy expanding more slowly, redeemed, may be worth more or less than their original cost. Source: Towers
companies will be sorely tested to keep Data Systems HYPO/REGISTERED TRADEMARK/.
earnings advancing. The Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a group of
unmanaged securities widely regarded by investors to be representative of the
Q. AND WHAT DO YOU THINK ABOUT THE MIDCAP stock market in general. Results shown assume the reinvestment of dividends. The
MARKET SECTOR WHERE THE FUND INVESTS? Standard & Poor's 400 Mid-Cap Index (S&P 400) is an unmanaged index comprising
A. Here are three reasons for our common stocks of approximately 400 mid-capitalization companies. The unmanaged
optimism about mid-cap stocks: Lipper Capital Appreciation Fund Index represents an average of the performance
. For the quarter ended September 30, of the 30 largest capital appreciation mutual funds. Data for the S&P 500 and
1998, reported earnings growth for the Lipper Index are for the period 4/30/93-12/31/98.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
28 AIM V.I. CAPITAL APPRECIATION FUND
143
APPENDIX IV
AIM V.I. INTERNATIONAL EQUITY FUND DISCUSSION AND ANALYSIS
Reproduced below is a discussion of the performance of AIM V.I. International
Equity Fund for the fiscal year ended December 31, 1998, that was prepared by
its officers and A I M Advisors, Inc. and included in its Annual Report dated
December 31, 1998.
The Managers' Overview
EUROPE SHELTERS FUND
FROM GLOBAL STORMS
A roundtable discussion with the Fund management team for AIM V.I. International
Equity Fund for the fiscal year ended December 31, 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Q. GLOBAL MARKET VOLATILITY DOMINATED --------------------------------- than in the United States, and investors
FINANCIAL NEWS IN 1998. HOW DID THE FUND could get that growth at a cheaper price.
PERFORM? Strong performance Europe's market environment has been
A. Despite the difficult environment, helped by the strict monetary and
including a major correction in world from European stocks provided budgetary policies required of countries
equity markets during August, the Fund joining the European Economic and Monetary
achieved excellent results. Strong the biggest boost to Union (EMU). Investors have benefited from
performance from European stocks provided a decrease in interest rates, lower
the biggest boost to the Fund's the Fund's performance inflation, and an increase in
performance. For the fiscal year ended privatization. Furthermore, the
December 31, 1998, total return was --------------------------------- introduction of a single currency (the
15.49%, besting the Lipper International euro), has prodded European companies
Fund Index, which posted a gain of 12.66%. riskiness of all emerging markets. Such toward more competitive practices, and the
The overall index for international negative sentiment led to massive outflows results are starting to appear on the
markets--the EAFE--achieved a total return of capital in Latin America. With the bottom line.
of 20.00% for the reporting period. additional stress of falling commodity
prices, Latin American markets ended 1998 Q. HOW HAVE YOU MANAGED THE PORTFOLIO IN
Q. WHY WAS MARKET TURMOIL SO PERVASIVE? with some of the world's worst performance THIS ENVIRONMENT?
A. The trouble began in Asia, where results. A. We've maintained our focus on earnings
devalued currencies plus billions in bad growth and on diversification. The
loans limited the region's ability to Q. IS THERE ANY INDICATION THAT THE ASIAN portfolio was invested in 142 holdings,
purchase goods and raw materials from the CRISIS IS ABATING? representing companies found in 25
world's sellers. In addition, cash- A. Toward the end of the reporting period, different countries.
strapped Asian companies flooded global Asian markets took an upturn. Interest By the end of the reporting period, we
commodities markets with their rates were falling and some currencies were still finding great opportunities in
inventories. The combination of oversupply were stabilizing. Reform efforts in South Europe, with France and the United Kingdom
and weakened demand caused prices to Korea and Thailand have been particularly bringing in some of the strongest results.
plummet, contributing to worldwide impressive. A favorite was French company Cap Gemini,
deflation. However, the first hints of stabiliza- one of Europe's biggest information-
Meanwhile, investors worried over news tion do not necessarily indicate certain systems companies.
of Russia's overwhelming government debt recovery. As 1998 came to a close, We had limited exposure to Japan, where
and the speculative borrowing practiced by economic conditions and corporate earnings many companies' earnings are not yet
its private banks. In August, Russia were still quite weak throughout the meeting our expectations. We've also
attempted to stabilize the banking system region. Inadequate bank reform efforts in drastically reduced our holdings in non-
by floating the ruble and suspending Japan continued to send warning signs to Japan Asia, focusing on the few companies
repayment of much of its foreign debt. investors. that have produced consistent earnings
These events spurred a global flight to growth despite the difficult operating
quality, resulting in a broad-based sell- Q. WHY HAVE EUROPE'S MARKETS STAYED STRONG? environment. As of the end of December, we
off. A. Europe did suffer during the summer's had no holdings in Malaysia, where capital
global downturn, but the markets almost controls have been in effect since the
Q. HOW DID LATIN AMERICAN MARKETS FARE? completely recovered during the fourth fall of 1998.
A. After watching currency devaluations quarter. For most of 1998, corporate In Latin America, our emphasis was on
and debt defaults in Asia and Russia, earnings growth in Europe was stronger defensive names with limited dollar debt,
investors began to re-evaluate the solid cash flows, and reliable management.
120 AIM V.I. INTERNATIONAL EQUITY FUND
144
GROWTH OF A $10,000 INVESTMENT AVERAGE ANNUAL TOTAL RETURN PORTFOLIO COMPOSITION
From 5/2/93--12/31/98 As of 12/31/98 As of 12/31/98, based on total net assets
AIM V.I. Lipper Inception (5/2/93) 13.36% TOP 10 EQUITY HOLDINGS
International International
Equity Fund EAFE Fund Index 1 Year 15.49 1. Pinault-Printemps-Redoute
(In thousands) S.A. (France) 1.42%
5/2/93 10,000 10,000 10,000 2. Verenigde Nederlandse
6/93 9,880 10,057 10,030 Uitgeversbedrijven
12/93 11,890 10,831 12,188 Verenigd Bezit
6/94 11,620 11,797 12,163 (Netherlands) 1.41
12/94 11,698 11,704 12,098 3. Cap Gemini Sogeti S.A.
6/95 12,670 12,027 12,398 (France) 1.39
12/95 13,714 13,056 13,311 4. Karstadt A.G. (Germany) 1.35
6/96 15,501 13,665 14,465 5. Nokia Oyj A.B.-Class A
12/96 16,464 13,886 15,231 (Finland) 1.33
6/97 18,387 15,464 17,355 6. Allied Irish Banks PLC
12/97 17,606 14,172 16,335 (United Kingdom) 1.31
6/98 20,916 16,451 18,198 7. Vodafone Group PLC
12/98 20,333 17,053 18,403 (United Kingdom) 1.25
Past performance cannot guarantee comparable future results. 8. Banque Nationale de Paris
(France) 1.23
Market volatility can significantly affect short-term performance. Results 9. Rentokil Initial PLC
of an investment made today may differ substantially from the historical (United Kingdom) 1.17
performance shown. 10. Kingfisher PLC (United
Kingdom) 1.17
The performance figures shown represent the AIM V.I. International Equity
Fund. They are not intended to reflect actual annuity values, and they do TOP 10 INDUSTRIES
not reflect charges at the separate account level which, if applied, would
lower the performance results. The Fund's performance figures are 1. Banks (Major Regional) 10.31%
historical and reflect reinvestment of all distributions and changes in the 2. Telephone 6.92
net asset value. The Fund's investment return and principal value will 3. Retail (Food Chains) 5.17
fluctuate so that Fund shares, when redeemed, may be worth more or less 4. Services (Commercial &
than their original cost. Source: Towers Data Systems Hypo--Registered Trademark--. Consumer) 5.39
The EAFE--Registered Trademark-- (Europe, Australasia, and the Far East) 5. Manufacturing (Diversified) 4.66
Index is a group of unmanaged foreign securities tracked by Morgan Stanley 6. Foods 4.40
Capital International. The unmanaged Lipper International Fund Index 7. Computers (Software &
represents an average of the performance of the 30 largest international Services) 3.72
mutual funds. Lipper Inc. is an independent mutual funds performance 8. Insurance (Multi-line) 3.57
monitor. Data for the indexes are for the period 4/30/93-12/31/98. 9. Telecommunications
An investment cannot be made in any index listed. Index results include (Cellular/Wireless) 3.43
reinvested dividends. 10. Electric Companies 2.99
International investing presents certain risks not associated with
investing solely in the United States. These include risks relating to TOP 10 COUNTRIES
fluctuations in the value of the U.S. dollar relative to the values of
other currencies, the custody arrangements made for the Fund's foreign 1. United Kingdom 18.00%
holdings, differences in accounting, political risks, and the lesser degree 2. France 16.11
of public information required to be provided by non-U.S. companies. 3. Japan 7.68
4. Netherlands 6.94
Q. WHAT IS YOUR OUTLOOK FOR THE NEAR TERM? and investor confidence--may begin to 5. Italy 6.24
A. Following the introduction of the euro return some time late in the year. When 6. Canada 5.55
in January, Europe may experience a and if that happens, of course, depends on 7. Germany 5.13
certain degree of uncertainty during the external demand and on the strength of 8. Switzerland 4.35
first quarter of 1999. There is some U.S., European and Japanese economies. 9. Belgium 3.25
question about how strong the euro should Japan may be the next great market 10. Spain 2.96
be relative to the U.S. dollar, and there recovery story, but we are still in a wait-
may be some volatility in currency markets and-see mode. Please keep in mind that the Fund's
as a result. But we expect most of the Latin America may remain quite volatile. portfolio composition is subject to change
wrinkles to be ironed out fairly quickly. We will continue to take a defensive and there is no assurance the Fund will
Many analysts think Asia will finally position until the economic environment continue to hold any particular security.
hit bottom in 1999, indicating that growth-- improves significantly.
AIM V.I. INTERNATIONAL EQUITY FUND
121
145
APPENDIX V
AIM V.I. DIVERSIFIED INCOME FUND DISCUSSION AND ANALYSIS
Reproduced below is a discussion of the performance of AIM V.I. Diversified
Income Fund for the fiscal year ended December 31, 1998, that was prepared by
its officers and A I M Advisors, Inc. and included in its Annual Report dated
December 31, 1998.
The Managers' Overview
FUND CONTENDS WITH EXTREMELY
NARROW BOND MARKET
A roundtable discussion with the Fund management team for AIM V.I. Diversified
Income Fund for the fiscal year ended December 31, 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Q. THE BOND MARKET WAS VERY NARROW FOR Q. HOW DID U.S. DOMESTIC INVESTMENT-GRADE -----------------------
MUCH OF THE YEAR. HOW DID AIM V.I. BONDS FARE?
DIVERSIFIED INCOME FUND PERFORM? A. In the U.S., Treasury securities rose . . . we remain confident that
A. An extremely narrow market environment, in price, sending their yields to historic
favoring the highest-rated government lows. For example, the yield of the our diversified approach to investing
bonds--particularly U.S. Treasury benchmark 30-year Treasury bond fell from
securities--detracted from the Fund's 5.92% at the beginning of the year to will enhance returns and reduce risks
performance. For the year ended 4.71% on October 5--its lowest level since
December 31, 1998, total return was 3.58%. this issue came into existence in 1977-- over the long term.
before ending 1998 at 5.09%.
Q. WHY WAS THE BOND MARKET SO NARROW? While the Treasury market rallied, -----------------------
A. An assortment of global crises created other investment-grade bonds appreciated
an aversion to risk among investors. less dramatically in value. Investment Treasuries and investment-grade corporate
These crises included severe economic grade corporate bonds, for example, bonds began to contract, but remained
problems in Asia, Russia and Latin underperformed Treasuries because of relatively wide at the end of the year.
America as well as political controversy declining company profits and an
in the United States. In this unsettled overabundance of supply. That caused the Q. WHAT ABOUT HIGH-YIELD BONDS?
market environment, investors flocked yield differentials between Treasuries A. High-yield bonds were among the asset
to U.S. Treasury securities and foreign and investment-grade corporate bonds to classes most adversely affected by the
government issues because of their widen substantially. flight to quality. The performance of
relative safety and liquidity. Such a However, the Federal Reserve Board this sector had been solid early in the
phenomenon is known as a "flight to (the Fed), in an effort to infuse year when economic growth was robust and
quality." liquidity back into the broader financial corporate profits were strong.
market, cut interest rates three times However, it deteriorated significantly
Q.DID YOU CHANGE YOUR INVESTMENT STRATEGY, in the fall. Yield spreads between after April in the
GIVEN THE UNUSUAL MARKET ENVIRONMENT?
A. No, we adhered to our disciplined PORTFOLIO COMPOSITION
strategy of investing in three major bond
classes: domestic investment-grade bonds, As of 12/31/98, based on total net assets
high-yield securities and global bonds.
We believe the unusual narrowness that TOP FIVE BOND HOLDINGS
pervaded the global bond market during COUPON MATURITY %
much of the reporting period will 1. LKB Global 6.00% 01/2026 2.09% Pie chart
eventually give way to more normal 2. ConAgra Inc. 7.125 10/2026 1.44
conditions. Moreover, we remain confident 3. Coca-Cola Enterprises, Inc. 7.24 06/2020 1.33 Foreign bonds 33.61%
that our diversified approach to 4. International Bank for Investment-grade
investing will enhance returns and reduce Reconstruction & Development 7.25 05/2003 1.26 bonds 33.30%
risk over the long term. 5. Mercantile Bancorp, Inc. 7.30 06/2007 1.14 High-yield bonds 26.78%
At the end of the reporting period, Other 6.31%
the Fund's total net assets were divided
as follows: domestic investment grade
bonds, 33.30%, high-yield bonds, 26.78%; Please keep in mind that the Fund's portfolio composition is subject to change and
global bonds, 33.61%; and other assets, there is no assurance the Fund will continue to hold any particular security.
6.31%.
AIM V.I. DIVERSIFIED INCOME FUND 53
146
wake of declining corporate profit RESULTS OF A $10,000 INVESTMENT
growth and rising default rates. The
performance of high-yield bonds perked up From 5/5/93-12/31/98
following the Fed's rate cuts, but it was
still lackluster for the year. We believe AIM V.I. Diversified Lehman Brothers AVERAGE ANNUAL TOTAL RETURNS
the drop in high-yield bond prices could Income Fund Aggregate Bond Index As of 12/31/98
create some attractive buying (in thousands)
opportunities in this sector. 5/5/93 $10,000 $10,000 Inception (5/5/93) 7.38%
12/93 10,605 10,466
Q. WHAT WERE SOME OF THE MAJOR THEMES 12/94 10,068 10,160 5 Years 7.12
IN THE GLOBAL BOND MARKET? 12/95 11,982 12,037
A. Europe and other developed markets 12/96 13,204 12,474 1 Year 3.58%
were relative safe havens from the 12/97 14,444 13,679
economic turmoil that swept across other 12/98 14,961 14,867
parts of the world during the year. In
most developed countries, higher-rated Past performance cannot guarantee comparable future results.
bonds were the beneficiaries of a low-
inflation, low-interest-rate environment Market volatility can significantly affect short-term performance. Results of
and the efforts of foreign governments to an investment made today may differ substantially from the historical
balance their budgets and reduce deficits. performance shown.
Bond markets we liked included the United
Kingdom, Canada, Germany and New Zealand. The performance figures shown represent the AIM V.I. Diversified Income Fund
For much of 1998, the U.S. dollar was and are not intended to reflect actual annuity values, and do not reflect
strong relative to most other major charges at the separate account level which, if applied, would lower the
currencies, although it did weaken toward performance results. The Fund's performance figures are historical and
the end of the fiscal year. The general reflect reinvestment of all distributions and changes in net asset value. The
strength of the dollar diminished returns Fund's investment return and principal value will fluctuate so that Fund
for U.S. investors. We mitigated the shares, when redeemed, may be worth more or less than their original cost.
effect of a strong dollar by selectively Source: Towers Data Systems HYPO(REGISTERED TRADEMARK).
hedging some of the Fund's currency The Lehman Aggregate Bond Index is an unmanaged index generally
exposure. considered representative of treasury, agency, corporate, and mortgage-backed
Russia's default in August had a debt securities. Index performance is from 4/30/93 through 12/31/98. Source:
disastrous impact on emerging market debt, Lehman Brothers.
which was already languishing as a result An investment cannot be made in any index listed. Index results
of the economic malaise in Asia. However, include reinvested dividends.
the poor performance of emerging-market Higher-yielding, lower-rated corporate bonds, commonly known as "junk
debt was of little consequence to the Fund bonds," have a greater risk of price fluctuation and loss of principal and
since it invests primarily in developed income than U.S. Treasury securities, which offer a government guarantee as
markets and had no exposure to Russia. to the repayment of principal and interest if held to maturity. Purchasers
should carefully assess the risks associated with an investment in this Fund.
Q. HOW WAS THE FUND STRUCTURED AT THE END International investing presents certain risks not associated with
OF THE REPORTING PERIOD? investing solely in the United States. These include risks relating to
A. The Fund had 180 holdings as of fluctuations in the value of the U.S. dollar relative to the values of other
December 31, 1998. The weighted average currencies, the custody arrangements made for the Fund's foreign holdings,
maturity of the portfolio was 11.30 years differences in accounting, political risks, and the lesser degree of public
and its duration was 6.60 years. information required to be provided by non-U.S. companies.
Q. WHAT IS YOUR OUTLOOK? to promote liquidity in the market. Regardless of market trends, we plan to
A. At the close of the fiscal year, the Moreover, other leading economic powers stick to our strategy of investing in
environment appeared favorable for bonds along with the United States were domestic investment-grade, high-yield and
in the United States, Europe and other pursuing policies aimed at creating a global bonds in an effort to reduce risk
developed countries. Perhaps most favorable global investment climate. In and enhance potential return.
important, inflation and interest rates late October, the Group of Seven
were low. Economic growth was still nations--the United States, the United
healthy, although it was expected to Kingdom, Canada, Germany, Italy, France
moderate in the months ahead. and Japan--approved a plan designed to
While the concerns that precipitated prop up financial markets in developing
the flight to Treasuries were still nations. That plan allows the International
lurking in the background, the Fed Monetary Fund to provide loans to
appeared ready to make additional financially troubled countries before
interest rate cuts, if deemed necessary, foreign investors pull out.
54 AIM V.I. DIVERSIFIED INCOME FUND
147
APPENDIX VI
AIM V.I. GOVERNMENT SECURITIES FUND DISCUSSION AND ANALYSIS
Reproduced below is a discussion of the performance of AIM V.I. Government
Securities Fund for the fiscal year ended December 31, 1998, that was
prepared by its officers and A I M Advisors, Inc. and included in its
Annual Report dated December 31, 1998.
The Managers' Overview
FUND PROVIDES STABILITY IN
TURBULENT MARKET ENVIRONMENT
A roundtable discussion with the Fund management team for AIM V.I. Government
Securities Fund for the fiscal year ended December 31, 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Q. IT WAS A VOLATILE TIME FOR EQUITY AND PORTFOLIO COMPOSITION we spread the Fund's assets among U.S.
FIXED-INCOME MARKETS ALIKE. HOW DID THE government bonds that have a variety of
FUND PERFORM DURING THE TWELVE MONTHS As of 12/31/98, based on total investments maturities and coupon rates. However, it
ENDED DECEMBER 31, 1998? is not unusual to re-allocate some of our
A. Despite an environment rife with Pie Chart assets into securities that may respond
turmoil and volatility, AIM V.I. favorably to the existing market
Government Securities Fund stayed in line Mortgage-Backed Obligations 68.46% conditions.
with its primary objective of providing a U.S. Treasury Obligations 15.78% As a general rule, the shorter the
steady flow of income while preserving U.S. Agency Obligations 10.54% time period before a securities' maturity
capital. For the fiscal year ended Cash Equivalent 5.22% the less volatile its price and yield.
December 31, 1998, the Fund's total Thus, in times of uncertainty in the bond
return was 7.73%. Please keep in mind that the Fund's market, the Fund may allocate more assets
portfolio composition is subject to change toward shorter-term securities, like five
Q. WHAT WERE THE MAJOR FACTORS INFLUENCING and there is no assurance the Fund will year notes, to help temper the volatility
THE INVESTING ENVIRONMENT DURING 1998? continue to hold any particular security. of the Fund's portfolio and protect
A. In general, the reporting period was a capital.
tumultuous one as the Asian economic At the same time, mortgage-backed
crisis that began in the latter half of beneficiaries of this volatile investment securities and bonds with longer
1997 spent 1998 intermittently wreaking environment were the government bonds in maturities, like 10-year U.S. Treasury
havoc in both equity and fixed income the United States and the industrialized notes, are more susceptible to price
markets. Certainly this was most evident nations in Europe. As these securities are fluctuations in a volatile market. While
in August and September when a combination backed by the full faith and credit of this creates a relatively greater risk, it
of factors stemming from Asia resulted in their governments, they were viewed as a also offers greater opportunity for income
a fear-driven global flight from all forms safe haven throughout this time of unrest. and growth of capital. In times of market
of investment risk. Markets eventually rebounded after a stability, the Fund may allocate a greater
In a matter of weeks aspirations for series of interest rate cuts by the amount of its assets to these types of
total returns were replaced with those of Federal Reserve Board (the Fed.) However, securities to take advantage of yield and
preservation of capital. Investors the effects of the market sell-off left total return opportunities.
abandoned riskier securities causing many investors wary. As investors had Overall, our primary goal is to
equity and nongovernment bond markets watched the value of riskier securities provide a product for the investor that
around the world to tumble. The chief plummet, many saw fit to diversify their will maintain a low level of volatility
assets by adding a relatively more stable while producing competitive returns.
--------------- asset in their portfolio, such as AIM V.I. Through diversification, the Fund strives
Government Securities Fund, to dampen to combine the average price volatility of
Our primary goal is to provide market volatility. a five-year Treasury note with the
distribution yield of a thirty-year
a product for the investor that will Q. HOW DOES THE FUND'S STRATEGY COMPENSATE Treasury bond.
FOR TIMES OF MARKET UNCERTAINTY?
maintain a low level of volatility while A. Diversification is a key element in Q.HOW WAS THIS INVESTMENT STRATEGY
weathering market volatility. As a result UTILIZED DURING THE VOLATILTY IN AUGUST
producing competitive returns. AND SEPTEMBER?
A. As market volatility typically results
--------------- in a demand for the relatively safer
securities like U.S. Treasuries, we
reduced our exposure to mortgage-backed
securities while reallocating a portion of
our assets
78 AIM V.I. GOVERNMENT SECURITIES FUND
148
in Treasuries. This proved beneficial for Q. WHAT IS YOUR OUTLOOK FOR THE NEAR-TERM? As in 1998, the devaluation of a currency
the Fund as the third quarter witnessed a A. While it appeared at the mid-point of or a similar economic crisis could result
surging demand for Treasuries. this year that the robust economic growth in investors rushing back into the U.S.
might result in an increase in the Federal Treasury market and additional rate cuts.
Q. HOW DID FALLING INTEREST RATES AFFECT Funds rate, it soon became apparent that On the domestic front, most analysts
THE FUND'S HOLDINGS IN MORTGAGE BACKED Asia's economic struggles and their expect a slowdown in U.S. economic growth
SECURITIES? effects on the global marketplace would and a continuation of relatively low
A. Historically, the Fund maintains a not allow for such action. Instead, the inflation. Historically, these conditions
substantial weighting in mortgage-backed Fed cut short-term rates by 0.75% in the have proven beneficial for bond investors
securities as they can provide a yield final months of 1998 to enhance worldwide Regardless of what the coming year may
that is generally higher than intermediate- liquidity. In addition, the Fed has made bring, AIM V.I. Government Securities Fund
term Treasury securities. Despite the fact it clear that it will not hesitate to will strive to tailor the portfolio to
that the Fed cut rates three times during lower rates again if need dictates. market conditions as they change
the Fall--causing longer-term interest Uncertainty still remains regarding Japan throughout the coming year. In doing so,
rates to fall in tandem--the Fund did not and the emerging markets of Asia and Latin the Fund will endeavor to provide the same
suffer any serious setbacks. This can be America, specifically in China and Brazil. stability and level of income it has in
largely attributed to the research the past.
intensive approach we take in selecting
these securities. Using thorough research, GROWTH OF A $10,000 INVESTMENT
the Fund targets mortgages which are less
likely to be refinanced. While mortgage From 5/5/93-12/31/98
refinancings did increase on the whole
during the fall, we found that our careful Lehman Brothers
selection process sufficiently reduced the AIM V.I. Government Intermediate
impact of refinancings on the Fund. Securities Fund Government Bond Index
(In thousands)
Q. HOW WAS THE FUND POSITIONED AT THE END 5/5/93 $10,000 $10,000
OF THE REPORTING PERIOD? 12/93 10,355 10,346 AVERAGE ANNUAL TOTAL RETURN
A. The third-quarter flight from risk 6/94 9,922 10,098
caused prices of mortgage-backed 12/94 9,969 10,165 As of 12/31/98
securities to decline. As prices declined, 6/95 10,935 11,083
yields on these securities rose 12/95 11,520 11,632 Inception (5/5/93) 5.76%
considerably in relation to Treasury 6/96 11,316 11,630 5 Years 5.80
yields. With low prices and attractive 12/96 11,784 12,104 1 Year 7.73
yields, the mortgage-backed markets were 6/97 12,094 12,438
awash with bargains. As it became clear 12/97 12,745 13,039
that investor confidence was returning and 6/98 13,211 13,479
that the Treasury rally was in its final 12/98 13,730 14,143
stages, management was able to reduce its
weighting in the lower-yielding Treasury
securities and add value to the portfolio Market volatility can significantly affect short-term performance. Results of an
with underpriced, higher-yielding mortgage- investment made today may differ substantially from the historical performance
backed securities. shown.
Typically, we like an asset allocation
of approximately 60% Mortgages, 25% U.S. The performance figures shown represent the AIM V.I. Government Securities Fund
Treasury securities, 10% U.S. Agency and are not intended to reflect actual annuity values, and do not reflect
obligations, and 5% cash and cash charges at the separate account level which, if applied, would lower the
equivalents. As you can see from the performance results. The Fund's performance figures are historical and reflect
accompanying pie chart, we have returned reinvestment of all distributions and changes in the net asset value. The Funds'
the portfolio close to the levels that the investment return and principal value will fluctuate so that Fund shares, when
Fund prefers. redeemed, may be worth more ore less than their original cost. Source: Tower
Data Systems HYPO/Registered Trademark/.
The Lehman Brothers Intermediate Government Bond Index is an unmanaged
composite generally considered representative of intermediate U.S. Treasury and
U.S. government agency securities. Results shown here are for the period 4/30/93
through 12/31/98. Source: Lipper Analytical Services, Inc. Index results are for
the period 4/30/93-12/31/98.
An Investment cannot be made in the indexes listed. Index results include
reinvested dividends.
AIM V.I. GOVERNMENT SECURITIES FUND 79
149
APPENDIX VII
AIM V.I. MONEY MARKET FUND DISCUSSION AND ANALYSES
Reproduced below is a discussion of the performance of AIM V.I. Money Market
Fund for the fiscal year ended December 31, 1998, that was prepared by its
officers and A I M Advisors, Inc. and included in its Annual Report dated
December 31, 1998.
The Managers' Overview
FUND PRODUCES COMPETITIVE YIELDS
IN 1998'S VOLATILE MARKETS
A roundtable discussion with the Fund management team for AIM V.I. Money Market Fund
for the fiscal year ended December 31, 1998.
- ------------------------------------------------------------------------------------------------------------------------------------
Q. HOW DID THE AIM V.I. MONEY rate by 0.25% on September 29. Few people
MARKET FUND PERFORM DURING THE were assuaged by the action. Two weeks -----------------
FISCAL YEAR? later, in an unusual inter-meeting move,
A. In a year of record market volatility the Fed lowered the federal funds rate and . . . the Fed appears to
and uncertainty among investors, the the discount rate by 0.25%, and a fierce
Fund's management team maintained a market rally ensued. Both rates were low- have adopted a "wait and see" attitude
weighted average maturity (WAM) in the ered by 0.25% again in November. The
14- to 23-day range. As of December 31, yield on the one-year U.S. Treasury bill, because inflation sits
1998, the WAM stood at 21 days and the which was as high as 5.32% in early July,
seven-day yield for the Fund was 4.56%. dropped to 4.37% in early December. By at its lowest point in more than
the close of the fiscal year, markets were
Q. WHY WAS THERE SO MUCH VOLA- enjoying relative equilibrium. At their a decade . . .
TILITY IN 1998? final policy meeting of the year, the Fed
A. Throughout the first half of the year, opted to leave interest rates alone for the -----------------
markets were influenced by anticipation time being.
that the Federal Reserve Board (the Fed) Q. HOW WILL THE FUND RESPOND TO
would raise interest rates in light of the Q. WHAT IS THE MARKET OUTLOOK THIS ENVIRONMENT?
continued feverish growth of the U.S. FOR 1999? A. The Fund's short weighted average
economy. In late July testimony before A. At the close of the fiscal year, the maturity makes it capable of responding
Congress, Fed Chairman Alan Greenspan consumer price index was on track to record quickly to any change in rates. It can
intimated that the potential threat of its smallest annual increase since 1986, take advantage of any reversal in
inflation could lead the Fed to raise when the index rose just 1.1%. The U.S. interest rates to provide competitive
interest rates. economy exceeded many forecasts and yield while maintaining a conservative
Market sentiment shifted over the sum- grew by 3.3% during the third quarter. position with respect to interest-rate
mer amid myriad financial troubles in And while the Fed appears to have adopt- risk.
Japan, Asia and Latin America; Russia's ed a "wait and see" attitude because infla-
effective default on its government debt; tion sits at its lowest point in more than The Consumer Price Index is
and the widely noted collapse of several a decade, some analysts expect more rate a measure of change in consumer
hedge funds. In the fall, when the threat cuts in the coming year as the U.S. econo- prices as determined by the U.S.
of a global credit crunch loomed, the Fed my continues to slow and world markets Bureau of Labor Statistics.
finally lowered interest rates to pump liq- continue to recover.
uidity and confidence into the markets and After offering some disappointments An investment in the Fund
demonstrated that it would intervene to as the year came to a close, corporate is not a deposit of a bank
forestall a recession in the United States. profits in the United States are expected and is not insured or
to be mixed and unemployment on the rise guaranteed by the Federal
Q. WHAT HAPPENED TO INTEREST RATES? in 1999. Since experiencing the markets' Deposit Insurance Corporation
A. In an attempt to calm the nerves of roller coaster ride in 1998, many analysts or any other government agency.
investors who were shifting their money also believe that high volatility may be There can be no assurance that
from equity markets to any security con- here to stay, as companies prepare to the Fund will be able to maintain
sidered liquid--a worldwide flight to compete in this new, uncertain a stable net asset value
quality--the Fed cut the federal funds environment. of $1.00 per share.
AIM V.I. MONEY MARKET FUND 131
150
GT GLOBAL VARIABLE INVESTMENT SERIES
GT GLOBAL VARIABLE INVESTMENT TRUST
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
Toll Free: (800) 454-0327
AIM VARIABLE INSURANCE FUNDS, INC.
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
Toll Free: (800) 454-0327
STATEMENT OF ADDITIONAL INFORMATION
(1999 Special Meeting of Shareholders of the Acquired Funds)
This Statement of Additional Information ("SAI") is not a prospectus, but you
should read it in conjunction with the Combined Proxy Statement and Prospectus
dated July 25, 1999 of GT Global Variable Investment Series ("GT Series"), GT
Global Variable Investment Trust ("GT Trust") and AIM Variable Insurance Funds,
Inc. ("AVIF"), for use in connection with the Special Meeting of Shareholders of
the following investment portfolios of GT Series and of GT Trust (the "Acquired
Funds") to be held on August 25, 1999:
GT Global Variable Growth & Income Fund
GT Global Variable America Fund
GT Global Variable International Fund
GT Global Variable Europe Fund
GT Global Variable Natural Resources Fund
GT Global Variable Infrastructure Fund
GT Global Variable New Pacific Fund
GT Global Variable Latin America Fund
GT Global Variable Emerging Markets Fund
GT Global Variable Telecommunications Fund
GT Global Variable Strategic Income Fund
GT Global Variable Global Government Income Fund
GT Global Variable U.S. Government Income Fund
GT Global Money Market Fund
For a free copy of the Combined Proxy Statement and Prospectus, please write GT
Series and GT Trust at the address shown above or call 1-800-347-4246. Unless
otherwise indicated, capitalized terms used in this SAI and not otherwise
defined have the same meanings as are given to them in the Combined Proxy
Statement and Prospectus.
1
151
This Statement of Additional Information consists of this cover page, Pro Forma
Financial Statements of the Acquiring Funds giving effect to the
Reorganizations, and the following described documents, each of which is
attached hereto and incorporated herein by reference:
1. Statement of Additional Information for AVIF dated May 3, 1999;
2. Annual Report of GT Global Variable Investment Series for period ended
December 31, 1998; and
3. Annual Report of GT Global Variable Investment Trust for period ended
December 31, 1998.
The date of this Statement of Additional Information is July 25, 1999.
2
152
STATEMENT OF
ADDITIONAL INFORMATION
A I M V A R I A B L E I N S U R A N C E F U N D S, I N C.
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TX 77046-1173
(713) 626-1919
AIM V.I. AGGRESSIVE GROWTH FUND AIM V.I. BALANCED FUND
AIM V.I. CAPITAL APPRECIATION FUND AIM V.I. CAPITAL DEVELOPMENT FUND
AIM V.I. DIVERSIFIED INCOME FUND AIM V.I. GLOBAL GROWTH AND INCOME FUND
AIM V.I. GLOBAL UTILITIES FUND AIM V.I. GOVERNMENT SECURITIES FUND
AIM V.I. GROWTH AND INCOME FUND AIM V.I. GROWTH FUND
AIM V.I. HIGH YIELD FUND AIM V.I. INTERNATIONAL EQUITY FUND
AIM V.I. MONEY MARKET FUND AIM V.I. TELECOMMUNICATIONS FUND
AIM V.I. VALUE FUND
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS, WHICH
MAY BE OBTAINED FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC., P. O. BOX 4739,
HOUSTON, TX 77210-4739
OR BY CALLING (713) 626-1919 (HOUSTON RESIDENTS)
OR (800) 347-1919 (ALL OTHERS).
--------------------
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 3, 1999
RELATING TO PROSPECTUS DATED: MAY 3, 1999
153
TABLE OF CONTENTS
PAGE
INTRODUCTION......................................................................................................1
GENERAL INFORMATION ABOUT THE FUNDS...............................................................................1
The Company and Its Shares...............................................................................1
PERFORMANCE.......................................................................................................2
Total Return Calculations................................................................................2
Historical Portfolio Results.............................................................................2
Yield Information........................................................................................3
PORTFOLIO TRANSACTIONS AND BROKERAGE..............................................................................4
General Brokerage Policy.................................................................................4
Section 28(e) Standards..................................................................................6
Portfolio Turnover.......................................................................................8
Brokerage Commissions Paid...............................................................................8
INVESTMENT STRATEGIES AND RISKS...................................................................................8
Aggressive Growth Fund...................................................................................9
Balanced Fund............................................................................................9
Capital Appreciation Fund...............................................................................10
Capital Development Fund................................................................................10
Diversified Income Fund.................................................................................10
Global Growth and Income Fund...........................................................................10
Global Utilities Fund...................................................................................11
Government Securities Fund..............................................................................12
Growth Fund.............................................................................................12
Growth and Income Fund..................................................................................13
High Yield Fund.........................................................................................13
International Equity Fund...............................................................................13
Money Market Fund.......................................................................................14
Telecommunications Fund.................................................................................15
Value Fund..............................................................................................16
CERTAIN INVESTMENT STRATEGIES AND TECHNIQUES.....................................................................16
Money Market Obligations................................................................................16
Repurchase Agreements...................................................................................17
U.S. Government Agency Mortgage-Backed Securities.......................................................17
Convertible Securities..................................................................................18
Real Estate Investments Trusts ("REITs")................................................................18
Foreign Securities......................................................................................19
Foreign Exchange Transactions...........................................................................20
ADRs and EDRs...........................................................................................20
Lending of Portfolio Securities.........................................................................20
Reverse Repurchase Agreements...........................................................................21
Delayed Delivery Agreements and When-Issued Securities..................................................21
Dollar Roll Transactions................................................................................22
Borrowing...............................................................................................23
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Illiquid Securities.....................................................................................23
Special Situations......................................................................................23
Warrants............................................................................................... 23
Short Sales.............................................................................................23
Rule 144A Securities....................................................................................24
Asset Allocation Among Countries........................................................................24
Utilities Industry......................................................................................24
OPTIONS, FUTURES AND CURRENCY STRATEGIES.........................................................................25
Introduction............................................................................................25
General Risks of Options, Futures and Currency Strategies...............................................26
Cover...................................................................................................26
Writing Call Options....................................................................................27
Writing Put Options.....................................................................................27
Purchasing Put Options..................................................................................27
Purchasing Call Options.................................................................................28
Index Options...........................................................................................29
Limitations on Options..................................................................................29
Interest Rate, Currency and Stock Index Futures Contracts...............................................29
Options on Futures Contracts............................................................................30
Forward Contracts.......................................................................................30
Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.....................31
HEDGING AND OTHER INVESTMENT TECHNIQUES..........................................................................31
Options.................................................................................................31
Futures and Forward Contracts...........................................................................34
RISK FACTORS.....................................................................................................36
Small Capitalization Companies..........................................................................36
Non-Investment Grade Debt Securities....................................................................36
Foreign Securities......................................................................................37
Non-diversified Portfolio (Global Utilities Fund Only)..................................................38
INVESTMENT RESTRICTIONS..........................................................................................38
Fundamental Restrictions................................................................................38
Non-fundamental Restrictions............................................................................39
MANAGEMENT.......................................................................................................40
Directors and Officers..................................................................................40
Remuneration of Directors......................................................................43
AIM Funds Retirement Plan for Eligible Directors/Trustees......................................45
Deferred Compensation Agreements...............................................................45
Investment Advisory, Sub-Advisory and Administrative Services Agreements................................46
The Distribution Agreement..............................................................................52
DETERMINATION OF NET ASSET VALUE.................................................................................52
PURCHASE AND REDEMPTION OF SHARES................................................................................55
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS.........................................................................55
MISCELLANEOUS INFORMATION........................................................................................58
Organization of the Company.............................................................................58
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Audit Reports...........................................................................................58
Legal Matters...........................................................................................59
Custodian and Transfer Agent............................................................................59
Principal Holders of Securities.........................................................................59
Other Information.......................................................................................64
APPENDIX A......................................................................................................A-1
APPENDIX B......................................................................................................B-1
APPENDIX C......................................................................................................C-1
FINANCIAL STATEMENTS.............................................................................................FS
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INTRODUCTION
AIM Variable Insurance Funds, Inc. (the "Company") is a mutual fund.
The rules and regulations of the United States Securities and Exchange
Commission (the "SEC") require all mutual funds to furnish prospective
investors certain information concerning the activities of the fund being
considered for investment. This information is included in Prospectuses dated
May 3, 1999 (referred to collectively as the "Prospectuses" and separately as a
"Prospectus"), which relate to one or more of the fifteen series portfolios of
the Company (referred to collectively as the "Funds" and separately as a
"Fund"). One or more of the Company's fifteen Funds may not be available under
a particular variable annuity contract or variable life insurance policy.
Accordingly, this Statement of Additional Information may contain information
that is not relevant to the investment options under such a contract or policy.
Additional copies of the Prospectuses of the Funds available under a contract
or policy and this Statement of Additional Information may be obtained without
charge by contacting the principal distributor of the Funds' shares, A I M
Distributors, Inc. ("AIM Distributors"), P. O. Box 4739, Houston, TX 77210-4739
or by calling (713) 626-1919. Investors must receive a Prospectus before they
invest. To the extent that this Statement of Additional Information contains
information concerning a Fund that is not available under a contract or policy,
the Statement of Additional Information does not constitute the offer of the
shares of that Fund.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds. Some of
the information required to be in this Statement of Additional Information is
also included in the Funds' current Prospectus and, in order to avoid
repetition, reference will be made to sections of the Prospectus. Additionally,
the Prospectus and this Statement of Additional Information omit certain
information contained in the Registration Statement filed with the SEC. Copies
of the Registration Statement, including items omitted from the Prospectus and
this Statement of Additional Information, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE COMPANY AND ITS SHARES
The Company was organized on January 22, 1993, as a Maryland
corporation, and is registered with the SEC as an open-end, series, management
investment company. The Company currently consists of fifteen separate Funds as
follows: the AIM V.I. Aggressive Growth Fund ("Aggressive Growth Fund"), the
AIM V.I. Balanced Fund ("Balanced Fund"), the AIM V.I. Capital Appreciation
Fund ("Capital Appreciation Fund"), the AIM V.I. Capital Development Fund
("Capital Development Fund"), the AIM V.I. Diversified Income Fund
("Diversified Income Fund"), the AIM V.I. Global Growth and Income Fund
("Global Growth and Income Fund"), the AIM V.I. Global Utilities Fund ("Global
Utilities Fund") (formerly known as the AIM V.I. Utilities Fund), the AIM V.I.
Government Securities Fund ("Government Fund"), the AIM V.I. Growth Fund
("Growth Fund"), the AIM V.I. Growth and Income Fund ("Growth and Income
Fund"), the AIM V.I. High Yield Fund ("High Yield Fund), the AIM V.I.
International Equity Fund ("International Fund"), the AIM V.I.
Telecommunications Fund ("Telecommunications Fund"), the AIM V.I. Money Market
Fund ("Money Market Fund"), the AIM V.I. Value Fund ("Value Fund").
Each share of a Fund is entitled to one vote, to participate equally
in dividends and distributions declared by the Board of Directors with respect
to the Fund and, upon liquidation of the Fund, to participate in its
proportionate share of the net assets allocable to the Fund remaining after
satisfaction of outstanding liabilities of the Fund. Fund shares are fully
paid, non-assessable and fully transferable when issued and have no preemptive,
conversion or exchange rights. Fractional shares have proportionately the same
rights, including voting rights, as are provided for a full share.
Shareholders of the Funds do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares of all Funds
voting together for election of directors may elect all of the
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members of the Board of Directors of the Company. In such event, the remaining
holders cannot elect any directors of the Company.
PERFORMANCE
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the
applicable Fund's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in such Fund's net asset value per
share (NAV) over the period. Average annual returns are calculated by
determining the growth or decline in value of a hypothetical investment in a
particular Fund over a stated period, and then calculating the annually
compounded percentage rate that would have produced the same result if the rate
of growth or decline in value had been constant over the period. While average
annual returns are a convenient means of comparing investment alternatives,
investors should realize that a Fund's performance is not constant over time,
but changes from year to year, and that average annual returns do not represent
the actual year-to-year performance of such Fund.
In addition to average annual returns, each Fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total returns
may be quoted as a percentage or as a dollar amount, and may be calculated for
a single investment, a series of investments, and/or a series of redemptions,
over any time period. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in
order to illustrate the relationship of these factors and their contributions
to total return. Total returns and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
HISTORICAL PORTFOLIO RESULTS
The Funds' (except the AIM V.I. Global Growth and Income Fund and the
AIM V.I. Telecommunications Fund) average annual and cumulative total return
for the fiscal year ended December 31, 1998 and average annual and cumulative
total returns for the period May 5, 1993 (commencement of operations) through
December 31, 1998, were as follows:
Since
Inception
-------------------------
Year Ended Average
December 31, Annual Cumulative
1998 Return Return
---- ------ ------
AIM V.I. Aggressive Growth Fund** N/A N/A (0.94)%
AIM V.I. Balanced Fund** N/A N/A 13.02%
AIM V.I. Capital Appreciation Fund 19.30% 18.77% 164.60%
AIM V.I. Capital Development Fund** N/A N/A (7.51)%
AIM V.I. Diversified Income Fund 3.58% 7.38% 49.61%
AIM V.I. Global Utilities Fund* 16.49% 15.44% 95.37%
AIM V.I. Government Securities Fund 7.73% 5.76% 37.30%
AIM V.I. Growth Fund 34.12% 20.87% 192.24%
AIM V.I. Growth and Income Fund* 27.68% 22.49% 157.71%
AIM V.I. High Yield Fund** N/A N/A (7.61)%
AIM V.I. International Equity Fund 15.49% 13.36% 103.33%
AIM V.I. Money Market Fund 5.06% 4.59% 28.89%
AIM V.I. Value Fund 32.41% 21.90% 206.59%
* The inception date of the AIM V.I. Global Utilities Fund and the AIM
V.I. Growth and Income Fund was May 2, 1994.
** The inception date of the AIM V.I. Aggressive Growth Fund, AIM V.I.
Balanced Fund, AIM V.I. Capital Development Fund and AIM V.I. High
Yield Fund was May 1, 1998.
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The total returns quoted above do not reflect charges levied at the
insurance company separate account level. For a complete description of the
applicable charges, see the fee table in the prospectus for the appropriate
insurance company separate account.
Each Fund's performance may be compared in advertising to the
performance of other mutual funds in general, or of particular types of mutual
funds, especially those with similar objectives. Such performance data may be
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. and other
independent services which monitor the performance of mutual funds. The Funds
may also advertise mutual fund performance rankings which have been assigned to
each respective Fund by such monitoring services.
Each Fund's performance may also be compared in advertising to the
performance of comparative benchmarks such as the Consumer Price Index ("CPI"),
the Standard & Poor's ("S&P") 500 Stock Index, and fixed-price investments such
as bank certificates of deposit and/or savings accounts.
The International Fund's performance may also be compared in
advertising to performance of comparative benchmarks such as The Financial
Times--Actuaries World Indices (a wide range of comprehensive measures of stock
price performance for the major stock markets and regional areas), Morgan
Stanley Capital International Indices, including the EAFE Index, Pacific Basin
Index and Pacific Ex Japan Index (a widely recognized series of indices in
international market performance), and indices of stocks comparable to those in
which the Fund invests.
Each Fund's advertising may from time to time include historical
discussions of general economic conditions such as inflation rates and changes
in the stock market, foreign and domestic interest rates and foreign and
domestic political circumstances and events.
In addition, each Fund's long-term performance may be described in
advertising in relation to historical, political and/or economic events.
From time to time, A I M Advisors, Inc. ("AIM") or its affiliates may
waive all or a portion of their fees and/or assume certain expenses of any
Fund. Voluntary fee waivers or reductions or commitments to assume expenses may
be rescinded at any time without further notice to investors. During periods of
voluntary fee waivers or reductions or commitments to assume expenses, AIM will
retain its ability to be reimbursed for such fee prior to the end of each
fiscal year. Contractual fee waivers or reductions or reimbursement of expenses
set forth in the Fee Table in a Prospectus may not be terminated or amended to
the Funds' detriment during the period stated in the agreement between AIM and
the Fund. Fee waivers or reductions or commitments to reduce expenses will have
the effect of increasing that Fund's yield and total return.
The performance of each Fund will vary from time to time and past
results are not necessarily indicative of future results. A Fund's performance
is a function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund and
market conditions. A shareholder's investment in a Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in any Fund.
From time to time, the Funds' sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. This
includes, but is not limited to, literature addressing general information
about mutual funds, variable annuities, variable life insurance, dollar-cost
averaging, stocks, bonds, money markets, certificates of deposit, retirement,
retirement plans, asset allocation, tax-free investing, college planning and
inflation.
YIELD INFORMATION
Quotations of yield on the Money Market Fund may appear from time to
time in the financial press and in advertisements.
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The Money Market Fund's yield is its investment income, less expenses,
expressed as a percentage of assets on an annualized basis for an identified
period, usually seven days. The yield is expressed as a simple annualized yield
and as a compounded effective yield. The yield does not reflect the fees and
charges imposed on the assets of the insurance company separate account.
The standard formulas prescribed by the SEC for calculating yield and
effective yield for the Money Market Fund are described below:
The simple annualized yield is computed by determining the net change
(exclusive of realized gains and losses from the sale of securities, unrealized
appreciation and depreciation, and income other than investment income) in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of the period, dividing the net change in account value by the
value of the account at the beginning of the period, and annualizing the
resulting quotient (base period return) on a 365-day basis. The net change in
account value reflects the value of additional shares purchased with dividends
from the original shares in the account during the period, dividends declared
on such additional shares during the period, and expenses accrued during the
period.
The compounded effective yield is computed by determining the
unannualized base period return, adding one to the base period return, raising
the sum to a power equal to 365 divided by the number of days in the period,
and subtracting one from the result. Historical yields are not necessarily
indicative of future yields. Rates of return will vary as interest rates and
other conditions affecting money market instruments change. Yields also depend
on the quality, length of maturity and type of instruments in the Fund's
portfolio and the Fund's operating expenses. Quotations of yield will be
accompanied by information concerning the average weighted maturity of the
Fund. Comparison of the quoted yields of various investments is valid only if
yields are calculated in the same manner and for identical limited periods.
When comparing the yield for a Fund with yields quoted with respect to other
investments, shareholders should consider (a) possible differences in time
periods, (b) the effect of the methods used to calculate quoted yields, (c) the
quality and average-weighted maturity of portfolio investments, expenses,
convenience, liquidity and other important factors, and (d) the taxable or
tax-exempt character of all or part of dividends received.
The simple annualized yield and compounded effective yield for the
Money Market Fund for the 7 days ended December 31, 1998 were 4.61% and 4.66%,
respectively.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
Subject to policies established by the Board of Directors of the
Company, A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and
sell securities for each Fund, for the selection of broker-dealers, for the
execution of the Fund's investment portfolio transactions, for the allocation
of brokerage fees in connection with such transactions and, where applicable,
for the negotiation of commissions and spreads on transactions. AIM's primary
consideration in effecting a security transaction is to obtain the best net
price and the most favorable execution of the order. While AIM generally seeks
reasonably competitive commission rates, each Fund does not necessarily pay the
lowest commission or spread available.
Purchases and sales of portfolio securities for the Diversified Income
Fund, the Money Market Fund and the Government Fund are generally transacted
with the issuer or a primary market maker. In addition, a portion of the
securities in which the Funds invest may be traded in over-the-counter ("OTC")
markets. In such transactions, the Fund deals directly with the dealers who
make markets in the securities involved, except in those circumstances where
better prices and executions are available elsewhere. Portfolio transactions
placed through dealers serving as primary market makers are effected at net
prices, without commissions as such, but which include compensation to the
dealer in the form of mark up or mark down.
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Traditionally, commission rates have not been negotiated on stock
markets outside the United States. In recent years, however, an increasing
number of overseas stock markets have adopted a system of negotiated rates,
although a number of markets continue to be subject to an established schedule
of minimum commission rates.
Foreign equity securities may be held by the Fund in the form of
American Depositary Receipts ("ADRs") or European Depositary Receipts ("EDRs"),
or other securities representing underlying securities of foreign issuers, or
securities convertible into foreign equity securities. These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. EDRs are receipts issued in Europe which evidence a
similar ownership arrangement. Generally, ADRs, in registered form, are
designed for use in the United States securities markets, and EDRs, in bearer
form, are designed for use in European securities markets. ADRs and EDRs may be
listed on stock exchanges, or traded in OTC markets in the United States or
Europe, as the case may be. ADRs, like other securities traded in the United
States, will be subject to negotiated commission rates.
The Funds are not under any obligation to deal with any broker or
group of brokers in the execution of transactions in portfolio securities.
Brokers who provide supplemental investment research to AIM may receive orders
for transactions by a Fund. Information so received will be in addition to and
not in lieu of the services required to be performed by AIM under its
agreements with the Fund, and the expenses of AIM will not necessarily be
reduced as a result of the receipt of such supplemental information. Certain
research services furnished by broker-dealers may be useful to AIM in
connection with its services to other advisory clients, including the other
mutual funds advised by AIM (collectively with the Funds, the "AIM Funds").
Also, a Fund may pay a higher price for securities or higher commissions in
recognition of research services furnished by broker-dealers.
AIM may from time to time determine target levels of commission
business for AIM to transact with various brokers on behalf of its clients
(including the Funds) over a certain time period. The target levels will be
determined based upon the following factors, among others: (1) the execution
services provided by the broker; (2) the research services provided by the
broker; (3) certain products and/or services provided to the Funds, the cost of
which will be included in Fund expenses reported to shareholders; and (4) the
broker's attitude toward an interest in mutual funds in general and in the
Funds and the other AIM Funds in particular. No specific formula will be used
in connection with any of the foregoing considerations in determining the
target levels. However, if a broker has indicated a certain level of desired
commissions in return for certain research services provided by the broker,
this factor will be taken into consideration by AIM.
Subject to the overall objective of obtaining best price and execution
for the Funds, AIM may also consider sales of shares by broker-dealers of each
Fund and of the other AIM Funds as well as sales of variable annuity contracts
("Contracts") and variable life insurance policies ("Policies") funded through
the Funds ("selling dealers"), as a factor in the selection of broker-dealers
to execute portfolio transactions for a Fund. Such portfolio transactions may
be executed directly by selling dealers or by other broker-dealers with which
selling dealers have clearing arrangements.
AIM will seek, whenever possible, to recapture for the benefit of a
Fund any commissions, fees, brokerage or similar payments paid by the Fund on
portfolio transactions. Normally, the only fees which may be recaptured are the
soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
AIM and its affiliates manage several other investment accounts, some
of which may have investment objectives similar to those of the Funds. It is
possible that, at times, identical securities will be appropriate for
investment by one or more of such investment accounts. The position of each
account, however, in the securities of the same issue may vary and the length
of time that each account may choose to hold its investment in the securities
of the same issue may likewise vary. The timing and amount of purchases by each
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account will also be determined by its cash position. If the purchase or sale
of securities is consistent with the investment policies of a Fund(s) and one
or more of these accounts is considered at or about the same time. AIM may
combine such transactions, in accordance with applicable laws and regulations,
in order to obtain the best net price and most favorable execution.
Simultaneous transactions could, however, adversely affect the ability of a
Fund to obtain or dispose of the full amount of a security which it seeks to
purchase or sell.
These combined transactions, and related brokerage charges, will be
allocated among the Fund(s) and such accounts in a manner consistent with
guidelines and procedures approved by the Company's Board of Directors that are
designed to achieve an equitable manner of allocation. In some cases the
procedure for allocating portfolio transactions among the various investment
accounts advised by AIM could have an adverse effect on the price or amount of
securities available to a Fund. In making such allocations, the main factors
considered by AIM are the respective investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and the judgments of the persons
responsible for recommending the investment.
From time to time, an identical security may be sold by an AIM Fund or
another investment account advised by AIM or A I M Capital Management, Inc.
("AIM Capital") and simultaneously purchased by another investment account
advised by AIM or AIM Capital, when such transactions comply with applicable
rules and regulations and are deemed consistent with the investment
objective(s) and policies of the investment accounts advised by AIM or AIM
Capital. Procedures pursuant to Rule 17a-7 under the Investment Company Act of
1940, as amended (the "1940 Act") regarding transactions between investment
accounts advised by AIM or AIM Capital have been adopted by the Boards of
Directors/Trustees of the various AIM Funds, including the Company. Although
such transactions may result in custodian, tax or other related expenses, no
brokerage commissions or other direct transaction costs are generated by
transactions among the investment accounts advised by AIM or AIM Capital.
SECTION 28(e) STANDARDS
As permitted by Section 28(e) of the Securities Exchange Act of 1934,
AIM may cause a Fund to pay a broker that provides brokerage and research
services to AIM an amount of commission for effecting a securities transaction
for the Fund in excess of the commission another broker would have charged for
effecting that transaction. To obtain the benefit of Section 28(e), AIM must
make a good faith determination that the commissions paid are "reasonable in
relation to the value of the brokerage and research services provided . . .
viewed in terms of either that particular transaction or [its] overall
responsibilities with respect to the accounts as to which [it] exercises
investment discretion" and that the services provided by a broker provide AIM
with lawful and appropriate assistance in the performance of its investment
decision-making responsibilities. Accordingly, the price to a Fund in any
transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered.
Broker-dealers utilized by AIM may furnish statistical, research and
other information or services which are deemed by AIM to be beneficial to the
Funds' investment programs. Research services received from brokers supplement
AIM's own research (and the research of sub-advisors to other clients of AIM)
and may include the following types of information: statistical and background
information on industry groups and individual companies; forecasts and
interpretations with respect to U.S. and foreign economies, securities markets,
specific industry groups and individual companies; information on political
developments; portfolio management strategies; performance information on
securities and information concerning prices of securities; and information
supplied by specialized services to AIM and to the Company's directors with
respect to the performance, investment activities and fees and expenses of
other mutual funds. Such information may be communicated electronically,
orally, in written form or on computer software. Research services may also
include the providing of equipment used to communicate research information,
the arranging of meetings with management of companies and the providing of
access to consultants who supply research information.
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The outside research assistance is useful to AIM since the brokers
utilized by AIM as a group tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, this research provides
AIM with a diverse perspective on financial markets. Research services which
are provided to AIM by brokers are available for the benefit of all accounts
managed or advised by AIM (or by sub-advisors to accounts managed or advised by
AIM). In some cases, the research services are available only from the broker
providing such services. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM is of the
opinion that because the broker research supplements rather than replaces its
research, the receipt of such research does not tend to decrease its expenses,
but tends to improve the quality of its investment advice. However, to the
extent that AIM would have purchased any such research services had such
services not been provided by brokers, the expenses of such services to AIM
could be considered to have been reduced accordingly.
For the fiscal year ended December 31, 1998 certain Funds paid
brokerage commissions to certain brokers for research services. The amount of
such transactions and related commissions paid by each Fund were as follows:
Commissions Transactions
----------- ------------
AIM V. I. Aggressive Growth Fund $ 476 $ 265,096
AIM V. I. Balanced Fund $ 107 $ 73,629
AIM V. I. Capital Appreciation Fund $ 111,070 $ 76,873,344
AIM V. I. Capital Development Fund $ 475 $ 255,434
AIM V. I. Global Utilities Fund $ 1,105 $ 556,721
AIM V. I. Growth Fund $ 58,834 $ 52,124,585
AIM V. I. Growth and Income Fund $ 154,841 $ 136,649,725
AIM V. I. International Equity Fund $ 401 $ 90,510
AIM V. I. Value Fund $ 126,500 $ 120,560,762
As of December 31, 1998, the following Funds entered into
repurchase agreements with the following regular brokers, as that term is
defined in Rule 10b-1 under the 1940 Act, having the noted market values.
GOLDMAN,
FUNDS SACHS & CO.
AIM V.I. Capital Appreciation Fund $ 59,251,734
- ------------------------------------------------------------------
AIM V.I. Diversified Fund $ 2,305,989
- ------------------------------------------------------------------
AIM V.I. Global Utilities Fund $ 2,391,815
- ------------------------------------------------------------------
AIM V.I. Growth Fund $ 31,583,054
- ------------------------------------------------------------------
AIM V.I. Growth and Income Fund $ 35,491,011
- ------------------------------------------------------------------
AIM V.I. International Equity Fund $ 17,938,040
- ------------------------------------------------------------------
AIM V.I. Value Fund $ 77,768,447
- ------------------------------------------------------------------
The following information regarding securities acquired by the Funds
of their regular brokers, as defined in Rule 10b-1 under the 1940 Act, is as of
December 31, 1998. The Balanced Fund, the Growth and Income Fund and the Value
Fund each held an amount of common stock issued by Merrill Lynch & Co. having
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a market value of $20,025, $9,345,000 and $2,670,000, respectively. The Growth
Fund held an amount of common stock issued by PaineWebber Group, Inc. having a
market value of $1,224,413.
PORTFOLIO TURNOVER
The portfolio turnover rate of each Fund is shown under "Financial
Highlights" in the Prospectus. In any particular year, however, market
conditions could result in portfolio activity at a rate greater or lesser than
anticipated. The estimated portfolio turnover rate for the Global Growth and
Income Fund and Telecommunications Fund is less than 100%. Higher portfolio
turnover increases transaction costs to the Fund.
BROKERAGE COMMISSIONS PAID
Brokerage commissions paid by each of the Funds (except the AIM V.I.
Global Growth and Income Fund and the AIM V.I. Telecommunications Fund) listed
below were as follows for the fiscal years ended December 31, 1998, December
31, 1997 and December 31, 1996.
December 31, December 31, December 31,
1998 1997 1996
---- ---- ----
AIM V.I. Aggressive Growth Fund* $ 2,983 N/A N/A
AIM V.I. Balanced Fund* $ 2,241 N/A N/A
AIM V.I. Capital Appreciation Fund $ 1,017,185 $ 644,279 $ 405,056
AIM V.I. Capital Development Fund* $ 3,748 N/A N/A
AIM V.I. Diversified Income Fund $ 282 $ 2,818 $ 1,670
AIM V.I. Global Utilities Fund $ 18,422 $ 12,208 $ 16,365
AIM V.I. Government Securities Fund $ -0- $ -0- $ -0-
AIM V.I. Growth Fund $ 876,546 $ 621,467 $ 578,444
AIM V.I. Growth and Income Fund $ 2,834,451 $ 1,190,597 $ 417,167
AIM V.I. High Yield Fund* $ -0- N/A N/A
AIM V.I. International Equity Fund $ 814,499 $ 605,318 $ 557,527
AIM V.I. Money Market Fund $ -0- $ -0- $ -0-
AIM V.I. Value Fund $ 1,920,264 $ 1,503,734 $ 1,126,384
* Commissions paid are for the period May 1,1998 (date operations commenced)
through December 31, 1998.
INVESTMENT STRATEGIES AND RISKS
Information concerning each Fund's fundamental investment objective is
set forth in the Prospectus under the heading "Investment Objectives and
Strategies." There can be no assurance that any Fund will achieve its
objective. The principal features of each Fund's investment program and the
primary risks associated with that investment program are discussed in the
Prospectus under the following headings: "Investment Objectives and Strategies"
and "Principal Risks of Investing in the Funds". The following discussion of
investment policies supplements the discussion of the investment strategies and
risks set forth in the Prospectus.
Set forth in this section is a description of each Fund's investment
policies, strategies and practices. The investment objective(s) of each Fund,
except the High Yield Fund, are deemed to be fundamental policies and,
therefore, unless permitted by law, may not be changed without the approval of
a majority of that Fund's outstanding shares (within the meaning of the 1940
Act). The Board of Directors on behalf of the High Yield
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Fund is permitted to change the investment objective of that Fund without
shareholder approval. Each Fund's investment policies, strategies and practices
are not fundamental. The Board of Directors of the Company reserves the right
to change any of these non-fundamental investment policies, strategies or
practices without shareholder approval. However, shareholders will be notified
before any material change in the investment policies become effective. Each
Fund has adopted investment restrictions, some of which are fundamental and
cannot be changed without shareholder approval. See "Investment Restrictions"
in this Statement of Additional Information. Individuals considering the
purchase of shares of any Fund should recognize that there are risks in the
ownership of any security.
AGGRESSIVE GROWTH FUND. The Fund will invest primarily in common
stocks, convertible bonds, convertible preferred stocks and warrants of
companies which, in the opinion of the Fund's investment advisor, are expected
to achieve earnings growth over time at a rate in excess of 15% per year. Many
of these companies are in the small to medium-sized category (i.e., companies
with a market capitalization within the range of small cap stocks in the
Russell 2000 Index.) Management of the Fund will be particularly interested in
companies that are likely to benefit from new or innovative products, services
or processes that should enhance such companies' prospects for future growth in
earnings. As a result of this policy, the market prices of many of the
securities purchased and held by the Fund may fluctuate widely. Any income
received from securities held by the Fund will be incidental, and an investor
should not consider a purchase of shares of the Fund as equivalent to a
complete investment program. The Fund's portfolio is primarily comprised of
securities of two basic categories: (a) "core" companies, which Fund management
considers to have experienced above-average and consistent long-term growth in
earnings and to have excellent prospects for outstanding future growth, and (b)
"earnings acceleration" companies which Fund management believes are currently
enjoying dramatic increase in profits. The Fund's strategy does not preclude
investment in large, seasoned companies which in the judgement of AIM possess
superior potential returns similar to companies with formative growth profiles.
The Fund will also invest in established smaller companies (under $500 million
in market capitalization) which offer exceptional value based upon
substantially above average earnings growth potential relative to market value.
The Fund may invest in non-equity securities, such as corporate bonds or U.S.
Government obligations during periods when, in the opinion of AIM, prevailing
market, financial, or economic conditions warrant, as well as when such
holdings are advisable in light of a change in circumstances of a particular
company or within a particular industry.
BALANCED FUND. The Fund's objective is to achieve as high a total
return to investors as possible, consistent with preservation of capital. The
Fund seeks to achieve its objective by investing in a broadly diversified
portfolio of high-yielding securities, including common stocks, preferred
stocks, convertible securities and bonds. Although equity securities will be
purchased primarily for capital appreciation and fixed income securities will
be purchased primarily for income purposes, income and capital appreciation
potential will be considered in connection with all investments. The Fund
normally will have a minimum of 30% and a maximum of 70% of its total assets
invested in equity securities and a minimum of 30% and a maximum of 70% of its
total assets invested in (non-convertible) fixed income securities. Most of
such fixed income securities will be rated Baa or better by Moody's Investors
Service, Inc. ("Moody's") or BBB or better by Standard & Poor's Rating Services
("S&P") or, in unrated, deemed to be of comparable quality by AIM, although the
Fund may invest to a limited extent in lower-rated securities. (For a
description of the various rating categories, see Appendix A to this Statement
of Additional Information.) The fixed income securities in which the Fund
invests may include U.S. Government obligations, mortgage-backed securities,
asset-backed securities, bank obligations, corporate debt obligations and
unrated obligations, including those of foreign issuers. The Fund may, in
pursuit of its objective, invest up to 10% of its total assets in debt
securities rated lower than Baa by Moody's or BBB by S&P, which are commonly
known as "junk bonds." See "Risk Factors -- Non-Investment Grade Debt
Securities" for more information concerning the risk factors associated with
investing in such securities. The Fund may also invest up to 25% of its total
assets in convertible securities. Compliance with all of the above percentage
requirements may limit the ability of the Fund to maximize total return. The
actual percentage of the assets invested in equity and fixed income securities
will vary from time to time, depending on the judgment of AIM as to general
market and economic conditions and trends, yields and interest rates and
changes in fiscal and monetary policies.
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CAPITAL APPRECIATION FUND. The Fund's investment objective is to seek
capital appreciation through investments in common stocks, with emphasis on
medium-sized and smaller emerging growth companies. AIM will be particularly
interested in companies that are likely to benefit from new or innovative
products, services or processes that should enhance such companies' prospects
for future growth in earnings. As a result of this policy, the market prices of
many of the securities purchased and held by the Fund may fluctuate widely. Any
income received from securities held by the Fund will be incidental, and an
investor should not consider a purchase of shares of the Fund as equivalent to
a complete investment program. The Capital Appreciation Fund's portfolio is
primarily comprised of securities of two basic categories of companies: (1)
"core" companies, which AIM considers to have experienced above-average and
consistent long-term growth in earnings with excellent prospects for
outstanding future growth, and (2) "earnings acceleration" companies which AIM
believes are currently enjoying a dramatic increase in profits.
CAPITAL DEVELOPMENT FUND. The Fund's investment objective is long-term
capital appreciation. Production of income is incidental to this objective. The
Fund's principal investments are in common stocks, convertible securities and
bonds. There can, of course, be no assurance that the Fund will in fact achieve
its objective since all investments are inherently subject to market risks.
The Fund will invest primarily in securities of small and medium-sized
companies (i.e., companies which fall in the smallest 85% by market
capitalization of publicly traded companies in the United States). Among
factors that AIM may consider when selecting investments in a company for the
Fund are (i) the growth prospects for a company's products, (ii) the economic
outlook for its industry, (iii) a company's new product development, (iv) its
operating management capabilities, (v) the relationship between the price of
the security and its estimated fundamental value, (vi) relevant market,
economic and political environments and (vii) financial characteristics such as
balance sheet analysis and return on assets. The Fund may invest in issuers
making initial public offerings of their securities if AIM determines that the
issuer has good prospects for growth. The Fund may also invest up to 10% of its
total assets in securities of other registered investment companies.
DIVERSIFIED INCOME FUND. The Fund's investment objective is to seek to
achieve a high level of current income. The Fund will seek to achieve its
investment objective by investing primarily in: (i) domestic and foreign
corporate debt securities, (ii) U.S. Government securities, including U.S.
Government Agency Mortgage-Backed Securities, (iii) foreign government
securities and (iv) lower-rated or unrated high yield debt securities (commonly
known as "junk bonds") of U.S. and foreign companies. Under normal
circumstances, the Fund's assets will be invested in each of these four
sectors. The Fund may invest up to 10% of its total assets in common stocks,
preferred stocks, similar equity securities and convertible securities of U.S.
and foreign companies. The Fund does not intend to invest more than 50% of its
total assets in lower-rated or unrated high yield securities or more than 50%
of its total assets in foreign debt securities. (For a description of the
various rating categories of corporate debt securities in which the Fund may
invest, see Appendix A to this Statement of Additional Information. For a
description of U.S. Government Agency Mortgage-Backed Securities, see Appendix
B to this Statement of Additional Information.) However, the Fund may from time
to time invest up to 100% of its total assets in U.S. Government securities
and, as a defensive measure, may invest up to 100% of its total assets in money
market securities. For a discussion of the investment risks associated with
investments in high yield securities and foreign securities, see "Risk Factors"
in this Statement of Additional Information.
GLOBAL GROWTH AND INCOME FUND. The Fund's investment objectives are
long-term capital appreciation together with current income. In seeking those
objectives, the Fund normally invests at least 65% of its total assets in a
combination of blue-chip equity securities and high quality government bonds.
The Fund considers an equity security to be "blue chip" if: (i) during the
issuer's most recent fiscal year the security offered an above average dividend
yield relative to the latest reported dividend yield on the Morgan Stanley
Capital International World Index; and (ii) the total equity market
capitalization of the issuer is at least $1 billion. Government bonds are
deemed to be high quality if at the time of the Fund's investment they are
rated within one of the two highest ratings categories of Moody's Investors
Services, Inc. ("Moody's") or Standard & Poor's,
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a division of The McGraw-Hill Companies, Inc. ("S&P"), i.e., rated Aaa or Aa by
Moody's or AAA or AA by S&P (or a comparable rating of any other nationally
recognized statistical rating organizations "NRSROs") or, if unrated, are
determined by AIM and INVESCO Asset Management Limited ("INVESCO") to be of
comparable quality. (For a description of the various rating categories of
corporate debt securities in which the Fund may invest, see Appendix A to this
Statement of Additional Information.)
Up to 35% of the Fund's assets may be invested in other equity
securities, convertible securities and investment grade government and
corporate debt obligations which AIM/INVESCO believes will assist the Fund in
achieving its objectives.
Equity securities that the Fund may purchase include common stocks,
preferred stocks, and warrants to acquire such stocks and other equity
securities. Government bonds that the Fund may purchase include debt
obligations issued or guaranteed by the U.S. or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities and debt obligations of supranational entities organized or
supported by several national governments, such as the World Bank and the Asian
Development Bank. The debt obligations held by the Fund may include debt
obligations convertible into equity securities or having attached warrants or
rights to purchase equity securities.
Under normal market conditions, the Fund invests in the securities of
issuers located in at least three different countries. Investments in
securities of issuers in any one country other than the United States, will
represent no more than 40% of the Fund's total assets. The Fund may purchase
securities of an issuer located in one country but denominated in the currency
of another country (or a multinational currency unit).
AIM/INVESCO allocates the Fund's assets among securities of issuers
located in countries where opportunities for meeting the Fund's investment
objectives are expected to be the most attractive. The relative proportions of
equity and debt securities held by the Fund at any one time will vary, and will
depend upon AIM/INVESCO's assessment of global political and economic
conditions and the relative strengths and weaknesses of the world equity and
debt markets. To enable the Fund to respond to general economic changes and
market conditions around the world, the Fund is authorized to invest up to 100%
of its assets in either equity securities or debt securities.
GLOBAL UTILITIES FUND. The Fund's investment objective is to achieve a
high level of current income, and as a secondary objective the Fund seeks to
achieve capital appreciation, by investing primarily in the common and
preferred stocks of public utility companies (either domestic or foreign).
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in securities of public utility companies (either domestic or
foreign). Public utility companies include companies that provide electricity,
natural gas or water and other sanitary services to the public, and telephone
or telegraph companies and other companies providing public communications
services. The Fund may also invest in developing utility technology companies
and in holding companies which derive a substantial portion of their revenues
from utility-related activities. Generally, a holding company will be
considered to derive a substantial portion of its revenues from utility-related
activities if such activities account for at least 40% of its revenues. The
Fund may invest up to 25% of its total assets in convertible securities. When
AIM deems it appropriate, the Fund may also purchase the bonds of such
companies. Investments in non-convertible bonds, however, will not exceed 25%
of the Fund's total assets. The Fund may invest up to 10% of its total assets
in lower-rated or unrated high yield securities. (For a description of the
various rating categories of corporate debt securities in which the Fund may
invest, see Appendix A to this Statement of Additional Information.) During the
fiscal year ended December 31, 1998, the Fund invested less than 5% of its net
assets in below investment grade debt securities. The Fund may also invest up
to 80% of its total assets in securities of foreign companies, including
investments in American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs") and underlying securities of foreign issuers. For a
discussion of the investment risks associated with investments in
non-investment grade debt securities and foreign securities, see "Risk Factors"
in this Statement of Additional Information.
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A portfolio of utility company securities is subject to a different
degree of volatility than a more broadly diversified portfolio. Economic,
operational or regulatory changes that affect utility companies will have a
material impact upon the value of the securities that the Fund owns. Events,
such as changing weather patterns, emergencies involving nuclear power plants,
or rapidly changing fuel prices that have no direct connection with companies
whose securities are owned by the Fund may affect the prices of those
securities.
Moreover, a portfolio of utilities industry securities is subject to
the risks unique to that industry, such as inflationary or other increases in
fuel and operating expenses, possible increases in the interest costs of loans
needed for capital construction programs, compliance with environmental
regulations, possible adverse changes in the regulatory climate and
availability of fuel sources.
GOVERNMENT SECURITIES FUND. The Fund's investment objective is to
achieve a high level of current income consistent with reasonable concern for
safety of principal by investing in debt securities issued, guaranteed or
otherwise backed by the United States Government. The government securities
which may be purchased by the Fund include but are not limited to (1) U.S.
Treasury obligations such as Treasury Bills (maturities of one year or less),
Treasury Notes (maturities of one to ten years) and Treasury Bonds (generally
maturities of greater than ten years) and (2) obligations issued or guaranteed
by U.S. Government agencies and instrumentalities ("Agency Securities") which
are supported by any of the following: (a) the full faith and credit of the
U.S. Treasury, such as obligations of the Government National Mortgage
Association ("GNMA"), (b) the right of the issuers to borrow an amount limited
to a specific line of credit from the U.S. Treasury, such as obligations of the
Federal National Mortgage Association ("FNMA"), the Federal Home Loan Bank and
the U.S. Postal Service or (c) the credit of the agency or instrumentality,
such as obligations of the Federal Home Loan Mortgage Corporation ("FHLMC") and
Federal Farm Credit System. Although their close relationship with the U.S.
Government is believed to make them high-quality securities with minimal credit
risks, the U.S. Government is not required by law to support the agencies and
instrumentalities listed in (b) and (c), above. Accordingly, such securities
may involve risk of loss of principal and interest; however, historically there
have not been any defaults of such issues. For a listing of some of the types
of Agency Securities in which the Fund may invest, see Appendix B to this
Statement of Additional Information.
The Fund's investments include high coupon U.S. Government Agency
Mortgage-Backed Securities, which provide a higher coupon at the time of
purchase than the prevailing market rate yield. The prices of high coupon U.S.
Government Agency Mortgage-Backed Securities do not tend to rise as rapidly as
those of traditional fixed rate securities at times when interest rates are
decreasing, and tend to decline more slowly at times when interest rates are
increasing. The Fund may purchase such securities at a premium, which means
that a faster principal prepayment rate than expected will reduce the market
value of and income from such securities, while a slower prepayment rate will
tend to increase the market value of and income from such securities.
The composition and weighted average maturity of the Fund's portfolio
will vary from time to time, based upon the determination of AIM and how best
to further the Fund's investment objective. The Fund may invest in government
securities of all maturities, short-term, intermediate-term and long-term. The
Fund intends to maintain a dollar-weighted average portfolio maturity of
between three and ten years. This policy regarding portfolio maturity is a
non-fundamental policy of the Fund.
GROWTH FUND. The Fund's investment objective is to seek growth of
capital principally through investment in common stocks of seasoned and better
capitalized companies considered by AIM to have strong earnings momentum.
Current income will not be an important criterion of investment selection, and
any such income should be considered incidental. It is anticipated that common
stocks will be the principal form of investment by the Fund. The Fund's
portfolio is primarily comprised of securities of two basic categories of
companies: (1) "core" companies, which AIM considers to have experienced
above-average and consistent long-term growth in earnings and to have excellent
prospects for outstanding future growth, and (2) "earnings acceleration"
companies which Fund management believes are currently enjoying a dramatic
increase in profits.
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GROWTH AND INCOME FUND. The Fund's investment objective is to seek
growth of capital, with current income as a secondary objective. The Fund seeks
to meet these objectives by investing at least 65% of its net assets in
income-producing securities, including dividend-paying common stocks and
convertible securities. The Fund's portfolio managers purchase securities of
established companies that have long-term above-average growth in earnings and
dividends, and growth companies that they believe have the potential for
above-average growth in earnings and dividends. The Fund's portfolio managers
consider whether to sell a particular security when they believe the security
no longer has that potential or the capacity to generate income.
HIGH YIELD FUND. The Fund's objective is to achieve a high level of
current income. The Fund seeks to achieve its objective by investing primarily
in publicly traded non-investment grade debt securities. The Fund will also
consider the possibility of capital growth when it purchases and sells
securities. Debt securities of less than investment grade are considered "high
risk" securities (commonly referred to as junk bonds). The Fund seeks high
income principally by purchasing securities that are rated Baa, Ba or B by
Moody's or BBB, BB, or B by S&P, or securities of comparable quality in the
opinion of AIM that are either unrated or rated by other NRSROs1. (For a
description of the various rating categories, see Appendix A to this Statement
of Additional Information.) The Fund may also hold, from time to time,
securities rated Caa by Moody's or CCC by S&P, or if unrated or rated by other
NRSROs, securities of comparable quality as determined by AIM. It should be
noted, however, that achieving the Fund's investment objective may be more
dependent on the credit analysis of AIM, and less on that of credit rating
agencies, than may be the case for funds that invest in more highly rated
bonds. At least 80% of the value of the Fund's total assets will be invested in
debt securities, including convertible debt securities, and/or cash and cash
equivalents. At least 65% of the value of the Fund's assets will be invested in
high yield debt securities. The Fund may also invest in preferred stocks.
While the securities held by the Fund are expected to provide greater
income and, possibly, opportunity for greater gain than investments in more
highly rated securities, they may be subject to greater risk of loss of income
and principal and are more speculative in nature. The Fund's yield and the net
asset value of its shares may be expected to fluctuate over time. Therefore, an
investment in the Fund may not be appropriate for some investors and should not
constitute a complete investment program for others. See "Risk Factors --
Non-Investment Grade Debt Securities."
The Fund may invest in both illiquid securities and securities which
are subject to restrictions on resale because they have not been registered
under the Securities Act of 1933. See "Illiquid Securities" for further
information regarding such investments.
INTERNATIONAL EQUITY FUND. The Fund's investment objective is to seek
to provide long-term growth of capital by investing in a diversified portfolio
of international equity securities the issuers of which are considered by AIM
to have strong earnings momentum. Any income realized by the Fund will be
incidental and will not be an important criterion in the selection of portfolio
securities.
In managing the Fund, AIM seeks to apply to a diversified portfolio of
international equity securities substantially the same investment strategy
which it applies to the Growth Fund with respect to that Fund's
- ---------------------
1 "Requisite NRSRO" shall mean (a) any two nationally recognized
statistical rating organizations that have issued a rating with
respect to a security or class of debt obligations of an issuer, or
(b) if only one NRSRO has issued a rating with respect to such
security or issuer at the time of the Fund acquires the security; that
NRSRO. At present the NRSROs are: Standard & Poor's Corp., Moody's
Investors Service, Inc., Thomson Bankwatch, Duff and Phelps, Inc.,
Fitch IBCA, Inc. and, with respect to certain types of securities,
IBCA Ltd and its subsidiary, IBCA, Inc. Subcategories or gradations in
ratings (such as "+" or "-") do not count as rating categories.
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investment in United States equities markets. The Fund will utilize to the
extent practicable a fully managed investment policy providing for the
selection of securities which meet certain quantitative standards determined by
AIM. AIM will review carefully the earnings history and prospects for growth of
each company considered for investment by the Fund. It is expected that the
Fund's portfolio, when fully invested, will generally be comprised of two basic
categories of foreign companies: (1) "core" companies, which AIM considers to
have experienced consistent long-term growth in earnings and to have strong
prospects for outstanding future growth, and (2) companies that AIM believes
are currently experiencing a greater than anticipated increase in earnings. If
a particular foreign company meets the quantitative standards determined by
AIM, its securities may be acquired by the Fund regardless of the location of
the company or the percentage of the Fund's investments in the company's
country or region. However, AIM will also consider other factors in making
investment decisions for the Fund, including such factors as the prospects for
relative economic growth among countries or regions, economic and political
conditions, currency exchange fluctuations, tax considerations and the
liquidity of a particular security. For a discussion of the investment risks
associated with investments in foreign securities, see "Risk Factors" in this
Statement of Additional Information.
MONEY MARKET FUND. The Fund's investment objective is to seek to
provide as high a level of current income as is consistent with the
preservation of capital and liquidity. The Fund seeks to achieve its objective
by investing in a diversified portfolio of high quality U.S. dollar denominated
money market instruments and other similar instruments with maturities of 397
days or less from the date of purchase, and will maintain a dollar
weighted-average portfolio maturity of 90 days or less. Securities subject to
repurchase agreements may bear longer maturities.
The Fund invests in a broad range of U.S. Government and foreign
government obligations, and bank and commercial instruments that may be
available in the money markets. Such obligations include U.S. Treasury
obligations and repurchase agreements secured by such obligations. The Money
Market Fund intends to invest in bankers' acceptances, certificates of deposit,
repurchase agreements, time deposits, variable rate master demand notes,
taxable municipal securities and commercial paper, and U.S. Government direct
obligations and U.S. Government agencies' securities. Bankers acceptances,
certificates of deposit and time deposits may be purchased from U.S. or foreign
banks. All of these instruments, which are collectively referred to as "Money
Market Obligations," are briefly described in Appendix C to this Statement of
Additional Information.
The Fund will limit investments in Money Market Obligations to those
which are denominated in U.S. dollars and which at the date of purchase are
"First Tier" securities as defined in Rule 2a-7 under the 1940 Act, as such
Rule may be amended from time to time. Generally "First Tier" securities are
securities that are rated in the highest rating category by two NRSROs, or, if
only rated by one NRSRO, are rated in the highest rating category by that
NRSRO, or, if unrated, are determined by AIM (under the supervision of and
pursuant to guidelines established by the Board of Directors) to be comparable
quality to a rated security that meets the foregoing quality standards. For a
more complete definition of a "First Tier" security, see "Money Market
Obligations" in this Statement of Additional Information.
The Money Market Fund may invest up to 100% of its total assets in
obligations issued by banks. While the Fund will limit its investments in bank
instruments to U.S. dollar denominated obligations, it may invest in Eurodollar
obligations (i.e., U.S. dollar-denominated obligations issued by a foreign
branch of a domestic bank), Yankee dollar obligations (i.e., U.S.
dollar-denominated obligations issued by a domestic branch of a foreign bank)
and obligations of foreign branches of foreign banks. The Money Market Fund
will limit its aggregate investments in foreign bank obligations, including
Eurodollar obligations and Yankee dollar obligations, to 25% of its total
assets at the time of purchase, provided that there is no limitation upon the
Fund's investments in (a) Eurodollar obligations, if the domestic parent of the
foreign branch issuing the obligation is unconditionally liable in the event
that the foreign branch for any reason fails to pay on the Eurodollar
obligation; and (b) Yankee dollar obligations, if the U.S. branch of the
foreign bank is subject to the same regulation as U.S. banks. Eurodollar,
Yankee dollar and other foreign bank obligations include time deposits, which
are non-negotiable deposits maintained in a bank for a specified period of time
at a stated
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interest rate. For a discussion of the risks pertaining to investments in
foreign securities, see "Risk Factors" in this Statement of Additional
Information.
TELECOMMUNICATIONS FUND. The Fund's investment objective is long-term
growth of capital. It seeks its objective by investing primarily in equity
securities of companies throughout the world engaged in the development,
manufacture or sale of telecommunications services or equipment.
At least 65% of the Fund's total assets normally will be invested in
common and preferred stocks and warrants to acquire such stocks issued by
telecommunications companies. A "telecommunications company" is an entity in
which (i) at least 50% of either its revenues or earnings was derived from
telecommunications activities, or (ii) at least 50% of its assets was devoted
to telecommunications activities, based on the issuer's most recent fiscal
year. The remainder of the assets of the Fund may be invested in debt
securities issued by telecommunications companies and/or equity and debt
securities of companies outside of the telecommunications industry which, in
the opinion of AIM, stand to benefit from developments in the
telecommunications industries. (For a description of the various rating
categories of corporate debt securities in which the Fund may invest, see
Appendix A to this Statement of Additional Information). The Fund may, in
pursuit of its objective, invest up to 5% of its total assets in below
investment grade debt securities. See "Risk Factors -- Non-Investment Grade
Debt Securities" for more information concerning the risk factors associated
with investing in such securities.
The Fund may invest substantially in securities denominated in one or
more currencies. Under normal conditions, the Fund invests in the equity
securities of issuers located in at least three different countries, including
the United States. No more than 40% of the Fund's total assets will be invested
in securities of issuers in any one country other than the United States.
Telecommunications companies cover a variety of sectors, ranging from
companies concentrating on established technologies to those primarily engaged
in emerging or developing technologies. The characteristics of companies
focusing on the same technology will vary among countries depending upon the
extent to which the technology is established in the particular country. AIM
will allocate the Fund's investments among these sectors depending upon its
assessment of their relative long-term growth potentials.
The Fund will invest primarily in issuers engaged in designing,
developing or providing the following products and services: communications
equipment and services (including equipment and services for both data and
voice transmission); electronic components and equipment; broadcasting
(including television and radio , satellite, microwave and cable television and
narrowcasting); computer equipment, mobile communications and cellular
radio/paging; electronic mail; local and wide area networking and linkage of
word and data processing systems; publishing and information systems; videotext
and teletext; and emerging technologies combining telephone, television and/or
computer systems.
Telecommunications is a global industry with significant, growing
markets outside of the United States. A sizeable proportion of the companies
that comprise the telecommunications industry are headquartered outside of the
United States. From time to time, however, a significant portion of the Fund's
assets may be invested in the securities of domestic issuers.
AIM uses its financial expertise in markets located throughout the
world in attempting to identify those countries and telecommunications
companies then providing the greatest potential for long-term capital
appreciation. In this fashion, AIM and the Fund seek to enable shareholders to
capitalize on the substantial investment opportunities and the potential for
long-term growth of capital presented by the global telecommunications
industry. AIM will allocate the Fund's assets among securities of countries and
in currency denominations and industry sectors where opportunities for meeting
the Fund's investment objective are expected to be the most attractive.
AIM believes that there are opportunities for continued growth in
demand for components, products, media and systems to collect, store, retrieve,
transmit, process, distribute, record, reproduce and use
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information. The pervasive societal impact of communications and information
technologies has been accelerated by the lower costs and higher efficiencies
that result from the blending of computers with telecommunications systems.
Accordingly, companies engage in the production of methods for using electronic
and, potentially, video technology to communicate information are expected to be
important in the Fund's portfolio. Older technologies, such as photography and
print, also may be represented, however.
VALUE FUND. The Fund's investment objective is to achieve long-term
growth of capital by investing primarily in equity securities judged by AIM to
be undervalued relative to the current or projected earnings of the companies
issuing the securities, or relative to current market values of assets owned by
the companies issuing the securities or relative to the equity market
generally. Income is a secondary objective and would be satisfied principally
from the income (interest and dividends) generated by the common stocks,
convertible bonds and convertible preferred stocks that make up the Fund's
portfolio. The Fund should not be purchased by those who seek income as their
primary investment objective.
In addition to the securities described above, the Fund may also
acquire preferred stocks and debt instruments having prospects for growth of
capital. Although these different types of securities can be expected to
generate amounts of income to satisfy the Fund's secondary objective, they will
be purchased for their potential for growth of capital.
The primary thrust of AIM's search for undervalued equity securities
is in four categories: (1) out-of-favor cyclical growth companies; (2)
established growth companies that are undervalued compared to historical
relative valuation parameters; (3) companies where there is early but tangible
evidence of improving prospects which are not yet reflected in the price of the
company's equity securities; and (4) companies whose equity securities are
selling at prices that do not reflect the current market value of its assets
and where there is reason to expect realization of this potential in the form
of increased equity values.
CERTAIN INVESTMENT STRATEGIES AND TECHNIQUES
Each of the Funds has the flexibility to invest, to the extent
described below, in a variety of instruments designed to enhance its investment
capabilities. Each of the Funds may invest in money market obligations, foreign
securities (including ADRs and EDRs), repurchase agreements, reverse repurchase
agreements, taxable municipal securities, illiquid securities and Rule 144A
securities; the Diversified Income Fund and the Government Fund may invest in
U.S. Government Agency Mortgage-Backed Securities; each of the Funds may
purchase or sell securities on a delayed delivery or when-issued basis and may
borrow money; each of the Funds, other than the Money Market Fund, may lend
portfolio securities and make short sales "against the box." A short sale is
"against the box" to the extent that the Fund contemporaneously owns or has the
right to obtain securities identical to those sold short without payment of any
further consideration.
Each of the Funds, other than the Money Market Fund, may write (i.e.,
sell) "covered" put and call options and buy put and call options on domestic
and foreign securities, securities indices and currencies. Each of the Funds,
other than the Money Market Fund, may use exchange-traded financial futures
contracts, options thereon, and forward contracts as a hedge to protect against
possible changes in market values. A brief description of these investment
instruments and their risks appears below. See "Hedging and Other Investment
Techniques" in this Statement of Additional Information for more detailed
information.
MONEY MARKET OBLIGATIONS
When deemed appropriate for temporary or defensive purposes, each of
the Funds may hold cash or cash equivalent Money Market Obligations. Of course,
the Money Market Fund invests exclusively in Money Market Obligations. While
none of the Funds other than the Money Market Fund is required by regulation or
fundamental policy to limit such investments to those which, at the date of
purchase, are "First Tier" securities as that term is defined in Rule 2a-7
under the 1940 Act, it is the current intention of AIM to limit such
investments to those securities which, at the time of purchase, are considered
"First Tier" securities or
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securities which AIM has determined to be of comparable credit quality. To the
extent that a Fund invests to a significant degree in these instruments, its
ability to achieve its investment objectives may be adversely affected.
In addition to the Money Market Obligations described above, as a
temporary or defensive measure, and without regard to their respective
investment objectives, AIM, or AIM/INVESCO for the Global Growth and Income
Fund may invest all or substantially all of the assets of the Aggressive Growth
Fund, the Balanced Fund, the Diversified Income Fund, the Global Growth and
Income Fund, the Global Utilities Fund, the High Yield Fund, the International
Fund and the Telecommunications Fund in cash or Money Market Obligations,
including repurchase agreements, denominated in foreign currencies.
As set forth in the Prospectus, the Money Market Fund will limit its
purchases of Money Market Obligations to U.S. dollar denominated securities
which are "First Tier" securities, as such term is defined from time to time in
Rule 2a-7 under the 1940 Act. A First Tier Security is generally a security
that: (i) has received a short-term rating, or is subject to a guarantee that
has received a short-term rating, or, in either case, is issued by an issuer
with a short-term rating from the Requisite NRSROs in the highest short-term
rating category for debt obligations; (ii) is an unrated security that the
Fund's investment adviser has determined are of comparable quality to a rated
security described in (i); (iii) is a security issued by a registered
investment company that is a money market fund; or (iv) is a Government
Security.
Subsequent to its purchase by the Fund, an issue of Money Market
Obligations may cease to be a First Tier security. Subject to certain
exceptions set forth in Rule 2a-7, such an event will not require the
elimination of the security from the Fund, but AIM will consider such an event
to be relevant in its determination of whether the Fund should continue to hold
the security.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements with
institutions believed by the Company's Board of Directors to present minimal
credit risk. A repurchase agreement is an instrument under which the Fund
acquires ownership of a debt security and the seller agrees, at the time of the
sale, to repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the Fund's holding period. With regard to
repurchase transactions, in the event of a bankruptcy or other default of a
seller of a repurchase agreement (such as the sellers' failure to repurchase
the obligation in accordance with the terms of the agreement), a Fund could
experience both delays in liquidating the underlying securities and losses,
including: (a) a possible decline in the value of the underlying security
during the period while the Fund seeks to enforce its rights thereto; (b)
possible subnormal levels of income and lack of access to income during this
period; and (c) expenses of enforcing its rights. Repurchase agreements are
considered to be loans by the Fund under the 1940 Act. Repurchase agreements
will be secured by U.S. Treasury securities, U.S. Government agency securities
(including, but not limited to, those which have been stripped of their
interest payments and mortgage-backed securities) and commercial paper.
Although the underlying collateral for repurchase agreements may have
maturities exceeding one year, the Funds will not enter into repurchase
agreements expiring in more than seven days. The Fund may, however, enter into
a "continuing contract" or "open" repurchase agreement under which the seller
is under a continuing obligation to repurchase the underlying obligation from
the Fund on demand and the effective interest rate is negotiated on a daily
basis. Repurchase agreements are considered to be loans by the Fund under the
1940 Act. Securities subject to repurchase agreements will be held in the
custodian's account with the Federal Book-Entry System on behalf of the Fund.
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES
The Diversified Income Fund and the Government Fund may invest in U.S.
Government Agency Mortgage-Backed Securities. These securities are obligations
issued or guaranteed by the Untied States
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Government or by one of its agencies or instrumentalities, including but not
limited to GNMA, FNMA, or FHLMC. U.S. Government Agency Mortgage-Backed
Certificates provide for the pass-through to investors of their pro-rata share
of monthly payments (including any principal prepayments) made by the
individual borrowers on the pooled mortgage loans, net of any fees paid to the
guarantor of such securities and servicers of the underlying mortgage loans.
GNMA, FNMA and FHLMC each guarantee timely distributions of interest to
certificate holders. GNMA and FNMA guarantee timely distributions of scheduled
principal. FHLMC has in the past guaranteed only the ultimate collection of
principal of the underlying mortgage loan; however, FHLMC Gold Participation
Certificates now guarantee timely payment of monthly principal reductions.
Although their close relationship with the U.S. Government is believed to make
them high-quality securities with minimal credit risks, the U.S. Government is
not obligated by law to support either FNMA or FHLMC. However, historically
there have not been any defaults of FNMA or FHLMC issues. See Appendix B for a
more complete description of GNMA securities.
Mortgage-backed securities consist of interests in underlying
mortgages generally with maturities of up to thirty years. However, due to
early unscheduled payments of principal of the underlying mortgages, the
securities have a shorter average life and, therefore, less volatility than a
comparable thirty-year bond. The value of U.S. Government Agency
Mortgage-Backed Securities, like other traditional debt instruments, will tend
to move in the opposite direction compared to interest rates.
CONVERTIBLE SECURITIES
To the extent consistent with their respective investment objectives,
each of the Funds (except the Money Market Fund) may invest in convertible
securities. Convertible securities usually consist of corporate debt securities
or preferred stock that may in certain circumstances be converted into a
predetermined number of shares of another form of that issuer's equity, usually
common stock. Convertible securities consequently often involve attributes of
both debt and equity instruments, and investment in such securities requires
analysis of both credit and stock market risks. Convertible securities rank
senior to common stock in a corporation's capital structure but are usually
subordinated to comparable nonconvertible securities. Convertible securities
may be subject to redemption at the option of the issuer at a price established
in the convertible security's governing instrument. Although the Funds will
only purchase convertible securities that AIM considers to have adequate
protection parameters, including an adequate capacity to pay interest and repay
principal in a timely manner, each applicable Fund invests in such securities
without regard to corporate bond ratings.
REAL ESTATE INVESTMENTS TRUSTS ("REITS")
To the extent consistent with their respective investment objectives
and policies, each of the Funds (except the Government Fund, International Fund
and Money Market Fund) may invest in equity and/or debt securities issued by
REITs. Such investments will not exceed (i) 25% of the total assets of
Aggressive Growth Fund, Balanced Fund, Capital Appreciation Fund, Capital
Development Fund, Global Utilities Fund, Growth Fund, Growth and Income Fund
and Value Fund; and (ii) 10% of the total assets of Diversified Income Fund and
High Yield Fund.
REITs are trusts which sell equity or debt securities to investors and
use the proceeds to invest in real estate or interest therein. A REIT may focus
on particular projects, such as apartment complexes, or geographic regions,
such as the Southeastern United States, or both.
To the extent that the Fund has the ability to invest in REITs, the
Fund could conceivably own real estate directly as a result of a default on the
securities it owns. The Fund, therefore, may be subject to certain risks
associated with the direct ownership of real estate including difficulties in
valuing and trading real estate, declines in the value of real estate, risks
related to general and local economic conditions, adverse changes in the
climate for real estate, increases in property taxes and operating expenses,
changes in zoning laws, casualty or condemnation losses, limitations on rents,
changes in neighborhood values, the appeal of properties to tenants, and
increases in interest rates.
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In addition to the risks described above, equity REITs may be affected
by any changes in the value of the underlying property owned by the trusts,
while mortgage REITs may be affected by the quality of any credit extended.
Equity and mortgage REITs are dependent upon management skill, are not
diversified, and are therefore subject to the risk of financing single or a
limited number of projects. Such trusts are also subject to heavy cash flow
dependency, defaults by borrowers, self-liquidation, and the possibility of
failing to maintain exemption from the 1940 Act. Changes in interest rates may
also affect the value of debt securities held by a Fund. By investing in REITs
indirectly through a Fund, a shareholder will bear not only his/her
proportionate share of the expenses of the Fund, but also, indirectly, similar
expenses of the REITs.
FOREIGN SECURITIES
To the extent consistent with their respective investment objectives,
each of the Funds may invest in foreign securities. It is not anticipated that
such foreign securities will constitute more than: (i) 20% of the value of the
total assets of the Balanced Fund, the Capital Appreciation Fund, the
Government Fund, the Growth Fund, the Growth and Income Fund, and the Money
Market Fund; (ii) 25% of the value of the total assets of the Aggressive Growth
Fund, the Capital Development Fund, the High Yield Fund and the Value Fund;
(iii) 50% of the value of the total assets of the Diversified Income Fund; (iv)
90% of the value of the total assets of the Global Growth and Income Fund; (v)
80% of the value of the total assets of the Global Utilities Fund; and (vi) 75%
of the value of the total assets of the Telecommunications Fund. The
International Fund will invest at least 70% of its total assets in foreign
securities.
The Diversified Income Fund may invest in debt obligations which may
be denominated in the U.S. dollar or in other currencies issued or guaranteed
by foreign corporations, certain supranational entities (such as the World
Bank, Asian Development Bank and European Economic Community), and foreign
governments (including political subdivisions having taxing authority) or their
agencies or instrumentalities. The Diversified Income Fund may also invest in
debt obligations issued by corporations denominated in non-U.S. dollar
currencies. No more than 25% of the Diversified Income Fund's total assets, at
the time of purchase, will be invested in government securities of any one
foreign country. At the present time, AIM does not intend to invest more than
10% of the Diversified Income Fund's total assets in securities issued by
foreign governments or foreign companies located in developing countries in
various regions of the world. A "developing country" is a country in the
initial stages of its industrial cycle. Investments in emerging markets or
developing countries involve exposure to economic structures that are generally
less diverse and mature and to political systems which can be expected to have
less stability than those of more developed countries. Such countries may have
relatively unstable governments, economies based on only a few industries, and
securities markets which trade only a small number of securities. Historical
experience indicates that emerging markets have been more volatile than the
markets of more mature economies; such markets have also from time to time
provided higher rates of return and greater risks to investors. AIM believes
that these characteristics of emerging markets can be expected to continue in
the future.
The Global Utilities Fund may invest up to 80% of its total assets in
securities of foreign companies, including investments in ADRs, EDRs and other
securities representing underlying securities of foreign issuers. Under normal
market conditions, the Global Utilities Fund will be invested in securities of
issuers located in at least four countries, one of which will be the United
States, although for defensive purposes, it may invest 100% of its total assets
in securities of U.S. issuers. In some foreign countries, utility companies are
partially owned by government agencies. In some cases, foreign government
agencies may have significant investments in businesses other than utility
companies. Also, investments in securities of foreign issuers may involve other
risks which are not ordinarily associated with investments in domestic issuers.
See "Risk Factors" in this Statement of Additional Information. In addition,
investors should also be aware that the Global Utilities Fund may invest in
companies located within emerging or developing countries.
Under normal market conditions the International Fund will invest at
least 70% of its total assets in marketable equity securities (including common
and preferred stock and depositary receipts for stock) and
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may invest up to 20% of its total assets in securities exchangeable for or
convertible into stock or foreign companies.
Under normal market conditions, the International Fund intends to
invest in the securities of foreign companies located in at least four
countries outside the United States. The International Fund will emphasize
investment in foreign companies in the developed countries of Western Europe
and the Pacific Basin, but the Fund may also invest to a lesser extent in the
securities of companies located in developing countries in various regions of
the world. At the present time, AIM does not intend to invest more than 20% of
the International Fund's total assets in securities issued by foreign
governments or foreign companies located in developing countries. For a
discussion of the risks pertaining to investments in foreign obligations, see
"Risk Factors" in this Statement of Additional Information.
FOREIGN EXCHANGE TRANSACTIONS
Purchases and sales of foreign securities are usually made with
foreign currencies, and consequently the Funds (except the Government Fund and
the Money Market Fund) may from time to time hold cash balances in the form of
foreign currencies and multinational currency units. Such foreign currencies
and multinational currency units will usually be acquired on a spot (i.e. cash)
basis at the spot rate prevailing in foreign exchange markets and will result
in currency conversion costs to the Fund. A Fund attempts to purchase and sell
foreign currencies on as favorable a basis as practicable; however, some price
spread on foreign exchange transactions (to cover service charges) may be
incurred, particularly when the Fund changes investments from one country to
another, or when U.S. Dollars are used to purchase foreign securities. Certain
countries could adopt policies which would prevent the Fund from transferring
cash out of such countries, and the Fund may be affected either favorably or
unfavorably by fluctuations in relative exchange rates while the Fund holds
foreign currencies.
ADRS AND EDRS
To the extent consistent with their respective investment objectives
each of the Funds (except the International Fund which is discussed separately
above) may also invest in securities which are in the form of ADRs, EDRs or
other securities representing underlying securities of foreign issuers. ADRs
are receipts typically issued by a United States bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
EDRs are receipts issued in Europe which evidence a similar ownership
arrangement. ADRs, EDRs and other securities representing underlying securities
of foreign issuers are treated as foreign securities for purposes of
determining the applicable limitation on investment in foreign securities.
LENDING OF PORTFOLIO SECURITIES
Each Fund (except the Money Market Fund) may, from time to time, lend
securities from their respective portfolios, with a value not exceeding 33_% of
their respective total assets, to banks, brokers and other financial
institutions, and receive in return collateral in the form of liquid assets
which will be maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities. The collateral received will
consist of cash, U.S. Government securities, letters of credit or such other
collateral as may be permitted under each such Fund's investment program. While
the securities are being lent, a Fund will continue to receive the equivalent
of the interest or dividends paid by the issuer on the securities, as well as
interest on the investment of the collateral or a fee from the borrower. A Fund
has a right to call each loan and obtain the securities on five business days'
notice or, in connection with securities trading on foreign markets, within
such longer period of time which coincides with the normal settlement period
for purchases and sales of such securities in such foreign markets. A Fund will
not have the right to vote securities while they are being lent, but it will
call a loan in anticipation of any important vote. During the period of the
loan, the applicable Fund receives the income on both the loaned securities and
the collateral (or a fee) and thereby increases its yield. In the event that
the borrower defaults on its obligation to return loaned securities because
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of insolvency or otherwise, the Fund could experience delays and costs in
gaining access to the collateral and could suffer a loss to the extent that the
value of the collateral falls below the market value of the loaned securities.
Loans will only be made to persons deemed by AIM to be of good standing and
will not be made unless, in the judgment of AIM, the consideration to be earned
from such loans would justify the risk.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale by the Fund of
portfolio securities, with an agreement that the Fund will repurchase the
securities at an agreed upon price, date and interest payment. Each Fund may
employ reverse repurchase agreements (i) for temporary emergency purposes, such
as to meet unanticipated net redemptions so as to avoid liquidating other
portfolio securities during unfavorable market conditions; (ii) to cover
short-term cash requirements resulting from the timing of trade settlements;
(iii) to take advantage of market situations where the interest income to be
earned from the investment of the proceeds of the transaction is greater than
the interest expense of the transaction. At the time it enters into a reverse
repurchase agreement, a Fund will segregate liquid assets having a dollar value
equal to the repurchase price. Each of the Funds may enter into reverse
repurchase agreements in amounts not exceeding 33_% of the value of their
respective total assets. Reverse repurchase agreements involve the risk that
the market value of securities retained by a Fund in lieu of liquidating may
decline below the repurchase price of the securities sold by the Fund which is
obligated to repurchase. This risk, if encountered, could cause a reduction in
the net asset value of the Fund's shares. Reverse repurchase agreements are
considered to be borrowings under the 1940 Act. See "Borrowing" in this
Statement of Additional Information for percentage limitations on borrowings.
DELAYED DELIVERY AGREEMENTS AND WHEN-ISSUED SECURITIES
Each Fund may enter into delayed delivery agreements and may purchase
securities on a "when-issued" basis.
Delayed delivery agreements involve commitments by each such Fund to
dealers or issuers to acquire securities or instruments at a specified future
date beyond the customary settlement date for such securities. These
commitments fix the payment price and interest rate to be received on the
investment. Delayed delivery agreements will not be used as a speculative or
leverage technique. Rather, from time to time, AIM can anticipate that cash for
investment purposes will result from scheduled maturities of existing portfolio
instruments or from net sales of shares of the Fund and may enter into delayed
delivery agreements to assure that the Fund will be as fully invested as
possible in instruments meeting its investment objective. Until the settlement
date, the Fund will segregate cash or other liquid assets of a dollar value
sufficient at all times to make payment for the delayed delivery securities.
The delayed delivery securities, which will not begin to accrue interest until
the settlement date, will be recorded as an asset of the Fund and will be
subject to the risks of market fluctuation. The purchase price of the delayed
delivery securities is a liability of the Fund until settlement. If cash is not
available to the Fund at the time of settlement, the Fund may be required to
dispose of portfolio securities that it would otherwise hold to maturity in
order to meet its obligation to accept delivery under a delayed delivery
agreement. The Board of Directors has determined that entering into delayed
delivery agreements does not present a materially increased risk of loss to
shareholders, but the Board of Directors may restrict the use of delayed
delivery agreements if the risk of loss is determined to be material or if it
affects the constant net asset value of the Money Market Fund.
Many new issues of debt securities are offered on a "when-issued"
basis, that is, the date for delivery of and payment for the securities is not
fixed at the date of purchase, but is set after the securities are issued
(normally within forty-five days after the date of the transaction). The
payment obligation and the interest rate that will be received on the
securities are fixed at the time the buyer enters into the commitment. The
Funds will only make commitments to purchase such debt securities with the
intention of actually acquiring such securities, but the Funds may each sell
these securities before the settlement date if it is deemed advisable. The Fund
holds, and maintains until the settlement date segregated liquid assets of a
dollar value sufficient
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at all times to make payment for the when-issued securities. The securities
will be marked-to-market and additional assets will be segregated if necessary
to maintain adequate coverage of the when-issued commitments.
Securities purchased on a when-issued basis and the securities held in
the Funds' portfolios are subject to changes in market value based upon the
public's perception of the creditworthiness of the issuer and changes in the
level of interest rates (which will generally result in all of those securities
changing in value in the same way, i.e., all those securities experiencing
appreciation when interest rates rise). Therefore, if, in order to achieve
higher interest income, a Fund is to remain substantially fully invested at the
same time that it has purchased securities on a when-issued basis, there will
be a possibility that the market value of the Fund's assets will fluctuate to a
greater degree. Furthermore, when the time comes for the Fund to meet its
obligations under when-issued commitments, the Fund will do so by using
then-available cash flow, by sale of the segregated securities, by the sale of
other securities or, although it would not normally expect to do so, by
directing the sale of the when-issued securities themselves (which may have a
market value greater or less than the applicable Fund's payment obligation).
A sale of securities to meet such obligations carries with it a
greater potential for the realization of net short-term capital gains, which
are not exempt from federal income taxes. The value of when-issued securities
on the settlement date may be more or less than the purchase price.
If a Fund enters into a delayed delivery agreement or purchases a
when-issued security, the Fund will direct its custodian bank to segregate
liquid assets in an amount equal to its delayed delivery agreements or
when-issued commitments. If the market value of such securities declines,
additional cash or securities will be segregated on a daily basis so that the
market value of the account will equal the amount of such Fund's delayed
delivery agreements and when-issued commitments. To the extent that funds are
segregated, they will not be available for new investment or to meet
redemptions. Investment in securities on a when-issued basis and use of delayed
delivery agreements may increase the Fund's exposure to market fluctuation, or
may increase the possibility that the Fund will incur a short-term loss, if the
Fund must engage in portfolio transactions in order to honor a when-issued
commitment or accept delivery of a security under a delayed delivery agreement.
The Fund will employ techniques designed to minimize these risks. No additional
delayed delivery agreements or when-issued commitments will be made by a Fund
if, as a result, more than 25% of the Fund's net assets would become so
committed.
The Government Fund may engage in buy/sell back transactions (a form
of delayed delivery agreement). In a buy/sell back transaction, the Fund enters
a trade to sell securities at one price and simultaneously enters a trade to
buy the same securities at another price for settlement at a future date.
DOLLAR ROLL TRANSACTIONS
In order to enhance portfolio returns and manage prepayment risk, the
Diversified Income Fund and the Government Fund may engage in dollar roll
transactions with respect to mortgage securities issued by GNMA, FNMA and
FHLMC. In a dollar roll transaction, the Fund sells a mortgage security held in
the portfolio to a financial institution such as a bank or broker-dealer, and
simultaneously agrees to repurchase a substantially similar security (same
type, coupon and maturity) from the institution at a later date at an agreed
upon price. The mortgage securities that are repurchased will bear the same
interest rate as those sold, but generally will be collateralized by different
pools of mortgages with different prepayments histories. During the period
between the sale and repurchase, the Fund will not be entitled to receive
interest and principal payments on the securities sold. Proceeds of the sale
will be invested in short-term instruments, and the income from these
investments, together with any additional fee income received on the sale,
could generate income for the Fund exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the securities
that the Fund has sold but is obligated to repurchase under the
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agreement. In the event the buyer of securities under a dollar roll transaction
files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from
the sale of the securities may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities. See "Borrowing," below for the
applicable limitation on dollar roll transactions.
BORROWING
Each of the Funds may borrow money to a limited extent from banks
(including the Funds' custodian bank) for temporary or emergency purposes
subject to the limitations under the 1940 Act. Each Fund will restrict
borrowings, reverse repurchase agreements and dollar roll transactions to an
aggregate of 33-1/3% of the Fund's total assets at the time of the transaction.
No Fund will purchase additional securities when any borrowings from banks
exceed 5% of the Fund's total assets.
ILLIQUID SECURITIES
None of the Funds will invest more than 15% of their respective net
assets in illiquid securities, including restricted securities which are
illiquid. The Money Market Fund will not invest more than 10% of its net assets
in illiquid securities.
SPECIAL SITUATIONS
Although the Capital Appreciation Fund does not currently intend to do
so, it may invest in "special situations." A special situation arises when, in
the opinion of the Fund's management, the securities of a particular company
will, within a reasonably estimable period of time, be accorded market
recognition at an appreciated value solely by reason of a development
applicable to that company, and regardless of general business conditions or
movements of the market as a whole. Developments creating special situations
might include, among others: liquidations, reorganizations, recapitalizations,
mergers, material litigation, technical breakthroughs and new management or
management policies. Although large and well known companies may be involved,
special situations more often involve comparatively small or unseasoned
companies. Investments in unseasoned companies and special situations often
involve much greater risk than is inherent in ordinary investment securities.
WARRANTS
The Aggressive Growth Fund, the Capital Development Fund, the Global
Growth and Income Fund, the Growth and Income Fund and the Telecommunications
Fund may, from time to time, invest in warrants. Warrants are, in effect,
longer-term call options. They give the holder the right to purchase a given
number of shares of a particular company at specified prices within certain
periods of time. The purchaser of a warrant expects that the market price of
the security will exceed the purchase price of the warrant plus the exercise
price of the warrant, thus giving him a profit. Of course, since the market
price may never exceed the exercise price before the expiration date of the
warrant, the purchaser of the warrant risks the loss of the entire purchase
price of the warrant. Warrants generally trade in the open market and may be
sold rather than exercised. Warrants are sometimes sold in unit form with other
securities of an issuer. Units of warrants and common stock may be employed in
financing young, unseasoned companies. The purchase price of a warrant varies
with the exercise price of a warrant, the current market value of the
underlying security, the life of the warrant and various other investment
factors.
SHORT SALES
Each of the Funds (except the Money Market Fund) may enter into short
sales transactions from time to time. None of these Funds will make short sales
of securities nor maintain a short position unless at all times when a short
position is open, the Fund owns an equal amount of such securities or
securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal
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in amount to, the securities sold short. This is a technique known as selling
short "against the box." Such short sales will be used by each of the Funds for
the purpose of deferring recognition of gain or loss for federal income tax
purposes. In no event may more than 10% of the value of any such Fund's total
assets be deposited or pledged as collateral for such sales at any time.
RULE 144A SECURITIES
Each of the Funds may invest in securities that are subject to
restrictions on resale because they have not been registered under the
Securities Act of 1933 (the "1933 Act"). These securities are sometimes
referred to as private placements. Although securities which may be resold only
to "qualified institutional buyers" in accordance with the provisions of Rule
144A under the 1933 Act are technically considered "restricted securities," the
Funds may each purchase Rule 144A securities without regard to the limitation
on investments in illiquid securities described above under "Illiquid
Securities," provided that a determination is made that such securities have a
readily available trading market. AIM will determine the liquidity of Rule 144A
securities under the supervision of the Company's Board of Directors.
Determination of whether a Rule 144A security is liquid or not is a question of
fact. In making this determination AIM will consider the trading markets for
the specific security taking into account the unregistered nature of a Rule
144A security. In addition, AIM could consider the (i) frequency of trades and
quotes, (ii) number of dealers and potential purchasers, (iii) dealer
undertakings to make a market, and (iv) nature of the security and of market
place trades (for example, the time needed to dispose of the security, the
method of soliciting offers and the mechanics of transfer). The liquidity of
Rule 144A securities will be monitored by AIM and, if as a result of changed
conditions, it is determined that a Rule 144A security is no longer liquid, the
Fund's holdings of illiquid securities will be reviewed to determine what, if
any, action is required to assure that the Fund does not exceed its applicable
percentage limitation for investments in illiquid securities.
ASSET ALLOCATION AMONG COUNTRIES
The Global Growth and Income Fund currently contemplates that it will
invest principally in securities of issuers in the United States, Canada,
Japan, the Western European nations, New Zealand and Australia, and it may
invest in securities denominated in more than one currency.
UTILITIES INDUSTRY
The following is a general description of the particular types of
utilities industries in which the Global Utilities Fund may invest.
Electric Utility Industry. Electric utilities are heavily regulated.
Local rates are subject to the review of state commissions, and sales either
between companies or that cross state lines are subject to review by the
Federal Energy Regulatory Commission. The industry is also subject to
regulation by the SEC under the Public Utility Holding Company Act of 1935. In
addition, companies constructing or operating nuclear powered generating
stations are subject to extensive regulation by the Nuclear Regulatory
Commission.
Electric utility companies are also subject to extensive local
regulation in environmental and site location matters. Future legislation with
regard to the issues of acid rain and toxic and radioactive wastes could have a
significant impact on the manner in which utility companies conduct their
business, and the costs that they incur. Since the late 1970s, investor-owned
utilities have experienced a number of unfavorable regulatory trends, including
increased regulatory resistance to price increases and new legislation
encouraging competition.
Electric utilities have recently become subject to competition in
varying degrees. This competition can have the effect of decreasing revenues
and profit margins.
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Natural Gas Industry. The natural gas industry is comprised primarily
of many small distribution companies and a few large interstate pipeline
companies. The Public Utility Holding Company Act of 1935 has generally acted
as a bar to the consolidation of pipeline and distribution companies.
Regulation of these companies is similar to that of electric companies. The
performance of natural gas utilities may also be substantially affected by
fluctuations in energy prices. Competition in the natural gas industry has
resulted in the consolidation of the industry.
Communications Industry. Most of the communications industry capacity
is concentrated in the hands of a few very large publicly-held companies,
unlike the situation in the electric and gas industries. Significant risks for
the investor to overcome still exist, however, including risk relating to
pricing at marginal versus embedded cost. New entrants may have lower costs of
material due to newer technologies or lower standards of reliability than those
heretofore imposed by American Telephone & Telegraph ("AT&T") on the industry.
Accordingly, the marginal cost of incremental service is much lower than the
costs embedded in an existing network. Communications companies are not subject
to the Public Utility Holding Company Act of 1935.
Interstate communications service may be subject to Federal
Communications Commission regulation. Local service may be regulated by the
states. In addition, AT&T and its former subsidiaries are still subject to
judicial review pursuant to the settlement of the antitrust case brought
against them by the Department of Justice.
Water Utility Industry. The water utility industry is composed of
regulated public utilities that are involved in the distribution of drinking
water to densely populated areas. The industry is geographically diverse and
subject to the same rate base and rate of return regulations as are other
public utilities. Demand for water is most heavily influenced by the local
weather, population growth in the service area and new construction. Supplies
of clean, drinkable water are limited and are primarily a function of the
amount of past rainfall.
Other. In addition to the particular types of utilities industries
described above, the Fund may invest in developing utility technology companies
(such as cellular telephone, fiber optics and satellite communications firms)
and in holding companies which derive a substantial portion of their revenues
from utility-related activities.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
The following discussion on options, futures and currency strategies
applies to the Aggressive Growth Fund, the Balanced Fund, the Capital
Appreciation Fund, the Capital Development Fund, the Global Growth and Income
Fund, the Global Utilities Fund, the Growth Fund, the Growth and Income Fund,
the International Fund, the Telecommunications Fund and the Value Fund.
INTRODUCTION
The Funds may each use forward contracts, futures contracts, options
on securities, options on indices, options on currencies, and options on
futures contracts to attempt to hedge against the overall level of investment
and currency risk normally associated with each Fund's investments. These
instruments are often referred to as "derivatives," which may be defined as
financial instruments whose performance is derived, at least in part, from the
performance of another asset (such as a security, currency or an index of
securities).
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GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Funds of options, futures contracts and forward
currency contracts involves special considerations and risks, as described
below. Risks pertaining to particular strategies are described in the sections
that follow.
(1) Successful use of hedging transactions depends upon AIM's ability
to correctly predict the direction of changes in the value of the applicable
markets and securities, contracts and/or currencies. While AIM is experienced
in the use of these instruments, there can be no assurance that any particular
hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation,
between the price movements of an instrument (such as an option contract) and
the price movements of the investments being hedged. For example, if a
"protective put" is used to hedge a potential decline in a security and the
security does decline in price, the put option's increased value may not
completely offset the loss in the underlying security. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as changing interest rates, market liquidity,
and speculative or other pressures on the markets in which the hedging
instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies can also
reduce opportunity for gain by offsetting the positive effect of favorable
price movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist
for any particular option, futures contract, forward contract or option thereon
at any particular time.
(5) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties. If a Fund were
unable to close out its positions in such instruments, it might be required to
continue to maintain such assets or accounts or make such payments until the
position expired or matured. The requirements might impair the Fund's ability
to sell a portfolio security or make an investment at a time when it would
otherwise be favorable to do so, or require that the Fund sell a portfolio
security at a disadvantageous time.
(6) There is no assurance that a Fund will use hedging transactions.
For example, if a Fund determines that the cost of hedging will exceed the
potential benefit to the Fund, the Fund will not enter into such transaction.
COVER
Transactions using forward contracts, futures contracts and options
(other than options purchased by a Fund) expose a Fund to an obligation to
another party. A Fund will not enter into any such transactions unless it owns
either (1) an offsetting ("covered") position in securities, currencies, or
other options, forward contracts or futures contracts or (2) cash, liquid
assets and/or short-term debt securities with a value sufficient at all times
to cover its potential obligations not covered as provided in (1) above. Each
Fund will comply with SEC guidelines regarding cover for these instruments and,
if the guidelines so require, set aside cash or liquid securities.
Assets used as cover cannot be sold while the position in the
corresponding forward contract, futures contract or option is open, unless they
are replaced with other appropriate assets. If a large portion of a Fund's
assets is used for cover or otherwise set aside, it could affect portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.
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WRITING CALL OPTIONS
Each of the Funds may write (sell) covered call options on securities,
futures contracts, forward contracts, indices and currencies. As the writer of
a call option, a Fund would have the obligation to deliver the underlying
security, cash or currency (depending on the type of derivative) to the holder
(buyer) at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of a Fund continues, it may be assigned an exercise notice,
requiring it to deliver the underlying security, cash or currency against
payment of the exercise price. This obligation terminates upon the expiration
of the call option, or such earlier time at which a Fund effects a closing
purchase transaction by purchasing an option identical to that previously sold.
When writing a call option a Fund, in return for the premium, gives up
the opportunity for profit from a price increase in the underlying security,
contract or currency above the exercise price, and retains the risk of loss
should the price of the security, contract or currency decline. Unlike one who
owns securities, contracts or currencies not subject to an option, a Fund has
no control over when it may be required to sell the underlying securities,
contracts or currencies, since most options may be exercised at any time prior
to the option's expiration. If a call option that a Fund has written expires,
it will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security, contract or
currency during the option period. If the call option is exercised, a Fund will
realize a gain or loss from the sale of the underlying security, contract or
currency, which will be increased or offset by the premium received.
Writing call options can serve as a limited hedge because declines in
the value of the hedged investment would be offset to the extent of the premium
received for writing the option.
Closing transactions may be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security, contract or
currency from being called or to permit the sale of the underlying security,
contract or currency. Furthermore, effecting a closing transaction will permit
the Fund to write another call option on the underlying security, contract or
currency with either a different exercise price or expiration date, or both.
WRITING PUT OPTIONS
Each of the Funds may write (sell) covered put options on securities,
futures contracts, forward contracts, indices and currencies. As the writer of
a put option, a Fund would have the obligation to buy the underlying security,
contract or currency (depending on the type of derivative) at the exercise
price at any time until (American style) or on (European style) the expiration
date. This obligation terminates upon the expiration of the put option, or such
earlier time at which a Fund effects a closing purchase transaction by
purchasing an option identical to that previously sold.
A Fund would write a put option at an exercise price that, reduced by
the premium received on the option, reflects the lower price it is willing to
pay for the underlying security, contract or currency. The risk in such a
transaction would be that the market price of the underlying security, contract
or currency would decline below the exercise price less the premium received.
PURCHASING PUT OPTIONS
Each of the Funds may purchase put options on securities, futures
contracts, forward contracts, indices and currencies. As the holder of a put
option, a Fund would have the right to sell the underlying security, contract
or currency at the exercise price at any time until (American style) or on
(European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such options, exercise such option or permit such
option to expire.
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A Fund may purchase a put option on an underlying security, contract
or currency ("protective put") owned by the Fund in order to protect against an
anticipated decline in the value of the security, contract or currency. Such
hedge protection is provided only during the life of the put option. The
premium paid for the put option and any transaction costs would reduce any
profit realized when the security, contract or currency is delivered upon
exercise of said option. Conversely, if the underlying security, contract or
currency does not decline in value, the option may expire worthless and the
premium paid for the protective put would be lost.
A Fund may also purchase put options on underlying securities,
contracts or currencies against which it has written other put options. For
example, where a Fund has written a put option on an underlying security,
rather than entering a closing transaction of the written option, it may
purchase a put option with a different exercise price and/or expiration date
that would eliminate some or all of the risk associated with the written put.
Used in combinations, these strategies are commonly referred to as "put
spreads." Likewise, a Fund may write call options on underlying securities,
contracts or currencies against which it has purchased protective put options.
This strategy is commonly referred to as a "collar."
PURCHASING CALL OPTIONS
Each of the Funds may purchase covered call options on securities,
futures contracts, forward contracts, indices and currencies. As the holder of
a call option, a Fund would have the right to purchase the underlying security,
contract or currency at the exercise price at any time until (American style)
or on (European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
Call options may be purchased by a Fund for the purpose of acquiring
the underlying security, contract or currency for its portfolio. Utilized in
this fashion, the purchase of call options would enable a Fund to acquire the
security, contract or currency at the exercise price of the call option plus
the premium paid. So long as it holds such a call option, rather than the
underlying security or currency itself, the Fund is partially protected from
any unexpected decline in the market price of the underlying security, contract
or currency and, in such event, could allow the call option to expire,
incurring a loss only to the extent of the premium paid for the option.
Each of the Funds may also purchase call options on underlying
securities, contracts or currencies against which it has written other call
options. For example, where a Fund has written a call option on an underlying
security, rather than entering a closing transaction of the written option, it
may purchase a call option with a different exercise price and/or expiration
date that would eliminate some or all of the risk associated with the written
call. Used in combinations, these strategies are commonly referred to as "call
spreads."
Options may be either listed on an exchange or traded in
over-the-counter ("OTC") markets. Listed options are third-party contracts
(i.e., performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation) and have standardized strike prices
and expiration dates. OTC options are two-party contracts with negotiated
strike prices and expiration dates. A Fund will not purchase an OTC option
unless it believes that daily valuations for such options are readily
obtainable. OTC options differ from exchange-traded options in that OTC options
are transacted with dealers directly and not through a clearing corporation
(which guarantees performance). Consequently, there is a risk of
non-performance by the dealer. Since no exchange is involved, OTC options are
valued on the basis of an average of the last bid prices obtained from dealers,
unless a quotation from only one dealer is available, in which case only that
dealer's price will be used. In the case of OTC options, there can be no
assurance that a liquid secondary market will exist for any particular option
at any specific time. Although a Fund will enter into OTC options only with
dealers that are expected to be capable of entering into closing transactions
with it, there is no assurance that the Fund will in fact be able to close out
an OTC option position at a favorable price prior to expiration. In the event
of insolvency of the dealer, a Fund might be unable to close out an OTC option
position at any time prior to its expiration.
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The staff of the SEC considers purchased OTC options to be illiquid
securities. A Fund may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written
by it. The assets used as cover for OTC options written by the Fund will be
considered illiquid unless the OTC options are sold to qualified dealers who
agree that the Fund may repurchase any OTC option it writes at a maximum price
to be calculated by a formula set forth in the option agreement. The cover for
an OTC option written subject to this procedure would be considered illiquid
only to the extent that the maximum repurchase price under the formula exceeds
the intrinsic value of the option.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities
or futures contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price movements in the
securities market or a particular market sector generally) rather than on price
movements in individual securities or futures contracts. The amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the call or put times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options
on securities. Because index options are settled in cash, when a Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will not
be perfectly correlated with the value of the index.
LIMITATIONS ON OPTIONS
A Fund will not write options if, immediately after such sale, the
aggregate value of securities or obligations underlying the outstanding options
exceeds 20% of the Fund's total assets. A Fund will not purchase options if, at
the time of the investment, the aggregate premiums paid for the options will
exceed 5% of the Fund's total assets.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each of the Funds may enter into interest rate, currency or stock
index futures contracts (collectively, "Futures" or "Futures Contracts") as a
hedge against changes in prevailing levels of interest rates, currency exchange
rates or stock price levels, respectively, in order to establish more
definitely the effective return on securities or currencies held or intended to
be acquired by it. A Fund's hedging may include sales of Futures as an offset
against the effect of expected increases in interest rates, and decreases in
currency exchange rates and stock prices, and purchases of Futures as an offset
against the effect of expected declines in interest rates, and increases in
currency exchange rates or stock prices.
A Futures Contract is a two party agreement to buy or sell a specified
amount of a specified security or currency (or delivery of a cash settlement
price, in the case of an index future) for a specified price at a designated
date, time and place. A stock index future provides for the delivery, at a
designated date, time and place, of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close
of trading on the contract and the price agreed upon in the Futures Contract;
no physical delivery of stocks comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Future is outstanding.
The Funds will only enter into Futures Contracts that are traded on
futures exchanges and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading thereon
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in the United States are regulated under the Commodity Exchange Act and by the
Commodity Futures Trading Commission ("CFTC").
Closing out an open Future is effected by entering into an offsetting
Future for the same aggregate amount of the identical financial instrument or
currency and the same delivery date. There can be no assurance, however, that a
Fund will be able to enter into an offsetting transaction with respect to a
particular Future at a particular time. If a Fund is not able to enter into an
offsetting transaction, it will continue to be required to maintain the margin
deposits on the Future.
A Fund's Futures transactions will be entered into for hedging
purposes only; that is, Futures will be sold to protect against a decline in
the price of securities or currencies that the Fund owns, or Futures will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and maintain its open
positions in Futures. A margin deposit made when the Futures Contract is
entered ("initial margin") is intended to ensure the Fund's performance under
the Futures Contract. The margin required for a particular Future is set by the
exchange on which the Future is traded and may be significantly modified from
time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the
futures commission merchant through which a Fund entered into the Futures
Contract will be made on a daily basis as the price of the underlying security,
currency or index fluctuates making the Futures more or less valuable, a
process known as marking-to-market.
If a Fund were unable to liquidate a Future or an option on a Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a
segregated account.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or
currencies except that options on Futures Contracts give the purchaser the
right, in return for the premium paid, to assume a position in a Futures
Contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. Upon exercise of the option, the delivery of the Futures position
by the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's Futures margin account.
FORWARD CONTRACTS
A forward contract is an obligation, usually arranged with a
commercial bank or other currency dealer, to purchase or sell a currency
against another currency at a future date and price as agreed upon by the
parties. A Fund either may accept or make delivery of the currency at the
maturity of the forward contract. A Fund may also, if its contra party agrees
prior to maturity, enter into a closing transaction involving the purchase or
sale of an offsetting contract. Forward contracts are traded over-the-counter,
and not on organized commodities or securities exchanges. As a result, it may
be more difficult to value such contracts, and it may be difficult to enter
into closing transactions.
Each of the Funds may engage in forward currency transactions in
anticipation of, or to protect itself against, fluctuations in exchange rates.
A Fund may enter into forward contracts with respect to a specific
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purchase or sale of a security, or with respect to its portfolio positions
generally. When a Fund purchases a security denominated in a foreign currency
for settlement in the near future, it may immediately purchase in the forward
market the currency needed to pay for and settle the purchase. By entering into
a forward contract with respect to the specific purchase or sale of a security
denominated in a foreign currency, the Fund can secure an exchange rate between
the trade and settlement dates for that purchase or sale transaction. This
practice is sometimes referred to as "transaction hedging." Position hedging is
the purchase or sale of foreign currency with respect to portfolio security
positions denominated or quoted in a foreign currency.
The cost to a Fund of engaging in forward contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because forward contracts are usually
entered into on a principal basis, no fees or commissions are involved. The use
of forward contracts does not eliminate fluctuations in the prices of the
underlying securities a Fund owns or intends to acquire, but it does establish
a rate of exchange in advance. In addition, while forward contract sales limit
the risk of loss due to a decline in the value of the hedged currencies, they
also limit any potential gain that might result should the value of the
currencies increase.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on
Futures Contracts and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish
those positions (excluding the amount by which options are "in-the-money") will
not exceed 5% of the total assets of the Fund, after taking into account
unrealized profits and unrealized losses on any contracts it has entered into.
This guideline may be modified by the Board, without a shareholder vote. This
limitation does not limit the percentage of the Fund's assets at risk to 5%.
HEDGING AND OTHER INVESTMENT TECHNIQUES
The following discussion on hedging and other investment techniques
applies to the Diversified Income Fund, the Government Fund and the High Yield
Fund.
OPTIONS
Each of the Funds may write (sell) "covered" put and call options and
buy put and call options, including securities index and foreign currency
options. A call option is a contract that gives to the holder the right to buy
a specified amount of the underlying security at a fixed or determinable price
(called the exercise or strike price) upon exercise of the option. A put option
is a contract that gives the holder the right to sell a specified amount of the
underlying security at a fixed or determinable price upon exercise of the
option. In the case of index options, exercises are settled through the payment
of cash rather than the delivery of property. A call option is covered if, for
example, the Fund owns or has the right to acquire the underlying security
covered by the call or, in the case of a call option on an index, holds
securities the price changes of which are expected to substantially replicate
the movement of the index. A put option is covered if, for example, the Fund
segregates liquid assets with a value equal to the exercise price of the put
option.
These Funds may write call options on securities or securities indexes
for the purpose of increasing their return (through receipt of premiums) or to
provide a partial hedge against a decline in the value of their portfolio
securities or both. In return for the premium income, the Fund loses any
opportunity to profit from an increase in the market price of the underlying
securities, above the exercise price, while the contract is outstanding, except
to the extent the premium represents a profit. The Fund also retains the risk
of loss if the price of the security declines, although the premium is intended
to offset that loss in whole or in part. As long as its obligations under the
option continue, a Fund must assume that the call may be exercised at any time
and that the net proceeds realized from the sale of the underlying securities
pursuant to the call may be
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substantially below the prevailing market price. These Funds may write put
options on securities or securities indexes in order to earn additional income
or (in the case of put options written on individual securities) to purchase
the underlying security at a price below the current market price. If a Fund
writes an option which expires unexercised or is closed out by the Fund at a
profit, it will retain all or part of the premium received for the option,
which will increase its gross income. If the price of the underlying security
moves adversely to the Fund's position, the option may be exercised and the
Fund will be required to sell or purchase the underlying security at a
disadvantageous price, or, in the case of index options, deliver an amount of
cash, which loss may only be partially offset by the amount of premium
received.
A Fund may enter into a "closing purchase transaction", by purchasing
an option identical to the one it has written, and terminate its obligations
under the covered call. The Fund will realize a gain (or loss) from a closing
purchase transaction if the amount paid to purchase a call option is less (or
more) than the premium received upon writing the corresponding call option. Any
loss resulting from the exercise or closing out of a call option is likely to
be offset in whole or in part by unrealized appreciation of the underlying
security owned by the Fund primarily because a price increase of a call option
generally reflects an increase in the market price of the securities on which
the option is based. In order to sell portfolio securities that cover a call
option, a Fund will effect a closing purchase transaction so as to close out
any existing covered call option on those securities. A closing purchase
transaction for exchange-traded options may be made only on a national
securities exchange. A liquid secondary market on an exchange may not always
exist for any particular option, or at any particular time, and, for some
options, such as over-the-counter options, no secondary market on an exchange
may exist. If a Fund is unable to effect a closing purchase transaction, the
Fund will not sell the underlying security until the option expires or the Fund
delivers the underlying security upon exercise.
A Fund may effect a closing purchase transaction to realize a profit
on an outstanding put option or to prevent an outstanding put option from being
exercised. If a Fund is able to enter into a closing purchase transaction, the
Fund will realize a profit (or loss) from that transaction if the cost of the
transaction is less (or more) than the premium received from the writing of the
option. After writing a put option, a Fund may incur a loss equal to the
difference between the exercise price of the option and the sum of the market
value of the underlying securities plus the premiums received from the sale of
the option.
Each of the Funds noted above may also purchase put or call options on
securities and securities indexes in order to hedge against changes in interest
rates or stock prices which may adversely affect the prices of securities that
the Fund wants to purchase at a later date, to hedge its existing investments
against a decline in value, or to attempt to reduce the risk of missing a
market or industry segment advance. In the event that the expected changes in
interest rates or stock prices occur, the Fund may be able to offset the
resulting adverse effect on the Fund by exercising or selling the options
purchased. The premium paid for a put or call option plus any transaction costs
will reduce the benefit, if any, realized by the Fund upon exercise or
liquidation of the option. Unless the price of the underlying security or level
of the securities index changes by an amount in excess of the premium paid, the
option may expire without value to the Fund.
The purchase of put options on securities enables a Fund to preserve,
at least partially, unrealized gains in an appreciated security in its
portfolio without actually selling the security. In addition, the Fund may
continue to receive interest or dividend income on the security.
An option on a securities index, unlike a stock option (which gives
the holder the right to purchase or sell a specified stock at a specified
price) gives the holder the right to receive a cash "exercise settlement
amount" equal to (i) the difference between the exercise price of the option
and the value of the underlying stock index on the exercise date, multiplied by
(ii) a fixed "index multiplier." A securities index fluctuates with changes in
the market values of the securities included in the index. For example, some
securities index options are based on a broad market index such as the S&P 500
or the NYSE Composite Index, or a narrower market index such as the S&P 100.
Indexes may also be based on an industry or market segment such as the AMEX Oil
and Gas Index or the Computer and Business Equipment Index. Options on stock
indexes are currently traded on the following exchanges, among others: The
Chicago Board Options Exchange, New York
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Stock Exchange, and American Stock Exchange. Options on indexes of debt
securities and other types of securities indexes are not currently available.
If such options are introduced and traded on exchanges in the future, the Funds
may use them.
The value of securities index options in any investment strategy
depends upon the extent to which price movements in the portion of the
underlying securities correlate with price movements in the selected securities
index. Perfect correlation is not possible because the securities held or to be
acquired by a Fund will not exactly match the composition of the securities
indexes on which options are written. In the purchase of securities index
options the principal risk is that the premium and transaction costs paid by a
Fund in purchasing an option will be lost if the changes (increase in the case
of a call, decrease in the case of a put) in the level of the index do not
exceed the cost of the option. In writing securities index options, the
principal risk is that a Fund could bear a loss on the options that would be
only partially offset (or not offset at all) by the increased value or reduced
cost of the hedged securities. Moreover, in the event the Fund were unable to
close an option it had written, it might be unable to sell the securities used
as cover.
The Fund, for hedging purposes, may purchase and write options in
combination with each other to adjust the risk and return characteristics of
the Fund's overall position. For example, the Fund may purchase a put option
and write a covered call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics are similar
to selling a futures contract. This technique, called a "collar," enables the
Fund to offset the cost of purchasing a put option with the premium received
from writing the call option. However, by selling the call option, the Fund
gives up the ability for potentially unlimited profit from the put option.
Another possible combined position would involve writing a covered call option
at one strike price and buying a call option at a lower price, in order to
reduce the risk of the written covered call option in the event of a
substantial price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.
Options purchased or written by a Fund may be traded on the national
securities exchanges or negotiated with a dealer. Options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, it may be
difficult to enter into closing transactions with respect to such options. Such
options and the securities used as "cover" for such options, unless otherwise
indicated, would be considered illiquid securities.
In instances in which a Fund has entered into agreements with primary
dealers with respect to the over-the-counter options it has written, and such
agreements would enable the Fund to have an absolute right to repurchase at a
pre-established formula price the over-the-counter option written by it, the
Fund would treat as illiquid only securities equal in amount to the formula
price described above less the amount by which the option is "in-the-money,"
i.e, the price of the option exceeds the exercise price.
Each of the Funds may purchase put and call options and write covered
put and call options on foreign currencies for the purpose of protecting
against declines in the dollar value of portfolio securities and against
increases in the dollar cost of securities to be acquired. Such investment
strategies will be used as a hedge and not for speculation. As in the case of
other types of options, the writing of an option on foreign currency will
constitute a hedge, however it differs in that it is only a partial hedge, up
to the amount of the premium received. Moreover, the Fund could be required to
purchase or sell foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may constitute
an effective hedge against fluctuations in exchange rates although, in the
event of rate movements adverse to the Fund's position, it may forfeit the
entire amount of the premium plus related transaction costs. Options on foreign
currencies may be traded on the national securities exchange or in the
over-the-counter market. As described above, options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, it may be
difficult to enter into closing transactions with respect to options traded
over-the-counter.
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Options are subject to certain risks, including the risk of imperfect
correlation between the option and the applicable Fund's other investments and
the risk that there may not be a liquid secondary market for the option when
the Fund seeks to hedge against adverse market movements. This may cause the
Fund to lose the entire premium on purchase options or reduce its ability to
effect closing transactions at favorable prices.
The Funds will not write options if, immediately after such sale, the
aggregate value of the securities or obligations underlying the outstanding
options exceeds 25% of the applicable Fund's total assets. The Funds will not
purchase options if, at the time of the investment, the aggregate premiums paid
for outstanding options will exceed 5% of the applicable Fund's total assets.
FUTURES AND FORWARD CONTRACTS
Each of the Funds may purchase and sell futures contracts on debt
securities and on indexes of debt securities to hedge against anticipated
changes in interest rates that might otherwise have an adverse effect on the
value of their assets or assets they intend to acquire. In addition, they may
purchase and sell stock index futures contracts to hedge the value of the
portfolio against changes in market conditions. These Funds may also purchase
put and call options on futures contracts and write "covered" put and call
options on futures contracts in order to hedge against changes in interest
rates or stock prices. A futures contract is a bilateral agreement to buy or
sell a security (or deliver a cash settlement price, in the case of an index
future) for a set price in the future. When the contract is entered into, a
good faith deposit, known as initial margin, is made with the broker.
Subsequent daily payments, known as variation margin, are made to and by the
broker reflecting changes in the value of the security or level of the index.
Futures contracts are authorized by boards of trade designated as "contracts
markets" by the Commodity Futures Trading Commission ("CFTC"). Certain results
may be accomplished more quickly, and with lower transaction costs, in the
futures market (because of its greater liquidity) than in the cash market.
In cases of purchases of futures contracts, an amount of liquid
assets, equal to the cost of the futures contracts (less any related margin
deposits), will be segregated to collateralize the position and ensure that the
use of such futures contracts is unleveraged. Unlike when a Fund purchases or
sells a security, no price is paid or received by a Fund upon the purchase or
sale of a future contract. Initially, a Fund will be required to deposit with
its custodian for the account of the broker a stated amount, as called for by
the particular contract, of liquid assets. This amount is known as "initial
margin." The nature of initial margin in futures transactions is different from
that of margin in securities transactions in that futures contract margin does
not involve the borrowing of funds by the customer to finance the transactions.
Rather, the initial margin is in the nature of a performance bond or
good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract assuming all contractual obligations have
been satisfied. Subsequent payments, called "variation margin," to and from the
broker will be made on a daily basis as the price of the futures contract
fluctuates, making the long and short positions in the futures contract more or
less valuable. This process is known as "marking-to-market." For example, when
a Fund has purchased a stock index futures contract and the price of the
underlying stock index has risen, that position will have increased in value
and the Fund will receive from the broker a variation margin payment with
respect to that increase in value. Conversely, where a Fund has purchased a
stock index futures contract and the price of the underlying stock index has
declined, that position would be less valuable and the Fund would be required
to make a variation margin payment to the broker. Variation margin payments
would be made in similar fashion when a Fund has purchased an interest rate
futures contract. At any time prior to expiration of the futures contract, a
Fund may elect to close the position by taking an opposite position which will
operate to terminate the Fund's position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the Fund and the Fund realizes a loss or a gain.
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A Fund will incur brokerage fees when it purchases and sells futures
contracts, and it will be required to maintain margin deposits. Positions taken
in the futures markets are typically liquidated through offsetting
transactions, which may result in a gain or a loss, before delivery or cash
settlement is required. However, a Fund may close out a position by making or
taking delivery of the underlying securities wherever it appears economically
advantageous to do so.
Purchases of options on futures contracts may present less risk than
the purchase and sale of the underlying futures contracts, since the potential
loss is limited to the amount of the premium plus related transaction costs. A
call option on a futures contract gives the purchaser the right, in return for
the premium paid, to purchase a futures contract (assume a "long" position) at
a specified exercise price at any time before the option expires. A put option
gives the purchaser the right, in return for the premium paid, to sell a
futures contract (assume a "short" position), for a specified exercise price,
at any time before the option expires.
Positions in futures contracts may be closed out only on an exchange
or a board of trade which provides the market for such futures. Although the
Funds intend to purchase or sell futures only on exchanges or boards of trade
where there appears to be an active market, there may not always be a liquid
market, and it may not be possible to close a futures position at that time; in
the event of adverse price movements, a Fund would continue to be required to
make daily cash payments of maintenance margin. Whenever futures positions are
used to hedge portfolio securities, however, any increase in the price of the
underlying securities held by the Fund may partially or completely offset
losses on the futures contracts.
If a broker or clearing member of an options or futures clearing
corporation were to become insolvent, the Funds could experience delays and
might not be able to trade or exercise options or futures purchased through
that broker. In addition, the Funds could have some or all of their positions
closed out without their consent. If substantial and widespread, these
insolvencies could ultimately impair the ability of the clearing corporations
themselves. While the principal purpose of engaging in these transactions is to
limit the effects of adverse market movements, the attendant expense may cause
the Funds' returns to be less than if the transactions had not occurred. Their
overall effectiveness, therefore, depends on AIM's accuracy in predicting
future changes in interest rate levels or securities price movements, as well
as on the expense of engaging in these transactions.
Although the Funds are authorized to invest in futures contracts and
related options with respect to non-U.S. instruments, they will limit such
investments to those which have been approved by the Commodity Futures Trading
Commission ("CFTC") for investment by U.S. investors. These Funds may enter
into futures contracts and buy and sell related options, provided that the
futures contracts and related options investments are made for "bona fide
hedging" purposes, as defined under CFTC regulations. No more than 5% of a
Fund's total assets will be committed to initial margin deposits required
pursuant to futures contracts. Percentage investment limitations on a Fund's
investment in options on futures contracts are set forth above under "Options."
To the extent that any of the Funds invests in securities denominated
in foreign currencies (which is a significant portion of securities held by the
Diversified Income Fund), the value of the Fund's portfolio will be affected by
changes in exchange rates between currencies (including the U.S. dollar), as
well as by changes in the market value of the securities themselves. In order
to mitigate the effects of such changes, each of the Funds may enter into
futures contracts on foreign currencies (and related options) and may enter
into forward contracts for the purchase or sale of a specific currency at a
future date at a price set at the time of the contract. Forward contracts are
traded over-the-counter, and not on organized commodities or securities
exchanges. As a result, it may be more difficult to value such contracts, and
it may be difficult to enter into closing transactions with respect to them.
In managing their currency exposure, the Funds may buy and sell
currencies either in the spot (cash) market or in the forward market (through
forward contracts generally expiring within one year). The Funds may also enter
into forward contracts with respect to a specific purchase or sale of a
security, or with respect
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to their portfolio positions generally. When such a Fund purchases a security
denominated in a foreign currency for settlement in the near future, it may
immediately purchase in the forward market the currency needed to pay for and
settle the purchase. By entering into a forward contract with respect to the
specific purchase or sale of a security denominated in a foreign currency, the
applicable Fund can secure an exchange rate between the trade and settlement
dates for that purchase or sale transaction. This practice is sometimes
referred to as "transaction hedging." Positions hedging is the purchase or sale
of foreign currency with respect to portfolio security positions (or underlying
portfolio positions, such as in an ADR) denominated or quoted in a foreign
currency. Unlike futures contracts, forward contracts are generally
individually negotiated and privately traded. A forward contract obligates the
seller to sell a specific security or currency at a specific price on a future
date, which may be any fixed number of days from the date of the contract. The
Funds may enter into forward contracts for transaction hedging purposes with
respect to all or a substantial portion of their trades. The Funds will not
speculate in foreign exchange nor commit a larger percentage of their total
assets to foreign exchange hedges than the percentage of their total assets
which they could invest in foreign securities.
There are risks associated with hedging transactions. During certain
market conditions, a hedging transaction may not completely offset a decline or
rise in the value of the Fund's portfolio securities or currency being hedged.
In addition, changes in the market value of securities or currencies may differ
substantially from the changes anticipated by the Fund when hedged positions
were established. Successful use of hedging transactions is dependent upon
AIM's ability to predict correctly movements in the direction of the applicable
markets. No assurance can be given that AIM's judgment in this respect will be
correct. Accordingly, a Fund may lose the expected benefit of hedging if
markets move in an unanticipated manner. Moreover, in the futures and options
on futures markets, it may not always be possible to execute a put or sell at
the desired price, or to close out an open position due to market conditions,
limits on open positions, and/or daily price fluctuations.
RISK FACTORS
Investors should consider carefully the following special factors before
investing in any of the Funds.
SMALL CAPITALIZATION COMPANIES
Investors should realize that equity securities of small to
medium-sized companies may involve greater risk than is associated with
investing in more established companies. Small to medium-sized companies often
have limited product and market diversification, fewer financial resources or
may be dependent on a few key managers. Any one of the foregoing may change
suddenly and have an immediate impact on the value of the company's securities.
Furthermore, whenever the securities markets are experiencing rapid price
changes due to national economic trends, secondary growth securities have
historically been subject to exaggerated price changes.
NON-INVESTMENT GRADE DEBT SECURITIES
The Balanced Fund, the Diversified Income Fund, the High Yield Fund,
and to a lesser extent the Global Utilities Fund and the Telecommunications
Fund, seek to meet their respective investment objectives by investing in
non-investment grade debt securities, commonly known as "junk bonds." While
generally providing greater income and opportunity for gain, non-investment
grade debt securities may be subject to greater risks than higher-rated
securities. Economic downturns tend to disrupt the market for junk bonds and
adversely affect their values. Such economic downturns may be expected to
result in increased price volatility for junk bonds and of the value of shares
of the above-named Funds, and increased issuer defaults on junk bonds.
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In addition, many issuers of junk bonds are substantially leveraged,
which may impair their ability to meet their obligations. In some cases, junk
bonds are subordinated to the prior payment of senior indebtedness, which
potentially limits a Fund's ability to fully recover principal or to receive
payments when senior securities are subject to a default.
The credit rating of a junk bond does not necessarily address its
market value risk, and ratings may from time to time change to reflect
developments regarding the issuer's financial condition. Junk bonds have
speculative characteristics which are likely to increase in number and
significance with each successive lower rating category.
When the secondary market for junk bonds becomes more illiquid, or in
the absence of readily available market quotations for such securities, the
relative lack of reliable objective data makes it more difficult for the
Company's directors to value a Fund's securities, and judgment plays a more
important role in determining such valuations. Increased illiquidity in the
junk bond market also may affect a Fund's ability to dispose of such securities
at desirable prices.
In the event a Fund experiences an unexpected level of net
redemptions, the Fund could be forced to sell its junk bonds without regard to
their investment merits, thereby decreasing the asset based upon which the
Fund's expenses can be spread and possibly reducing the Fund's rate of return.
Prices of junk bonds have been found to be less sensitive to fluctuations in
interest rates, and more sensitive to adverse economic changes and individual
corporate developments, than those of higher-rated debt securities.
FOREIGN SECURITIES
Investments by a Fund in foreign securities whether denominated in
U.S. dollars or foreign currencies, may entail the following risks set forth
below. Investments by a Fund in ADRs, EDRs or similar securities also may
entail some or all of the risks described below.
CURRENCY RISK. The value of the Fund's foreign investments may be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security generally decreases when the value of the U.S. dollar rises
against the foreign currency in which the security is denominated, and tends to
increase when the value of the U.S. dollar falls against such currency.
On January 1, 1999, certain members of the European Economic and
Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain established a
common European currency known as the "euro" and each members's local currency
became a denomination of the euro. It is anticipated that each participating
country will replace its local currency with the euro on July 1, 2002. Any
other European country that is a member of the European Union and satisfies the
criteria for participation in the EMU may elect to participate in the EMU and
may supplement its existing currency with the euro. The anticipated replacement
of existing currencies with the euro on July 1, 2002 could cause market
disruptions before or after July 1, 2002 and could adversely affect the value
of securities held by the Fund.
POLITICAL AND ECONOMIC RISK. The economies of many of the countries in
which the Fund may invest are not as developed as the United States economy and
may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could also adversely affect the value of the
Fund's investments.
REGULATORY RISK. Foreign companies are generally not subject to the
regulatory controls imposed on United States issuers and, as a consequence,
there is generally less publicly available information about foreign securities
than is available about domestic securities. Foreign companies are not subject
to uniform accounting, auditing and financial reporting standards, practices
and requirements comparable to those
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applicable to domestic companies. Income from foreign securities owned by the
Fund may be reduced by a withholding tax at the source, which tax would reduce
dividend income payable to the Fund's shareholders.
MARKET RISK. The securities markets in many of the countries in which
the Fund invests will have substantially less trading volume than the major
United States markets. As a result, the securities of some foreign companies
and governments may be less liquid and experience more price volatility than
comparable domestic securities. Increased custodian costs as well as
administrative difficulties (such as the need to use foreign custodians) may be
associated with the maintenance of assets in foreign jurisdictions. There is
generally less government regulation and supervision of foreign stock
exchanges, brokers and issuers which may make it difficult to enforce
contractual obligations. In addition, transaction costs in foreign securities
markets are likely to be higher, since brokerage commission rates in foreign
countries are likely to be higher than in the United States.
In addition, there are risks associated with certain investment
strategies employed by the Funds as discussed in the previous section.
NON-DIVERSIFIED PORTFOLIO (GLOBAL UTILITIES FUND ONLY)
The Global Utilities Fund is a non-diversified portfolio, which means
that it may invest a greater proportion of its assets in the securities of a
smaller number of issuers and therefore may be subject to greater market and
credit risk than a more broadly diversified portfolio. (A diversified portfolio
may not invest more than 5% of its assets in obligations of one issuer, with
respect to 75% of its total assets.)
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
The following restrictions apply to all of the Funds and are
fundamental. Unless permitted by law, they will not be changed for any Fund
without approval of that Fund's voting securities.
None of the Funds will:
(1) invest for the purpose of exercising control over or management
over a company except that each Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order;
(2) act as an underwriter, except to the extent that, in connection
with the disposition of portfolio securities, the fund may be deemed to be an
underwriter for purposes of the 1933 Act;
(3) purchase or sell real estate or any interest therein, except that
each Fund may, as appropriate and consistent with its investment policies and
other investment restrictions, invest in securities of corporate or
governmental entities secured by real estate or marketable interests therein or
securities of issuers that engage in real estate operations or interests
therein, and may hold and sell real estate acquired as a result of ownership in
such securities;
(4) purchase or sell commodity contracts, except that each Fund may,
as appropriate and consistent with its investment policies and other investment
restrictions, enter into futures contracts on securities, securities indices
and currency, options on such futures contracts, forward foreign currency
exchange contracts, forward commitments and repurchase agreements;
(5) make loans, except for collateralized loans of portfolio
securities in an amount not exceeding 33-1/3% of the applicable Fund's total
assets. This restriction does not prevent a Fund from purchasing
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government obligations, short-term commercial paper, or publicly traded debt,
including bonds, notes, debentures, certificates of deposit, bankers acceptances
and equipment trust certificates, nor does this restriction apply to loans made
under insurance policies, or through entry into repurchase agreements, to the
extent they may be viewed as loans;
(6) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after such purchase, the
value of its investments in such industry would exceed 25% of its total assets
at market value at the time of each investment, except that the Money Market
Fund may invest up to 100% of its assets in obligations issued by banks. This
limitation does not apply to the Global Utilities Fund or to investments in
obligations of the U.S. Government or any of its agencies or instrumentalities
but will apply to foreign government obligations unless the Securities and
Exchange Commission permits their exclusion;
(7) issue senior securities, except to the extent permitted by the
1940 Act, including permitted borrowings;
(8) purchase securities of an issuer (other than investments in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or except that each Fund may purchase securities of other
investment companies to the extent permitted by applicable law or exemptive
order), if as a result with respect to 75% of the value of the Fund's total
assets, taken at market value, (i) more than 5% of the Fund's total assets
taken at market value would be invested in the securities of such issuer,
except that up to 25% of the Fund's total assets may be invested in securities
issued or guaranteed by any foreign government or its agencies or
instrumentalities, or (ii) such purchase would at the time result in more than
10% of the outstanding voting securities of such issuer being held by the Fund.
As a matter of operating policy, the Money Market Fund will invest no more than
5% of the value of that Fund's total assets in securities, other than U.S.
Government securities of any one issuer, except that the Money Market Fund may
invest up to 25% of its total assets in First Tier Securities (as defined in
Rule 2a-7 under the 1940 Act) of a single issuer for a period of up to three
business days after the purchase of such security. This restriction does not
apply to the Global Utilities Fund; and
(9) Each Fund may, not withstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental
investment objectives, policies and limitations as that Fund.
NON-FUNDAMENTAL RESTRICTIONS
The following investment restrictions apply to all of the Funds but
are not fundamental. They may be changed for any Fund without approval of that
Fund's voting securities.
(1) None of the Funds will invest more than 15% (10% for the Money
Market Fund) of its assets in securities restricted as to disposition under
federal securities laws, or securities otherwise considered illiquid or not
readily marketable, including repurchase agreements having a maturity of more
than seven days.
(2) None of the Funds will purchase or retain the securities of any
issuer if, to the knowledge of AIM, those officers and Directors of the
Company, its adviser or distributor owning individually more than 1/2 of 1% of
the securities of such issuer together own more than 5% of the securities of
such issuer.
(3) The Company does not currently intend to invest all of the assets
of any Fund in the securities of a single open-end management investment
company with the same fundamental investment objectives, policies and
limitations as that Fund.
(4) The Fund may not invest in securities issued by other investment
companies except as part of a merger, reorganization or other acquisition and
except to the extent permitted by (i) the 1940 Act, as amended
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from time to time, (ii) the rules and regulations promulgated by the SEC under
the 1940 Act, as amended from time to time, or (iii) an exemption or other
relief from the provisions of the 1940 Act.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during at least the last five years are set forth below. Unless
otherwise indicated, the address of each director and executive officer is 11
Greenway Plaza, Suite 100, Houston, Texas 77046.
POSITIONS HELD WITH
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
*CHARLES T. BAUER (80) Director and Chairman of the Board of Directors,
Chairman A I M Management Group Inc., A I M Advisors,
Inc., and A I M Capital Management, Inc.
BRUCE L. CROCKETT (55) Director Director, ACE Limited (insurance company),
906 Frome Lane Formerly, Director, President and Chief Executive
McLean, VA 22102 Officer, COMSAT Corporation and Chairman, Board
of Governors of INTELSAT, (international
communications company).
OWEN DALY II (74) Director Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel Corp.,
Baltimore, MD 21210 Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the
Board of Equitable Bancorporation.
EDWARD K. DUNN, JR. (63) Director Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp. Formerly, Vice Chairman of the
Baltimore, MD 21201 Board of Directors and President, Mercantile-Safe
Deposit & Trust Co.; and President, Mercantile
Bankshares.
JACK FIELDS (47) Director Chief Executive Officer, Texana Global, Inc.
8810 Will Clayton Parkway (foreign trading company) and Twenty First
Jetero Plaza, Suite E Century, Inc. (a governmental affairs company).
Humble, TX 77338 Formerly, Member of the U.S. House of
Representatives.
- --------------------------
* A director who is an "Interested person of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
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POSITIONS HELD WITH
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
*CARL FRISCHLING (62) Director Partner, Kramer, Levin, Naftalis & Frankel (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law
New York, NY 10022 firm).
**ROBERT H. GRAHAM (52) Director and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and
President, A I M Advisors, Inc.; Director and
Senior Vice President, A I M Capital
Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc., and Fund Management
Company; Director, AMVESCAP PLC.
PREMA MATHAI-DAVIS (48) Director Chief Executive Officer, YWCA of the U.S.A.;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for the
New York, NY 10118 Aging; and Member, Board of Directors,
Metropolitan Transportation Authority of New York
State.
LEWIS F. PENNOCK (56) Director Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
LOUIS S. SKLAR (59) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited Partnership
2800 Post Oak Blvd. (real estate development).
Houston, TX 77056
GARY T. CRUM (51) Senior Vice President Director and President, A I M Capital Management,
Inc.; Director and Senior Vice President,
A I M Management Group Inc. and A I M Advisors,
Inc.; and Director, A I M Distributors, Inc. and
AMVESCAP PLC.
- --------------------------
* A director who is an "Interested person of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
** A director who is an "Interested person" of the Company as defined in the
1940 Act.
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POSITIONS HELD WITH
NAME, ADDRESS AND AGE REGISTRANT PRINCIPAL OCCUPATION DURING PAST 5 YEARS
--------------------- ---------- ----------------------------------------
CAROL F. RELIHAN (44) Senior Vice Director, Senior Vice President, General Counsel
President and and Secretary, A I M Advisors, Inc.; Senior Vice
Secretary President, General Counsel and Secretary, A I M
Management Group Inc.; Director, Vice President
and General Counsel, Fund Management Company;
General Counsel and Vice President, A I M Fund
Services, Inc.; and Vice President, A I M Capital
Management, Inc., and A I M Distributors, Inc.
DANA R. SUTTON (40) Vice President and Vice President and Fund Controller,
Treasurer A I M Advisors, Inc.; and Assistant Vice
President and Assistant Treasurer, Fund
Management Company.
ROBERT G. ALLEY (50) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President,
A I M Advisors, Inc.
STUART W. COCO (43) Vice President Senior Vice President, A I M Capital Management,
Inc. and Vice President, A I M Advisors, Inc.
MELVILLE B. COX (55) Vice President Vice President and Chief Compliance Officer,
A I M Advisors, Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc., and Fund Management Company.
KAREN DUNN KELLEY (38) Vice President Senior Vice President, A I M Capital Management,
Inc. and Vice President, A I M Advisors, Inc.
EDGAR M. LARSEN (58) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn
(Chairman), Fields, Frischling, Pennock, Sklar and Ms. Mathai-Davis. The Audit
Committee is responsible for meeting with the Company's auditors to review
audit procedures and results and to consider any matters arising from an audit
to be brought to the attention of the directors as a whole with respect to the
Company's fund accounting or its internal accounting controls, or for
considering such matters as may from time to time be set forth in a Charter
adopted by the Board of Directors and such Committee.
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198
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly, Dunn, Fields, Frischling, Pennock, Sklar (Chairman) and Ms. Mathai-Davis.
The Investments Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution issues, or considering such matters as may from time to time be
set forth in a charter adopted by the Board of Directors and such Committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock, Sklar and Ms. Mathai-Davis.
The Nominating and Compensation Committee is responsible for considering and
nominating individuals to stand for election as directors who are not
interested persons, reviewing from time to time the compensation payable to the
disinterested directors, or considering such matters as may from time to time
be set forth in a charter adopted by the Board of Directors of such Committee.
All of the Company's Directors also serve as directors or trustees of
some or all of the other investment companies managed or advised by AIM. All of
the Directors' executive officers hold similar offices with some or all of the
other investment companies managed or advised by AIM.
Remuneration of Directors
Each director is reimbursed for expenses incurred in connection with
each meeting of the Board of Directors or any Committee thereof. Each director
of the Company who is not also an officer of the Company is compensated for his
services according to a fee schedule which recognizes the fact that such
director also serves as a director or trustee of certain other investment
companies advised or managed by AIM. Each such director receives a fee,
allocated among the AIM Funds for which he serves as a director or trustee,
which consists of an annual retainer component and a meeting fee component.
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199
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended December 31, 1998 for each director of the
Company:
RETIREMENT
BENEFITS
AGGREGATE ACCRUED TOTAL
COMPENSATION BY ALL AIM COMPENSATION
DIRECTOR FROM COMPANY(1) FUNDS(2) FROM ALL AIM FUNDS(3)
- ------------------------------ ----------------- -------------- ---------------------
Charles T. Bauer $ -0- $ -0- $ -0-
- ------------------------------ ----------------- -------------- --------------
Bruce L. Crockett $ 13,095 $ 37,485 $ 96,000
- ------------------------------ ----------------- -------------- --------------
Owen Daly II $ 13,095 $ 122,898 $ 96,000
- ------------------------------ ----------------- -------------- --------------
Edward K. Dunn, Jr. $ 11,098 $ -0- $ 78,889
- ------------------------------ ----------------- -------------- --------------
Jack Fields $ 13,024 $ 15,826 $ 95,500
- ------------------------------ ----------------- -------------- --------------
Carl Frischling(4) $ 13,024 $ 97,791 $ 95,500
- ------------------------------ ----------------- -------------- --------------
Robert H. Graham $ -0- $ -0- $ -0-
- ------------------------------ ----------------- -------------- --------------
John F. Kroeger(5) $ 8,980 $ 107,896 $ 91,654
- ------------------------------ ----------------- -------------- --------------
Prema Mathai-Davis $ 4,625 $ -0- $ 32,636
- ------------------------------ ----------------- -------------- --------------
Lewis F. Pennock $ 13,024 $ 45,766 $ 95,500
- ------------------------------ ----------------- -------------- --------------
Ian W. Robinson(6) $ 12,876 $ 94,442 $ 94,500
- ------------------------------ ----------------- -------------- --------------
Louis S. Sklar $ 12,952 $ 90,232 $ 95,500
- ------------------------------ ----------------- -------------- --------------
- -------------------------
(1) The total amount of compensation deferred by all Directors of the
Company during the fiscal year ended December 31, 1998, including
interest earned thereon, was $60,584.
(2) During the fiscal year ended December 31, 1998, the total amount of
expenses allocated to the Company in respect of such retirement
benefits was $21,293. Data reflects compensation estimated for the
calendar year ended December 31, 1998.
(3) Each Director serves as a director or trustee of a total of 12
registered investment companies advised by AIM. Data reflects
compensation estimated for the calendar year ended December 31, 1998.
(4) The Company paid the law firm of Kramer, Levin, Naftalis & Frankel LLP
$35,121 in legal fees for services provided to the Funds during the
fiscal year ended December 31, 1998. Mr. Frischling, a Director of the
Company, is a partner in such firm.
(5) Mr. Kroeger was a director until June 11, 1998, when he resigned. On
that date he became a consultant to the Company. Of the amount listed
above $4,723 was for compensation for service as a director and the
remainder as a consultant. Mr. Kroeger passed away on November 26,
1998. Mr. Kroeger's widow will receive his pension as described below
under "AIM Funds Retirement Plan for Eligible Directors/Trustee."
(6) Mr. Robinson was a director until March 12, 1999, when he retired.
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200
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not a employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
AIM Funds"). Each eligible director is entitled to receive an annual benefit
from the Applicable AIM Funds commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to a maximum
of 75% of the annual retainer paid or accrued by the Applicable AIM Funds for
such director during the twelve-month period immediately preceding the
director's retirement (including amounts deferred under a separate agreement
between the Applicable AIM Funds and the director) and based on the number of
such director's years of service (not in excess of 10 years of service)
completed with respect to any of the Applicable AIM Funds. Such benefit is
payable to each eligible director in quarterly installments. If an eligible
director dies after attaining the normal retirement date but before receipt of
any benefits under the Plan commences, the director's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased director, for no more than ten years beginning the first day of
the calendar quarter following the date of the director's death. Payments under
the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming a specified level of
compensation and years of service classifications. The estimated credited years
of service for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger,
Mathai-Davis, Pennock, Robinson and Sklar are 11, 12, 1, 2, 21, 21, 1, 17, 11
and 9 years, respectively.
ANNUAL BENEFITS UPON RETIREMENT
Number of Annual Retirement
Years of Paid By All AIM Funds
Service With
the Applicable AIM
Funds
------------------ ---------------------
10 $ 67,500
---------- ----------
9 $ 60,750
---------- ----------
8 $ 54,000
---------- ----------
7 $ 47,250
---------- ----------
6 $ 40,500
---------- ----------
5 $ 33,750
---------- ----------
Deferred Compensation Agreements
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors elected to defer receipt of 100% of their
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201
compensation payable by the Company, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of their deferral account shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will be
paid in cash, in generally equal quarterly installments over a period of five
(5) or ten (10) years (depending on the Agreement) beginning on the date the
deferring director's retirement benefits commence under the Plan. The Company's
Board of Directors, in its sole discretion, may accelerate or extend the
distribution of such deferral accounts after the deferring director's
termination of service as a director of the Company. If a deferring director
dies prior to the distribution of amounts in his deferral account, the balance
of the deferral account will be distributed to his designated beneficiary in a
single lump sum payment as soon as practicable after such deferring director's
death. The Agreements are not funded and, with respect to the payments of
amounts held in the deferral accounts, the deferring directors have the status
of unsecured creditors of the Company and of each other AIM Fund from which
they are deferring compensation.
INVESTMENT ADVISORY, SUB-ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS
Each Fund has entered into a master investment advisory agreement (the
"Advisory Agreement") dated February 28, 1997, and a master administrative
services agreement (the "Administrative Services Agreement"), dated May 1,
1998, with AIM. A prior investment advisory agreement with substantially
identical terms to the Advisory Agreement was in effect prior to February 28,
1997. A prior master administrative services agreement ("Prior Administrative
Services Agreement") with substantially similar terms to the Administrative
Services Agreement, was in effect prior to May 1, 1998. In addition, AIM has
entered into a Sub-Advisory Agreement, dated December 14, 1998, (the
"Sub-Advisory Agreement") with INVESCO Asset Management Limited ("INVESCO"), an
indirect wholly owned subsidiary of AMVESCAP PLC, with respect to Global Growth
and Income Fund. The address of INVESCO is 11 Devonshire Square, London,
England EC2 M4YR. See "Fund Management" in the Prospectus.
AIM was organized in 1976, and along with its subsidiaries, manages or
advises over 110 investment portfolios encompassing a broad range of investment
objectives. AIM is a wholly owned subsidiary of A I M Management Group, Inc.
("AIM Management"), a holding company that has been engaged in the financial
services business since 1976. The address of AIM is 11 Greenway Plaza, Suite
100, Houston, Texas 77046-1173.
AIM and the Company have adopted a Code of Ethics (the "Code of
Ethics") which requires investment personnel and certain other employees (a) to
pre-clear all personal securities transactions subject to the Code of Ethics,
(b) to file reports or duplicate confirmations regarding such transactions, (c)
to refrain from personally engaging in (i) short-term trading of a security,
(ii) transactions involving a security within seven days of an AIM Fund
transaction involving the same security, and (iii) transactions involving
securities being considered for investment by an AIM Fund and (d) abide by
certain other provisions under the Code of Ethics. The Code of Ethics also
prohibits investment personnel and all other employees from purchasing
securities in an initial public offering. Personal trading reports are reviewed
periodically by AIM, and the Board of Directors reviews quarterly and annual
reports (including information on any substantial violations of the Code of
Ethics). Sanctions for violations of the Code of Ethics may include censure,
monetary penalties, suspension or termination of employment.
The Advisory Agreement for the Funds provides that each Fund will pay
all expenses of the Fund, including, without limitation: brokerage commissions,
taxes, legal, auditing, or governmental fees, the cost of preparing share
certificates, custodian, transfer and shareholder service agent costs, expenses
of issue, sale, redemption and repurchase of shares, expenses of registering
and qualifying shares for sale, expenses relating to directors and shareholder
meetings, the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Company on behalf of
the Funds in connection with membership in investment company organizations,
the cost of printing copies of prospectuses and statements of additional
information distributed to the Fund's shareholders; and all other charges and
costs of the Fund's operations unless otherwise explicitly provided.
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202
The Advisory Agreement for the Funds and the Sub-Advisory Agreement
for Global Growth and Income Fund provides that the agreement will remain in
effect for the initial term and continue in effect from year to year thereafter
only if such continuance is specifically approved at least annually (i) by the
Company's Board of Directors or by the vote of a majority of the outstanding
voting securities of the Funds (as defined in the 1940 Act); and (ii) by the
affirmative vote of a majority of the directors who are not parties to the
agreement or "interested persons" of any such party (the "Non-Interested
Directors") by votes cast in person at a meeting called for such purpose. The
Advisory Agreement was initially approved by the Company's Board of Directors
(including the affirmative vote of all of the Non-Interested Directors) on
December 11, 1996 and was approved by the Funds' shareholders on February 7,
1997. The Board of Directors of the Company approved the continuance of the
Agreement until June 30, 1998. The Advisory Agreement became effective on
February 28, 1997. The Sub-Advisory Agreement was initially approved by the
Company's Board of Directors (including the affirmative vote of all of the
Non-Interested Directors) on September 26, 1998. The Sub-Advisory Agreement
became effective December 14, 1998. The Advisory Agreement provides that the
Company, AIM (in the case of the Advisory Agreement) or INVESCO (in the case of
the Sub-Advisory Agreement) may terminate such agreement with respect to any
Fund(s) on sixty (60) days' written notice without penalty. Each agreement
terminates automatically in the event of its assignment. As compensation for
its services, AIM pays 0.40% of the advisory fees it receives pursuant to the
Advisory Agreement with respect to Global Growth and Income Fund to INVESCO.
AIM may from time to time waive or reduce its fee. Voluntary fee
waivers or reductions may be rescinded at any time without further notice to
investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee prior to the end of each
fiscal year. Contractual fee waivers or reductions set forth in the Fee Table
in a Prospectus may not be terminated or amended to the Fund's detriment during
the period stated in the agreement between AIM and the Fund.
Pursuant to the Advisory Agreement, AIM receives a fee from each of
AIM V.I. Aggressive Growth Fund, AIM V.I. Balanced Fund, AIM V.I. Capital
Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Diversified
Income Fund AIM V.I. Global Growth and Income Fund, AIM V.I. Global Utilities
Fund, AIM V.I. Government Securities Fund, AIM V.I. Growth Fund, AIM V.I.
Growth and Income Fund, AIM V.I. High Yield Fund, AIM V.I. International Equity
Fund, AIM V.I. Money Market Fund, AIM V.I. Telecommunications Fund and AIM V.I.
Value Fund calculated at the following annual rate, based on the average daily
net assets of the Fund during the year:
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. GLOBAL UTILITIES FUND
AIM V.I. GROWTH FUND
AIM V.I. GROWTH AND INCOME FUND
AIM V.I. VALUE FUND
ANNUAL
NET ASSETS RATE
- ---------- --------
First $250 million............................................. 0.65%
Over $250 million ............................................. 0.60%
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203
AIM V.I. AGGRESSIVE GROWTH FUND
ANNUAL
NET ASSETS RATE
- ---------- ------
First $150 million............................................................................... 0.80%
Over $150 million ............................................................................... 0.625%
AIM V.I. BALANCED FUND
ANNUAL
NET ASSETS RATE
- ---------- ------
First $150 million............................................................................... 0.75%
Over $150 million ............................................................................... 0.50%
AIM V.I. CAPITAL DEVELOPMENT FUND
ANNUAL
NET ASSETS RATE
- ---------- ------
First $350 million............................................................................... 0.75%
Over $350 million ............................................................................... 0.625%
AIM V.I. DIVERSIFIED INCOME FUND
ANNUAL
NET ASSETS RATE
- ---------- ------
First $250 million............................................................................... 0.60%
Over $250 million ............................................................................... 0.55%
AIM V.I. GLOBAL GROWTH AND INCOME FUND
AIM V.I. TELECOMMUNICATIONS FUND
ANNUAL
NET ASSETS RATE
- ---------- ------
Average Daily Net Assets......................................................................... 1.00%
AIM V.I. GOVERNMENT SECURITIES FUND
ANNUAL
NET ASSETS RATE
- ---------- ------
First $250 million............................................................................... 0.50%
Over $250 million ............................................................................... 0.45%
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204
AIM V.I. HIGH YIELD FUND
ANNUAL
NET ASSETS RATE
- ---------- ------
First $200 million ............................................................................... 0.625%
Next $300 million ................................................................................ 0.55%
Next $500 million ................................................................................ 0.50%
Amount over $1 billion............................................................................ 0.45%
AIM V.I. INTERNATIONAL EQUITY FUND
ANNUAL
NET ASSETS RATE
- ---------- ------
First $250 million................................................................................ 0.75%
Over $250 million ................................................................................ 0.70%
AIM V.I. MONEY MARKET FUND
ANNUAL
NET ASSETS RATE
- ---------- ------
First $250 million ............................................................................... 0.40%
Over $250 million ................................................................................ 0.35%
Each of the following Funds (except the AIM V.I. Global Growth and
Income Fund and the AIM V.I. Telecommunications Fund) paid to AIM a management
fee (net of fee waivers) for the fiscal years ended December 31, 1998, December
31, 1997, and December 31, 1996, under the Advisory Agreement and a prior,
substantially identical advisory agreement, as follows:
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205
December 31, December 31, December 31,
1998 1997 1996
---- ---- ----
AIM V.I. Aggressive Growth Fund* $ 1,609 N/A N/A
AIM V.I. Balanced Fund* $ -0- N/A N/A
AIM V.I. Capital Appreciation Fund $ 3,521,837 $3,083,708 $1,884,838
AIM V.I. Capital Development Fund* $ -0- N/A N/A
AIM V.I. Diversified Income Fund $ 580,119 $ $ 306,235
AIM V.I. Global Utilities Fund $ 161,488 $ 106,309 $ 57,054
AIM V.I. Government Securities Fund $ 221,956 $ 138,550 $ 107,471
AIM V.I. Growth Fund $ 1,941,818 $1,453,488 $ 916,484
AIM V.I. Growth and Income Fund $ 5,556,833 $2,609,695 $ 678,242
AIM V.I. High Yield Fund* $ -0- N/A N/A
AIM V.I. International Equity Fund $ 1,744,127 $1,519,323 $ 924,578
AIM V.I. Money Market Fund $ 252,407 $ 254,546 $ 264,855
AIM V.I. Value Fund $ 5,570,566 $3,303,799 $1,955,091
* Fees paid were for the period May 1, 1998 (date operations commenced) through
December 31, 1998.
For the fiscal years ended December 31, 1998, December 31, 1997 and
December 31, 1996, AIM waived management fees for each Fund (except the AIM
V.I. Global Growth and Income Fund and the AIM V.I. Telecommunications Fund) as
follows:
December 31, December 31, December 31,
1998 1997 1996
---- ---- ----
AIM V.I. Aggressive Growth Fund* $ 11,445 N/A N/A
AIM V.I. Balanced Fund* $ 21,238 N/A N/A
AIM V.I. Capital Appreciation Fund $ -0- $ -0- $ -0-
AIM V.I. Capital Development Fund* $ 9,522 N/A N/A
AIM V.I. Diversified Income Fund $ -0- $ -0- $ -0-
AIM V.I. Global Utilities Fund $ -0- $ -0- $ 15,954
AIM V.I. Government Securities Fund $ -0- $ -0- $ -0-
AIM V.I. Growth Fund $ -0- $ -0- $ -0-
AIM V.I. Growth and Income Fund $ -0- $ -0- $ -0-
AIM V.I. High Yield Fund* $ 20,728 N/A N/A
AIM V.I. International Equity Fund $ -0- $ -0- $ -0-
AIM V.I. Money Market Fund $ -0- $ -0- $ -0-
AIM V.I. Value Fund $ -0- $ -0- $ -0-
* Fees waived were for the period May 1, 1998 (date operations commenced)
through December 31, 1998.
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206
In addition to the management fees paid by each Fund (except the AIM
V.I. Global Growth and Income Fund and the AIM V.I. Telecommunications Fund)
for the fiscal years ended December 31, 1998, December 31, 1997 and December
31, 1996, AIM absorbed other expenses as follows:
December 31, December 31, December 31,
1998 1997 1996
---- ---- ----
AIM V.I. Aggressive Growth Fund* $ 43,400 N/A N/A
AIM V.I. Balanced Fund* $ 25,501 N/A N/A
AIM V.I. Capital Appreciation Fund $ -0- $ -0- $ -0-
AIM V.I. Capital Development Fund* $ 48,808 N/A N/A
AIM V.I. Diversified Income Fund $ -0- $ -0- $ -0-
AIM V.I. Global Utilities Fund $ -0- $ -0- $ -0-
AIM V.I. Government Securities Fund $ -0- $ -0- $ -0-
AIM V.I. Growth Fund $ -0- $ -0- $ -0-
AIM V.I. Growth and Income Fund $ -0- $ -0- $ -0-
AIM V.I. High Yield Fund* $ 24,798 N/A N/A
AIM V.I. International Equity Fund $ -0- $ -0- $ -0-
AIM V.I. Money Market Fund $ -0- $ -0- $ -0-
AIM V.I. Value Fund $ -0- $ -0- $ -0-
* Fee amounts are for the period May 1, 1998 (date operations commenced)
through December 31, 1998.
The Administrative Services Agreement for the Funds provides that AIM
may perform certain accounting and other administrative services to each Fund
which are not required to be performed by AIM under the Advisory Agreement. For
such services, AIM would be entitled to receive from each Fund reimbursement of
its expenses. In addition, AIM provides, or assures that Participating Insurance
Companies will provide, certain services implementing the Company's funding
arrangements with Participating Insurance Companies. These services include:
establishment of compliance procedures; negotiation of participation agreements;
preparation of prospectuses, financial reports and proxy statements for existing
Contractowners; maintenance of master accounts; facilitation of purchases and
redemptions requested by Contractowners; distribution to existing Contractowners
of copies of prospectuses, proxy materials, periodic Fund reports and other
materials; maintenance of records; and Contractowner services and communication.
Effective May 1, 1998, the Funds reimburse AIM for its costs in providing, or
assuring that Participating Insurance Companies provide, these services,
currently in an amount up to 0.25% of the average net asset value of each Fund
in excess of the net asset value of each Fund on April 30, 1998.
The Administrative Services Agreement for the Funds provides that the
agreement will remain in effect for the initial term and continue in effect
from year to year thereafter only if such continuance is specifically approved
at least annually (i) by the Company's Board of Directors or by the vote of a
majority of the outstanding voting securities of the Funds (as defined in the
1940 Act); and (ii) by the affirmative vote of a majority of the Non-Interested
Directors, by votes cast in person at a meeting called for such purpose. The
agreement terminates automatically in the event of its assignment or in the
event of termination of the Master Investment Advisory Agreement.
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For the fiscal years ended December 31, 1998, December 31, 1997 and
December 31, 1996, AIM received reimbursement of administrative services costs
from each of the Funds (except the AIM V.I. Global Growth and Income Fund and
the AIM V.I. Telecommunications Fund) pursuant to the Prior Administrative
Services Agreement as follows:
December 31, December 31, December 31,
1998 1997 1996
---- ---- ----
AIM V.I. Aggressive Growth Fund* $ 26,658 N/A N/A
AIM V.I. Balanced Fund* $ 26,649 N/A N/A
AIM V.I. Capital Appreciation Fund $ 62,063 $43,588 $46,623
AIM V.I. Capital Development Fund* $ 26,658 N/A N/A
AIM V.I. Diversified Income Fund $ 47,528 $48,683 $49,500
AIM V.I. Global Utilities Fund $ 46,855 $47,128 $47,729
AIM V.I. Government Securities Fund $ 50,152 $37,872 $38,695
AIM V.I. Growth Fund $ 57,128 $44,692 $39,552
AIM V.I. Growth and Income Fund $ 296,138 $43,065 $38,784
AIM V.I. High Yield Fund* $ 28,103 N/A N/A
AIM V.I. International Equity Fund $ 76,026 $59,724 $58,644
AIM V.I. Money Market Fund $ 36,480 $38,289 $29,412
AIM V.I. Value Fund $ 420,725 $53,632 $47,116
* Fees paid were for the period May 1, 1998 (date operations commenced)
through December 31, 1998.
THE DISTRIBUTION AGREEMENT
The Funds have entered into a master distribution agreement (the
"Distribution Agreement") with AIM Distributors, dated February 28, 1997.
Information concerning AIM Distributors and the continuous offering of the
Funds' shares is set forth in the Prospectus under the heading "Fund
Management." The Distribution Agreement provides that AIM Distributors will
bear the expenses of printing from the final proof and distributing
prospectuses and statements of additional information of the Funds relating to
the sale of Fund shares. The Distribution Agreement provides that the Funds
shall bear the expenses of qualification of shares of the Fund for sale in
connection with the public offering in any jurisdictions where qualification is
required by law. AIM Distributors has not undertaken to sell any specified
number of shares of the Funds.
The Distribution Agreement for the Funds provides that it will
continue in effect for its initial term and from year to year thereafter only
if such continuance is specifically approved at least annually (i) by the
Company's Board of Directors or by the vote of a majority of the outstanding
voting securities of the Funds (as defined in the 1940 Act); and (ii) by the
affirmative vote of a majority of Non-Interested Directors by votes cast in
person at a meeting called for such purpose. The Company or AIM Distributors
may terminate its Distribution Agreement on sixty (60) days' written notice
without penalty. The Distribution Agreement will terminate automatically in the
event of its assignment.
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each of the Funds
will be determined as of the close of regular trading of the New York Stock
Exchange ("NYSE") (generally 4:00 p.m. Eastern Time) on each "business day of
the Fund." In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern
Time) on a particular day, the net asset value of a Fund share is determined as
of the close of the NYSE on such day.
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208
For purposes of determining net asset value per share, futures and options
contracts generally will be valued 15 minutes after the close of trading of the
NYSE. A "business day of a Fund" is any day on which the NYSE is open for
business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the observed holidays of New Year's Day,
Martin Luther King, Jr. Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of a Fund is determined by subtracting the liabilities (e.g.,
the expenses) of the Fund from the assets of the Fund and dividing the result
by the total number of shares outstanding of such Fund. The determination of a
Fund's net asset value per share is made in accordance with generally accepted
accounting principles.
VALUATION OF INVESTMENTS OF ALL FUNDS EXCEPT THE MONEY MARKET FUND.
Among other items, a Fund's liabilities include accrued expenses and dividends
payable, and its total assets include portfolio securities valued at their
market value as well as income accrued but not received. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the Company's officers
and in accordance with methods which are specifically authorized by the Board
of Directors of the Company. Short-term obligations with maturities of 60 days
or less are valued at amortized cost as reflecting fair value.
VALUATION OF THE MONEY MARKET FUND'S INVESTMENTS. The Money Market
Fund uses the amortized cost method of valuing the securities held by the Fund
and rounds the Fund's per share net asset value to the nearest whole cent;
therefore, it is anticipated that the net asset value of the shares of the Fund
will remain constant at $1.00 per share. However, the Company can give no
assurance that the Fund can maintain a $1.00 net asset value per share.
FUTURE CONTRACTS. Initial margin deposits made upon entering into
futures contracts are recognized as assets due from the broker (the Fund's
agent in acquiring the futures position). During the period the futures
contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are made or received depending upon whether unrealized gains or
losses are incurred. When the contract is closed, the Fund that has entered
into the futures contract records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transaction and
the Fund's basis in the contract.
For the Money Market Fund: The net asset value per share of the Fund
is determined daily as of the close of trading on the New York Stock Exchange
("NYSE") (generally 4:00 p.m. Eastern time) on each business day of the Fund.
In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a
particular day, the net asset value of a Fund share is determined as of the
close of the NYSE on such day. Net asset value per share is determined by
dividing the value of the Fund's securities, cash and other assets (including
interest accrued but not collected), less all its liabilities (including
accrued expenses and dividends payable), by the number of shares outstanding of
the Fund and rounding the resulting per share net asset value to the nearest
one cent. Determination of the Fund's net asset value per share is made in
accordance with generally accepted accounting principles.
The securities of the Fund are valued on the basis of amortized cost.
This method values a security at its cost on the date of purchase and
thereafter assumes a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the security. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Fund would receive if the security were
sold. During such periods, the daily yield on shares of the Fund computed as
described under "Yield Information" may differ somewhat from an identical
computation made by another investment company with identical investments
utilizing available indications as to the market value of its portfolio
securities.
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209
The valuation of the portfolio instruments based upon their amortized
cost and the concomitant maintenance of the net asset value per share of $1.00
for the Fund is permitted in accordance with applicable rules and regulations
of the SEC which require the Fund to adhere to certain conditions. The Fund
will invest only in "Eligible Securities," as defined in Rule 2a-7 of the 1940
Act, which the Fund's Board of Directors has determined present minimal credit
risk. Rule 2a-7 also requires, among other things, that the Fund maintain a
dollar-weighted average portfolio maturity of 90 days or less and purchase only
instruments having remaining maturities of 397 calendar days or less.
The Board of Directors is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Fund's price per share at
$1.00 for the Fund as computed for the purpose of sales and redemptions. Such
procedures include review of the Fund's holdings by the Board of Directors at
such intervals as they may deem appropriate, to determine whether the net asset
value calculated by using available market quotations or other reputable
sources for the Fund deviates from $1.00 per share and, if so, whether such
deviation may result in material dilution or is otherwise unfair to existing
holders of the Fund's shares. In the event the Board of Directors determines
that such a deviation exists for the Fund, it will take such corrective action
as the Board of Directors deems necessary and appropriate with respect to the
Fund, including the sale of portfolio instruments prior to maturity to realize
capital gains or losses or to shorten the average portfolio maturity; the
withholding of dividends; redemption of shares in kind; or the establishment of
a net asset value per share by using available market quotations.
The Fund intends to comply with any amendments made to Rule 2a-7 which
may require corresponding changes in the Fund's procedures which are designed
to stabilize the Fund's price per share at $1.00.
For All Other Funds: The net asset value per share of each Fund is
normally determined daily as of the close of trading on the NYSE (generally
4:00 p.m. Eastern time) on each business day of the Company. In the event the
NYSE closes early (i.e. before 4:00 p.m. Eastern Time) on a particular day, the
net asset value of a Fund share is determined as of the close of the NYSE on
such day. For purposes of determining net asset value per share, futures and
options contracts closing prices which are available 15 minutes after the close
of trading of the NYSE will generally be used. Net asset value per share is
determined by dividing the value of the Fund's securities, cash and other
assets (including interest accrued but not collected), less all its liabilities
(including accrued expenses and dividends payable), by the total number of
shares outstanding. Determination of the Fund's net asset value per share is
made in accordance with generally accepted accounting principles.
Each equity security held by the Fund is valued at its last sales
price on the exchange where the security is principally traded or, lacking any
sales on a particular day, the security is valued at the closing bid price on
that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued
at the mean between the last bid and asked prices based upon quotes furnished
by market makers for such securities. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation date
or absent a last sales price, at the closing bid price on that day. Debt
securities are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such
as institution-size trading in similar groups of securities, developments
related to special securities, yield, quality, coupon rate, maturity, type of
issue, individual trading characteristics and other market data. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the Company's officers
in a manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued on the
basis of amortized cost. For purposes of determining net asset value per share,
futures and options contracts generally will be valued 15 minutes after the
close of trading of the NYSE.
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210
Generally, trading in foreign securities is substantially completed
each day at various times prior to the close of the NYSE. The values of such
foreign securities used in computing the net asset value of each Fund's shares
are determined at such times as trading is completed. Foreign currency exchange
rates are also generally determined prior the close of the NYSE. Occasionally,
events affecting the values of such foreign securities and such foreign
securities exchange rates may occur after the time at which such values are
determined and prior to the close of the NYSE that will not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Directors.
PURCHASE AND REDEMPTION OF SHARES
The Company offers the shares of the Funds, on a continuous basis, to
both registered and unregistered separate accounts of affiliated and
unaffiliated Participating Insurance Companies to fund variable annuity
contracts (the "Contracts") and variable life insurance policies ("Policies").
Each separate account contains divisions, each of which corresponds to a Fund
in the Company. Net purchase payments under the Contracts are placed in one or
more of the divisions of the relevant separate account and the assets of each
division are invested in the shares of the Fund which corresponds to that
division. Each separate account purchases and redeems shares of these Funds for
its divisions at net asset value without sales or redemption charges.
Currently several insurance company separate accounts invest in the Funds.
The Company, in the future, may offer the shares of its Funds to
certain pension and retirement plans ("Plans") qualified under the Internal
Revenue Code. The relationships of Plans and Plan participants to the Fund
would be subject, in part, to the provisions of the individual plans and
applicable law. Accordingly, such relationships could be different from those
described in this Prospectus for separate accounts and owners of Contracts and
Policies, in such areas, for example, as tax matters and voting privileges.
The Board of Directors monitors for possible conflicts among separate
accounts (and will do so for plans) buying shares of the Funds. Conflicts could
develop for a variety of reasons. For example, differences in treatment under
tax and other laws or the failure by a separate account to comply with such
laws could cause a conflict. To eliminate a conflict, the Board of Directors
may require a separate account or Plan to withdraw its participation in a Fund.
A Fund's net asset value could decrease if it had to sell investment securities
to pay redemption proceeds to a separate account (or plan) withdrawing because
of a conflict.
Each Fund ordinarily effects orders to purchase or redeem its shares
that are based on transactions under Policies or Contracts (e.g., purchase or
premium payments, surrender or withdrawal requests, etc.) at the Fund's net
asset value per share next computed on the day on which the separate account
processes such transactions. Each Fund effects orders to purchase or redeem its
shares that are not based on such transactions at the Fund's net asset value
per share next computed on the day on which the Fund receives the orders.
Please refer to the appropriate separate account prospectus related to
your Contract for more information regarding the Contract.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS. The Funds declare and distribute
dividends representing substantially all net investment income as follows:
DIVIDENDS DIVIDENDS
DECLARED PAID
-------- ----
AIM V.I. Aggressive Growth Fund ................................ annually annually
AIM V.I. Balanced Fund ......................................... annually annually
AIM V.I. Capital Appreciation Fund ............................. annually annually
AIM V.I. Capital Development Fund .............................. annually annually
AIM V.I. Diversified Income Fund ............................... annually annually
AIM V.I. Global Utilities Fund ................................. annually annually
AIM V.I. Global Growth and Income Fund ......................... annually annually
AIM V.I. Government Securities Fund ............................ annually annually
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211
AIM V.I. Growth Fund ........................................... annually annually
AIM V.I. Growth and Income Fund ................................ annually annually
AIM V.I. High Yield Fund ....................................... annually annually
AIM V.I. International Equity Fund ............................. annually annually
AIM V.I. Money Market Fund ..................................... daily daily
AIM V.I. Telecommunications Fund................................ annually annually
AIM V.I. Value Fund ............................................ annually annually
Substantially all net realized capital gains, if any, are distributed
on an annual basis, except for the Money Market Fund, which may distribute net
realized short-term gains more frequently.
All such distributions will be automatically reinvested, at the
election of Participating Insurance Companies, in shares of the Fund issuing
the distribution at the net asset value determined on the reinvestment date.
TAX MATTERS. Each series of shares of the Company is treated as a
separate association taxable as a corporation. Each Fund intends to qualify
under the Internal Revenue Code of 1986, as amended (the "Code"), as a
regulated investment company ("RIC") for each taxable year. As a RIC, a Fund
will not be subject to federal income tax to the extent it distributes to its
shareholders its net investment income and net capital gains.
In order to qualify as a regulated investment company, each Fund must
satisfy certain requirements concerning the nature of its income,
diversification of its assets and distribution of its income to shareholders.
In order to ensure that individuals holding the Contracts whose assets are
invested in a Fund will not be subject to federal income tax on distributions
made by the Fund prior to the receipt of payments under the Contracts, each
Fund intends to comply with additional requirements of Section 817(h) of the
Code relating to both diversification of its assets and eligibility of an
investor to be its shareholder. Certain of these requirements in the aggregate
may limit the ability of a Fund to engage in transactions involving options,
futures contracts, forward contracts and foreign currency and related deposits.
Any Fund's transactions in non-equity options, forward contracts,
futures contracts and foreign currency will be subject to special tax rules,
the effect of which may be to accelerate income to the Fund, defer Fund losses,
cause adjustments in the holding periods of fund securities and convert
short-term capital losses into long-term capital losses. These losses could
therefore affect the amount, timing and character of distributions.
The holding of the foreign currencies and investments by a Fund in
certain "passive foreign investment companies" may be limited in order to avoid
imposition of a tax on such Fund.
Each Fund investing in foreign securities may be subject to foreign
withholding taxes on income from its investments. In any year in which more
than 50% in value of a Fund's total assets at the close of the taxable year
consists of securities of foreign corporations, the Fund may elect to treat any
foreign taxes paid by it as if they had been paid by its shareholders. The
insurance company segregated asset accounts holding Fund shares should consider
the impact of this election.
Holders of Contracts under which assets are invested in the Funds
should refer to the prospectus for the Contracts for information regarding the
tax aspects of ownership of such Contracts.
Each Fund is treated as a separate association taxable as a
corporation.
Each Fund intends to qualify under the Internal Revenue Code of 1986,
as amended (the "Code"), as a regulated investment company ("RIC") for each
taxable year. Accordingly, each Fund must, among other things, meet the
following requirements: A. Each Fund must generally derive at least 90% of its
gross income
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212
from dividends, interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities, foreign currencies, or
other income derived with respect to its business of investing in such stock,
securities or currencies. B. Each Fund must diversify its holdings so that, at
the end of each fiscal quarter or within 30 days thereafter: (i) at least 50%
of the market value of the Fund's assets is represented by cash, cash items
(including receivables), U.S. Government securities, securities of other RICs,
and other securities, with such other securities limited, with respect to any
one issuer, to an amount not greater than 5% of the Fund's assets and not more
than 10% of the outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its assets is invested in the securities of any one
issuer (other than U.S. Government securities or securities of other RICs).
The Code imposes a nondeductible 4% excise tax on a RIC that fails to
distribute during each calendar year at least 98% of its ordinary income for
the calendar year, at least 98% of its capital gain net income for the 12-month
period ending on October 31 of the calendar year and certain other amounts.
Each Fund intends to make sufficient distributions to avoid imposition of the
excise tax. Some Funds meet an exception which results in their not being
subject to excise tax.
As a RIC, each Fund will not be subject to federal income tax on its
income and gains distributed to shareholders if it distributes at least (i) 90%
of its investment company taxable income for the taxable year; and (ii) 90% of
the excess of its tax-exempt interest income under Code Section 103(a) over its
deductions disallowed under Code Sections 265 and 171(a)(2).
Each Fund intends to comply with the diversification requirements
imposed by Section 817(h) of the Code and the regulations thereunder. These
requirements, which are in addition to the diversification requirements imposed
on each Fund by the 1940 Act and Subchapter M of the Code, place certain
limitations on (i) the assets of the insurance company separate accounts that
may be invested in securities of a single issuer and (ii) eligible investors.
Because Section 817(h) and those regulations treat the assets of each Fund as
assets of the corresponding division of the insurance company separate
accounts, each Fund intends to comply with these diversification requirements.
Specifically, the regulations provide that, except as permitted by the "safe
harbor" described below, as of the end of each calendar quarter or within 30
days thereafter no more than 55% of a Fund's total assets may be represented by
any one investment, no more than 70% by any two investments, no more than 80%
by any three investments and no more than 90% by any four investments. For this
purpose, all securities of the same issuer are considered a single investment,
and while each U.S. Government agency and instrumentality is considered a
separate issuer, a particular foreign government and its agencies,
instrumentalities and political subdivisions all will be considered the same
issuer. The regulations also provide that a Fund's shareholders are limited,
generally, to life insurance company separate accounts, general accounts of the
same life insurance company, an investment adviser or affiliate in connection
with the creation or management of a Fund or the trustee of a qualified pension
plan. Section 817(h) provides, as a safe harbor, that a separate account will
be treated as being adequately diversified if the diversification requirements
under Subchapter M are satisfied and no more than 55% of the value of the
account's total assets are cash and cash items, government securities and
securities of other RICs. Failure of a Fund to satisfy the Section 817(h)
requirements would result in taxation of and treatment of the Contract holders
investing in a corresponding division other than as described in the applicable
prospectuses of the various insurance company separate accounts.
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213
MISCELLANEOUS INFORMATION
ORGANIZATION OF THE COMPANY
The Company was organized on January 22, 1993 as a Maryland
corporation, and is registered with the Securities and Exchange Commission as
an open-end, series, management investment company. The Company currently
consists of thirteen separate portfolios (i.e., the Funds).
The authorized capital stock of the Company consists of 4,000,000,000
shares of common stock with a par value of $.001 per share, of which
250,000,000 shares are classified AIM V.I. AGGRESSIVE GROWTH FUND shares,
250,000,000 shares are classified AIM V.I. BALANCED FUND shares, 250,000,000
shares are classified AIM V.I. CAPITAL APPRECIATION FUND shares, 250,000,000
shares are classified AIM V.I. CAPITAL DEVELOPMENT FUND shares, 250,000,000
shares are classified AIM V.I. DIVERSIFIED INCOME FUND shares, 250,000,000
shares are classified AIM V.I. GLOBAL GROWTH AND INCOME FUND shares,
250,000,000 shares are classified AIM V.I. GLOBAL UTILITIES FUND shares,
250,000,000 shares are classified AIM V.I. GOVERNMENT SECURITIES FUND shares,
250,000,000 are classified AIM V.I. GROWTH FUND shares, 250,000,000 shares are
classified AIM V.I. GROWTH AND INCOME FUND shares, 250,000,000 shares are
classified AIM V.I. HIGH YIELD FUND shares, 250,000,000 shares are classified
AIM V.I. INTERNATIONAL EQUITY FUND shares, 250,000,000 shares are classified
AIM V.I. MONEY MARKET FUND shares, 250,000,000 shares are classified AIM V.I.
TELECOMMUNICATIONS FUND shares, 250,000,000 shares are classified AIM V.I.
VALUE FUND shares, and the balance of which are unclassified.
The shares of each Fund have equal rights with respect to voting,
except that (i) the holders of shares of a particular Fund voting together will
have the exclusive right to vote on matters (such as advisory fees) pertaining
solely to that Fund, and (ii) the holders of shares of a particular Fund will
have the exclusive right to vote on matters pertaining to distribution plans,
if any such plans are adopted, relating solely to such Fund. Shareholders of
the Funds do not have cumulative voting rights.
The Company understands that insurance company separate accounts
owning shares of the Funds will vote their shares in accordance with the
instructions received from Contract owners, annuitants and beneficiaries. Fund
shares held by a registered separate account as to which no instructions have
been received will be voted for or against any proposition, or in abstention,
in the same proportion as the shares of that separate account as to which
instructions have been received. Fund shares held by a registered separate
account that are not attributable to Contracts will also be voted for or
against any proposition in the same proportion as the shares for which voting
instructions are received by that separate account. If an insurance company
determines, however, that it is permitted to vote any such shares of the Funds
in its own right, it may elect to do so, subject to the then current
interpretation of the 1940 Act and the rules thereunder.
Under Maryland law and the Company's By-Laws, the Company need not
hold an annual meeting of shareholders unless a meeting is required under the
1940 Act to elect directors. Shareholders may remove directors from office, and
a meeting of shareholders may be called at the request of the holders of 10% or
more of the Company's outstanding shares.
There are not preemptive or conversion rights applicable to any of the
Company's shares. Each Fund's shares, when issued, are fully paid and
non-assessable.
AUDIT REPORTS
The Company furnishes semi-annual reports containing information about
the Funds and their operations, including a list of the investments held in
each Fund's portfolio and their respective financial statements. Financial
statements, audited by independent auditors, will be issued annually. The firm
of Tait, Weller & Baker, Two Penn Center Plaza, Philadelphia, PA 19102, serves
as the auditors of each Fund.
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214
LEGAL MATTERS
Freedman, Levy, Kroll & Simonds, Washington, D.C. has advised the
Company on certain federal securities law matters.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street"), 225 Franklin
Street, Boston, MA 02110, is custodian of all securities and cash of the Funds.
The custodian attends to the collection of principal and income, pays and
collects all monies for securities bought and sold by the Portfolios, and
performs certain other ministerial duties. State Street also acts as transfer
and dividend disbursing agent for the Funds. These services do not include any
supervisory function over management or provide any protection against any
possible depreciation of assets. The Funds pay State Street such compensation
as may be agreed upon from time to time.
PRINCIPAL HOLDERS OF SECURITIES
To the best of the knowledge of each Fund, the names of the record
holders of 5% or more of the outstanding shares of the Fund as of April 1,
1999, and the percentage of the outstanding shares of such Fund owned by such
shareholders as of such date are set out below. The address of A I M Advisors,
Inc. is 11 Greenway Plaza, Suite 100, Houston, TX 77046. The address of
Connecticut General Life Insurance Company is 900 Cottage Grove Road, Hartford,
CT 06152-2321. The address of Glenbrook Life and Annuity Company is 3100
Sanders Road, N4C, Northbrook, IL 60062. The address of IDS Life Insurance
Company is IDS Tower 10, T27/52, Minneapolis, MN 55440. The address of Merrill
Lynch Life Insurance Company is 800 Scudders Mill Road, Plainsboro, NJ 08536.
The address of Pruco Life Insurance Company and Pruco Life Insurance Company of
New Jersey is Gateway Center Three, 13th Floor, Newark, NJ 07102. The address
of First Citicorp Life Insurance Company is One Court Square, Long Island City,
NY 11120. The address of Union Central Life Insurance Company is 1876 Waycross
Road, Cincinnati, OH 45240. The address for Hartford Life Insurance Company is
200 Hopmeadow Street, Simsburg, CT 06089. The address of Security Life of
Denver Insurance Company is 1290 Broadway, Denver, CO 80203.
AIM V.I. AGGRESSIVE GROWTH FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Glenbrook Life & Annuity Company -0- -0- 83.18%*
A I M Advisors, Inc. -0- -0- 16.82%
- -------------------------
* A shareholder who beneficially owns more than 25% of the voting securities
of a Fund may be presumed to "control" the Fund. The Funds understand that
insurance company separate accounts owning shares of the Funds will vote their
shares in accordance with instructions received from Contract owners,
annuitants and beneficiaries. If an insurance company determines, however, that
it is permitted to vote any such shares of the Funds in its own right, it may
elect to do so, subject to the then current interpretation of the 1940 Act and
the rules thereunder.
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215
AIM V.I. BALANCED FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Glenbrook Life & Annuity Company -0- -0- 70.87%*
Union Central Life Insurance Company -0- -0- 23.13%
A I M Advisors, Inc. -0- -0- 6.01%
AIM V.I. CAPITAL APPRECIATION FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Connecticut General Life Insurance Company -0- -0- 44.73%*
Glenbrook Life & Annuity Company -0- -0- 19.20%
Merrill Lynch Life Insurance Company -0- -0- 14.57%
AIM V.I. CAPITAL DEVELOPMENT FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Glenbrook Life & Annuity Company -0- -0- 75.19%*
A I M Advisors, Inc. -0- -0- 24.81%
- -------------------------
* A shareholder who beneficially owns more than 25% of the voting securities
of a Fund may be presumed to "control" the Fund. The Funds understand that
insurance company separate accounts owning shares of the Funds will vote their
shares in accordance with instructions received from Contract owners,
annuitants and beneficiaries. If an insurance company determines, however, that
it is permitted to vote any such shares of the Funds in its own right, it may
elect to do so, subject to the then current interpretation of the 1940 Act and
the rules thereunder.
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216
AIM V.I. DIVERSIFIED INCOME FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Connecticut General Life Insurance Company -0- -0- 63.37%*
Glenbrook Life & Annuity Company -0- -0- 31.41%*
AIM V.I. GLOBAL UTILITIES FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Connecticut General Life Insurance Company -0- -0- 59.47%*
Glenbrook Life & Annuity Company -0- -0- 38.70%*
AIM V.I. GOVERNMENT SECURITIES FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Connecticut General Life Insurance Company -0- -0- 43.56%*
Glenbrook Life & Annuity Company -0- -0- 21.45%
First Citicorp Life Insurance Company -0- -0- 20.33%
Security Life of Denver Insurance Company -0- -0- 6.00%
- -------------------------
* A shareholder who beneficially owns more than 25% of the voting securities
of a Fund may be presumed to "control" the Fund. The Funds understand that
insurance company separate accounts owning shares of the Funds will vote their
shares in accordance with instructions received from Contract owners,
annuitants and beneficiaries. If an insurance company determines, however, that
it is permitted to vote any such shares of the Funds in its own right, it may
elect to do so, subject to the then current interpretation of the 1940 Act and
the rules thereunder.
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217
AIM V.I. GROWTH FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Connecticut General Life Insurance Company -0- -0- 61.10%*
Glenbrook Life & Annuity Company -0- -0- 27.31%*
AIM V.I. GROWTH AND INCOME FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
IDS Life Insurance Company -0- -0- 62.15%*
Connecticut General Life Insurance Company -0- -0- 11.77%
Glenbrook Life & Annuity Company -0- -0- 10.29%
Pruco Life Insurance Company -0- -0- 7.75%
AIM V.I. HIGH YIELD FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Glenbrook Life & Annuity Company -0- -0- 50.74%*
Hartford Life Insurance Company -0- -0- 24.98%
A I M Advisors, Inc. -0- -0- 24.29%
- -------------------------
* A shareholder who beneficially owns more than 25% of the voting securities
of a Fund may be presumed to "control" the Fund. The Funds understand that
insurance company separate accounts owning shares of the Funds will vote their
shares in accordance with instructions received from Contract owners,
annuitants and beneficiaries. If an insurance company determines, however, that
it is permitted to vote any such shares of the Funds in its own right, it may
elect to do so, subject to the then current interpretation of the 1940 Act and
the rules thereunder.
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AIM V.I. INTERNATIONAL EQUITY FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Connecticut General Life Insurance Company -0- -0- 60.77%*
Glenbrook Life & Annuity Company -0- -0- 23.38%
First Citicorp Life Insurance Company -0- -0- 6.25%
AIM V.I. MONEY MARKET FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Connecticut General Life Insurance Company -0- -0- 68.76%*
Glenbrook Life & Annuity Company -0- -0- 29.91%*
AIM V.I. VALUE FUND
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ---- --------------
Connecticut General Life Insurance Company -0- -0- 35.42%*
Merrill Lynch Life Insurance Company -0- -0- 27.63%*
Glenbrook Life & Annuity Company -0- -0- 13.55%
Pruco Life Insurance Company of New Jersey -0- -0- 11.52%
- -------------------------
* A shareholder who beneficially owns more than 25% of the voting securities
of a Fund may be presumed to "control" the Fund. The Funds understand that
insurance company separate accounts owning shares of the Funds will vote their
shares in accordance with instructions received from Contract owners,
annuitants and beneficiaries. If an insurance company determines, however, that
it is permitted to vote any such shares of the Funds in its own right, it may
elect to do so, subject to the then current interpretation of the 1940 Act and
the rules thereunder.
63
219
A I M Advisors, Inc. provided the initial capitalization of the AIM
V.I. Global Growth and Income Fund and AIM V.I. Telecommunications Fund and,
accordingly, as of the date of this Statement of Additional Information, owned
all the outstanding shares of common stock of the Funds. Although the Funds
expect that the sale of its shares to the public pursuant to the Prospectus
will promptly reduce the percentage of such shares owned by A I M Advisors,
Inc. to less than 1% of the total shares outstanding, as long as A I M
Advisors, Inc. owns over 25% of the shares of the Fund that are outstanding, it
may be presumed to be in "control" of the Fund, as defined in the 1940 Act.
As of April 1, 1999, the directors and officers of the Company as a
group owned beneficially less than 1% of the outstanding shares of the Company.
OTHER INFORMATION
The Prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement which the Funds
have filed with the SEC under the Securities Act of 1933 and reference is
hereby made to the Registration Statement for further information with respect
to the Funds and the securities offered hereby. The Registration Statement is
available for inspection by the public at the SEC in Washington, D.C.
64
220
APPENDIX A
- -------------------------------------------------------------------------------
DESCRIPTION OF CORPORATE BOND RATINGS
Investment grade debt securities are those rating categories indicated
by an asterisk (*).
Moody's Investors Service, Inc.'s corporate bond ratings are as
follows:
*Aaa -- Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
*Aa -- Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than in
Aaa securities.
*A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
*Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during other good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier indicates that the security ranks in the higher end of its
A-1
221
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Standard and Poor's Ratings Services classifications are as follows:
*AAA -- Debt rated "AAA" has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
*AA -- Debt rated "AA" has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in small degree.
*A -- Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
*BBB -- Debt rated "BBB" is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher categories.
BB, B, CCC, CC, C -- Debt rated "BB", "B", "CCC", "CC" and "C" is
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation and "C" the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
BB -- Debt rated "BB" has less near-term vulnerability to default than
other speculative issues. However, It faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments. The
"BB" rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB --" rating.
B -- Debt rated "B" has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely Impair capacity
or willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB --" rating.
CCC -- Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, it's not
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B --" rating.
CC -- The rating "CC" is typically applied to debt subordinated to
senior debt that is assigned an actual or implied "CCC" rating.
C -- The rating "C" is typically applied to debt subordinated to
senior debt which is assigned an actual or implied "CCC--" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
C1 -- The rating "C1" is reserved for income bonds on which no
interest is being paid.
A-2
222
D -- Debt rated "D" is in payment default. The "D" rating category is
used when interest payments or principal or principal payments are not made on
the date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
Plus (+) or Minus (-): The rating from "AA" to "CCC" maybe modified by
the addition of a plus or minus sign to show relative standing within the major
categories.
Duff & Phelps fixed-income ratings are as follows:
*AAA -- Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
*AA+, AA, AA- -- High credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to time because of economic
conditions.
*A+, A, A- -- Protection factors are average but adequate. However,
risk factors are more variable and greater in periods of economic stress.
*BBB+, BBB, BBB- -- Below average protection factors but still
considered sufficient for prudent investment. Considerable variability in risk
during economic cycles.
BB+, BB, BB- -- Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial protection factors
fluctuate according to industry conditions or company fortunes. Overall quality
may move up or down frequently within this category.
B+, B, B- -- Below investment grade and possessing risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in quality rating
within this category or into a higher or lower quality rating grade.
CCC -- Well below investment grade securities. May be in default or
have considerable uncertainty as to timely payment of Interest, preferred
dividends and/or principal. Protection factors are narrow and risk can be
substantial with unfavorable economic/industry conditions, and/or with
unfavorable company developments.
Fitch IBCA Inc.'s bond ratings are as follows:
*AAA -- Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
*AA -- Bonds considered to be Investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+".
*A -- Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
*BBB -- Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate Adverse changes in economic conditions and
A-3
223
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
BB -- Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B -- Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
CCC -- Bonds have certain Identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC -- Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C -- Bonds are in imminent default in payment of interest or
principal.
DDD, DD, and D -- Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the
basis of their ultimate recovery value in liquidation or reorganization of the
obligor. "DDD" represents the highest potential for recovery on these bonds,
and "D" represents the lowest potential for recovery.
Plus (+) Minus (-) -- Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs, however, are not used in the "AAA", "DDD",
"DD", or "D" categories.
A-4
224
APPENDIX B
- -------------------------------------------------------------------------------
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED
BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES
The following list includes certain common Agency Securities, as
defined In the Prospectus, and does not purport to be exhaustive.
EXPORT-IMPORT BANK CERTIFICATES -- are certificates of beneficial
interest and participation certificates issued and guaranteed by the
Export-Import Bank of the United States.
FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS -- are bonds issued by a
cooperatively owned, nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. Government.
FEDERAL HOME LOAN BANK NOTES AND BONDS -- are notes and bonds issued
by the Federal Home Loan Bank System.
DEBENTURES -- are debentures issued by the Federal Housing Authority
of the U.S. Government.
FHA INSURED NOTES -- are bonds issued by the Farmers Home
Administration of the U.S. Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS -- are bonds
issued and guaranteed by FHLMC, a corporate instrumentality of the U.S.
Government. The Federal Home Loan Banks own all the capital stock of FHLMC,
which obtains its funds by selling mortgages (as well as participation
interests in the mortgages) and by borrowing funds through the issuance of
debentures and otherwise.
FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS" -- represent
undivided interests in specified groups of conventional mortgage loans (and/or
participation interests in those loans) underwritten and owned by FHLMC. At
least 95% of the aggregate principal balance of the whole mortgage loans and/or
participations in a group formed by FHLMC typically consists of single-family
mortgage loans, and not more than 5% consists of multi-family loans. FHLMC
Participation Certificates are not guaranteed by, and do not constitute a debt
or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC
Participation Certificates are issued in fully registered form only, in
original unpaid principal balances of $25,000, $100,000, $200,000, $500,000, $1
million and $5 million. FHLMC guarantees to each registered holder of a
Participation Certificate, to the extent of such holder's pro rata share (i)
the timely payment of interest accruing at the applicable certificate rate on
the unpaid principal balance outstanding on the mortgage loans, and (ii)
collection of all principal on the mortgage loans without any offset or
deductions. Pursuant to these guaranties, FHLMC indemnifies holders of
Participation Certificates against any reduction in principal by reason of
charges for property repairs, maintenance, and foreclosure.
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS -- are bonds
issued and guaranteed by FNMA, a federally chartered and privately-owned
corporation.
FNMA PASS-THROUGH CERTIFICATES OR "FANNIE MAES" -- are mortgage
pass-through certificates issued and guaranteed by FNMA. FNMA Certificates
represent a fractional undivided ownership interest in a pool of mortgage loans
either provided from FNMA's own portfolio or purchased from primary lenders.
The mortgage loans included in the pool are conventional, insured by the
Federal Housing Administration or guaranteed by the Veterans Administration.
FNMA Certificates are not backed by, nor entitled to, the full faith and credit
of the U.S. Government.
B-1
225
Loans not provided from FNMA's own portfolio are purchased only from
primary lenders that satisfy certain criteria developed by FNMA, including
depth of mortgage origination experience, servicing experience and financial
capacity. FNMA may purchase an entire loan pool from a single lender, and issue
Certificates backed by that loan pool alone, or may package a pool made up of
loans purchased from various lenders.
Various types of mortgage loans, and loans with varying interest
rates, may be included in a single pool, although each pool will consist of
mortgage loans related to one-family or two-to-four family residential
properties. Substantially all FNMA mortgage pools currently consist of fixed
interest rate and growing equity mortgage loans, although FNMA mortgage pools
may also consist of adjustable interest rate mortgage loans or other types of
mortgage loans. Each mortgage loan must conform to FNMA's published
requirements or guidelines with respect to maximum principal amount,
loan-to-value ratio, loan term, underwriting standards and insurance coverage.
All mortgage loans are held by FNMA as trustee pursuant to a trust
indenture for the benefit of Certificate holders. The trust indenture gives
FNMA responsibility for servicing and administering the loans in a pool. FNMA
contracts with the lenders or other servicing institutions to perform all
services and duties customary to the servicing of mortgages, as well as duties
specifically prescribed by FNMA, all under FNMA supervision. FNMA may remove
service providers for cause.
The pass-through rate on FNMA Certificates is the lowest annual
interest rate borne by an underlying mortgage loan in the pool, less a fee to
FNMA as compensation for servicing and for FNMA's guarantee lenders servicing
the underlying mortgage loans receive as compensation a portion of the fee paid
to FNMA, the excess yields on pooled loans with coupon rates above the lowest
rate borne by any mortgage loan in the pool and certain other amounts
collected, such as late charges.
The minimum size of a FNMA pool is $1 million of mortgage loans.
Registered holders purchase Certificates in amounts not less than $25,000.
FNMA Certificates are marketed by the servicing lender banks, usually
through securities dealers. The lender of a single lender pool typically
markets all Certificates based on that pool, and lenders of multiple lender
pools market Certificates based on a pro rata interest in the aggregate pool.
The amount of FNMA Certificates currently outstanding is limited.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR
"GINNIE MAES" -- are mortgage-backed securities which represent a partial
ownership interest in a pool of mortgage loans issued by lenders such as
mortgage bankers, commercial banks and savings and loan associations. Each
mortgage loan included in the pool is either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration. A "pool" or group
of such mortgages is assembled, and, after being approved by GNMA, is offered
to investors through securities dealers. GNMA is a U.S. Government corporation
within the Department of Housing and Urban Development.
GNMA Certificates differ from bonds in that the principal is paid back
monthly by the borrower over the term of the loan rather than returned in a
lump sum at maturity. GNMA Certificates are called "modified pass-through"
securities because they entitle the holder to receive its proportionate share
of all interest and principal payments owed on the mortgage pool, net of fees
paid to the issuer and GNMA, regardless of whether or not the mortgagor
actually makes the payment. Payment of principal of and interest on GNMA
Certificates of the "modified pass-through" type is guaranteed by GNMA and
backed by the full faith and credit of the U.S. Government.
The average life of a GNMA Certificate is likely to be substantially
less than the original maturity of the mortgage pools underlying the
securities. Prepayments of principal by mortgagors and mortgage foreclosures
B-2
226
will usually result in the return on the greater part of principal invested far
in advance of the maturity of the mortgages in the pool. Foreclosures impose
little risk to principal investment because of the GNMA guarantee.
As the prepayment rates of individual mortgage pools will vary widely,
it is not possible to accurately predict the average life of a particular issue
of GNMA Certificates. However, statistics published by the FHA indicate that
the average life of a single family dwelling mortgage with 25- to 30-year
maturity, the type of mortgage which backs the vast majority of GNMA
Certificates, is approximately 12 years. It is therefore customary practice to
treat GNMA Certificates as 30-year mortgage-backed securities which prepay
fully in the twelfth year.
As a consequence of the fees paid to GNMA and the issuer of GNMA
Certificates, the coupon rate of interest of GNMA Certificates is lower than
the interest paid on the VA-guaranteed or FHA-insured mortgages underlying the
Certificates.
The yield which will be earned on GNMA Certificates may vary from
their coupon rates for the following reasons: (i) Certificates may be issued at
a premium or discount, rather than at par; (ii) Certificates may trade in the
secondary market at a premium or discount after issuance; (iii) interest is
earned and compounded monthly which has the effect of raising the effective
yield earned on the Certificates; and (iv) the actual yield of each Certificate
is affected by the prepayment of mortgages included in the mortgage pool
underlying the Certificates and the rate at which principal so prepaid is
reinvested. In addition, prepayment of mortgages included in the mortgage pool
underlying a GNMA Certificate purchased at a premium may result in a loss to
the Fund.
Due to the large amount of GNMA Certificates outstanding and active
participation in the secondary market by securities dealers and investors, GNMA
Certificates are highly liquid instruments. Prices of GNMA Certificates are
readily available from securities dealers and depend on, among other things,
the level of market rates, the Certificate's coupon rate and the prepayment
experience of the pool of mortgages backing each Certificate.
SERVICES ADMINISTRATION ("GSA") PARTICIPATION CERTIFICATES -- are
participation certificates issued by the General Services Administration of the
U.S. Government.
MARITIME ADMINISTRATION BONDS -- are bonds issued and provided by the
Department of Transportation of the U.S. Government.
NEW COMMUNITIES DEBENTURES -- are debentures issued in accordance with
the provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.
PUBLIC HOUSING NOTES AND BONDS -- are short-term project notes and
long-term bonds issued by public housing and urban renewal agencies in
connection with programs administered by the Department of Housing and Urban
Development of the U.S. Government, the payment of which is secured by the U.S.
Government.
SBA DEBENTURES -- are debentures fully guaranteed as to principal and
interest by the Small Business Administration of the U.S. Government.
SLMA DEBENTURES -- are debentures backed by the Student Loan Marketing
Association.
TITLE XI BONDS -- are bonds issued in accordance with the provisions
of Title XI of the Merchant Marine Act of 1936, as amended, the payment of
which is guaranteed by the U.S. Government.
B-3
227
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS -- are bonds
issued by the Washington Metropolitan Area Transit Authority and are guaranteed
by the Secretary of Transportation of the U.S. Government.
B-4
228
APPENDIX C
- -------------------------------------------------------------------------------
DESCRIPTION OF MONEY MARKET OBLIGATIONS
The following list does not purport to be an exhaustive list of all
Money Market Obligations, and the Funds reserve the right to invest in Money
Market Obligations other than those listed below:
1. GOVERNMENT OBLIGATIONS.
U.S. GOVERNMENT DIRECT OBLIGATIONS -- Bills, notes, and bonds issued
by the U.S. Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES -- Certain federal agencies such
as the Government National Mortgage Association have been established as
instrumentalities of the U.S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States or are guaranteed by the Treasury or supported by the issuing agencies'
right to borrow from the Treasury.
FOREIGN GOVERNMENT OBLIGATIONS -- These are U.S. dollar denominated
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by the Fund's investment advisor to be of comparable quality to the other
obligations in which the Fund may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank. The percentage of the Fund's assets invested in
securities Issued by foreign governments will vary depending on the relative
yields of such securities, the economic and financial markets of the countries
in which the investments are made and the interest rate climate of such
countries.
2. BANK INSTRUMENTS.
BANKERS' ACCEPTANCES -- A bill of exchange or time draft drawn on and
accepted by a commercial bank. It is used by corporations to finance the
shipment and storage of goods and to furnish dollar exchange. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT -- A negotiable interest-bearing instrument
with a specific maturity. Certificates of deposit are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market, prior to maturity.
TIME DEPOSITS -- A non-negotiable receipt issued by a bank in exchange
for the deposit of funds. Like a certificate of deposit, it earns a specified
rate of interest over a definite period of time; however, it cannot be traded
in the secondary market.
EURODOLLAR OBLIGATIONS -- A Eurodollar obligation is a U.S.
dollar-denominated obligation issued by a foreign branch of a domestic bank.
YANKEE DOLLAR OBLIGATIONS -- A Yankee dollar obligation is a U.S.
dollar-denominated obligation issued by a domestic branch of a foreign bank.
C-1
229
3. COMMERCIAL INSTRUMENTS.
COMMERCIAL PAPER -- The term used to designate unsecured short-term
promissory notes issued by corporations and other entities. Maturities on these
issues vary from a few days to nine months.
VARIABLE RATE MASTER DEMAND NOTES -- Variable rate master demand notes
are unsecured demand notes that permit Investment of fluctuating amounts of
money at variable rates of interest pursuant to arrangements with issuers who
meet the foregoing quality criteria as discussed in the Statement of Additional
Information under "Investment Programs." The interest rate on a variable rate
master demand note is periodically redetermined according to a prescribed
formula. Although there is no secondary market in master demand notes, the
payee may demand payment of the principal amount of the note on relatively
short notice. All variable rate master demand notes acquired by the Money
Market Fund will be payable within a prescribed notice period not to exceed
seven days.
4. REPURCHASE AGREEMENTS.
A repurchase agreement is a contractual undertaking whereby the seller
of securities (limited to U.S. Government securities, including securities
issued or guaranteed by the U.S. Treasury or the various agencies and
instrumentalities of the U.S. Government) agrees to repurchase the securities
at a specified price on a future date determined by negotiations.
5. TAXABLE MUNICIPAL SECURITIES.
Taxable municipal securities are debt securities issued by or on
behalf of states and their political subdivisions, the District of Columbia,
and possessions of the United States, the interest on which is not exempt from
federal income tax.
C-2
230
FINANCIAL STATEMENTS
FS
231
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Aggressive Growth Fund, a series of shares of common stock of AIM Variable
Insurance Funds, Inc. including the schedule of investments as of December 31,
1998, the related statement of operations, the statement of changes in net
assets, and the financial highlights for the period May 1, 1998 (commencement
of operations) through December 31, 1998. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Aggressive Growth Fund, as of December 31, 1998, the results of its
operations, the changes in its net assets, and the financial highlights for
the period May 1, 1998 (commencement of operations) through December 31, 1998
in conformity with generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
--------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. AGGRESSIVE GROWTH FUND
FS-1
232
SCHEDULE OF INVESTMENTS
December 31, 1998
MARKET
SHARES VALUE
COMMON STOCKS - 82.28%
AEROSPACE/DEFENSE - 0.36%
AAR Corp. 500 $ 11,938
- -----------------------------------------------------------------
Aviation Sales Co.(a) 100 4,063
- -----------------------------------------------------------------
16,001
- -----------------------------------------------------------------
AIR FREIGHT - 0.19%
Expeditors International of Washington, Inc. 200 8,400
- -----------------------------------------------------------------
AIRLINES - 0.61%
ASA Holdings, Inc. 100 3,050
- -----------------------------------------------------------------
Atlantic Coast Airlines Holdings(a) 500 12,500
- -----------------------------------------------------------------
Ryanair Holdings PLC-ADR (Ireland)(a) 300 11,325
- -----------------------------------------------------------------
26,875
- -----------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.64%
Danaher Corp. 200 10,862
- -----------------------------------------------------------------
Gentex Corp.(a) 500 10,000
- -----------------------------------------------------------------
Tower Automotive, Inc.(a) 300 7,482
- -----------------------------------------------------------------
28,344
- -----------------------------------------------------------------
BANKS (REGIONAL) - 2.09%
Bank United Corp. - Class A 200 7,850
- -----------------------------------------------------------------
Centennial Bancorp(a) 300 5,625
- -----------------------------------------------------------------
Centura Banks, Inc. 100 7,438
- -----------------------------------------------------------------
Community First Bankshares, Inc. 600 12,638
- -----------------------------------------------------------------
First Republic Bank(a) 300 7,518
- -----------------------------------------------------------------
First Washington Bancorp, Inc. 200 4,800
- -----------------------------------------------------------------
Provident Bankshares Corp. 200 4,975
- -----------------------------------------------------------------
Silicon Valley Bancshares(a) 200 3,406
- -----------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(a) 500 8,938
- -----------------------------------------------------------------
Sterling Bancshares, Inc. 300 4,462
- -----------------------------------------------------------------
Trustmark Corp. 200 4,525
- -----------------------------------------------------------------
Westamerica Bancorp. 200 7,350
- -----------------------------------------------------------------
Zions Bancorp. 200 12,475
- -----------------------------------------------------------------
92,000
- -----------------------------------------------------------------
BIOTECHNOLOGY - 0.78%
Curative Health Services, Inc.(a) 200 6,700
- -----------------------------------------------------------------
IDEXX Laboratories, Inc.(a) 700 18,834
- -----------------------------------------------------------------
PathoGenesis Corp.(a) 100 5,800
- -----------------------------------------------------------------
Pharmaceutical Product Development, Inc.(a) 100 3,006
- -----------------------------------------------------------------
34,340
- -----------------------------------------------------------------
MARKET
SHARES VALUE
BROADCASTING (TELEVISION, RADIO & CABLE) - 1.26%
Chancellor Media Corp.(a) 200 $ 9,575
- ---------------------------------------------------------------------
Heftel Broadcasting Corp.(a) 800 39,400
- ---------------------------------------------------------------------
Jacor Communications, Inc.(a) 100 6,437
- ---------------------------------------------------------------------
55,412
- ---------------------------------------------------------------------
BUILDING MATERIALS - 0.13%
NCI Building Systems, Inc.(a) 200 5,625
- ---------------------------------------------------------------------
CHEMICALS (SPECIALTY) - 0.33%
OM Group, Inc. 400 14,600
- ---------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 2.12%
Brightpoint, Inc.(a) 2,200 30,250
- ---------------------------------------------------------------------
Comverse Technology, Inc.(a) 500 35,500
- ---------------------------------------------------------------------
Dycom Industries, Inc.(a) 200 11,425
- ---------------------------------------------------------------------
REMEC, Inc.(a) 400 7,200
- ---------------------------------------------------------------------
Tekelec(a) 300 4,968
- ---------------------------------------------------------------------
VideoServer, Inc.(a) 200 3,675
- ---------------------------------------------------------------------
93,018
- ---------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.82%
Brooktrout Technology, Inc.(a) 200 3,425
- ---------------------------------------------------------------------
IDX Systems Corp.(a) 100 4,400
- ---------------------------------------------------------------------
Micron Electronics, Inc.(a) 800 13,850
- ---------------------------------------------------------------------
National Instruments Corp.(a) 200 6,825
- ---------------------------------------------------------------------
Visual Networks, Inc.(a) 200 7,500
- ---------------------------------------------------------------------
36,000
- ---------------------------------------------------------------------
COMPUTERS (NETWORKING) - 0.85%
Broadcom Corp.(a) 200 24,150
- ---------------------------------------------------------------------
International Network Services(a) 200 13,300
- ---------------------------------------------------------------------
37,450
- ---------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.27%
Cybex Computer Products Corp.(a) 300 8,812
- ---------------------------------------------------------------------
Jabil Circuit, Inc.(a) 200 14,925
- ---------------------------------------------------------------------
Network Appliance, Inc.(a) 800 36,000
- ---------------------------------------------------------------------
QLogic Corp.(a) 100 13,087
- ---------------------------------------------------------------------
SMART Modular Technologies, Inc.(a) 600 16,650
- ---------------------------------------------------------------------
Xircom, Inc.(a) 300 10,200
- ---------------------------------------------------------------------
99,674
- ---------------------------------------------------------------------
AIM V.I. AGGRESSIVE GROWTH FUND
FS-2
233
MARKET
SHARES VALUE
COMPUTERS (SOFTWARE & SERVICES) - 11.96%
American Management Systems, Inc.(a) 200 $ 8,000
- -----------------------------------------------------------------------
Aspect Development, Inc.(a) 200 8,863
- -----------------------------------------------------------------------
Avant! Corp.(a) 400 6,400
- -----------------------------------------------------------------------
AVT Corp.(a) 400 11,600
- -----------------------------------------------------------------------
AXENT Technologies, Inc.(a) 400 12,225
- -----------------------------------------------------------------------
Business Objects S.A.-ADR (France)(a) 300 9,750
- -----------------------------------------------------------------------
Check Point Software Technologies Ltd.(a) (Israel) 400 18,325
- -----------------------------------------------------------------------
Citrix Systems, Inc.(a) 400 38,825
- -----------------------------------------------------------------------
Computer Management Sciences, Inc.(a) 500 8,688
- -----------------------------------------------------------------------
Concord Communications, Inc.(a) 200 11,350
- -----------------------------------------------------------------------
Concord EFS, Inc.(a) 900 38,137
- -----------------------------------------------------------------------
Documentum, Inc.(a) 200 10,687
- -----------------------------------------------------------------------
Electronics for Imaging, Inc.(a) 500 20,093
- -----------------------------------------------------------------------
Engineering Animation, Inc.(a) 500 27,000
- -----------------------------------------------------------------------
Gemstar International Group Ltd.(a) 200 11,450
- -----------------------------------------------------------------------
HNC Software, Inc.(a) 300 12,132
- -----------------------------------------------------------------------
Hyperion Solutions Corp.(a) 390 7,020
- -----------------------------------------------------------------------
Jack Henry & Associates 100 4,975
- -----------------------------------------------------------------------
Kronos, Inc.(a) 100 4,432
- -----------------------------------------------------------------------
Legato Systems, Inc.(a) 300 19,782
- -----------------------------------------------------------------------
Lycos, Inc.(a) 500 27,781
- -----------------------------------------------------------------------
Macromedia, Inc.(a) 200 6,738
- -----------------------------------------------------------------------
Medical Manager Corp.(a) 600 18,825
- -----------------------------------------------------------------------
Mercury Interactive Corp.(a) 200 12,650
- -----------------------------------------------------------------------
Mobius Management Systems, Inc.(a) 100 1,487
- -----------------------------------------------------------------------
PC Connection, Inc.(a) 400 7,050
- -----------------------------------------------------------------------
QRS Corp.(a) 100 4,800
- -----------------------------------------------------------------------
QuadraMed Corp.(a) 300 6,150
- -----------------------------------------------------------------------
Rational Software Corp.(a) 900 23,850
- -----------------------------------------------------------------------
Sapient Corp.(a) 100 5,600
- -----------------------------------------------------------------------
ScanSource, Inc.(a) 100 2,150
- -----------------------------------------------------------------------
Secure Computing Corp.(a) 400 7,625
- -----------------------------------------------------------------------
Sterling Software, Inc. (a) 200 5,412
- -----------------------------------------------------------------------
Technisource, Inc.(a) 100 987
- -----------------------------------------------------------------------
Transaction Systems Architects, Inc. - Class A(a) 200 10,000
- -----------------------------------------------------------------------
USWeb Corp.(a) 700 18,463
- -----------------------------------------------------------------------
Veritas Software Corp.(a) 650 38,959
- -----------------------------------------------------------------------
Visio Corp.(a) 500 18,282
- -----------------------------------------------------------------------
Whittman-Hart, Inc.(a) 200 5,525
- -----------------------------------------------------------------------
Wind River Systems(a) 300 14,100
- -----------------------------------------------------------------------
526,168
- -----------------------------------------------------------------------
MARKET
SHARES VALUE
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.75%
Action Performance Companies, Inc.(a) 300 $ 10,613
- ------------------------------------------------------------------
Blyth Industries, Inc.(a) 500 15,625
- ------------------------------------------------------------------
Department 56, Inc.(a) 100 3,756
- ------------------------------------------------------------------
Fossil, Inc.(a) 100 2,875
- ------------------------------------------------------------------
32,869
- ------------------------------------------------------------------
CONSUMER FINANCE - 0.37%
AmeriCredit Corp.(a) 700 9,668
- ------------------------------------------------------------------
Doral Financial Corp. 300 6,637
- ------------------------------------------------------------------
16,305
- ------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.40%
Patterson Dental Co.(a) 400 17,400
- ------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.60%
AFC Cable Systems, Inc.(a) 300 10,088
- ------------------------------------------------------------------
Hadco Corp.(a) 100 3,500
- ------------------------------------------------------------------
Oak Industries, Inc.(a) 200 7,000
- ------------------------------------------------------------------
Sanmina Corp.(a) 400 25,000
- ------------------------------------------------------------------
Sawtek, Inc.(a) 100 1,750
- ------------------------------------------------------------------
SLI, Inc.(a) 200 5,550
- ------------------------------------------------------------------
Symbol Technologies, Inc. 600 38,363
- ------------------------------------------------------------------
Uniphase Corp.(a) 300 20,812
- ------------------------------------------------------------------
Watsco, Inc. 150 2,513
- ------------------------------------------------------------------
114,576
- ------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 0.10%
Anicom, Inc.(a) 500 4,594
- ------------------------------------------------------------------
ELECTRONICS (DEFENSE) - 0.21%
Aeroflex, Inc.(a) 600 9,075
- ------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.60%
Waters Corp.(a) 300 26,175
- ------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 6.32%
Apex PC Solutions, Inc.(a) 100 2,887
- ------------------------------------------------------------------
Applied Micro Circuits Corp.(a) 400 13,587
- ------------------------------------------------------------------
Artisan Components, Inc.(a) 500 2,657
- ------------------------------------------------------------------
Burr-Brown Corp.(a) 100 2,343
- ------------------------------------------------------------------
Dallas Semiconductor Corp. 200 8,150
- ------------------------------------------------------------------
Flextronics International Ltd.(a) 700 59,938
- ------------------------------------------------------------------
Level One Communications, Inc.(a) 600 21,300
- ------------------------------------------------------------------
Micrel, Inc.(a) 200 11,000
- ------------------------------------------------------------------
Microchip Technology, Inc.(a) 800 29,600
- ------------------------------------------------------------------
PMC-Sierra, Inc.(a) 300 18,938
- ------------------------------------------------------------------
Semtech Corp.(a) 300 10,763
- ------------------------------------------------------------------
Sipex Corp.(a) 1,000 35,125
- ------------------------------------------------------------------
TranSwitch Corp.(a) 500 19,468
- ------------------------------------------------------------------
Unitrode Corp.(a) 600 10,500
- ------------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 700 31,938
- ------------------------------------------------------------------
278,194
- ------------------------------------------------------------------
AIM V.I. AGGRESSIVE GROWTH FUND
FS-3
234
MARKET
SHARES VALUE
ENTERTAINMENT - 0.81%
Cinar Films Inc.-Class B(a) (Canada) 100 $ 2,538
- ------------------------------------------------------------------
SFX Entertainment, Inc.-Class A(a) 600 32,925
- ------------------------------------------------------------------
35,463
- ------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS) - 0.45%
Asyst Technologies, Inc.(a) 300 6,112
- ------------------------------------------------------------------
Etec Systems, Inc.(a) 100 4,000
- ------------------------------------------------------------------
Novellus Systems, Inc.(a) 200 9,900
- ------------------------------------------------------------------
20,012
- ------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 1.04%
Insignia Financial Group, Inc.(a) 200 2,425
- ------------------------------------------------------------------
NCO Group, Inc.(a) 300 13,500
- ------------------------------------------------------------------
SEI Investments Co. 300 29,812
- ------------------------------------------------------------------
45,737
- ------------------------------------------------------------------
FOODS - 1.04%
American Italian Pasta Co.-Class A(a) 200 5,275
- ------------------------------------------------------------------
Earthgrains Co. (The) 200 6,187
- ------------------------------------------------------------------
Fresh Del Monte Produce, Inc.(a) 200 4,337
- ------------------------------------------------------------------
Hain Food Group, Inc. (The)(a) 600 15,000
- ------------------------------------------------------------------
International Home Foods, Inc.(a) 200 3,375
- ------------------------------------------------------------------
Pilgrim's Pride Corp.-Class B 100 1,994
- ------------------------------------------------------------------
United Natural Foods, Inc.(a) 400 9,650
- ------------------------------------------------------------------
45,818
- ------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.64%
Alpharma, Inc.-Class A 600 21,188
- ------------------------------------------------------------------
Biovail Corporation International(a) (Canada) 200 7,563
- ------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 600 35,775
- ------------------------------------------------------------------
Parexel International Corp.(a) 300 7,500
- ------------------------------------------------------------------
72,026
- ------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 1.28%
Health Management Associates, Inc.-Class A(a) 1,000 21,625
- ------------------------------------------------------------------
New American Healthcare Corp.(a) 300 3,356
- ------------------------------------------------------------------
Province Healthcare Co.(a) 300 10,763
- ------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 400 20,750
- ------------------------------------------------------------------
56,494
- ------------------------------------------------------------------
HEALTH CARE (LONG-TERM CARE) - 0.33%
Assisted Living Concepts, Inc.(a) 700 9,189
- ------------------------------------------------------------------
Sunrise Assisted Living, Inc.(a) 100 5,187
- ------------------------------------------------------------------
14,376
- ------------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 0.46%
Express Scripts, Inc.-Class A(a) 300 20,138
- ------------------------------------------------------------------
MARKET
SHARES VALUE
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 3.98%
Haemonetics Corp.(a) 100 $ 2,275
- ---------------------------------------------------------------------
Henry Schein, Inc.(a) 900 40,275
- ---------------------------------------------------------------------
Hologic, Inc.(a) 700 8,487
- ---------------------------------------------------------------------
MiniMed, Inc.(a) 200 20,950
- ---------------------------------------------------------------------
Osteotech, Inc.(a) 300 13,950
- ---------------------------------------------------------------------
PSS World Medical, Inc.(a) 300 6,900
- ---------------------------------------------------------------------
ResMed, Inc.(a) 200 9,075
- ---------------------------------------------------------------------
Serologicals Corp.(a) 300 9,000
- ---------------------------------------------------------------------
Sybron International Corp.(a) 900 24,469
- ---------------------------------------------------------------------
VISX, Inc.(a) 400 34,975
- ---------------------------------------------------------------------
Xomed Surgical Products, Inc.(a) 150 4,800
- ---------------------------------------------------------------------
175,156
- ---------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 3.27%
Advance Paradigm, Inc.(a) 200 7,000
- ---------------------------------------------------------------------
Covance, Inc.(a) 200 5,825
- ---------------------------------------------------------------------
First Consulting Group, Inc.(a) 200 4,100
- ---------------------------------------------------------------------
Hooper Holmes, Inc. 400 11,600
- ---------------------------------------------------------------------
Lincare Holdings, Inc.(a) 100 4,056
- ---------------------------------------------------------------------
NCS HealthCare, Inc.-Class A (a) 700 16,625
- ---------------------------------------------------------------------
Ocular Sciences, Inc.(a) 400 10,700
- ---------------------------------------------------------------------
Omnicare, Inc. 600 20,850
- ---------------------------------------------------------------------
Orthodontic Centers of America, Inc.(a) 800 15,550
- ---------------------------------------------------------------------
Renal Care Group, Inc.(a) 300 8,644
- ---------------------------------------------------------------------
Res-Care, Inc.(a) 200 4,938
- ---------------------------------------------------------------------
Superior Consultant Holdings Corp.(a) 300 13,050
- ---------------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 300 8,868
- ---------------------------------------------------------------------
Veterinary Centers of America, Inc.(a) 600 11,963
- ---------------------------------------------------------------------
143,769
- ---------------------------------------------------------------------
HOMEBUILDING - 0.17%
American Homestar Corp.(a) 500 7,500
- ---------------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES - 0.02%
International Comfort Products Corp. (Canada)(a) 100 800
- ---------------------------------------------------------------------
HOUSEWARES - 0.30%
Helen of Troy Ltd.(a) 900 13,218
- ---------------------------------------------------------------------
INSURANCE (LIFE & HEALTH) - 0.12%
Penn Treaty American Corp.(a) 200 5,388
- ---------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 0.07%
Century Business Services, Inc.(a) 200 2,875
- ---------------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 0.58%
CMAC Investment Corp. 200 9,187
- ---------------------------------------------------------------------
Fidelity National Financial, Inc. 110 3,355
- ---------------------------------------------------------------------
FPIC Insurance Group, Inc.(a) 200 9,563
- ---------------------------------------------------------------------
HCC Insurance Holdings, Inc. 200 3,525
- ---------------------------------------------------------------------
25,630
- ---------------------------------------------------------------------
AIM V.I. AGGRESSIVE GROWTH FUND
FS-4
235
MARKET
SHARES VALUE
INVESTMENT MANAGEMENT - 0.52%
Eaton Vance Corp. 300 $ 6,262
- -----------------------------------------------------------------
Knight/Trimark Group, Inc.-Class A(a) 700 16,756
- -----------------------------------------------------------------
23,018
- -----------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.16%
International Speedway Corp.-Class A 100 4,050
- -----------------------------------------------------------------
Speedway Motorsports, Inc. 100 2,850
- -----------------------------------------------------------------
6,900
- -----------------------------------------------------------------
LODGING-HOTELS - 0.17%
Royal Caribbean Cruises Ltd. (Norway) 200 7,400
- -----------------------------------------------------------------
MACHINERY (DIVERSIFIED) - 0.26%
Applied Power, Inc.-Class A 300 11,325
- -----------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.29%
Matthews International Corp.-Class A 200 6,300
- -----------------------------------------------------------------
Spartech Corp. 300 6,600
- -----------------------------------------------------------------
12,900
- -----------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.31%
JLG Industries, Inc. 500 7,812
- -----------------------------------------------------------------
Zebra Technologies Corp.(a) 200 5,750
- -----------------------------------------------------------------
13,562
- -----------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES - 0.87%
Daisytek International Corp.(a) 900 17,100
- -----------------------------------------------------------------
Herman Miller, Inc. 500 13,437
- -----------------------------------------------------------------
United Stationers, Inc.(a) 300 7,800
- -----------------------------------------------------------------
38,337
- -----------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.38%
Cal Dive International, Inc.(a) 200 4,150
- -----------------------------------------------------------------
Core Laboratories N.V.(a) (Netherlands) 500 9,563
- -----------------------------------------------------------------
Global Industries Ltd.(a) 500 3,062
- -----------------------------------------------------------------
16,775
- -----------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.43%
Cabot Oil & Gas Corp.-Class A 300 4,500
- -----------------------------------------------------------------
Evergreen Resources, Inc.(a) 500 8,875
- -----------------------------------------------------------------
Stone Energy Corp.(a) 200 5,750
- -----------------------------------------------------------------
19,125
- -----------------------------------------------------------------
PERSONAL CARE - 0.44%
Steiner Leisure Ltd.(a) 600 19,200
- -----------------------------------------------------------------
PUBLISHING - 0.33%
IDG Books Worldwide, Inc.-Class A(a) 400 6,900
- -----------------------------------------------------------------
Meredith Corp. 200 7,575
- -----------------------------------------------------------------
14,475
- -----------------------------------------------------------------
RAILROADS - 0.37%
MotivePower Industries, Inc.(a) 500 16,093
- -----------------------------------------------------------------
MARKET
SHARES VALUE
RESTAURANTS - 1.14%
Buffets, Inc.(a) 200 $ 2,387
- -------------------------------------------------------------
CEC Entertainment, Inc.(a) 700 19,425
- -------------------------------------------------------------
Papa John's International, Inc.(a) 300 13,238
- -------------------------------------------------------------
Sonic Corp.(a) 600 14,925
- -------------------------------------------------------------
49,975
- -------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 1.94%
Best Buy Co., Inc.(a) 100 6,138
- -------------------------------------------------------------
CDW Computer Centers, Inc.(a) 700 67,156
- -------------------------------------------------------------
Tech Data Corp.(a) 300 12,075
- -------------------------------------------------------------
85,369
- -------------------------------------------------------------
RETAIL (DISCOUNTERS) - 1.30%
Burlington Coat Factory Warehouse Corp. 500 8,157
- -------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 450 19,659
- -------------------------------------------------------------
Family Dollar Stores, Inc. 500 11,000
- -------------------------------------------------------------
99 Cents Only Stores(a) 375 18,421
- -------------------------------------------------------------
57,237
- -------------------------------------------------------------
RETAIL (FOOD CHAINS) - 0.14%
Wild Oats Markets, Inc.(a) 200 6,300
- -------------------------------------------------------------
RETAIL (HOME SHOPPING) - 0.17%
DM Management Co.(a) 400 7,600
- -------------------------------------------------------------
RETAIL (SPECIALTY) - 2.81%
Casey's General Stores, Inc. 200 2,607
- -------------------------------------------------------------
Cost Plus, Inc.(a) 200 6,275
- -------------------------------------------------------------
CSK Auto Corp.(a) 400 10,675
- -------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a) 400 9,700
- -------------------------------------------------------------
Linens 'N Things, Inc.(a) 500 19,813
- -------------------------------------------------------------
Michaels Stores, Inc.(a) 500 9,046
- -------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 300 14,175
- -------------------------------------------------------------
PETsMART, Inc.(a) 400 4,400
- -------------------------------------------------------------
Rent-Way, Inc.(a) 300 7,294
- -------------------------------------------------------------
Renters Choice, Inc.(a) 600 19,050
- -------------------------------------------------------------
Trans World Entertainment Corp.(a) 650 12,390
- -------------------------------------------------------------
Williams-Sonoma, Inc.(a) 200 8,062
- -------------------------------------------------------------
123,487
- -------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 2.86%
Abercrombie & Fitch Co.-Class A(a) 338 23,913
- -------------------------------------------------------------
American Eagle Outfitters, Inc.(a) 400 26,650
- -------------------------------------------------------------
AnnTaylor Stores Corp.(a) 400 15,775
- -------------------------------------------------------------
Buckle, Inc. (The)(a) 850 20,400
- -------------------------------------------------------------
Goody's Family Clothing, Inc.(a) 1,100 11,035
- -------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 650 20,637
- -------------------------------------------------------------
Pacific Sunwear of California(a) 450 7,369
- -------------------------------------------------------------
125,779
- -------------------------------------------------------------
AIM V.I. AGGRESSIVE GROWTH FUND
FS-5
236
MARKET
SHARES VALUE
SERVICES (ADVERTISING/MARKETING) - 1.18%
Abacus Direct Corp.(a) 100 $ 4,550
- ----------------------------------------------------------------
Acxiom Corp.(a) 500 15,500
- ----------------------------------------------------------------
ADVO, Inc.(a) 100 2,637
- ----------------------------------------------------------------
Market Facts, Inc.(a) 500 13,000
- ----------------------------------------------------------------
Metris Companies, Inc. 100 5,032
- ----------------------------------------------------------------
Professional Detailing, Inc.(a) 100 2,825
- ----------------------------------------------------------------
TMP Worldwide, Inc.(a) 200 8,400
- ----------------------------------------------------------------
51,944
- ----------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 2.60%
Bright Horizons Family Solutions, Inc.(a) 300 8,100
- ----------------------------------------------------------------
Championship Auto Racing Teams, Inc.(a) 100 2,963
- ----------------------------------------------------------------
ChoicePoint, Inc.(a) 100 6,450
- ----------------------------------------------------------------
G & K Services, Inc.-Class A 300 15,975
- ----------------------------------------------------------------
Iron Mountain, Inc.(a) 200 7,213
- ----------------------------------------------------------------
MSC Industrial Direct Co., Inc.-Class A(a) 400 9,050
- ----------------------------------------------------------------
Regis Corp. 400 16,000
- ----------------------------------------------------------------
Ritchie Bros. Auctioneers, Inc.(a) (Canada) 200 5,388
- ----------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 900 20,025
- ----------------------------------------------------------------
Strayer Education, Inc. 400 14,100
- ----------------------------------------------------------------
Sylvan Learning Systems, Inc.(a) 300 9,150
- ----------------------------------------------------------------
114,414
- ----------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 2.71%
Analysts International Corp. 200 3,850
- ----------------------------------------------------------------
Ciber, Inc.(a) 200 5,587
- ----------------------------------------------------------------
Computer Task Group, Inc. 600 16,275
- ----------------------------------------------------------------
Insight Enterprises, Inc.(a) 1,000 50,875
- ----------------------------------------------------------------
Keane, Inc.(a) 200 7,988
- ----------------------------------------------------------------
Safeguard Scientifics, Inc.(a) 100 2,743
- ----------------------------------------------------------------
SunGard Data Systems, Inc.(a) 800 31,750
- ----------------------------------------------------------------
119,068
- ----------------------------------------------------------------
SERVICES (DATA PROCESSING) - 3.77%
Affiliated Computer Services, Inc.(a) 700 31,500
- ----------------------------------------------------------------
Computer Horizons Corp.(a) 200 5,325
- ----------------------------------------------------------------
CSG Systems International, Inc.(a) 700 55,300
- ----------------------------------------------------------------
FactSet Research Systems, Inc.(a) 200 12,350
- ----------------------------------------------------------------
Lason Holdings, Inc.(a) 100 5,818
- ----------------------------------------------------------------
MedQuist, Inc.(a) 400 15,800
- ----------------------------------------------------------------
National Computer Systems, Inc. 500 18,500
- ----------------------------------------------------------------
NOVA Corp.(a) 614 21,298
- ----------------------------------------------------------------
165,891
- ----------------------------------------------------------------
MARKET
SHARES VALUE
SERVICES (EMPLOYMENT) - 1.05%
On Assignment, Inc.(a) 100 $ 3,450
- --------------------------------------------------------------------------
RCM Technologies, Inc.(a) 200 5,300
- --------------------------------------------------------------------------
Robert Half International, Inc.(a) 300 13,408
- --------------------------------------------------------------------------
Romac International, Inc.(a) 700 15,575
- --------------------------------------------------------------------------
Select Appointments Holdings PLC-ADR
(United Kingdom) 400 8,600
- --------------------------------------------------------------------------
46,333
- --------------------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL) - 0.40%
Cornell Corrections, Inc.(a) 500 9,500
- --------------------------------------------------------------------------
Tetra Tech, Inc.(a) 300 8,118
- --------------------------------------------------------------------------
17,618
- --------------------------------------------------------------------------
SPECIALTY PRINTING - 0.83%
Consolidated Graphics, Inc.(a) 300 20,268
- --------------------------------------------------------------------------
Valassis Communications, Inc.(a) 200 10,325
- --------------------------------------------------------------------------
World Color Press, Inc.(a) 200 6,088
- --------------------------------------------------------------------------
36,681
- --------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.29%
Amdocs Ltd.(a) 400 6,850
- --------------------------------------------------------------------------
International Telecommunication Data Systems, Inc.(a) 400 5,900
- --------------------------------------------------------------------------
12,750
- --------------------------------------------------------------------------
TELEPHONE - 0.34%
GeoTel Communications Corp.(a) 400 14,900
- --------------------------------------------------------------------------
Textiles (Apparel) - 0.82%
Quicksilver, Inc.(a) 1,000 30,000
- --------------------------------------------------------------------------
Tommy Hilfiger Corp.(a) 100 6,000
- --------------------------------------------------------------------------
36,000
- --------------------------------------------------------------------------
TEXTILES (HOME FURNISHINGS) - 0.48%
Mohawk Industries, Inc.(a) 500 21,032
- --------------------------------------------------------------------------
Truckers - 0.25%
Swift Transportation Co., Inc.(a) 400 11,213
- --------------------------------------------------------------------------
Trucks & Parts - 0.32%
Wabash National Corp. 700 14,218
- --------------------------------------------------------------------------
WASTE MANAGEMENT - 1.03%
Allied Waste Industries, Inc.(a) 1,360 32,130
- --------------------------------------------------------------------------
KTI, Inc.(a) 600 12,975
- --------------------------------------------------------------------------
45,105
- --------------------------------------------------------------------------
Total Common Stocks (Cost $2,946,310) 3,619,519
- --------------------------------------------------------------------------
AIM V.I. AGGRESSIVE GROWTH FUND
FS-6
237
PRINCIPAL MARKET
AMOUNT VALUE
U.S TREASURY BILLS(b) - 8.10%
4.439%, 03/25/99 (Cost $356,307) $360,000(c) $ 356,307
- --------------------------------------------------------------------------------
Total Investments, excluding repurchase agreement
(Cost $3,302,617) 3,975,826
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT(d) - 10.43%
SBC Warburg Dillon Read, Inc., 4.75%
01/04/99(e) (Cost $459,028) 459,028 459,028
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.81% 4,434,854
- --------------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (0.81)% (35,751)
- --------------------------------------------------------------------------------
NET ASSETS - 100.00% $4,399,103
================================================================================
(a) Non-income producing security.
(b) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover
margin requirements for open future contracts. See Note 7.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75% due 06/30/99 to 11/15/21 with an aggregate market
value at 12/31/98 of $1,020,001,079.
Investment Abbreviation:
ADR - American Depositary Receipt
See Notes to Financial Statements.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-7
238
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, excluding repurchase agreements, at market
value (cost $3,302,617) $ 3,975,826
- ---------------------------------------------------------------------
Repurchase agreements (cost $459,028) 459,028
- ---------------------------------------------------------------------
Receivables for:
Capital stock sold 3,114
- ---------------------------------------------------------------------
Investments sold 19,772
- ---------------------------------------------------------------------
Dividends and interest 259
- ---------------------------------------------------------------------
Variation margin 3,875
- ---------------------------------------------------------------------
Reimbursement from advisor 45,009
- ---------------------------------------------------------------------
Investment for deferred compensation plan 2,778
- ---------------------------------------------------------------------
Total assets 4,509,661
- ---------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 100,750
- ---------------------------------------------------------------------
Deferred compensation plan 2,778
- ---------------------------------------------------------------------
Accrued operating expenses 7,030
- ---------------------------------------------------------------------
Total liabilities 110,558
- ---------------------------------------------------------------------
Net assets applicable to shares outstanding $ 4,399,103
=====================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ---------------------------------------------------------------------
Outstanding 446,621
=====================================================================
Net asset value, offering and redemption price per share $9.85
=====================================================================
STATEMENT OF OPERATIONS
For the period May 1, 1998 (date operations commenced)
through December 31, 1998
INVESTMENT INCOME:
Interest $ 33,438
- ---------------------------------------------------------------------
Dividends 1,129
- ---------------------------------------------------------------------
Total investment income 34,567
- ---------------------------------------------------------------------
EXPENSES:
Advisory fees 13,054
- ---------------------------------------------------------------------
Administrative services fees 26,658
- ---------------------------------------------------------------------
Custodian fees 18,571
- ---------------------------------------------------------------------
Directors' fees and expenses 6,301
- ---------------------------------------------------------------------
Legal fees 7,771
- ---------------------------------------------------------------------
Other 3,066
- ---------------------------------------------------------------------
Total expenses 75,421
- ---------------------------------------------------------------------
Less: Fees waived and reimbursed by advisor (56,454)
- ---------------------------------------------------------------------
Expenses paid indirectly (65)
- ---------------------------------------------------------------------
Net expenses 18,902
- ---------------------------------------------------------------------
Net investment income 15,665
- ---------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (182,452)
- ---------------------------------------------------------------------
Futures contracts (213,085)
- ---------------------------------------------------------------------
(395,537)
- ---------------------------------------------------------------------
Net unrealized appreciation of:
Investment securities 673,210
- ---------------------------------------------------------------------
Futures contracts 15,300
- ---------------------------------------------------------------------
688,510
- ---------------------------------------------------------------------
Net gain from investment securities and futures contracts 292,973
- ---------------------------------------------------------------------
Net increase in net assets resulting from operations $ 308,638
=====================================================================
See Notes to Financial Statements.
AIM V.I. AGGRESSIVE GROWTH FUND
FS-8
239
STATEMENT OF CHANGES IN NET ASSETS
For the period May 1, 1998 (date operations commenced) through December 31,
1998
1998
----------
OPERATIONS:
Net investment income $ 15,665
- ------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and futures
contracts (395,537)
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and futures
contracts 688,510
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations 308,638
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment income (22,273)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 4,112,738
- ------------------------------------------------------------------------------
Net increase in net assets 4,399,103
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period --
- ------------------------------------------------------------------------------
End of period $4,399,103
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,108,916
- ------------------------------------------------------------------------------
Undistributed net investment income (2,786)
- ------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities
and futures contracts (395,537)
- ------------------------------------------------------------------------------
Unrealized appreciation of investment securities and futures
contracts 688,510
- ------------------------------------------------------------------------------
$4,399,103
==============================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Aggressive Growth Fund (the "Fund"). The Fund's investment
objective is to achieve long-term growth of capital. The Fund commenced
operations on May 1, 1998. Currently, shares of the Fund are sold only to
insurance company separate accounts to fund the benefits of variable annuity
contracts and variable life insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. If no mean is
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean of the closing bid and asked
prices. Debt obligations (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided
by the pricing service may be determined without exclusive reliance on
quoted prices and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices
are not provided by any of the above methods are valued at the mean between
last bid and asked prices based upon quotes furnished by independent
sources. Securities for which market quotations either are not readily
available or are questionable are valued at fair value as determined in
good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. Generally, trading in foreign securities
is substantially completed each day at various times prior to the close of
the New York Stock Exchange. The values of such securities used in
computing the net asset value of the Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined
prior to the close of the New York Stock Exchange. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the New
York Stock Exchange which
AIM V.I. AGGRESSIVE GROWTH FUND
FS-9
240
will not be reflected in the computation of the Fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as
determined in good faith by or under the supervision of the Board of
Directors.
B. Securities Transactions, Investment Income and Distributions -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 as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1998
additional paid-in capital was decreased by $3,822, undistributed net
investment income was increased by $3,822 in order to comply with the
requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements. The Fund had capital
loss carryforwards (which may be carried forward to offset future taxable
capital gains, if any) of $354,222, which expires, if not previously
utilized, through the year 2006. The Fund cannot distribute capital gains
to shareholders until the tax loss carryforwards have been utilized.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash as collateral for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of
the contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I
M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.80% of
the first $150 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $150 million. During the
period May 1, 1998 (date operations commenced) through December 31, 1998, AIM
waived expenses of $11,445 and reimbursed expenses of $45,009.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the period May 1, 1998 (date
operations commenced) through December 31, 1998, AIM was reimbursed $26,658
for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the period May 1, 1998 (date operations commenced) through December
31, 1998, the Fund incurred legal fees of $1,697 for services rendered by
Kramer, Levin, Naftalis & Frankel as counsel to the Board of Directors. A
member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $65 under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of
the Fund's total expenses of $65 during the period May 1, 1998 (date
operations commenced) through December 31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest a director's fees,
if so elected by such director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the period May 1, 1998 (date operations
commenced) through December 31, 1998 was $3,584,305 and $455,412,
respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $759,923
- -----------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (95,945)
- -----------------------------------------------------------------------
Net unrealized appreciation of investment securities $663,978
=======================================================================
Cost of investments for tax purposes is $3,770,876.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the period May 1, 1998 (date
operations commenced) through December 31, 1998 were as follows:
Shares Amount
------- ----------
Sold 464,162 $4,261,686
- ---------------------------------------------------------
Issued as reinvestment of dividends 2,421 22,273
- ---------------------------------------------------------
Reacquired (19,962) (171,221)
- ---------------------------------------------------------
446,621 $4,112,738
=========================================================
AIM V.I. AGGRESSIVE GROWTH FUND
FS-10
241
NOTE 7- FUTURES CONTRACTS
On December 31, 1998, $20,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
No. of Month/ Unrealized
Contracts Commitment Appreciation
Contract --------- ---------- ------------
Russell 2000 Index 1 Mar 99/Buy $15,300
================================================================================
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the period May 1, 1998 (date operations commenced) through December 31,
1998.
1998
------
Net asset value, beginning of period $10.00
- ----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.04
- ----------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.14)
- ----------------------------------------------------------------------
Total from investment operations (0.10)
- ----------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.05)
- ----------------------------------------------------------------------
Net asset value, end of period $ 9.85
================================================================= ======
Total return(a) (0.94)%
================================================================= ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $4,399
================================================================= ======
Ratio of expenses to average net assets(b) 1.16%(c)
================================================================= ======
Ratio of net investment income to average net assets(d) 0.96%(c)
================================================================= ======
Portfolio turnover rate 30%
================================================================= ======
(a) Total return is not annualized.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
4.62% (annualized).
(c) Ratios are annualized and based on average net assets of $2,430,925.
(d) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursement was (2.50)% (annualized).
AIM V.I. AGGRESSIVE GROWTH FUND
FS-11
242
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Balanced Fund, a series of shares of common stock of AIM Variable
Insurance Funds, Inc. including the schedule of investments as of December 31,
1998, the related statement of operations, the statement of changes in net
assets, and the financial highlights for the period May 1, 1998 (commencement
of operations) through December 31, 1998. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Balanced Fund, as of December 31, 1998, the results of its operations, the
changes in its net assets, and the financial highlights for the period May 1,
1998 (commencement of operations) through December 31, 1998 in conformity with
generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
--------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. BALANCED FUND
FS-12
243
SCHEDULE OF INVESTMENTS
December 31, 1998
PRINCIPAL MARKET
AMOUNT VALUE
DOMESTIC BONDS & NOTES - 22.68%
BANKS (MONEY CENTER) - 0.74%
First Union Bancorp, Sub. Deb., 7.50%, 04/15/35 $ 70,000 $ 76,815
- -------------------------------------------------------------------------------
BANKS (REGIONAL) - 0.71%
HSBC Americas Inc., Unsec. Sub. Notes, 7.00%, 11/01/06 70,000 73,016
- -------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 2.45%
Comcast Cable Communications, Unsec. Unsub. Notes,
6.20%, 11/15/08 100,000 101,998
- -------------------------------------------------------------------------------
CSC Holdings Inc., Series B Sr. Unsec. Deb., 7.625%,
07/15/18 50,000 51,196
- -------------------------------------------------------------------------------
USA Networks, Inc., Sr. Notes, 6.75%, 11/15/05(a)
(Acquired 11/30/98; Cost $100,274) 100,000 100,266
- -------------------------------------------------------------------------------
253,460
- -------------------------------------------------------------------------------
CHEMICALS - 1.18%
Airgas Inc., Medium Term Notes, 7.14%, 03/08/04 50,000 51,056
- -------------------------------------------------------------------------------
Solutia Inc., Sr. Unsec. Deb., 6.72%, 10/15/37 70,000 71,120
- -------------------------------------------------------------------------------
122,176
- -------------------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 0.49%
Monsanto Co., Deb., 6.50%, 12/01/18(a)
(Acquired 12/04/98; Cost $49,791) 50,000 50,349
- -------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.34%
Comverse Technology Inc., Conv. Unsec. Sub. Deb.,
4.50%, 07/01/05 28,000 35,420
- -------------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.29%
Candescent Technology Corp., Conv. Sr. Sub. Deb.,
7.00%, 05/01/03(a)
(Acquired 11/06/98-11/09/98; Cost $28,326) 33,000 29,700
- -------------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 0.33%
Network Associates Inc., Conv. Unsec. Sub. Deb., 3.44%,
02/13/18(b) 55,000 33,825
- -------------------------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.70%
American Greetings, Unsec. Notes, 6.10%, 08/01/28 70,000 72,414
- -------------------------------------------------------------------------------
CONSUMER FINANCE - 2.55%
Beneficial Corp.-Series H, Medium Term Notes, 6.94%,
12/15/06 250,000 263,978
- -------------------------------------------------------------------------------
ELECTRIC COMPANIES - 0.77%
Commonwealth Edison Co., First Mortgage Notes, 7.50%,
07/01/13 70,000 79,153
- -------------------------------------------------------------------------------
ENTERTAINMENT - 0.76%
Time Warner, Inc., Unsec. Deb., 6.85%, 01/15/26 75,000 78,903
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
FINANCIAL (DIVERSIFIED) - 2.88%
Associates Corp of North America, Series B Sr. Deb.,
6.95%, 11/01/18 $ 50,000 $ 53,213
- -------------------------------------------------------------------------------
Private Export Funding, Sec. Deb., 8.35%, 01/31/01 230,000 244,858
- -------------------------------------------------------------------------------
298,071
- -------------------------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER) - 0.38%
Elan Finance Corp., Conv. Gtd. Sub. Notes, 3.25%,
12/14/18(a)(b)
(Acquired 12/08/98; Cost $36,766) 70,000 39,375
- -------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.49%
Beckman Coulter, Sr. Unsec. Gtd. Notes, 7.45%, 03/04/08 50,000 50,865
- -------------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.50%
Merrill Lynch & Co., Unsec. Notes, 6.875%, 11/15/18 50,000 51,659
- -------------------------------------------------------------------------------
NATURAL GAS - 2.72%
Enron Corp., Notes, 6.75%, 08/01/09 70,000 72,784
- -------------------------------------------------------------------------------
K N Energy, Inc., Unsec. Deb., 7.35%, 08/01/26 100,000 105,515
- -------------------------------------------------------------------------------
National Fuel Gas Co., Series D, Medium Term Notes,
6.303%, 05/27/08 100,000 103,332
- -------------------------------------------------------------------------------
281,631
- -------------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.24%
R & B Falcon Corp., Sr. Notes, 9.50%, 12/15/08(a)
(Acquired 12/17/98; Cost $25,000) 25,000 25,125
- -------------------------------------------------------------------------------
RAILROADS - 1.45%
CSX Corp.-Series C, Medium Term Notes, 6.80%, 12/01/28 150,000 149,625
- -------------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 0.08%
Affiliated Computer Services, Conv. Sub. Notes, 4.00%,
03/15/05 7,000 8,544
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 1.89%
Global Telesystems Group, Conv. Sr. Sub. Deb., 5.75%,
07/01/10 15,000 16,931
- -------------------------------------------------------------------------------
MCI Communications Corp., Putable Sr. Unsec. Deb.,
7.125%, 06/15/27 70,000 74,445
- -------------------------------------------------------------------------------
Sprint Capital Corp., Sr. Unsec. Gtd. Notes, 6.875%,
11/15/28 100,000 104,216
- -------------------------------------------------------------------------------
195,592
- -------------------------------------------------------------------------------
TELEPHONE - 0.74%
SBC Communications Inc., Deb., 7.375%, 07/15/43 70,000 76,385
- -------------------------------------------------------------------------------
Total Domestic Bonds & Notes
(Cost $2,305,968) 2,346,081
- -------------------------------------------------------------------------------
AIM V.I. BALANCED FUND
FS-13
244
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS - 28.92%
BANKS (MONEY CENTER) - 0.56%
BankAmerica Corp. 300 $ 18,038
- --------------------------------------------------------------
Chase Manhattan Corp. (The) 500 34,031
- --------------------------------------------------------------
First Union Corp. 100 6,081
- --------------------------------------------------------------
58,150
- --------------------------------------------------------------
BANKS (REGIONAL) - 0.25%
Bank United Corp.-Class A 300 11,775
- --------------------------------------------------------------
Southwest Bancorp. of Texas, Inc.(c) 800 14,300
- --------------------------------------------------------------
26,075
- --------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC) - 0.21%
Coca-Cola Co. (The) 200 13,375
- --------------------------------------------------------------
PepsiCo, Inc. 200 8,188
- --------------------------------------------------------------
21,563
- --------------------------------------------------------------
BIOTECHNOLOGY - 0.48%
Biogen, Inc.(c) 300 24,900
- --------------------------------------------------------------
Genzyme Corp.(c) 500 24,875
- --------------------------------------------------------------
49,775
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.72%
CBS Corp.(c) 800 26,200
- --------------------------------------------------------------
Heftel Broadcasting Corp.(c) 400 19,700
- --------------------------------------------------------------
Univision Communications, Inc.(c) 800 28,950
- --------------------------------------------------------------
74,850
- --------------------------------------------------------------
BUILDING MATERIALS - 0.12%
Group Maintenance America Corp.(c) 1,000 12,125
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.89%
ADC Telecommunications, Inc.(c) 300 10,425
- --------------------------------------------------------------
ANTEC Corp.(c) 1,100 22,138
- --------------------------------------------------------------
Brightpoint, Inc.(c) 600 8,250
- --------------------------------------------------------------
Lucent Technologies, Inc. 400 44,000
- --------------------------------------------------------------
Tellabs, Inc.(c) 100 6,856
- --------------------------------------------------------------
91,669
- --------------------------------------------------------------
COMPUTERS (HARDWARE) - 1.09%
Compaq Computer Corp. 800 33,550
- --------------------------------------------------------------
Dell Computer Corp.(c) 600 43,913
- --------------------------------------------------------------
International Business Machines Corp. 100 18,475
- --------------------------------------------------------------
Sun Microsystems, Inc.(c) 200 17,125
- --------------------------------------------------------------
113,063
- --------------------------------------------------------------
MARKET
SHARES VALUE
COMPUTERS (NETWORKING) - 0.83%
Ascend Communications, Inc.(c) 600 $ 39,450
- ---------------------------------------------------------------------
Cisco Systems, Inc.(c) 500 46,406
- ---------------------------------------------------------------------
85,856
- ---------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 0.41%
EMC Corp.(c) 500 42,500
- ---------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 2.28%
America Online, Inc. 600 96,000
- ---------------------------------------------------------------------
Computer Associates International, Inc. 100 4,263
- ---------------------------------------------------------------------
Engineering Animation, Inc.(c) 300 16,200
- ---------------------------------------------------------------------
HBO & Co. 900 25,819
- ---------------------------------------------------------------------
ISS Group, Inc.(c) 300 16,500
- ---------------------------------------------------------------------
Microsoft Corp.(c) 100 13,869
- ---------------------------------------------------------------------
Platinum Technology, Inc.(c) 400 7,650
- ---------------------------------------------------------------------
Sterling Commerce, Inc.(c) 300 13,500
- ---------------------------------------------------------------------
USWeb Corp.(c) 1,600 42,200
- ---------------------------------------------------------------------
236,001
- ---------------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.09%
Blyth Industries, Inc.(c) 300 9,375
- ---------------------------------------------------------------------
CONSUMER FINANCE - 0.23%
SLM Holding Corp. 500 24,000
- ---------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.26%
Cardinal Health, Inc. 350 26,556
- ---------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.39%
General Electric Co. 400 40,825
- ---------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.13%
Quanta Services, Inc.(c) 600 13,238
- ---------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 0.23%
Intel Corp. 200 23,713
- ---------------------------------------------------------------------
ENTERTAINMENT - 0.20%
Walt Disney Co. (The) 700 21,000
- ---------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.08%
Applied Materials, Inc.(c) 200 8,538
- ---------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 1.78%
American Express Co. 200 20,450
- ---------------------------------------------------------------------
CIT Group, Inc. (The) 300 9,544
- ---------------------------------------------------------------------
Citigroup, Inc. 500 24,750
- ---------------------------------------------------------------------
Fannie Mae 700 51,769
- ---------------------------------------------------------------------
FINOVA Group, Inc. 200 10,788
- ---------------------------------------------------------------------
Freddie Mac 400 25,775
- ---------------------------------------------------------------------
Heller Financial, Inc. 500 14,688
- ---------------------------------------------------------------------
Medallion Financial Corp. 800 11,450
- ---------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 200 14,200
- ---------------------------------------------------------------------
183,414
- ---------------------------------------------------------------------
AIM V.I. BALANCED FUND
FS-14
245
MARKET
SHARES VALUE
FOODS - 0.57%
Keebler Foods Co.(c) 700 $ 26,338
- -------------------------------------------------------------------
Ralston-Ralston Purina Group 1,000 32,375
- -------------------------------------------------------------------
58,713
- -------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 1.18%
Abbott Laboratories 200 9,800
- -------------------------------------------------------------------
American Home Products Corp. 400 22,525
- -------------------------------------------------------------------
Bristol-Myers Squibb Co. 200 26,763
- -------------------------------------------------------------------
Johnson & Johnson 300 25,163
- -------------------------------------------------------------------
Warner-Lambert Co. 500 37,594
- -------------------------------------------------------------------
121,845
- -------------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER) - 0.40%
Barr Laboratories, Inc.(c) 300 14,400
- -------------------------------------------------------------------
Forest Laboratories, Inc.(c) 500 26,594
- -------------------------------------------------------------------
40,994
- -------------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) - 1.03%
Lilly (Eli) & Co. 400 35,550
- -------------------------------------------------------------------
Merck & Co., Inc. 200 29,538
- -------------------------------------------------------------------
Pfizer, Inc. 200 25,088
- -------------------------------------------------------------------
Schering-Plough Corp. 300 16,575
- -------------------------------------------------------------------
106,751
- -------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.10%
Province Healthcare Co.(c) 300 10,763
- -------------------------------------------------------------------
HEALTH CARE (LONG TERM CARE) - 0.49%
Assisted Living Concepts, Inc.(c) 700 9,188
- -------------------------------------------------------------------
Sunrise Assisted Living, Inc.(c) 800 41,500
- -------------------------------------------------------------------
50,688
- -------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.55%
Arterial Vascular Engineering, Inc.(c) 400 21,000
- -------------------------------------------------------------------
Baxter International, Inc. 300 19,294
- -------------------------------------------------------------------
Becton, Dickinson & Co. 600 25,613
- -------------------------------------------------------------------
Guidant Corp. 200 22,050
- -------------------------------------------------------------------
Medtronic, Inc. 500 37,125
- -------------------------------------------------------------------
VISX, Inc.(c) 400 34,975
- -------------------------------------------------------------------
160,057
- -------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 0.43%
MAXIMUS, Inc.(c) 400 14,800
- -------------------------------------------------------------------
Omnicare, Inc. 400 13,900
- -------------------------------------------------------------------
Quintiles Transnational Corp.(c) 300 16,013
- -------------------------------------------------------------------
44,713
- -------------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES - 0.12%
Ethan Allen Interiors, Inc. 300 12,300
- -------------------------------------------------------------------
MARKET
SHARES VALUE
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.27%
Colgate-Palmolive Co. 100 $ 9,288
- -------------------------------------------------------------------
Procter & Gamble Co. (The) 200 18,263
- -------------------------------------------------------------------
27,551
- -------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.41%
Equitable Companies, Inc. 300 17,363
- -------------------------------------------------------------------
Nationwide Financial Services, Inc.-Class A 300 15,506
- -------------------------------------------------------------------
ReliaStar Financial Corp. 200 9,225
- -------------------------------------------------------------------
42,094
- -------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 0.40%
CIGNA Corp. 200 15,463
- -------------------------------------------------------------------
Lincoln National Corp. 200 16,363
- -------------------------------------------------------------------
MONY Group, Inc.(c) 300 9,394
- -------------------------------------------------------------------
41,220
- -------------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 0.43%
Everest Reinsurance Holdings, Inc. 400 15,575
- -------------------------------------------------------------------
Progressive Corp. 100 16,938
- -------------------------------------------------------------------
Travelers Property Casualty Corp.-Class A 400 12,400
- -------------------------------------------------------------------
44,913
- -------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.19%
Merrill Lynch & Co., Inc. 300 20,025
- -------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.12%
Federated Investors, Inc.-Class B 700 12,688
- -------------------------------------------------------------------
LAND DEVELOPMENT - 0.08%
Silverleaf Resorts, Inc. 900 8,381
- -------------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.10%
Coach USA, Inc.(c) 300 10,406
- -------------------------------------------------------------------
LODGING-HOTELS - 0.23%
Carnival Corp.-Class A 500 24,000
- -------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.22%
Tyco International Ltd. 300 22,631
- -------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.64%
Superior TeleCom, Inc. 1,000 47,250
- -------------------------------------------------------------------
USEC, Inc. 1,400 19,425
- -------------------------------------------------------------------
66,675
- -------------------------------------------------------------------
METAL FABRICATORS - 0.08%
Metals USA(c) 800 7,800
- -------------------------------------------------------------------
NATURAL GAS - 0.41%
Enron Corp. 300 17,119
- -------------------------------------------------------------------
Williams Companies, Inc. (The) 800 24,950
- -------------------------------------------------------------------
42,069
- -------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.14%
Halliburton Co. 500 14,813
- -------------------------------------------------------------------
AIM V.I. BALANCED FUND
FS-15
246
MARKET
SHARES VALUE
OIL & GAS (EXPLORATION & PRODUCTION) - 0.18%
Conoco Inc. - Class A(c) 900 $ 18,789
- --------------------------------------------------------------------
OIL (INTERNATIONAL INTERGRATED) - 0.14%
Exxon Corp. 200 14,626
- --------------------------------------------------------------------
PERSONAL CARE - 0.45%
Avon Products, Inc. 400 17,700
- --------------------------------------------------------------------
Gillette Co. 600 28,989
- --------------------------------------------------------------------
46,689
- --------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 0.30%
AES Corp.(c) 500 23,689
- --------------------------------------------------------------------
CalEnergy Co., Inc.(c) 200 6,939
- --------------------------------------------------------------------
30,628
- --------------------------------------------------------------------
PUBLISHING - 0.07%
Meredith Corp. 200 7,576
- --------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 0.49%
Alexandria Real Estate Equities, Inc. 700 21,657
- --------------------------------------------------------------------
Boston Properties, Inc. 300 9,150
- --------------------------------------------------------------------
Crescent Real Estate Equities, Co. 400 9,200
- --------------------------------------------------------------------
Golf Trust of America, Inc. 400 11,100
- --------------------------------------------------------------------
51,107
- --------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 0.47%
American Stores Co. 500 18,470
- --------------------------------------------------------------------
Safeway, Inc.(c) 500 30,470
- --------------------------------------------------------------------
48,940
- --------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 0.37%
Dayton Hudson Corp. 700 37,975
- --------------------------------------------------------------------
RETAIL (SPECIALTY) - 0.37%
Linens 'N Things, Inc.(c) 700 27,738
- --------------------------------------------------------------------
Musicland Stores Corp.(c) 700 10,456
- --------------------------------------------------------------------
38,194
- --------------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 0.22%
Washington Mutual, Inc. 600 22,913
- --------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 0.33%
Outdoor Systems, Inc.(c) 800 24,000
- --------------------------------------------------------------------
Young & Rubicam, Inc.(c) 300 9,713
- --------------------------------------------------------------------
33,713
- --------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 1.18%
Apollo Group, Inc.(c) 1,000 33,875
- --------------------------------------------------------------------
Avis Rent A Car, Inc.(c) 600 14,513
- --------------------------------------------------------------------
Comfort Systems USA, Inc.(c) 500 8,938
- --------------------------------------------------------------------
Hertz Corp. - Class A 400 18,250
- --------------------------------------------------------------------
INSpire Insurance Solutions, Inc.(c) 500 9,188
- --------------------------------------------------------------------
Metzler Group, Inc.(c) 500 24,344
- --------------------------------------------------------------------
Service Corp. International 200 7,613
- --------------------------------------------------------------------
SM&A Corp.(c) 300 5,700
- --------------------------------------------------------------------
122,421
- --------------------------------------------------------------------
MARKET
SHARES VALUE
SERVICES (DATA PROCESSING) - 0.37%
Ceridian Corp.(c) 300 $ 20,944
- -----------------------------------------------------------------------------
DST Systems, Inc.(c) 300 17,119
- -----------------------------------------------------------------------------
38,063
- -----------------------------------------------------------------------------
SERVICES (EMPLOYMENT) - 0.31%
Administaff, Inc.(c) 300 7,500
- -----------------------------------------------------------------------------
Data Processing Resources Corp.(c) 600 17,550
- -----------------------------------------------------------------------------
Metamor Worldwide, Inc.(c) 300 7,500
- -----------------------------------------------------------------------------
32,550
- -----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 1.22%
AT&T Corp. 300 22,575
- -----------------------------------------------------------------------------
IXC Communications, Inc.(c) 600 20,175
- -----------------------------------------------------------------------------
MCI WorldCom, Inc.(c) 500 35,875
- -----------------------------------------------------------------------------
Pacific Gateway Exchange, Inc.(c) 500 24,031
- -----------------------------------------------------------------------------
WinStar Communications, Inc.(c) 600 23,400
- -----------------------------------------------------------------------------
126,056
- -----------------------------------------------------------------------------
TELEPHONE - 0.88%
Bell Atlantic Corp. 300 17,044
- -----------------------------------------------------------------------------
McLeodUSA Inc. - Class A(c) 500 15,625
- -----------------------------------------------------------------------------
Qwest Communications International, Inc.(c) 900 45,000
- -----------------------------------------------------------------------------
US West, Inc. 200 12,925
- -----------------------------------------------------------------------------
90,594
- -----------------------------------------------------------------------------
TOBACCO - 0.26%
Philip Morris Companies, Inc. 500 26,750
- -----------------------------------------------------------------------------
WASTE MANAGEMENT - 0.49%
Allied Waste Industries, Inc.(c) 1,000 23,625
- -----------------------------------------------------------------------------
Denali, Inc.(c) 1,000 14,000
- -----------------------------------------------------------------------------
Republic Services, Inc.(c) 700 12,906
- -----------------------------------------------------------------------------
50,531
- -----------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $2,528,522) 2,992,491
- -----------------------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 1.10%
CHEMICALS (DIVERSIFIED) - 0.47%
Monsanto Co., $2.60 Conv. Pfd. 1,000 49,000
- -----------------------------------------------------------------------------
HOMEBUILDING - 0.14%
Fleetwood Capital Trust, $3.00 Conv. Gtd. Pfd. 300 14,063
- -----------------------------------------------------------------------------
NATURAL GAS - 0.11%
KN Energy, Inc., $3.548 Conv. Pfd. 300 11,269
- -----------------------------------------------------------------------------
PERSONAL CARE - 0.15%
Estee Lauder Co., $3.805 Conv. Pfd. 200 15,500
- -----------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.23%
United Rentals Trust I, $3.25 Conv. Pfd.(a) (Acquired
12/10/98; Cost $19,375) 500 24,063
- -----------------------------------------------------------------------------
Total Domestic Convertible Preferred Stocks (Cost
$100,198) 113,895
- -----------------------------------------------------------------------------
AIM V.I. BALANCED FUND
FS-16
247
PRINCIPAL MARKET
AMOUNT VALUE
DOMESTIC CONVERTIBLE BONDS - 0.27%
Global Telesystems Group (Telecommunications - Long
Distance) Sr. Sub. Notes, 8.75%, 06/30/00 (Cost
$21,506) 10,000 $ 27,550
- ----------------------------------------------------------------------------------
U.S. DOLLAR DENOMINATED FOREIGN BONDS & NOTES - 2.56%
CANADA - 0.95%
Laidlaw, Inc. (Services - Commercial & Consumer), Yankee
Unsec. Deb., 6.70%, 05/01/08 100,000 97,797
- ----------------------------------------------------------------------------------
NORWAY - 0.91%
Petroleum Geo-Services A.S.A., (Oil & Gas-Drilling &
Equipment), Sr. Unsec. Yankee Notes, 7.125%,
03/30/28 100,000 94,393
- ----------------------------------------------------------------------------------
UNITED KINGDOM - 0.70%
Terra Nova Ins Holdings (Insurance - Property - Casual-
ty), Sr. Unsec. Gtd. Notes, 7.20%, 8/15/07 70,000 72,279
- ----------------------------------------------------------------------------------
Total U.S. Dollar Denominated Foreign Bonds & Notes -
(Cost $263,664) 264,469
- ----------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED BONDS & NOTES(d) - 1.70%
DUTCH GUILDERS - 0.37%
Koninklijke Ahold NV (Retail - Food Chains), Conv. Sub.
Notes, 3.00%, 09/30/03 NLG 60,000 38,335
- ----------------------------------------------------------------------------------
FRENCH FRANCS - 0.34%
France Telecom (Telephone), Conv. Bonds, 2.00%,
01/01/04 FRF 183,680 34,956
- ----------------------------------------------------------------------------------
NEW ZEALAND DOLLARS - 0.99%
International Bank for Reconstruction & Development
(Banks - Money Center), Sr. Unsec. Unsub. Notes, 5.50%,
04/15/04 NZD 200,000 102,794
- ----------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost
$173,980) 176,085
- ----------------------------------------------------------------------------------
SHARES
FOREIGN STOCKS & OTHER EQUITYINTERESTS - 1.81%
BERMUDA - 0.26%
Global Crossing Ltd. (Telecommunications - Long
Distance)(c) 600 27,075
- ----------------------------------------------------------------------------------
CANADA - 0.33%
Cadillac Fairview Corp. (Land Development)(c) 600 11,213
- ----------------------------------------------------------------------------------
Teleglobe, Inc. (Services - Commercial & Consumer) 600 21,600
- ----------------------------------------------------------------------------------
32,813
- ----------------------------------------------------------------------------------
CAYMAN ISLANDS - 0.20%
Scottish Annuity Life & Holdings, Ltd. (Insurance -
Life/Health) 1,500 20,625
- ----------------------------------------------------------------------------------
MARKET
SHARES VALUE
FINLAND - 0.47%
Fortum Corp. (Electric Companies)(c) 2,100 $ 12,773
- --------------------------------------------------------------------------------
Nokia Oyj A.B. - Class A - ADR (Communications
Equipment) 300 36,131
- --------------------------------------------------------------------------------
48,904
- --------------------------------------------------------------------------------
FRANCE - 0.15%
France Telecom S.A. - ADR (Communications Equipment) 200 15,788
- --------------------------------------------------------------------------------
GERMANY - 0.17%
DaimlerChrysler AG (Automobiles) 187 17,964
- --------------------------------------------------------------------------------
NETHERLANDS - 0.13%
Equant N.V. (Computers - Networking)(c) 200 13,563
- --------------------------------------------------------------------------------
UNITED KINGDOM - 0.10%
ESG Re Limited (Insurance - Life/Health) 500 10,125
- --------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests (Cost
$156,229) 186,857
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
U.S. GOVERNMENT AGENCY SECURITIES - 6.42%
Fannie Mae
6.18%, 03/15/01 $ 300,000 308,001
- --------------------------------------------------------------------------------
6.50%, 11/01/28 353,499 355,818
- --------------------------------------------------------------------------------
Total U.S. Government Agency Securities (Cost
$659,478) 663,819
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 20.02%
Bills, 4.439%, 03/25/99(e) 1,428,000 1,413,349
- --------------------------------------------------------------------------------
Notes, 15.75%, 11/15/01 25,000 32,357
- --------------------------------------------------------------------------------
Notes, 5.75%, 04/30/03(f) 600,000 624,774
- --------------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $2,050,826) 2,070,480
- --------------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreement)
(Cost $8,260,371) 8,841,727
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 13.11%(g)
SBC Warburg Dillon Read Inc., 4.75%,
01/04/99(h) (Cost $1,356,240) 1,356,240 1,356,240
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.59% 10,197,967
- --------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 1.41% 145,369
- --------------------------------------------------------------------------------
NET ASSETS - 100.00% $10,343,336
- --------------------------------------------------------------------------------
AIM V.I. BALANCED FUND
FS-17
248
(a) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at 12/31/98 was $268,878 which
represented 2.60% of the Fund's net assets.
(b) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original discount.
(c) Non-income producing security.
(d) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(e) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(f) A portion of the principal balance was pledged as collateral to cover
margin requirements for open future contracts. See Note 7.
(g) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(h) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75% due 06/30/99 to 11/15/21 with an aggregate market
value at 12/31/98 of $1,020,001,079.
Investment abbreviations
ADR -- American Depositary Receipts
Conv. -- Convertible
Deb. -- Debentures
FRF -- French Francs
Gtd. -- Guaranteed
NLG -- Dutch Guilder
NZD -- New Zealand Dollar
Pfd. -- Preferred
Sec. -- Secured
Sr. -- Senior
Sub. -- Subordinated
Unsec. -- Unsecured
Unsub. -- Unsubordinated
See Notes to Financial Statements.
AIM V.I. BALANCED FUND
FS-18
249
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, excluding repurchase agreement, at market value (cost
$8,260,371) $ 8,841,727
- -------------------------------------------------------------------------------
Repurchase Agreement (cost $1,356,240) 1,356,240
- -------------------------------------------------------------------------------
Receivables for:
Investments sold 8,875
- -------------------------------------------------------------------------------
Reimbursement from advisor 26,753
- -------------------------------------------------------------------------------
Capital stock sold 73,907
- -------------------------------------------------------------------------------
Dividends and interest 61,043
- -------------------------------------------------------------------------------
Variation margin 5,950
- -------------------------------------------------------------------------------
Investment for deferred compensation plan 2,779
- -------------------------------------------------------------------------------
Total assets 10,377,274
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 24,717
- -------------------------------------------------------------------------------
Deferred compensation plan 2,779
- -------------------------------------------------------------------------------
Accrued directors' fees 100
- -------------------------------------------------------------------------------
Accrued operating expenses 6,342
- -------------------------------------------------------------------------------
Total liabilities 33,938
- -------------------------------------------------------------------------------
Net assets applicable to shares outstanding $10,343,336
- -------------------------------------------------------------------------------
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- -------------------------------------------------------------------------------
Outstanding 928,627
- -------------------------------------------------------------------------------
Net asset value, offering and redemption price per share $11.14
- -------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the period May 1, 1998 (date operations commenced)
through December 31, 1998
INVESTMENT INCOME:
Dividends $ 3,473
- --------------------------------------------------------------------------
Interest 135,187
- --------------------------------------------------------------------------
Total investment income 138,660
- --------------------------------------------------------------------------
EXPENSES:
Advisory fees 21,238
- --------------------------------------------------------------------------
Administrative services fees 26,649
- --------------------------------------------------------------------------
Custodian fees 12,932
- --------------------------------------------------------------------------
Directors' fees and expenses 6,407
- --------------------------------------------------------------------------
Legal fees 8,287
- --------------------------------------------------------------------------
Other 4,734
- --------------------------------------------------------------------------
Total expenses 80,247
- --------------------------------------------------------------------------
Less: Expenses paid indirectly (39)
- --------------------------------------------------------------------------
Fees waived and expenses reimbursed by advisor (46,739)
- --------------------------------------------------------------------------
Net expenses 33,469
- --------------------------------------------------------------------------
Net investment income 105,191
- --------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FUTURES AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 11,031
- --------------------------------------------------------------------------
Foreign currencies 1,960
- --------------------------------------------------------------------------
Futures contracts 122,291
- --------------------------------------------------------------------------
Option contracts 213
- --------------------------------------------------------------------------
135,495
- --------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 581,356
- --------------------------------------------------------------------------
Foreign currencies (443)
- --------------------------------------------------------------------------
Futures contracts 119,775
- --------------------------------------------------------------------------
700,688
- --------------------------------------------------------------------------
Net gain from investment securities and futures contracts 836,183
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $941,374
- --------------------------------------------------------------------------
See Notes to Financial Statements.
AIM V.I. BALANCED FUND
FS-19
250
STATEMENT OF CHANGES IN NET ASSETS
For the period May 1, 1998 (date operations commenced) through December 31,
1998
OPERATIONS:
Net investment income $ 105,191
- ---------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 135,495
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities, foreign
currencies and futures contracts 700,688
- ---------------------------------------------------------------------------
Net increase in net assets resulting from operations 941,374
- ---------------------------------------------------------------------------
Dividends from net investment income (115,294)
- ---------------------------------------------------------------------------
Distributions from net realized gains (20,295)
- ---------------------------------------------------------------------------
Net increase from capital stock transactions 9,537,551
- ---------------------------------------------------------------------------
Net increase in net assets 10,343,336
- ---------------------------------------------------------------------------
NET ASSETS:
Beginning of period --
- ---------------------------------------------------------------------------
End of period $10,343,336
===========================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 9,536,421
- ---------------------------------------------------------------------------
Undistributed net investment income (2,790)
- ---------------------------------------------------------------------------
Undistributed net realized gain from investment securities,
foreign currencies, futures and options contracts 109,017
- ---------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 700,688
- ---------------------------------------------------------------------------
$10,343,336
===========================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Balanced Fund (the "Fund"). The Fund's investment objective is
to achieve as high a total return to investors as possible, consistent with
preservation of capital. The Fund commenced operations on May 1, 1998.
Currently, shares of the Fund are sold only to insurance company separate
accounts to fund the benefits of variable annuity contracts and variable life
insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market (but
not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. If a mean is not available,
as is the case in some foreign markets, the closing bid will be used absent
a last sales price. Each security reported on the NASDAQ National Market
System is valued at the last sales price on the valuation date or absent a
last sales price, at the mean of the closing bid and asked prices. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued at the mean between last bid and asked
prices based upon quotes furnished by independent sources. Securities for
which market quotations either are not readily available or are questionable
are valued at fair value as determined in good faith by or under the
supervision of the Company's officers in a manner specifically authorized by
the Board of Directors. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value.
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York Stock
Exchange.
AIM V.I. BALANCED FUND
FS-20
251
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Directors.
B. Securities Transactions, Investment Income and Distributions -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 as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1998
additional paid-in capital was decreased by $1,130, undistributed net
investment income was increased by $7,313 and undistributed net realized
gains was decreased by $6,183 in order to comply with the requirements of
the American Institute of Certified Public Accountants Statement of
Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash as collateral for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of
the contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
E. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
F. Put Options - The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, a Fund pays an option premium. The option's underlying instrument
may be a security, or a futures contract. Put options may be used by a Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a portion of the Fund's resulting losses. At the same time,
because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
G. Bond Premiums - It is the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes.
H. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
I. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the amount of a purchase or sale of a security denominated in
a foreign currency in order to "lock-in" the U.S. dollar price of that
security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value
of the foreign currency changes unfavorably.
AIM V.I. BALANCED FUND
FS-21
252
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.75% of
the first $150 million of the Fund's average daily net assets, plus 0.50% of the
Fund's average daily net assets in excess of $150 million. During the period May
1, 1998 (date operations commenced) through December 31, 1998, AIM waived fees
and reimbursed expenses of $46,739.
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the period May 1, 1998 (date
operations commenced) through December 31, 1998, AIM was reimbursed $26,649 for
such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the year ended December 31, 1998, the Fund incurred legal fees of
$1,697 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $39 under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of
the Fund's total expenses of $39 during the period May 1, 1998 (date
operations commenced) through December 31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest a director's fees,
if so elected by such director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the period May 1, 1998 (date operations
commenced) through December 31, 1998 was $7,087,066 and $251,369,
respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $611,897
- -----------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (30,541)
- -----------------------------------------------------------------------
Net unrealized appreciation of investment securities $581,356
=======================================================================
Investments have the same cost for tax and financial statement purposes.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the period May 1, 1998 (date
operations commenced) through December 31, 1998 were as follows:
DECEMBER 31, 1998
-------------------
SHARES AMOUNT
------- ----------
Sold 954,695 $9,785,741
- -------------------------------------------------------------
Issued as reinvestment of distributions 12,578 135,589
- -------------------------------------------------------------
Reacquired (38,646) (383,779)
- -------------------------------------------------------------
928,627 $9,537,551
=============================================================
NOTE 7 - OPEN FUTURES CONTRACTS
On December 31, 1998, $109,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts. Open futures contracts were as follows:
NUMBER OF UNREALIZED
CONTRACTS CONTRACTS MONTH/COMMITMENT APPRECIATION
--------- -----------------------------------
S&P 500 Index 7 March 99/Buy $119,775
======================================================
NOTE 8 - CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended December 31, 1998
are summarized as follows:
CALL OPTION CONTRACTS
---------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of period -- --
- ------------------------------------------------
Written 1 122
- ------------------------------------------------
Closed (1) (122)
- ------------------------------------------------
Exercised -- --
- ------------------------------------------------
Expired -- --
- ------------------------------------------------
End of period -- --
================================================
NOTE 9 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the period May 1, 1998 (date operations commenced) through December 31,
1998.
DECEMBER 31,
1998
------------
Net asset value, beginning of period $ 10.00
- -------------------------------------------------------- -------
Income from investment operations:
Net investment income 0.12
- -------------------------------------------------------- -------
Net gains on securities (both realized and unrealized) 1.18
- -------------------------------------------------------- -------
Total from investment operations 1.30
- -------------------------------------------------------- -------
Less Distributions:
Dividends from net investment income (0.14)
- -------------------------------------------------------- -------
Distributions from net realized gains (0.02)
- -------------------------------------------------------- -------
Total Distributions (0.16)
- -------------------------------------------------------- -------
Net asset value, end of period $ 11.14
======================================================== =======
Total return(a) 13.02%
======================================================== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $10,343
======================================================== =======
Ratio of expenses to average net assets(b) 1.18%(c)
======================================================== =======
Ratio of net investment income to average net assets(d) 3.71%(c)
======================================================== =======
Portfolio turnover rate 9%
======================================================== =======
(a) Total return is not annualized.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.83% (annualized).
(c) Ratios are annualized and based on average net assets of $4,218,617.
(d) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursement was 2.07% (annualized).
AIM V.I. BALANCED FUND
FS-22
253
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Capital Appreciation Fund, a series of shares of common stock of AIM
Variable Insurance Funds, Inc. including the schedule of investments as of
December 31, 1998, the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended, the eleven month period ended December 31, 1995, the year
ended January 31, 1995, and the period May 5, 1993 (commencement of operations)
through January 31, 1994. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Capital Appreciation Fund, as of December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended, the eleven month period ended
December 31, 1995, the year ended January 31, 1995 and the period May 5, 1993
(commencement of operations) through January 31, 1994 in conformity with
generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
--------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. CAPITAL APPRECIATION FUND
FS-23
254
SCHEDULE OF INVESTMENTS
December 31, 1998
MARKET
SHARES VALUE
COMMON STOCKS - 87.72%
AEROSPACE/DEFENSE - 0.42%
AAR Corp. 50,000 $ 1,193,750
- -------------------------------------------------------------
BE Aerospace, Inc.(a) 20,000 420,000
- -------------------------------------------------------------
Gulfstream Aerospace Corp.(a) 20,500 1,091,625
- -------------------------------------------------------------
2,705,375
- -------------------------------------------------------------
AIRLINES - 0.23%
Southwest Airlines Co. 65,500 1,469,656
- -------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.44%
Danaher Corp. 52,300 2,840,544
- -------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 0.31%
Northern Trust Corp. 23,000 2,008,188
- -------------------------------------------------------------
BANKS (REGIONAL) - 2.63%
AmSouth Bancorporation 30,000 1,368,750
- -------------------------------------------------------------
First Tennessee National Corp. 50,000 1,903,125
- -------------------------------------------------------------
Firstar Corp. 65,000 6,061,250
- -------------------------------------------------------------
Golden State Bancorp, Inc.(a) 53,000 881,125
- -------------------------------------------------------------
Hibernia Corp.-Class A 85,000 1,476,875
- -------------------------------------------------------------
North Fork Bancorporation, Inc. 110,000 2,633,125
- -------------------------------------------------------------
TCF Financial Corp. 40,000 967,500
- -------------------------------------------------------------
Zions Bancorp. 27,500 1,715,313
- -------------------------------------------------------------
17,007,063
- -------------------------------------------------------------
BIOTECHNOLOGY - 0.72%
Biogen, Inc.(a) 44,200 3,668,600
- -------------------------------------------------------------
Curative Health Services, Inc.(a) 29,700 994,950
- -------------------------------------------------------------
4,663,550
- -------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO, &
CABLE) - 2.34%
Chancellor Media Corp.(a) 62,272 2,981,272
- -------------------------------------------------------------
Comcast Corp.-Class A 42,400 2,488,350
- -------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 21,500 1,486,187
- -------------------------------------------------------------
Heftel Broadcasting Corp.(a) 22,100 1,088,425
- -------------------------------------------------------------
Liberty Media Group(a) 60,000 2,763,750
- -------------------------------------------------------------
Univision Communications, Inc.(a) 65,500 2,370,281
- -------------------------------------------------------------
USA Networks, Inc.(a) 59,600 1,974,250
- -------------------------------------------------------------
15,152,515
- -------------------------------------------------------------
BUILDING MATERIALS - 0.19%
Masco Corp. 41,800 1,201,750
- -------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 2.44%
ADC Telecommunications, Inc.(a) 17,200 597,700
- -------------------------------------------------------------
Andrew Corp.(a) 75,000 1,237,500
- -------------------------------------------------------------
Comverse Technology, Inc.(a) 41,100 2,918,100
- -------------------------------------------------------------
ECI Telecommunications Ltd. (Israel) 19,000 676,875
- -------------------------------------------------------------
General Instrument Corp.(a) 66,000 2,239,875
- -------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR (Finland) 56,300 6,780,631
- -------------------------------------------------------------
QUALCOMM, Inc.(a) 26,000 1,347,125
- -------------------------------------------------------------
15,797,806
- -------------------------------------------------------------
MARKET
SHARES VALUE
COMPUTERS (HARDWARE) - 1.67%
Apple Computer, Inc.(a) 23,000 $ 941,562
- ---------------------------------------------------------------------------
Comdisco, Inc. 165,200 2,787,750
- ---------------------------------------------------------------------------
Dell Computer Corp.(a) 40,600 2,971,413
- ---------------------------------------------------------------------------
Gateway 2000, Inc.(a) 22,100 1,131,244
- ---------------------------------------------------------------------------
IDX Systems Corp.(a) 19,000 836,000
- ---------------------------------------------------------------------------
Micron Electronics, Inc.(a) 23,400 405,112
- ---------------------------------------------------------------------------
NCR Corp.(a) 42,000 1,753,500
- ---------------------------------------------------------------------------
10,826,581
- ---------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 2.99%
Ascend Communications, Inc.(a) 128,300 8,435,725
- ---------------------------------------------------------------------------
Cisco Systems, Inc.(a) 16,625 1,543,008
- ---------------------------------------------------------------------------
Newbridge Networks Corp. (Canada)(a) 50,000 1,518,750
- ---------------------------------------------------------------------------
3Com Corp.(a) 175,000 7,842,187
- ---------------------------------------------------------------------------
19,339,670
- ---------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.45%
Adaptec, Inc.(a) 52,300 918,519
- ---------------------------------------------------------------------------
EMC Corp.(a) 103,000 8,755,000
- ---------------------------------------------------------------------------
Lexmark International Group, Inc.(a) 40,200 4,040,100
- ---------------------------------------------------------------------------
Seagate Technology, Inc.(a) 71,200 2,153,800
- ---------------------------------------------------------------------------
15,867,419
- ---------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 9.99%
America Online, Inc. 32,500 5,200,000
- ---------------------------------------------------------------------------
Aspect Development, Inc.(a) 40,000 1,772,500
- ---------------------------------------------------------------------------
BMC Software, Inc.(a) 167,000 7,441,938
- ---------------------------------------------------------------------------
Cadence Design Systems, Inc.(a) 105,800 3,147,550
- ---------------------------------------------------------------------------
Check Point Software Technologies Ltd. (Israel)(a) 22,200 1,017,037
- ---------------------------------------------------------------------------
Citrix Systems, Inc.(a) 55,700 5,406,381
- ---------------------------------------------------------------------------
Compuware Corp.(a) 113,300 8,851,562
- ---------------------------------------------------------------------------
Concord EFS, Inc.(a) 194,800 8,254,649
- ---------------------------------------------------------------------------
Electronic Arts, Inc.(a) 21,000 1,178,625
- ---------------------------------------------------------------------------
Informix Corp.(a) 35,600 351,550
- ---------------------------------------------------------------------------
Intuit, Inc.(a) 27,000 1,957,500
- ---------------------------------------------------------------------------
Learning Company, Inc. (The)(a) 45,000 1,167,188
- ---------------------------------------------------------------------------
Microsoft Corp.(a) 11,100 1,539,431
- ---------------------------------------------------------------------------
Network Associates, Inc.(a) 28,200 1,868,250
- ---------------------------------------------------------------------------
Novell, Inc.(a) 35,000 634,375
- ---------------------------------------------------------------------------
Parametric Technology Co.(a) 75,000 1,228,125
- ---------------------------------------------------------------------------
Sterling Commerce, Inc.(a) 56,055 2,522,475
- ---------------------------------------------------------------------------
Sterling Software, Inc.(a) 63,600 1,721,175
- ---------------------------------------------------------------------------
Synopsys, Inc.(a) 60,000 3,255,000
- ---------------------------------------------------------------------------
VERITAS Software Corp.(a) 36,100 2,163,744
- ---------------------------------------------------------------------------
Wind River Systems(a) 40,000 1,880,000
- ---------------------------------------------------------------------------
Yahoo! Inc.(a) 9,000 2,115,563
- ---------------------------------------------------------------------------
64,674,618
- ---------------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
FS-24
255
MARKET
SHARES VALUE
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.23%
Action Performance Companies, Inc.(a) 16,000 $ 566,000
- ----------------------------------------------------------------------
Blyth Industries, Inc.(a) 30,400 950,000
- ----------------------------------------------------------------------
1,516,000
- ----------------------------------------------------------------------
CONSUMER FINANCE - 1.84%
Capital One Financial Corp. 33,600 3,864,000
- ----------------------------------------------------------------------
Countrywide Credit Industries, Inc. 23,400 1,174,388
- ----------------------------------------------------------------------
Providian Financial Corp. 66,300 4,972,500
- ----------------------------------------------------------------------
SLM Holding Corp. 40,050 1,922,400
- ----------------------------------------------------------------------
11,933,288
- ----------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 2.06%
Bergen Brunswig Corp.-Class A 75,400 2,629,575
- ----------------------------------------------------------------------
Cardinal Health, Inc. 99,630 7,559,426
- ----------------------------------------------------------------------
Patterson Dental Co.(a) 20,000 870,000
- ----------------------------------------------------------------------
SUPERVALU, INC. 26,300 736,400
- ----------------------------------------------------------------------
U.S. Foodservice(a) 31,200 1,528,800
- ----------------------------------------------------------------------
13,324,201
- ----------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.12%
American Power Conversion Corp.(a) 82,300 3,986,406
- ----------------------------------------------------------------------
Molex, Inc. 4,300 163,938
- ----------------------------------------------------------------------
Sanmina Corp.(a) 30,000 1,875,000
- ----------------------------------------------------------------------
SCI Systems, Inc.(a) 42,400 2,448,600
- ----------------------------------------------------------------------
Solectron Corp.(a) 66,700 6,198,931
- ----------------------------------------------------------------------
Symbol Technologies, Inc. 64,250 4,107,984
- ----------------------------------------------------------------------
Uniphase Corp.(a) 20,300 1,408,313
- ----------------------------------------------------------------------
20,189,172
- ----------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 0.17%
Arrow Electronics, Inc.(a) 41,100 1,096,856
- ----------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.38%
Perkin-Elmer Corp. 7,500 731,719
- ----------------------------------------------------------------------
Waters Corp.(a) 20,000 1,745,000
- ----------------------------------------------------------------------
2,476,719
- ----------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 3.63%
Altera Corp.(a) 55,200 3,360,300
- ----------------------------------------------------------------------
Analog Devices, Inc.(a) 85,000 2,666,875
- ----------------------------------------------------------------------
Linear Technology Corp. 40,000 3,582,500
- ----------------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 66,400 2,900,850
- ----------------------------------------------------------------------
Microchip Technology, Inc.(a) 94,200 3,485,400
- ----------------------------------------------------------------------
Micron Technology, Inc.(a) 44,300 2,239,919
- ----------------------------------------------------------------------
National Semiconductor Corp.(a) 70,000 945,000
- ----------------------------------------------------------------------
PMC-Sierra, Inc.(a) 39,500 2,493,437
- ----------------------------------------------------------------------
Xilinx, Inc.(a) 27,800 1,810,475
- ----------------------------------------------------------------------
23,484,756
- ----------------------------------------------------------------------
MARKET
SHARES VALUE
EQUIPMENT (SEMICONDUCTOR) - 0.26%
Applied Materials, Inc.(a) 40,000 $ 1,707,500
- ----------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.74%
FINOVA Group, Inc. 27,500 1,483,281
- ----------------------------------------------------------------------
MGIC Investment Corp. 46,633 1,856,573
- ----------------------------------------------------------------------
Newcourt Credit Group, Inc. (Canada) 41,600 1,453,400
- ----------------------------------------------------------------------
4,793,254
- ----------------------------------------------------------------------
FOODS - 0.51%
Earthgrains Co. (The) 10,200 315,562
- ----------------------------------------------------------------------
Flowers Industries, Inc. 45,000 1,077,188
- ----------------------------------------------------------------------
Keebler Foods Co.(a) 8,900 334,863
- ----------------------------------------------------------------------
Quaker Oats Co. (The) 26,600 1,582,700
- ----------------------------------------------------------------------
3,310,313
- ----------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 2.49%
Alpharma, Inc.-Class A 12,750 450,234
- ----------------------------------------------------------------------
Elan Corp. PLC-ADR (Ireland)(a) 44,100 3,067,706
- ----------------------------------------------------------------------
Forest Laboratories, Inc.(a) 22,400 1,191,400
- ----------------------------------------------------------------------
Jones Medical Industries, Inc. 99,500 3,631,750
- ----------------------------------------------------------------------
Medicis Pharmaceutical Corp.-Class A(a) 33,000 1,967,625
- ----------------------------------------------------------------------
Mylan Laboratories, Inc. 104,700 3,298,050
- ----------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 40,000 2,515,000
- ----------------------------------------------------------------------
16,121,765
- ----------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 1.13%
Health Management Associates, Inc.-Class A(a) 174,202 3,767,118
- ----------------------------------------------------------------------
Universal Health Services, Inc.-Class B(a) 68,400 3,548,250
- ----------------------------------------------------------------------
7,315,368
- ----------------------------------------------------------------------
HEALTH CARE (LONG TERM CARE) - 0.14%
HCR Manor Care, Inc.(a) 30,000 881,250
- ----------------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 0.62%
Express Scripts, Inc.-Class A(a) 43,600 2,926,650
- ----------------------------------------------------------------------
Trigon Healthcare, Inc.(a) 28,500 1,063,406
- ----------------------------------------------------------------------
3,990,056
- ----------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 3.75%
Bausch & Lomb, Inc. 25,000 1,500,000
- ----------------------------------------------------------------------
Becton, Dickinson & Co. 169,500 7,235,531
- ----------------------------------------------------------------------
Biomet, Inc. 86,800 3,493,700
- ----------------------------------------------------------------------
Guidant Corp. 79,100 8,720,775
- ----------------------------------------------------------------------
Henry Schein, Inc.(a) 34,985 1,565,579
- ----------------------------------------------------------------------
Safeskin Corp.(a) 14,300 344,987
- ----------------------------------------------------------------------
Sybron International Corp.(a) 51,400 1,397,438
- ----------------------------------------------------------------------
24,258,010
- ----------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
FS-25
256
MARKET
SHARES VALUE
HEALTH CARE (SPECIALIZED SERVICES) - 1.76%
Alza Corp.(a) 42,000 $ 2,194,500
- -------------------------------------------------------------------------
Covance, Inc.(a) 47,000 1,368,875
- -------------------------------------------------------------------------
HEALTHSOUTH Corp.(a) 43,200 666,900
- -------------------------------------------------------------------------
Omnicare, Inc. 88,400 3,071,900
- -------------------------------------------------------------------------
Orthodontic Centers of America, Inc.(a) 15,000 291,562
- -------------------------------------------------------------------------
Quintiles Transnational Corp.(a) 21,100 1,126,213
- -------------------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 90,000 2,660,625
- -------------------------------------------------------------------------
11,380,575
- -------------------------------------------------------------------------
HOMEBUILDING - 0.50%
Clayton Homes, Inc. 146,625 2,025,258
- -------------------------------------------------------------------------
Fleetwood Enterprises, Inc. 14,000 486,500
- -------------------------------------------------------------------------
Kaufman and Broad Home Corporation 24,600 707,250
- -------------------------------------------------------------------------
3,219,008
- -------------------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES - 0.59%
Leggett & Platt, Inc. 70,000 1,540,000
- -------------------------------------------------------------------------
Maytag Corp. 37,000 2,303,250
- -------------------------------------------------------------------------
3,843,250
- -------------------------------------------------------------------------
HOUSEWARES - 0.09%
Helen of Troy Ltd.(a) 38,000 558,125
- -------------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 1.25%
AFLAC, Inc. 38,900 1,711,600
- -------------------------------------------------------------------------
Provident Companies, Inc. 60,000 2,490,000
- -------------------------------------------------------------------------
ReliaStar Financial Corp. 63,000 2,905,875
- -------------------------------------------------------------------------
Torchmark Corp. 28,000 988,750
- -------------------------------------------------------------------------
8,096,225
- -------------------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 0.60%
Progressive Corp. 23,000 3,895,625
- -------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 1.17%
Edwards (A.G.), Inc. 25,000 931,250
- -------------------------------------------------------------------------
Lehman Brothers Holdings, Inc. 27,000 1,189,688
- -------------------------------------------------------------------------
Schwab (Charles) Corp. (The) 97,500 5,478,281
- -------------------------------------------------------------------------
7,599,219
- -------------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.69%
Federated Investors, Inc.-Class B 85,000 1,540,625
- -------------------------------------------------------------------------
T. Rowe Price Associates, Inc. 85,800 2,938,650
- -------------------------------------------------------------------------
4,479,275
- -------------------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.76%
Harley-Davidson, Inc. 94,000 4,453,250
- -------------------------------------------------------------------------
Speedway Motorsports, Inc.(a) 15,900 453,150
- -------------------------------------------------------------------------
4,906,400
- -------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 1.31%
Corning, Inc. 137,200 6,174,000
- -------------------------------------------------------------------------
Crane Co. 17,400 525,262
- -------------------------------------------------------------------------
Hillenbrand Industries, Inc. 21,500 1,222,813
- -------------------------------------------------------------------------
Pentair, Inc. 14,500 577,281
- -------------------------------------------------------------------------
8,499,356
- -------------------------------------------------------------------------
MARKET
SHARES VALUE
MANUFACTURING (SPECIALIZED) - 0.44%
Avery Dennison Corp. 23,600 $ 1,063,475
- -------------------------------------------------------------------------
Coflexip SA-ADR (France) 10,100 324,462
- -------------------------------------------------------------------------
Diebold, Inc. 40,800 1,456,050
- -------------------------------------------------------------------------
2,843,987
- -------------------------------------------------------------------------
NATURAL GAS - 0.37%
El Paso Energy Corp. 68,000 2,367,250
- -------------------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES - 0.12%
Herman Miller, Inc. 28,000 752,500
- -------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 1.54%
Baker Hughes, Inc. 85,000 1,503,438
- -------------------------------------------------------------------------
BJ Services Co.(a) 62,000 968,750
- -------------------------------------------------------------------------
Cooper Cameron Corp.(a) 60,000 1,470,000
- -------------------------------------------------------------------------
Core Laboratories N.V. (Netherlands)(a) 30,200 577,575
- -------------------------------------------------------------------------
Diamond Offshore Drilling, Inc. 40,000 947,500
- -------------------------------------------------------------------------
Global Industries Ltd.(a) 108,000 661,500
- -------------------------------------------------------------------------
Rowan Companies, Inc.(a) 80,000 800,000
- -------------------------------------------------------------------------
Smith International, Inc.(a) 50,000 1,259,375
- -------------------------------------------------------------------------
Transocean Offshore, Inc. 25,000 670,312
- -------------------------------------------------------------------------
Varco International, Inc.(a) 140,000 1,085,000
- -------------------------------------------------------------------------
9,943,450
- -------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.41%
Apache Corp. 67,000 1,695,938
- -------------------------------------------------------------------------
Santa Fe Energy Resources, Inc.(a) 80,000 590,000
- -------------------------------------------------------------------------
Stolt Comex Seaway, S.A. (United Kingdom)(a) 40,000 270,000
- -------------------------------------------------------------------------
Stolt Comex Seaway, S.A.-ADR (United Kingdom)(a) 20,000 112,500
- -------------------------------------------------------------------------
2,668,438
- -------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 0.29%
AES Corp.(a) 40,000 1,895,000
- -------------------------------------------------------------------------
PRODUCTS (NON-DURABLES) - 0.46%
Clorox Co. (The) 12,600 1,471,838
- -------------------------------------------------------------------------
Dial Corp. (The) 53,000 1,530,375
- -------------------------------------------------------------------------
3,002,213
- -------------------------------------------------------------------------
PUBLISHING - 0.38%
McGraw-Hill Companies, Inc. (The) 24,000 2,445,000
- -------------------------------------------------------------------------
RAILROADS - 0.38%
Kansas City Southern Industries, Inc. 50,000 2,459,375
- -------------------------------------------------------------------------
RESTAURANTS - 1.69%
Brinker International, Inc.(a) 82,000 2,367,750
- -------------------------------------------------------------------------
Outback Steakhouse, Inc.(a) 56,000 2,233,000
- -------------------------------------------------------------------------
Papa John's International, Inc.(a) 41,900 1,848,838
- -------------------------------------------------------------------------
Starbucks Corp.(a) 39,400 2,211,325
- -------------------------------------------------------------------------
Tricon Global Restaurants, Inc.(a) 45,000 2,255,625
- -------------------------------------------------------------------------
10,916,538
- -------------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
FS-26
257
MARKET
SHARES VALUE
RETAIL (BUILDING SUPPLIES) - 0.32%
Lowe's Companies, Inc. 40,200 $ 2,057,738
- -----------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 1.07%
Best Buy Co., Inc.(a) 21,000 1,288,875
- -----------------------------------------------------------------
CDW Computer Centers, Inc.(a) 38,500 3,693,594
- -----------------------------------------------------------------
Tech Data Corp.(a) 48,600 1,956,150
- -----------------------------------------------------------------
6,938,619
- -----------------------------------------------------------------
RETAIL (DEPARTMENT STORES) - 0.50%
Kohl's Corp.(a) 53,000 3,256,188
- -----------------------------------------------------------------
RETAIL (DISCOUNTERS) - 1.04%
Dollar Tree Stores, Inc.(a) 73,475 3,209,939
- -----------------------------------------------------------------
Family Dollar Stores, Inc. 126,000 2,772,000
- -----------------------------------------------------------------
Ross Stores, Inc. 20,000 787,500
- -----------------------------------------------------------------
6,769,439
- -----------------------------------------------------------------
RETAIL (DRUG STORES) - 0.80%
Rite Aid Corp. 104,560 5,182,255
- -----------------------------------------------------------------
RETAIL (FOOD CHAINS) - 1.05%
Kroger Co.(a) 86,900 5,257,450
- -----------------------------------------------------------------
Safeway, Inc.(a) 25,400 1,547,812
- -----------------------------------------------------------------
6,805,262
- -----------------------------------------------------------------
RETAIL (SPECIALTY) - 3.25%
Amazon.com, Inc.(a) 6,500 2,088,125
- -----------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 112,000 3,822,000
- -----------------------------------------------------------------
Linens 'n Things, Inc.(a) 11,600 459,650
- -----------------------------------------------------------------
Michaels Stores, Inc.(a) 41,000 741,844
- -----------------------------------------------------------------
Office Depot, Inc.(a) 130,000 4,801,875
- -----------------------------------------------------------------
Staples, Inc.(a) 171,187 7,478,732
- -----------------------------------------------------------------
Williams-Sonoma, Inc.(a) 40,000 1,612,500
- -----------------------------------------------------------------
21,004,726
- -----------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 1.83%
Abercrombie & Fitch Co.-Class A(a) 33,300 2,355,975
- -----------------------------------------------------------------
Gap, Inc. (The) 43,575 2,451,094
- -----------------------------------------------------------------
Intimate Brands, Inc. 46,000 1,374,250
- -----------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 83,625 2,655,093
- -----------------------------------------------------------------
TJX Companies, Inc. 103,000 2,987,000
- -----------------------------------------------------------------
11,823,412
- -----------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 0.89%
Astoria Financial Corp. 30,000 1,372,500
- -----------------------------------------------------------------
Dime Bancorp, Inc. 106,000 2,802,375
- -----------------------------------------------------------------
GreenPoint Financial Corp. 45,000 1,580,625
- -----------------------------------------------------------------
5,755,500
- -----------------------------------------------------------------
MARKET
SHARES VALUE
SERVICES (ADVERTISING & MARKETING) - 2.06%
Interpublic Group of Companies, Inc. (The) 20,000 $ 1,595,000
- -------------------------------------------------------------------
Lamar Advertising Co.(a) 66,000 2,458,500
- -------------------------------------------------------------------
Omnicom Group, Inc. 103,300 5,991,400
- -------------------------------------------------------------------
Outdoor Systems, Inc.(a) 57,000 1,710,000
- -------------------------------------------------------------------
Snyder Communications, Inc.(a) 47,700 1,609,875
- -------------------------------------------------------------------
13,364,775
- -------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 2.87%
Apollo Group, Inc.(a) 65,500 2,218,813
- -------------------------------------------------------------------
ChoicePoint, Inc.(a) 24,500 1,580,250
- -------------------------------------------------------------------
Cintas Corp. 63,100 4,444,606
- -------------------------------------------------------------------
G & K Services, Inc.-Class A 15,000 798,750
- -------------------------------------------------------------------
IMS Health, Inc. 51,500 3,885,031
- -------------------------------------------------------------------
Service Corp. International 32,400 1,233,225
- -------------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 107,500 2,391,875
- -------------------------------------------------------------------
Viad Corp. 60,000 1,822,500
- -------------------------------------------------------------------
Waddell & Reed Financial, Inc. 1,507 35,697
- -------------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class B 6,489 150,869
- -------------------------------------------------------------------
18,561,616
- -------------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 1.15%
CIBER, Inc.(a) 25,000 698,437
- -------------------------------------------------------------------
Keane, Inc.(a) 49,700 1,984,893
- -------------------------------------------------------------------
Policy Management Systems Corp.(a) 35,000 1,767,500
- -------------------------------------------------------------------
SunGard Data Systems, Inc.(a) 75,200 2,984,500
- -------------------------------------------------------------------
7,435,330
- -------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 3.93%
Affiliated Computer Services, Inc.(a) 30,500 1,372,500
- -------------------------------------------------------------------
Billing Concepts Corp.(a) 58,500 643,500
- -------------------------------------------------------------------
Ceridian Corp.(a) 53,700 3,748,931
- -------------------------------------------------------------------
CSG Systems International, Inc.(a) 34,900 2,757,100
- -------------------------------------------------------------------
DST Systems, Inc.(a) 30,300 1,728,994
- -------------------------------------------------------------------
Equifax, Inc. 44,100 1,507,669
- -------------------------------------------------------------------
Fiserv, Inc.(a) 103,150 5,305,778
- -------------------------------------------------------------------
National Data Corp. 48,000 2,337,000
- -------------------------------------------------------------------
NOVA Corp.(a) 57,407 1,991,306
- -------------------------------------------------------------------
Paychex, Inc. 78,975 4,062,276
- -------------------------------------------------------------------
25,455,054
- -------------------------------------------------------------------
SERVICES (EMPLOYMENT) - 0.21%
Robert Half International, Inc.(a) 30,400 1,358,500
- -------------------------------------------------------------------
SPECIALTY PRINTING - 0.28%
Valassis Communications, Inc.(a) 35,000 1,806,875
- -------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.23%
Metromedia Fiber Network, Inc.(a) 44,000 1,474,000
- -------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
FS-27
258
MARKET
SHARES VALUE
TELECOMMUNICATIONS (LONG DISTANCE) - 0.65%
Global TeleSystems Group, Inc.(a) 75,000 $ 4,181,250
- --------------------------------------------------------------------------
TELEPHONE - 1.07%
Century Telephone Enterprises, Inc. 64,600 4,360,500
- --------------------------------------------------------------------------
Cincinnati Bell, Inc. 37,800 1,429,312
- --------------------------------------------------------------------------
NTL, Inc. (United Kingdom)(a) 20,000 1,128,750
- --------------------------------------------------------------------------
6,918,562
- --------------------------------------------------------------------------
TEXTILES (APPAREL) - 0.30%
Jones Apparel Group, Inc.(a) 52,500 1,158,281
- --------------------------------------------------------------------------
Tommy Hilfiger Corp.(a) 13,100 786,000
- --------------------------------------------------------------------------
1,944,281
- --------------------------------------------------------------------------
TEXTILES (HOME FURNISHINGS) - 0.25%
Shaw Industries, Inc. 67,000 1,624,750
- --------------------------------------------------------------------------
WASTE MANAGEMENT - 1.28%
Allied Waste Industries, Inc.(a) 110,670 2,614,579
- --------------------------------------------------------------------------
Republic Services, Inc.(a) 50,000 921,875
- --------------------------------------------------------------------------
Waste Management, Inc. 101,675 4,740,597
- --------------------------------------------------------------------------
8,277,051
- --------------------------------------------------------------------------
Total Common Stocks (Cost $377,506,768) 567,719,235
- --------------------------------------------------------------------------
WARRANTS - 0.03%
Banks (Regional)
Golden State Bancorp, Litigation Wts., expiring
01/01/01 (Cost $227,318)(a) 40,000 182,500
- --------------------------------------------------------------------------
PRINCIPAL
AMOUNT
TIME DEPOSIT - 1.08%
Credit Communal De Belgium, 5.125%, 01/04/99
(Cost $7,000,000) $ 7,000,000 7,000,000
- --------------------------------------------------------------------------
REPURCHASE AGREEMENT - 9.15%(b)
Goldman Sachs & Co., 4.40%, 01/04/99(c)
(Cost $59,251,734) 59,251,734 59,251,734
- --------------------------------------------------------------------------
TOTAL INVESTMENTS - 97.98% 634,153,469
- --------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 2.02% 13,094,534
- --------------------------------------------------------------------------
NET ASSETS - 100.00% $647,248,003
==========================================================================
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to insure its market value is at least 102% of the sales
price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(c) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$700,342,222. Collateralized by $646,494,000 U.S. Government obligations,
0% to 11.75% due 02/15/99 to 04/15/28 with an aggregate market value at
12/31/98 of $714,694,897.
Abbreviations:
ADR -- American Depositary Receipt
Wts. -- Warrants
See Notes to Financial Statements
AIM V.I. CAPITAL APPRECIATION FUND
FS-28
259
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, at market value (cost $443,985,820) $634,153,469
- ----------------------------------------------------------------------
Receivables for:
Investments sold 13,808,584
- ----------------------------------------------------------------------
Capital stock sold 677,286
- ----------------------------------------------------------------------
Dividends and interest 191,840
- ----------------------------------------------------------------------
Investment for deferred compensation plan 25,282
- ----------------------------------------------------------------------
Other assets 2,963
- ----------------------------------------------------------------------
Total assets 648,859,424
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,236,530
- ----------------------------------------------------------------------
Capital stock reacquired 13,206
- ----------------------------------------------------------------------
Deferred compensation plan 25,282
- ----------------------------------------------------------------------
Accrued advisory fees 317,257
- ----------------------------------------------------------------------
Accrued directors' fees 232
- ----------------------------------------------------------------------
Accrued administrative services fees 8,797
- ----------------------------------------------------------------------
Accrued operating expenses 10,117
- ----------------------------------------------------------------------
Total liabilities 1,611,421
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $647,248,003
======================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 25,689,529
- ----------------------------------------------------------------------
Net asset value, offering and redemption price per share $ 25.20
======================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
INVESTMENT INCOME:
Interest $ 2,782,124
- ---------------------------------------------------------------------------
Dividends (net of $17,799 foreign withholding tax) 1,619,969
- ---------------------------------------------------------------------------
Total investment income 4,402,093
- ---------------------------------------------------------------------------
EXPENSES:
Advisory fees 3,521,837
- ---------------------------------------------------------------------------
Administrative services fees 53,266
- ---------------------------------------------------------------------------
Custodian fees 104,218
- ---------------------------------------------------------------------------
Directors' fees and expenses 12,181
- ---------------------------------------------------------------------------
Other 88,482
- ---------------------------------------------------------------------------
Total expenses 3,779,984
- ---------------------------------------------------------------------------
Less: Expenses paid indirectly (9,472)
- ---------------------------------------------------------------------------
Net expenses 3,770,512
- ---------------------------------------------------------------------------
Net investment income 631,581
- ---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND OPTION CONTRACTS:
Net realized gain from:
Investment securities 22,739,811
- ---------------------------------------------------------------------------
Foreign currencies 43,713
- ---------------------------------------------------------------------------
Option contracts 25,169
- ---------------------------------------------------------------------------
22,808,693
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities 78,385,559
- ---------------------------------------------------------------------------
Net gain from investment securities, foreign currencies and
option contracts 101,194,252
- ---------------------------------------------------------------------------
Net increase in net assets resulting from operations $101,825,833
===========================================================================
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
FS-29
260
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
1998 1997
------------ ------------
OPERATIONS:
Net investment income $ 631,581 $ 914,009
- ------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies and option contracts 22,808,693 16,155,941
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities and foreign currencies 78,385,559 35,953,703
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 101,825,833 53,023,653
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment
income (922,615) (536,874)
- ------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains (16,345,246) (6,902,664)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 39,909,953 107,132,798
- ------------------------------------------------------------------------------
Net increase in net assets 124,467,925 152,716,913
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 522,780,078 370,063,165
- ------------------------------------------------------------------------------
End of year $647,248,003 $522,780,078
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $434,303,451 $394,408,721
- ------------------------------------------------------------------------------
Undistributed net investment income 700,362 876,543
- ------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and
option contracts 22,076,541 15,712,724
- ------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and futures contracts 190,167,649 111,782,090
- ------------------------------------------------------------------------------
$647,248,003 $522,780,078
==============================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Capital Appreciation Fund (the "Fund"). The Fund's investment
objective is to seek capital appreciation through investments in common stocks,
with emphasis on medium-sized and smaller emerging growth companies. Currently,
shares of the Fund are sold only to insurance company separate accounts to fund
the benefits of variable annuity contracts and variable life insurance
policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
The following is a summary of the significant accounting policies followed by
the Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market (but
not including securities reported on the NASDAQ National Market System) is
valued at the mean between the last bid and asked prices based upon quotes
furnished by market makers for such securities. If a mean is not available,
as is the case in some foreign markets, the closing bid will be used absent
a last sales price. Each security reported on the NASDAQ National Market
System is valued at the last sales price on the valuation date, or absent a
last sales price, at the mean of the closing bid and asked prices. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market quotations are not readily
available or are questionable are valued at fair value as determined in good
faith by or under the supervision of the Company's officers in a manner
specifically authorized by the Board of Directors of the Company. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. Generally, trading in foreign securities is
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times.
Foreign currency exchange rates are also generally
AIM V.I. CAPITAL APPRECIATION FUND
FS-30
261
determined prior to the close of the New York Stock Exchange. Occasionally,
events affecting the values of such securities and such exchange rates may
occur between the times at which they are determined and the close of the New
York Stock Exchange which will not be reflected in the computation of the
Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities will be valued at
their fair value as determined in good faith by or under the supervision of
the Board of Directors.
B. Securities Transactions, Investment Income and Distributions -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 as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1998
additional paid-in capital was decreased by $15,223, undistributed net
investment income was increased by $114,853 and undistributed net realized
gains was decreased by $99,630 in order to comply with the requirements of
the American Institute of Certified Public Accountants Statement of
Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash as collateral for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contract at the
end of each day's trading. Variation margin payments are made or received
depending upon whether unrealized gains or losses are incurred. When the
contracts are closed, the Fund recognizes a realized gain or loss equal to
the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the amount of a purchase or sale of a security denominated in
a foreign currency in order to "lock-in" the U.S. dollar price of that
security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value
of the foreign currency changes unfavorably.
G. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the year ended December 31, 1998,
AIM was reimbursed $53,266 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
AIM V.I. CAPITAL APPRECIATION FUND
FS-31
262
During the year ended December 31, 1998, the Fund incurred legal fees of
$4,536 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $9,472 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $9,472 during the year ended
December 31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the year ended December 31, 1998 was
$427,487,795 and $457,350,071, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $202,819,727
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (13,557,353)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $189,262,374
===========================================================================
Cost of investments for tax purposes is $444,891,095.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1998
and 1997 were as follows:
1998 1997
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -------------
Sold 4,333,736 $ 99,858,597 9,656,144 $202,278,514
- -------------------------------------------------------------------------------
Issued as reinvestment of
distributions 740,474 17,267,861 357,327 7,439,538
- -------------------------------------------------------------------------------
Reacquired (3,416,071) (77,216,505) (5,025,910) (102,585,254)
- -------------------------------------------------------------------------------
1,658,139 $ 39,909,953 4,987,561 $ 107,132,798
===============================================================================
NOTE 7 - CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended December 31, 1998
are summarized as follows:
CALL OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
Beginning of period -- $ --
- ----------------------------------------------
Written 1,092 271,645
- ----------------------------------------------
Closed (678) (154,318)
- ----------------------------------------------
Expired (244) (21,153)
- ----------------------------------------------
Exercised (170) (96,174)
- ----------------------------------------------
End of period -- $ --
==============================================
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during each of the years in the three-year period ended December 31, 1998, the
eleven months ended December 31, 1995, the year ended January 31, 1995, and
the period May 5, 1993 (date operations commenced) through January 31, 1994.
DECEMBER 31, JANUARY 31,
----------------------------------------- -----------------
1998 1997 1996 1995 1995 1994
-------- -------- -------- -------- ------- -------
Net asset value,
beginning of period $ 21.75 $ 19.43 $ 16.55 $ 12.05 $ 12.58 $ 10.00
- ------------------------ -------- -------- -------- -------- ------- -------
Income from investment
operations:
Net investment income 0.02 0.03 0.02 0.04 0.05 --
- ------------------------ -------- -------- -------- -------- ------- -------
Net gains (losses) on
securities (both
realized and
unrealized) 4.12 2.58 2.89 4.46 (0.54) 2.59
- ------------------------ -------- -------- -------- -------- ------- -------
Total from investment
operations 4.14 2.61 2.91 4.50 (0.49) 2.59
- ------------------------ -------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income (0.04) (0.02) (0.03) -- (0.04) (0.01)
- ------------------------ -------- -------- -------- -------- ------- -------
Distributions from net
realized gains (0.65) (0.27) -- -- -- --
- ------------------------ -------- -------- -------- -------- ------- -------
Total distributions (0.69) (0.29) (0.03) -- (0.04) (0.01)
- ------------------------ -------- -------- -------- -------- ------- -------
Net asset value, end of
period $ 25.20 $ 21.75 $ 19.43 $ 16.55 $ 12.05 $ 12.58
======================== ======== ======== ======== ======== ======= =======
Total return(a) 19.30% 13.51% 17.58% 37.38% (3.91)% 25.90%
======================== ======== ======== ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s omitted) $647,248 $522,642 $370,063 $212,152 $88,177 $35,354
======================== ======== ======== ======== ======== ======= =======
Ratio of expenses to
average net assets 0.67%(b) 0.68% 0.73% 0.75%(c) 0.84% 1.06%(c)
======================== ======== ======== ======== ======== ======= =======
Ratio of net investment
income to average net
assets 0.11%(b) 0.18% 0.18% 0.39%(c) 0.46% 0.07%(c)
======================== ======== ======== ======== ======== ======= =======
Portfolio turnover rate 83% 65% 59% 37% 81% 34%
======================== ======== ======== ======== ======== ======= =======
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $566,139,574.
(c) Annualized.
AIM V.I. CAPITAL APPRECIATION FUND
FS-32
263
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Capital Development Fund, a series of shares of common stock of AIM
Variable Insurance Funds, Inc. including the schedule of investments as of
December 31, 1998, the related statement of operations, the statement of
changes in net assets, and the financial highlights for the period May 1, 1998
(commencement of operations) through December 31, 1998. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Capital Development Fund, as of December 31, 1998, the results of its
operations, the changes in its net assets, and the financial highlights for the
period May 1, 1998 (commencement of operations) through December 31, 1998 in
conformity with generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
--------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-33
264
SCHEDULE OF INVESTMENTS
December 31, 1998
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS - 87.38%
AEROSPACE/DEFENSE - 0.78%
Gulfstream Aerospace Corp.(a) 100 $ 5,325
- --------------------------------------------------------------------
Hawk Corp.(a) 200 1,675
- --------------------------------------------------------------------
Kroll-O'Gara Co. (The)(a) 400 15,775
- --------------------------------------------------------------------
TriStar Aerospace Co.(a) 300 2,100
- --------------------------------------------------------------------
24,875
- --------------------------------------------------------------------
AIRLINES - 0.43%
Atlantic Coast Airlines Holdings(a) 400 10,000
- --------------------------------------------------------------------
Midway Airlines, Corp.(a) 300 3,600
- --------------------------------------------------------------------
13,600
- --------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.69%
Keystone Automotive Industries, Inc.(a) 500 10,469
- --------------------------------------------------------------------
Stoneridge, Inc.(a) 500 11,375
- --------------------------------------------------------------------
21,844
- --------------------------------------------------------------------
BANKS (REGIONAL) - 1.27%
Banco Santandr Puerto Rico(a) 300 6,581
- --------------------------------------------------------------------
Bank United Corp.-Class A 200 7,850
- --------------------------------------------------------------------
Golden State Bancorp, Inc.(a) 600 9,975
- --------------------------------------------------------------------
Independence Community Bank Corp. 400 6,375
- --------------------------------------------------------------------
North Fork Bancorporation, Inc. 400 9,575
- --------------------------------------------------------------------
40,356
- --------------------------------------------------------------------
BEVERAGES (ALCOHOLIC) - 0.65%
Beringer Wine Estates-Class B(a) 200 8,938
- --------------------------------------------------------------------
Canandaigua Wine Co., Inc.-Class A(a) 200 11,563
- --------------------------------------------------------------------
20,501
- --------------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC) - 0.15%
Triarc Companies, Inc.(a) 300 4,800
- --------------------------------------------------------------------
BIOTECHNOLOGY - 0.54%
IDEXX Laboratories, Inc.(a) 300 8,072
- --------------------------------------------------------------------
Pharmaceutical Product Development, Inc.(a) 300 9,019
- --------------------------------------------------------------------
17,091
- --------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 2.29%
Capstar Broadcasting Corp.-Class A(a) 400 9,150
- --------------------------------------------------------------------
Chancellor Media Corp.(a) 200 9,575
- --------------------------------------------------------------------
Cox Radio, Inc.-Class A(a) 200 8,450
- --------------------------------------------------------------------
Emmis Broadcasting Corp.-Class A(a) 300 13,013
- --------------------------------------------------------------------
Hearst-Argyle Television, Inc.(a) 100 3,300
- --------------------------------------------------------------------
Heftel Broadcasting Corp.(a) 200 9,850
- --------------------------------------------------------------------
Metro Networks, Inc.(a) 200 8,525
- --------------------------------------------------------------------
Univision Communications, Inc.(a) 300 10,856
- --------------------------------------------------------------------
72,719
- --------------------------------------------------------------------
MARKET
SHARES VALUE
BUILDING MATERIAL - 0.27%
Pameco Corp.(a) 200 $ 2,313
- ----------------------------------------------------------
White Cap Industries, Inc.(a) 400 6,100
- ----------------------------------------------------------
8,413
- ----------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.71%
ADC Telecommunications, Inc.(a) 300 10,425
- ----------------------------------------------------------
Comverse Technology, Inc.(a) 300 21,300
- ----------------------------------------------------------
Excel Switching Corp.(a) 300 11,400
- ----------------------------------------------------------
NorthEast Optic Network, Inc.(a) 600 6,225
- ----------------------------------------------------------
Tekelec(a) 300 4,969
- ----------------------------------------------------------
54,319
- ----------------------------------------------------------
COMPUTER (HARDWARE) - 0.50%
Bell & Howell Co.(a) 300 11,344
- ----------------------------------------------------------
IDX Systems Corp.(a) 100 4,400
- ----------------------------------------------------------
15,744
- ----------------------------------------------------------
COMPUTER (NETWORKING) - 0.76%
Ascend Communications, Inc.(a) 100 6,575
- ----------------------------------------------------------
FORE Systems, Inc.(a) 700 12,819
- ----------------------------------------------------------
Fvc.com, Inc.(a) 300 4,725
- ----------------------------------------------------------
24,119
- ----------------------------------------------------------
COMPUTER (PERIPHERALS) - 0.74%
Actel Corp.(a) 200 4,000
- ----------------------------------------------------------
Quantum Corp.(a) 400 8,500
- ----------------------------------------------------------
SMART Modular Technologies, Inc.(a) 400 11,100
- ----------------------------------------------------------
23,600
- ----------------------------------------------------------
COMPUTER (SOFTWARE & SERVICES) - 8.88%
Avant! Corp.(a) 200 3,200
- ----------------------------------------------------------
Axent Technologies, Inc.(a) 200 6,113
- ----------------------------------------------------------
Best Software, Inc.(a) 550 13,063
- ----------------------------------------------------------
Cadence Design Systems, Inc.(a) 400 11,900
- ----------------------------------------------------------
Complete Business Solutions, Inc.(a) 400 13,550
- ----------------------------------------------------------
Concord Communications, Inc.(a) 100 5,675
- ----------------------------------------------------------
Concord EFS, Inc.(a) 300 12,712
- ----------------------------------------------------------
DA Consulting Group, Inc.(a) 300 6,562
- ----------------------------------------------------------
Datastream Systems, Inc.(a) 600 6,900
- ----------------------------------------------------------
Dendrite International, Inc.(a) 200 4,994
- ----------------------------------------------------------
Electronic Arts, Inc.(a) 100 5,612
- ----------------------------------------------------------
HNC Software, Inc.(a) 300 12,131
- ----------------------------------------------------------
Hyperion Solutions Corp.(a) 190 3,420
- ----------------------------------------------------------
InfoCure Corp.(a) 500 16,375
- ----------------------------------------------------------
Intuit, Inc.(a) 200 14,500
- ----------------------------------------------------------
Learning Company, Inc. (The)(a) 150 3,891
- ----------------------------------------------------------
Manhattan Associates, Inc.(a) 100 2,725
- ----------------------------------------------------------
Mastech Corp.(a) 400 11,450
- ----------------------------------------------------------
Medical Manager Corp.(a) 700 21,963
- ----------------------------------------------------------
Mercury Interactive Corp.(a) 200 12,650
- ----------------------------------------------------------
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-34
265
MARKET
SHARES VALUE
COMPUTER (SOFTWARE & SERVICES) -- (CONTINUED)
Network Associates, Inc.(a) 200 $ 13,250
- -------------------------------------------------------------------
Platinum Technology, Inc.(a) 400 7,650
- -------------------------------------------------------------------
Rational Software Corp.(a) 300 7,950
- -------------------------------------------------------------------
Sterling Commerce, Inc.(a) 300 13,500
- -------------------------------------------------------------------
Synopsys, Inc.(a) 200 10,850
- -------------------------------------------------------------------
Transaction Systems Architects, Inc.-Class A(a) 200 10,000
- -------------------------------------------------------------------
Unigraphics Solutions, Inc.(a) 300 4,350
- -------------------------------------------------------------------
USWeb Corp.(a) 400 10,550
- -------------------------------------------------------------------
Visio Corp.(a) 300 10,969
- -------------------------------------------------------------------
Walker Interactive Systems, Inc.(a) 500 3,375
- -------------------------------------------------------------------
281,830
- -------------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.39%
Blyth Industries, Inc.(a) 400 12,500
- -------------------------------------------------------------------
CONSUMER FINANCE - 0.60%
American Capital Strategies, Ltd. 200 3,450
- -------------------------------------------------------------------
AmeriCredit Corp.(a) 700 9,669
- -------------------------------------------------------------------
Cash America International, Inc. 300 4,556
- -------------------------------------------------------------------
United Panam Financial Corp.(a) 300 1,256
- -------------------------------------------------------------------
18,931
- -------------------------------------------------------------------
CONTAINERS (METAL & GLASS) - 0.39%
Silgan Holdings, Inc.(a) 450 12,509
- -------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.91%
JP Foodservice, Inc.(a) 200 9,800
- -------------------------------------------------------------------
McKesson Corp. 100 7,906
- -------------------------------------------------------------------
Performance Food Group Co.(a) 400 11,250
- -------------------------------------------------------------------
28,956
- -------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.19%
AFC Cable Systems, Inc.(a) 200 6,725
- -------------------------------------------------------------------
American Power Conversion Corp.(a) 200 9,688
- -------------------------------------------------------------------
PCD, Inc.(a) 200 2,600
- -------------------------------------------------------------------
Pinnacle Systems, Inc.(a) 200 7,150
- -------------------------------------------------------------------
SCI Systems, Inc.(a) 200 11,550
- -------------------------------------------------------------------
37,713
- -------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.42%
Quanta Services, Inc.(a) 600 13,238
- -------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 1.03%
Apex PC Solutions, Inc.(a) 200 5,775
- -------------------------------------------------------------------
Microchip Technology, Inc.(a) 300 11,100
- -------------------------------------------------------------------
Sipex Corp.(a) 300 10,538
- -------------------------------------------------------------------
Unitrode Corp.(a) 300 5,250
- -------------------------------------------------------------------
32,663
- -------------------------------------------------------------------
MARKET
SHARES VALUE
ENTERTAINMENT - 0.96%
Loews Cineplex Entertainment Corp.(a) 800 $ 8,100
- ------------------------------------------------------------------
Metro-Goldwyn-Mayer, Inc.(a) 458 6,040
- ------------------------------------------------------------------
Metromedia International Group, Inc.(a) 600 3,263
- ------------------------------------------------------------------
SFX Entertainment, Inc.-Class A(a) 200 10,975
- ------------------------------------------------------------------
The Sports Club Co., Inc.(a) 500 1,969
- ------------------------------------------------------------------
30,347
- ------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.54%
Etec Systems, Inc.(a) 200 8,000
- ------------------------------------------------------------------
Photronics, Inc.(a) 200 4,794
- ------------------------------------------------------------------
Teradyne, Inc.(a) 100 4,238
- ------------------------------------------------------------------
17,032
- ------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 1.02%
FirstCity Financial Corp.(a) 300 3,881
- ------------------------------------------------------------------
Hamilton Bancorp, Inc.(a) 200 5,337
- ------------------------------------------------------------------
Medallion Financial Corp. 400 5,725
- ------------------------------------------------------------------
PMI Group, Inc. (The) 100 4,938
- ------------------------------------------------------------------
Rock Financial Corp. 200 2,600
- ------------------------------------------------------------------
SEI Investments Co. 100 9,938
- ------------------------------------------------------------------
32,419
- ------------------------------------------------------------------
FOODS - 1.63%
American Italian Pasta Co.-Class A(a) 450 11,869
- ------------------------------------------------------------------
International Home Foods, Inc.(a) 600 10,125
- ------------------------------------------------------------------
Keebler Foods Co.(a) 300 11,288
- ------------------------------------------------------------------
Suiza Foods Corp.(a) 200 10,187
- ------------------------------------------------------------------
Universal Foods Corp. 300 8,231
- ------------------------------------------------------------------
51,700
- ------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.30%
Harrah's Entertainment, Inc.(a) 300 4,706
- ------------------------------------------------------------------
International Game Technology 200 4,863
- ------------------------------------------------------------------
9,569
- ------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 0.40%
Allergan, Inc. 100 6,475
- ------------------------------------------------------------------
IVAX Corp.(a) 500 6,219
- ------------------------------------------------------------------
12,694
- ------------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER) - 2.37%
Barr Laboratories, Inc.(a) 300 14,400
- ------------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 600 9,113
- ------------------------------------------------------------------
Forest Laboratories, Inc.(a) 200 10,637
- ------------------------------------------------------------------
Jones Medical Industries, Inc. 300 10,950
- ------------------------------------------------------------------
Mylan Laboratories, Inc. 400 12,600
- ------------------------------------------------------------------
Parexel International Corp.(a) 200 5,000
- ------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 200 12,575
- ------------------------------------------------------------------
75,275
- ------------------------------------------------------------------
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-35
266
MARKET
SHARES VALUE
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.52%
Health Management Associates, Inc.-Class A(a) 400 $ 8,650
- -----------------------------------------------------------------
New American Healthcare Corp.(a) 700 7,831
- -----------------------------------------------------------------
16,481
- -----------------------------------------------------------------
HEALTH CARE (LONG TERM CARE) - 0.33%
Sunrise Assisted Living, Inc.(a) 200 10,375
- -----------------------------------------------------------------
HEALTH CARE (MANAGED CARE) - 0.64%
Alternative Living Services, Inc.(a) 200 6,850
- -----------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 200 13,425
- -----------------------------------------------------------------
20,275
- -----------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 3.14%
Biomet, Inc. 200 8,050
- -----------------------------------------------------------------
Coopers Companies, Inc.(a) 400 8,275
- -----------------------------------------------------------------
Cyberonics, Inc.(a) 300 4,050
- -----------------------------------------------------------------
DVI, Inc.(a) 300 5,438
- -----------------------------------------------------------------
Henry Schein, Inc.(a) 300 13,425
- -----------------------------------------------------------------
Lifecore Biomedical, Inc.(a) 400 4,100
- -----------------------------------------------------------------
Maxxim Medical, Inc.(a) 300 8,925
- -----------------------------------------------------------------
MiniMed, Inc.(a) 100 10,475
- -----------------------------------------------------------------
PSS World Medical, Inc.(a) 500 11,500
- -----------------------------------------------------------------
Serologicals Corp.(a) 300 9,000
- -----------------------------------------------------------------
Steris Corp.(a) 100 2,843
- -----------------------------------------------------------------
Sybron International Corp.(a) 500 13,594
- -----------------------------------------------------------------
99,675
- -----------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 3.40%
Advance Paradigm, Inc.(a) 400 14,000
- -----------------------------------------------------------------
Capital Senior Living Corp.(a) 300 4,181
- -----------------------------------------------------------------
Covance, Inc.(a) 200 5,825
- -----------------------------------------------------------------
First Consulting Group, Inc.(a) 500 10,250
- -----------------------------------------------------------------
MAXIMUS, Inc.(a) 400 14,800
- -----------------------------------------------------------------
Ocular Sciences, Inc.(a) 300 8,025
- -----------------------------------------------------------------
Omnicare, Inc. 200 6,950
- -----------------------------------------------------------------
Orthodontic Centers of America, Inc.(a) 600 11,663
- -----------------------------------------------------------------
PharMerica, Inc.(a) 400 2,400
- -----------------------------------------------------------------
Renal Care Group, Inc.(a) 200 5,762
- -----------------------------------------------------------------
Renex Corp.(a) 300 2,175
- -----------------------------------------------------------------
Superior Consultant Holdings Corp.(a) 200 8,700
- -----------------------------------------------------------------
Ventana Medical Systems, Inc.(a) 600 12,975
- -----------------------------------------------------------------
107,706
- -----------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES - 0.18%
Service Experts, Inc.(a) 200 5,850
- -----------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.18%
Dial Corp. (The) 200 5,775
- -----------------------------------------------------------------
MARKET
SHARES VALUE
HOUSEWARES - 0.35%
Central Garden and Pet Co.(a) 250 $ 3,594
- ---------------------------------------------------------------
Helen of Troy Ltd.(a) 200 2,937
- ---------------------------------------------------------------
Windmere-Durable Holdings, Inc.(a) 600 4,650
- ---------------------------------------------------------------
11,181
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.79%
Healthcare Recoveries, Inc.(a) 700 11,900
- ---------------------------------------------------------------
Nationwide Financial Services, Inc.-Class A 200 10,338
- ---------------------------------------------------------------
PAULA Financial 300 2,812
- ---------------------------------------------------------------
25,050
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE) - 0.27%
Horace Mann Educators Corp. 300 8,550
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 1.44%
Amerin Corp.(a) 350 8,269
- ---------------------------------------------------------------
CMAC Investment Corp. 100 4,594
- ---------------------------------------------------------------
CNA Surety Corp. 500 7,875
- ---------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 200 7,788
- ---------------------------------------------------------------
Fidelity National Financial, Inc. 220 6,710
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 300 5,287
- ---------------------------------------------------------------
Reliance Group Holdings, Inc. 400 5,150
- ---------------------------------------------------------------
45,673
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.57%
EVEREN Capital Corp. 400 9,100
- ---------------------------------------------------------------
Hambrecht & Quist Group(a) 400 9,075
- ---------------------------------------------------------------
18,175
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT - 1.06%
Affiliated Managers Group, Inc.(a) 500 14,938
- ---------------------------------------------------------------
Conning Corp. 100 2,075
- ---------------------------------------------------------------
Knight/Trimark Group, Inc.-Class A(a) 700 16,756
- ---------------------------------------------------------------
33,769
- ---------------------------------------------------------------
LAND DEVELOPMENT - 0.12%
Silverleaf Resorts, Inc.(a) 400 3,725
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.79%
Family Golf Centers, Inc.(a) 400 7,900
- ---------------------------------------------------------------
GTECH Holdings Corp.(a) 200 5,125
- ---------------------------------------------------------------
International Speedway Corp.-Class A 300 12,150
- ---------------------------------------------------------------
25,175
- ---------------------------------------------------------------
LODGING-HOTELS - 0.55%
Prime Hospitality Corp.(a) 400 4,225
- ---------------------------------------------------------------
Royal Caribbean Cruises Ltd. 300 11,100
- ---------------------------------------------------------------
Vail Resorts, Inc.(a) 100 2,200
- ---------------------------------------------------------------
17,525
- ---------------------------------------------------------------
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-36
267
MARKET
SHARES VALUE
MANUFACTURING (SPECIALIZED) - 2.36%
Alpine Group, Inc. (The)(a) 300 $ 4,500
- ----------------------------------------------------------------
American Bank Note Holographics, Inc.(a) 1,000 17,500
- ----------------------------------------------------------------
Armor Holdings, Inc.(a) 200 2,288
- ----------------------------------------------------------------
First Years, Inc. (The) 700 11,068
- ----------------------------------------------------------------
Howmet International, Inc.(a) 600 9,675
- ----------------------------------------------------------------
Mettler-Toledo International, Inc.(a) 400 11,225
- ----------------------------------------------------------------
Superior TeleCom, Inc. 200 9,450
- ----------------------------------------------------------------
US Filter Corp.(a) 300 6,862
- ----------------------------------------------------------------
U.S.A. Floral Products, Inc.(a) 200 2,300
- ----------------------------------------------------------------
74,868
- ----------------------------------------------------------------
METAL FABRICATORS - 0.22%
Metals USA, Inc.(a) 700 6,825
- ----------------------------------------------------------------
NATURAL GAS - 0.11%
KN Energy, Inc. 100 3,638
- ----------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES - 0.70%
Daisytek International Corp.(a) 400 7,600
- ----------------------------------------------------------------
Knoll, Inc.(a) 200 5,925
- ----------------------------------------------------------------
School Specialty, Inc.(a) 400 8,550
- ----------------------------------------------------------------
22,075
- ----------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.30%
Cal Dive International, Inc.(a) 200 4,150
- ----------------------------------------------------------------
Newpark Resources, Inc.(a) 800 5,450
- ----------------------------------------------------------------
9,600
- ----------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 1.46%
Anadarko Petroleum Corp. 300 9,263
- ----------------------------------------------------------------
Apache Corp. 300 7,594
- ----------------------------------------------------------------
Devon Energy Corp. 300 9,206
- ----------------------------------------------------------------
Newfield Exploration Co.(a) 100 2,087
- ----------------------------------------------------------------
Noble Affiliates, Inc. 200 4,925
- ----------------------------------------------------------------
Ocean Energy, Inc.(a) 200 1,262
- ----------------------------------------------------------------
Snyder Oil Corp. 500 6,656
- ----------------------------------------------------------------
Union Pacific Resources Group, Inc. 600 5,438
- ----------------------------------------------------------------
46,431
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.06%
Wausau-Mosinee Paper Corp. 100 1,768
- ----------------------------------------------------------------
PERSONAL CARE - 1.52%
Chattem, Inc.(a) 300 14,363
- ----------------------------------------------------------------
NBTY, Inc.(a) 700 4,988
- ----------------------------------------------------------------
Playtex Products, Inc.(a) 600 9,637
- ----------------------------------------------------------------
Rexall Sundown, Inc.(a) 400 5,600
- ----------------------------------------------------------------
Steiner Leisure Ltd.(a) 300 9,600
- ----------------------------------------------------------------
Twinlab Corp.(a) 300 3,937
- ----------------------------------------------------------------
48,125
- ----------------------------------------------------------------
MARKET
SHARES VALUE
PUBLISHING - 0.93%
IDG Books Worldwide, Inc.-Class A(a) 700 $ 12,075
- -----------------------------------------------------------------
Petersen Companies, Inc. (The)-Class A(a) 200 6,775
- -----------------------------------------------------------------
Scholastic Corp.(a) 200 10,725
- -----------------------------------------------------------------
29,575
- -----------------------------------------------------------------
RAILROADS - 0.31%
Kansas City Southern Industries, Inc. 200 9,837
- -----------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 1.96%
AMRESCO Capital Trust, Inc. 350 3,325
- -----------------------------------------------------------------
Apartment Investment & Management Co.-Class A 200 7,438
- -----------------------------------------------------------------
CarrAmerica Realty Corp. 200 4,800
- -----------------------------------------------------------------
CCA Prison Realty Trust 300 6,150
- -----------------------------------------------------------------
Colonial Properties Trust 200 5,325
- -----------------------------------------------------------------
Corporate Office Properties Trust, Inc. 600 4,275
- -----------------------------------------------------------------
Correctional Properties Trust 400 7,225
- -----------------------------------------------------------------
Kilroy Realty Corp. 300 6,900
- -----------------------------------------------------------------
Manufactured Home Communities, Inc. 300 7,519
- -----------------------------------------------------------------
MeriStar Hospitality Corp. 200 3,712
- -----------------------------------------------------------------
Weeks Corp. 200 5,637
- -----------------------------------------------------------------
62,306
- -----------------------------------------------------------------
RESTAURANTS - 1.49%
Avado Brands, Inc. 600 4,988
- -----------------------------------------------------------------
Brinker International, Inc.(a) 500 14,438
- -----------------------------------------------------------------
CEC Entertainment, Inc.(a) 350 9,712
- -----------------------------------------------------------------
Dave & Buster's, Inc.(a) 300 6,918
- -----------------------------------------------------------------
Starbucks Corp.(a) 200 11,225
- -----------------------------------------------------------------
47,281
- -----------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 0.43%
CDW Computer Centers, Inc.(a) 100 9,593
- -----------------------------------------------------------------
Tech Data Corp.(a) 100 4,025
- -----------------------------------------------------------------
13,618
- -----------------------------------------------------------------
RETAIL (DISCOUNTERS) - 0.47%
Family Dollar Stores, Inc. 600 13,200
- -----------------------------------------------------------------
K & G Men's Center, Inc.(a) 200 1,775
- -----------------------------------------------------------------
14,975
- -----------------------------------------------------------------
RETAIL (FOOD CHAINS) - 1.18%
American Stores Co. 200 7,388
- -----------------------------------------------------------------
BJ's Wholesale Club, Inc.(a) 200 9,262
- -----------------------------------------------------------------
Whole Foods Market, Inc.(a) 200 9,675
- -----------------------------------------------------------------
Wild Oats Markets, Inc.(a) 350 11,025
- -----------------------------------------------------------------
37,350
- -----------------------------------------------------------------
RETAIL (HOME SHOPPING) - 0.43%
Micro Warehouse, Inc.(a) 400 13,525
- -----------------------------------------------------------------
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-37
268
MARKET
SHARES VALUE
RETAIL (SPECIALTY) - 5.10%
Casey's General Stores, Inc. 200 $ 2,606
- ------------------------------------------------------------
CSK Auto Corp.(a) 600 16,013
- ------------------------------------------------------------
Electronics Boutique Holdings Corp.(a) 400 8,150
- ------------------------------------------------------------
Group 1 Automotive, Inc.(a) 200 5,200
- ------------------------------------------------------------
Guitar Center, Inc.(a) 300 7,388
- ------------------------------------------------------------
Hibbett Sporting Goods, Inc.(a) 300 7,275
- ------------------------------------------------------------
Hot Topic, Inc.(a) 100 1,288
- ------------------------------------------------------------
Just for Feet, Inc.(a) 300 5,213
- ------------------------------------------------------------
Linens 'N Things, Inc.(a) 600 23,775
- ------------------------------------------------------------
Lithia Motors, Inc.-Class A(a) 300 4,950
- ------------------------------------------------------------
Michaels Stores, Inc.(a) 300 5,428
- ------------------------------------------------------------
Musicland Stores Corp.(a) 600 8,962
- ------------------------------------------------------------
PETsMART, Inc.(a) 400 4,400
- ------------------------------------------------------------
Pier 1 Imports, Inc.(a) 300 2,906
- ------------------------------------------------------------
Rainbow Rentals, Inc.(a) 300 2,962
- ------------------------------------------------------------
Rent-Way, Inc.(a) 376 9,151
- ------------------------------------------------------------
Renters Choice, Inc.(a) 400 12,700
- ------------------------------------------------------------
Select Comfort Corp.(a) 100 2,643
- ------------------------------------------------------------
Williams-Sonoma, Inc.(a) 400 16,125
- ------------------------------------------------------------
Zale Corp.(a) 450 14,513
- ------------------------------------------------------------
161,648
- ------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 0.51%
Abercrombie & Fitch Co.-Class A(a) 100 7,075
- ------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 200 6,350
- ------------------------------------------------------------
Stage Stores, Inc.(a) 300 2,812
- ------------------------------------------------------------
16,237
- ------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 0.27%
Allied Capital Corp. 500 8,656
- ------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 2.94%
Abacus Direct Corp.(a) 100 4,550
- ------------------------------------------------------------
Acxiom Corp.(a) 420 13,020
- ------------------------------------------------------------
Forrester Research, Inc.(a) 200 8,750
- ------------------------------------------------------------
HA-LO Industries, Inc.(a) 300 11,288
- ------------------------------------------------------------
Information Resources, Inc.(a) 200 2,037
- ------------------------------------------------------------
Lamar Advertising Co.(a) 450 16,762
- ------------------------------------------------------------
Market Facts, Inc.(a) 300 7,800
- ------------------------------------------------------------
Nielsen Media Research 333 5,994
- ------------------------------------------------------------
Snyder Communications, Inc.(a) 300 10,125
- ------------------------------------------------------------
Young & Rubicam, Inc.(a) 400 12,950
- ------------------------------------------------------------
93,276
- ------------------------------------------------------------
MARKET
SHARES VALUE
SERVICES (COMMERCIAL & CONSUMER) - 6.65%
ABR Information Services, Inc.(a) 500 $ 9,812
- -------------------------------------------------------------
Advantage Learning Systems, Inc.(a) 100 6,575
- -------------------------------------------------------------
Apollo Group, Inc.(a) 400 13,550
- -------------------------------------------------------------
Avis Rent A Car, Inc.(a) 300 7,256
- -------------------------------------------------------------
Bright Horizons Family Solutions, Inc.(a) 400 10,800
- -------------------------------------------------------------
Career Education Corp.(a) 100 3,000
- -------------------------------------------------------------
F.Y.I., Inc.(a) 300 9,600
- -------------------------------------------------------------
G & K Services, Inc.-Class A 100 5,325
- -------------------------------------------------------------
Galileo International, Inc. 300 13,050
- -------------------------------------------------------------
Hertz Corp.-Class A 200 9,125
- -------------------------------------------------------------
INSpire Insurance Solutions, Inc.(a) 300 5,512
- -------------------------------------------------------------
Iron Mountain, Inc.(a) 350 12,622
- -------------------------------------------------------------
LaSalle Partners, Inc.(a) 100 2,944
- -------------------------------------------------------------
MemberWorks, Inc.(a) 200 5,900
- -------------------------------------------------------------
Metzler Group, Inc.(a) 300 14,606
- -------------------------------------------------------------
Pegasus Systems, Inc.(a) 500 18,000
- -------------------------------------------------------------
Pittston Brink's Group 100 3,188
- -------------------------------------------------------------
Primark Corp.(a) 200 5,425
- -------------------------------------------------------------
Protection One, Inc. 900 7,706
- -------------------------------------------------------------
Regis Corp. 300 12,000
- -------------------------------------------------------------
Strayer Education, Inc. 100 3,525
- -------------------------------------------------------------
Sylvan Learning Systems, Inc.(a) 300 9,150
- -------------------------------------------------------------
Trammell Crow Co.(a) 100 2,800
- -------------------------------------------------------------
Travel Services International, Inc.(a) 500 15,250
- -------------------------------------------------------------
United Road Services, Inc.(a) 100 1,838
- -------------------------------------------------------------
Waddell & Reed Financial, Inc.-Class A 100 2,369
- -------------------------------------------------------------
210,928
- -------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 2.56%
Cotelligent Group, Inc.(a) 300 6,394
- -------------------------------------------------------------
Insight Enterprises, Inc.(a) 250 12,719
- -------------------------------------------------------------
Keane, Inc.(a) 100 3,993
- -------------------------------------------------------------
Policy Management Systems Corp.(a) 300 15,150
- -------------------------------------------------------------
SunGard Data Systems, Inc.(a) 700 27,781
- -------------------------------------------------------------
Sykes Enterprises, Inc.(a) 500 15,250
- -------------------------------------------------------------
81,287
- -------------------------------------------------------------
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-38
269
MARKET
SHARES VALUE
SERVICES (DATA PROCESSING) - 3.94%
Billing Concepts Corp.(a) 300 $ 3,300
- -------------------------------------------------------------------------
BISYS Group, Inc.(a) 450 23,231
- -------------------------------------------------------------------------
Computer Horizons Corp.(a) 300 7,988
- -------------------------------------------------------------------------
CSG Systems International, Inc.(a) 300 23,700
- -------------------------------------------------------------------------
DST Systems, Inc.(a) 100 5,706
- -------------------------------------------------------------------------
Fiserv, Inc.(a) 200 10,288
- -------------------------------------------------------------------------
4Front Software International, Inc.(a) 800 8,850
- -------------------------------------------------------------------------
Lason Holdings, Inc.(a) 200 11,637
- -------------------------------------------------------------------------
MedQuist, Inc.(a) 200 7,900
- -------------------------------------------------------------------------
NOVA Corp.(a) 300 10,406
- -------------------------------------------------------------------------
Transaction Network Services, Inc.(a) 600 12,037
- -------------------------------------------------------------------------
125,043
- -------------------------------------------------------------------------
SERVICES (EMPLOYMENT) - 0.77%
Labor Ready, Inc.(a) 400 7,875
- -------------------------------------------------------------------------
Metamor Worldwide, Inc.(a) 400 10,000
- -------------------------------------------------------------------------
Syntel, Inc.(a) 100 1,131
- -------------------------------------------------------------------------
Vincam Group, Inc. (The)(a) 300 5,269
- -------------------------------------------------------------------------
24,275
- -------------------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL) - 1.20%
Casella Waste Systems, Inc.(a) 500 18,563
- -------------------------------------------------------------------------
Corrections Corp. of America(a) 300 5,287
- -------------------------------------------------------------------------
Wackenhut Corrections Corp.(a) 300 8,587
- -------------------------------------------------------------------------
Waste Connections, Inc.(a) 300 5,513
- -------------------------------------------------------------------------
37,950
- -------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.20%
Associated Group, Inc. (The)-Class A(a) 400 17,200
- -------------------------------------------------------------------------
International Telecommunication Data Systems, Inc.(a) 500 7,375
- -------------------------------------------------------------------------
Metromedia Fiber Network, Inc.(a) 400 13,400
- -------------------------------------------------------------------------
37,975
- -------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.35%
Global TeleSystems Group, Inc.(a) 200 11,150
- -------------------------------------------------------------------------
TELEPHONE - 0.27%
ICG Communications, Inc.(a) 400 8,600
- -------------------------------------------------------------------------
TEXTILES (APPAREL) - 0.31%
Columbia Sportswear Co.(a) 400 6,750
- -------------------------------------------------------------------------
Nautica Enterprises, Inc.(a) 200 3,000
- -------------------------------------------------------------------------
9,750
- -------------------------------------------------------------------------
WASTE MANAGEMENT - 1.24%
Catalytica, Inc.(a) 500 9,000
- -------------------------------------------------------------------------
Safety-Kleen Corp(a) 700 9,887
- -------------------------------------------------------------------------
Superior Services, Inc.(a) 400 8,025
- -------------------------------------------------------------------------
U.S. Liquids Inc.(a) 400 9,000
- -------------------------------------------------------------------------
Waste Industries, Inc.(a) 200 3,450
- -------------------------------------------------------------------------
39,362
- -------------------------------------------------------------------------
Total Domestic Common Stocks (Cost $2,487,893) 2,772,251
- -------------------------------------------------------------------------
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 3.44%
BERMUDA - 0.37%
Annuity and Life Re, Ltd. (Insurance-Life/Health) 100 $ 2,700
- ------------------------------------------------------------------------------
Global Crossing Ltd. (Telecommunications-Long Distance)(a) 200 9,025
- ------------------------------------------------------------------------------
11,725
- ------------------------------------------------------------------------------
CANADA - 0.47%
Alliance Atlantis Communications Corp.-Class B
(Entertainment)(a) 100 1,644
- ------------------------------------------------------------------------------
Celestica, Inc. (Electronics-Semiconductors)(a) 300 7,406
- ------------------------------------------------------------------------------
Four Seasons Hotels, Inc. (Lodging-Hotels) 200 5,850
- ------------------------------------------------------------------------------
14,900
- ------------------------------------------------------------------------------
CAYMAN ISLANDS - 0.43%
Sutton Group Financial Services Ltd. (Insurance-
Life/Health)(a) 1,000 13,750
- ------------------------------------------------------------------------------
IRELAND - 0.54%
Ryanair Holdings PLC-ADR (Airlines)(a) 200 7,550
- ------------------------------------------------------------------------------
Saville Systems Ireland PLC-ADR (Services-Data
Processing)(a) 500 9,500
- ------------------------------------------------------------------------------
17,050
- ------------------------------------------------------------------------------
ISRAEL - 0.88%
Check Point Software Technologies Ltd. (Computer- Software
& Services(a) 100 4,581
- ------------------------------------------------------------------------------
Galileo Technology Ltd. (Electronics-Semiconductors)(a) 700 18,900
- ------------------------------------------------------------------------------
NICE-Systems Ltd. (Communications-Equipment)(a) 200 4,325
- ------------------------------------------------------------------------------
27,806
- ------------------------------------------------------------------------------
UNITED KINGDOM - 0.75%
ESG Re Limited (Insurance-Life/Health) 100 2,025
- ------------------------------------------------------------------------------
LucasVarity PLC-ADR (Auto Parts & Equipment) 200 6,700
- ------------------------------------------------------------------------------
NTL Inc. (Telephone)(a) 200 11,287
- ------------------------------------------------------------------------------
Signet Group PLC (Retail-General Merchandise)(a) 4,000 2,044
- ------------------------------------------------------------------------------
Stolt Comex Seaway, S.A. (Oil & Gas-Exploration &
Production)(a) 250 1,687
- ------------------------------------------------------------------------------
23,743
- ------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests (Cost
$98,384) 108,974
- ------------------------------------------------------------------------------
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-39
270
PRINCIPAL MARKET
AMOUNT VALUE
REPURCHASE AGREEMENT(b) - 7.74%
SBC Warburg Dillion Read, Inc., 4.75%, 01/04/99(c) (Cost
$245,668) $245,668 $ 245,668
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.56% 3,126,893
- ------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 1.44% 45,575
- ------------------------------------------------------------------------------
NET ASSETS - 100.00% $3,172,468
==============================================================================
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(c) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75% due 06/30/99 to 11/15/21 with an aggregate market
value at 12/31/98 of $1,020,001,079.
Abbreviation:
ADR -- American Depositary Receipt
See Notes to Financial Statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-40
271
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments at market value (cost $2,831,945) $ 3,126,893
- ---------------------------------------------------------------------
Receivables for:
Capital stock sold 26,986
- ---------------------------------------------------------------------
Dividends and interest 1,092
- ---------------------------------------------------------------------
Investments sold 8,881
- ---------------------------------------------------------------------
Reimbursement from advisor 50,307
- ---------------------------------------------------------------------
Investment for deferred compensation plan 2,777
- ---------------------------------------------------------------------
Total assets 3,216,936
- ---------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 34,293
- ---------------------------------------------------------------------
Deferred compensation plan 2,777
- ---------------------------------------------------------------------
Accrued directors' fees 410
- ---------------------------------------------------------------------
Accrued operating expenses 6,988
- ---------------------------------------------------------------------
Total liabilities 44,468
- ---------------------------------------------------------------------
Net assets applicable to shares outstanding $ 3,172,468
- ---------------------------------------------------------------------
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ---------------------------------------------------------------------
Outstanding 344,450
- ---------------------------------------------------------------------
Net asset value, offering and redemption price per share $9.21
=====================================================================
STATEMENT OF OPERATIONS
For the period May 1, 1998 (date operations commenced)
through December 31, 1998
INVESTMENT INCOME:
Interest $ 19,212
- --------------------------------------------------------------------
Dividends 4,034
- --------------------------------------------------------------------
Total investment income 23,246
- --------------------------------------------------------------------
EXPENSES:
Advisory fees 9,522
- --------------------------------------------------------------------
Administrative services fees 26,658
- --------------------------------------------------------------------
Custodian fees 20,224
- --------------------------------------------------------------------
Directors' fees and expenses 6,710
- --------------------------------------------------------------------
Legal fees 7,847
- --------------------------------------------------------------------
Other 2,699
- --------------------------------------------------------------------
Total expenses 73,660
- --------------------------------------------------------------------
Less: Fees waived and reimbursed by advisor (58,330)
- --------------------------------------------------------------------
Expenses paid indirectly (210)
- --------------------------------------------------------------------
Net expenses 15,120
- --------------------------------------------------------------------
Net investment income 8,126
- --------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities (142,359)
- --------------------------------------------------------------------
Futures contracts (111,690)
- --------------------------------------------------------------------
Foreign currencies 28
- --------------------------------------------------------------------
(254,021)
- --------------------------------------------------------------------
Net unrealized appreciation of:
Investment securities 294,948
- --------------------------------------------------------------------
Net gain from investment securities and futures contracts 40,927
- --------------------------------------------------------------------
Net increase in net assets resulting from operations $ 49,053
====================================================================
See Notes to Financial Statements.
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-41
272
STATEMENT OF CHANGES IN NET ASSETS
For the period May 1, 1998 (date operations commenced) through December 31,
1998
OPERATIONS:
Net investment income $ 8,126
- ------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and futures
contracts (254,021)
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 294,948
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations 49,053
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment income (12,074)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 3,135,489
- ------------------------------------------------------------------------------
Net increase in net assets 3,172,468
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period --
- ------------------------------------------------------------------------------
End of period $3,172,468
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,134,630
- ------------------------------------------------------------------------------
Undistributed net investment income (3,061)
- ------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities
and futures contracts (254,049)
- ------------------------------------------------------------------------------
Unrealized appreciation of investment securities 294,948
- ------------------------------------------------------------------------------
$3,172,468
==============================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Capital Development Fund (the "Fund"). The Fund's investment
objective is long-term capital appreciation. The Fund commenced operations on
May 1, 1998. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. If no mean is
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or, absent a last sales price, at the mean of the closing bid and
asked prices. Debt obligations (including convertible bonds) are valued on
the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive
reliance on quoted prices and may reflect appropriate factors such as
yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued at
the mean between last bid and asked prices based upon quotes furnished by
independent sources. Securities for which market quotations either are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Company's
officers in a manner specifically authorized by the Board of Directors.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. Generally, trading in
foreign securities is substantially completed each day at various times
prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-42
273
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Directors.
B. Securities Transactions, Investment Income and Distributions -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 as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1998
additional paid-in capital was decreased by $859, undistributed net
investment income was increased by $887 and undistributed net realized
gains was decreased by $28 in order to comply with the requirements of the
American Institute of Certified Public Accountants Statement of Position
93-2. Net assets of the Fund were unaffected by the reclassifications
discussed above.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements. The Fund had capital
loss carryforwards (which may be carried forward to offset future taxable
capital gains, if any) of $204,323, which expires, if not previously
utilized, through the year 2006. The Fund cannot distribute capital gains
to shareholders until the tax loss carryforwards have been utilized.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash as collateral for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of
the contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.75% of
the first $350 million of the Fund's average daily net assets, plus 0.625% of
the Fund's average daily net assets in excess of $350 million. During the
period May 1, 1998 (date operations commenced) through December 31, 1998, AIM
waived advisory fees and reimbursed expenses of $58,330.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the period May 1, 1998 (date
operations commenced) through December 31, 1998, AIM was reimbursed $26,658
for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $210 under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of
the Fund's total expenses of $210 during the period May 1, 1998 (date
operations commenced) through December 31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest a director's fees,
if so elected by such director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the period May 1, 1998 (date operations
commenced) through December 31, 1998 was $3,405,734 and $676,949,
respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $ 431,624
- ------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (160,611)
- ------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 271,013
========================================================================
Cost of investments for tax purposes is $2,855,880.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the period May 1, 1998 (date
operations commenced) through December 31, 1998 as follows:
1998
-------------------
SHARES AMOUNT
------- ----------
Sold 403,978 $3,617,838
- -------------------------------------------------------------
Issued as reinvestment of distributions 1,426 12,074
- -------------------------------------------------------------
Reacquired (60,954) (494,423)
- -------------------------------------------------------------
344,450 $3,135,489
=============================================================
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-43
274
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the period May 1, 1998 (date operations commenced) through December 31,
1998.
DECEMBER 31,
1998
------------
Net asset value, beginning of period $10.00
- ----------------------------------------------------------------- ------
Income from investment operations:
Net investment income 0.03(a)
- ----------------------------------------------------------------- ------
Net gains (losses) on securities (both realized and unrealized) (0.78)
- ----------------------------------------------------------------- ------
Total from investment operations (0.75)
- ----------------------------------------------------------------- ------
Less distributions:
Dividends from net investment income (0.04)
- ----------------------------------------------------------------- ------
Net asset value, end of period $ 9.21
================================================================= ======
Total return(b) (7.51)%
================================================================= ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $3,172
================================================================= ======
Ratio of expenses to average net assets(c) 1.21%(d)
================================================================= ======
Ratio of net investment income to average net assets(e) 0.62%
================================================================= ======
Portfolio turnover rate 45%
================================================================= ======
(a) Calculated using average shares outstanding.
(b) Total returns is not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
5.80% (annualized).
(d) Ratios are annualized and based on average net assets of $1,891,388.
(e) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursement was (3.97)% (annualized).
AIM V.I. CAPITAL DEVELOPMENT FUND
FS-44
275
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Diversified Income Fund, a series of shares of common stock of AIM
Variable Insurance Funds, Inc. including the schedule of investments as of
December 31, 1998, the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended, the eleven month period ended December 31, 1995, the year
ended January 31, 1995, and the period May 5, 1993 (commencement of operations)
through January 31, 1994. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Diversified Income Fund, as of December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended, the eleven month period ended
December 31, 1995, the year ended January 31, 1995 and the period May 5, 1993
(commencement of operations) through January 31, 1994 in conformity with
generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
--------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. DIVERSIFIED INCOME FUND
FS-45
276
SCHEDULE OF INVESTMENTS
December 31, 1998
PRINCIPAL MARKET
AMOUNT(a) VALUE
U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS &
NOTES - 67.63%
AEROSPACE/DEFENSE - 0.35%
Pacific Aerospace & Electronics, Sr. Sub Notes,
11.25%, 08/01/05 (Acquired 07/24/98; Cost
$450,000)(b) $ 450,000 $ 339,750
- ------------------------------------------------------------------------------
AIR FREIGHT - 0.44%
Atlas Air, Inc., Sr. Notes, 10.75%, 08/01/05 400,000 422,000
- ------------------------------------------------------------------------------
AIRLINES - 2.74%
Airplanes Pass Through Trust, Series D Gtd. Sub.
Bonds, 10.875%, 03/15/19 300,000 315,189
- ------------------------------------------------------------------------------
America West Airlines, Inc., Pass Through
Certificates, 6.86%, 07/02/04 863,999 862,012
- ------------------------------------------------------------------------------
Delta Air Lines, Inc., Deb., 9.00%, 05/15/16 825,000 947,917
- ------------------------------------------------------------------------------
United Air Lines, Inc., Pass Through Certificates,
9.56%, 10/19/18 425,000 521,603
- ------------------------------------------------------------------------------
2,646,721
- ------------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.41%
Advance Stores Co. Inc., Series B Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 04/15/08 390,000 397,800
- ------------------------------------------------------------------------------
AUTOMOBILES - 0.52%
General Motors Corp., Deb., 8.80%, 03/01/21 400,000 505,973
- ------------------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 0.60%
Regions Financial Corp., Sub. Notes,
7.75%, 09/15/24 500,000 576,015
- ------------------------------------------------------------------------------
BANKS (MONEY CENTER) - 1.73%
Deutsche Bank Financial, Unsec. Gtd. Sub. Deb., 6.70%,
12/13/06 750,000 790,343
- ------------------------------------------------------------------------------
First Union Bancorp, Sub. Deb., 7.50%, 04/15/35 800,000 877,888
- ------------------------------------------------------------------------------
1,668,231
- ------------------------------------------------------------------------------
BANKS (REGIONAL) - 1.45%
Mercantile Bancorp Inc., Unsec. Sub. Notes, 7.30%,
06/15/07 1,000,000 1,095,900
- ------------------------------------------------------------------------------
Mercantile Bank Inc., Sub. Notes,
6.375%, 01/15/04 300,000 307,056
- ------------------------------------------------------------------------------
1,402,956
- ------------------------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC) - 1.33%
Coca-Cola Enterprises, Inc., Putable Notes,
7.24%, 06/20/20(c) 5,000,000 1,282,200
- ------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 4.24%
Comcast Cable Communications, Notes,
8.50%, 05/01/27 500,000 627,470
- ------------------------------------------------------------------------------
CSC Holdings, Inc.,
Sr. Notes, 7.875%, 12/15/07 500,000 527,400
- ------------------------------------------------------------------------------
Sr. Unsec. Deb., 7.625%, 07/15/18 500,000 511,960
- ------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT(a) VALUE
BROADCASTING (TELEVISION, RADIO & CABLE) -
(CONTINUED)
EchoStar DBS Corp., Sr. Sec. Gtd. Notes,
12.50%, 07/01/02 $ 430,000 $ 498,800
- -------------------------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc. Notes,
11.875%, 10/15/07(d) 1,000,000 462,500
- -------------------------------------------------------------------------------
TCI Communications, Inc., Sr. Notes,
8.00%, 08/01/05 850,000 958,435
- -------------------------------------------------------------------------------
USA Networks, Inc., Sr. Notes, 6.75%, 11/15/05
(Acquired 11/30/98; Cost $501,370)(b) 500,000 501,330
- -------------------------------------------------------------------------------
4,087,895
- -------------------------------------------------------------------------------
CHEMICALS - 2.41%
Airgas Inc., Medium Term Notes, 7.14%, 03/08/04 750,000 765,840
- -------------------------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada), Yankee Deb.,
8.50%, 12/15/12 500,000 606,900
- -------------------------------------------------------------------------------
Solutia, Inc., Bonds, 6.72%, 10/15/37 750,000 762,000
- -------------------------------------------------------------------------------
Sterling Chemicals, Inc., Sr. Unsec. Sub. Notes,
11.75%, 08/15/06 220,000 190,300
- -------------------------------------------------------------------------------
2,325,040
- -------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.47%
Dialog Corp. PLC (United Kingdom), Series A Sr. Sub.
Notes, 11.00%, 11/15/07 350,000 350,000
- -------------------------------------------------------------------------------
Northern Telecom (Canada), Yankee Notes,
6.00%, 09/01/03 100,000 101,482
- -------------------------------------------------------------------------------
451,482
- -------------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 0.50%
Exodus Communications, Sr. Unsec. Notes, 11.25%,
07/01/08 480,000 484,800
- -------------------------------------------------------------------------------
CONSUMER FINANCE - 1.97%
GMAC, Notes, 9.00%, 10/15/02 750,000 836,985
- -------------------------------------------------------------------------------
Household Finance Corp., Notes,
7.125%, 09/01/05 1,000,000 1,064,040
- -------------------------------------------------------------------------------
1,901,025
- -------------------------------------------------------------------------------
CONTAINERS & PACKAGING (PAPER) - 0.15%
MVE Inc., Sr. Sec. Notes, 12.50%, 02/15/02 145,000 142,825
- -------------------------------------------------------------------------------
ELECTRIC COMPANIES - 3.56%
Cleveland Electric Illumination, Series D Sr. Sec.
Notes, 7.88%, 11/01/17 500,000 527,796
- -------------------------------------------------------------------------------
El Paso Electric Co.,
Series D Sec. First Mortgage Bonds,
8.90%, 02/01/06 500,000 563,250
- -------------------------------------------------------------------------------
Series E Sec. First Mortgage Bonds,
9.40%, 05/01/11 150,000 170,336
- -------------------------------------------------------------------------------
Niagara Mohawk Power Corp.,
First Mortgage Notes, 9.25%, 10/01/01 1,000,000 1,083,450
- -------------------------------------------------------------------------------
Series G Sr. Unsec. Notes, 7.75%, 10/01/08 1,000,000 1,093,100
- -------------------------------------------------------------------------------
3,437,932
- -------------------------------------------------------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
FS-46
277
PRINCIPAL MARKET
AMOUNT(a) VALUE
ELECTRICAL EQUIPMENT - 0.22%
Electronic Retailing Systems International, Inc.,
Sr. Disc. Notes, 13.25%, 02/01/04(d) $ 590,000 $ 215,350
- ------------------------------------------------------------------------------
ENTERTAINMENT - 1.42%
Ascent Entertainment Group, Sr. Sec. Disc. Notes,
11.875%, 12/15/04(d) 350,000 211,750
- ------------------------------------------------------------------------------
Time Warner, Inc.,
Deb., 9.125%, 01/15/13 500,000 628,805
- ------------------------------------------------------------------------------
Unsec. Deb., 6.85%, 01/15/26 500,000 526,020
- ------------------------------------------------------------------------------
1,366,575
- ------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 1.72%
Associates Corp. of North America, Series B Sr. Deb.,
7.95%, 02/15/10 750,000 867,908
- ------------------------------------------------------------------------------
Finova Capital Corp., Unsec. Notes,
7.40%, 05/06/06 750,000 789,195
- ------------------------------------------------------------------------------
1,657,103
- ------------------------------------------------------------------------------
FOODS - 2.07%
AmeriServ Food Co., Gtd. Notes,
10.125%, 07/15/07 320,000 280,000
- ------------------------------------------------------------------------------
ConAgra Inc., Sr. Unsec. Notes, 7.125%, 10/01/26 1,300,000 1,388,972
- ------------------------------------------------------------------------------
Del Monte Corp./Foods Co., Sr. Unsec. Sub. Notes,
12.25%, 04/15/07 290,000 330,600
- ------------------------------------------------------------------------------
1,999,572
- ------------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.39%
Venetian Casino Resort LLC, Gtd. Mortgage Notes,
12.25%, 11/15/04 400,000 376,000
- ------------------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.80%
Tenet Healthcare Corp., Sr. Notes, 8.00%, 01/15/05 750,000 769,942
- ------------------------------------------------------------------------------
HEALTH CARE (LONG TERM CARE) - 0.39%
Mariner Post-Acute Network, Inc.,
Series B Sr. Unsec. Disc. Sub. Notes,
10.50%, 11/01/07(d) 380,000 165,300
- ------------------------------------------------------------------------------
Series B Sr. Unsec. Sub. Notes, 9.50%, 11/01/07 270,000 209,250
- ------------------------------------------------------------------------------
374,550
- ------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.79%
Alaris Medical Systems, Sr. Unsec. Gtd. Sub. Deb.,
9.75%, 12/01/06 300,000 306,000
- ------------------------------------------------------------------------------
Dade International Inc., Series B Sr. Sub. Notes,
11.125%, 05/01/06 80,000 89,000
- ------------------------------------------------------------------------------
Mediq Inc., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 06/01/08 380,000 366,700
- ------------------------------------------------------------------------------
761,700
- ------------------------------------------------------------------------------
HOUSEWARES - 0.49%
Decora Industries, Inc., Series B Sr. Sec. Gtd. Notes,
11.00%, 05/01/05 500,000 472,500
- ------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT(a) VALUE
INSURANCE (LIFE/HEALTH) - 0.89%
Americo Life, Inc., Sr. Sub. Notes, 9.25%, 06/01/05 $ 75,000 $ 77,250
- -----------------------------------------------------------------------------
Torchmark Corp., Notes, 7.875%, 05/15/23 750,000 779,640
- -----------------------------------------------------------------------------
856,890
- -----------------------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 0.48%
Orion Capital Trust II, Gtd. Notes,
7.70%, 04/15/28 500,000 459,410
- -----------------------------------------------------------------------------
IRON & STEEL - 0.33%
Acme Metal, Inc., Sr. Unsec. Gtd. Deb.,
10.875%, 12/15/07(e) 588,000 79,380
- -----------------------------------------------------------------------------
GS Industries, Inc., Sr. Gtd. Notes,
12.00%, 09/01/04 350,000 239,750
- -----------------------------------------------------------------------------
319,130
- -----------------------------------------------------------------------------
LODGING-HOTELS - 2.21%
Booth Creek Ski Holdings, Sr. Notes,
12.50%, 03/15/07 390,000 388,050
- -----------------------------------------------------------------------------
Coast Hotels & Casinos Inc., Series B Sec. First
Mortgage Gtd. Notes, 13.00%, 12/15/02 180,000 203,400
- -----------------------------------------------------------------------------
ITT Corp., Unsec. Gtd. Deb., 7.375%, 11/15/15 750,000 638,100
- -----------------------------------------------------------------------------
John Q. Hammons Hotels, Inc., Sec. First Mortgage
Notes, 9.75%, 10/01/05 550,000 517,000
- -----------------------------------------------------------------------------
Stena Line A.B. (Sweden), Sr. Yankee Notes, 10.625%,
06/01/08 430,000 389,150
- -----------------------------------------------------------------------------
2,135,700
- -----------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.34%
Elgin National Industies, Sr. Unsec. Gtd. Sub. Notes,
11.00%, 11/01/07 320,000 323,200
- -----------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.43%
MMI Products, Inc., Sr. Unsec. Sub. Notes,
11.25%, 04/15/07 380,000 412,300
- -----------------------------------------------------------------------------
METALS MINING - 0.94%
Centaur Mining & Exploration Ltd. (Australia), Sr.
Yankee Gtd. Notes, 11.00%, 12/01/07 550,000 503,250
- -----------------------------------------------------------------------------
Rio Algom Ltd. (Canada), Yankee Unsec. Deb., 7.05%,
11/01/05 370,000 402,219
- -----------------------------------------------------------------------------
905,469
- -----------------------------------------------------------------------------
NATURAL GAS - 2.90%
Dynegy, Inc., Sr. Unsec. Deb., 7.125%, 05/15/18 500,000 493,355
- -----------------------------------------------------------------------------
Enron Corp.,
Notes, 6.75%, 08/01/09 750,000 779,827
- -----------------------------------------------------------------------------
Sr. Sub. Deb., 6.75%, 07/01/05 450,000 464,558
- -----------------------------------------------------------------------------
Ferrellgas Partners, Series B Sr. Sec. Gtd. Notes,
9.375%, 06/15/06 525,000 527,625
- -----------------------------------------------------------------------------
K N Energy, Inc., Unsec. Deb., 7.35%, 08/01/26 500,000 527,575
- -----------------------------------------------------------------------------
2,792,940
- -----------------------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES - 0.32%
United Stationer Supply, Sr. Sub. Notes,
12.75%, 05/01/05 275,000 308,000
- -----------------------------------------------------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
FS-47
278
PRINCIPAL MARKET
AMOUNT(a) VALUE
OIL (INTERNATIONAL INTEGRATED) - 0.84%
Gulf Canada Resources, Ltd. (Canada), Sr. Yankee Unsec.
Notes, 8.35%, 08/01/06 $ 800,000 $ 805,736
- -------------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 1.44%
Petroleum Geo-Services A.S.A. (Norway), Sr. Yankee
Unsec. Notes, 7.125%, 03/30/28 750,000 707,948
- -------------------------------------------------------------------------------
R&B Falcon Corp.,
Sr. Notes, 9.50%, 12/15/08 (Acquired 12/17/98; Cost
$250,000)(b) 250,000 251,250
- -------------------------------------------------------------------------------
Series B Sr. Unsec. Notes, 6.95%, 04/15/08 500,000 434,285
- -------------------------------------------------------------------------------
1,393,483
- -------------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 1.98%
Abraxas Petroleum Corp., Series D Sr. Unsec. Gtd.
Notes, 11.50%, 11/01/04 125,000 95,625
- -------------------------------------------------------------------------------
Chesapeake Energy Corp., Series B Sr. Unsec. Gtd.
Notes, 9.625%, 05/01/05 230,000 180,550
- -------------------------------------------------------------------------------
Kelley Oil & Gas Corp., Series B Sr. Gtd. Sub. Notes,
10.375%, 10/15/06 400,000 298,000
- -------------------------------------------------------------------------------
Louis Dreyfus Natural Gas, Sr. Sub. Notes,
9.25%, 06/15/04 500,000 539,585
- -------------------------------------------------------------------------------
Queen Sand Resources, Inc., Sr. Unsec. Gtd. Notes,
12.50%, 07/01/08 400,000 282,000
- -------------------------------------------------------------------------------
Talisman Energy, Inc. (Canada), Yankee Deb., 7.125%,
06/01/07 500,000 517,020
- -------------------------------------------------------------------------------
1,912,780
- -------------------------------------------------------------------------------
OIL & GAS (REFINING & MARKETING) - 0.34%
Texas Petrochemical Corp., Sr. Unsec. Sub. Notes,
11.125%, 07/01/06 330,000 326,700
- -------------------------------------------------------------------------------
PERSONAL CARE - 1.09%
Alberto-Culver Corp., Notes, 6.375%, 06/15/28 1,000,000 1,047,880
- -------------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 0.85%
AES Corp., Sr. Notes, 8.00%, 12/31/08 750,000 747,532
- -------------------------------------------------------------------------------
Panda Global Energy Co. (China), Sr. Yankee Sec. Gtd.
Notes, 12.50%, 04/15/04 150,000 68,250
- -------------------------------------------------------------------------------
815,782
- -------------------------------------------------------------------------------
PUBLISHING (NEWSPAPERS) - 1.53%
News America Holdings, Inc.,
Sr. Gtd. Deb., 9.25%, 02/01/13 750,000 936,127
- -------------------------------------------------------------------------------
Sr. Gtd. Putable Bonds, 7.43%, 10/01/26 500,000 543,560
- -------------------------------------------------------------------------------
1,479,687
- -------------------------------------------------------------------------------
RAILROADS - 0.76%
Norfolk Southern Corp., Putable Bonds,
7.05%, 05/01/37 650,000 733,993
- -------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 1.51%
Glenborough Properties, Series B Sr. Unsec. Notes,
7.625%, 03/15/05 800,000 766,798
- -------------------------------------------------------------------------------
Spieker Properties LP, Unsec. Deb.,
7.35%, 12/01/17 750,000 689,363
- -------------------------------------------------------------------------------
1,456,161
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT(a) VALUE
RETAIL (GENERAL MERCHANDISE) - 0.27%
Plainwell Inc., Series B Sr. Unsec. Sub. Notes, 11.00%,
03/01/08 $ 330,000 $ 259,050
- -------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 1.56%
CEX Holdings, Inc., Series B Sr. Unsec. Gtd. Sub. Notes,
9.625%, 06/01/08 370,000 334,850
- -------------------------------------------------------------------------------
CSK Auto Inc., Sr. Gtd. Sub. Deb.,
11.00%, 11/01/06 260,000 274,300
- -------------------------------------------------------------------------------
Neff Corp., Sr. Sub. Notes, 10.25%, 06/01/08 (Acquired
12/02/98; Cost $325,103)(b) 330,000 320,100
- -------------------------------------------------------------------------------
Renters Choice, Inc., Sr. Sub. Notes, 11.00%, 08/15/08
(Acquired 08/13/98; Cost $500,000)(b) 500,000 510,000
- -------------------------------------------------------------------------------
Wilson's - The Leather Experts, Inc., Sr. Notes, 11.25%,
08/15/04 70,000 68,950
- -------------------------------------------------------------------------------
1,508,200
- -------------------------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 0.74%
Big 5 Corp., Sr. Unsec. Notes, 10.875%, 11/15/07 500,000 507,500
- -------------------------------------------------------------------------------
J Crew Operating Corp., Sr. Sub. Notes,
10.375%, 10/15/07 240,000 207,600
- -------------------------------------------------------------------------------
715,100
- -------------------------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 0.87%
Sovereign Bancorp, Inc., Sub. Notes,
8.00%, 03/15/03 800,000 841,608
- -------------------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 0.32%
MDC Communications Corp. (Canada), Sr. Yankee Unsec.
Sub. Notes, 10.50%, 12/01/06 300,000 307,500
- -------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.96%
Laidlaw, Inc. (Canada), Yankee Unsec. Deb.,
6.70%, 05/01/08 500,000 488,985
- -------------------------------------------------------------------------------
Pegasus Shipping Hellas Co. (Bermuda), Series A Sr.
Yankee Sec. Gtd. Mortgage Notes,
11.875%, 11/15/04 500,000 432,500
- -------------------------------------------------------------------------------
921,485
- -------------------------------------------------------------------------------
SERVICES (EMPLOYMENT) - 0.38%
MSX International, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.375%, 01/15/08 380,000 363,850
- -------------------------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL) - 0.04%
ATC Group Services, Inc., Sr. Unsec. Gtd. Sub. Notes,
12.00%, 01/15/08(e) 450,000 42,750
- -------------------------------------------------------------------------------
SHIPPING - 0.43%
Pacific & Atlantic Holdings, Yankee First Mortgage
Notes, 11.50%, 05/30/08 530,000 410,750
- -------------------------------------------------------------------------------
SOVEREIGN DEBT - 2.66%
Province of Manitoba (Canada), Yankee Bonds, 7.75%,
07/17/16 700,000 826,322
- -------------------------------------------------------------------------------
Province of Quebec (Canada),
Series A Yankee Notes, 6.29%, 03/06/26 800,000 897,184
- -------------------------------------------------------------------------------
Yankee Notes, 5.735%, 03/02/26 750,000 845,025
- -------------------------------------------------------------------------------
2,568,531
- -------------------------------------------------------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
FS-48
279
PRINCIPAL MARKET
AMOUNT(a) VALUE
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.58%
Clearnet Communications Inc. (Canada), Sr. Yankee
Unsec. Disc. Notes, 14.75%, 12/15/05(d) $ 110,000 $ 95,150
- ------------------------------------------------------------------------------
Metrocall Inc., Sr. Sub. Notes, 11.00%, 09/15/08
(Acquired 12/17/98; Cost $446,868)(b) 450,000 454,500
- ------------------------------------------------------------------------------
Nextel Communications, Inc., Sr. Notes, 12.00%,
11/01/08 (Acquired 10/28/98; Cost $552,037)(b) 560,000 616,000
- ------------------------------------------------------------------------------
PageMart Wireless, Inc., Sr. Sub. Disc. Notes, 11.25%,
02/01/08(d) 750,000 363,750
- ------------------------------------------------------------------------------
1,529,400
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 2.65%
Bell Canada (Canada), Yankee Deb.,
9.50%, 10/15/10 350,000 461,058
- ------------------------------------------------------------------------------
Centel Capital, Deb., 9.00%, 10/15/19 320,000 411,693
- ------------------------------------------------------------------------------
Esprit Telecom Group PLC (United Kingdom), Sr. Yankee
Notes, 11.50%, 12/15/07 350,000 364,000
- ------------------------------------------------------------------------------
MCI Communications Corp., Putable Sr. Unsec. Deb.,
7.125%, 06/15/27 1,000,000 1,063,500
- ------------------------------------------------------------------------------
Versatel Telecom BV (Netherlands), Sr. Notes, 13.25%,
05/15/08 250,000 255,000
- ------------------------------------------------------------------------------
2,555,251
- ------------------------------------------------------------------------------
TELEPHONE - 2.47%
Cable & Wireless Communications PLC (United Kingdom),
Yankee Notes, 6.75%, 03/06/08 750,000 767,655
- ------------------------------------------------------------------------------
ESAT Telecom Group PLC (Ireland), Sr. Yankee Notes,
12.50%, 02/01/07(d) 470,000 312,550
- ------------------------------------------------------------------------------
NTL Inc., Sr. Notes, 11.50%, 10/01/08
(Acquired 10/26/98; Cost $440,000)(b) 440,000 481,800
- ------------------------------------------------------------------------------
SBC Communications, Inc., Deb., 7.375%, 07/15/43 750,000 818,415
- ------------------------------------------------------------------------------
2,380,420
- ------------------------------------------------------------------------------
TEXTILES (APPAREL) - 0.74%
Fruit of the Loom, Notes, 6.50%, 11/15/03 750,000 712,620
- ------------------------------------------------------------------------------
TRUCKERS - 0.41%
Travelcenters of America, Inc., Sr. Unsec. Gtd. Sub.
Deb., 10.25%, 04/01/07 400,000 400,000
- ------------------------------------------------------------------------------
TRUCKS & PARTS - 0.12%
Blue Bird Body Co., Series B Sr. Sub. Notes, 10.75%,
11/15/06 110,000 113,850
- ------------------------------------------------------------------------------
WASTE MANAGEMENT - 1.09%
WMX Technologies, Inc., Unsec. Notes,
7.10%, 08/01/26 1,000,000 1,047,230
- ------------------------------------------------------------------------------
Total U.S. Dollar Denominated
Non-Convertible Bonds & Notes
(Cost $65,650,575) 65,228,773
- ------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT(a) VALUE
U.S. DOLLAR DENOMINATED CONVERTIBLE
BONDS & NOTES - 0.56%
SHIPPING - 0.56%
Hutchison Delta Finance (Cayman Islands), Conv.
Unsec. Notes, 7.00%, 11/08/02
(Cost $527,500) $ 500,000 $ 537,500
- ------------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS
& NOTES - 12.32%(f)
CANADA - 6.11%
Bank of Montreal (Banks - Money Center), Sub. Deb.,
7.92%, 07/31/12 CAD 850,000 643,722
- ------------------------------------------------------------------------------
Bell Mobility Cellular (Telecommunications -
Cellular/Wireless), Deb., 6.55%, 06/02/08 750,000 501,936
- ------------------------------------------------------------------------------
Canadian Oil Debco, Inc. (Oil & Gas-Exploration &
Production), Deb.,
11.00%, 10/31/00 450,000 320,000
- ------------------------------------------------------------------------------
Clearnet Communications, Inc. (Telecommunications -
Cellular/Wireless),
Sr. Disc. Notes, 11.75%, 08/13/07(d) 1,500,000 590,686
- ------------------------------------------------------------------------------
Sr. Disc. Notes, 10.40%, 05/15/08(d) 1,600,000 556,863
- ------------------------------------------------------------------------------
Microcell Telecommunications, Inc.
(Telecommunications - Cellular/Wireless), Sr.
Disc. Notes, 11.125%, 10/15/07(d) 1,000,000 361,111
- ------------------------------------------------------------------------------
NAV Canada (Services - Commercial & Consumer),
Bonds, 7.40%, 06/01/27 1,000,000 800,771
- ------------------------------------------------------------------------------
Poco Petroleums Ltd. (Oil & Gas -
Exploration & Production), Unsec. Deb., 6.60%,
09/11/07 750,000 480,863
- ------------------------------------------------------------------------------
Teleglobe Canada, Inc. (Telephone), Unsec. Deb.,
8.35%, 06/20/03 850,000 621,039
- ------------------------------------------------------------------------------
Trans-Canada Pipelines (Natural Gas),
Series Q Deb., 10.625%, 10/20/09 500,000 450,412
- ------------------------------------------------------------------------------
Unsec. Notes, 8.55%, 02/01/06 280,000 213,365
- ------------------------------------------------------------------------------
Westcoast Energy, Inc. (Natural Gas), Deb., 6.45%,
12/18/06 500,000 346,085
- ------------------------------------------------------------------------------
5,886,853
- ------------------------------------------------------------------------------
GERMANY - 2.83%
International Bank for Reconstruction & Development
(Banks - Money Center), Unsec. Global Bonds,
7.125%, 04/12/05(c) DEM 1,000,000 711,987
- ------------------------------------------------------------------------------
LKB Global (Financial-Diversified), Gtd. Notes,
6.00%, 01/25/06 3,000,000 2,016,627
- ------------------------------------------------------------------------------
2,728,614
- ------------------------------------------------------------------------------
NEW ZEALAND - 1.57%
International Bank for Reconstruction & Development
(Banks - Money Center),
Sr. Unsub. Notes, 7.25%, 05/27/03 NZD 2,200,000 1,211,399
- ------------------------------------------------------------------------------
Sr. Unsec. Notes, 6.77%, 08/20/07(c) 1,000,000 303,547
- ------------------------------------------------------------------------------
1,514,946
- ------------------------------------------------------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
FS-49
280
PRINCIPAL MARKET
AMOUNT(a) VALUE
UNITED KINGDOM - 1.81%
International Bank for Reconstruction &
Development (Banks - Money Center),
Sr. Unsec. Notes, 6.875%, 07/14/00 GBP 500,000 $ 846,580
- -----------------------------------------------------------------------------
Sutton Bridge Financial Ltd. (Financial -
Diversified), Gtd. Eurobonds, 8.625%, 06/30/22
(Acquired 05/29/97;
Cost $733,650)(b) 450,000 901,279
- -----------------------------------------------------------------------------
1,747,859
- -----------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated
Non- Convertible Bonds & Notes
(Cost $12,210,409) 11,878,272
- -----------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS &
NOTES - 1.09%(f)
GERMANY - 0.64%
Daimler-Benz A.G. (Automobiles), Conv. Gtd. Unsub.
Eurobonds, 4.125%, 07/05/03 DEM 570,000 619,119
- -----------------------------------------------------------------------------
UNITED KINGDOM - 0.45%
COLT Telecom Group PLC (Telephone), Conv. Notes,
2.00%, 08/06/05 GBP 700,000 435,819
- -----------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Convertible
Bonds & Notes
(Cost $833,353) 1,054,938
- -----------------------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED GOVERNMENT
BONDS & NOTES - 10.67%(f)
BRITISH POUND STERLING - 3.22%
Federal National Mortgage Association, Sr. Unsec.
Notes, 6.875%, 06/07/02 GBP 450,000 795,215
- -----------------------------------------------------------------------------
United Kingdom Treasury,
Bonds, 8.00%, 12/07/00 400,000 702,549
- -----------------------------------------------------------------------------
Gtd. Notes, 7.00%, 11/06/01 400,000 705,209
- -----------------------------------------------------------------------------
Bonds, 7.50%, 12/07/06 450,000 899,399
- -----------------------------------------------------------------------------
3,102,372
- -----------------------------------------------------------------------------
CANADIAN DOLLARS - 2.81%
British Columbia Municipal Finance Authority,
Bonds, 7.75%, 12/01/05 CAD 500,000 374,441
- -----------------------------------------------------------------------------
Canadian Government, Bonds,
6.625%, 10/03/07 500,000 270,179
- -----------------------------------------------------------------------------
Ontario Province, Sr. Unsec. Unsub. Global Bonds,
8.00%, 03/11/03 750,000 545,666
- -----------------------------------------------------------------------------
Province of Ontario, Deb., 11.125%, 02/14/01 500,000 913,595
- -----------------------------------------------------------------------------
Province of Ontario, Unsec. Unsub. Notes, 6.25%,
12/03/08 1,000,000 517,059
- -----------------------------------------------------------------------------
Quebec (Province of), Deb., 9.375%, 01/16/23 100,000 91,871
- -----------------------------------------------------------------------------
2,712,811
- -----------------------------------------------------------------------------
GERMAN DEUTSCHE MARKS - 0.74%
Bundesrepublic Deutschland, Bonds,
6.875%, 05/12/05 DEM 1,000,000 708,431
- -----------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT(a) VALUE
NEW ZEALAND DOLLARS - 1.14%
Federal National Mortgage Association, Notes,
7.25%, 06/20/02 NZD 1,250,000 $ 682,650
- ------------------------------------------------------------------------------
New Zealand Government, Bonds,
8.00%, 02/15/01 750,000 416,233
- ------------------------------------------------------------------------------
1,098,883
- ------------------------------------------------------------------------------
SWEDISH KRONAS - 2.76%
Swedish Government,
Bonds, 6.00%, 02/09/05 SEK 6,000,000 821,959
- ------------------------------------------------------------------------------
Bonds, 6.50%, 10/25/06 6,000,000 860,313
- ------------------------------------------------------------------------------
Bonds, 5.00%, 01/28/09 7,500,000 983,492
- ------------------------------------------------------------------------------
2,665,764
- ------------------------------------------------------------------------------
Total Non-U.S. Dollar Denominated Government
Bonds & Notes
(Cost $10,155,523) 10,288,261
- ------------------------------------------------------------------------------
SHARES
DOMESTIC COMMON STOCK - 0.02%
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.02%
Nextel Communications, Inc. - Class A(g)
(Cost $12,000) 743 17,553
- ------------------------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 1.40%
BANKS (REGIONAL) - 0.52%
Westpac Banking Corp. STRYPES Trust - $3.135
Conv. Pfd. 16,000 505,000
- ------------------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.88%
Conseco Inc. - $4.278 Conv. PRIDES 8,000 844,000
- ------------------------------------------------------------------------------
Total Domestic Convertible Preferred Stocks
(Cost $990,600) 1,349,000
- ------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 0.41%
BANKS (MAJOR REGIONAL) - 0.36%
Societe Generale (France) 2,150 348,108
- ------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.00%
Knology Holdings, Inc., expiring 10/15/07
(Acquired 03/12/98; Cost $0)(b)(h) 1,000 2,250
- ------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.00%
Electronic Retailing Systems International,
expiring 02/01/04(h) 590 2,950
- ------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.00%
MVE, Inc., expiring 02/15/02(h) 190 1,900
- ------------------------------------------------------------------------------
METAL FABRICATORS - 0.00%
Gulf States Steel, Inc., expiring 04/15/03(h) 230 2
- ------------------------------------------------------------------------------
AIM V.I. DIVERSIFIED INCOME FUND
FS-50
281
MARKET
SHARES VALUE
PERSONAL CARE - 0.00%
IHF Capital Inc., Series I, expiring 11/14/99(h) 150 $ 75
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.01%
Clearnet Communications Inc. (Canada), expiring
09/15/05(h) 891 6,237
- -------------------------------------------------------------------------------
Loral Space & Communications Ltd., expiring 01/15/07(h) 580 6,235
- -------------------------------------------------------------------------------
12,472
- -------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.00%
Versatel, expiring 01/15/07(h) 250 2,531
- -------------------------------------------------------------------------------
TELEPHONE - 0.04%
ESAT Holdings Ltd., expiring 02/01/07(h) 470 33,017
- -------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interest (Cost
$279,886) 403,305
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT(a)
U.S. TREASURY SECURITIES - 1.42%
5.625%, 05/15/08 $ 300,000 $ 319,872
- -------------------------------------------------------------------------------
5.50%, 08/15/28 1,000,000 1,046,970
- -------------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $1,378,625) 1,366,842
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 2.39%(i)
Goldman Sachs & Co., 4.40%, 01/04/99(j)
(Cost $2,305,989) 2,305,989 2,305,989
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 97.91% 94,430,433
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 2.09% 2,014,920
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $96,445,353
===============================================================================
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Principal amount is in U.S. Dollars, except as indicated by note (e).
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at 12/31/98 was $4,378,259
which represents 4.54% of the Fund's net assets.
(c) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(d) Step bond issued at a discount. The interest rate represents the coupon
rate at which the bond will accrue at a specified future date.
(e) Defaulted security. Currently, the issuer is partially in default with
respect to interest payments.
(f) Foreign denominated security. Par value and coupon rate are denominated in
currency of country indicated.
(g) Non-income producing security.
(h) Non-income producing security acquired as part of a unit with or in
exchange for other securities.
(i) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to ensure its market value is at least 102% of the Notes
to Schedule of Investments - (Continued)
sales price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds, private accounts, and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(j) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$700,342,222. Collateralized by $646,494,000 U.S. Government obligations,
0% to 11.75% due 02/15/99 to 04/15/28 with an aggregate market value at
12/31/98 of $714,694,897.
Abbreviations:
CAD - Canadian Dollar
Conv. - Convertible
Deb. - Debentures
DEM - German Deutsche Mark
Disc. - Discounted
GBP - British Pound Sterling
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
PRIDES - Preferred Redeemable Increased Dividend Equity Security
Sec. - Secured
SEK - Swedish Krona
Sr. - Senior
STRYPES - Structured Yield Product Exchangeable for Stock
Sub. - Subordinated
Unsec. - Unsecured
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
FS-51
282
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, at market value (cost $94,344,460) $94,430,433
- ---------------------------------------------------------------------
Foreign currencies, at value (cost $142,597) 144,120
- ---------------------------------------------------------------------
Receivables for:
Forward currency contracts 206,490
- ---------------------------------------------------------------------
Capital stock sold 53,293
- ---------------------------------------------------------------------
Dividends and interest 1,847,543
- ---------------------------------------------------------------------
Investment for deferred compensation plan 22,013
- ---------------------------------------------------------------------
Other assets 452
- ---------------------------------------------------------------------
Total assets 96,704,344
- ---------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 86,236
- ---------------------------------------------------------------------
Deferred compensation plan 22,013
- ---------------------------------------------------------------------
Forward currency contracts 70,412
- ---------------------------------------------------------------------
Accrued advisory fees 49,252
- ---------------------------------------------------------------------
Accrued directors' fees 183
- ---------------------------------------------------------------------
Accrued operating expenses 30,895
- ---------------------------------------------------------------------
Total liabilities 258,991
- ---------------------------------------------------------------------
Net assets applicable to shares outstanding $96,445,353
- ---------------------------------------------------------------------
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ---------------------------------------------------------------------
Outstanding 8,818,969
- ---------------------------------------------------------------------
Net asset value, offering and redemption price per share $ 10.94
=====================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
INVESTMENT INCOME:
Interest $ 7,419,812
- -------------------------------------------------------------------------------
Dividends 81,920
- -------------------------------------------------------------------------------
Total investment income 7,501,732
- -------------------------------------------------------------------------------
EXPENSES:
Advisory fees 580,119
- -------------------------------------------------------------------------------
Administrative services fees 47,472
- -------------------------------------------------------------------------------
Custodian fees 37,018
- -------------------------------------------------------------------------------
Directors' fees and expenses 8,887
- -------------------------------------------------------------------------------
Other 67,596
- -------------------------------------------------------------------------------
Total expenses 741,092
- -------------------------------------------------------------------------------
Less: Expenses paid directly (615)
- -------------------------------------------------------------------------------
Net expenses 740,477
- -------------------------------------------------------------------------------
Net investment income 6,761,255
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (1,271,441)
- -------------------------------------------------------------------------------
Foreign currencies (10,161)
- -------------------------------------------------------------------------------
Forward currency contracts 396,825
- -------------------------------------------------------------------------------
(884,777)
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities (2,232,376)
- -------------------------------------------------------------------------------
Foreign currencies 19,348
- -------------------------------------------------------------------------------
Forward currency contracts (373,121)
- -------------------------------------------------------------------------------
(2,586,149)
- -------------------------------------------------------------------------------
Net gain (loss) on investment securities, foreign currencies and
forward currency contracts (3,470,926)
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 3,290,329
===============================================================================
See Notes to Financial Statements.
AIM V.I. DIVERSIFIED INCOME FUND
FS-52
283
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
1998 1997
----------- -----------
OPERATIONS:
Net investment income $ 6,761,255 $ 5,150,458
- -----------------------------------------------------------------------------
Net realized gain (loss) from investment
securities, foreign currencies and forward
currency contracts (884,777) 1,075,468
- -----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities, foreign currencies and
forward currency contracts (2,586,149) 695,704
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 3,290,329 6,921,630
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment
income (4,724,444) (77,788)
- -----------------------------------------------------------------------------
Distributions to shareholders from net realized
gains (1,507,363) --
- -----------------------------------------------------------------------------
Net increase from capital stock transactions 10,068,179 18,851,039
- -----------------------------------------------------------------------------
Net increase in net assets 7,126,701 25,694,881
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of year 89,318,652 63,623,771
- -----------------------------------------------------------------------------
End of year $96,445,353 $89,318,652
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $90,723,425 $80,655,246
- -----------------------------------------------------------------------------
Undistributed net investment income 5,805,150 4,195,077
- -----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
forward currency contracts (311,599) 1,653,803
- -----------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and forward currency contracts 228,377 2,814,526
- -----------------------------------------------------------------------------
$96,445,353 $89,318,652
=============================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Diversified Income Fund (the "Fund"). The Fund's investment
objective is to seek to achieve a high level of current income. The Fund will
seek to achieve its objective by investing primarily in a diversified
portfolio of foreign and U.S. government and corporate debt securities,
including lower rated high yield debt securities (commonly known as "junk
bonds"). These high yield bonds may involve special risks in addition to the
risks associated with investment in higher rated debt securities. High yield
bonds may be more susceptible to real or perceived adverse economic and
competitive industry conditions than higher grade bonds. Also, the secondary
market in which high yield bonds are traded may be less liquid than the market
for higher grade bonds. Currently, shares of the Fund are sold only to
insurance company separate accounts to fund the benefits of variable annuity
contracts and variable life insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations--Debt obligations are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as institution-size trading in similar
groups of securities, developments related to special securities, yield,
quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Investment securities for which
prices are not provided by the pricing service and which are listed or
traded on an exchange are valued at the last sales price on the exchange
where the security is principally traded or, lacking any sales on a
particular day, at the mean between the closing bid and asked prices on
that day unless the Board of Directors, or persons designated by the Board
of Directors, determines that the over-the-counter quotations more closely
reflect the current market value of the security. Securities traded in the
over-the-counter market, except (i) securities priced by the pricing
service, (ii) securities for which representative exchange prices are
available, and (iii) securities reported in the NASDAQ National Market
System, are valued at the mean between representative last bid and asked
prices obtained from
AIM V.I. DIVERSIFIED INCOME FUND
FS-53
284
an electronic quotation reporting system, if such prices are available, or
from established market makers. Each security reported in the NASDAQ National
Market System is valued at the last sales price on the valuation date or
absent a last sales price, at the mean of the closing bid and asked prices.
Securities for which market quotations are either not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Fund's officers in accordance with methods which
are specifically authorized by the Board of Directors. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. Generally, trading in foreign securities as well
as corporate bonds and U.S. Government securities is substantially completed
each day at various times prior to the close of the New York Stock Exchange.
The values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York Stock
Exchange. Occasionally, events affecting the values of such securities and
such exchange rates may occur between the times at which they are determined
and the close of the New York Stock Exchange which will not be reflected in
the computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value as determined in good faith by or under
the supervision of the Board of Directors.
B. Foreign Currency Translation - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollars at date of valuation. Purchases and sales of portfolio securities
and income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
C. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a currency contract for
the amount of a purchase or sale of a security denominated in a foreign
currency in order to "lock-in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
Outstanding forward currency contracts at December 31, 1998 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT ------------------------- APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- ---------- ---------- ----------- ----------- --------------
02/04/99 CAD 5,000,000 $ 3,281,529 $ 3,267,875 $ 13,654
01/15/99 DEM 2,700,000 1,655,660 1,621,505 34,155
01/15/99 DEM 500,000 296,384 300,279 (3,895)
02/26/99 DEM 3,800,000 2,238,850 2,286,929 (48,079)
01/14/99 GBP 1,250,000 2,107,175 2,074,708 32,467
02/26/99 GBP 2,000,000 3,298,740 3,307,651 (8,911)
01/13/99 NZD 1,900,000 989,425 998,952 (9,527)
02/04/99 NZD 2,500,000 1,329,050 1,314,275 14,775
02/26/99 NZD 1,800,000 959,310 946,223 13,087
01/29/99 SEK 20,500,000 2,626,353 2,528,001 98,352
----------- ----------- --------
$18,782,476 $18,646,398 $136,078
=========== =========== ========
D. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Dividend income and distributions to shareholders are recorded on
the ex-dividend date. It is the policy of the Fund not to amortize premiums
on bonds for financial reporting purposes. Realized gains or losses from
securities transactions are recorded on the identified cost basis. On
December 31, 1998 undistributed net investment income was decreased by
$426,738 and undistributed net realized gains was increased by $426,738 in
order to comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2. Net assets of the
Fund were unaffected by the reclassifications discussed above.
E. Federal Income Taxes - For federal income tax purposes, each portfolio in
the Company is taxed as a separate entity. It is the Fund's policy to
continue to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income and capital gains to its shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
The Fund had capital loss carryforwards (which may be carried forward to
offset future taxable capital gains, if any) of $299,947, which expires, if
not previously utilized, through the year 2006. The Fund cannot distribute
capital gains to shareholders until the tax loss carryforwards have been
utilized.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.60% of
the first $250 million of the Fund's average daily net assets, plus 0.55% of
such Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the year ended December 31, 1998,
AIM was reimbursed $47,472 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the year ended December 31, 1998, the Fund incurred legal fees of
$3,617 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $615 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $615 during the year ended December
31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who
is not an "interested person" of AIM. The Company may invest directors' fees,
if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
AIM V.I. DIVERSIFIED INCOME FUND
FS-54
285
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
1998 was $55,546,371 and $46,737,685, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $ 4,188,413
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (4,102,440)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 85,973
==========================================================================
Investments have the same cost for tax and financial statement purposes.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1998
and 1997 were as follows:
1998 1997
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold 2,291,048 $ 26,553,679 2,860,755 $ 30,505,544
- ------------------------------------------------------------------------------
Issued as reinvestment of
distributions 569,635 6,231,807 6,908 77,788
- ------------------------------------------------------------------------------
Reacquired (1,956,150) (22,717,307) (1,114,698) (11,732,293)
- ------------------------------------------------------------------------------
904,533 $ 10,068,179 1,752,965 $ 18,851,039
==============================================================================
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during each of the years in the three-year period ended December 31, 1998, the
eleven months ended December 31, 1995, the year ended January 31, 1995 and the
period May 5, 1993 (date operations commenced) through January 31, 1994.
DECEMBER 31, JANUARY 31,
------------------------------------- -------------------
1998 1997 1996 1995 1995 1994
------- ------- ------- ------- ------- -------
Net asset value,
beginning of period $ 11.29 $ 10.33 $ 10.00 $ 9.12 $ 10.46 $ 10.00
- -----------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.75 0.73 0.73 0.69 0.76 0.54
- -----------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (0.35) 0.24 0.28 0.94 (1.42) 0.29
- -----------------------------------------------------------------------------------------------
Total from investment
operations 0.40 0.97 1.01 1.63 (0.66) 0.83
- -----------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income (0.57) (0.01) (0.68) (0.75) (0.68) (0.35)
- -----------------------------------------------------------------------------------------------
Distributions from net
realized capital gains (0.18) -- -- -- -- (0.02)
- -----------------------------------------------------------------------------------------------
Total distributions (0.75) (0.01) (0.68) (0.75) (0.68) (0.37)
- -----------------------------------------------------------------------------------------------
Net asset value, end of
period $ 10.94 $ 11.29 $ 10.33 $ 10.00 $ 9.12 $ 10.46
===============================================================================================
Total return(a) 3.58% 9.39% 10.19% 18.11% (6.35)% 8.33%
===============================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $96,445 $89,319 $63,624 $44,630 $25,271 $14,530
===============================================================================================
Ratio of expenses to
average net assets 0.77%(b) 0.80% 0.86% 0.88%(c) 0.91%(d) 1.05%(c)(d)
===============================================================================================
Ratio of net investment
income to average net
assets 6.99%(b) 6.90% 7.09% 7.65%(c) 8.07%(e) 6.78%(c)(e)
===============================================================================================
Portfolio turnover rate 50% 52% 76% 72% 100% 57%
===============================================================================================
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $96,686,554.
(c) Annualized.
(d) After fee waivers and/or expense reimbursement. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.03% and 1.69% (annualized) for January 31, 1995 and 1994, respectively.
(e) After fee waivers and/or expense reimbursement. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 7.95% and 6.14% (annualized) for January 31, 1995 and
1994, respectively.
AIM V.I. DIVERSIFIED INCOME FUND
FS-55
286
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Global Utilities Fund, a series of shares of common stock of AIM Variable
Insurance Funds, Inc. including the schedule of investments as of December 31,
1998, the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the three years in the period
then ended, the eleven month period ended December 31, 1995, and the period May
2, 1994 (commencement of operations) through January 31, 1995. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Global Utilities Fund, as of December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended, the eleven month period ended
December 31, 1995, and the period May 2, 1994 (commencement of operations)
through January 31, 1995 in conformity with generally accepted accounting
principles.
/s/ TAIT, WELLER & BAKER
--------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. GLOBAL UTILITIES FUND
FS-56
287
SCHEDULE OF INVESTMENTS
December 31, 1998
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS - 48.82%
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.54%
Univision Communications, Inc.(a) 4,200 $ 151,987
- ------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 2.97%
ANTEC Corp.(a) 4,000 80,500
- ------------------------------------------------------------------
Carrier Access Corp.(a) 4,300 148,081
- ------------------------------------------------------------------
Lucent Technologies, Inc. 4,500 495,000
- ------------------------------------------------------------------
Tellabs, Inc.(a) 1,600 109,700
- ------------------------------------------------------------------
833,281
- ------------------------------------------------------------------
ELECTRIC COMPANIES - 17.65%
Allegheny Energy, Inc. 7,300 251,850
- ------------------------------------------------------------------
BEC Energy 3,400 140,038
- ------------------------------------------------------------------
Carolina Power & Light Co. 4,400 207,075
- ------------------------------------------------------------------
Cinergy Corp. 5,100 175,313
- ------------------------------------------------------------------
CMS Energy Corp. 1,600 77,500
- ------------------------------------------------------------------
DQE, Inc. 7,000 307,562
- ------------------------------------------------------------------
Edison International 12,000 334,500
- ------------------------------------------------------------------
Energy East Corp. 6,000 339,000
- ------------------------------------------------------------------
FPL Group, Inc. 5,600 345,100
- ------------------------------------------------------------------
IPALCO Enterprises, Inc. 2,000 110,625
- ------------------------------------------------------------------
New Century Energies, Inc. 4,500 219,375
- ------------------------------------------------------------------
Niagara Mohawk Power Corp.(a) 14,800 238,650
- ------------------------------------------------------------------
NIPSCO Industries, Inc. 11,600 353,075
- ------------------------------------------------------------------
Pinnacle West Capital Corp. 10,800 457,650
- ------------------------------------------------------------------
Public Service Co. of New Mexico 9,800 200,287
- ------------------------------------------------------------------
Sierra Pacific Resources 3,700 140,600
- ------------------------------------------------------------------
Southern Co. 11,600 337,125
- ------------------------------------------------------------------
Teco Energy, Inc. 12,300 346,706
- ------------------------------------------------------------------
Texas Utilities Co. 5,240 244,643
- ------------------------------------------------------------------
Unicom Corp. 3,400 131,113
- ------------------------------------------------------------------
4,957,787
- ------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.43%
Quanta Services, Inc.(a) 5,500 121,344
- ------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 1.38%
Superior TeleCom, Inc. 5,325 251,606
- ------------------------------------------------------------------
USEC, Inc. 9,800 135,975
- ------------------------------------------------------------------
387,581
- ------------------------------------------------------------------
MARKET
SHARES VALUE
NATURAL GAS - 4.09%
Columbia Energy Group 2,700 $ 155,925
- -----------------------------------------------------------------------
Energen Corp. 2,800 54,600
- -----------------------------------------------------------------------
Enron Corp. 2,200 125,538
- -----------------------------------------------------------------------
KN Energy, Inc. 4,600 167,325
- -----------------------------------------------------------------------
Public Service Co. of North Carolina, Inc. 3,200 83,200
- -----------------------------------------------------------------------
Williams Companies, Inc. (The) 18,000 561,375
- -----------------------------------------------------------------------
1,147,963
- -----------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 1.07%
AES Corp.(a) 2,400 113,700
- -----------------------------------------------------------------------
CalEnergy Co., Inc.(a) 5,400 187,312
- -----------------------------------------------------------------------
301,012
- -----------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS - 1.33%
Alexandria Real Estate Equities, Inc. 4,700 145,406
- -----------------------------------------------------------------------
Boston Properties, Inc. 4,300 131,150
- -----------------------------------------------------------------------
Crescent Real Estate Equities, Co. 2,300 52,900
- -----------------------------------------------------------------------
Golf Trust of America, Inc. 1,600 44,400
- -----------------------------------------------------------------------
373,856
- -----------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.24%
Metzler Group, Inc.(a) 1,400 68,162
- -----------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 5.43%
AT&T Corp. 2,640 198,660
- -----------------------------------------------------------------------
Global TeleSystems Group, Inc.(a) 1,800 100,350
- -----------------------------------------------------------------------
IXC Communications, Inc.(a) 5,700 191,663
- -----------------------------------------------------------------------
MCI WorldCom, Inc.(a) 8,887 637,642
- -----------------------------------------------------------------------
Pacific Gateway Exchange, Inc.(a) 3,200 153,800
- -----------------------------------------------------------------------
WinStar Communications, Inc.(a) 6,275 244,725
- -----------------------------------------------------------------------
1,526,840
- -----------------------------------------------------------------------
TELEPHONE - 13.69%
Ameritech Corp. 10,400 659,100
- -----------------------------------------------------------------------
Bell Atlantic Corp. 3,600 204,525
- -----------------------------------------------------------------------
BellSouth Corp. 9,800 488,775
- -----------------------------------------------------------------------
Century Telephone Enterprises, Inc. 6,800 459,000
- -----------------------------------------------------------------------
Cincinnati Bell, Inc. 13,300 502,906
- -----------------------------------------------------------------------
GTE Corp. 3,200 215,800
- -----------------------------------------------------------------------
McLeodUSA, Inc. - Class A(a) 3,100 96,875
- -----------------------------------------------------------------------
NEXTLINK Communications, Inc. - Class A(a) 1,100 31,213
- -----------------------------------------------------------------------
Qwest Communications International, Inc.(a) 6,400 320,000
- -----------------------------------------------------------------------
SBC Communications, Inc. 13,200 707,850
- -----------------------------------------------------------------------
US West, Inc. 2,500 161,563
- -----------------------------------------------------------------------
3,847,607
- -----------------------------------------------------------------------
Total Domestic Common Stocks (Cost $8,478,351) 13,717,420
- -----------------------------------------------------------------------
AIM V.I. GLOBAL UTILITIES FUND
FS-57
288
MARKET
SHARES VALUE
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 1.50%
NATURAL GAS - 1.26%
El Paso Energy Cap Trust, Inc. - $2.375 Conv. Pfd. 6,700 $ 320,762
- ------------------------------------------------------------------------------
KN Energy, Inc. - $3.548 Conv. Pfd. 900 33,807
- ------------------------------------------------------------------------------
354,569
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.15%
WinStar Communications, Inc. - $3.50 Conv. Pfd. 900 41,400
- ------------------------------------------------------------------------------
TELEPHONE - 0.09%
NEXTLINK Communications, Inc. - $3.25 Conv. Pfd.(b)
(Acquired 03/26/98; Cost $30,000) 600 24,450
- ------------------------------------------------------------------------------
Total Domestic Convertible Preferred Stocks (Cost
$466,623) 420,419
- ------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS - 23.44%
AUSTRALIA - 0.24%
Telstra Corp. Ltd. (Telephone) 14,380 67,182
- ------------------------------------------------------------------------------
AUSTRIA - 0.53%
Oesterreichische Elektrizitaetswirtschafts A.G. -
Class A (Electric Companies) 970 148,277
- ------------------------------------------------------------------------------
BELGIUM - 0.62%
Electrabel S.A. (Electric Companies) 400 174,820
- ------------------------------------------------------------------------------
BERMUDA - 0.45%
Global Crossing Ltd. (Telecommunications - Long
Distance)(a) 2,800 126,351
- ------------------------------------------------------------------------------
CANADA - 1.84%
MetroNet Communications Corp. - Class B
(Telecommunications)(a) 2,700 90,450
- ------------------------------------------------------------------------------
Teleglobe, Inc. (Telecommunications - Long
Distance) 3,800 136,800
- ------------------------------------------------------------------------------
TELUS Corp. (Telecommunications - Cellular &
Wireless) 8,500 180,555
- ------------------------------------------------------------------------------
Westcoast Energy Inc. (Natural Gas) 5,500 109,313
- ------------------------------------------------------------------------------
517,118
- ------------------------------------------------------------------------------
DENMARK - 0.60%
Tele Danmark A.S. - ADR (Telephone) 2,500 169,688
- ------------------------------------------------------------------------------
FINLAND - 1.14%
Fortum Corp. (Electric Companies)(a) 6,300 38,320
- ------------------------------------------------------------------------------
Nokia Oyj A.B. - Class A - ADR (Communications
Equipment) 2,000 240,875
- ------------------------------------------------------------------------------
Sonera Group Oyj (Telecommunications -
Cellular/Wireless)(a)(b)
(Acquired 11/10/98; Cost $20,144) 2,300 40,617
- ------------------------------------------------------------------------------
319,812
- ------------------------------------------------------------------------------
MARKET
SHARES VALUE
FRANCE - 0.98%
France Telecom S.A. - ADR (Communications Equipment) 3,500 $ 276,281
- ----------------------------------------------------------------------------
GERMANY - 1.00%
RWE A.G. (Electric Companies) 2,425 132,790
- ----------------------------------------------------------------------------
Viag A.G. (Manufacturing - Diversified) 250 146,574
- ----------------------------------------------------------------------------
279,364
- ----------------------------------------------------------------------------
GREECE - 0.11%
Panafon Hellenic Telecom S.A. - GDR
(Telecommunications - Cellular/Wireless)(a)(b)
(Acquired 11/20/98; Cost $21,696) 1,200 31,800
- ----------------------------------------------------------------------------
HUNGARY - 0.33%
Magyar Tavkozlesi - ADR (Telecommunications - Long
Distance) 3,100 92,419
- ----------------------------------------------------------------------------
ITALY - 4.40%
AEM S.p.A. (Electric Companies)(a)(b)
(Acquired 07/17/98; Cost $52,035) 55,000 131,950
- ----------------------------------------------------------------------------
Societa Nordelettrica S.p.A. (Electric Companies) 49,000 216,730
- ----------------------------------------------------------------------------
Telecom Italia Mobile S.p.A. (Telecommunications -
Cellular/Wireless) 38,025 280,695
- ----------------------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 71,277 608,099
- ----------------------------------------------------------------------------
1,237,474
- ----------------------------------------------------------------------------
JAPAN - 0.42%
Nippon Telegraph & Telephone Corp.
(Telecommunications - Long Distance) 90 69,464
- ----------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. - ADR
(Telecommunications - Long Distance) 1,300 48,750
- ----------------------------------------------------------------------------
118,214
- ----------------------------------------------------------------------------
NETHERLANDS - 0.61%
Equant N.V. (Computers - Networking)(a) 900 61,032
- ----------------------------------------------------------------------------
Koninklijke KPN N.V. (Telecommunications - Long
Distance) 3 150
- ----------------------------------------------------------------------------
Royal PTT Nederland N.V. - ADR (Telephone) 24 1,206
- ----------------------------------------------------------------------------
TNT Post Group N.V. (Air Freight) 284 9,148
- ----------------------------------------------------------------------------
TNT Post Group N.V. - ADR (Air Freight) 3,046 98,985
- ----------------------------------------------------------------------------
170,521
- ----------------------------------------------------------------------------
PORTUGAL - 2.06%
Electricidade de Portugal, S.A. (Electric Companies) 2,900 63,906
- ----------------------------------------------------------------------------
Electricidade de Portugal, S.A. - ADR (Electric
Companies) 4,000 178,250
- ----------------------------------------------------------------------------
Portugal Telecom S.A. - ADR (Telephone) 5,700 254,363
- ----------------------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.
(Telecommunications - Cellular/Wireless) 200 40,919
- ----------------------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A. - ADR
(Telecommunications - Cellular/Wireless) 200 40,884
- ----------------------------------------------------------------------------
578,322
- ----------------------------------------------------------------------------
AIM V.I. GLOBAL UTILITIES FUND
FS-58
289
MARKET
SHARES VALUE
SPAIN - 2.81%
Autopistas Concesionaria Espanola S.A. (Services -
Commercial & Consumer) 3,900 $ 64,784
- ------------------------------------------------------------------------------
Iberdrola S.A. (Electric Companies) 21,000 392,447
- ------------------------------------------------------------------------------
Telefonica S.A. - ADR (Telephone) 2,448 331,398
- ------------------------------------------------------------------------------
788,629
- ------------------------------------------------------------------------------
SWITZERLAND - 0.75%
Swisscom A. G. (Telephone)(a) 500 209,364
- ------------------------------------------------------------------------------
UNITED KINGDOM - 4.55%
Hyder PLC (Water Utilities) 4,280 53,702
- ------------------------------------------------------------------------------
National Grid Group PLC (Electric Companies) 10,313 82,225
- ------------------------------------------------------------------------------
PowerGen PLC (Electric Companies) 31,485 413,366
- ------------------------------------------------------------------------------
PowerGen PLC - ADR (Electric Companies) 1,100 58,850
- ------------------------------------------------------------------------------
Scottish & Southern Energy PLC (Electric Companies) 9,706 109,203
- ------------------------------------------------------------------------------
Scottish Power PLC (Electric Companies) 15,950 163,682
- ------------------------------------------------------------------------------
United Utilities PLC (Water Utilities) 15,459 214,008
- ------------------------------------------------------------------------------
Yorkshire Water PLC (Water Utilities) 20,174 184,399
- ------------------------------------------------------------------------------
1,279,435
- ------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests (Cost
$4,201,239) 6,585,071
- ------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
DOMESTIC NON-CONVERTIBLE BONDS & NOTES - 9.99%
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.92%
Comcast Cable Communications, Unsec. Unsub. Notes,
6.20%, 11/15/08 $ 150,000 152,997
- ------------------------------------------------------------------------------
Comcast Corp., Sr. Sub. Deb., 9.50%, 01/15/08 100,000 105,750
- ------------------------------------------------------------------------------
258,747
- ------------------------------------------------------------------------------
CONSUMER FINANCE - 0.30%
GMAC, Notes, 9.00%, 10/15/02 75,000 83,698
- ------------------------------------------------------------------------------
ELECTRIC COMPANIES - 2.28%
Commonwealth Edison Co., First Mortgage Notes, 7.50%,
07/01/13 130,000 146,998
- ------------------------------------------------------------------------------
El Paso Electric Co., Sec. First Mortgage Bonds
Series D, 8.90%, 02/01/06 75,000 84,488
- ------------------------------------------------------------------------------
Series E, 9.40%, 05/01/11 100,000 113,557
- ------------------------------------------------------------------------------
Niagara Mohawk Power Corp., Series G Sr. Unsec. Notes,
7.75%, 10/01/08 100,000 109,310
- ------------------------------------------------------------------------------
Western Resources, Inc.
Sr. Unsec. Notes, 6.25%, 08/15/03 75,000 76,482
- ------------------------------------------------------------------------------
Sr. Notes, 7.125%, 08/15/09 100,000 108,860
- ------------------------------------------------------------------------------
639,695
- ------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
ENTERTAINMENT - 1.06%
Time Warner, Inc.
Deb., 9.125%, 01/15/13 $ 175,000 $ 220,082
- ----------------------------------------------------------------------------
Unsec. Deb., 6.85%, 01/15/26 75,000 78,903
- ----------------------------------------------------------------------------
298,985
- ----------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.38%
California Energy Co., Notes, 10.25%, 01/15/04 100,000 105,620
- ----------------------------------------------------------------------------
NATURAL GAS - 1.73%
Dynegy Inc., Sr. Unsec. Deb., 7.125%, 05/15/18 100,000 98,671
- ----------------------------------------------------------------------------
Ferrellgas Partners, Series B Sr. Sec. Gtd. Notes,
9.375%, 06/15/06 75,000 75,376
- ----------------------------------------------------------------------------
KN Energy, Inc., Unsec. Deb., 7.35%, 08/01/26 250,000 263,787
- ----------------------------------------------------------------------------
PanEnergy Corp., Notes, 7.875%, 08/15/04 45,000 49,408
- ----------------------------------------------------------------------------
487,242
- ----------------------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION) - 0.37%
Tennessee Gas Pipeline Co., Bonds,
7.00%, 03/15/27 100,000 104,712
- ----------------------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT) - 1.41%
AES Corp.
Sr. Sub. Notes, 10.25%, 07/15/06 75,000 81,188
- ----------------------------------------------------------------------------
Sr. Notes, 8.00%, 12/31/08 100,000 99,671
- ----------------------------------------------------------------------------
Arizona Public Service Co., Deb., 8.00%, 12/30/15 75,000 86,266
- ----------------------------------------------------------------------------
Indiana Michigan Power, Sec. Lease Obligation Bonds,
9.82%, 12/07/22 93,405 126,767
- ----------------------------------------------------------------------------
393,892
- ----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 1.54%
AT&T Corp., Sr. Notes, 7.75%, 03/01/07 150,000 173,046
- ----------------------------------------------------------------------------
Sprint Capital Corp., Sr. Unsec. Notes, 6.875%,
11/15/28 250,000 260,540
- ----------------------------------------------------------------------------
433,586
- ----------------------------------------------------------------------------
Total Domestic Non-Convertible Bonds & Notes (Cost
$2,666,053) 2,806,177
- ----------------------------------------------------------------------------
DOMESTIC CONVERTIBLE BONDS - 2.12%
COMPUTERS (HARDWARE) - 1.32%
Candescent Technology Corp., Conv. Sr. Sub.(b) Deb.,
7.00%, 05/01/03 (Acquired 04/17/98-11/09/98; Cost
$396,154) 412,000 370,800
- ----------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.80%
Global Telesystems Group, Sr. Sub. Notes, 8.75%,
06/30/00 80,000 225,400
- ----------------------------------------------------------------------------
Total Domestic Convertible Bonds (Cost $539,616) 596,200
- ----------------------------------------------------------------------------
AIM V.I. GLOBAL UTILITIES FUND
FS-59
290
PRINCIPAL MARKET
AMOUNT VALUE
FOREIGN NON-CONVERTIBLE BONDS & NOTES - 1.91%(c)
CANADA - 1.91%
Bell Canada (Telecommunications -Cellular/Wireless)
Unsec. Deb., 10.875%, 10/11/04 CAD $ 50,000 $ 41,386
- ---------------------------------------------------------------------------
Series EW Deb., 8.80%, 08/17/05 50,000 38,846
- ---------------------------------------------------------------------------
Canadian Oil Debco Inc.
(Oil & Gas - Exploration & Production),
Deb., 11.00%, 10/31/00 100,000 71,111
- ---------------------------------------------------------------------------
Ontario Hydro (Electric Companies),
Sr. Unsec. Notes, 9.00%, 06/24/02 200,000 147,456
- ---------------------------------------------------------------------------
Teleglobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 100,000 73,064
- ---------------------------------------------------------------------------
Trans-Canada Pipelines (Natural Gas)
Unsec. Notes, 8.55%, 02/01/06 70,000 53,341
- ---------------------------------------------------------------------------
Series Q Deb., 10.625%, 10/20/09 125,000 112,603
- ---------------------------------------------------------------------------
Total Foreign Non-Convertible Bonds & Notes (Cost
$554,253) 537,807
- ---------------------------------------------------------------------------
FOREIGN CONVERTIBLE BONDS - 2.18%(c)
FRANCE - 0.41%
France Telecom (Telephone), Conv. Bonds,
2.00%, 01/01/04 FRF 603,520 114,856
- ---------------------------------------------------------------------------
UNITED KINGDOM - 1.77%
National Grid Co. PLC, (Electric Companies), Bonds,
4.25%, 02/17/08 GBP 240,000 498,569
- ---------------------------------------------------------------------------
Total Foreign Convertible Bonds (Cost $504,277) 613,425
- ---------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 1.17%
U.S. TREASURY BONDS - 0.61%
7.625%, 02/15/25 130,000 171,000
- ---------------------------------------------------------------------------
U.S. TREASURY NOTES - 0.56%
6.625%, 06/30/01 150,000 157,114
- ---------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost $292,052) 328,114
- ---------------------------------------------------------------------------
REPURCHASE AGREEMENT - 8.51%(d)
Goldman, Sachs & Co., 4.40%, 01/04/99
(Cost $2,391,815)(e) 2,391,815 2,391,815
- ---------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES - 99.64% 27,996,448
- ---------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.36% 137,180
- ---------------------------------------------------------------------------
NET ASSETS - 100.00% $28,133,628
===========================================================================
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with provisions of Rule 144A under the Securities Act of 1933,
as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
market value of these securities at 12/31/98 was $599,617 which
represented 2.13% of the Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(d) 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 agreements. The collateral is
marked to market daily to ensure its market value is at least 102% of the
sales price of the repurchase agreement. The investments in some
repurchase agreements are through participation in joint accounts with
other mutual funds, private accounts, and certain non-registered
investment companies managed by the investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$700,342,222. Collateralized by $646,494,000 U.S. Government obligations,
0% to 11.75% due 02/15/99 to 04/15/28 with an aggregate market value at
12/31/98 at $714,694,897.
Abbreviations:
ADR - American Depositary Receipt
CAD - Canadian Dollars
Conv. - Convertible
Deb. - Debentures
FRF - French Francs
GBP - British Pound Sterling
GDR - Global Depositary Receipt
Gtd. - Guaranteed
Pfd. - Preferred
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
FS-60
291
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, at market value (cost $20,094,279) $27,996,448
- ---------------------------------------------------------------------
Foreign currencies, at value (cost $421) 423
- ---------------------------------------------------------------------
Receivables for:
Capital stock sold 35,150
- ---------------------------------------------------------------------
Dividends and interest 124,164
- ---------------------------------------------------------------------
Investment for deferred compensation plan 18,328
- ---------------------------------------------------------------------
Total assets 28,174,513
- ---------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 103
- ---------------------------------------------------------------------
Deferred compensation plan 18,328
- ---------------------------------------------------------------------
Accrued advisory fees 14,982
- ---------------------------------------------------------------------
Accrued directors' fees 175
- ---------------------------------------------------------------------
Accrued operating expenses 7,297
- ---------------------------------------------------------------------
Total liabilities 40,885
- ---------------------------------------------------------------------
Net assets applicable to shares outstanding $28,133,628
- ---------------------------------------------------------------------
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ---------------------------------------------------------------------
Outstanding 1,620,177
- ---------------------------------------------------------------------
Net asset value, offering and redemption price per share $17.36
=====================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends (net of $24,555 foreign withholding tax) $ 488,969
- ---------------------------------------------------------------------------
Interest 396,662
- ---------------------------------------------------------------------------
Total investment income 885,631
- ---------------------------------------------------------------------------
EXPENSES:
Advisory fees 161,488
- ---------------------------------------------------------------------------
Administrative services fees 46,855
- ---------------------------------------------------------------------------
Custodian fees 22,823
- ---------------------------------------------------------------------------
Directors' fees and expenses 8,926
- ---------------------------------------------------------------------------
Professional fees 20,541
- ---------------------------------------------------------------------------
Other 14,694
- ---------------------------------------------------------------------------
Total expenses 275,327
- ---------------------------------------------------------------------------
Less: Expenses paid indirectly (276)
- ---------------------------------------------------------------------------
Net expenses 275,051
- ---------------------------------------------------------------------------
Net investment income 610,580
- ---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities (179,826)
- ---------------------------------------------------------------------------
Foreign currencies 8,019
- ---------------------------------------------------------------------------
Futures contracts 110,924
- ---------------------------------------------------------------------------
Option contracts 921
- ---------------------------------------------------------------------------
(59,962)
- ---------------------------------------------------------------------------
Net unrealized appreciation of:
Investment securities 3,278,067
- ---------------------------------------------------------------------------
Foreign currencies 587
- ---------------------------------------------------------------------------
3,278,654
- ---------------------------------------------------------------------------
Net gain on investment securities, foreign currencies, futures
and option contracts 3,218,692
- ---------------------------------------------------------------------------
Net increase in net assets resulting from operations $3,829,272
===========================================================================
See Notes to Financial Statements.
AIM V.I. GLOBAL UTILITIES FUND
FS-61
292
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
1998 1997
----------- -----------
OPERATIONS:
Net investment income $ 610,580 $ 458,649
- --------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies, futures and option contracts (59,962) 176,145
- --------------------------------------------------------------------------------
Net unrealized appreciation of investment securities
and foreign currencies 3,278,654 2,779,707
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations 3,829,272 3,414,501
- --------------------------------------------------------------------------------
Dividends to shareholders from net investment income (450,038) --
- --------------------------------------------------------------------------------
Distributions from net realized gains (187,121) (6,795)
- --------------------------------------------------------------------------------
Net increase from capital stock transactions 2,862,654 5,095,582
- --------------------------------------------------------------------------------
Net increase in net assets 6,054,767 8,503,288
- --------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 22,078,861 13,575,573
- --------------------------------------------------------------------------------
End of year $28,133,628 $22,078,861
================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $19,698,693 $16,836,039
- --------------------------------------------------------------------------------
Undistributed net investment income 608,138 439,576
- --------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities, foreign currencies, futures
and option contracts (75,451) 179,652
- --------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and option contracts 7,902,248 4,623,594
- --------------------------------------------------------------------------------
$28,133,628 $22,078,861
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Global Utilities Fund (the "Fund"). The Fund's investment
objective is to achieve a high level of current income, and as a secondary
objective the Fund seeks to achieve capital appreciation, by investing
primarily in the common and preferred stocks of public utility companies
(either domestic or foreign). Currently, shares of the Fund are sold only to
insurance company separate accounts to fund the benefits of variable annuity
contracts and variable life insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. If a mean is
not available, as is the case in some foreign markets, the closing bid will
be used absent a last sales price. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or, absent a last sales price, at the mean of the closing bid and
asked prices. Debt obligations (including convertible bonds) are valued on
the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued at
the mean between last bid and asked prices based upon quotes furnished by
independent sources. Securities for which market quotations either are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Company's
officers in a manner specifically authorized by the Board of Directors.
Short-term obligations having
AIM V.I. GLOBAL UTILITIES FUND
FS-62
293
60 days or less to maturity are valued at amortized cost which approximates
market value. Generally, trading in foreign securities is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the New
York Stock Exchange. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which they
are determined and the close of the New York Stock Exchange which will not be
reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair value as determined in
good faith by or under the supervision of the Board of Directors.
B. Securities Transactions, Investment Income and Distributions -Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Realized gains or losses from securities transactions
are recorded on the identified cost basis. On December 31, 1998,
undistributed net realized gain (loss) was decreased and undistributed net
investment income was increased by $8,020 in order to comply with the
requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements. The Fund had capital
loss carryforwards (which may be carried forward to offset future taxable
capital gains, if any) of $50,716, which expires, if not previously
utilized, through the year 2006. The Fund cannot distribute capital gains
to shareholders until the tax loss carryforwards have been utilized.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollars at date of valuation. Purchases and sales of portfolio securities
and income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the amount of a purchase or sale of a security denominated in
a foreign currency in order to "lock-in" the U.S. dollar price of that
security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value
of the foreign currency changes unfavorably.
G. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
H. Put options - The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
options' underlying instrument at a fixed strike price. In return for this
right, a Fund pays an option premium. The option's underlying instrument
may be a security, or a futures contract. Put options may be used by a Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a
AIM V.I. GLOBAL UTILITIES FUND
FS-63
294
portion of the Fund's resulting losses. At the same time, because the maximum
the Fund has at risk is the cost of the option, purchasing put options does
not eliminate the potential for the Fund to profit from an increase in the
value of the securities hedged.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the year ended December 31, 1998,
AIM was reimbursed $46,855 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the year ended December 31, 1998, the Fund incurred legal fees of
$3,476 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $276 under an expense offset
arrangement. The effect of this arrangement resulted in a reduction of the
Fund's total expenses of $276 during the year ended December 31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
1998 was $10,839,264 and $6,928,632, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $8,036,931
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (134,773)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $7,902,158
=========================================================================
Cost of investments for tax purposes is $20,094,290.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1998
and 1997 were as follows:
1998 1997
-------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-------- ---------- -------- -----------
Sold 516,028 $8,375,181 505,614 $ 6,971,987
- -----------------------------------------------------------------------
Issued as reinvestment of
distributions 37,858 637,159 459 6,795
- -----------------------------------------------------------------------
Reacquired (380,439) (6,149,686) (140,799) (1,883,200)
- -----------------------------------------------------------------------
173,447 $2,862,654 365,274 $ 5,095,582
=======================================================================
NOTE 7 - OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended December 31, 1998
are summarized as follows:
OPTION CONTRACTS
------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
----------------
Beginning of period -- $ --
- ---------------------------------------
Written 14,000 921
- ---------------------------------------
Closed (14,000) (921)
- ---------------------------------------
Expired -- --
- ---------------------------------------
End of period -- $ --
=======================================
AIM V.I. GLOBAL UTILITIES FUND
FS-64
295
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during each of the years in the three-year period ended December 31, 1998, the
eleven months ended December 31, 1995 and the period May 2, 1994 (date
operations commenced) through January 31, 1995.
DECEMBER 31,
--------------------------------------- JANUARY 31,
1998 1997 1996 1995 1995
------- ------- ------- ------ -----------
Net asset value,
beginning of period $ 15.26 $ 12.55 $11.64 $9.69 $10.00
- ---------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.35 0.32 0.40 0.29 0.27
- ---------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 2.15 2.40 0.99 1.98 (0.33)
- ---------------------------------------------------------------------------------------
Total from investment
operations 2.50 2.72 1.39 2.27 (0.06)
- ---------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income (0.28) -- (0.41) (0.31) (0.25)
- ---------------------------------------------------------------------------------------
Distributions from net
realized gains (0.12) (0.01) (0.07) (0.01) --
- ---------------------------------------------------------------------------------------
Total distributions (0.40) (0.01) (0.48) (0.32) (0.25)
- ---------------------------------------------------------------------------------------
Net asset value, end of
period $ 17.36 $ 15.26 $12.55 $11.64 $ 9.69
=======================================================================================
Total return(a) 16.49% 21.63% 12.07% 23.73% (0.56)%
=======================================================================================
Ratios/supplemental data:
Net assets, end of
period (000s omitted) $28,134 $22,079 $13,576 $8,394 $2,958
=======================================================================================
Ratio of expenses to
average net assets 1.11%(b) 1.28% 1.40%(c) 1.47%(c)(d) 1.31%(d)(e)
=======================================================================================
Ratio of net investment
income to average net
assets 2.46%(b) 2.81% 3.56%(c) 3.76%(c)(d) 4.39%(d)(e)
=======================================================================================
Portfolio turnover rate 32% 28% 47% 58% 69%
=======================================================================================
(a) Totals returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $24,844,324.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses and
net investment income to average net assets prior to fee waivers and/or
expense reimbursements were 1.55%, 3.42% for 1996 and 2.44% (annualized)
and 2.79% (annualized) for 1995.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses and
net investment income to average net assets prior to fee waivers and/or
expense reimbursements were 2.80% (annualized) and 2.90% (annualized),
respectively.
AIM V.I. GLOBAL UTILITIES FUND
FS-65
296
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Government Securities Fund, a series of shares of common stock of AIM
Variable Insurance Funds, Inc. including the schedule of investments as of
December 31, 1998, the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended, the eleven month period ended December 31, 1995, the year
ended January 31, 1995, and the period May 5, 1993 (commencement of operations)
through January 31, 1994. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Government Securities Fund, as of December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended, the eleven month period ended
December 31, 1995, the year ended January 31, 1995 and the period May 5, 1993
(commencement of operations) through January 31, 1994 in conformity with
generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
--------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. GOVERNMENT SECURITIES FUND
FS-66
297
SCHEDULE OF INVESTMENTS
December 31, 1998
PRINCIPAL MARKET
AMOUNT VALUE
U.S. GOVERNMENT AGENCY SECURITIES - 101.99%
FEDERAL FARM CREDIT BANK - 3.88%
Medium term notes
5.96%, 07/14/03 $ 200,000 $ 206,830
- ---------------------------------------------------------------------------
5.80%, 06/17/05 1,000,000 1,030,620
- ---------------------------------------------------------------------------
6.22%, 06/17/08 1,000,000 1,020,460
- ---------------------------------------------------------------------------
2,257,910
- ---------------------------------------------------------------------------
FEDERAL HOME LOAN BANK - 4.15%
Debentures
8.375%, 10/25/99 150,000 154,281
- ---------------------------------------------------------------------------
6.00%, 06/27/00 250,000 253,985
- ---------------------------------------------------------------------------
5.97%, 12/11/00 1,000,000 1,019,900
- ---------------------------------------------------------------------------
7.31%, 07/06/01 500,000 528,280
- ---------------------------------------------------------------------------
8.17%, 12/16/04 400,000 459,712
- ---------------------------------------------------------------------------
2,416,158
- ---------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. ("FHLMC") - 20.98%
Debentures
6.13%, 08/19/99 150,000 151,287
- ---------------------------------------------------------------------------
Pass through certificates
6.00%, 11/01/08 to 08/01/10 692,788 699,280
- ---------------------------------------------------------------------------
6.50%, 12/01/08 to 01/14/29 8,612,043 8,695,795
- ---------------------------------------------------------------------------
7.00%, 11/01/10 to 01/01/26 1,316,740 1,350,198
- ---------------------------------------------------------------------------
10.50%, 08/01/19 175,967 193,618
- ---------------------------------------------------------------------------
8.50%, 08/01/24 to 12/01/26 1,064,597 1,118,576
- ---------------------------------------------------------------------------
12,208,754
- ---------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") - 35.73%
Debentures
4.696%, 06/02/99 500,000 499,600
- ---------------------------------------------------------------------------
8.25%, 12/18/00 500,000 531,060
- ---------------------------------------------------------------------------
7.50%, 02/01/02 1,350,000 1,445,756
- ---------------------------------------------------------------------------
7.55%, 04/22/02 400,000 430,612
- ---------------------------------------------------------------------------
8.50%, 02/01/05 500,000 516,845
- ---------------------------------------------------------------------------
5.75%, 06/15/05 500,000 513,945
- ---------------------------------------------------------------------------
Medium term notes
7.375%, 03/28/05 300,000 333,747
- ---------------------------------------------------------------------------
Pass through certificates
7.50%, 11/01/09 to 07/01/27 2,444,502 2,519,349
- ---------------------------------------------------------------------------
7.00%, 07/01/11 to 01/01/28 4,745,887 4,860,237
- ---------------------------------------------------------------------------
6.50%, 10/01/10 to 06/01/23(a)(b) 1,446,854 1,470,115
- ---------------------------------------------------------------------------
6.00%, 10/01/13 to 12/01/13 2,981,962 2,992,190
- ---------------------------------------------------------------------------
5.50%, 01/20/14(a)(b) 4,000,000 3,954,261
- ---------------------------------------------------------------------------
8.50%, 09/01/24 173,169 182,368
- ---------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") - CONTINUED
STRIPS(a)
7.37%, 10/09/19 $1,800,000 $ 538,218
- ---------------------------------------------------------------------------
20,788,303
- ---------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") - 31.68%
Pass through certificates
9.50%, 08/15/03 to 09/15/16 52,981 57,265
- ---------------------------------------------------------------------------
9.00%, 09/15/08 to 10/15/16 121,713 130,650
- ---------------------------------------------------------------------------
11.00%, 10/15/15 26,171 29,107
- ---------------------------------------------------------------------------
10.50%, 09/15/17 to 11/15/19 29,476 32,460
- ---------------------------------------------------------------------------
10.00%, 06/15/19 939,580 1,027,665
- ---------------------------------------------------------------------------
6.50%, 12/15/23 417,615 424,790
- ---------------------------------------------------------------------------
8.00%, 10/15/25 to 07/15/26 2,107,426 2,198,099
- ---------------------------------------------------------------------------
7.50%, 05/15/27 to 08/15/28 2,703,267 2,791,836
- ---------------------------------------------------------------------------
7.00%, 04/15/28 to 06/15/28 3,707,135 3,799,189
- ---------------------------------------------------------------------------
6.00%, 01/21/29(a)(b) 8,000,000 7,941,015
- ---------------------------------------------------------------------------
18,432,076
- ---------------------------------------------------------------------------
PRIVATE EXPORT FUNDING COMPANY - 0.55%
Debentures
7.30%, 01/31/02 300,000 318,633
- ---------------------------------------------------------------------------
STUDENT LOAN MARKETING ASSOCIATION - 1.39%
Debentures
4.838%, 02/22/99 500,000 499,900
- ---------------------------------------------------------------------------
5.55%, 12/15/99 150,000 151,125
- ---------------------------------------------------------------------------
6.50%, 08/01/02 150,000 157,262
- ---------------------------------------------------------------------------
808,287
- ---------------------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY - 3.63%
Debentures
6.375%, 06/15/05 2,000,000 2,114,460
- ---------------------------------------------------------------------------
Total U.S. Government Agency Securities
(Cost $58,447,599) 59,344,581
- ---------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 20.37%
U.S. TREASURY NOTES & BONDS - 18.75%
6.125%, 12/31/01 500,000 520,840
- ---------------------------------------------------------------------------
6.00%, 07/31/02 300,000 313,026
- ---------------------------------------------------------------------------
5.25%, 08/15/03 3,500,000 3,590,545
- ---------------------------------------------------------------------------
5.50%, 02/15/08 1,000,000 1,059,290
- ---------------------------------------------------------------------------
6.875%, 08/15/25 500,000 606,180
- ---------------------------------------------------------------------------
6.125%, 11/15/27 1,500,000 1,679,850
- ---------------------------------------------------------------------------
5.50%, 08/15/28 3,000,000 3,140,910
- ---------------------------------------------------------------------------
10,910,641
- ---------------------------------------------------------------------------
AIM V.I. GOVERNMENT SECURITIES FUND
FS-67
298
PRINCIPAL
AMOUNT MARKET VALUE
U.S. TREASURY STRIPS(c) - 1.62%
5.378%, 05/15/06 $ 750,000 $ 527,393
- -----------------------------------------------------------------------------
6.80%, 11/15/18 1,250,000 414,837
- -----------------------------------------------------------------------------
942,230
- -----------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $11,566,802) 11,852,871
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENT - 6.74%(d)
SBC Warburg Dillion Read , Inc., 4.75%,
01/04/99(e) (Cost $3,921,882) 3,921,882 3,921,882
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS - 129.10% 75,119,334
- -----------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (29.10%) (16,934,653)
- -----------------------------------------------------------------------------
NET ASSETS - 100.00% $ 58,184,681
=============================================================================
NOTES TO SCHEDULE OF INVESTMENTS:
(a) At 12/31/98, cost of securities purchased on a when-issued basis totaled
$15,929,375.
(b) These securities are subject to dollar roll transactions. See Note 1 of
Notes to Financial Statements.
(c) STRIPS are traded on a discount basis. In such cases the interest rate
shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75%, due 06/30/99 to 11/15/21 with an aggregate market
value at 12/31/98 of $1,020,001,079.
Abbreviation:
STRIPS - Separately Traded Registered Interest and Principal Security
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-68
299
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, at market value (cost $73,936,283) $ 75,119,334
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 37,061
- ----------------------------------------------------------------------
Interest 482,349
- ----------------------------------------------------------------------
Investment for deferred compensation plan 21,587
- ----------------------------------------------------------------------
Other assets 6,610
- ----------------------------------------------------------------------
Total assets 75,666,941
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 15,929,375
- ----------------------------------------------------------------------
Capital stock reacquired 1,479,184
- ----------------------------------------------------------------------
Deferred compensation plan 21,587
- ----------------------------------------------------------------------
Accrued advisory fees 24,918
- ----------------------------------------------------------------------
Accrued administrative services fees 2,655
- ----------------------------------------------------------------------
Accrued operating expenses 24,541
- ----------------------------------------------------------------------
Total liabilities 17,482,260
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $ 58,184,681
======================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 5,205,570
- ----------------------------------------------------------------------
Net asset value, offering and redemption price per share $11.18
======================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
INVESTMENT INCOME:
Interest $2,890,554
- --------------------------------------------------------------------
EXPENSES:
Advisory fees 221,956
- --------------------------------------------------------------------
Administrative services fees 43,129
- --------------------------------------------------------------------
Custodian fees 20,817
- --------------------------------------------------------------------
Directors' fees and expenses 8,172
- --------------------------------------------------------------------
Interest expense 20,591
- --------------------------------------------------------------------
Professional fees 27,641
- --------------------------------------------------------------------
Other 17,635
- --------------------------------------------------------------------
Total expenses 359,941
- --------------------------------------------------------------------
Net investment income 2,530,613
- --------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES:
Net realized gain from investment securities 241,993
- --------------------------------------------------------------------
Net unrealized appreciation of investment securities 445,919
- --------------------------------------------------------------------
Net gain on investment securities 687,912
- --------------------------------------------------------------------
Net increase in net assets resulting from operations $3,218,525
====================================================================
See Notes to Financial Statements.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-69
300
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
1998 1997
----------- -----------
OPERATIONS:
Net investment income $ 2,530,613 $ 1,620,458
- ------------------------------------------------------------------------------
Net realized gain (loss) from investment securities 241,993 (100,162)
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities 445,919 728,502
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 3,218,525 2,248,798
- ------------------------------------------------------------------------------
Dividends from net investment income (1,611,964) (15,600)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 22,778,324 7,040,082
- ------------------------------------------------------------------------------
Net increase in net assets 24,384,885 9,273,280
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 33,799,796 24,526,516
- ------------------------------------------------------------------------------
End of year $58,184,681 $33,799,796
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $54,757,995 $31,984,676
- ------------------------------------------------------------------------------
Undistributed net investment income 2,488,745 1,585,397
- ------------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities (245,110) (507,409)
- ------------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,183,051 737,132
- ------------------------------------------------------------------------------
$58,184,681 $33,799,796
==============================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Government Securities Fund (the "Fund"). The Fund's investment
objective is to achieve a high level of current income consistent with
reasonable concern for safety of principal by investing in debt securities
issued, guaranteed or otherwise backed by the United States Government.
Currently, shares of the Fund are sold only to insurance company separate
accounts to fund the benefits of variable annuity contracts and variable life
insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - Debt obligations that are issued or guaranteed by the
U.S. Government, its agencies, authorities, and instrumentalities are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate, maturity and seasoning differential.
Securities for which market prices are not provided by the pricing service
are valued at the mean between last bid and asked prices based upon quotes
furnished by independent sources. Securities for which market quotations
are either not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. The Fund may engage
in dollar roll transactions with respect to mortgage securities issued by
GNMA, FNMA and FHLMC. In a dollar roll transaction, the Fund sells a
mortgage security held in the portfolio to a financial institution such as
a bank or broker-dealer, and simultaneously agrees to repurchase a
substantially similar
AIM V.I. GOVERNMENT SECURITIES FUND
FS-70
301
security (same type, coupon and maturity) from the institution at a later
date at an agreed upon price. The mortgage securities that are repurchased
will bear the same interest rate as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories. During the period between the sale and repurchase, the Fund will
not be entitled to receive interest and principal payments on the securities
sold. Proceeds of the sale will be reinvested in short-term instruments, and
the income from these investments, together with any additional fee income
received on the sale, could generate income for the Fund exceeding the yield
on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the securities
that the Fund has sold but is obligated to repurchase under the agreement. In
the event the buyer of securities in a dollar roll transaction files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale
of the securities may be restricted pending a determination by the other
party, or its trustee or receiver, whether to enforce the Fund's obligation
to repurchase the securities.
Interest income is recorded as earned from settlement date and is recorded on
the accrual basis. Distributions to shareholders are recorded on the ex-
dividend date. Realized gains or losses from securities transactions are
recorded on the identified cost basis.
On December 31, 1998, undistributed net realized gain (loss) was increased
$20,306, undistributed net investment income was decreased $15,301 and paid
in capital was decreased $5,005 as a result of permanent book/tax difference
due to the differing book/tax treatment for principal paydown losses on
mortgage back securities. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Federal Income Taxes - For federal income tax purposes, each portfolio in
the Company is taxed as a separate entity. It is the Fund's policy to
continue to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income and capital gains to its shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
The Fund had capital loss carryforwards (which may be carried forward to
offset future taxable capital gains, if any) of $180,497, which expires, if
not previously utilized, through the year 2004. The Fund cannot distribute
capital gains to shareholders until the tax loss carryforwards have been
utilized.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master investment
advisory agreement, the Fund pays an advisory fee to AIM at an annual rate of
0.50% of the first $250 million of the Fund's average daily net assets, plus
0.45% of the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the year ended December 31, 1998,
AIM was reimbursed $43,129 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of the
Fund's shares.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the year ended December 31, 1998, the Fund incurred legal fees of
$3,499 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who
is not an "interested person" of AIM. The Company may invest a director's
fees, if so elected by such director, in mutual fund shares in accordance with
a deferred compensation plan.
NOTE 4 - BORROWINGS
Reverse repurchase agreements involve the sale of securities held by the
Fund, with an agreement that the Fund will repurchase such securities at an
agreed-upon price and date. Proceeds from reverse repurchase agreements are
treated as borrowings. The agreements are collateralized by the underlying
securities and are carried at the amount at which the securities will
subsequently be repurchased as specified in the agreements. The maximum amount
outstanding during the year ended December 31, 1998 was $3,683,750 while
borrowings averaged $940,485 per day with a weighted average interest rate of
2.19%. No borrowings existed at December 31, 1998.
The Fund will limit its borrowings from banks, reverse repurchase agreements
and dollar roll transactions to an aggregate of 33 1/3% of its total assets at
the time of investment. The Fund will not purchase additional securities when
any borrowings from banks exceed 5% of the Fund's total assets.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
1998 was $55,684,558 and $33,064,108, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $1,245,286
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (126,848)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $1,118,438
========================================================================-
Cost of investments for tax purposes is $74,000,896.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1998
and 1997 were as follows:
1998 1997
----------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- -----------
Sold 3,062,093 $34,224,621 1,272,288 $13,023,561
- ---------------------------------------------------------------------------
Issued as reinvestment of
dividends 144,183 1,611,964 1,468 15,600
- ---------------------------------------------------------------------------
Reacquired (1,168,506) (13,058,261) (591,274) (5,999,079)
- ---------------------------------------------------------------------------
2,037,770 $22,778,324 682,482 $ 7,040,082
===========================================================================
AIM V.I. GOVERNMENT SECURITIES FUND
FS-71
302
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during each of the years in the three-year period ended December 31, 1998, the
eleven months ended December 31, 1995, the year ended January 31, 1995 and the
period May 5, 1993 (date operations commenced) through January 31, 1994.
DECEMBER 31, JANUARY 31,
------------------------------------- -------------------
1998 1997 1996 1995 1995 1994
------- ------- ------- ------- ------- -------
Net asset value,
beginning of period $ 10.67 $ 9.87 $ 10.17 $ 9.39 $ 10.24 $ 10.00
- -----------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.63(a) 0.59 0.58 0.54 0.53 0.38
- -----------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 0.20 0.22 (0.35) 0.74 (0.88) 0.10
- -----------------------------------------------------------------------------------------------
Total from investment
operations 0.83 0.81 0.23 1.28 (0.35) 0.48
- -----------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income (0.32) (0.01) (0.53) (0.50) (0.50) (0.24)
- -----------------------------------------------------------------------------------------------
Net asset value, end of
period $ 11.18 $ 10.67 $ 9.87 $ 10.17 $ 9.39 $ 10.24
===============================================================================================
Total return(b) 7.73% 8.16% 2.29% 13.84% (3.42)% 4.78%
===============================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $58,185 $33,800 $24,527 $19,545 $12,887 $10,643
===============================================================================================
Ratio of expenses
(exclusive of interest
expense) to average net
assets 0.76%(c) 0.87% 0.91% 1.19%(d) 0.95%(e) 1.00%(d)(e)
===============================================================================================
Ratio of net investment
income to average net
assets 5.70%(c) 5.85% 5.80% 5.78%(d) 5.51%(f) 4.74%(d)(f)
===============================================================================================
Portfolio turnover rate 78% 66% 32% 41% 29% 0%
===============================================================================================
Borrowings for the
period:
Amount of debt
outstanding at end of
period (000s omitted) -- -- -- -- -- --
===============================================================================================
Average amount of debt
outstanding during the
period (000s omitted)(g) $ 940 -- -- -- -- --
===============================================================================================
Average number of shares
outstanding during the
period (000s omitted)(g) 3,992 -- -- -- -- --
===============================================================================================
Average amount of debt
per share during the
period $0.2355 -- -- -- -- --
===============================================================================================
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are based on average net assets of $44,391,219.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.10% and 1.80% (annualized) for January 1995 and 1994, respectively.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.35% and 3.94% (annualized) for January 1995 and
1994, respectively.
(g) Averages computed on a daily basis.
AIM V.I. GOVERNMENT SECURITIES FUND
FS-72
303
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM V.I.
Growth and Income Fund, a series of shares of common stock of AIM Variable
Insurance Funds, Inc. including the schedule of investments as of December 31,
1998, the related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended and
the financial highlights for each of the three years in the period then ended,
the eleven month period ended December 31, 1995 and the period May 2, 1994
(commencement of operations) through January 31, 1995. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Growth Fund and Income Fund, as of December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended, the eleven month period ended December
31, 1995, and the period May 2, 1994 (commencement of operations) through
January 31, 1995 in conformity with generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
--------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. GROWTH AND INCOME FUND
FS-73
304
SCHEDULE OF INVESTMENTS
December 31, 1998
MARKET
SHARES VALUE
COMMON STOCKS - 80.72%
AUTOMOBILES - 1.00%
Ford Motor Co. 215,000 $ 12,617,812
- ------------------------------------------------------------------
BANKS (MONEY CENTER) - 2.36%
BankAmerica Corp. 100,000 6,012,500
- ------------------------------------------------------------------
Chase Manhattan Corp. (The) 350,000 23,821,875
- ------------------------------------------------------------------
29,834,375
- ------------------------------------------------------------------
BROADCASTING (RADIO, TELEVISION & CABLE) - 1.32%
Comcast Corp. - Class A 175,000 10,270,313
- ------------------------------------------------------------------
Infinity Manhattan Corp. - Class A(a) 231,300 6,331,838
- ------------------------------------------------------------------
16,602,151
- ------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 1.22%
Monsanto Co. 325,000 15,437,500
- ------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.79%
Lucent Technologies, Inc. 90,000 9,900,000
- ------------------------------------------------------------------
COMPUTERS (HARDWARE) - 3.78%
Compaq Computer Corp.(b) 170,000 7,129,375
- ------------------------------------------------------------------
Dell Computer Corp.(a) 200,000 14,637,500
- ------------------------------------------------------------------
Hewlett-Packard 110,000 7,514,375
- ------------------------------------------------------------------
International Business Machines Corp. 65,000 12,008,750
- ------------------------------------------------------------------
Sun Microsystems, Inc.(a) 75,000 6,421,875
- ------------------------------------------------------------------
47,711,875
- ------------------------------------------------------------------
COMPUTERS (NETWORKING) - 2.00%
Ascend Communications, Inc.(a) 80,000 5,260,000
- ------------------------------------------------------------------
Cisco Systems, Inc.(a) 215,000 19,954,687
- ------------------------------------------------------------------
25,214,687
- ------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 5.01%
BMC Software, Inc.(a) 225,000 10,026,562
- ------------------------------------------------------------------
Computer Sciences Corp.(a) 100,000 6,443,750
- ------------------------------------------------------------------
Compuware Corp.(a)(b) 60,000 4,687,500
- ------------------------------------------------------------------
HBO & Co. 200,000 5,737,500
- ------------------------------------------------------------------
Microsoft Corp.(a) 210,000 29,124,375
- ------------------------------------------------------------------
Novell, Inc.(a) 400,000 7,250,000
- ------------------------------------------------------------------
63,269,687
- ------------------------------------------------------------------
CONSUMER FINANCE - 0.97%
MBNA Corp. 219,100 5,463,824
- ------------------------------------------------------------------
Providian Financial Corp. 90,000 6,750,000
- ------------------------------------------------------------------
12,213,824
- ------------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 0.91%
Bergen Brunswig Corp. - Class A 83,000 2,894,625
- ------------------------------------------------------------------
Cardinal Health, Inc. 112,500 8,535,937
- ------------------------------------------------------------------
11,430,562
- ------------------------------------------------------------------
MARKET
SHARES VALUE
ELECTRIC COMPANIES - 1.19%
Duke Power Co. 90,000 $ 5,765,625
- --------------------------------------------------------------------------
Edison International 200,000 5,575,000
- --------------------------------------------------------------------------
FPL Group, Inc. 60,000 3,697,500
- --------------------------------------------------------------------------
15,038,125
- --------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 3.51%
AMP, Inc. 150,000 7,809,375
- --------------------------------------------------------------------------
General Electric Co. 310,600 31,700,613
- --------------------------------------------------------------------------
Honeywell, Inc. 60,000 4,518,750
- --------------------------------------------------------------------------
Philips Electronics N.V. - New York Shares -ADR
(Netherlands) 3,800 257,213
- --------------------------------------------------------------------------
44,285,951
- --------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 0.66%
Intel Corp. 70,000 8,299,375
- --------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 7.64%
American Express Co. 125,000 12,781,250
- --------------------------------------------------------------------------
Associates First Capital Corp. - Class A 150,000 6,356,250
- --------------------------------------------------------------------------
Citigroup, Inc. 375,000 18,562,500
- --------------------------------------------------------------------------
Fannie Mae 210,000 15,540,000
- --------------------------------------------------------------------------
Freddie Mac 300,000 19,331,250
- --------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 130,000 9,230,000
- --------------------------------------------------------------------------
SunAmerica, Inc. 180,000 14,602,500
- --------------------------------------------------------------------------
96,403,750
- --------------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 4.10%
Abbott Laboratories 90,000 4,410,000
- --------------------------------------------------------------------------
American Home Products Corp. 100,000 5,631,250
- --------------------------------------------------------------------------
Bristol-Myers Squibb Co. 130,000 17,395,625
- --------------------------------------------------------------------------
Johnson & Johnson 75,000 6,290,625
- --------------------------------------------------------------------------
Warner-Lambert Co. 240,000 18,045,000
- --------------------------------------------------------------------------
51,772,500
- --------------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 6.62%
Lilly (Eli) & Co. 160,000 14,220,000
- --------------------------------------------------------------------------
Merck & Co., Inc. 130,000 19,199,375
- --------------------------------------------------------------------------
Pfizer, Inc. 260,000 32,613,750
- --------------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 310,000 17,553,750
- --------------------------------------------------------------------------
83,586,875
- --------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 3.34%
Allegiance Corp. 100,000 4,662,500
- --------------------------------------------------------------------------
Arterial Vascular Engineering, Inc.(a) 125,000 6,562,500
- --------------------------------------------------------------------------
Baxter International, Inc. 80,700 5,190,019
- --------------------------------------------------------------------------
Becton, Dickinson & Co. 120,000 5,122,500
- --------------------------------------------------------------------------
Boston Scientific Corp.(a) 266,500 7,145,531
- --------------------------------------------------------------------------
Guidant Corp. 65,000 7,166,250
- --------------------------------------------------------------------------
Medtronic, Inc. 85,000 6,311,250
- --------------------------------------------------------------------------
42,160,550
- --------------------------------------------------------------------------
AIM V.I. GROWTH AND INCOME FUND
FS-74
305
MARKET
SHARES VALUE
HEALTH CARE (SPECIALIZED SERVICES) - 0.76%
Omnicare, Inc. 275,000 $ 9,556,250
- ---------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 2.01%
Colgate-Palmolive Co. 125,000 11,609,375
- ---------------------------------------------------------------------------
Procter & Gamble Co. (The) 150,000 13,696,875
- ---------------------------------------------------------------------------
25,306,250
- ---------------------------------------------------------------------------
HOUSEWARES - 0.23%
Newell Co. 19,000 783,750
- ---------------------------------------------------------------------------
Rubbermaid, Inc. 65,000 2,043,438
- ---------------------------------------------------------------------------
2,827,188
- ---------------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 0.77%
American International Group, Inc. 100,000 9,662,500
- ---------------------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 0.38%
Allstate Corp. (The) 125,000 4,828,125
- ---------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.74%
Merrill Lynch & Co., Inc. 140,000 9,345,000
- ---------------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.35%
Franklin Resources, Inc. 140,000 4,480,000
- ---------------------------------------------------------------------------
LODGING-HOTELS - 0.90%
Carnival Corp. - Class A(b) 237,000 11,376,000
- ---------------------------------------------------------------------------
MACHINERY (DIVERSIFIED) - 0.32%
Ingersoll-Rand Co. 86,300 4,050,706
- ---------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 3.08%
Corning, Inc. 150,000 6,750,000
- ---------------------------------------------------------------------------
Tyco International Ltd. (Bermuda) 340,000 25,648,750
- ---------------------------------------------------------------------------
United Technologies Corp. 59,000 6,416,250
- ---------------------------------------------------------------------------
38,815,000
- ---------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.28%
Diebold, Inc. 100,000 3,568,750
- ---------------------------------------------------------------------------
NATURAL GAS - 1.47%
El Paso Natural Gas Co. 100,000 3,481,250
- ---------------------------------------------------------------------------
Enron Corp. 150,000 8,559,375
- ---------------------------------------------------------------------------
Williams Companies, Inc. (The) 210,000 6,549,375
- ---------------------------------------------------------------------------
18,590,000
- ---------------------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED) - 1.49%
Royal Dutch Petroleum Co. - New York Shares - ADR
(Netherlands) 260,000 12,447,500
- ---------------------------------------------------------------------------
Texaco, Inc. 120,000 6,345,000
- ---------------------------------------------------------------------------
18,792,500
- ---------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 1.88%
Baker Hughes, Inc. 375,000 6,632,812
- ---------------------------------------------------------------------------
Halliburton Co. 342,500 10,146,563
- ---------------------------------------------------------------------------
Schlumberger Ltd. 150,000 6,918,750
- ---------------------------------------------------------------------------
23,698,125
- ---------------------------------------------------------------------------
MARKET
SHARES VALUE
OIL & GAS (EXPLORATION & PRODUCTION) - 0.71%
Conoco, Inc.(a) 430,000 $ 8,976,250
- ----------------------------------------------------------------
PERSONAL CARE - 0.35%
Avon Products, Inc. 100,000 4,425,000
- ----------------------------------------------------------------
PHOTOGRAPHY/IMAGING - 0.84%
Xerox Corp. 90,000 10,620,000
- ----------------------------------------------------------------
PUBLISHING - 0.34%
Dow Jones & Co., Inc. 90,000 4,331,250
- ----------------------------------------------------------------
RAILROADS - 0.39%
Kansas City Southern Industries, Inc. 100,000 4,918,750
- ----------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.41%
Lowe's Companies, Inc. 100,000 5,118,750
- ----------------------------------------------------------------
RETAIL (DEPARTMENT STORES) - 1.35%
Federated Department Stores, Inc.(a) 100,000 4,356,250
- ----------------------------------------------------------------
J.C. Penney Co., Inc. 130,000 6,093,750
- ----------------------------------------------------------------
Saks, Inc.(a) 210,000 6,628,125
- ----------------------------------------------------------------
17,078,125
- ----------------------------------------------------------------
RETAIL (DISCOUNTERS) - 0.35%
Family Dollar Stores, Inc. 200,000 4,400,000
- ----------------------------------------------------------------
RETAIL (DRUG STORES) - 0.53%
Walgreen Co. 115,000 6,734,688
- ----------------------------------------------------------------
RETAIL (FOOD CHAINS) - 0.60%
Safeway, Inc.(a) 125,000 7,617,188
- ----------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 2.54%
Dayton Hudson Corp. 215,000 11,663,750
- ----------------------------------------------------------------
Wal-Mart Stores, Inc. 250,000 20,359,375
- ----------------------------------------------------------------
32,023,125
- ----------------------------------------------------------------
RETAIL (SPECIALTY) - 0.80%
Office Depot, Inc.(a) 171,400 6,331,088
- ----------------------------------------------------------------
Staples, Inc.(a) 85,091 3,717,411
- ----------------------------------------------------------------
10,048,499
- ----------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL) - 0.37%
TJX Companies, Inc. 160,000 4,640,000
- ----------------------------------------------------------------
SAVINGS & LOAN COMPANIES - 0.45%
Washington Mutual, Inc. 150,000 5,728,125
- ----------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.21%
Service Corp. International 70,000 2,664,375
- ----------------------------------------------------------------
SERVICES (DATA PROCESSING) - 0.62%
Equifax, Inc. 100,000 3,418,750
- ----------------------------------------------------------------
Fiserv, Inc.(a) 85,000 4,372,188
- ----------------------------------------------------------------
7,790,938
- ----------------------------------------------------------------
AIM V.I. GROWTH AND INCOME FUND
FS-75
306
MARKET
SHARES VALUE
TELECOMMUNICATIONS (LONG DISTANCE) - 2.27%
MCI WorldCom, Inc.(a) 400,000 $ 28,700,000
- ---------------------------------------------------------------------------
TELEPHONE - 3.65%
AT&T Corp. 63,100 4,779,825
- ---------------------------------------------------------------------------
Ameritech Corp. 135,000 8,555,625
- ---------------------------------------------------------------------------
BellSouth Corp. 280,000 13,965,000
- ---------------------------------------------------------------------------
GTE Corp. 100,000 6,743,750
- ---------------------------------------------------------------------------
SBC Communications, Inc. 225,000 12,065,625
- ---------------------------------------------------------------------------
46,109,825
- ---------------------------------------------------------------------------
TOBACCO - 2.86%
Philip Morris Companies, Inc. 675,000 36,112,500
- ---------------------------------------------------------------------------
Total Common Stocks (Cost $766,711,907) 1,018,713,381
- ---------------------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 6.07%
BROADCASTING (TELEVISION, RADIO & CABLE) - 2.07%
Chancellor Media Corp., $3.00 Conv. Pfd. 75,000 7,429,687
- ---------------------------------------------------------------------------
MediaOne Group, Inc., $3.63 Conv. Pfd. 125,000 8,312,500
- ---------------------------------------------------------------------------
MediaOne Group, Inc., $2.25 Series D Conv. Pfd. 110,000 10,450,000
- ---------------------------------------------------------------------------
26,192,187
- ---------------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 0.43%
Monsanto Co., $2.60 Conv. Pfd. 110,000 5,390,000
- ---------------------------------------------------------------------------
ELECTRIC COMPANIES - 1.06%
Houston Industries, Inc. - $3.22 Conv. Pfd. 125,500 13,350,063
- ---------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 0.56%
McKesson Financing Trust, $2.50 Conv. Pfd. 65,000 7,076,875
- ---------------------------------------------------------------------------
HOUSEWARES - 0.19%
Newell Financial Trust, Inc., $2.625 Conv. Pfd. 47,000 2,479,250
- ---------------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.42%
Conseco, Inc. - $4.278 Conv. PRIDES 50,000 5,275,000
- ---------------------------------------------------------------------------
LODGING - HOTELS - 0.52%
Royal Caribbean Cruises Ltd. - $3.63 Conv. Pfd. 56,000 6,636,000
- ---------------------------------------------------------------------------
RETAIL (DRUG STORES) - 0.48%
CVS Corp., $4.23 Conv. Pfd. 60,000 6,011,250
- ---------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.34%
Loral Space & Communications Ltd., $3.00 Conv. Pfd. 80,000 4,250,000
- ---------------------------------------------------------------------------
Total Domestic Convertible Preferred Stocks (Cost
$65,636,173) 76,660,625
- ---------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
CONVERTIBLE CORPORATE BONDS - 10.03%
AUTO PARTS & EQUIPMENT - 0.24%
Magna International, Inc., Conv. Sub. Deb., 4.875%,
02/15/05 $3,000,000 $ 3,086,250
- -------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.29%
Jacor Communications, Inc., Conv. Sr. LYON, 5.50%,
06/12/11(c) 4,000,000 3,590,000
- -------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.30%
Comverse Technology, Inc., Conv. Sub. Deb. 4.50%,
07/01/05(d) (Acquired 06/25/98; Cost $3,000,000) 3,000,000 3,795,000
- -------------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.43%
Candescent Technology Corp., Conv. Sr. Sub. Deb.,
7.00%, 05/01/03(d) (Acquired 04/17/98; Cost
$5,862,772) 6,000,000 5,400,000
- -------------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 1.35%
EMC Corp., Conv. Sub. Notes, 3.25%, 03/15/02 4,500,000 16,965,000
- -------------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 3.13%
America Online, Inc., Conv. Sub. Notes, 4.00%,
11/15/02 3,500,000 21,555,625
- -------------------------------------------------------------------------------
America Online, Inc., Conv. Sub. Notes, 4.00%,
11/15/02(d) (Acquired 02/10/98; Cost $2,499,041) 2,000,000 12,317,500
- -------------------------------------------------------------------------------
Veritas Software Corp., Conv. Unsec. Sub. Notes,
5.25%, 11/01/04 3,500,000 5,656,875
- -------------------------------------------------------------------------------
39,530,000
- -------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.57%
SCI Systems, Inc., Conv. Sub. Notes, 5.00%, 05/01/06 3,000,000 7,136,250
- -------------------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 0.32%
Loews Corp., Conv. Sub. Notes, 3.125%, 09/15/07 5,000,000 4,000,000
- -------------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.63%
Home Depot, Inc., Conv. Sub. Notes, 3.25%, 10/01/01 3,000,000 7,968,750
- -------------------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 0.54%
Costco Companies, Inc. Conv. Sub. Notes, 3.50%,
08/19/17(e) 8,000,000 6,860,000
- -------------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 0.36%
Affiliated Computer Services, Conv. Sub. Notes,
4.00%, 03/15/05 1,750,000 2,136,093
- -------------------------------------------------------------------------------
Affiliated Computer Services, Conv. Sub. Notes,
4.00%, 03/15/05(d) (Acquired 03/17/98; Cost
$2,006,875) 2,000,000 2,441,250
- -------------------------------------------------------------------------------
4,577,343
- -------------------------------------------------------------------------------
AIM V.I. GROWTH AND INCOME FUND
FS-76
307
PRINCIPAL MARKET
AMOUNT VALUE
TELECOMMUNICATIONS (LONG DISTANCE) - 1.25%
Global Telesystems Group, Inc., Conv. Sr. Sub.
Deb., 8.75%, 06/30/00 $ 500,000 $ 1,408,750
- --------------------------------------------------------------------------
Global Telesystems Group, Inc., Conv. Sr. Sub.
Deb., 8.75%, 06/30/00(d) (Acquired 02/05/98;
Cost $1,950,312) 1,500,000 4,226,250
- --------------------------------------------------------------------------
Global Telesystems Group, Inc., Conv. Sr. Sub.
Deb., 5.75%, 07/01/10 9,000,000 10,158,750
- --------------------------------------------------------------------------
15,793,750
- --------------------------------------------------------------------------
WASTE MANAGEMENT - 0.62%
USA Waste Services, Inc., Conv. Sub. Notes,
4.50%, 06/01/01 5,000,000 7,843,750
- --------------------------------------------------------------------------
Total Convertible Corporate Bonds
(Cost $76,598,280) 126,546,093
- --------------------------------------------------------------------------
FOREIGN CONVERTIBLE NOTES - 0.37%
SERVICES - COMMERCIAL & CONSUMER - 0.37%
Airtours PLC, Conv. Sub. Notes, 5.75% 01/05/04(d)(e)
(Acquired 02/05/98; Cost $4,514,585) GBP 2,729,000 4,660,046
- --------------------------------------------------------------------------
Total Foreign Convertible Notes
(Cost $4,514,585) 4,660,046
- --------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 1.26%
9.125%, 05/15/99 10,000,000 10,161,400
- --------------------------------------------------------------------------
11.75%, 02/15/01 5,000,000 5,716,450
- --------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $16,353,828) 15,877,850
- --------------------------------------------------------------------------
REPURCHASE AGREEMENT(f) - 2.81%
Goldman Sachs & Co., 4.40%, 01/04/99(g)
(Cost $35,491,011) 35,491,011 35,491,011
- --------------------------------------------------------------------------
TOTAL INVESTMENTS SECURITIES - 101.26% 1,277,949,006
- --------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (1.26)% (15,890,237)
- --------------------------------------------------------------------------
NET ASSETS - 100.00% $1,262,058,769
==========================================================================
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 8.
(c) Zero coupon bond issued at a discount. Interest rate shown represents the
rate of original issue discount.
(d) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with the procedures established by the Board of Directors. The
aggregate market value of these securities at 12/31/98 was $32,840,046
which represented 2.60% of the Fund's net assets.
(e) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(f) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to ensure its market value is at least 102% of the sales
price of the repurchase agreement. The investments in some repurchase are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(g) Joint repurchase agreements entered into 12/31/98 with a maturing value of
$700,342,222. Collateralized by $646,494,000 U.S. Government obligations,
0% to 11.75% due 02/15/99 to 04/15/28 with an aggregate market value at
12/31/98 of $714,694,897.
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
Gtd. - Guaranteed
LYON - Liquid Yield Option Notes
Pfd. - Preferred
PRIDES - Preferred Redeemable Increased Dividend Equity Security
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
See Notes to Financial Statements.
AIM V.I. GROWTH AND INCOME FUND
FS-77
308
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, at market value (cost $965,305,784) $1,277,949,006
- ------------------------------------------------------------------------
Receivables for:
Investments sold 24,131,504
- ------------------------------------------------------------------------
Capital stock sold 636,098
- ------------------------------------------------------------------------
Dividends and interest 2,075,051
- ------------------------------------------------------------------------
Investment for deferred compensation plan 21,235
- ------------------------------------------------------------------------
Other assets 14,825
- ------------------------------------------------------------------------
Total assets 1,304,827,719
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 39,326,193
- ------------------------------------------------------------------------
Capital stock reacquired 1,033,605
- ------------------------------------------------------------------------
Deferred compensation plan 21,235
- ------------------------------------------------------------------------
Options written (Premiums received $617,471) 1,728,012
- ------------------------------------------------------------------------
Accrued advisory fees 612,379
- ------------------------------------------------------------------------
Accrued directors' fees 325
- ------------------------------------------------------------------------
Accrued operating expenses 47,201
- ------------------------------------------------------------------------
Total liabilities 42,768,950
- ------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,262,058,769
========================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ------------------------------------------------------------------------
Outstanding 53,131,024
========================================================================
Net asset value, offering and redemption price per share $23.75
========================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends (net of $135,103 foreign withholding tax) $ 10,826,657
- ------------------------------------------------------------------------------
Interest 7,206,342
- ------------------------------------------------------------------------------
Total investment income 18,032,999
- ------------------------------------------------------------------------------
EXPENSES:
Advisory fees 5,556,833
- ------------------------------------------------------------------------------
Administrative services fees 60,729
- ------------------------------------------------------------------------------
Custodian fees 119,817
- ------------------------------------------------------------------------------
Directors' fees and expenses 15,043
- ------------------------------------------------------------------------------
Interest expense (Note 4) 58,555
- ------------------------------------------------------------------------------
Other 90,585
- ------------------------------------------------------------------------------
Total expenses 5,901,562
- ------------------------------------------------------------------------------
Less: Expenses paid indirectly (18,086)
- ------------------------------------------------------------------------------
Net expenses 5,883,476
- ------------------------------------------------------------------------------
Net investment income 12,149,523
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 7,206,698
- ------------------------------------------------------------------------------
Foreign currencies (127,792)
- ------------------------------------------------------------------------------
Futures contracts (845,486)
- ------------------------------------------------------------------------------
Option contracts (1,146,650)
- ------------------------------------------------------------------------------
5,086,770
- ------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 224,947,459
- ------------------------------------------------------------------------------
Foreign currencies 5,448
- ------------------------------------------------------------------------------
Futures contracts 277,200
- ------------------------------------------------------------------------------
Option contracts (905,620)
- ------------------------------------------------------------------------------
224,324,487
- ------------------------------------------------------------------------------
Net gain from investment securities, foreign currencies,
futures and option contracts 229,411,257
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations $241,560,780
==============================================================================
See Notes to Financial Statements.
AIM V.I. GROWTH AND INCOME FUND
FS-78
309
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
1998 1997
-------------- ------------
OPERATIONS:
Net investment income $ 12,149,523 $ 4,767,618
- ------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, futures and option
contracts 5,086,770 9,736,106
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, foreign currencies, futures and
option contracts 224,324,487 66,989,418
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 241,560,780 81,493,142
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment
income (4,873,870) (326,695)
- ------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains (12,029,125) (490,042)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 398,288,439 349,104,509
- ------------------------------------------------------------------------------
Net increase in net assets 622,946,224 429,780,914
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 639,112,545 209,331,631
- ------------------------------------------------------------------------------
End of year $1,262,058,769 $639,112,545
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 935,990,892 $537,626,187
- ------------------------------------------------------------------------------
Undistributed net investment income 11,997,368 4,850,844
- ------------------------------------------------------------------------------
Undistributed net realized gain on sales from
investment securities, foreign currencies,
futures and option contracts 2,532,381 9,421,873
- ------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and option
contracts 311,538,128 87,213,641
- ------------------------------------------------------------------------------
$1,262,058,769 $639,112,545
==============================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Growth and Income Fund (the "Fund"). The Fund's investment
objective is to seek growth of capital, with current income as a secondary
objective. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts and
variable life insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. If a mean is
not available, as is the case in some foreign markets, the closing bid will
be used absent a last sales price. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean of the closing bid and asked
prices. Debt obligations (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided
by the pricing service may be determined without exclusive reliance on
quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices
are not provided by any of the above methods are valued at the mean between
the last bid and asked prices based upon quotes furnished by independent
sources. Securities for which market quotations either are not readily
available or are questionable are valued at fair value as determined in
good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. Generally, trading in foreign securities
is
AIM V.I. GROWTH AND INCOME FUND
FS-79
310
substantially completed each day at various times prior to the close of the
New York Stock Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of
the New York Stock Exchange. Occasionally, events affecting the values of
such securities and such exchange rates may occur between the times at which
they are determined and the close of the New York Stock Exchange which will
not be reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair value as determined in
good faith by or under the supervision of the Board of Directors.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Dividend income and distributions to shareholders are recorded on
the ex-dividend date. Realized gains or losses from securities transactions
are recorded on the identified cost basis. On December 31, 1998, paid-in
capital was increased by $76,266, undistributed net investment income was
decreased by $129,129 and undistributed net realized gains increased by
$52,863 in order to comply with the requirements of the American Institute
of Certified Public Accountants Statement of Position 93-2. Net assets of
the Fund were unaffected by the reclassifications discussed above.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the
contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the purchase or sale of a security denominated in a foreign
currency in order to "lock in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably.
G. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written. The Fund will
not write a covered call option if, immediately thereafter, the aggregate
value of the securities underlying all such options, determined as of the
dates such options were written, would exceed 25% of the net assets of the
Fund.
H. Put options - The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
options's underlying instrument at a fixed strike price. In return for this
right, a Fund pays an option premium. The options's underlying instrument
may be a security, or a futures contract. Put options may be used by a Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a portion of the Fund's resulting losses. At the same time,
because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM
AIM V.I. GROWTH AND INCOME FUND
FS-80
311
at an annual rate of 0.65% of the first $250 million of the Fund's average
daily net assets, plus 0.60% of the Fund's average daily net assets in excess
of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the year ended December 31, 1998,
AIM was reimbursed $60,729 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the year ended December 31, 1998, the Fund incurred legal fees of
$4,825 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $18,086 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $18,086 during the year ended
December 31, 1998.
NOTE 4 - BORROWINGS
Reverse repurchase agreements involve the sale of securities held by the Fund,
with an agreement that the Fund will repurchase such securities at an agreed-
upon price and date. Proceeds from reverse repurchase agreements are treated
as borrowings. The agreements are collateralized by the underlying securities
and are carried at the amount at which the securities will subsequently be
repurchased as specified in the agreements. The maximum amount outstanding
during the period ended December 31, 1998 was $18,886,000 while borrowings
averaged $1,028,866 per day with a weighted average interest rate of 5.60%.
NOTE 5 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
1998 was $1,628,755,153 and $1,243,229,582, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $315,376,411
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (9,991,857)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $305,384,554
===========================================================================
Cost of investments for tax purposes is $972,564,452.
NOTE 7 - CAPITAL STOCK
Changes in capital stock outstanding during the year ended December 31, 1998
and 1997 were as follows:
1998 1997
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold 19,890,074 $409,625,526 20,645,975 $361,699,824
- ------------------------------------------------------------------------------
Issued as reinvestment of
distributions 751,578 16,902,995 44,268 816,737
- ------------------------------------------------------------------------------
Reacquired (1,379,171) (28,240,082) (745,032) (13,412,052)
- ------------------------------------------------------------------------------
19,262,481 $398,288,439 19,945,211 $349,104,509
==============================================================================
NOTE 8 - CALL OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended December 31, 1998
are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------
Beginning of year 3,100 $ 624,245
- -----------------------------------------
Written 47,846 11,523,972
- -----------------------------------------
Closed (37,960) (9,750,978)
- -----------------------------------------
Exercised (6,648) (1,542,256)
- -----------------------------------------
Expired (3,671) (237,512)
- -----------------------------------------
End of year 2,667 $ 617,471
=========================================
Open call option contracts written at December 31, 1998 were as follows:
DECEMBER
31, 1998 UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
- ----- ------------- --------------------------------------
Carnival Corp. Jan $40 750 $226,440 $ 585,938 $ (359,498)
- -------------------------------------------------------------------------------------
Compaq Computer Corp. Jan 37 1/2 1,450 213,143 715,937 (502,794)
- -------------------------------------------------------------------------------------
Compuware Corp. Jan 70 467 177,888 426,137 (248,249)
- -------------------------------------------------------------------------------------
2,667 $617,471 $1,728,012 $(1,110,541)
=====================================================================================
AIM V.I. GROWTH AND INCOME FUND
FS-81
312
NOTE 9 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during each of the years in the three-year period ended December 31, 1998, the
eleven months ended December 31, 1995 and the period May 2, 1994 (date
operations commenced) through January 31, 1995.
December 31,
------------------------------------------ January 31,
1998 1997 1996 1995 1995
---------- -------- -------- ------- -----------
Net asset value,
beginning of period $ 18.87 $ 15.03 $ 12.68 $ 9.98 $10.00
- ----------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.26(a) 0.13 0.16 0.14 0.11
- ----------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 4.95 3.74 2.36 3.11 (0.02)
- ----------------------------------------------------------------------------------------
Total from investment
operations 5.21 3.87 2.52 3.25 0.09
- ----------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income (0.09) (0.01) (0.14) (0.14) (0.11)
- ----------------------------------------------------------------------------------------
Distributions from net
realized gains (0.24) (0.02) (0.03) (0.41) --
- ----------------------------------------------------------------------------------------
Total distributions (0.33) (0.03) (0.17) (0.55) (0.11)
- ----------------------------------------------------------------------------------------
Net asset value, end of
period $ 23.75 $ 18.87 $ 15.03 $ 12.68 $ 9.98
========================================================================================
Total return(b) 27.68% 25.72% 19.95% 32.65% 0.90%
========================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s omitted) $1,262,059 $639,113 $209,332 $38,567 $7,380
========================================================================================
Ratio of expenses to
average net assets 0.65%(c) 0.69% 0.78% 0.78%(d) 1.07%(d)(e)
========================================================================================
Ratio of net investment
income to average net
assets 1.34%(c) 1.15% 2.05% 1.92%(d) 1.95%(d)(e)
========================================================================================
Portfolio turnover rate 140% 135% 148% 145% 96%
========================================================================================
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are based on average net assets of $905,305,521.
(d) Annualized.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses and
net investment income to average net assets prior to fee waivers and/or
expense reimbursements were 1.72% (annualized) and 1.30% (annualized),
respectively.
AIM V.I. GROWTH AND INCOME FUND
FS-82
313
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Growth Fund, a series of shares of common stock of AIM Variable Insurance
Funds, Inc. including the schedule of investments as of December 31, 1998, the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and
the financial highlights for each of the three years in the period then ended,
the eleven month period ended December 31, 1995, the year ended January 31,
1995, and the period May 5, 1993 (commencement of operations) through January
31, 1994. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Growth Fund, as of December 31, 1998, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the three years
in the period then ended, the eleven month period ended December 31, 1995, the
year ended January 31, 1995 and the period May 5, 1993 (commencement of
operations) through January 31, 1994 in conformity with generally accepted
accounting principles.
/s/ TAIT, WELLER & BAKER
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. GROWTH FUND
FS-83
314
SCHEDULE OF INVESTMENTS
December 31, 1998
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS - 86.97%
BANKS (REGIONAL) - 0.40%
North Fork Bancorporation, Inc. 62,000 $ 1,484,125
- ------------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC) - 0.63%
PepsiCo, Inc. 57,700 2,362,094
- ------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 5.82%
Chancellor Media Corp.(a) 60,500 2,896,437
- ------------------------------------------------------------------
Clear Channel Communications, Inc.(a) 42,476 2,314,942
- ------------------------------------------------------------------
Comcast Corp.-Class A 66,000 3,873,375
- ------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 49,500 3,421,687
- ------------------------------------------------------------------
Infinity Broadcasting Corp.-Class A(a) 63,500 1,738,312
- ------------------------------------------------------------------
Jacor Communications, Inc.(a) 41,000 2,639,375
- ------------------------------------------------------------------
Liberty Media Group(a) 21,600 994,950
- ------------------------------------------------------------------
Tele-Communications, Inc.-Class A(a) 68,000 3,761,250
- ------------------------------------------------------------------
21,640,328
- ------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 0.52%
Monsanto Co. 40,800 1,938,000
- ------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 0.70%
Lucent Technologies, Inc.(b)(c) 23,500 2,585,000
- ------------------------------------------------------------------
COMPUTERS (HARDWARE) - 5.33%
Compaq Computer Corp. 78,800 3,304,675
- ------------------------------------------------------------------
Dell Computer Corp.(a)(b) 74,000 5,415,875
- ------------------------------------------------------------------
International Business Machines Corp. 45,200 8,350,700
- ------------------------------------------------------------------
Sun Microsystems, Inc.(a) 32,000 2,740,000
- ------------------------------------------------------------------
19,811,250
- ------------------------------------------------------------------
COMPUTERS (NETWORKING) - 3.73%
3Com Corp.(a) 77,500 3,472,969
- ------------------------------------------------------------------
Ascend Communications, Inc.(a) 63,975 4,206,356
- ------------------------------------------------------------------
Cisco Systems, Inc.(a) 66,550 6,176,672
- ------------------------------------------------------------------
13,855,997
- ------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 0.99%
EMC Corp.(a) 43,500 3,697,500
- ------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 10.98%
America Online, Inc. 116,000 18,560,000
- ------------------------------------------------------------------
BMC Software, Inc.(a) 74,000 3,297,625
- ------------------------------------------------------------------
Compuware Corp.(a) 48,000 3,750,000
- ------------------------------------------------------------------
HBO & Co. 53,000 1,520,437
- ------------------------------------------------------------------
Microsoft Corp.(a) 57,300 7,946,794
- ------------------------------------------------------------------
Oracle Corp.(a) 93,000 4,010,625
- ------------------------------------------------------------------
Unisys Corp.(a) 51,000 1,756,313
- ------------------------------------------------------------------
40,841,794
- ------------------------------------------------------------------
MARKET
SHARES VALUE
CONSUMER FINANCE - 0.60%
Providian Financial Corp. 30,000 $ 2,250,000
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH) - 2.05%
AmeriSource Health Corp.-Class A(a) 24,100 1,566,500
- --------------------------------------------------------------
Cardinal Health, Inc. 61,500 4,666,312
- --------------------------------------------------------------
McKesson Corp. 6,500 513,906
- --------------------------------------------------------------
Sysco Corp. 31,800 872,513
- --------------------------------------------------------------
7,619,231
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.58%
AMP, Inc. 20,000 1,041,250
- --------------------------------------------------------------
General Electric Co. 40,000 4,082,500
- --------------------------------------------------------------
Sanmina Corp.(a) 9,000 562,500
- --------------------------------------------------------------
SCI Systems, Inc.(a) 32,300 1,865,325
- --------------------------------------------------------------
Symbol Technologies, Inc. 31,800 2,033,213
- --------------------------------------------------------------
9,584,788
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 6.11%
Advanced Micro Devices, Inc.(a) 33,600 972,300
- --------------------------------------------------------------
Altera Corp.(a) 45,000 2,739,375
- --------------------------------------------------------------
Analog Devices, Inc.(a) 60,000 1,882,500
- --------------------------------------------------------------
Intel Corp. 66,600 7,896,262
- --------------------------------------------------------------
LSI Logic Corp.(a) 78,000 1,257,750
- --------------------------------------------------------------
Micron Technology, Inc.(a) 26,000 1,314,625
- --------------------------------------------------------------
National Semiconductor Corp.(a) 76,200 1,028,700
- --------------------------------------------------------------
Texas Instruments, Inc. 40,000 3,422,500
- --------------------------------------------------------------
Xilinx, Inc.(a) 34,000 2,214,250
- --------------------------------------------------------------
22,728,262
- --------------------------------------------------------------
ENTERTAINMENT - 1.08%
Time Warner, Inc. 64,600 4,009,238
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 0.51%
Applied Materials, Inc.(a) 44,000 1,878,250
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 5.93%
American Express Co. 14,000 1,431,500
- --------------------------------------------------------------
Fannie Mae 61,200 4,528,800
- --------------------------------------------------------------
Freddie Mac 97,000 6,250,437
- --------------------------------------------------------------
MBIA, Inc. 58,400 3,828,849
- --------------------------------------------------------------
MGIC Investment Corp. 44,799 1,783,560
- --------------------------------------------------------------
SunAmerica, Inc. 52,000 4,218,500
- --------------------------------------------------------------
22,041,646
- --------------------------------------------------------------
AIM V.I. GROWTH FUND
FS-84
315
MARKET
SHARES VALUE
HEALTH CARE (DIVERSIFIED) - 3.86%
Abbott Laboratories 52,200 $ 2,557,800
- ---------------------------------------------------------------------
American Home Products Corp. 18,000 1,013,625
- ---------------------------------------------------------------------
Bristol-Myers Squibb Co. 22,300 2,984,019
- ---------------------------------------------------------------------
Johnson & Johnson 17,000 1,425,875
- ---------------------------------------------------------------------
Warner-Lambert Co. 85,000 6,390,937
- ---------------------------------------------------------------------
14,372,256
- ---------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.31%
Mylan Laboratories, Inc. 65,600 2,066,400
- ---------------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 44,900 2,823,088
- ---------------------------------------------------------------------
4,889,488
- ---------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 5.54%
Lilly (Eli) & Co. 55,600 4,941,450
- ---------------------------------------------------------------------
Merck & Co., Inc. 11,000 1,624,562
- ---------------------------------------------------------------------
Pfizer, Inc. 48,000 6,021,000
- ---------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 96,900 5,486,962
- ---------------------------------------------------------------------
Schering-Plough Corp. 46,000 2,541,500
- ---------------------------------------------------------------------
20,615,474
- ---------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 4.65%
Arterial Vascular Engineering, Inc.(a) 45,000 2,362,500
- ---------------------------------------------------------------------
Baxter International, Inc. 4,800 308,700
- ---------------------------------------------------------------------
Becton, Dickinson & Co. 154,000 6,573,875
- ---------------------------------------------------------------------
Biomet, Inc. 49,500 1,992,375
- ---------------------------------------------------------------------
Guidant Corp. 38,200 4,211,550
- ---------------------------------------------------------------------
Medtronic, Inc. 25,000 1,856,250
- ---------------------------------------------------------------------
17,305,250
- ---------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 0.58%
Procter & Gamble Co. (The) 23,500 2,145,844
- ---------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.13%
Nationwide Financial Services, Inc.-Class A 9,600 496,200
- ---------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 0.34%
American International Group, Inc. 12,900 1,246,463
- ---------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.33%
Paine Webber Group, Inc. 31,700 1,224,413
- ---------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.21%
Franklin Resources, Inc. 10,900 348,800
- ---------------------------------------------------------------------
T. Rowe Price Associates, Inc. 12,900 441,825
- ---------------------------------------------------------------------
790,625
- ---------------------------------------------------------------------
LODGING - HOTELS - 1.41%
Carnival Corp.-Class A 109,300 5,246,400
- ---------------------------------------------------------------------
MARKET
SHARES VALUE
MANUFACTURING (DIVERSIFIED) - 0.61%
Tyco International Ltd. 30,000 $ 2,263,125
- ------------------------------------------------------------------
NATURAL GAS - 0.66%
Enron Corp. 43,000 2,453,688
- ------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 3.01%
Home Depot, Inc. (The) 97,000 5,935,188
- ------------------------------------------------------------------
Lowe's Companies, Inc. 103,100 5,277,431
- ------------------------------------------------------------------
11,212,619
- ------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 0.56%
Best Buy Co., Inc.(a) 34,000 2,086,750
- ------------------------------------------------------------------
RETAIL (DRUG STORES) - 0.43%
CVS Corp. 29,000 1,595,000
- ------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 1.74%
Albertson's, Inc. 29,000 1,846,937
- ------------------------------------------------------------------
Kroger Co.(a) 43,000 2,601,500
- ------------------------------------------------------------------
Safeway, Inc.(a) 33,000 2,010,938
- ------------------------------------------------------------------
6,459,375
- ------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 1.57%
Costco Companies, Inc.(a)(b) 30,000 2,165,625
- ------------------------------------------------------------------
Dayton Hudson Corp. 33,000 1,790,250
- ------------------------------------------------------------------
Wal-Mart Stores, Inc. 23,000 1,873,063
- ------------------------------------------------------------------
5,828,938
- ------------------------------------------------------------------
RETAIL (SPECIALTY) - 2.68%
Office Depot, Inc.(a) 154,000 5,688,375
- ------------------------------------------------------------------
Staples, Inc.(a) 98,000 4,281,375
- ------------------------------------------------------------------
9,969,750
- ------------------------------------------------------------------
RETAIL (SPECIALTY - APPAREL) - 0.36%
Gap, Inc. (The) 24,050 1,352,812
- ------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 1.12%
Outdoor Systems, Inc.(a) 139,450 4,183,500
- ------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.22%
Service Corp. International 21,500 818,344
- ------------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 0.57%
Keane, Inc.(a) 53,100 2,120,681
- ------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 1.24%
Ceridian Corp.(a) 26,900 1,877,956
- ------------------------------------------------------------------
Equifax, Inc. 34,400 1,176,050
- ------------------------------------------------------------------
Fiserv, Inc.(a) 30,150 1,550,841
- ------------------------------------------------------------------
4,604,847
- ------------------------------------------------------------------
AIM V.I. GROWTH FUND
FS-85
316
MARKET
SHARES VALUE
TELECOMMUNICATIONS (LONG DISTANCE) - 4.94%
MCI WorldCom, Inc.(a) 256,243 $ 18,385,435
- -------------------------------------------------------------------------------
TOBACCO - 0.94%
Philip Morris Companies, Inc. 65,000 3,477,500
- -------------------------------------------------------------------------------
Total Domestic Common Stocks (Cost $204,614,000) 323,472,280
- -------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 3.10%
FINLAND - 0.41%
Nokia Oyj A.B.-Class A-ADR (Communications Equipment) 5,700 686,494
- -------------------------------------------------------------------------------
Nokia Oyj A.B.-Class A (Communications Equipment) 6,800 827,234
- -------------------------------------------------------------------------------
1,513,728
- -------------------------------------------------------------------------------
FRANCE - 0.27%
Renault S.A. (Automobiles) 22,500 1,010,377
- -------------------------------------------------------------------------------
IRELAND - 0.54%
Elan Corp. PLC-ADR (Health Care-Drugs-Generic &
Other)(a) 29,000 2,017,313
- -------------------------------------------------------------------------------
NETHERLANDS - 1.00%
Philips Electronics N.V. (Electrical Equipment) 19,000 1,274,625
- -------------------------------------------------------------------------------
Philips Electronics N.V.-ADR-New York Shares
(Electrical Equipment) 36,000 2,436,750
- -------------------------------------------------------------------------------
3,711,375
- -------------------------------------------------------------------------------
SWITZERLAND - 0.88%
Nestle S.A. (Foods) 1,500 3,266,093
- -------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests (Cost
$10,115,291) 11,518,886
- -------------------------------------------------------------------------------
OPTIONS PURCHASED - 0.00%
NUMBER OF EXERCISE EXPIRATION
CONTRACTS PRICE DATE
PUTS - 0.00%
Lucent Technologies, Inc.
(Communications Equipment
(Cost $118,378) 157 $95 Jan-99 8,831
- --------------------------------------------------------------
PRINCIPAL
AMOUNT
FOREIGN CONVERTIBLE BONDS - 0.84%
SWITZERLAND - 0.84%
Nestle Holding Inc., Conv. Bond, 3.00%,
06/17/02 (Cost $2,941,380) $2,200,000 3,105,903
- -----------------------------------------------------------------------
REPURCHASE AGREEMENT - 8.49%(d)
Goldman, Sachs & Co., 4.40%, 01/04/99(e) (Cost
$31,583,054) 31,583,054 31,583,054
- -----------------------------------------------------------------------
TOTAL INVESTMENTS - 99.40% 369,688,954
- -----------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.60% 2,225,797
- -----------------------------------------------------------------------
NET ASSETS - 100.00% $371,914,751
======================================================================-
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of this security is subject to call options.
(c) A portion of this security is subject to put options.
(d) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to ensure its market value is at least 102% of the sales
price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds, private accounts, and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(e) Joint repurchase agreements entered into 12/31/98 with a maturing value of
$700,342,222. Collaterialized by $646,494,000 U.S. Government obligations,
0% to 11.75% due 02/15/99 to 04/15/28 with an aggregate market value at
12/31/98 of $714,694,897.
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
See Notes to Financial Statements.
AIM V.I. GROWTH FUND
FS-86
317
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments at market value (cost $249,372,103) $369,688,954
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 1,229,040
- ----------------------------------------------------------------------
Investments sold 2,040,256
- ----------------------------------------------------------------------
Dividends and interest 224,599
- ----------------------------------------------------------------------
Investment for deferred compensation plan 23,264
- ----------------------------------------------------------------------
Other assets 1,985
- ----------------------------------------------------------------------
Total assets 373,208,098
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 61,353
- ----------------------------------------------------------------------
Deferred compensation plan 23,264
- ----------------------------------------------------------------------
Options written (Premiums received $739,850) 953,563
- ----------------------------------------------------------------------
Accrued advisory fees 186,515
- ----------------------------------------------------------------------
Accrued directors' fees 2,560
- ----------------------------------------------------------------------
Accrued administrative services fees 3,637
- ----------------------------------------------------------------------
Accrued operating expenses 62,455
- ----------------------------------------------------------------------
Total liabilities 1,293,347
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $371,914,751
======================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 14,997,262
======================================================================
Net asset value, offering and redemption price per share $24.80
======================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends (net of $48,337 foreign withholding tax) $ 1,895,594
- ------------------------------------------------------------------------------
Interest 1,514,487
- ------------------------------------------------------------------------------
Total investment income 3,410,081
- ------------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,941,818
- ------------------------------------------------------------------------------
Administrative services fees 50,535
- ------------------------------------------------------------------------------
Custodian fees 98,543
- ------------------------------------------------------------------------------
Directors' fees and expenses 12,859
- ------------------------------------------------------------------------------
Other 79,110
- ------------------------------------------------------------------------------
Total expenses 2,182,865
- ------------------------------------------------------------------------------
Less: Expenses paid indirectly (2,844)
- ------------------------------------------------------------------------------
Net expenses 2,180,021
- ------------------------------------------------------------------------------
Net investment income 1,230,060
- ------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES AND OPTIONS CONTRACTS:
Net realized gain (loss) from:
Investment securities 22,750,448
- ------------------------------------------------------------------------------
Foreign currencies 87,369
- ------------------------------------------------------------------------------
Futures contracts 1,100,047
- ------------------------------------------------------------------------------
Options contracts (1,680,833)
- ------------------------------------------------------------------------------
22,257,031
- ------------------------------------------------------------------------------
Net unrealized appreciation of:
Investment securities 67,962,858
- ------------------------------------------------------------------------------
Foreign currencies 4,310
- ------------------------------------------------------------------------------
Options contracts 90,382
- ------------------------------------------------------------------------------
68,057,550
- ------------------------------------------------------------------------------
Net gain from investment securities, foreign currencies, futures
and options contracts 90,314,581
- ------------------------------------------------------------------------------
Net increase in net assets resulting from operations $91,544,641
==============================================================================
See Notes to Financial Statements.
AIM V.I. GROWTH FUND
FS-87
318
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
1998 1997
------------ ------------
OPERATIONS:
Net investment income $ 1,230,060 $ 1,211,773
- ------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, futures and options
contracts 22,257,031 22,109,980
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, foreign currencies, futures and
options contracts 68,057,550 28,069,985
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 91,544,641 51,391,738
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment
income (1,180,373) (1,119,140)
- ------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains (22,129,920) (8,443,286)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 44,828,633 38,384,566
- ------------------------------------------------------------------------------
Net increase in net assets 113,062,981 80,213,878
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 258,851,770 178,637,892
- ------------------------------------------------------------------------------
End of year $371,914,751 $258,851,770
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $228,798,661 $183,975,681
- ------------------------------------------------------------------------------
Undistributed net investment income 1,289,508 1,182,806
- ------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and
options contracts 21,719,134 21,643,385
- ------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, futures and options
contracts 120,107,448 52,049,898
- ------------------------------------------------------------------------------
$371,914,751 $258,851,770
==============================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Growth Fund (the "Fund"). The Fund's investment objective is
to seek growth of capital principally through investment in common stocks of
seasoned and better capitalized companies considered by AIM to have strong
earnings momentum. Currently, shares of the Fund are sold only to insurance
company separate accounts to fund the benefits of variable annuity contracts
and variable life insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. If no mean is
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean of the closing bid and asked
prices. Debt obligations (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided
by the pricing service may be determined without exclusive reliance on
quoted prices and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices
are not provided by any of the above methods are valued at the mean between
last bid and asked prices based upon quotes furnished by independent
sources. Securities for which market quotations either are not readily
available or are questionable are valued at fair value as determined in
good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors.
AIM V.I. GROWTH FUND
FS-88
319
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. Generally, trading in foreign
securities is substantially completed each day at various times prior to the
close of the New York Stock Exchange. The values of such securities used in
computing the net asset value of the Fund's shares are determined as of such
times. Foreign currency exchange rates are also generally determined prior to
the close of the New York Stock Exchange. Occasionally, events affecting the
values of such securities and such exchange rates may occur between the times
at which they are determined and the close of the New York Stock Exchange
which will not be reflected in the computation of the Fund's net asset value.
If events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair value as
determined in good faith by or under the supervision of the Board of
Directors.
B. Securities Transactions, Investment Income and Distributions -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 as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1998
additional paid-in capital was decreased by $5,653, undistributed net
investment income was increased by $57,015 and undistributed net realized
gains was decreased by $51,362 in order to comply with the requirements of
the American Institute of Certified Public Accountants Statement of
Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash as collateral for the
account of the broker (the Fund's agent in acquiring the futures position).
During the period the futures contracts are open, changes in the value of
the contracts are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contracts at
the end of each day's trading. Variation margin payments are made or
received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
E. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
F. Put options - The Fund may purchase put options. By purchasing a put
option, the Fund obtains the right (but not the obligation) to sell the
option's underlying instrument at a fixed strike price. In return for this
right, a Fund pays an option premium. The option's underlying instrument
may be a security, or a futures contract. Put options may be used by a Fund
to hedge securities it owns by locking in a minimum price at which the Fund
can sell. If security prices fall, the put option could be exercised to
offset all or a portion of the Fund's resulting losses. At the same time,
because the maximum the Fund has at risk is the cost of the option,
purchasing put options does not eliminate the potential for the Fund to
profit from an increase in the value of the securities hedged.
G. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
H. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the amount of a purchase or sale of a security denominated in
a foreign currency in order to "lock-in" the U.S. dollar price of that
security. The Fund could be
AIM V.I. GROWTH FUND
FS-89
320
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I
M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the year ended December 31, 1998,
AIM was reimbursed $50,535 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the year ended December 31, 1998, the Fund incurred legal fees of
$4,004 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $2,844 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $2,844 during the year ended
December 31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest a director's fees,
if so elected by such director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the year ended December 31, 1998 was
$385,017,854 and $363,389,349, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $120,017,053
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (1,102,014)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $118,915,039
===========================================================================
Cost of investments for tax purposes is $250,773,915.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1998
and 1997 were as follows:
1998 1997
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
Sold 2,345,258 $52,301,342 2,757,339 $ 51,600,352
- -----------------------------------------------------------------------------
Issued as reinvestment of
distributions 1,005,621 23,310,293 492,909 9,562,426
- -----------------------------------------------------------------------------
Reacquired (1,407,943) (30,783,002) (1,185,922) (22,778,212)
- -----------------------------------------------------------------------------
1,942,936 $44,828,633 2,064,326 $ 38,384,566
=============================================================================
NOTE 7 - CALL OPTIONS CONTRACTS WRITTEN
Transactions in call options written during the year ended December 31, 1998
are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------
Beginning of period 1,815 $ 531,904
- -------------------------------------------
Written 10,693 5,020,455
- -------------------------------------------
Closed (7,461) (3,712,050)
- -------------------------------------------
Exercised (2,378) (653,704)
- -------------------------------------------
Expired (1,472) (446,755)
- -------------------------------------------
End of period 1,197 $ 739,850
===========================================
Open call options held at December 31, 1998 were as follows:
DECEMBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUM 1998 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
- ----- ----------------------------------------------------
Costco Companies, Inc. Jan. 99 55 300 $182,544 $528,750 $(346,206)
- --------------------------------------------------------------------------------------
Dell Computer Corp. Jan. 99 70 740 422,526 356,125 66,401
- --------------------------------------------------------------------------------------
Lucent Technologies,
Inc. Jan. 99 110 157 134,780 68,688 66,092
- --------------------------------------------------------------------------------------
1,197 $739,850 $953,563 $(213,713)
======================================================================================
AIM V.I. GROWTH FUND
FS-90
321
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the
Fund during each of the years in the three-year period ended December 31,
1998, the eleven months ended December 31, 1995, the year ended January
31, 1995, and the period May 5, 1993 (date operations commenced) through
January 31, 1994.
DECEMBER 31, JANUARY 31,
----------------------------------------- -----------------
1998 1997 1996 1995 1995 1994
-------- -------- -------- -------- ------- -------
Net asset value,
beginning of period $ 19.83 $ 16.25 $ 14.44 $ 10.71 $ 11.59 $ 10.00
- ------------------------ -------- -------- -------- -------- ------- -------
Income from investment
operations:
Net investment income 0.08 0.08 0.07 0.09 0.06 0.02
- ------------------------ -------- -------- -------- -------- ------- -------
Net gains (losses) on
securities (both
realized and
unrealized) 6.57 4.27 2.52 3.65 (0.88) 1.59
- ------------------------ -------- -------- -------- -------- ------- -------
Total from investment
operations 6.65 4.35 2.59 3.74 (0.82) 1.61
- ------------------------ -------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income (0.09) (0.09) (0.06) (0.01) (0.06) (0.02)
- ------------------------ -------- -------- -------- -------- ------- -------
Distributions from net
realized gains (1.59) (0.68) (0.72) -- -- --
- ------------------------ -------- -------- -------- -------- ------- -------
Total distributions (1.68) (0.77) (0.78) (0.01) (0.06) (0.02)
- ------------------------ -------- -------- -------- -------- ------- -------
Net asset value, end of
period $ 24.80 $ 19.83 $ 16.25 $ 14.44 $ 10.71 $ 11.59
======================== ======== ======== ======== ======== ======= =======
Total return(a) 34.12% 26.87% 18.09% 34.89% (7.11)% 16.07%
======================== ======== ======== ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s omitted) $371,915 $258,852 $178,638 $102,600 $45,497 $25,115
======================== ======== ======== ======== ======== ======= =======
Ratio of expenses to
average net assets 0.72%(b) 0.73% 0.78% 0.84%(c) 0.95% 0.85%(c)(d)
======================== ======== ======== ======== ======== ======= =======
Ratio of net investment
income to average net
assets 0.41%(b) 0.54% 0.79% 0.95%(c) 0.71% 0.51%(c)(d)
======================== ======== ======== ======== ======== ======= =======
Portfolio turnover rate 133% 132% 143% 125% 179% 99%
======================== ======== ======== ======== ======== ======= =======
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $302,803,063.
(c) Annualized.
(d) After fee waivers and/or expense reimbursement. Ratios of
expenses and net investment income (loss) to average net assets
prior to fee waivers and/or expense reimbursements were 1.50%
(annualized) and (0.14)% (annualized), respectively.
AIM V.I. GROWTH FUND
FS-91
322
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. High Yield Fund, a series of shares of common stock of AIM Variable
Insurance Funds, Inc. including the schedule of investments as of December 31,
1998, the related statement of operations, the statement of changes in net
assets, and the financial highlights for the period May 1, 1998 (commencement
of operations) through December 31, 1998. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. High Yield Fund, as of December 31, 1998, the results of its operations,
the changes in its net assets, and the financial highlights for the period May
1, 1998 (commencement of operations) through December 31, 1998 in conformity
with generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. HIGH YIELD FUND
FS-92
323
SCHEDULE OF INVESTMENTS
December 31, 1998
PRINCIPAL MARKET
AMOUNT VALUE
CORPORATE BONDS & NOTES - 91.37%
AEROSPACE/DEFENSE - 1.42%
Pacific Aerospace & Electronics, Inc., Sr. Sub. Notes,
11.25%, 08/01/05(a) (Acquired 07/24/98; Cost $150,000) $150,000 $ 113,250
- -------------------------------------------------------------------------------
AIR FREIGHT - 1.99%
Atlas Air, Inc., Sr. Unsec. Notes, 10.75%, 08/01/05 150,000 158,250
- -------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 3.26%
EchoStar DBS Corp., Sr. Sec. Gtd. Notes, 12.50%, 07/01/02 150,000 174,000
- -------------------------------------------------------------------------------
Park N View, Inc., Series B Sr. Notes, 13.00%,
05/15/08(b) 100,000 85,500
- -------------------------------------------------------------------------------
259,500
- -------------------------------------------------------------------------------
BUILDING MATERIALS - 2.37%
Congoleum Corp., Sr. Unsec. Notes, 8.625%, 08/01/08 100,000 99,000
- -------------------------------------------------------------------------------
Imperial Home Decor Group, Series B Sr. Unsec. Gtd. Sub.
Notes, 11.00%, 03/15/08 100,000 89,500
- -------------------------------------------------------------------------------
188,500
- -------------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 4.35%
Convergent Communications, Series B Sr. Unsec. Notes,
13.00%, 04/01/08(c) 90,000 43,650
- -------------------------------------------------------------------------------
Exodus Communications, Sr. Unsec. Notes, 11.25%, 07/01/08 300,000 303,000
- -------------------------------------------------------------------------------
346,650
- -------------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 0.76%
Metal Management, Inc., Sr. Unsec. Gtd. Sub. Notes,
10.00%, 05/15/08 100,000 60,500
- -------------------------------------------------------------------------------
CONSTRUCTION (CEMENT & AGGREGATES) - 1.65%
Schuff Steel Co., Sr. Unsec. Gtd. Sub. Notes, 10.50%,
06/01/08 150,000 131,250
- -------------------------------------------------------------------------------
CONTAINERS & PACKAGING (PAPER) - 1.05%
BPC Holding Corp., Series B Sr. Sec. Notes, 12.50%,
06/15/06 80,000 83,600
- -------------------------------------------------------------------------------
FOODS - 0.80%
RAB Enterprise, Inc., Sr. Notes, 13.00%, 05/01/08(a)
(Acquired 05/05/98; Cost $90,900) 90,000 63,450
- -------------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 12.18%
Alliance Gaming Corp., Series B Sr. Unsec. Gtd. Sub.
Notes, 10.00%, 08/01/07 100,000 90,500
- -------------------------------------------------------------------------------
Circus Circus Enterprises, Inc., Sr. Sub. Notes, 9.25%,
12/01/05 300,000 311,175
- -------------------------------------------------------------------------------
Majestic Star Casino, LLC, Sr. Sec. Notes, 12.75%,
05/15/03 150,000 156,750
- -------------------------------------------------------------------------------
Resort at Summerlin/RAS Co., Sr. Unsec. Sub. PIK Notes,
13.00%, 12/15/07 111,000 106,005
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
GAMING, LOTTERY & PARIMUTUEL COMPANIES - (CONTINUED)
Venetian Casino Resort LLC, Sec. Gtd. Mortgage Notes,
12.25%, 11/15/04 $ 325,000 $ 305,500
- -------------------------------------------------------------------------------
969,930
- -------------------------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER) - 1.91%
Biovail Corp., Sr. Notes, 10.875%, 11/15/05(a) (Acquired
11/10/98 - 11/24/98; Cost $151,650) 150,000 152,250
- -------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 6.34%
Alaris Medical, Inc., Sr. Disc. Notes, 11.125%,
08/01/08(a)(d) (Acquired 07/23/98; Cost $121,856) 200,000 110,000
- -------------------------------------------------------------------------------
Alliance Imaging, Sr. Sub. Notes, 9.625%, 12/15/05 200,000 199,000
- -------------------------------------------------------------------------------
Everest Healthcare Services Corp., Sr. Unsec. Gtd. Sub.
Notes, 9.75%, 05/01/08 100,000 99,500
- -------------------------------------------------------------------------------
Mediq, Inc., Sr. Unsec. Gtd. Sub. Notes, 11.00%, 06/01/08 100,000 96,500
- -------------------------------------------------------------------------------
505,000
- -------------------------------------------------------------------------------
HOMEBUILDING - 0.24%
Schuler Homes, Sr. Unsec. Gtd. Notes, 9.00%, 04/15/08 20,000 19,500
- -------------------------------------------------------------------------------
HOUSEWARES - 4.03%
Decora Industries, Inc., Series B Sr. Sec. Gtd. Notes,
11.00%, 05/01/05 340,000 321,300
- -------------------------------------------------------------------------------
LODGING-HOTELS - 7.33%
American Skiing Co., Series B Sr. Sub. Notes, 12.00%,
07/15/06 300,000 313,500
- -------------------------------------------------------------------------------
Booth Creek Ski Holdings, Sr. Unsec. Gtd. Notes, 12.50%,
03/15/07 90,000 89,550
- -------------------------------------------------------------------------------
Stena Line A.B. (Sweden), Sr. Unsec. Yankee Notes,
10.625%, 06/01/08 200,000 181,000
- -------------------------------------------------------------------------------
584,050
- -------------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 2.47%
Anthony Crane Rentals, Sr. Notes, 10.375%, 08/01/08(a)
(Acquired 07/15/98 - 07/20/98; Cost $100,375) 100,000 96,500
- -------------------------------------------------------------------------------
Generac Portable Products, Sr. Sub. Notes, 11.25%,
07/01/06(a) (Acquired 07/02/98; Cost $100,000) 100,000 100,500
- -------------------------------------------------------------------------------
197,000
- -------------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 7.02%
Brand Scaffold Services, Sr. Unsec. Notes, 10.25%,
02/15/08 150,000 143,250
- -------------------------------------------------------------------------------
Derby Cycle Corp., Sr. Notes, 10.00%, 05/15/08(a)
(Acquired 05/07/98; Cost $100,000) 100,000 86,500
- -------------------------------------------------------------------------------
Globe Manufacturing Corp., Sr. Sub. Notes, 10.00%,
08/01/08(a) (Acquired 07/28/98 - 10/27/98; Cost
$179,193) 200,000 182,000
- -------------------------------------------------------------------------------
Omega Cabinets, Sr. Sub. Notes, 10.50%, 06/15/07 150,000 147,750
- -------------------------------------------------------------------------------
559,500
- -------------------------------------------------------------------------------
AIM V.I. HIGH YIELD FUND
FS-93
324
PRINCIPAL MARKET
AMOUNT VALUE
OIL & GAS (EXPLORATION & PRODUCTION) - 0.71%
Lodestar Holdings Inc., Sr. Unsec. Gtd. Notes, 11.50%,
05/15/05 $ 70,000 $ 56,350
- ------------------------------------------------------------------------------
PUBLISHING - 1.05%
Liberty Group Publishing, Inc., Sr. Unsec. Disc. Deb.,
11.625%, 02/01/09(d) 150,000 83,250
- ------------------------------------------------------------------------------
RAILROAD - 1.01%
TFM SA de CV. (Mexico), Sr. Gtd. Yankee Notes, 10.25%,
06/15/07 95,000 80,750
- ------------------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 1.97%
Plainwell, Inc., Series B Sr. Unsec. Sub. Notes, 11.00%,
03/01/08 200,000 157,000
- ------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 5.00%
CEX Holdings, Inc., Series B Sr. Unsec. Gtd. Sub. Notes,
9.625%, 06/01/08 95,000 85,975
- ------------------------------------------------------------------------------
National Vision Associates, Sr. Notes, 12.75%,
10/15/05(a) (Acquired 10/05/98; Cost $148,296) 150,000 159,750
- ------------------------------------------------------------------------------
Rent-A-Center, Inc., Sr. Sub. Notes, 11.00%, 08/15/08(a)
(Acquired 08/13/98; Cost $150,000) 150,000 153,000
- ------------------------------------------------------------------------------
398,725
- ------------------------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL) - 0.12%
ATC Group Services, Inc., Sr. Unsec. Gtd. Sub. Notes,
12.00%, 01/15/08(e) 100,000 9,500
- ------------------------------------------------------------------------------
SHIPPING - 2.10%
Millenium Seacarriers, First Priority Ship Mortgage
Notes, 12.00%, 07/15/05(a)(f) (Acquired 07/20/98; Cost
$96,733) 100,000 80,500
- ------------------------------------------------------------------------------
Pegasus Shipping Hellas Co. (Bermuda), Sr. Sec. Gtd.
Mortgage Notes, 11.875%, 11/15/04 100,000 86,500
- ------------------------------------------------------------------------------
167,000
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 11.26%
Dobson Communications Corp., Sr. Notes, 11.75%, 04/15/07 200,000 203,500
- ------------------------------------------------------------------------------
Metrocall, Inc., Sr. Sub. Notes, 11.00%, 09/15/08(a)
(Acquired 12/17/98; Cost $337,634) 340,000 343,400
- ------------------------------------------------------------------------------
Nextel Communications, Inc., Sr. Notes, 12.00%,
11/01/08(a) (Acquired 10/28/98; Cost $221,801) 225,000 247,500
- ------------------------------------------------------------------------------
Spectrasite Holdings, Inc., Sr. Disc. Notes, 12.00%,
07/15/08(a)(d) (Acquired 06/23/98; Cost $117,927) 200,000 103,000
- ------------------------------------------------------------------------------
897,400
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 5.36%
Long Distance Direct, Inc., Sr. Notes, 12.25%,
04/15/08(a)(g) (Acquired 05/05/98 - 10/01/98; Cost
$131,064) 140,000 120,750
- ------------------------------------------------------------------------------
Versatel Telecom B.V. (Netherlands), Sr. Notes, 13.25%,
05/15/08 100,000 102,000
- ------------------------------------------------------------------------------
Versatel Telecom B.V. (Netherlands), Sr. Notes, 13.25%,
05/15/08(a)(h) (Acquired 11/17/98;
Cost $192,036) 200,000 204,000
- ------------------------------------------------------------------------------
426,750
- ------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
TELEPHONE - 2.48%
Dobson Communications Corp., Sr. Unsec. Notes, 12.25%,
06/15/08 $100,000 $ 92,750
- ------------------------------------------------------------------------------
US Xchange LLC, Sr. Unsec. Notes, 15.00%, 07/01/08 100,000 105,250
- ------------------------------------------------------------------------------
198,000
- ------------------------------------------------------------------------------
TRUCK & PARTS - 1.14%
HDA Part System, Inc., Sr. Sub. Notes, 12.00%,
08/01/05(a) (Acquired 07/28/98; Cost $100,000) 100,000 90,500
- ------------------------------------------------------------------------------
Total Corporate Bonds & Notes
(Cost $7,595,612) 7,278,705
- ------------------------------------------------------------------------------
SHARES
PREFERRED STOCK - 1.04%
BROADCASTING (TELEVISION, RADIO, & CABLE) - 1.04%
Benedek Communications, 11.50% PIK Pfd. (Cost $100,000) 102 83,130
- ------------------------------------------------------------------------------
WARRANTS - 0.10%
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.08%
Park N View, Inc., expiring 05/15/08 (United Kingdom)(i) 100 6,200
- ------------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 0.00%
Convergent Communications, expiring 04/01/08(i) 360 4
- ------------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.00%
Resort At Summerlin/RAS Co., expiring 12/15/07(i) 100 1
- ------------------------------------------------------------------------------
METAL FABRICATORS - 0.00%
Gulf States Steel, Inc., expiring 04/15/03(i) 60 1
- ------------------------------------------------------------------------------
SHIPPING - 0.01%
Millenium Seacarriers, expiring 07/15/03(i) 100 625
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.01%
Long Distance Direct, Inc., expiring 04/13/08(i) 140 350
- ------------------------------------------------------------------------------
Versatel Telecom B.V. (New Zealand), expiring
05/15/08(i) 100 1,012
- ------------------------------------------------------------------------------
1,362
- ------------------------------------------------------------------------------
Total Warrants (Cost $166) 8,193
- ------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENT - 4.47%(j)
SBC Warburg Dillion Read, Inc., 4.75%, 1/04/99(k) (Cost
$356,078) $356,078 356,078
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS - 96.98% 7,726,106
- ------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 3.02% 240,195
- ------------------------------------------------------------------------------
NET ASSETS - 100.00% $7,966,301
================================================================================
AIM V.I. HIGH YIELD FUND
FS-94
325
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at 12/31/98 was $2,202,850 which
represented 27.65% of the Fund's net assets.
(b) Issued as a unit. This unit also includes 100 warrants to purchase 6.73833
shares of common stock per warrant.
(c) Issued as a unit. This unit also includes 360 warrants to purchase 10.8
shares of common stock per warrant.
(d) Step bond issued at a discount. Interest rate shown represents the coupon
rate at which the bond will accrue at a specified future date.
(e) Defaulted security. Currently, the issuer is partially in default with
respect to interest payments.
(f) Issued as a unit. This unit also includes 100 warrants to purchase 1.9
shares of common stock per warrant.
(g) Issued as a unit. This unit also includes 140 warrants to purchase 15.0874
shares of common stock per warrant.
(h) Issued as unit. This unit also includes 100 warrants to purchase 6.667
shares of common stock per warrant.
(i) Non-income producing security.
(j) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investments advisor or its affiliates.
(k) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75% due 06/30/99 to 11/15/21 with an aggregate market
value at 12/31/98 of $1,020,001,079.
Abbreviations:
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Pfd. - Preferred
PIK - Payment in Kind
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND
FS-95
326
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, at market value (cost $8,051,856) $ 7,726,106
- ----------------------------------------------------------------------
Cash 7,980
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 15,759
- ----------------------------------------------------------------------
Dividends and interest 194,385
- ----------------------------------------------------------------------
Reimbursement from advisor 28,175
- ----------------------------------------------------------------------
Investment for deferred compensation plan 2,781
- ----------------------------------------------------------------------
Other assets 3,402
- ----------------------------------------------------------------------
Total assets 7,978,588
- ----------------------------------------------------------------------
LIABILITIES:
Payables for Capital stock reacquired 57
- ----------------------------------------------------------------------
Deferred compensation plan 2,781
- ----------------------------------------------------------------------
Accrued administrative services fees 663
- ----------------------------------------------------------------------
Accrued operating expenses 8,786
- ----------------------------------------------------------------------
Total liabilities 12,287
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $ 7,966,301
======================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 901,675
======================================================================
Net asset value, offering and redemption price per share $8.84
======================================================================
STATEMENT OF OPERATIONS
For the period May 1, 1998 (date operations commenced)
through December 31, 1998
INVESTMENT INCOME:
Interest $ 360,052
- -------------------------------------------------------------------------------
EXPENSES:
Advisory fees 20,728
- -------------------------------------------------------------------------------
Administrative services fees 27,339
- -------------------------------------------------------------------------------
Custodian fees 12,190
- -------------------------------------------------------------------------------
Directors' fees and expenses 6,309
- -------------------------------------------------------------------------------
Professional fees 10,645
- -------------------------------------------------------------------------------
Other 5,661
- -------------------------------------------------------------------------------
Total expenses 82,872
- -------------------------------------------------------------------------------
Less: Expenses paid indirectly (655)
- -------------------------------------------------------------------------------
Fees waived and reimbursed by advisor (45,526)
- -------------------------------------------------------------------------------
Net expenses 36,691
- -------------------------------------------------------------------------------
Net investment income 323,361
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES:
Net realized gain (loss) from investment securities (367,230)
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities (325,750)
- -------------------------------------------------------------------------------
Net gain (loss) from investment securities (692,980)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(369,619)
===============================================================================
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND
FS-96
327
STATEMENT OF CHANGES IN NET ASSETS
For the period May 1, 1998 (date operations commenced) through December 31,
1998
OPERATIONS:
Net investment income $ 323,361
- -----------------------------------------------------------------------------
Net realized gain (loss) from investment securities (367,230)
- -----------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities (325,750)
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (369,619)
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment income (330,305)
- -----------------------------------------------------------------------------
Net increase from capital stock transactions 8,666,225
- -----------------------------------------------------------------------------
Net increase in net assets 7,966,301
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period -
- -----------------------------------------------------------------------------
End of period $7,966,301
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $8,662,066
- -----------------------------------------------------------------------------
Undistributed net investment income (loss) (2,785)
- -----------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (367,230)
- -----------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (325,750)
- -----------------------------------------------------------------------------
$7,966,301
=============================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. High Yield Fund (the "Fund"). The Fund's investment objective
is to achieve a high level of current income by investing primarily in
publicly traded non-investment grade debt securities. The Fund will also
consider the possibility of capital growth when it purchases and sells
securities. Debt securities of less than investment grade are considered "high
risk" securities (commonly referred to as junk bonds). These bonds may involve
special risks in addition to the risks associated with investment in higher
rated debt securities. High yield bonds may be more susceptible to real or
perceived adverse economic and competitive industry conditions than higher
grade bonds. Also, the secondary market in which high yield bonds are traded
may be less liquid than the market for higher grade bonds. The Fund commenced
operations on May 1, 1998. Currently, shares of the Fund are sold only to
insurance company separate accounts to fund the benefits of variable annuity
contracts and variable life insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could
differ from those estimates. The following is a summary of the significant
accounting policies followed by the Fund in the presentation of its financial
statements.
A. Security Valuations - Debt securities (including convertible bonds) are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
institution-size trading in similar groups of securities, developments
related to special securities, yield, quality, coupon rate, maturity, type
of issue, individual trading characteristics and other market data.
Investment securities for which prices are not provided by the pricing
service and which are listed or traded on an exchange (except convertible
bonds) are valued at the last sales price on the exchange where principally
traded or, lacking any sales on a particular day, at the mean between the
closing bid and asked prices on that day unless the Board of Directors, or
persons designated by the Board of Directors, determines that over-the-
counter quotations more closely reflect the current market value of the
security. Securities traded in the over-the-counter market, except (i)
securities priced by the pricing service, (ii) securities for which
representative exchange prices are available, and (iii) securities reported
in the NASDAQ National Market System, are valued at the mean between
representative last bid and asked prices obtained from an electronic
quotation reporting system, if such prices are available, or from
established market makers. Each security reported in the NASDAQ National
Market System is valued at the last sales price on the valuation date or
absent a last sales price, at the mean between the closing bid and asked
prices. Securities for which market quotations either are not
AIM V.I. HIGH YIELD FUND
FS-97
328
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value.
B. Securities Transactions, Investment Income and Distributions -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 as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1998
additional paid-in capital was decreased by $4,159 and undistributed net
investment income was increased by $4,159 in order to comply with the
requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements. The Fund had capital
loss carryforwards (which may be carried forward to offset future taxable
capital gains, if any) of $247,108, which expires, if not previously
utilized, through the year 2006. The Fund cannot distribute capital gains
to shareholders until the tax loss carryforwards have been utilized.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.625% of
the first $200 million of the Fund's average daily net assets, plus 0.55% of
the Fund's average daily net assets of the next $300 million, plus 0.50% of
the Fund's average daily net assets of the next $500 million, plus 0.45% of
the Fund's average daily net assets in excess of $1 billion. During the period
May 1, 1998 (date operations commenced) through December 31, 1998, AIM waived
fees and reimbursed expenses of $45,526.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the period May 1, 1998 (date
operations commenced) through December 31, 1998, AIM was reimbursed $27,339
for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the period May 1, 1998 (date operations commenced) through December
31, 1998, the Fund incurred legal fees of $1,697 for services rendered by
Kramer, Levin, Naftalis & Frankel as counsel to the Board of Directors. A
member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $655 under an expense offset
arrangement. The effect of the above arrangement resulted in a reduction of
the Fund's total expenses of $655 during the period May 1, 1998 (date
operations commenced) through December 31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest a director's fees,
if so elected by such director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the period May 1, 1998 (date operations
commenced) through December 31, 1998 was $9,741,226 and $1,711,250,
respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $ 152,901
- -------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (478,651)
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities $(325,750)
===============================================================================
Investments have the same cost for tax and financial statements.
AIM V.I. HIGH YIELD FUND
FS-98
329
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the period May 1, 1998 (date
operations commenced) through December 31, 1998 were as follows:
SHARES AMOUNT
------- ----------
Sold 910,186 $8,767,632
- ---------------------------------------------------------
Issued as reinvestment of dividends 37,577 330,305
- ---------------------------------------------------------
Reacquired (46,088) (431,712)
- ---------------------------------------------------------
901,675 $8,666,225
=========================================================
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during the period May 1, 1998 (date operations commenced) through December 31,
1998.
1998
------
Net asset value, beginning of period $10.00
- ----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.39
- ----------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (1.15)
- ----------------------------------------------------------------------
Total from investment operations (0.76)
- ----------------------------------------------------------------------
Less dividends from net investment income (0.40)
- ----------------------------------------------------------------------
Net asset value, end of period $ 8.84
================================================================= ======
Total return(a) (7.61)%
================================================================= ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s omitted) $7,966
================================================================= ======
Ratio of expenses to average net assets(b) 1.13%(c)
================================================================= ======
Ratio of net investment income to average net assets(d) 9.75%(c)
================================================================= ======
Portfolio turnover rate 39%
================================================================= ======
(a) Total return is not annualized.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements
was 2.50% (annualized).
(c) Ratios are based on average net assets of $4,940,917.
(d) After fee waivers and/or expense reimbursements. Ratio of net
investment income to average net assets prior to fee waivers and/or
expense reimbursements was 8.36% (annualized).
AIM V.I. HIGH YIELD FUND
FS-99
330
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. International Equity Fund, a series of shares of common stock of AIM
Variable Insurance Funds, Inc. including the schedule of investments as of
December 31, 1998, the related statement of operations for the year then ended,
the statement of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended, the eleven month period ended December 31, 1995, the year
ended January 31, 1995, and the period May 5, 1993 (commencement of operations)
through January 31, 1994. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. International Equity Fund, as of December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended, the eleven month period ended
December 31, 1995, the year ended January 31, 1995 and the period May 5, 1993
(commencement of operations) through January 31, 1994 in conformity with
generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. INTERNATIONAL EQUITY FUND
FS-100
331
SCHEDULE OF INVESTMENTS
December 31, 1998
MARKET
SHARES VALUE
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 91.58%
ARGENTINA - 1.11%
Telefonica de Argentina S.A.-ADR (Telephone) 29,300 $ 818,569
- -----------------------------------------------------------------------------
YPF Sociedad Anonima-ADR (Oil-International
Integrated) 65,900 1,841,081
- -----------------------------------------------------------------------------
2,659,650
- -----------------------------------------------------------------------------
AUSTRALIA - 0.87%
AMP Ltd. (Insurance-Life/Health)(a) 120,800 1,529,244
- -----------------------------------------------------------------------------
Cable & Wireless Optus, Ltd. (Telephone)(a) 268,000 562,851
- -----------------------------------------------------------------------------
2,092,095
- -----------------------------------------------------------------------------
BELGIUM - 3.25%
Barco N.V. (Manufacturing-Diversified) 4,000 1,123,010
- -----------------------------------------------------------------------------
Colruyt N.V. (Retail-Food Chains) 2,600 2,167,294
- -----------------------------------------------------------------------------
Delhaize-Le Lion, S.A. (Retail-Food & Drug)(a) 29,000 2,551,664
- -----------------------------------------------------------------------------
UCB S.A. (Manufacturing-Diversified) 320 1,963,531
- -----------------------------------------------------------------------------
7,805,499
- -----------------------------------------------------------------------------
BRAZIL - 0.95%
Companhia Brasileira de Distribuicao Grupo Pao de
Acucar-Pfd. (Retail-Food Chain) 57,700 894,350
- -----------------------------------------------------------------------------
Embratel Participacoes S.A. ADR (Telephone)(a) 14,100 196,519
- -----------------------------------------------------------------------------
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-
Exploration & Production) 3,013 341,719
- -----------------------------------------------------------------------------
Tele Celular Sul Participacoes S.A.
(Telecommunications-Cellular/Wireless)(a) 1,410 24,587
- -----------------------------------------------------------------------------
Tele Centro Oeste Celular Participacoes S.A.
(Telecommunication-Cellular/Wireless)(a) 1 3
- -----------------------------------------------------------------------------
Tele Centro Sul Participacoes S.A. (Telephone)(a) 2,820 117,911
- -----------------------------------------------------------------------------
Tele Sudeste Celular Participacoes S.A.
(Telecommunications-Cellular/Wireless) 2,820 58,339
- -----------------------------------------------------------------------------
Telecomunicacoes Brasileiras S.A.-ADR (Telephone) 14,100 1,542
- -----------------------------------------------------------------------------
Telesp Celular Participacoes S.A.
(Telecommunications-Cellular/Wireless)(a) 5,640 98,700
- -----------------------------------------------------------------------------
Telesp Celular S.A. (Telecommunications-
Cellular/Wireless)(a) 5,500 241,763
- -----------------------------------------------------------------------------
Telesp Participacoes S.A.-ADR (Telephone) 14,100 311,963
- -----------------------------------------------------------------------------
2,287,396
- -----------------------------------------------------------------------------
CANADA - 5.55%
ATI Technologies, Inc. (Computers-Hardware)(a) 43,100 491,565
- -----------------------------------------------------------------------------
Bank of Montreal (Banks-Major Regional) 35,000 1,411,438
- -----------------------------------------------------------------------------
BCE Inc. (Telephone) 32,300 1,221,278
- -----------------------------------------------------------------------------
Bombardier Inc. (Aerospace/Defense) 137,600 1,978,562
- -----------------------------------------------------------------------------
MARKET
SHARES VALUE
CANADA - (CONTINUED)
Canadian National Railway Co. (Railroads) 9,000 $ 466,874
- -------------------------------------------------------------------------------
Imasco Ltd. (Manufacturing-Diversified) 95,600 2,043,216
- -------------------------------------------------------------------------------
Northern Telecom Ltd.-ADR (Communications Equipment) 10,917 547,215
- -------------------------------------------------------------------------------
Royal Bank of Canada (Banks-Major Regional) 32,500 1,626,062
- -------------------------------------------------------------------------------
Suncor Energy, Inc. (Oil-International Integrated) 38,000 1,142,483
- -------------------------------------------------------------------------------
Teleglobe, Inc. (Telecommunications) 39,500 1,419,935
- -------------------------------------------------------------------------------
Toronto-Dominion Bank (Banks-Regional) 28,100 988,092
- -------------------------------------------------------------------------------
13,336,720
- -------------------------------------------------------------------------------
CROATIA - 0.25%
Pliva DD - GDR (Health Care - Drugs-Major
Pharmaceutical) (Acquired 05/13/98-05/20/98; Cost
$604,917)(b) 36,000 597,600
- -------------------------------------------------------------------------------
FINLAND - 1.81%
Nokia Oyj A.B.-Class A (Communications Equipment) 26,200 3,187,285
- -------------------------------------------------------------------------------
Sonera Group Oyj (Telecommunications-
Cellular/Wireless) (Acquired 11/10/98;
Cost $700,547)(a)(b) 65,250 1,152,262
- -------------------------------------------------------------------------------
4,339,547
- -------------------------------------------------------------------------------
FRANCE - 16.11%
Accor S.A. (Lodging-Hotels) 5,500 1,190,625
- -------------------------------------------------------------------------------
Altran Technologies, S.A. (Services-Commercial &
Consumer) 3,900 940,549
- -------------------------------------------------------------------------------
AXA S.A. (Insurance-Multi-Line) 13,000 1,883,889
- -------------------------------------------------------------------------------
Banque Nationale de Paris (Banks-Major Regional) 36,000 2,963,986
- -------------------------------------------------------------------------------
Cap Gemini Sogeti S.A. (Computer-Software & Services) 20,800 3,337,973
- -------------------------------------------------------------------------------
Danone (Foods) 8,000 2,290,008
- -------------------------------------------------------------------------------
Elf Aquitaine S.A. (Oil & Gas-Refining & Marketing) 19,500 2,253,690
- -------------------------------------------------------------------------------
Essilor International S.A. (Manufacturing-
Specialized) 2,275 895,429
- -------------------------------------------------------------------------------
Etablissements Economiques du Casino Guichard-
Perrachon (Retail-Food Chains)(a) 20,400 2,124,126
- -------------------------------------------------------------------------------
Legrand S.A. (Housewares) 6,900 1,828,232
- -------------------------------------------------------------------------------
Pinault-Printemps-Redoute S.A. (Retail-General
Merchandise) 17,800 3,401,091
- -------------------------------------------------------------------------------
Promodes (Retail-Food Chains) 3,650 2,653,833
- -------------------------------------------------------------------------------
PSA Peugeot Citreon (Automobiles) 7,000 1,083,281
- -------------------------------------------------------------------------------
Renault S.A. (Automobiles) 49,000 2,200,376
- -------------------------------------------------------------------------------
Rexal S.A. (Distributors-Food & Health) 13,600 1,291,994
- -------------------------------------------------------------------------------
Rhone-Poulenc-Class A (Chemicals-Diversified) 25,100 1,291,486
- -------------------------------------------------------------------------------
AIM V.I. INTERNATIONAL EQUITY FUND
FS-101
332
MARKET
SHARES VALUE
FRANCE - (CONTINUED)
Societe Generale (Banks-Major Regional) 8,550 $ 1,384,337
- -------------------------------------------------------------------------------
Societe Television Francaise 1 (Broadcasting-
Television, Radio & Cable) 6,600 1,174,881
- -------------------------------------------------------------------------------
Suez Lyonnaise des Eaux (Manufacturing-Diversified) 11,600 2,382,467
- -------------------------------------------------------------------------------
Total S.A.-Class B (Oil & Gas-Refining & Marketing) 9,500 961,982
- -------------------------------------------------------------------------------
Valeo S.A. (Auto Parts & Equipment) 15,000 1,181,859
- -------------------------------------------------------------------------------
38,716,094
- -------------------------------------------------------------------------------
GERMANY - 5.13%
Allianz A.G. (Insurance-Multi-Line) 7,600 2,786,606
- -------------------------------------------------------------------------------
Bayerische Vereinsbank A.G. (Banks-Major Regional) 27,000 2,114,438
- -------------------------------------------------------------------------------
BHF-Bank A.G. (Banks-Major Regional) 15,000 603,097
- -------------------------------------------------------------------------------
DaimlerChrysler A.G. (Automobiles) 12,964 1,279,751
- -------------------------------------------------------------------------------
Dresdner Bank A.G. (Banks-Major Regional) 38,500 1,617,259
- -------------------------------------------------------------------------------
Karstadt A.G. (Retail-Department Stores) 6,200 3,236,918
- -------------------------------------------------------------------------------
Porsche A.G.-Pfd. (Automobiles) 300 684,109
- -------------------------------------------------------------------------------
12,322,178
- -------------------------------------------------------------------------------
HONG KONG - 1.73%
China Telecom Ltd. (Telecommunications-
Cellular/Wireless)(a) 582,000 1,006,673
- -------------------------------------------------------------------------------
Cosco Pacific Ltd. (Financial-Diversified) 2,444,000 1,017,400
- -------------------------------------------------------------------------------
Hutchison Whampoa Ltd. (Retail-Food Chains) 242,000 1,710,253
- -------------------------------------------------------------------------------
Ng Fung Hong Ltd. (Foods) 460,000 412,671
- -------------------------------------------------------------------------------
4,146,997
- -------------------------------------------------------------------------------
INDONESIA - 0.34%
Gulf Indonesia Resources Ltd. (Oil-International
Integrated)(a) 127,400 828,100
- -------------------------------------------------------------------------------
IRELAND - 1.95%
Allied Irish Banks PLC (Banks-Regional) 176,500 3,144,447
- -------------------------------------------------------------------------------
Bank of Ireland (Banks-Major Regional) 70,500 1,543,049
- -------------------------------------------------------------------------------
4,687,496
- -------------------------------------------------------------------------------
ITALY - 6.24%
Assicurazioni Generali (Insurance-Multi-Line) 49,100 2,049,918
- -------------------------------------------------------------------------------
Banca Commerciale Italiana (Banks-Major Regional) 109,300 753,930
- -------------------------------------------------------------------------------
Banca di Roma (Banks-Major Regional)(a) 972,000 1,646,760
- -------------------------------------------------------------------------------
Credito Italiano S.p.A. (Banks-Major Regional) 333,400 1,975,950
- -------------------------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining
& Marketing) 189,000 1,235,070
- -------------------------------------------------------------------------------
Olivetti S.p.A. (Telecommunications-
Cellular/Wireless)(a) 378,000 1,315,121
- -------------------------------------------------------------------------------
San Paolo-IMI S.p.A. (Banks-Major Regional) 122,160 2,158,330
- -------------------------------------------------------------------------------
Telecom Italia Mobile S.p.A. (Telecommunications-
Cellular/Wireless) 271,000 2,000,484
- -------------------------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 217,500 1,855,600
- -------------------------------------------------------------------------------
14,991,163
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE
JAPAN - 7.68%
Advantest Corp. (Electronics-Instrumentation)(a) 34,700 $ 2,199,079
- -------------------------------------------------------------------------------
Alps Electric Co., Ltd. (Electronics-Component
Distributors)(a) 47,000 863,206
- -------------------------------------------------------------------------------
Hoya Corp.(Manufacturing-Specialized)(a) 17,000 827,580
- -------------------------------------------------------------------------------
Matsushita Communication Industrial Co., Ltd.
(Telephone)(a) 16,000 754,824
- -------------------------------------------------------------------------------
Murata Manufacturing Co., Ltd. (Electronics-Component
Distributors) 20,000 830,235
- -------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corp. (Telephone) 1,500 1,157,727
- -------------------------------------------------------------------------------
Nippon Television Network Corp. (Broadcasting-
Television, Radio & Cable) 2,690 792,857
- -------------------------------------------------------------------------------
NTT Data Corp. (Computers-Software & Services)(a) 365 1,812,400
- -------------------------------------------------------------------------------
Okuma Corp. (Machine Tools)(a) 205,000 1,066,915
- -------------------------------------------------------------------------------
Omron Corp. (Electronics-Component Distributors)(a) 57,000 780,988
- -------------------------------------------------------------------------------
SMC Corp. (Machinery-Diversified) 5,900 471,039
- -------------------------------------------------------------------------------
Sony Corp. (Electronics-Component Distributors) 16,800 1,223,792
- -------------------------------------------------------------------------------
Takeda Chemical Industries (Health Care - Drugs-
Generic & Other) 53,000 2,040,627
- -------------------------------------------------------------------------------
TDK Corp. (Electrical Equipment) 17,000 1,554,346
- -------------------------------------------------------------------------------
Tokyo Electron Ltd. (Electronics-Semiconductors)(a) 55,000 2,088,423
- -------------------------------------------------------------------------------
18,464,038
- -------------------------------------------------------------------------------
MEXICO - 2.11%
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 39,800 527,350
- -------------------------------------------------------------------------------
Formento Economico Mexicano, S.A. de C.V.-Class B
(Beverages-Alcoholic) 70,720 1,882,920
- -------------------------------------------------------------------------------
Grupo Financiero Banamex Accival, S.A. de C.V.
(Financial-Diversified)(a) 767,000 1,005,622
- -------------------------------------------------------------------------------
Grupo Modelo S.A. de C.V.-Series C (Beverages-
Alcoholic) 387,000 818,955
- -------------------------------------------------------------------------------
Grupo Televisa S.A.-GDR (Entertainment)(a) 33,700 831,969
- -------------------------------------------------------------------------------
5,066,816
- -------------------------------------------------------------------------------
NETHERLANDS - 6.94%
Getronics N.V. (Computers-Software & Services) 42,500 2,104,408
- -------------------------------------------------------------------------------
Heineken N.V. (Beverages-Alcoholic) 46,800 2,815,675
- -------------------------------------------------------------------------------
IHC Caland N.V. (Manufacturing-Specialized) 11,100 460,973
- -------------------------------------------------------------------------------
Koninklijke Ahold N.V. (Retail-Food Chains) 51,800 1,914,024
- -------------------------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 26,000 1,238,952
- -------------------------------------------------------------------------------
Laurus N.V. (Retail-General Merchandise) 23,380 590,039
- -------------------------------------------------------------------------------
Randstad Holdings N.V. (Services-Commercial &
Consumer) 13,000 699,074
- -------------------------------------------------------------------------------
Vendex N.V. (Retail-General Merchandise) 33,400 810,904
- -------------------------------------------------------------------------------
Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit (Publishing) 90,100 3,396,380
- -------------------------------------------------------------------------------
Wolters Kluwer N.V. (Specialty Printing)(a) 12,350 2,642,014
- -------------------------------------------------------------------------------
16,672,443
- -------------------------------------------------------------------------------
AIM V.I. INTERNATIONAL EQUITY FUND
FS-102
333
MARKET
SHARES VALUE
NORWAY - 0.18%
Merkantildata A.S.A (Services-Commercial & Consumer) 44,000 $ 434,371
- ------------------------------------------------------------------------------
PHILIPPINES - 0.30%
Philippine Long Distance Telephone Co.-ADR
(Telephone) 11,600 300,875
- ------------------------------------------------------------------------------
Philippine Long Distance Telephone Co. (Telephone) 16,660 429,935
- ------------------------------------------------------------------------------
730,810
- ------------------------------------------------------------------------------
PORTUGAL - 2.44%
Banco Comercial Portugues, S.A. (Banks-Major
Regional) 66,200 2,037,072
- ------------------------------------------------------------------------------
Electricidade de Portugal, S.A.-ADR (Electric
Companies) 13,800 614,962
- ------------------------------------------------------------------------------
Electricidade de Portugal, S.A. (Electric Companies) 25,000 550,915
- ------------------------------------------------------------------------------
Portugal Telecom S.A. (Telephone) 35,900 1,647,469
- ------------------------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.
(Telecommunications-Cellular/Wireless) 5,000 1,022,980
- ------------------------------------------------------------------------------
5,873,398
- ------------------------------------------------------------------------------
SINGAPORE - 0.24%
Keppel Corp. Ltd. (Engineering & Construction)(a) 217,000 581,472
- ------------------------------------------------------------------------------
SPAIN - 2.96%
Corp. Financiera Reunida, S.A. (Investment
Management)(a) 49,400 742,372
- ------------------------------------------------------------------------------
Endesa S.A. (Electric Companies) 49,200 1,302,119
- ------------------------------------------------------------------------------
Iberdrola S.A. (Electric Companies) 148,000 2,765,820
- ------------------------------------------------------------------------------
Telefonica de Espana (Telephone) 50,900 2,260,710
- ------------------------------------------------------------------------------
Telefonica de Espana-Rights, expiring 01/30/99
(Telephone) 50,900 45,143
- ------------------------------------------------------------------------------
7,116,164
- ------------------------------------------------------------------------------
SWEDEN - 1.09%
Hennes & Mauritz A.B.-Class B (Retail-Specialty-
Apparel) 21,494 1,752,343
- ------------------------------------------------------------------------------
WM-Data A.B. (Computers-Software & Services) 20,500 873,523
- ------------------------------------------------------------------------------
2,625,866
- ------------------------------------------------------------------------------
SWITZERLAND - 4.35%
Adecco S.A. (Services-Commercial & Consumer)(a) 2,600 1,187,154
- ------------------------------------------------------------------------------
Julius Baer Holding A.G. (Banks-Major Regional)(a) 230 764,601
- ------------------------------------------------------------------------------
Nestle S.A. (Foods) 800 1,741,917
- ------------------------------------------------------------------------------
Novartis A.G. (Health Care-Diversified) 1,380 2,713,370
- ------------------------------------------------------------------------------
UBS A.G. (Banks-Major Regional) 7,107 2,184,062
- ------------------------------------------------------------------------------
Zurich Allied A.G. (Insurance-Multi-Line)(a) 2,500 1,851,515
- ------------------------------------------------------------------------------
10,442,619
- ------------------------------------------------------------------------------
MARKET
SHARES VALUE
UNITED KINGDOM - 18.00%
Airtours PLC (Services-Commercial & Consumer) 135,450 $ 859,898
- -------------------------------------------------------------------------------
Bodycote International PLC (Chemicals-Specialty) 40,500 553,600
- -------------------------------------------------------------------------------
British Aerospace PLC (Aerospace/Defense) 226,200 1,915,321
- -------------------------------------------------------------------------------
British Energy PLC (Electric Companies-Utilities) 219,000 2,502,198
- -------------------------------------------------------------------------------
British Petroleum Co. PLC (Oil & Gas-Refining &
Marketing) 113,800 1,697,390
- -------------------------------------------------------------------------------
Cable & Wireless PLC (Telecommunications-
Cellular/Wireless) 107,810 1,324,062
- -------------------------------------------------------------------------------
Compass Group PLC (Services-Commercial & Consumer) 156,000 1,784,980
- -------------------------------------------------------------------------------
EMAP PLC (Publishing) 93,100 1,779,313
- -------------------------------------------------------------------------------
General Electric Co. PLC (Manufacturing-Diversified) 262,600 2,367,551
- -------------------------------------------------------------------------------
GKN PLC (Manufacturing-Diversified) 100,000 1,325,365
- -------------------------------------------------------------------------------
Hays PLC (Services-Commercial & Consumer) 278,800 2,444,106
- -------------------------------------------------------------------------------
Kingfisher PLC (Retail-Department Stores) 261,000 2,821,582
- -------------------------------------------------------------------------------
Ladbroke Group PLC (Leisure Time-Products) 234,000 939,156
- -------------------------------------------------------------------------------
Logica PLC (Computer Software/Services) 92,500 803,986
- -------------------------------------------------------------------------------
Misys PLC (Services-Commercial & Consumer) 127,500 927,558
- -------------------------------------------------------------------------------
Orange PLC (Telecommunications)(a) 172,000 1,996,640
- -------------------------------------------------------------------------------
Pearson PLC (Specialty Printing) 106,300 2,107,553
- -------------------------------------------------------------------------------
Provident Financial PLC (Consumer Finance) 89,543 1,316,982
- -------------------------------------------------------------------------------
Railtrack Group PLC (Shipping) 78,644 2,053,272
- -------------------------------------------------------------------------------
Rentokil Initial PLC (Services-Commercial & Consumer) 375,000 2,823,152
- -------------------------------------------------------------------------------
Seton Scholl Healthcare PLC (Healthcare-Medical
Products & Supplies)(a) 42,000 586,318
- -------------------------------------------------------------------------------
Somerfield PLC (Retail-Food Chains) 145,000 968,720
- -------------------------------------------------------------------------------
Stagecoach Holdings PLC (Shipping) 145,000 576,534
- -------------------------------------------------------------------------------
Unilever PLC (Foods) 208,000 2,329,850
- -------------------------------------------------------------------------------
Vodafone Group PLC (Telecommunications-
Cellular/Wireless) 185,000 3,000,726
- -------------------------------------------------------------------------------
WPP Group PLC (Services-Advertising/ Marketing) 240,000 1,458,816
- -------------------------------------------------------------------------------
43,264,629
- -------------------------------------------------------------------------------
TOTAL FOREIGN STOCKS & OTHER EQUITY INTERESTS (Cost
$163,998,293) 220,083,161
- -------------------------------------------------------------------------------
AIM V.I. INTERNATIONAL EQUITY FUND
FS-103
334
PRINCIPAL MARKET
AMOUNT VALUE
FOREIGN CONVERTIBLE BONDS - 0.43%
HONG KONG - 0.08%
Cosco Treasury Co. Ltd. (Financial -Diversified),
Conv. Gtd. Bonds, 1.00%, 03/13/03 $ 246,000 $ 178,965
- -------------------------------------------------------------------------------
UNITED KINGDOM - 0.35%
Airtours PLC (Services -
Commercial & Consumer)(c),
Conv. Sub. Notes, 5.75%, 01/05/04 GBP 498,000 850,386
- -------------------------------------------------------------------------------
TOTAL FOREIGN CONVERTIBLE BONDS (Cost $995,959) 1,029,351
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 7.46%(d)
Goldman, Sachs & Co., 4.40%, 01/04/99 (Cost
$17,938,040)(e) 17,938,040 17,938,040
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.47% 239,050,552
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.53% 1,263,760
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $240,314,312
===============================================================================
NOTES TO SCHEDULE OF INVESTMENTS
(a) Non-income producing security.
(b) Restricted securities. May be resold to qualified institutional buyers in
accordance with provisions of Rule 144A under the Securities Act of 1933,
as amended. The valuation of the these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities was $1,749,862 which at 12/31/98
represented 0.73% of the Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$700,342,222. Collateralized by $646,494,000 U.S. Government obligations,
0% to 11.75% due 02/15/99 to 04/15/28 with an aggregate market value at
12/31/98 of $714,694,897.
Abbreviations:
ADR - American Depositary Receipt
Conv.- Convertible
Deb. - Debentures
GBP - British Pound Sterling
GDR. - Global Depositary Receipt
Gtd. - Guaranteed
Pfd. - Preferred
Sub. - Subordinated
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL EQUITY FUND
FS-104
335
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, at market value (cost $182,932,292) $239,050,552
- ----------------------------------------------------------------------
Foreign currencies, at value (cost $963,811) 982,733
- ----------------------------------------------------------------------
Receivables for:
Capital stock sold 50,764
- ----------------------------------------------------------------------
Investments sold 119,244
- ----------------------------------------------------------------------
Dividends and interest 450,298
- ----------------------------------------------------------------------
Investment for deferred compensation plan 23,005
- ----------------------------------------------------------------------
Other assets 687
- ----------------------------------------------------------------------
Total assets 240,677,283
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 136,066
- ----------------------------------------------------------------------
Deferred compensation plan 23,005
- ----------------------------------------------------------------------
Accrued advisory fees 148,393
- ----------------------------------------------------------------------
Accrued directors' fees 397
- ----------------------------------------------------------------------
Accrued operating expenses 55,110
- ----------------------------------------------------------------------
Total liabilities 362,971
- ----------------------------------------------------------------------
Net assets applicable to shares outstanding $240,314,312
======================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ----------------------------------------------------------------------
Outstanding 12,249,573
======================================================================
Net asset value, offering and redemption price per share $19.62
======================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends (net of $426,044 foreign withholding tax) $ 3,026,033
- -------------------------------------------------------------------------
Interest 937,102
- -------------------------------------------------------------------------
Total investment income 3,963,135
- -------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,744,127
- -------------------------------------------------------------------------
Administrative services fees 68,587
- -------------------------------------------------------------------------
Custodian fees 220,051
- -------------------------------------------------------------------------
Directors' fees and expenses 8,867
- -------------------------------------------------------------------------
Other 70,591
- -------------------------------------------------------------------------
Total expenses 2,112,223
- -------------------------------------------------------------------------
Less: Expenses paid indirectly (1,417)
- -------------------------------------------------------------------------
Net expenses 2,110,806
- -------------------------------------------------------------------------
Net investment income 1,852,329
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES AND
FOREIGN CURRENCIES:
Net realized gain from:
Investment securities 12,331,648
- -------------------------------------------------------------------------
Foreign currencies 929,906
- -------------------------------------------------------------------------
13,261,554
- -------------------------------------------------------------------------
Net unrealized appreciation of:
Investment securities 15,897,320
- -------------------------------------------------------------------------
Foreign currencies 72,349
- -------------------------------------------------------------------------
15,969,669
- -------------------------------------------------------------------------
Net gain from investment securities and foreign currencies 29,231,223
- -------------------------------------------------------------------------
Net increase in net assets resulting from operations $31,083,552
=========================================================================
See Notes to Financial Statements.
AIM V.I. INTERNATIONAL EQUITY FUND
FS-105
336
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
1998 1997
------------ ------------
OPERATIONS:
Net investment income $ 1,852,329 $ 1,372,766
- -----------------------------------------------------------------------------
Net realized gain (loss) from investment
securities and foreign currencies 13,261,554 (743,433)
- -----------------------------------------------------------------------------
Net unrealized appreciation of investment
securities and foreign currencies 15,969,669 11,878,346
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 31,083,552 12,507,679
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment
income (1,910,166) (955,397)
- -----------------------------------------------------------------------------
Distributions to shareholders from net realized
gains -- (3,362,028)
- -----------------------------------------------------------------------------
Net increase from capital stock transactions 118,341 37,094,253
- -----------------------------------------------------------------------------
Net increase in net assets 29,291,727 45,284,507
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of year 211,022,585 165,738,078
- -----------------------------------------------------------------------------
End of year $240,314,312 $211,022,585
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $170,399,034 $170,283,064
- -----------------------------------------------------------------------------
Undistributed net investment income 1,934,360 1,134,854
- -----------------------------------------------------------------------------
Undistributed net realized gain (loss) from
investment securities and foreign currencies 11,825,802 (580,780)
- -----------------------------------------------------------------------------
Unrealized appreciation of investment securities
and foreign currencies 56,155,116 40,185,447
- -----------------------------------------------------------------------------
$240,314,312 $211,022,585
=============================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to AIM V.I. International Equity Fund (the "Fund"). The Fund's investment
objective is to seek to provide long-term growth of capital by investing in a
diversified portfolio of international equity securities the issuers of which
are considered by AIM to have strong earnings momentum. Currently, shares of
the Fund are sold only to insurance company separate accounts to fund the
benefits of variable annuity contracts and variable life insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. If a mean is
not available, as is the case in some foreign markets, the closing bid will
be used absent a last sales price. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean of the closing bid and asked
prices. Debt obligations (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided
by the pricing service may be determined without exclusive reliance on
quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices
are not provided by any of the above methods are valued at the mean between
last bid and asked prices based upon quotes furnished by independent
sources. Securities for which market quotations either are not readily
available or are questionable are valued at fair value as determined in
good faith by or under the
AIM V.I. INTERNATIONAL EQUITY FUND
FS-106
337
supervision of the Company's officers in a manner specifically authorized by
the Board of Directors. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value.
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are
also generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Directors.
B. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
C. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency
contract for the amount of a purchase or sale of a security denominated in
a foreign currency in order to "lock in" the U.S. dollar price of that
security. The Fund could be exposed to risk if counterparties to the
contracts are unable to meet the terms of their contracts or if the value
of the foreign currency changes unfavorably.
D. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on an accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
E. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. On December 31, 1998,
undistributed income was increased by $857,343, undistributed net realized
gains decreased by $854,972 and paid-in-capital decreased by $2,371 in
order to comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2. Net assets of the
Fund were unaffected by the reclassifications discussed above.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.75% of
the first $250 million of the Fund's average daily net assets, plus 0.70% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the year ended December 31, 1998,
AIM was reimbursed $68,587 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the year ended December 31, 1998, the Fund incurred legal fees of
$2,525 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $1,417 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $1,417 during the year ended
December 31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended December 31,
1998 was $162,175,992 and $169,568,442, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, on a tax basis, as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $60,248,789
- --------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (5,508,109)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $54,740,680
==========================================================================
Cost of investments for tax purposes is $184,309,872.
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1998
and 1997 were as follows:
1998 1997
----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
Sold 2,410,075 $46,643,002 2,963,552 $ 50,938,182
- -----------------------------------------------------------------------------
Issued as reinvestment of
distributions 101,067 1,910,166 257,449 4,317,425
- -----------------------------------------------------------------------------
Reacquired (2,581,125) (48,434,827) (1,031,143) (18,161,354)
- -----------------------------------------------------------------------------
(69,983) $ 118,341 2,189,858 $ 37,094,253
=============================================================================
AIM V.I. INTERNATIONAL EQUITY FUND
FS-107
338
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during each of the years in the three-year period ended December 31, 1998, the
eleven months ended December 31, 1995, the year ended January 31, 1995 and the
period May 5, 1993 (date operations commenced) through January 31, 1994.
DECEMBER 31, JANUARY 31,
---------------------------------------- -------------------
1998 1997 1996 1995 1995 1994
-------- -------- -------- ------- ------- -------
Net asset value,
beginning of period $ 17.13 $ 16.36 $ 13.66 $ 11.03 $ 12.49 $ 10.00
- --------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.15 0.10 0.07 0.07 0.06 --
- --------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) 2.50 1.03 2.67 2.58 (1.49) 2.49
- --------------------------------------------------------------------------------------------------
Total from investment
operations 2.65 1.13 2.74 2.65 (1.43) 2.49
- --------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net
investment income (0.16) (0.08) (0.04) (0.02) (0.03) --
- --------------------------------------------------------------------------------------------------
Distributions from net
realized gains -- (0.28) -- -- -- --
- --------------------------------------------------------------------------------------------------
Total distributions (0.16) (0.36) (0.04) (0.02) (0.03) --
- --------------------------------------------------------------------------------------------------
Net asset value, end of
period $ 19.62 $ 17.13 $ 16.36 $ 13.66 $ 11.03 $ 12.49
==================================================================================================
Total return(a) 15.49% 6.94% 20.05% 24.04% (11.48)% 24.90%
==================================================================================================
Ratios/supplemental data:
Net assets, end of
period (000s omitted) $240,314 $211,023 $165,738 $82,257 $55,019 $23,533
==================================================================================================
Ratio of expenses to
average net assets 0.91%(b) 0.93% 0.96% 1.15%(c) 1.27%(d) 1.98%(c)(d)
==================================================================================================
Ratio of net investment
income (loss) to
average net assets 0.80%(b) 0.68% 0.78% 0.75%(c) 0.60%(e) (0.15)%(c)(e)
==================================================================================================
Portfolio turnover rate 76% 57% 59% 67% 64% 26%
==================================================================================================
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $232,550,286
(c) Annualized.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.28% and 3.06% (annualized), for January 1995 and 1994 respectively.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were 0.59% and (1.23)% (annualized), for January 1995 and
1994 respectively.
AIM V.I. INTERNATIONAL EQUITY FUND
FS-108
339
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Money Market Fund, a series of shares of common stock of AIM Variable
Insurance Funds, Inc. including the schedule of investments as of December 31,
1998, the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the three years in the period
then ended, the eleven month period ended December 31, 1995, the year ended
January 31, 1995, and the period May 5, 1993 (commencement of operations)
through January 31, 1994. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Money Market Fund, as of December 31, 1998, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended and the financial highlights for each of the
three years in the period then ended, the eleven month period ended December
31, 1995, the year ended January 31, 1995 and the period May 5, 1993
(commencement of operations) through January 31, 1994 in conformity with
generally accepted accounting principles.
/s/ TAIT, WELLER & BAKER
------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. MONEY MARKET FUND
FS-109
340
SCHEDULE OF INVESTMENTS
December 31, 1998
PAR
(000) VALUE
COMMERCIAL PAPER - 42.60%(a)
ASSET-BACKED SECURITIES - MULTI-PURPOSE - 22.50%
Bavaria TRR Corp.
5.20%, 03/02/99 $ 2,000 $ 1,982,667
- ---------------------------------------------------------------------
Clipper Receivables Corp.
5.75%, 01/08/99 3,000 2,996,646
- ---------------------------------------------------------------------
Edison Asset Securitization, LLC
5.30%, 01/29/99 3,000 2,987,634
- ---------------------------------------------------------------------
Falcon Asset Securitization Corp.
5.28%, 01/19/99 500 498,680
- ---------------------------------------------------------------------
Mont Blanc Capital Corp.
5.20%, 01/13/99 2,000 1,996,533
- ---------------------------------------------------------------------
Monte Rosa Capital Corp.
5.32%, 01/21/99 1,000 997,045
- ---------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.25%, 03/11/99 2,000 1,979,875
- ---------------------------------------------------------------------
5.06%, 04/21/99 1,000 984,539
- ---------------------------------------------------------------------
14,423,619
- ---------------------------------------------------------------------
ASSET-BACKED SECURITIES - TRADE RECEIVABLES - 6.21%
Corporate Asset Funding Co.
5.20%, 02/17/99 1,000 993,211
- ---------------------------------------------------------------------
Delaware Funding Corp.
5.45%, 01/11/99 2,000 1,996,972
- ---------------------------------------------------------------------
5.15%, 03/11/99 1,000 990,129
- ---------------------------------------------------------------------
3,980,312
- ---------------------------------------------------------------------
BANKS - DOMESTIC - 3.10%
First Chicago Financial Corp.
5.26%, 02/19/99 2,000 1,985,681
- ---------------------------------------------------------------------
FINANCE - MULTIPLE INDUSTRY - 3.08%
General Electric Capital Corp.
5.05%, 04/06/99 2,000 1,973,347
- ---------------------------------------------------------------------
HOUSEHOLD PRODUCTS - 4.61%
Colgate-Palmolive Co.
4.85%, 04/22/99 3,000 2,955,138
- ---------------------------------------------------------------------
INSURANCE (LIFE) - 1.56%
Hancock (John) Capital Corp.
5.35%, 01/22/99 1,000 996,879
- ---------------------------------------------------------------------
INSURANCE (OTHER) - 1.54%
Marsh & McLennan Companies, Inc.
5.10%, 03/22/99 1,000 988,667
- ---------------------------------------------------------------------
Total Commercial Paper (Cost $27,303,643) 27,303,643
- ---------------------------------------------------------------------
PAR
(000) VALUE
CORPORATE NOTES - 1.56%
AUTOMOBILE - 1.56%
Ford Motor Credit Co.
5.625%, 01/15/99 (Cost $1,000,070) $ 1,000 $ 1,000,070
- ----------------------------------------------------------------------------
MASTER NOTE AGREEMENTS - 12.48%(b)
Citicorp Securities, Inc.
5.75%, 01/25/99(c) 2,000 2,000,000
- ----------------------------------------------------------------------------
Merrill Lynch Mortgage Capital, Inc.
5.78%, 08/16/99(d) 3,000 3,000,000
- ----------------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co.
5.60%, 05/24/99(e) 3,000 3,000,000
- ----------------------------------------------------------------------------
Total Master Note Agreements
(Cost $8,000,000) 8,000,000
- ----------------------------------------------------------------------------
TIME DEPOSITS - 4.68%
BANKS - FOREIGN - 4.68%
Credit Communal de Belgique
5.125%, 01/04/99 (Cost $3,000,000) 3,000 3,000,000
- ----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES - 3.12%
Federal National Mortgage Association
4.696%, 06/02/99(f) (Cost $2,000,000) 2,000 2,000,000
- ----------------------------------------------------------------------------
Total Investments, excluding Repurchase Agreements 41,303,713
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 35.39%(g)
Bear, Stearns & Co., Inc.,
4.85%(h) 3,000 3,000,000
- ----------------------------------------------------------------------------
J.P. Morgan Securities, Inc.,
4.75%, 01/04/99(i) 15,000 15,000,000
- ----------------------------------------------------------------------------
SBC Warburg Dillon Read Securities, Inc.,
4.75%, 01/04/99(j) 4,677 4,676,787
- ----------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $22,676,787) 22,676,787
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.83% 63,980,500(k)
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.17% 109,823
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $64,090,323
============================================================================
AIM V.I. MONEY MARKET FUND
FS-110
341
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Some commercial paper is traded on a discount basis. In such cases, the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(b) The investments in master note agreements are through participation in
joint accounts with other mutual funds, private accounts, and certain
nonregistered investment companies managed by the investment advisor or its
affiliates.
(c) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon 3 business days' notice to the issuer.
Interest rates on master notes are redetermined periodically. Rate shown is
the rate in effect on 12/31/98.
(d) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon 2 days' notice to the issuer. Interest rates
on master notes are redetermined periodically. Rate shown is the rate in
effect on 12/31/98.
(e) Master Note Purchase Agreement may be terminated by either party upon 3
business days' prior written notice. Interest rates on master notes are
redetermined periodically. Rate shown is the rate in effect on 12/31/98.
(f) Interest rates are redetermined weekly. Rate shown is the rate in effect on
12/31/98.
(g) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(h) Open joint repurchase agreement entered into 12/31/98. Either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $354,763,000 U.S. Government obligations, 0% to 8.65% due
01/15/99 to 06/11/18 with an aggregate market value at 12/31/98 of
$360,262,932.
(i) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$500,263,889. Collateralized by $606,702,000 U.S. Government obligations,
0% to 7.55% due 01/04/99 to 10/03/22 with an aggregate market value at
12/31/98 of $510,001,764.
(j) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75% due 06/30/99 to 11/15/21 with an aggregate market
value at 12/31/98 of $1,020,001,079.
(k) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
FS-111
342
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, excluding repurchase agreements, at value (cost
$41,303,713) $ 41,303,713
- --------------------------------------------------------------------------
Repurchase agreements (cost $22,676,787) 22,676,787
- --------------------------------------------------------------------------
Receivables for:
Capital stock sold 78,786
- --------------------------------------------------------------------------
Interest receivable 71,601
- --------------------------------------------------------------------------
Investment for deferred compensation plan 22,139
- --------------------------------------------------------------------------
Other assets 385
- --------------------------------------------------------------------------
Total assets 64,153,411
- --------------------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 80
- --------------------------------------------------------------------------
Deferred compensation plan 22,139
- --------------------------------------------------------------------------
Accrued advisory fees 21,659
- --------------------------------------------------------------------------
Accrued directors' fees 293
- --------------------------------------------------------------------------
Accrued operating expenses 18,917
- --------------------------------------------------------------------------
Total liabilities 63,088
- --------------------------------------------------------------------------
Net assets applicable to shares outstanding $ 64,090,323
==========================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- --------------------------------------------------------------------------
Outstanding 64,090,266
==========================================================================
Net asset value, offering and redemption price per share $ 1.00
==========================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
INVESTMENT INCOME:
Interest $3,483,093
- ----------------------------------------------------------------
EXPENSES:
Advisory fees 252,407
- ----------------------------------------------------------------
Administrative services fees 36,480
- ----------------------------------------------------------------
Custodian fees 26,470
- ----------------------------------------------------------------
Directors' fees and expenses 8,885
- ----------------------------------------------------------------
Other 43,075
- ----------------------------------------------------------------
Total expenses 367,317
- ----------------------------------------------------------------
Net investment income 3,115,776
- ----------------------------------------------------------------
Net increase in net assets resulting from operations $3,115,776
================================================================
See Notes to Financial Statements.
AIM V.I. MONEY MARKET FUND
FS-112
343
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
1998 1997
----------- -----------
OPERATIONS:
Net investment income $ 3,115,776 $ 3,190,054
- ---------------------------------------------------------------------------
Net increase in net assets resulting from
operations 3,115,776 3,190,054
- ---------------------------------------------------------------------------
Dividends to shareholders from net investment
income (3,115,776) (3,190,054)
- ---------------------------------------------------------------------------
Net increase (decrease) from capital stock
transactions 5,455,702 (4,894,872)
- ---------------------------------------------------------------------------
Net increase (decrease) in net assets 5,455,702 (4,894,872)
- ---------------------------------------------------------------------------
NET ASSETS:
Beginning of year 58,634,621 63,529,493
- ---------------------------------------------------------------------------
End of year $64,090,323 $58,634,621
===========================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $64,090,266 $58,634,564
- ---------------------------------------------------------------------------
Undistributed net realized gain from investment
securities 57 57
- ---------------------------------------------------------------------------
$64,090,323 $58,634,621
===========================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Money Market Fund (the "Fund"). The Fund's investment
objective is to seek to provide as high a level of current income as is
consistent with the preservation of capital and liquidity. Currently, shares
of the Fund are sold only to insurance company separate accounts to fund the
benefits of variable annuity contracts and variable life insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - The Fund's securities are valued on the basis of
amortized cost which approximates market value. This method values a
security at its cost on the date of purchase and thereafter, assumes a
constant amortization to maturity of any discount or premiums.
B. Securities Transactions, Investment Income and Distributions -Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and
discounts on investments, is recorded as earned from settlement date and is
recorded on the accrual basis. Distributions to shareholders are declared
and paid daily.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and
capital gains to its shareholders. Therefore, no provision for federal
income taxes is recorded in the financial statements.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I
M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.40% of
the first $250 million of the Fund's average daily net assets, plus 0.35% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing
AIM V.I. MONEY MARKET FUND
FS-113
344
accounting services and other administrative services to the Fund. During the
year ended December 31, 1998, AIM was reimbursed $36,480 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the year ended December 31, 1998, the Fund incurred legal fees of
$3,548 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who
is not an "interested person" of AIM. The Company may invest directors' fees,
if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 4 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1998
and 1997 were as follows:
1998 1997
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
Sold 100,181,770 $100,181,770 88,948,357 $ 88,948,357
- ---------------------- ----------- ------------ ----------- ------------
Issued as reinvestment
of dividends 3,115,776 3,115,776 3,190,054 3,190,054
- ---------------------- ----------- ------------ ----------- ------------
Reacquired (97,841,844) (97,841,844) (97,033,283) (97,033,283)
- ---------------------- ----------- ------------ ----------- ------------
5,455,702 $ 5,455,702 (4,894,872) $ (4,894,872)
=========== ============ =========== ============
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during each of the years in the three-year period ended December 31, 1998, the
eleven months ended December 31, 1995, the year ended January 31, 1995 and the
period May 5, 1993 (date operations commenced) through January 31, 1994.
DECEMBER 31, JANUARY 31,
------------------------------------- -------------------
1998 1997 1996 1995 1995 1994
------- ------- ------- ------- ------- -------
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income 0.05 0.05 0.05 0.05 0.04 0.02
- ----------------------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.04) (0.02)
- ----------------------- ------- ------- ------- ------- ------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================= ======= ======= ======= ======= ======= =======
Total return 5.06% 5.14% 4.97% 5.69%(a) 3.98% 2.27%(a)
======================= ======= ======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000s omitted) $64,090 $58,635 $63,529 $65,506 $31,017 $13,891
======================= ======= ======= ======= ======= ======= =======
Ratio of expenses to
average net assets 0.58%(b) 0.59% 0.55% 0.53%(a) 0.63%(c) 0.95%(a)(d)
======================= ======= ======= ======= ======= ======= =======
Ratio of net investment
income to average net
assets 4.94%(b) 5.01% 4.84% 5.40%(a) 4.14%(c) 2.29%(a)(d)
======================= ======= ======= ======= ======= ======= =======
(a) Annualized.
(b) Ratios are based on average daily net assets of $63,101,740.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses and
net investment income to average daily net assets prior to fee waivers
and/or expense reimbursements were 0.70% and 4.07%, respectively.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses and
net investment income to average daily net assets prior to fee waivers
and/or expense reimbursements were 1.53% (annualized) and 1.70%
(annualized), respectively.
AIM V.I. MONEY MARKET FUND
FS-114
345
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
AIM Variable Insurance Funds, Inc.
We have audited the accompanying statement of assets and liabilities of AIM
V.I. Value Fund, a series of shares of common stock of AIM Variable Insurance
Funds, Inc. including the schedule of investments as of December 31, 1998, the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and
the financial highlights for each of the three years in the period then ended,
the eleven month period ended December 31, 1995, the year ended January 31,
1995, and the period May 5, 1993 (commencement of operations) through January
31, 1994. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
V.I. Value Fund, as of December 31, 1998, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the three years in
the period then ended, the eleven month period ended December 31, 1995, the
year ended January 31, 1995 and the period May 5, 1993 (commencement of
operations) through January 31, 1994 in conformity with generally accepted
accounting principles.
/s/ TAIT, WELLER & BAKER
------------------------------
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 3, 1999
AIM V.I. VALUE FUND
FS-115
346
SCHEDULE OF INVESTMENTS
December 31, 1998
MARKET
SHARES VALUE
DOMESTIC COMMON STOCKS - 85.50%
AIRLINES - 0.38%
Continental Airlines, Inc.(a) 136,900 $ 4,586,150
- ------------------------------------------------------------------
AUTOMOBILES - 0.21%
Ford Motor Co. 44,000 2,582,250
- ------------------------------------------------------------------
BANKS (MONEY CENTER) - 1.55%
Chase Manhattan Corp. (The) 278,000 18,921,375
- ------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 4.68%
Comcast Corp.-Class A 105,000 6,162,188
- ------------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 400,000 27,650,000
- ------------------------------------------------------------------
MediaOne Group, Inc.(a) 497,500 23,382,500
- ------------------------------------------------------------------
57,194,688
- ------------------------------------------------------------------
BUILDING MATERIALS - 0.48%
Masco Corp. 205,000 5,893,750
- ------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 1.05%
Comverse Technology, Inc.(a) 120,000 8,520,000
- ------------------------------------------------------------------
Lucent Technologies, Inc. 39,000 4,290,000
- ------------------------------------------------------------------
12,810,000
- ------------------------------------------------------------------
COMPUTERS (HARDWARE) - 3.23%
Dell Computer Corp.(a) 245,000 17,930,938
- ------------------------------------------------------------------
International Business Machines Corp. 46,000 8,498,500
- ------------------------------------------------------------------
Sun Microsystems, Inc.(a) 152,000 13,015,001
- ------------------------------------------------------------------
39,444,439
- ------------------------------------------------------------------
COMPUTERS (NETWORKING) - 1.64%
Cisco Systems, Inc.(a) 216,000 20,047,500
- ------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 0.98%
EMC Corp.(a) 104,000 8,840,000
- ------------------------------------------------------------------
Lexmark International Group, Inc.(a) 31,000 3,115,500
- ------------------------------------------------------------------
11,955,500
- ------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 6.87%
BMC Software, Inc.(a) 365,000 16,265,313
- ------------------------------------------------------------------
Computer Sciences Corp.(a) 190,000 12,243,125
- ------------------------------------------------------------------
Microsoft Corp.(a) 188,000 26,073,251
- ------------------------------------------------------------------
Sterling Commerce, Inc.(a) 153,000 6,885,000
- ------------------------------------------------------------------
Unisys Corp.(a) 655,000 22,556,563
- ------------------------------------------------------------------
84,023,252
- ------------------------------------------------------------------
CONSUMER FINANCE - 1.05%
MBNA Corp. 122,000 3,042,375
- ------------------------------------------------------------------
Providian Financial Corp. 130,500 9,787,500
- ------------------------------------------------------------------
12,829,875
- ------------------------------------------------------------------
MARKET
SHARES VALUE
DISTRIBUTORS (FOOD & HEALTH) - 0.07%
Cardinal Health, Inc. 10,650 $ 808,069
- ----------------------------------------------------------------------
ELECTRIC COMPANIES - 0.11%
Wisconsin Energy Corp. 43,600 1,370,675
- ----------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 1.75%
General Electric Co. 209,000 21,331,063
- ----------------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION) - 0.11%
Waters Corp.(a) 15,900 1,387,275
- ----------------------------------------------------------------------
ENTERTAINMENT - 3.05%
Time Warner, Inc. 600,000 37,237,500
- ----------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 6.77%
Ambac Financial Group, Inc. 73,000 4,393,687
- ----------------------------------------------------------------------
American Express Co. 98,000 10,020,500
- ----------------------------------------------------------------------
American General Corp. 85,000 6,630,000
- ----------------------------------------------------------------------
Associates First Capital Corp.-Class A 370,000 15,678,750
- ----------------------------------------------------------------------
Citigroup, Inc. 93,000 4,603,500
- ----------------------------------------------------------------------
Fannie Mae 245,000 18,130,000
- ----------------------------------------------------------------------
Freddie Mac 324,000 20,877,750
- ----------------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover & Co. 35,000 2,485,000
- ----------------------------------------------------------------------
82,819,187
- ----------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 1.81%
Bristol-Myers Squibb Co. 142,000 19,001,376
- ----------------------------------------------------------------------
Warner-Lambert Co. 41,000 3,082,688
- ----------------------------------------------------------------------
22,084,064
- ----------------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER) - 0.33%
Watson Pharmaceuticals, Inc.(a) 64,200 4,036,575
- ----------------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) - 4.05%
Merck & Co., Inc. 72,000 10,633,500
- ----------------------------------------------------------------------
Pharmacia & Upjohn, Inc. 685,000 38,788,125
- ----------------------------------------------------------------------
49,421,625
- ----------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 4.97%
Allegiance Corp. 77,000 3,590,125
- ----------------------------------------------------------------------
Guidant Corp. 455,000 50,163,750
- ----------------------------------------------------------------------
Medtronic, Inc. 93,700 6,957,225
- ----------------------------------------------------------------------
60,711,100
- ----------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 0.52%
Alza Corp.(a) 122,500 6,400,625
- ----------------------------------------------------------------------
AIM V.I. VALUE FUND
FS-116
347
MARKET
SHARES VALUE
HOUSEHOLD PRODUCTS (NON-DURABLES) - 2.08%
Colgate-Palmolive Co. 273,000 $ 25,354,875
- ------------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.32%
Provident Companies, Inc. 95,000 3,942,500
- ------------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 4.34%
Ace, Ltd. 163,000 5,613,313
- ------------------------------------------------------------------------
American International Group, Inc. 430,000 41,548,750
- ------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 107,500 5,899,063
- ------------------------------------------------------------------------
53,061,126
- ------------------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY) - 2.10%
Allstate Corp. (The) 179,500 6,933,187
- ------------------------------------------------------------------------
EXEL Ltd.-Class A 145,000 10,875,000
- ------------------------------------------------------------------------
Progressive Corp. 46,000 7,791,250
- ------------------------------------------------------------------------
25,599,437
- ------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 0.22%
Merrill Lynch & Co., Inc.(b) 40,000 2,670,000
- ------------------------------------------------------------------------
LODGING-HOTELS - 2.19%
Carnival Corp. 412,400 19,795,200
- ------------------------------------------------------------------------
Royal Caribbean Cruises Ltd. 187,500 6,937,500
- ------------------------------------------------------------------------
26,732,700
- ------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 1.62%
Tyco International Ltd. 262,000 19,764,624
- ------------------------------------------------------------------------
NATURAL GAS - 1.00%
El Paso Energy Corp. 85,000 2,959,062
- ------------------------------------------------------------------------
Enron Corp. 111,000 6,333,937
- ------------------------------------------------------------------------
Williams Companies, Inc. (The) 92,000 2,869,250
- ------------------------------------------------------------------------
12,162,249
- ------------------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED) - 0.25%
Amoco Corp. 50,000 3,018,750
- ------------------------------------------------------------------------
PERSONAL CARE - 1.07%
Avon Products, Inc. 295,000 13,053,750
- ------------------------------------------------------------------------
PHOTOGRAPHY/IMAGING - 1.74%
Xerox Corp. 180,000 21,240,000
- ------------------------------------------------------------------------
PUBLISHING - 0.32%
Dow Jones & Co., Inc. 82,000 3,946,250
- ------------------------------------------------------------------------
PUBLISHING (NEWSPAPERS) - 0.26%
New York Times Co.-Class A (The) 90,000 3,121,875
- ------------------------------------------------------------------------
RAILROADS - 0.27%
Kansas City Southern Industries, Inc. 66,000 3,246,375
- ------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.83%
Lowe's Companies, Inc. 198,000 10,135,125
- ------------------------------------------------------------------------
RETAIL (DEPARTMENT STORES) - 0.21%
Federated Department Stores, Inc.(a) 58,000 2,526,625
- ------------------------------------------------------------------------
MARKET
SHARES VALUE
RETAIL (FOOD CHAINS) - 2.09%
Albertson's, Inc. 30,000 $ 1,910,624
- ------------------------------------------------------------------------------
Kroger Co.(a) 200,000 12,100,000
- ------------------------------------------------------------------------------
Safeway, Inc.(a) 188,000 11,456,249
- ------------------------------------------------------------------------------
25,466,873
- ------------------------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE) - 5.17%
Costco Companies, Inc.(a) 205,000 14,798,437
- ------------------------------------------------------------------------------
Dayton Hudson Corp. 432,000 23,436,000
- ------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 307,600 25,050,174
- ------------------------------------------------------------------------------
63,284,611
- ------------------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 1.61%
Omnicom Group, Inc. 340,000 19,720,000
- ------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.34%
Stewart Enterprises, Inc.-Class A 187,000 4,160,750
- ------------------------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS) - 0.63%
SunGard Data Systems, Inc.(a) 195,300 7,750,969
- ------------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 0.36%
Ceridian Corp.(a) 25,000 1,745,313
- ------------------------------------------------------------------------------
Equifax, Inc. 78,000 2,666,625
- ------------------------------------------------------------------------------
4,411,938
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 1.61%
AirTouch Communications, Inc.(a) 272,000 19,617,999
- ------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 4.86%
MCI WorldCom, Inc.(a) 827,413 59,366,882
- ------------------------------------------------------------------------------
TELEPHONE - 1.36%
BellSouth Corp. 192,000 9,576,000
- ------------------------------------------------------------------------------
SBC Communications, Inc. 131,000 7,024,875
- ------------------------------------------------------------------------------
16,600,875
- ------------------------------------------------------------------------------
TOBACCO - 1.09%
Philip Morris Companies, Inc. 248,000 13,268,000
- ------------------------------------------------------------------------------
WASTE MANAGEMENT - 1.90%
Waste Management, Inc. 496,998 23,172,532
- ------------------------------------------------------------------------------
Total Domestic Common Stocks (Cost $733,092,819) 1,044,294,227
- ------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 4.67%
CANADA - 0.40%
Royal Bank of Canada (Banks-Major Regional) 97,000 4,853,170
- ------------------------------------------------------------------------------
FINLAND - 3.56%
Nokia Oyj A.B.-Class A (Communications Equipment) 1,000 121,652
- ------------------------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR (Communications
Equipment) 360,000 43,357,500
- ------------------------------------------------------------------------------
43,479,152
- ------------------------------------------------------------------------------
SWEDEN - 0.25%
Telefonaktiebolaget LM Ericsson-ADR (Communications
Equipment) 130,000 3,111,875
- ------------------------------------------------------------------------------
AIM V.I. VALUE FUND
FS-117
348
MARKET
SHARES VALUE
UNITED KINGDOM - 0.46%
British Petroleum Co. PLC-ADR (Oil-International
Integrated) 32,500 $ 2,912,813
- --------------------------------------------------------------------------------
WPP Group PLC (Services-Advertising/Marketing) 440,000 2,674,495
- --------------------------------------------------------------------------------
5,587,308
- --------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $37,148,648) 57,031,505
- --------------------------------------------------------------------------------
Total Investments, excluding repurchase agreements
(Cost $770,241,467) 1,101,325,732
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
REPURCHASE AGREEMENTS - 10.83%(c)
Goldman Sachs & Co., 4.40%, 01/04/99(d) $77,768,447 77,768,447
- --------------------------------------------------------------------------------
J.P. Morgan Securities Inc., 4.75%, 01/04/99(e) 54,514,006 54,514,006
- --------------------------------------------------------------------------------
Total Repurchase Agreements (Cost $132,282,453) 132,282,453
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 101.00% 1,233,608,185
- --------------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (1.00%) (12,224,640)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.00% $1,221,383,545
================================================================================
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(d) Joint repurchase agreement entered into 12/3198 with a maturing value of
$700,342,222. Collateralized by $646,494,000 U.S. Government obligations,
0% to 11.75% due 02/15/99 to 04/15/28 with an aggregate market value at
12/31/98 of $714,694,897.
(e) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$500,263,889. Collateralized by $606,702,000 U.S. Government obligations,
0% to 7.55% due 01/04/99 to 10/03/22 with an aggregate market value at
12/31/98 of $510,001,764.
Abbreviation:
ADR - American Depositary Receipt
See Notes to Financial Statements.
AIM V.I. VALUE FUND
FS-118
349
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1998
ASSETS:
Investments, excluding repurchase agreements, at market
value (cost $770,241,467) $1,101,325,732
- ------------------------------------------------------------------------
Repurchase Agreements (cost $132,282,453) 132,282,453
- ------------------------------------------------------------------------
Receivables for:
Investments sold 2,519,615
- ------------------------------------------------------------------------
Capital stock sold 1,390,091
- ------------------------------------------------------------------------
Dividends and interest 499,599
- ------------------------------------------------------------------------
Forward currency contracts 348,763
- ------------------------------------------------------------------------
Investment for deferred compensation plan 26,193
- ------------------------------------------------------------------------
Other assets 18,530
- ------------------------------------------------------------------------
Total assets 1,238,410,976
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 15,933,766
- ------------------------------------------------------------------------
Fund shares reacquired 238,496
- ------------------------------------------------------------------------
Forward currency contracts 24,155
- ------------------------------------------------------------------------
Deferred compensation 26,193
- ------------------------------------------------------------------------
Options written (premiums received $83,771) 76,250
- ------------------------------------------------------------------------
Accrued advisory fees 592,834
- ------------------------------------------------------------------------
Accrued directors' fees 200
- ------------------------------------------------------------------------
Accrued operating expenses 135,537
- ------------------------------------------------------------------------
Total liabilities 17,027,431
- ------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,221,383,545
========================================================================
CAPITAL SHARES, $0.001 PAR VALUE PER SHARE:
Authorized 250,000,000
- ------------------------------------------------------------------------
Outstanding 46,535,623
========================================================================
Net asset value, offering and redemption price per share $26.25
========================================================================
STATEMENT OF OPERATIONS
For the year ended December 31, 1998
INVESTMENT INCOME:
Dividends (net of $166,301 foreign withholding tax) $ 7,033,962
- -------------------------------------------------------------------------------
Interest 5,125,076
- -------------------------------------------------------------------------------
Total investment income 12,159,038
- -------------------------------------------------------------------------------
EXPENSES:
Advisory fees 5,570,566
- -------------------------------------------------------------------------------
Administrative services fees 191,309
- -------------------------------------------------------------------------------
Custodian fees 93,826
- -------------------------------------------------------------------------------
Directors' fees and expenses 14,121
- -------------------------------------------------------------------------------
Other 108,257
- -------------------------------------------------------------------------------
Total expenses 5,978,079
- -------------------------------------------------------------------------------
Less: Expenses paid indirectly (3,727)
- -------------------------------------------------------------------------------
Net expenses 5,974,352
- -------------------------------------------------------------------------------
Net investment income 6,184,686
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FORWARD CURRENCY CONTRACTS, FUTURES AND
OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 35,892,808
- -------------------------------------------------------------------------------
Foreign currencies 54,577
- -------------------------------------------------------------------------------
Forward currency contracts (2,231,868)
- -------------------------------------------------------------------------------
Futures contracts (2,938,668)
- -------------------------------------------------------------------------------
Option contracts (301,361)
- -------------------------------------------------------------------------------
30,475,488
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 229,992,325
- -------------------------------------------------------------------------------
Foreign currencies 10,564
- -------------------------------------------------------------------------------
Forward currency contracts 324,688
- -------------------------------------------------------------------------------
Option contracts (214,285)
- -------------------------------------------------------------------------------
230,113,292
- -------------------------------------------------------------------------------
Net gain on investment securities, foreign currencies, futures
and option contracts 260,588,780
- -------------------------------------------------------------------------------
Net increase in net assets resulting from operations $266,773,466
===============================================================================
See Notes to Financial Statements.
AIM V.I. VALUE FUND
FS-119
350
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1998 and 1997
1998 1997
-------------- ------------
OPERATIONS:
Net investment income $ 6,184,686 $ 5,578,959
- ------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies, forward currency
contracts, futures and option contracts 30,475,488 47,871,104
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, foreign currencies, forward
currency contracts, futures and option
contracts 230,113,292 51,486,076
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 266,773,466 104,936,139
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment
income (5,622,957) (6,026,082)
- ------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains (49,732,413) (18,500,854)
- ------------------------------------------------------------------------------
Net increase from capital stock transactions 319,123,956 240,697,144
- ------------------------------------------------------------------------------
Net increase in net assets 530,542,052 321,106,347
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 690,841,493 369,735,146
- ------------------------------------------------------------------------------
End of year $1,221,383,545 $690,841,493
==============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 855,502,720 $536,384,006
- ------------------------------------------------------------------------------
Undistributed net investment income 6,191,169 5,579,627
- ------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, forward
currency contracts, futures and option
contracts 28,274,001 47,575,497
- ------------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies, forward
currency contracts, futures and option
contracts 331,415,655 101,302,363
- ------------------------------------------------------------------------------
$1,221,383,545 $690,841,493
==============================================================================
See Notes to Financial Statements.
AIM V.I. VALUE FUND
FS-120
351
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
organized on January 22, 1993, and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of fifteen portfolios. Matters affecting each
portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only
to the AIM V.I. Value Fund (the "Fund"). The Fund's investment objective is to
achieve long-term growth of capital by investing primarily in equity
securities judged by AIM to be undervalued relative to the current or
projected earnings of the companies issuing the securities or relative to
current market values of assets owned by the companies issuing the securities
or relative to the equity market generally. Income is a secondary objective.
Currently, shares of the Fund are sold only to insurance company separate
accounts to fund the benefits of variable annuity contracts and variable life
insurance policies.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. If a mean is
not available, as is the case in some foreign markets, the closing bid will
be used absent a last sales price. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date, or absent a last sales price, at the mean of the closing bid and
asked prices. Debt obligations (including convertible bonds) are valued on
the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued at
the mean between last bid and asked prices based upon quotes furnished by
independent sources. Securities for which market quotations are either not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Company's
officers in a manner specifically authorized by the Board of Directors.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. Generally, trading in
foreign securities is substantially completed each day at various times
prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these
securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors.
B. Securities Transactions, Investment Income and Distributions -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 as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On December 31, 1998
additional paid-in capital was decreased by $5,242, undistributed net
investment income was increased by $49,813 and undistributed net realized
gains was decreased by $44,571 in order to comply with the requirements of
the American Institute of Certified Public Accountants Statement of
Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash, and/or by securing a
standby letter of credit from a major commercial bank, as collateral, for
the account of the broker (the Fund's agent in acquiring the futures
position). During the period the futures contract is open, changes in the
value of the contract are recognized as unrealized gains or losses by
"marking to market" on a daily basis to reflect the market value of the
contract at the end of each day's trading. Variation margin payments are
made or received depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contract may not correlate with changes in the securities being hedged.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign
AIM V.I. VALUE FUND
FS-121
352
currencies are translated into U.S. dollar amounts on the respective dates of
such transactions. The Fund does not separately account for that portion of
the results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to attempt
to minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a currency contract for
the amount of a purchase or sale of a security denominated in a foreign
currency in order to "lock-in" the U.S. dollar price of that security. The
Fund could be exposed to risk if counterparties to the contracts are unable
to meet the terms of their contracts or if the value of the foreign
currency changes unfavorably. Outstanding forward currency contracts at
December 31, 1998 were as follows:
CONTRACT TO UNREALIZED
SETTLEMENT ---------------------- APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
---------- ------- ---------------------------------
1/13/99 CAD 2,200,000 $ 1,425,378 1,437,868 $(12,490)
2/10/99 CAD 2,600,000 1,696,630 1,699,368 (2,738)
2/26/99 CAD 700,000 451,715 457,574 (5,859)
1/19/99 FIM 21,000,000 4,232,653 4,124,647 108,006
1/20/99 FIM 78,500,000 15,439,796 15,419,146 20,650
1/21/99 FIM 29,000,000 5,789,467 5,696,548 92,919
1/22/99 FIM 26,000,000 5,149,996 5,107,522 42,474
1/19/99 GBP 1,200,000 2,034,264 1,990,805 43,459
1/20/99 GBP 1,000,000 1,671,000 1,658,852 12,148
2/16/99 GBP 200,000 330,720 331,024 (304)
1/19/99 SEK 14,500,000 1,816,382 1,787,275 29,107
2/16/99 SEK 4,000,000 490,883 493,647 (2,764)
--------------------------------------------------------------
$40,528,884 40,204,276 $324,608
==============================================================
G. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with
A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company
and AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services and other
administrative services to the Fund. During the year ended December 31, 1998,
AIM was reimbursed $191,309 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of the
Fund's shares.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the year ended December 31, 1998, the Fund incurred legal fees of
$5,050 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel
to the Board of Directors. A member of that firm is a director of the Company.
NOTE 3 - INDIRECT EXPENSES
The Fund received reductions in custodian fees of $3,727 under an expense
offset arrangement. The effect of the above arrangement resulted in a
reduction of the Fund's total expenses of $3,727 during the year ended
December 31, 1998.
NOTE 4 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who
is not an "interested person" of AIM. The Company may invest a director's
fees, if so elected by such director, in mutual fund shares in accordance with
a deferred compensation plan.
NOTE 5 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the year ended December 31, 1998 was
$1,106,685,292 and $810,337,550, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1998 is as follows:
Aggregate unrealized appreciation of investment securities $332,234,972
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (5,428,239)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $326,806,733
===========================================================================
Cost of investments for tax purposes is $906,801,452.
AIM V.I. VALUE FUND
FS-122
353
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1998
and 1997 were as follows:
1998 1997
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Sold 13,690,852 $321,377,374 12,245,239 $244,753,656
- ------------------------------------------------------------------------------
Issued as reinvestment of
distributions 2,225,788 55,355,370 1,188,320 24,526,936
- ------------------------------------------------------------------------------
Reacquired (2,542,811) (57,608,788) (1,424,104) (28,583,448)
- ------------------------------------------------------------------------------
13,373,829 $319,123,956 12,009,455 $240,697,144
==============================================================================
NOTE 7 - CALL OPTIONS CONTRACTS WRITTEN
Transactions in call option contracts written during the year ended December
31, 1998 are summarized as follows:
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------------------
Beginning of period 2,102 $ 941,588
- -------------------------------------------
Written 8,349 4,655,767
- -------------------------------------------
Closed (2,906) (1,495,359)
- -------------------------------------------
Exercised (4,463) (3,094,748)
- -------------------------------------------
Expired (2,882) (923,477)
- -------------------------------------------
End of period 200 $ 83,771
===========================================
Open call option contracts written at December 31, 1998 were as follows:
CONTRACT STRIKE NUMBER OF PREMIUM DECEMBER 31, 1998 UNREALIZED
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
- ----- -------------------------------------------------------
Merrill Lynch & Co.,
Inc. Jan. 99 65 200 $83,771 $76,250 $7,521
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share outstanding of the Fund
during each of the years in the three-year period ended December 31, 1998, the
eleven months ended December 31, 1995, the year ended January 31, 1995, and the
period May 5, 1993 (date operations commenced) through January 31, 1994.
DECEMBER 31, JANUARY 31,
------------------------------------------- ------------------
1998 1997 1996 1995 1995 1994
---------- -------- -------- -------- -------- -------
Net asset value,
beginning of period $ 20.83 $ 17.48 $ 16.11 $ 11.83 $ 12.17 $ 10.00
- ------------------------ ---------- -------- -------- -------- -------- -------
Income from investment
operations:
Net investment income 0.09 0.08 0.30 0.11 0.10 0.02
- ------------------------ ---------- -------- -------- -------- -------- -------
Net gains (losses) on
securities (both
realized and
unrealized) 6.59 4.05 2.09 4.18 (0.35) 2.17
- ------------------------ ---------- -------- -------- -------- -------- -------
Total from investment
operations 6.68 4.13 2.39 4.29 (0.25) 2.19
- ------------------------ ---------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income (0.13) (0.19) (0.10) (0.01) (0.09) (0.02)
- ------------------------ ---------- -------- -------- -------- -------- -------
Distributions from net
realized gains (1.13) (0.59) (0.92) -- -- --
- ------------------------ ---------- -------- -------- -------- -------- -------
Total distributions (1.26) (0.78) (1.02) (0.01) (0.09) (0.02)
- ------------------------ ---------- -------- -------- -------- -------- -------
Net asset value, end of
period $ 26.25 $ 20.83 $ 17.48 $ 16.11 $ 11.83 $ 12.17
======================== ========== ======== ======== ======== ======== =======
Total return(a) 32.41% 23.69% 15.02% 36.25% (2.03)% 21.94%
======================== ========== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of
period (000s omitted) $1,221,384 $690,841 $369,735 $257,212 $109,257 $38,255
======================== ========== ======== ======== ======== ======== =======
Ratio of expenses to
average net assets 0.66%(b) 0.70% 0.73% 0.75%(c) 0.82% 1.00%(c)(d)
======================== ========== ======== ======== ======== ======== =======
Ratio of net investment
income to average net
assets 0.68%(b) 1.05% 2.00% 1.11%(c) 1.17% 0.51%(c)(d)
======================== ========== ======== ======== ======== ======== =======
Portfolio turnover rate 100% 127% 129% 145% 143% 87%
======================== ========== ======== ======== ======== ======== =======
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $907,594,296.
(c) Annualized.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses and net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 1.35% (annualized) and 0.16% (annualized),
respectively.
AIM V.I. VALUE FUND
FS-123
354
GT GLOBAL
VARIABLE AMERICA FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: February 10, 1993
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year 6.60% -0.60%
5 Years 15.39% 15.17%
Life of Fund 15.34% 15.25%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year 8.09%
5 Years 17.02%
Life of Fund 16.96%
PERFORMANCE
The Fund's performance fluctuated considerably during a very volatile market.
Like the entire mid-cap stock market, the Fund was hard hit during a deep
sell-off in August. However, the Fund rallied significantly between October 8,
when many markets hit their low for 1998, and the close of the fiscal year. The
Fund's total return for the fiscal year ending December 31, 1998, was 8.09%.
Comparatively, the Russell Midcap Index had a return of 10.10% for the same
period.
MARKET REVIEW
As the fiscal year opened, concern about Asia's financial difficulties was
widespread. The midsize company stocks in which the Fund invests were especially
out of favor as uneasy investors sought the relative safety of blue chip stocks.
Markets rallied in the spring as investors seemed to shrug off Asian worries.
For the first half of the fiscal year, the Fund produced solid returns. The
latter half of the fiscal year was even more volatile. A much-noted summer rally
took many stock indexes to all-time highs by mid-July, but mid-cap stocks did
not really participate.
In August, another wave of concern washed over markets. Its causes were
multiple: the seemingly intractable Asian downturn, a default on Russian
government debt, the collapse of some highly leveraged hedge funds, and
recognition that domestic corporate profit growth was slipping after several
years of robust growth. The market downturn that ensued eventually involved even
the very large, very liquid stocks that were chiefly responsible for the U.S.
market's earlier rise.
Late in the fiscal year amid evidence of a possible credit crunch both here and
abroad, the Federal Reserve Board (the Fed) shifted its focus from inflation
fighting to providing liquidity and supporting markets. In three steps, it
lowered the short-term target federal funds rate from 5.50% to 4.75%, and equity
markets rallied in response. In the short run at least, the Fed appeared to have
assured investors that it would intervene to forestall a recession.
Mid-cap stocks finished the year lower than their large-cap counterparts. The
tumble in mid-cap markets this fiscal year offered a great buying opportunity
for the Fund, as many growth-oriented stocks were available at a significant
discount.
OUTLOOK
We are optimistic that the United States will avoid a recession in 1999. The
economy is likely to experience annual gross domestic product growth in the 1.5%
to 2.0% range, so low inflation and low interest rates should continue. The
challenge will be earnings. With global markets in or near recession and the
U.S. economy expanding more slowly, companies will find it harder to produce
earnings growth. There is clearly added risk until the Asian and Latin American
situations stabilize.
We believe there are several reasons for optimism about mid-cap stocks.
Valuations of the stocks in the mid-cap sector are significantly lower than in
the large-cap sector. These mid-cap stocks also offer some refuge because they
tend to have less international exposure. In addition, smaller-company stocks
historically do better than large-company stocks when the Fed eases monetary
policy, and we were encouraged to note that this was true after the Fed began
lowering interest rates in 1998. Although this is much too short a period in
which to identify a market trend, from the Fed's first interest rate cut
September 29 through the December 31 close of the fiscal year, mid-caps did
outperform large-caps. Of course, a favorable environment for smaller-company
stocks bodes well for the Fund.
PERFORMANCE SUMMARY
[CHART]
GT Global America Fund Russell Midcap Index
2/10/93 $10,000 $10,000
12/93 $11,467 $11,513
12/94 $13,632 $11,196
12/95 $17,090 $15,061
12/96 $20,260 $18,209
12/97 $23,276 $22,219
12/98 $25,159 $25,451
The chart above shows the performance of the Fund since inception compared to
the Russell Midcap Index for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not charges
and expenses of the separate account. Past performance is no guarantee of future
results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The Russell Midcap Index is composed of the capitalization-weighted average
price of 800 selected common stocks of medium-size domestic companies. Its
performance includes the effect of reinvested dividends and is measured in U.S.
dollars.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
1
355
GT GLOBAL
VARIABLE EMERGING MARKETS FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: July 5, 1994
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year -37.77% -42.51%
Life of Fund -10.09% -10.49%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year -36.90%
Life of Fund -8.83%
PERFORMANCE
The Fund faced a very challenging environment during 1998. Asia continued to
deteriorate; short periods of optimism were overshadowed by poor earnings
reports and by concerns about the slow pace of bank reform in Japan. Then a new
shock to the world's markets came in August, when Russia attempted to stabilize
its banking system by floating the ruble and suspending repayment of much of its
foreign debt.
Concerns about the Asian and Russian financial crises caused investors to turn
away from emerging markets in droves. Latin America, in particular, suffered
from investor flight and the associated increase in interest rates.
Results for the fiscal year ended December 31, 1998 were quite disappointing.
Total return was -36.90%, compared to the MSCI Emerging Markets Free Index's
return of -27.52% and the -21.84% return of the IFC Investable Composite.
MARKET REVIEW
During 1998, we attempted to concentrate the portfolio in the markets and stocks
where we were most confident about the growth and valuation outlook. We
deliberately reduced the breadth of holdings, drastically reducing our exposure
to Russia and eliminating exposure to such highly unstable markets as Pakistan,
Sri Lanka, the Philippines, Thailand, and Malaysia.
We favored Latin America, based on our belief in the region's long-term
potential. Unfortunately, Latin America remained in the doldrums for the last
half of the year, despite a substantial aid package from the International
Monetary Fund. In contrast, many Asian markets made a surprise (though
short-lived) comeback during the fall. Our overweighting in Latin American and
underweighting in Asia contributed to the Fund's relatively disappointing
numbers.
In Brazil, we focused on a number of privatization candidates. Many of the
larger utilities in Brazil appear undervalued given the strong medium-term
growth prospects for the economy. We also emphasized oil and natural resource
stocks because they benefit from U.S. dollar revenues and from privatization
efforts, which should encourage greater operating efficiency.
Our second largest country allocation was to Mexico, which we believe will show
relatively stable economic growth into 1999. We focused on blue chips as well as
stocks that stand to benefit from the large devaluation of the peso.
One of the advantages of a global emerging markets portfolio is its diversity.
We were able to find opportunities in some of the world's smaller markets. For
instance, Egypt has demonstrated relatively strong growth, falling interest
rates, a decline in inflation, and attractive valuations. We also raised our
weighting in Greece, which has made major strides in economic and fiscal reform
in hopes of gaining admittance to Europe's Economic and Monetary Union (EMU).
OUTLOOK
Although we expect growth to be disappointing over the next year, we believe
that emerging markets continue to offer a long-term investment option for the
most aggressive investors. The fundamentals driving growth in emerging markets
are still there: consumption, industrialization, a maturing financial services
industry, and continuing investment in infrastructure.
Emerging markets potentially can offer earnings growth rates that exceed those
in developed countries, often at considerably discounted valuations. However,
there are also many more risks and uncertainties associated with this type of
investment. We urge you to read your Fund's prospectus for more information
about its objectives, strategies, and risks.
PERFORMANCE SUMMARY
[CHART]
GT Global
Variable Emerging IFC Investable MSCI Emerging
Markets Fund Composite Index Markets Free Index
6/30/94 $10,000 $10,000 $10,000
12/94 $10,012 $10,308 $10,273
6/95 $ 9,398 $ 9,561 $ 9,936
12/95 $ 9,257 $ 9,440 $ 9,739
6/96 $11,614 $10,590 $10,777
12/96 $12,133 $10,324 $10,326
6/97 $13,899 $11,987 $12,159
12/97 $10,464 $ 8,803 $ 9,129
6/98 $ 8,596 $ 7,421 $ 7,408
12/98 $ 6,603 $ 6,867 $ 6,819
The chart above shows the performance of the Fund since inception (7/5/94)
compared to the various indexes for the same period. It assumes a hypothetical
$10,000 initial investment in the Fund and reflects all Fund expenses, but not
charges and expenses of the separate account. Please note that results for the
IFCI Composite Index are for the period 6/30/94 to 12/31/98. Past performance is
no guarantee of comparable future results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The MSCI Emerging Markets Free Index is a group of unmanaged securities from
emerging markets tracked by Morgan Stanley Capital International. A "free" index
includes only securities available to non-domestic investors. The IFC Investable
Composite index is a market value-weighted average of the performance of the
securities listed on the exchange of 29 countries. It includes the effect of
reinvested dividends and is measured in U.S. dollars.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
2
356
GT GLOBAL
VARIABLE EUROPE FUND
TOTAL RETURN THROUGH DECEMBER 31, 1998
Inception date: February 10, 1993
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year 14.37% 8.37%
5 Years 12.07% 11.82%
Life of Fund 14.60% 14.51%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year 15.98%
5 Years 13.65%
Life of Fund 16.21%
PERFORMANCE
While 1998 was indeed a roller-coaster year for most world markets, Europe was
still one of the best places to be invested. For the fiscal year ended
December 31, 1998, the Fund's total return was 15.98%. In comparison, the Morgan
Stanley Capital International (MSCI) Europe Index returned 28.53%.
Despite the lag in the Fund's return relative to the index, the Fund made
tremendous strides toward the close of the reporting period. From the market low
on October 8 to the end of the fiscal year, the Fund returned 31.83%. In
comparison, the MSCI Europe Index returned 25.77% over the same period.
MARKET REVIEW
Europe was the relative calm spot during a stormy year throughout much of the
world. Weaker demand from Asia continued to affect corporate profits around the
globe. In August, Russia devalued the ruble and suspended repayment of much of
its foreign debt, creating another round of losses, particularly in the
financial industry. But while the waters did get a little choppy in Europe,
overall the region was spared catastrophe.
European companies continued to show superior earnings growth compared to their
U.S. counterparts. At the same time, their shares are available at cheaper
prices, making them an excellent value for investors. Even though Europe was
affected by the summer's global downturn, the major long-term themes driving
growth in the region have sheltered it somewhat from the extreme losses felt in
other parts of the world. A third-quarter sell-off by nervous investors put a
damper on returns, but the global markets almost completely recovered during the
fourth quarter.
In early December, markets soared when the countries preparing to enter Europe's
Economic and Monetary Union (EMU) participated in a coordinated interest-rate
cut. Ten of the 11 EMU countries cut rates to 3%. The Bank of Italy cut its rate
to 3.5%. The United Kingdom, which is not participating in the EMU launch, also
cut rates significantly. The interest-rate cuts were executed in hopes of
aligning monetary policy among nations in the EMU.
OUTLOOK
With the introduction of the euro, early 1999 may exhibit a certain degree of
volatility. For instance, markets could react to possible tension between
politicians wanting further interest-rate cuts and the European Central Bank
wanting to be cautious. There is also some question about how strong the euro
should be relative to the U.S. dollar, and there may be some volatility in
currency markets as a result. However, we expect most of the wrinkles to be
ironed out within the first quarter of 1999.
Another important influence on the markets early in 1999 will be the
announcements of corporate earnings for the fourth quarter of 1998 and outlooks
for 1999. These should indicate whether global financial difficulties are having
a protracted influence, or whether corporate earnings are more resilient than
expected. We expect a significant number of earnings disappointments, especially
from large multinational companies, but it is possible that the market will be
more positively affected by further interest rate cuts than by earnings reports.
What makes Europe so exciting right now is the change in attitude toward
entrepreneurship and investing. With more people bringing their ideas to the
marketplace and more citizens becoming shareholders, Europe may be on its way to
becoming one of the economic powerhouses of the 21st century.
PERFORMANCE SUMMARY
[CHART]
GT Global Variable MSCI
Europe Fund Europe Index
2/10/93 $10,000 $10,000
6/93 $10,842 $10,845
12/93 $12,775 $12,953
6/94 $12,399 $12,611
12/94 $12,699 $13,297
6/95 $13,033 $15,040
12/95 $13,926 $16,240
6/96 $16,916 $17,319
12/96 $18,139 $19,743
6/97 $20,144 $22,596
12/97 $20,886 $24,520
6/98 $26,706 $31,060
12/98 $24,223 $31,037
The chart above shows the performance of the Fund since inception, compared to
the MSCI Europe Index for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but no charges and
expenses of the separate account. Past performance is no guarantee of future
results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The MSCI Europe Index is a group of unmanaged European securities tracked by
Morgan Stanley Capital International.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
3
357
GT GLOBAL
VARIABLE GLOBAL GOVERNMENT INCOME FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception Date: February 10, 1993
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year 11.14% 5.14%
5 Years 4.26% 3.92%
Life of Fund 4.96% 4.83%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year 12.69%
5 Years 5.72%
Life of Fund 6.43%
PERFORMANCE
Despite tumultuous events in the global marketplace, the Fund stayed in line
with its primary objective of preserving capital while providing a steady flow
of income. The Fund's total return for the year ended December 31, 1998 was
12.69%. Comparatively, the J.P. Morgan Global Government Bond index, the Fund's
benchmark, had a return of 15.31% over the 12-month period.
MARKET REVIEW
Problems in Asia at the start of the reporting period left us cautious as we
approached the new year. As a result, the majority of our portfolio was
allocated toward high-grade government debt offered by more industrialized
countries. While the Fund can allocate a limited portion of its assets to
lower-rated bonds of foreign governments and corporations, instability in Asia
and other emerging markets kept our exposure to this area limited. Paring back
our exposure to emerging markets proved to be a prudent strategy as Asia's
economic problems re-emerged again in May after a hiatus from market activity in
the first quarter of 1998.
By August, the effects of the Asian crisis had spread to Russia, Eastern Europe,
and Latin America. Investor aspirations for positive returns were replaced with
the goal of preserving capital. The result was a global sell-off as investors
retreated from all forms of investment risk and invested in relatively safer
government bonds of industrialized countries. As the Fund was already heavily
weighted in lower-risk U.S. and European government securities, this surge in
demand proved very beneficial for the Fund. At the same time, the Fund had
limited exposure to the lesser-developed countries hurt by this flight from
risk, and performance was left largely unhindered by the negative events in the
global marketplace.
OUTLOOK
Equity and non-industrialized fixed-income markets around the world suffered
serious setbacks in the months leading up to the close of the reporting period.
However, in the final weeks of October, a series of rate cuts in the United
States and Europe reliquified the markets, instilling a newfound confidence in
the global marketplace. While the rate cuts are providing temporary relief, we
believe the economic crises stemming from the Asian markets require more
complicated solutions.
We will continue to limit our exposure to the emerging market sectors. While the
Fund may invest in those regions, their recent instability make most investment
opportunities there unsuitable for the Fund's investment objective.
U.S. government securities will most likely continue to be a staple of the
Fund's portfolio. However, positive growth and inflationary trends are making
Europe an increasingly attractive realm for asset allocation. With the formation
of the European Economic Monetary Union and the introduction of the euro,
management will have to adjust its investment approach to Europe. Now that
interest rate trends will be correlated among member countries, the investment
landscape has changed substantially. Instead of judging the direction of
interest rates in each individual country, management will have to anticipate
interest rates for the region as a whole while at the same time assessing an
individual country's ability to service its debt.
Ultimately, we will stay true to our discipline and endeavor to provide
stability and a steady stream of income for our shareholders.
PERFORMANCE SUMMARY
[CHART]
GT Global Government JP Morgan Global
Income Fund Government Bond Index
2/10/93 $10,000 $10,000
12/93 $10,925 $11,091
12/94 $9,975 $11,233
12/95 $11,556 $13,403
12/96 $12,269 $13,992
12/97 $12,805 $14,188
12/98 $14,431 $16,361
The chart above shows the performance of the Fund since inception, compared to
the J.P. Morgan Global Government Bond Index for the same time period. It
assumes a hypothetical $10,000 initial investment in the Fund and reflects all
Fund expenses but not charges and expenses of the separate account. Past
performance is no guarantee of future results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The J.P. Morgan Global Government Bond Index is a market-value-weighted average
of government bonds from 13 major developed bond markets. It includes the effect
of reinvested coupons and is measured in U.S. dollars.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
4
358
GT GLOBAL
VARIABLE GROWTH & INCOME FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: February 10, 1993
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year 17.94% 11.94%
5 Years 11.08% 10.82%
Life of Fund 12.18% 12.08%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year 19.60%
Life of Fund 13.76%
PERFORMANCE
The Fund turned in an outstanding total return of 19.60% over the fiscal year
ending December 31, 1998. Total return over the same period was 24.34% for the
Morgan Stanley Capital International (MSCI) World Index and 15.31% for the
J.P. Morgan Global Government Bond Index.
In the first part of the year, the Fund invested heavily in blue-chip stocks and
enjoyed the bull market run-up in the United States and Europe. When markets
turned turbulent over the summer, we increased the Fund's holdings in U.S.
Treasury, German and U.K. bonds. As of December 31, 1998, 26.92% of the
portfolio consisted of government bonds.
We also increased our exposure in consumer franchises such as Cadbury Schweppes
PLC, a British confection and beverage company whose products include the
Cadbury chocolates brand. In addition, the Fund increased its investment in
long-time holding Bristol-Myers Squibb Co., a U.S. health and personal care
company with household-name brands such as Clairol and Excedrin.
During the summer, we reduced the Fund's financial holdings, especially in
European banks with exposure in emerging markets.
MARKET REVIEW
The bull market in the United States and Europe climbed in the first part of
the year, then came to an abrupt halt in the summer. Major indexes that
reached all-time highs in July plummeted in August. A number of events
converged to create the sharp downturn. Currency devaluations occurred in
Thailand, Malaysia, Indonesia, and Korea. A lingering recession gripped
Japan. Crippled by overwhelming debt, Russia suspended repayment of much of
its foreign debt. As Russia created a floating exchange rate for the ruble,
its currency valuation plummeted. Fears of a global credit crunch spread to
Latin America, as investors worried that Brazil could not sustain its
exchange rate in light of the country's increasing debt.
The one bright spot throughout the turmoil was the government bond market. In
the unsettled stock-market environment, investors worldwide flocked to U.S.
Treasury issues because of their relative safety and liquidity. Treasury
securities rose in price, sending their yields to historic lows.
By the end of the year, stock markets stabilized then rallied. In a move felt
around the world, the Federal Reserve Board (the Fed) reassured markets by
lowering the short-term target federal funds rate three times.
In late October, the Group of Seven countries - the United States, Japan,
Germany, France, Great Britain, Italy, and Canada - agreed with a plan to allow
the International Monetary Fund to provide $90 billion in loans to financially
troubled countries such as Brazil.
OUTLOOK
We're cautious about the prospects for worldwide earnings growth over the next
two years. The problems in Asia, Russia and Latin America will not disappear
overnight. We expect slower growth, continuing low inflation and weak commodity
prices. Corporate earnings growth will be harder to sustain, and we expect them
to be modest in 1999.
The real problem for international markets is the unsettling issue of currency
fluctuation.
Although we expect the markets to remain volatile, the Fund's investment
discipline helps it weather market uncertainties. We emphasize high-quality
blue-chip stocks with above-average dividend yields and AA or better-rated
government bonds. The Fund also is globally well diversified. We believe our
investment strategy positions the Fund to grow in value while providing a stable
income stream.
PERFORMANCE SUMMARY
[CHART]
GT Variable Growth & MSCI JP Morgan Global
Income Fund World Index Government Bond Index
2/10/93 $10,000 $10,000 $10,000
6/93 $10,437 $11,506 $10,630
12/93 $11,775 $12,270 $11,091
6/94 $11,278 $12,745 $11,052
12/94 $11,439 $12,954 $11,233
6/95 $12,059 $12,175 $12,981
12/95 $13,211 $15,716 $13,403
6/96 $13,694 $16,868 $13,247
12/96 $15,368 $17,915 $13,992
6/97 $16,674 $20,715 $13,840
12/97 $17,825 $20,823 $14,188
6/98 $20,570 $24,332 $14,652
12/98 $21,361 $24,939 $16,361
The chart above shows the performance of the Fund since inception, compared to
various indexes for the same period. It assumes a hypothetical $10,000 initial
investment in the Fund and reflects all Fund expenses but not expenses and
charges of the separate account. Past performance is no guarantee of future
results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The MSCI World Index is a group of unmanaged global securities tracked by Morgan
Stanley Capital International.
The J.P. Morgan Global Government Bond Index is a market value-weighted average
of government bonds from 13 major developed bond markets. It includes the effect
of reinvested coupons and is measured in U.S. dollars.
Indexes are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
5
359
GT GLOBAL
VARIABLE INFRASTRUCTURE FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: January 31, 1995
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year 4.89% -1.10%
Life of Fund 10.14% 9.56%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year 6.58%
Life of Fund 11.69%
PERFORMANCE
International investors endured a difficult year, including a major
correction in world equity markets during August. For the fiscal year ending
December 31, 1998, the Fund reported a total annual return of 6.34%. The MSCI
World Index had a total return of 24.34% over the same period.
During the first half of 1998, the Fund reported strong performance because of
its heavy weightings in European and U.S. stocks. Its good performance ended
quickly with the market's decline in July.
The Fund's weakness near the end of the reporting period stems from its exposure
to cyclically sensitive companies such as airlines, machinery makers, industrial
components manufacturers, and construction and engineering firms. Infrastructure
companies were hit hard by investors' fears that the credit crunch in emerging
markets could spread to Europe and the United States, possibly halting growth.
We decreased our exposure in the weakest economies, mostly in emerging markets.
We also lessened our exposure to companies with significant sales to emerging
markets such as airlines, long-haul freight, and commodity-oriented companies.
We re-deployed these assets into utility stocks because of their defensive
characteristics during volatile, uncertain markets. Utilities, energy, and gas
production companies represented a major portion of the portfolio's total assets
at the end of the fiscal year. Top utility holdings included Enron Corp., a U.S.
gas producer and distributor, and U.S. utilities Dominion Resources, Houston
Industries, and AES. Other main holdings include European utilities Endesa S.A.
of Spain and Telecom Italia of Italy. We expect to retain this high
concentration in utility stocks as long as uncertainty prevails throughout most
of the other infrastructure sectors.
MARKET REVIEW
The first half of the reporting period saw strong performance from the U.S. and
European stock markets. But beginning in July, markets fell as fears of a global
credit crunch spread from emerging markets to the developed markets of the
United States and Europe. Other factors adding to the market decline included a
Russian default on government debt, the Asian financial crisis, and the collapse
of some highly leveraged hedge funds. Near the end of the fiscal year, the
Federal Reserve Board (the Fed) addressed concerns about credit by lowering the
short-term target federal funds rate three times. Equity markets rallied in
response.
OUTLOOK
The Fund takes a conservative approach to infrastructure investing throughout
the world. We search for areas where capital spending is strongest. Therefore,
we have been avoiding emerging market equities in favor of Europe and North
America, where we see robust infrastructure spending. The Fund's current asset
mix by geography is North America, 47.15%; Europe, 41.23%; Asia, 3.10%, and
Latin America, .96%.
We expect the Asian crises to continue to cripple many emerging market
economies. We will remain underweight in these markets until we see definitive
signs of a re-acceleration of infrastructure spending. Barring any significant
unforeseen change in the economic outlook for much of Europe and North America,
we expect to retain a high weighting in these regions with a relatively
conservative bias toward utilities and other high-quality, conservative growth
companies.
PERFORMANCE SUMMARY
[CHART]
GT Global Variable MSCI
Infrastructure Fund World Index
1/31/95 $10,000 $10,000
6/95 $11,025 $11,107
12/95 $11,058 $12,314
6/96 $13,033 $13,217
12/96 $13,809 $14,038
6/97 $14,926 $16,231
12/97 $14,500 $16,316
6/98 $16,018 $19,066
12/98 $15,418 $20,361
The chart above shows the performance of the Fund since inception, compared to
various indexes for the same period. It assumes a hypothetical $10,000 initial
investment in the Fund and reflects all Fund expenses but not expenses and
charges of the separate account. Past performance is no guarantee of future
results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The MSCI World Index is a group of unmanaged global securities tracked by Morgan
Stanley Capital International.
Indexes are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
Investing in a single-sector mutual fund may involve greater risk and potential
reward than investing in a more diversified fund.
6
360
GT GLOBAL
VARIABLE INTERNATIONAL FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: July 5, 1994
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year -1.87% -7.76%
Life of Fund 0.20% -0.24%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year -0.64%
Life of Fund 1.60%
PERFORMANCE
Falling world markets and record volatility created a challenging environment
for the GT Global Variable International Fund. Pressures from the Asian
financial crisis, plummeting commodity prices, currency devaluations around the
world, and the Russian government's default on a substantial portion of its
foreign debt all converged in mid-year. Nervous investors abandoned riskier
investments and fled to such safe havens as U.S. Treasuries. Investor flight was
most dramatic in emerging markets, but few world markets were spared. As a
result, many of the gains enjoyed from booming European and U.S. markets early
in 1998 were reversed during the summer and early fall.
Unfortunately, the Fund did not escape this turmoil; it took quite a beating
during summer's global sell-off. The Fund's holdings in the United States and
Europe were hit particularly hard during that period. While developed markets
staged a recovery later in the fall, many emerging markets continued to be
extremely volatile. The Fund had a relatively small exposure to emerging
markets, but the poor performance of these stocks had a disproportionate
influence on performance.
As a result of these difficulties, the Fund's total return for the fiscal year
ended December 31, 1998 was -0.64%. In comparison, the EAFE Index had a return
of 20.00% for the same period.
MARKET REVIEW
Our strategy during this period was to focus primarily on stocks with strong,
sustainable earnings growth. We sought companies with good products and healthy
consumer demand, as well as companies that stood to benefit from lower long-term
interest rates.
Our sector allocations remained relatively stable during the last half of 1998.
We continued to favor financials, focusing on asset quality as a key determinant
for selection. European banks were especially attractive, as the banking
industry has been consolidating in anticipation of European Economic and
Monetary Union (EMU). The European telecommunications industry also offered good
opportunities, largely as a result of deregulation. For instance, Telecom Italia
has made some strong competitive moves by expanding its services to consumers.
Industries we avoided include commodity manufacturing companies, capital goods
companies and basic industries because they are generally less successful in a
falling interest-rate environment.
We increased our weighting in continental Europe to take advantage of bargain
prices after summer's declines. However, a few of these selections proved
disappointing; their prices continued to drop, contributing to the Fund's
underperformance.
We reduced our weightings in emerging markets and the Asia-Pacific area. The
move was beneficial in Latin America, but in Asia it meant that we missed out on
some opportunities that came from a surprise rally in the fall.
OUTLOOK
We expect a certain amount of volatility to continue through early 1999. While
fundamentals are still in place for strong growth in Europe and in the United
States, global turmoil could put a dent in corporate profits.
Smaller markets are likely to remain weak. Brazil's devaluation of its currency
in mid-January caused steep drops in Latin American markets; we will remain
cautious in the region until there are clear signs of stabilization. In Asia, we
think the outlook will start to improve in the latter half of 1999, but as of
the close of the reporting period, most Asian economies were still
deteriorating.
PERFORMANCE SUMMARY
[CHART]
GT Global Variable EAFE
International Fund Index
7/5/94 $10,000 $10,000
12/94 $9,419 $9,921
6/95 $8,913 $10,195
12/95 $9,313 $11,067
6/96 $9,843 $11,584
12/96 $10,106 $11,771
6/97 $10,925 $13,109
12/97 $10,806 $12,013
6/98 $11,949 $13,945
12/98 $10,737 $14,179
The chart above shows the performance of the Fund since inception, compared to
the EAFE Index for the same period. It assumes a hypothetical $10,000 initial
investment in the Fund and reflects all Fund expenses but not charges and
expenses of the separate account. Past performance is no guarantee of future
results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The Morgan Stanley Capital International Europe, Australasia, and the Far East
(EAFE)-Registered Trademark- Index is a market value-weighted average of the
performance of 1,106 securities listed on 20 major world stock exchanges. It
includes the effect of reinvested dividends and is measured in U.S. dollars.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
7
361
GT GLOBAL
VARIABLE LATIN AMERICA FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: February 10, 1993
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year -42.52% -45.96%
5 Years -8.78% -9.15%
Life of Fund -1.43% -1.60%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year -41.71%
5 Years -7.51%
Life of Fund -0.04%
PERFORMANCE
1998 was a very difficult and volatile year for investors in emerging markets.
The Fund took advantage of a market recovery early in 1998, but the upward trend
was quickly reversed during the summer as a result of the Russian government's
debt problems.
In the wake of the Asian and Russian crises, investors began to re-evaluate the
riskiness of all emerging markets. Negative sentiment led to massive outflows of
capital in Latin America. With the additional stress of falling commodity prices
and uncertain fiscal reform efforts, Latin American markets ended 1998 with some
of the world's worst performance results.
Such difficulties hurt the Fund's return significantly. For the fiscal year
ended December 31, 1998, total return was -41.71%. The MSCI Emerging Free Latin
America Index had a total return of -35.11% and the IFC Investable Latin America
Fund returned -35.54% for the same period.
MARKET REVIEW
Our largest allocation was to Brazil. Thanks to an aid package from the
International Monetary Fund, the risk perception for the region improved
slightly in the third quarter. Rate cuts in developed markets and a strong U.S.
market aided a recovery in Latin American markets in November.
However, the Brazilian Congress surprised investors early in December when it
voted against a key fiscal reform measure. The credibility of the whole reform
program was hurt by the move. In reaction, interest-rate sensitive stocks lost
much of the ground they'd gained just a few weeks earlier. The Fund focused its
investments in utilities and telecommunications companies, which are defensive
in a downturn.
Our second largest country allocation was to Mexico. Compared to other Latin
American markets, Mexico performed much better during the last quarter of 1998,
especially in December when it acted as a safe haven for investors fleeing
Brazil.
Chile's economy is slowing decisively. The outlook for Pacific Rim demand has
improved, although the timetable for recovery is still uncertain. Falling copper
prices remain a concern. On the positive side, electric utilities and banks
provided a few good opportunities for the Fund.
Although Argentina's prospects looked good from a top-down point of view, there
were few attractive choices in the country's very narrow stock market. Oil
stocks, which have been poor performers, make up around 40% of the market.
Banking stocks drove performance in November but gave up much of their gains in
December.
Our investments in Peru, Venezuela and Colombia were extremely limited. Peru's
economy has been slow to recover from the effects of the El Nino weather
pattern, which ravaged the fishing industry. Government reconstruction spending
has also been slow to materialize. Venezuela has been very hard hit by the
global economic downturn due to its dependence on oil prices. Colombian markets
are extremely illiquid and the macroeconomic outlook is unclear.
OUTLOOK
We have not lost hope for the region. However, the near- to mid-term outlook
depends very much on global events and trends. The overall level of world
economic growth, and the impact it has on commodity prices, will be extremely
important.
It's also essential for emerging markets as a whole to begin recovery and win
back investor confidence. For now, all eyes will be on Brazil for some
indication that reform is being taken seriously.
PERFORMANCE SUMMARY
[CHART]
GT Global MSCI EMF
Variable Latin Latin America IFC Investable
America Fund Index Latin America Index
1/31/93 $10,000 $10,000 $10,000
6/93 $10,017 $10,296 $11,068
12/93 $14,733 $15,520 $16,560
6/94 $13,731 $14,980 $15,059
12/94 $16,080 $15,621 $15,010
6/95 $10,923 $13,654 $12,401
12/95 $10,550 $13,616 $12,481
6/96 $12,205 $16,005 $14,447
12/96 $12,921 $16,639 $14,629
6/97 $15,994 $23,425 $20,464
12/97 $14,798 $21,901 $18,911
6/98 $11,598 $17,565 $15,326
12/98 $9,974 $14,303 $12,191
The chart above shows the performance of the Fund since inception (2/10/93)
compared to the various indexes for the same period. It assumes a hypothetical
$10,000 initial investment in the Fund and reflects all Fund expenses, but not
expenses and charges of the separate account. Please note that results for both
indexes are for the period 1/31/93 to 12/31/98. Past performance is no guarantee
of comparable future results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The MSCI Emerging Markets Latin America and IFC Investable Latin America indexes
are market value-weighted averages of companies listed in Argentina, Brazil,
Chile, Colombia, Mexico, Peru and Venezuela. Both indexes are measured in U.S.
dollars and include the effect of reinvested dividends. Indexes are unmanaged,
not available for direct investment and do not include sales charges and
professional management fees.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
8
362
GT GLOBAL MONEY MARKET FUND
PERFORMANCE
The Fund's total return for the year ended December 31, 1998, was 5.22%. The
Fund's SEC (Securities and Exchange Commission) seven-day yield was 4.28% at the
end of the reporting period. Because the Fund invests only in short-term debt
obligations with remaining maturities of 13 months or less, its performance
generally reflects the level of short-term interest rates.
MARKET REVIEW
Throughout the first half of the year, markets were influenced by anticipation
that the Federal Reserve Board (the Fed) would raise interest rates in light of
the continued feverish growth of the U.S. economy. In late July testimony before
Congress, Fed Chairman Alan Greenspan intimated that the potential threat of
inflation could lead the Fed to raise interest rates.
Market sentiment shifted over the summer amid myriad financial troubles in
Japan, Asia and Latin America; Russia's effective default on its government
debt; and the widely noted collapse of several hedge funds. In the fall, when
the threat of a global credit crunch loomed, the Fed finally lowered interest
rates to pump liquidity and confidence into the markets and demonstrated that it
would intervene to forestall a recession in the U.S.
In the unsettled market environment, investors flocked to Treasury issues
because of their relative safety and liquidity. As the prices of Treasuries
rose, their yields fell to historic lows. For example, the yield of the
benchmark 30-year Treasury bond fell from 5.92% at the beginning of 1998 to
4.71% on October 5, its lowest level since the issue came into existence in
1977. As a result, the spread between Treasury issues and high-yield bonds
reached its widest point ever.
In an attempt to calm the nerves of investors who were shifting their money from
equity markets to any security considered liquid-a worldwide flight to
quality-the Fed cut the federal funds rate by 0.25% on September 29. Few people
were assuaged by the action. Two weeks later, in an unusual inter-meeting move,
the Fed lowered the federal funds rate and the discount rate by 0.25%, and a
fierce market rally ensued. Both rates were lowered by 0.25% again in November.
By the close of the fiscal year, markets were enjoying relative equilibrium. At
their final policy meeting of 1998, the Fed opted to leave interest rates alone
for the time being.
OUTLOOK
At the close of the fiscal year, the consumer price index was on track to record
its smallest annual increase since 1986, when the index rose just 1.1%. The U.S.
economy exceeded many forecasts and grew by 3.3% during the third quarter. And
while the Fed appears to have adopted a "wait and see" attitude as inflation
sits at its lowest point in more than a decade, some analysts expect more rate
cuts in the coming year as the U.S. economy continues to slow and world markets
continue to recover and stabilize.
After offering some disappointments as the year came to a close, corporate
profits in the U.S. are expected to be mixed and unemployment on the rise in
1999. After experiencing the market's roller-coaster ride in 1998, many analysts
also believe that high volatility may be here to stay, as companies prepare to
compete in this new, uncertain environment.
The Fund's strategy remains conservative. We continue to invest in commercial
paper of large issuers, rated in the highest categories by S&P or Moody's, or of
equivalent quality, and U.S. Treasury and Agency obligations. We do not use
derivatives in the management of the Fund.
9
363
GT GLOBAL
VARIABLE NATURAL RESOURCES FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: January 31, 1995
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year -33.93% -37.89%
Life of Fund 4.45% 3.77%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year -33.01%
Life of Fund 5.94%
PERFORMANCE
We have been in a very challenging environment during 1998. The Fund has
suffered from worldwide deflationary trends, as well as from the poor
performance of natural resources companies following the decline in commodity
prices. In this trying environment, the Fund returned a disappointing -33.01%
for the 12-month period ended December 31, 1998.
During the same period, the Morgan Stanley Capital International (MSCI) World
Index returned 24.34%. However, because the index is designed to represent the
performance of all markets, it does not reflect the Fund's concentration in
natural resources industries.
MARKET REVIEW
Troubles in world markets began with the second wave of "Asian contagion."
Crippled by devalued currencies and billions in bad loans, Asian companies
glutted the global commodity markets with their inventories to produce
desperately needed revenues. At the same time, a strong U.S. dollar drove down
demand for dollar-priced commodities. The combination of increased supply and
weakened demand was disastrous for natural resources companies around the globe,
whose share prices are predominantly influenced by the commodity markets. At the
close of the fiscal year, global markets were showing signs of recovery led by a
late rally in the U.S. market. However, relief has not yet reached the commodity
markets, where prices remained depressed.
Given these unsettling conditions, the Fund has taken a defensive position in
developed countries and had minimal exposure to emerging markets. As of December
31, the Fund had 69.40% of its net assets in the United States. The balance was
invested in continental Europe, Canada, the United Kingdom, and South Korea. Our
holdings in Canada were decreased to 8.30% due to a weakening Canadian economy
and a substantial decline in the value of the Canadian dollar.
OUTLOOK
We are optimistic that markets worldwide have performed a turnaround, coming
back from steep declines in the summer. Investors are being reassured by news
that foreign governments are taking positions to stave off a global recession.
However, as economic growth seems to be decelerating, low inflation and low
interest rates are likely for the near future.
Given that natural resources companies tend to move opposite of most financial
assets and that they generally do better during times of inflation, we will
continue to focus on risk control in 1999. Along these lines, we have
diversified the Fund's portfolio for better defense against battered commodity
prices by purchasing positions in a variety of commodity types. These include
cement, gypsum and gravel manufacturers, who have remained relatively unaffected
by the recent market turbulence. In this deflationary environment, we are also
moving away from riskier investments in smaller, high-growth companies and
investing in the more stable and predictable large caps. For example, we have
holdings in some integrated oil companies that are better positioned to weather
continuing weak market conditions due to their huge size and diverse business
operations.
We remain focused on our disciplined, earnings-driven stock selection process,
looking at the underlying fundamentals of individual companies, not the overall
market. Low commodity prices worldwide will continue to exert significant
downward pressure on earnings of natural resources companies, increasing the
risks and uncertainties of this type of investment. We will continue to focus on
finding the best growth prospects in these challenging times.
PERFORMANCE SUMMARY
[CHART]
GT Global Variable MSCI
Natural Resources Fund World Index
1/31/95 $10,000 $10,000
6/95 $11,067 $11,107
12/95 $12,220 $12,314
6/96 $15,407 $13,217
12/96 $18,471 $14,038
6/97 $16,560 $16,231
12/97 $18,710 $16,316
6/98 $15,076 $19,066
12/98 $12,534 $20,361
The chart above shows the performance of the Fund since inception, compared to
the MSCI World Index for the same period. It assumes a hypothetical $10,000
initial investment in the Funds and reflect all Fund expenses but not charges
and expenses of the separate account. Past performance is no guarantee of future
results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The MSCI World Index is a market value-weighted average of the performance of
1,571 securities listed on major world stock exchanges -- the U.S., Europe,
Canada, Australia, New Zealand and the Far East. It includes the effect of
reinvested dividends and is measured in U.S. dollars.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
Investing in a single-sector mutual fund may involve greater risk and potential
reward than investing in a more diversified fund.
10
364
GT GLOBAL
VARIABLE NEW PACIFIC FUND(1)
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: February 10, 1993
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year -15.73% -20.78%
5 Years -11.70% -12.05%
Life of Fund -5.65% -5.81%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year -14.54%
5 Years -10.46%
Life of Fund -4.32%
PERFORMANCE
Throughout 1998, Asia's markets were characterized by sharp movements in stock
prices. Slight gains at the first of the year were overshadowed by a deep
downturn in the summer. The decline was essentially a flight-to-quality
phenomenon spurred by worldwide currency troubles and Russia's foreign debt
default.
Relief came in the fall, when the Federal Reserve Board (the Fed) made a series
of rate cuts to help calm investors' nerves. These moves, a stronger yen and
falling interest rates across Asia gave investors courage to return to the
region. The magnitude of response was actually much stronger than expected.
Asia's markets experienced a dramatic upward reversal, led by
interest-rate-sensitive sectors. The rally was short-lived, however, with most
of the gain concentrated in the first half of October. While the upswing was
good news for the region, it was bad news for the Fund, which had been more
defensively positioned in early October.
Total return for the fiscal year ended December 31, 1998, was -14.54%. In
comparison, the Morgan Stanley Capital International (MSCI) Pacific ex-Japan
Index returned -6.64% over the same period.
MARKET REVIEW
During the fourth quarter, we increased the Fund's exposure to such
interest-rate-sensitive sectors as land development and finance. We concentrated
on opportunities in Hong Kong, Singapore, and Australia, where the banking
systems are sounder than in other parts of the region. While we focused on
financials to take advantage of the current lower interest-rate environment, we
also maintained our exposure to stocks that are more defensive, such as
utilities and telecommunications companies.
These moves, as well as our macroeconomic analysis, led us to increase our
positions in Hong Kong, Korea and Taiwan. Of all the countries in the region,
Korea has made some of the most impressive steps toward reform. In particular,
the government has been very strict about rehabilitating its banks. We believe
Korea will continue to encourage further corporate and financial reform in 1999.
We reduced our allocation to India, where political uncertainty and weak
government finances have hurt market performance.
OUTLOOK
Lower inflation and falling interest rates across Asia helped the region make
some important strides toward recovery in 1998. These improvements boosted
investor confidence late in the year and should support equity markets in the
near term. However, they may not be sufficient for a real economic recovery. The
global easing in interest rates has not entirely removed the threat of weak
external demand. Furthermore, Japan's recovery depends very much on the strength
of policy implementation. The rehabilitation of the banking systems in the
region is still in its primary stage.
Asia must still undergo what is likely to be a very long and painful period of
recovery. However, the ingredients for growth are still there. Asia is still the
lowest-cost, most efficient manufacturing region in the world, boasting
brand-new production infrastructure, high workforce productivity, and advanced
production techniques. For the aggressive, long-term investor, the Fund offers
exposure to this region's potential.
PERFORMANCE SUMMARY
[CHART]
GT Global Variable MSCI Pacific
New Pacific Fund ex-Japan Index
2/10/93 $10,000 $10,000
6/93 $10,892 $11,328
12/93 $13,392 $17,475
6/94 $11,990 $14,907
12/94 $11,722 $14,983
6/95 $11,655 $16,030
12/95 $11,697 $16,925
6/96 $13,785 $18,500
12/96 $15,320 $20,402
6/97 $15,091 $20,725
12/97 $9,022 $14,081
6/98 $7,259 $11,688
12/98 $7,710 $13,146
The chart above shows the performance of the Fund since inception, compared to
the MSCI Pacific ex-Japan Index. Results for the index are for the period
1/31/93- 12/31/98. It assumes a hypothetical $10,000 initial investment in the
Fund and reflects all Fund expenses but not charges and expenses of the separate
account. Past performance is no guarantee of future results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
(1) On July 5, 1994, the Fund eliminated Japan from its primary investment area.
The MSCI Pacific ex-Japan Index is a market value-weighted average of the
performance of 205 securities listed on five major Pacific Rim stock exchanges.
It includes the effect of reinvested dividends and is measured in U.S. dollars.
Indexes are unmanaged, not available for direct investment and do not include
the effect of sales charges and professional management fees.
11
365
GT GLOBAL
VARIABLE STRATEGIC INCOME FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: February 10, 1993
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year -1.98% -7.86%
5 Years 3.65% 3.31%
Life of Fund 7.21% 7.09%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year -0.61%
5 Years 5.11%
Life of Fund 8.72%
PERFORMANCE
Bond markets, particularly non-investment grade, endured a bumpy ride during
this volatile year, but the Fund managed to recover some of its previous losses
and finish the fiscal year near positive territory. For the fiscal year ended
December 31, 1998, the Fund posted a total return of -0.61%. Comparatively, the
J.P. Morgan Global Government Bond Index had a return of 15.31% for the fiscal
year, and the J.P. Morgan Emerging Markets Bond Index (Brady) returned -14.35%
for the same period.
After paring our emerging market weighting, we added more U.S. investment-grade
bonds, U.K. gilts (government bonds) and German bonds. We believe the economic
fundamentals of those countries remain strong and provide a good measure of
liquidity, safety and diversification. We increased the Fund's exposure to U.S.
corporate bonds because we believe they are an attractive asset class at current
spread levels.
MARKET REVIEW
Hard hit by internal economic and political strife and Japan's extensive
financial problems, many emerging markets struggled to maintain currency value
and avoid recession. Japan's banking system was seriously hindered by a
proliferation of bad loans, causing a major withdrawal of funding from
Asia-perhaps the biggest destabilizing factor in Asia this year. With Russia's
bond default in August, the crisis continued to spread to other emerging
markets, including Latin America. Investor sentiment in the face of this global
instability caused a capital flight to safe havens as preservation of capital
quickly became the leading investment objective. Investors began pulling their
money out of nearly any market that was perceived to be risky, and demand for
U.S. investment-grade bonds soared in due course.
Markets in the U.S. were at first largely unaffected by overseas economic
uncertainty because of continued domestic growth, low inflation, and high
consumer confidence. However, as the crisis in Asia grew and concerns about a
slowing economy spread, U.S. markets began to stutter. Russia's woes and the
collapse of several hedge funds were the last straw, and equity markets plunged
in response to investors' "flight to quality and liquidity." Investment-grade
bond markets jumped as a result, with the spread between U.S. Treasury
securities and high-yield bonds at its widest ever while investors fled to
high-quality bonds. The yield on the 30-year U.S. government bond fell from
5.95% at the beginning of 1998 to 4.71% on October 5-its lowest level since the
issue came into existence in 1977. A series of three rate cuts by the Federal
Reserve Board (the Fed) helped calm U.S. markets as the year came to a close.
OUTLOOK
Events have offered some positive developments that may improve attitudes about
foreign markets. Japan has proposed initiatives to address the multitude of bad
loans in the commercial banking system by providing public funds to shore up
problem institutions. The U.S. Congress passed funding for the International
Monetary Fund (IMF), and talks to extend credit to Brazil have helped to improve
the emerging market debt outlook. Additional funding requests from other
sovereign entities may be coming as the IMF has more resources to lend to
nations in need. We remain optimistic about the income potential of overseas
market debt.
The major long-term themes driving growth in Europe have sheltered it somewhat
from the extreme losses felt in other parts of the world. The strict budgets and
tough financial standards required for admittance to European Economic and
Monetary Union (EMU) have helped Europe's governments clean up their books.
Interest rates have dropped and inflation has lessened. We will be watching
Europe closely in 1999 to see how the introduction of the euro affects the
region as 11 bond markets are consolidated into one.
PERFORMANCE SUMMARY
[CHART]
GT Global Variable JP Morgan Global JP Morgan
Strategic Income Fund Government Bond Index EMBI (Brady)
2/10/93 $10,000 $10,000 $10,000
12/93 $12,754 $11,092 $14,250
12/94 $10,575 $11,239 $11,587
12/95 $12,637 $13,403 $14,779
12/96 $15,364 $13,093 $19,820
12/97 $16,462 $14,189 $23,081
12/98 $16,361 $16,362 $24,489
The chart above shows the performance of the Fund since inception compared to
the J.P. Morgan Global Government Bond Index and the J.P. Morgan Emerging
Markets Bond Index (Brady) for the same period. It assumes a hypothetical
$10,000 initial investment in the Fund and reflects all Fund expenses but not
charges and expenses of the separate account. Past performance is no guarantee
of future results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The J.P. Morgan Global Government Bond Index is a market value-weighted average
of government bonds from 13 major bond markets. It includes the effect of
reinvested coupons and is measured in U.S. dollars.
The J.P. Morgan Emerging Markets Bond Index (Brady) tracks total returns for
traded external debt Brady bonds in the emerging markets. Brady bonds are
foreign bonds collateralized by U.S. Treasury bonds.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
12
366
GT GLOBAL
VARIABLE TELECOMMUNICATIONS FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception date: October 18, 1993
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year 20.42% 14.42%
5 Years 15.58% 15.36%
Life of Fund 16.77% 16.67%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year 22.11%
5 Years 17.21%
Life of Fund 18.41%
PERFORMANCE
Despite an extremely volatile stock market and much concern among investors, the
Fund finished the reporting period with a big push forward. For the fiscal year
ended December 31, 1998, the Fund posted a total return of 22.11%.
Comparatively, the MSCI World Index had a return of 24.34% for the fiscal year,
and the MSCI Telecommunications Index had a return of 49.78% for the same
period.
Companies that did particularly well for the Fund include Finland's Nokia,
Germany's Mannesmann, Italy's Telecom Italia, and NTL from the United Kingdom.
Also contributing to the Fund's success were companies from the United States
such as Tele-Communications, MCI WorldCom, America Online, and SBC
Communications.
MARKET REVIEW
After setting records in the first half of 1998, markets succumbed to the "Asian
contagion" in July, which cast doubts on the sustainability of the long economic
expansion in the United States and the boom in Europe's stock markets. Russia's
bond default in August contributed to a market downturn that eventually involved
even the very large, very liquid stocks that were chiefly responsible for the
U.S. market's earlier rise. Many overseas markets were devastated.
Fortunately, an October rally in the U.S. stock market halted the downturn,
buoyed by better-than-expected earnings reports from some companies and two
back-to-back interest rate reductions by the Federal Reserve Board (the Fed). A
third Fed rate cut in November helped keep the market rally going for the most
part through the end of 1998.
The major long-term themes driving growth in Europe sheltered it somewhat from
the extreme losses felt in other parts of the world. Many of the continent's
telephone markets are now open to competition, and we believe this will lead to
continued growth as new companies face less risk in going head-to-head with
former monopolies.
Because of the ongoing difficulties in the emerging markets and investors'
shunning of investments in smaller growth companies, we put a greater emphasis
on conservative, established telecommunications service and equipment companies.
We continue to believe, however, that global deregulation and innovations in
technology favor a new generation of telecommunications companies because there
will be an increase in competition via new products and services.
Holdings in wireless services and equipment, especially in Europe, were
increased to take advantage of ongoing positive earnings in that industry. Lower
calling prices and increased competition continue to help drive domestic and
international growth in wireless communications. Holdings in Russia and Latin
America were reduced because of economic difficulties there, while increases
were made in holdings in the United Kingdom, Germany and France.
OUTLOOK
The stock market as a whole has handily recovered from its lows in 1998. Strong
gains in markets overseas have contributed to the U.S. market's comeback, as has
anticipation of future interest rate cuts by the Fed.
We remain optimistic that wireless services, especially in Europe, will continue
to see upside surprises in subscriber additions and revenues. Now that the euro
has been introduced in Europe, we will also be watching that region closely to
see how European companies perform in the wake of increased competition and
tougher financial standards.
PERFORMANCE SUMMARY
[CHART]
GT Global Variable MSCI MSCI Telecommunications
Telecommunications Fund World Index Index
10/18/93 $10,000 $10,000 $10,000
12/93 $10,892 $9,899 $9,645
12/94 $11,670 $10,452 $9,386
12/95 $14,432 $12,680 $11,910
12/96 $17,224 $14,454 $12,923
12/97 $19,731 $16,800 $16,246
12/98 $24,093 $20,528 $24,527
The chart above shows the performance of the Fund since inception, compared to
the MSCI World Index and the MSCI Telecommunications Index for the same period.
It assumes a hypothetical $10,000 initial investment in the Fund and reflects
all Fund expenses but not charges and expenses of the separate account. Past
performance is no guarantee of future results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The MSCI World Index is a group of unmanaged global securities listed on major
world stock exchanges tracked by Morgan Stanley Capital International.
The MSCI Telecommunications Index is a market value-weighted average of the
performance of securities listed on 10 major stock exchanges. It includes the
effect of reinvested dividends and is measured in U.S. dollars.
Investing in a single-sector mutual fund involves greater risk and potential
reward than investing in a more diversified fund.
An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
13
367
GT GLOBAL
VARIABLE U.S. GOVERNMENT INCOME FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1998
Inception Date: February 10, 1993
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
1 Year 7.55% .55%
5 Years 3.90% 3.56%
Life of Fund 4.17% 4.03%
FUND PERFORMANCE
AVERAGE ANNUALIZED
1 Year 9.06%
5 Years 5.36%
Life of Fund 5.64%
PERFORMANCE
Despite an environment rife with turmoil and volatility, the GT Global Variable
U.S. Government Income Fund stayed in line with its primary objective of
providing a steady flow of income while preserving capital. For the fiscal year
ended December 31, 1998, the Fund's total return was 9.06%.
MARKET REVIEW
In general, the reporting period was a tumultuous one as the Asian economic
crisis that began in the latter half of 1997 spent 1998 intermittently wreaking
havoc in both equity and fixed income markets. Certainly this was most evident
in August and September when a combination of factors stemming from
Asia--including the recession in Japan, currency and debt struggles in Russia,
and the near collapse of the hedge fund Long-Term Capital--resulted in a
fear-driven global flight from all forms of investment risk.
In a matter of weeks aspirations for total returns were replaced with those of
preservation of capital. Investors abandoned riskier securities, causing equity
and nongovernment bond markets around the world to tumble. The only
beneficiaries of this volatile investment environment were the government bond
markets in the United States and the industrialized nations in Europe. As these
securities are backed by the full faith and credit of their governments, they
were viewed as a safe haven throughout this time of unrest. As these are the
types of securities targeted by the Fund, we were able to reap some benefits
during this time of market turbulence.
Markets eventually rebounded after a series of interest rate cuts by the Federal
Reserve Board (the Fed). However the effects of the market sell-off left many
investors wary. As investors had watched the value of riskier securities
plummet, many saw fit to diversify their assets by adding a relatively more
stable asset in their portfolio, like the GT Global Variable U.S. Government
Income Fund, to dampen market volatility.
OUTLOOK
While it appeared at the mid-point of this year that the robust economic growth
might result in an increase in the federal funds rate, it soon became apparent
that Asia's economic struggles and their effects on the global marketplace would
not allow for such action. Instead, the Fed cut short-term rates by 0.75% in the
final months of 1998 to enhance worldwide liquidity. In addition, the Fed has
made it clear that it would not hesitate to lower rates again if need dictates.
Uncertainty still remains regarding Japan and the emerging markets of Asia and
Latin America, specifically in China and Brazil. As in 1998, the devaluation of
a currency or a similar economic crisis could result in investors rushing back
into the U.S. Treasury market and additional rate cuts.
On the domestic front, most analysts expect a slowdown in U.S. economic growth
and a continuation of relatively low inflation. Historically, these conditions
have proven beneficial for bond investors. Regardless of what the coming year
may bring, GT Global Variable U.S. Government Income Fund will strive to tailor
the portfolio to market conditions as they change throughout the coming year. In
doing so, the Fund will endeavor to provide the same stability and level of
income it has in the past.
PERFORMANCE SUMMARY
[CHART]
GT Global Variable JP Morgan
U.S. Government U.S. Government
Income Fund Bond Index
2/10/93 $10,000 $10,000
12/93 $10,638 $10,792
12/94 $9,971 $10,479
12/95 $11,440 $12,296
12/96 $11,695 $12,658
12/97 $12,666 $13,924
12/98 $13,813 $15,351
The chart above shows the performance of the Fund since inception, compared to
the J.P. Morgan U.S. Government Bond Index for the same time period. It assumes
a hypothetical $10,000 initial investment in the Fund and reflects all Fund
expenses but not charges and expenses of the separate account. Past performance
is no guarantee of future results.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
The J.P. Morgan U. S. Government Bond Index is a market-value-weighted index of
U. S. Treasury issues with remaining maturities of at least one year. It
includes the effect of reinvested coupons and is measured in U.S. dollars.
Indexes are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
14
368
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2
369
GT GLOBAL
ALLOCATOR
FUNDS'
FINANCIAL
STATEMENTS
370
(THIS PAGE INTENTIONALLY LEFT BLANK)
2
371
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Government & Government Agency Obligations (59.7%)
Algeria (1.0%)
Algeria Tranche 1 Loan Assignment, 6.625% due 9/4/06+ .... USD 500,000 $ 225,000 1.0
Argentina (2.9%)
Republic of Argentina:
11% due 12/4/05 - 144A{.} .............................. USD 180,000 179,550 0.8
11% due 10/9/06 ........................................ USD 134,000 132,828 0.6
Discount Bond, 6.0625% due 3/31/23+ .................... USD 150,000 111,188 0.5
Global Bond, 11.375% due 1/30/17 ....................... USD 110,000 110,275 0.5
I.O. Strip, 12.11% due 4/10/05 ......................... USD 115,000 104,938 0.5
Brazil (0.9%)
Brazil Floating Rate Discount Note, 6.125% due
4/15/24+ ................................................ USD 325,000 194,188 0.9
Bulgaria (1.9%)
Republic of Bulgaria:
Discounted Bond Series A, 6.6875% due 7/28/24 -
Euro+ ................................................. USD 397,000 278,893 1.3
Front Loaded Interest Reduction Bond Series A, 2.5%
(2.75% at 7/99) due 7/28/12++ ......................... USD 218,000 124,941 0.6
Canada (1.0%)
Canadian Government, 6% due 6/1/08 ....................... CAD 300,000 212,294 1.0
Colombia (0.9%)
Republic of Colombia:
8.625% due 4/1/08 ...................................... USD 179,000 153,045 0.7
7.27% due 6/15/03 - 144A{.} ............................ USD 55,000 47,025 0.2
Denmark (2.4%)
Kingdom of Denmark, 7% due 11/10/24 ...................... DKK 2,600,000 523,432 2.4
Germany (14.2%)
Deutschland Republic:
6% due 1/5/06 .......................................... DEM 2,180,000 1,491,100 6.8
6.5% due 7/4/27 ........................................ DEM 920,000 690,147 3.1
6.5% due 10/14/05 ...................................... DEM 700,000 489,672 2.2
6% due 7/4/07 .......................................... DEM 670,000 463,844 2.1
Greece (1.7%)
Hellenic Republic:
8.8% due 6/19/07 ....................................... GRD 50,000,000 198,849 0.9
9.2% due 3/21/02 ....................................... GRD 50,000,000 184,616 0.8
Italy (4.3%)
Italian Government, 7.25% due 11/1/26 .................... ITL 780,000,000 634,596 2.9
Italian Buoni Poliennali Del Tesoro (BTPS), 8.5% due
1/1/04 .................................................. ITL 420,000,000 313,022 1.4
Ivory Coast (1.2%)
Ivory Coast:
1.9% due 3/29/18 ....................................... FRF 3,851,250 186,034 0.8
2% due 3/29/18 ......................................... USD 296,250 87,564 0.4
Korea (1.1%)
Korea Republic Restructured Debt, 8.281% due 4/8/00 ...... USD 250,000 239,375 1.1
Mexico (0.6%)
United Mexican States, 9.875% due 1/15/07 ................ USD 131,000 129,526 0.6
The accompanying notes are an integral part of the financial statements.
F1
372
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Government & Government Agency Obligations (Continued)
Netherlands (1.1%)
Netherlands Government Bond, 5.5% due 1/15/28 ............ NLG 400,000 $ 236,184 1.1
Peru (1.7%)
Republic of Peru, Past Due Interest Bond, 4.00% (4.50% at
7/99) due 3/7/17++ ...................................... USD 584,000 369,380 1.7
Russia (0.2%)
Bank for Foreign Economic Affairs (Venesheconombank)
Principal Loans, 6.625% due 12/15/20+ ................... USD 667,458 43,385 0.2
Russian Ministry of Finance #6, due 5/14/06 GDR -
144A{.} ................................................. USD 9,000 653 --
Turkey (0.4%)
Republic of Turkey, 12% due 12/15/08 ..................... USD 96,000 95,520 0.4
United Kingdom (10.0%)
United Kingdom Treasury, 9% due 10/13/08 ................. GBP 970,000 2,200,798 10.0
United States (12.2%)
United States Treasury:
6.375% due 8/15/27{./} ................................. USD 1,660,000 1,909,225 8.7
4.25% due 11/15/03 ..................................... USD 300,000 296,227 1.3
4.75% due 11/15/08 ..................................... USD 170,000 171,381 0.8
Federal National Mortgage Association, 7.25% due
6/20/02 ................................................. NZD 550,000 298,589 1.4
-----------
Total Government & Government Agency Obligations (cost
$13,455,718) ................................................ 13,127,284
-----------
Corporate Bonds (26.7%)
Argentina (1.9%)
Telefonica de Argentina, 9.125% due 5/7/08 - Reg S{c} .... USD 245,000 226,652 1.0
YPF S.A., 10% due 11/2/28 ................................ USD 95,000 97,969 0.4
Supercanal Holdings S.A., 11.5% due 5/15/05 - Reg S{c} ... USD 100,000 57,500 0.3
Mastellone Hermanos S.A., 11.75% due 4/1/08 - 144A{.} .... USD 53,000 42,798 0.2
Brazil (0.2%)
Banco Hipotecario Espana, 10% due 4/17/03 - 144A{.} ...... USD 53,000 48,760 0.2
Cayman Islands (0.5%)
Nacional Financiera SNC, 8.649% due 12/1/00 - Euro 144A+
{.} ..................................................... USD 105,000 106,050 0.5
Colombia (0.1%)
Financiera Energia Nacional, 9.375% due 6/15/06 - Reg
S{c} .................................................... USD 30,000 25,200 0.1
Germany (0.6%)
Bayerische Landesbank NY, 5.875% due 12/1/08 ............. USD 140,000 143,163 0.6
Jamaica (0.1%)
Mechala Group Jamaica, 12.75% due 12/30/99 - Reg S{c} .... USD 44,000 30,800 0.1
Mexico (4.1%)
Petroleos Mexicanos:
8.85% due 9/15/07 - 144A{.} ............................ USD 180,000 162,000 0.7
9.375% due 12/2/08 - 144A{.} ........................... USD 130,000 129,675 0.6
9.25% due 3/30/18 - 144A{.} ............................ USD 160,000 128,800 0.6
Banco Nacional Comercio Exte., 8% due 7/18/02 - Reg
S{c} .................................................... USD 153,000 149,940 0.7
The accompanying notes are an integral part of the financial statements.
F2
373
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Corporate Bonds (Continued)
Monterrey Power, S.A. de C.V., 9.625% due 11/15/09 -
144A{.} ................................................. USD 193,000 $ 148,610 0.7
Dine, S.A. de C.V., 8.75% due 10/15/07 - 144A{.} ......... USD 90,000 72,450 0.3
Grupo Industrial Durango, S.A., 12.625% due 8/1/03 ....... USD 50,000 44,125 0.2
Cemex Valenciana, 9.66% due 12/29/49 ..................... USD 40,000 36,200 0.2
Grupo Azucarero Mexico, 11.5% due 1/15/05 - Reg S{c} ..... USD 50,000 19,000 0.1
Netherlands (0.6%)
TPSA Finance BV, 7.75% due 12/10/08 - 144A{.} ............ USD 126,000 124,268 0.6
Russia (0.2%)
Lukinter Finance BV Convertible, 3.5% due 5/6/02 -
144A{.} ................................................. USD 94,000 34,310 0.2
Mosenergo Finance BV, 8.375% due 10/9/02 - 144A{.} ....... USD 67,000 11,725 --
United Kingdom (0.4%)
Colt Telecom Group PLC, 7.625% due 7/31/08 ............... DEM 150,000 89,058 0.4
United States (18.0%)
Comcast Cable Communications, 6.2% due 11/15/08 .......... USD 300,000 305,994 1.4
Xerox Corp., 5.5% due 11/15/03 ........................... USD 300,000 300,834 1.4
Ford Motor Credit Corp., 5.25% due 6/16/08 ............... DEM 320,000 200,895 0.9
Unisys Corp., 7.875% due 4/1/08 .......................... USD 150,000 159,938 0.7
Chase Manhattan Corp., 6.25% due 1/15/06 ................. USD 152,000 157,318 0.7
Lenfest Communications, 8.25% due 2/15/08 - 144A{.} ...... USD 150,000 157,125 0.7
Lin Television Corp., 8.375% due 3/1/08 - 144A{.} ........ USD 150,000 151,313 0.7
General Motors Acceptance Corp., 6.625% due 10/15/05 ..... USD 143,000 150,998 0.7
Engle Homes, Inc., 9.25% due 2/1/08 ...................... USD 150,000 150,750 0.7
Hollywood Casino Corp., 12.75% due 11/1/03 ............... USD 125,000 133,750 0.6
Riddell Sports, Inc., 10.5% due 7/15/07 .................. USD 135,000 128,242 0.6
Smithfield Foods, Inc., 7.625% due 2/15/08 ............... USD 125,000 126,250 0.6
Graham Packaging/GPC Capital, 8.75% due 1/15/08 -
144A{.} ................................................. USD 125,000 125,625 0.6
Trump Atlantic Association Funding, Inc., 11.25% due
5/1/06 .................................................. USD 135,000 118,800 0.5
Cendant Corp., 7.75% due 12/1/03 ......................... USD 100,000 101,216 0.5
United Stationers Supply, 8.375% due 4/15/08 - 144A{.} ... USD 100,000 100,250 0.5
Drypers Corp. Series B, 10.25% due 6/15/07 ............... USD 90,000 87,750 0.4
Loews Cineplex Entertainment, 8.875% due 8/1/08 -
144A{.} ................................................. USD 75,000 77,813 0.4
Circus Circus Enterprise, 9.25% due 12/1/05 .............. USD 75,000 77,794 0.3
Fisher Scientific International, 9% due 2/1/08 ........... USD 75,000 75,000 0.3
Chancellor Media Corp., 8.125% due 12/15/07 - 144A{.} .... USD 75,000 74,813 0.3
PSINET, Inc., 10% due 2/15/05 ............................ USD 75,000 74,625 0.3
Viasystems, Inc., 9.75% due 6/1/07 ....................... USD 75,000 70,125 0.3
U.S. Filter Corp., 4.5% due 12/15/01 ..................... USD 73,000 69,168 0.3
Niagara Mohawk Power, 7.375% due 7/1/03 .................. USD 65,000 66,632 0.3
Penn National Gaming, Inc., 10.625% due 12/15/04 -
144A{.} ................................................. USD 55,000 58,025 0.3
Duane Reade, Inc., 9.25% due 2/15/08 ..................... USD 55,000 56,925 0.3
Eagle Family Foods, 8.75% due 1/15/08 - 144A{.} .......... USD 60,000 56,850 0.3
Norampac, Inc., 9.5% due 2/1/08 - 144A{.} ................ USD 55,000 56,100 0.3
Allbritton Communication, 8.875% due 2/1/08 - 144A{.} .... USD 55,000 55,000 0.2
International Home Foods, 10.375% due 11/1/06 ............ USD 50,000 54,375 0.2
Revlon Consumer Products, 8.625% due 2/2/08 - 144A{.} .... USD 55,000 50,875 0.2
The accompanying notes are an integral part of the financial statements.
F3
374
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Corporate Bonds (Continued)
Syratech Corp., 11% due 4/15/07{.} ....................... USD 60,000 $ 48,900 0.2
Salton/Maxim Housewares, 10.75% due 12/15/05 - 144A{.} ... USD 45,000 45,506 0.2
Park Place Entertainment, 7.875% due 12/15/05 -
144A{.} ................................................. USD 45,000 45,281 0.2
Healthsouth Corp., 3.25% due 4/1/03 ...................... USD 50,000 42,750 0.2
Delco Remy International, Inc., 8.625% due 12/15/07 ...... USD 40,000 41,200 0.2
BTI Telecommunications Corp., 10.5% due 9/15/07 -
144A{.} ................................................. USD 55,000 40,975 0.2
Hayes Lemmerz International, Inc., 8.25% due 12/15/05 -
144A{.} ................................................. USD 40,000 40,000 0.2
Pillowtex Corp., 9% due 12/15/07 - 144A{.} ............... USD 25,000 25,875 0.1
ACME Metal, Inc., 10.875% due 12/15/07 - 144A(::) {.} .... USD 45,000 6,075 --
-----------
Total Corporate Bonds (cost $6,120,826) ...................... 5,896,783
-----------
Mortgage Backed (7.2%)
Denmark (1.4%)
Realkredit Danmark, 6% due 10/1/26 ....................... DKK 1,904,000 298,991 1.4
United States (5.8%)
Government National Mortgage Association TBA Pass Thru
Pool, due 1/15/29{*} .................................... USD 1,300,000 1,288,625 5.8
-----------
Total Mortgage Backed (cost $1,540,127) ...................... 1,587,616
-----------
Structured Notes (0.5%)
Korea (0.5%)
Fixed Rate Trust Certificate 13.55% due 2/15/02 (Issued by
a newly created Delaware Business Trust, collateralized
by triple A paper. This trust certificate has a credit
risk component linked to the value of a referenced
security: Korean Development[::] (Cost $130,000) ........ USD 130,000 102,700 0.5
----------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $21,246,671) ............ 20,714,383 94.1
----------- -----
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Republic of Argentina Global Bond Warrants, 11% due 12/3/99
(cost $0) ................................................. ARG 180 8,640 --
----------- -----
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Commercial Paper - Discounted (5.9%)
United States (5.9%)
GE Capital, effective yield 5.25%, due 1/21/99 ........... USD 1,300,000 1,296,136 5.9
-----------
Total Commercial Paper - Discounted (cost $1,296,136) ........ 1,296,136
----------- -----
TOTAL SHORT-TERM INVESTMENTS (cost $1,296,136) ............... 1,296,136 5.9
----------- -----
The accompanying notes are an integral part of the financial statements.
F4
375
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
Dated December 31, 1998 with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50%,
collateralized by $695,000 U.S. Treasury Notes, 7.75% due
12/31/99 (market value of collateral is $715,633, including
accrued interest)(cost $698,000) ......................... $ 698,000 3.2
----------- -----
TOTAL INVESTMENTS (cost $23,240,807) * ...................... 22,717,159 103.2
Other Assets and Liabilities ................................. (695,314) (3.2)
----------- -----
NET ASSETS ................................................... $22,021,845 100.0
----------- -----
----------- -----
- --------------
[::] Certain events may cause the contract to terminate prior to date
shown.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
+ The coupon rate shown on floating rate note represents the rate at
period end.
(::) Valued in good faith at fair value using procedures approved by the
Board of Directors (See Note 1 of Notes to Financial Statements).
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
{*} Purchased on a forward commitment basis.
{./} All or part of the Fund's holdings in this security is segregated
as collateral for when issued or derivative instruments.
* For Federal income tax purposes, cost is $23,399,273 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 629,172
Unrealized depreciation: (1,311,286)
-------------
Net unrealized depreciation: $ (682,114)
-------------
-------------
Abbreviation:
GDR--Global Depositary Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
MARKET VALUE UNREALIZED
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ------------ ------------ -------- --------------
Canadian Dollars........................ 209,194 1.54785 3/18/99 $ (2,455)
French Francs........................... 161,647 5.45470 3/18/99 3,348
------------ ------------
Total Contracts to Sell (Receivable
amount $371,734)................... 370,841 893
------------ ------------
THE VALUE OF CONTRACTS TO SELL AS PERCENTAGE OF NET ASSETS IS 1.68%.
Total Open Forward Foreign Currency
Contracts.......................... $ 893
------------
------------
- -----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F5
376
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Government & Government Agency Obligations (81.1%)
Canada (1.8%)
Canadian Government, 6% due 6/1/08 ........................ CAD 230,000 $ 162,759 1.8
Denmark (10.6%)
Kingdom of Denmark Bullet, 6% due 11/15/09 ................ DKK 5,200,000 933,025 10.6
Germany (10.8%)
Deutschland Republic:
6% due 7/4/07 ........................................... DEM 1,020,000 706,150 8.0
6.5% due 10/14/05 ....................................... DEM 250,000 174,883 2.0
6% due 1/5/06 ........................................... DEM 105,000 71,819 0.8
Greece (3.6%)
Hellenic Republic:
8.8% due 6/19/07 ........................................ GRD 50,000,000 198,849 2.3
9.2% due 3/21/02 ........................................ GRD 30,000,000 110,769 1.3
Italy (9.3%)
Italian Buoni Poliennali del Tesoro (BTPS):
7.25% due 1/1/26 ........................................ ITL 610,000,000 496,287 5.6
8.5% due 1/1/04 ......................................... ITL 440,000,000 327,928 3.7
Netherlands (1.8%)
Netherlands Government Bond, 5.5% due 1/15/28 ............. NLG 275,000 162,376 1.8
United Kingdom (9.3%)
United Kingdom Treasury, 9% due 10/13/08 .................. GBP 360,000 816,791 9.3
United States (32.8%)
United States Treasury:
5.625% due 5/15/08 ...................................... USD 1,515,000 1,617,055 18.4
6.375% due 8/15/27{./} .................................. USD 740,000 851,405 9.7
4.75% due 11/15/08 ...................................... USD 280,000 282,275 3.2
Federal National Mortgage Association, 6.375% due
8/15/07 .................................................. AUD 200,000 129,119 1.5
Uruguay (1.1%)
Republic of Uruguay, 7.875% due 7/15/27 - 144A{.} ......... USD 100,000 98,000 1.1
----------
Total Government & Government Agency Obligations (cost
$7,015,142) .................................................. 7,139,490
----------
Corporate Bonds (10.0%)
Germany (2.0%)
Bayerische Landesbank NY, 5.875% due 12/1/08 .............. USD 100,000 102,259 1.2
Kredit Fuer Wiederaufbau International Finance, 7.25% due
7/16/07 .................................................. AUD 100,000 67,831 0.8
Tunisia (2.3%)
Banque Centrais de Tunisie, 8.25% due 9/19/27 ............. USD 250,000 207,049 2.3
United Kingdom (4.3%)
SBC Jersey, 8.75% due 6/20/05 ............................. GBP 200,000 380,552 4.3
United States (1.4%)
Ford Motor Credit Corp., 5.25% due 6/16/08 ................ DEM 190,000 119,282 1.4
----------
Total Corporate Bonds (cost $882,222) ......................... 876,973
----------
The accompanying notes are an integral part of the financial statements.
F6
377
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Mortgage Backed (6.5%)
Denmark (2.8%)
Realkredit Danmark, 6% due 10/1/26 ........................ DKK 1,596,000 $ 250,624 2.8
United States (3.7%)
Government National Mortgage Association TBA Pass Thru
Pool, due 1/15/29{*} ..................................... USD 275,000 272,594 3.1
Federal Home Loan Mortgage Association Pool #E62449, 8.5%
due 3/1/10 ............................................... USD 48,446 50,217 0.6
----------
Total Mortgage Backed (cost $553,986) ......................... 573,435
---------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $8,451,350) .............. 8,589,898 97.6
---------- -----
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Commercial Paper - Discounted (3.1%)
United States (3.1%)
General Electric Capital Corp., effective yield 5.25%, due
1/21/99
(cost $274,133) .......................................... USD 275,000 274,133 3.1
---------- -----
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
Dated December 31, 1998, with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50%,
collateralized by $130,000 U.S. Treasury Bonds, 6.75% due
8/15/26 (market value of collateral is $158,681, including
accrued interest).(cost $151,000) ......................... 151,000 1.7
---------- -----
TOTAL INVESTMENTS (cost $8,876,483) * ........................ 9,015,031 102.4
Other Assets and Liabilities .................................. (214,340) (2.4)
---------- -----
NET ASSETS .................................................... $8,800,691 100.0
---------- -----
---------- -----
- --------------
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{./} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities. See Note 1 to the
financial statements.
{*} Purchased on a forward commitment basis.
* For Federal income tax purposes, cost is $8,876,483 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 287,545
Unrealized depreciation: (148,997)
-------------
Net unrealized appreciation: $ 138,548
-------------
-------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACT OUTSTANDING
DECEMBER 31, 1998
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACT TO SELL: (U.S. DOLLARS) PRICE DATE DEPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
Canadian Dollars........................ 156,896 1.54785 3/18/99 $ (1,842)
-------------- --------------
Total Contract to Sell (Receivable
amount $155,054)..................... 156,896 (1,842)
-------------- --------------
THE VALUE OF CONTRACT TO SELL AS
PERCENTAGE OF NET ASSETS IS 1.78%.
Total Open Forward Foreign Currency
Contract............................. $ (1,842)
--------------
--------------
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F7
378
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Government & Government Agency Obligations (65.9%)
United States Treasury:
7.625% due 2/15/25 ........................................ USD 1,050,000 $1,381,511 18.7
9.25% due 2/15/16 ......................................... USD 600,000 861,680 11.7
5.625% due 5/15/08 ........................................ USD 300,000 320,209 4.3
Federal Home Loan Mortgage Corp., 5.75% due 7/15/03 ......... USD 1,300,000 1,335,607 18.1
Tennessee Valley Authority Series A, 6.375% due 6/15/05 ..... USD 400,000 423,250 5.7
Student Loan Marketing Assoc., 7.5% due 3/8/00 .............. USD 350,000 360,406 4.9
Federal National Mortgage Association, 6.8% due 1/10/03 ..... USD 90,000 95,446 1.3
Financial Assistance Corp., 9.375% due 7/21/03 .............. USD 75,000 87,843 1.2
----------
Total Government & Government Agency Obligations (cost
$4,719,931) .................................................. 4,865,952
----------
Mortgage Backed (26.1%)
Federal National Mortgage Association:
Pool #398668, 6.5% due 9/1/27 ............................. USD 308,167 310,383 4.2
Pool #363939, 7% due 3/1/04 ............................... USD 124,630 127,317 1.7
Pool #356801, 6% due 12/1/08 .............................. USD 106,578 107,045 1.5
Mortgage Index Amortizing Trust, 6.682% due 8/25/04 ......... USD 500,000 501,206 6.8
FHLM Corporation Gold Pool #E72223, 6% due 9/1/13 ........... USD 494,634 496,335 6.7
Government National Mortgage Association:
Pool # 780523, 7.5% due 3/15/08 ........................... USD 219,072 227,013 3.1
Federal Home Loan Mortgage Corp. Series 1462 PL due
7/15/21 .................................................... USD 155,000 158,426 2.1
----------
Total Mortgage Backed (cost $1,911,230) ....................... 1,927,725
----------
Supranational Bonds (7.7%)
International Bank of Reconstruction & Development, 5.25% due
9/16/03 .................................................... USD 350,000 352,625 4.8
Asian Development Bank, 8% due 4/30/01 ...................... USD 200,000 210,806 2.9
----------
Total Supranational Bonds (cost $529,321) ..................... 563,431
---------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $7,160,482) .............. 7,357,108 99.7
---------- -----
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
Dated December 31, 1998, with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50%,
collateralized by $30,000 U.S. Treasury Bonds, 8.88% due
8/15/17 (market value of collateral is $43,177, including
accrued interest) (cost $40,000) .......................... 40,000 0.5
---------- -----
TOTAL INVESTMENTS (cost $7,200,482) * ........................ 7,397,108 100.2
Other Assets and Liabilities .................................. (15,937) (0.2)
---------- -----
NET ASSETS .................................................... $7,381,171 100.0
---------- -----
---------- -----
- --------------
* For Federal income tax purposes, cost is $7,200,482 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 212,935
Unrealized depreciation: (16,309)
-------------
Net unrealized appreciation: $ 196,626
-------------
-------------
The accompanying notes are an integral part of the financial statements.
F8
379
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Telephone (20.7%)
Telecomunicacoes Brasileiras S.A. - Telebras: ............... BRZL -- -- 8.2
Preferred - ADR{\/} ....................................... -- 5,740 $ 417,226 --
Common .................................................... -- 8,793 393,043 --
Carso Global Telecom "A1"-/- ................................ MEX 96,300 324,891 3.3
Nortel Inversora S.A. - ADR{\/} ............................. ARG 19,400 310,400 3.1
Telecomunicacoes de Sao Paulo S.A. - TELESP: ................ BRZL -- -- 2.2
Common-/- ................................................. -- 1,428 122,940 --
Preferred ................................................. -- 736 100,375 --
Telefonica de Argentina S.A. - ADR{\/} ...................... ARG 4,300 120,131 1.2
Tele Centro Sul Participacoes S.A. - ADR{\/}-/- ............. BRZL 2,500 104,531 1.1
Telesp Participacoes S.A.-/- ................................ BRZL 7,365 94,495 1.0
Tele Norte Leste Participacoes S.A. - Preferred-/- .......... BRZL 5,165 64,563 0.6
----------
2,052,595
----------
Electric Companies (15.3%)
Enersis S.A. - ADR{\/} ...................................... CHLE 11,800 304,588 3.1
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ...... BRZL 12,583 239,538 2.4
Companhia de Eletricidade do Estado da Bahia - COELBA ....... BRZL 4,960 168,303 1.7
Companhia Paranaense de Energia (Copel): .................... BRZL -- -- 1.7
ADR{\/} ................................................... -- 13,673 97,420 --
Common .................................................... -- 11,938 68,189 --
C.A. La Electricidad de Caracas - ADR{\/} ................... VENZ 7,153 152,001 1.5
Eletricidade de Sao Paulo S.A. .............................. BRZL 2,900 134,454 1.4
Gener S.A. - ADR{\/} ........................................ CHLE 7,764 124,224 1.3
Empresa Nacional de Electricidad S.A. - ADR{\/} ............. CHLE 9,100 103,513 1.0
Light - Servicos de Eletricidade S.A. ....................... BRZL 572 69,582 0.7
Companhia Paulista de Forca e Luz-/- ........................ BRZL 430 30,969 0.3
Empresa Bandeirante de Energia S.A.-/- ...................... BRZL 1,336 14,381 0.1
C.A. La Electridad de Caracas ............................... VENZ 14,348 6,199 0.1
----------
1,513,361
----------
Beverages-Alcoholic (8.1%)
Fomento Economico Mexicano, S.A. de C.V. - ADR{\/} .......... MEX 18,100 481,913 4.9
Compania Cervecerias Unidas S.A. - ADR{\/} .................. CHLE 10,300 198,275 2.0
Quilmes Industrial S.A. (Quinsa) - ADR{\/} .................. LUX 13,300 123,856 1.2
Cerveceria Backus & Johnston S.A. ........................... PERU 6,244 2,058 --
----------
806,102
----------
Manufacturing-Diversified (6.8%)
Grupo Carso S.A. de C.V. "A1"-/- ............................ MEX 83,800 284,412 2.9
Desc S.A. de C.V. - ADR{\/} ................................. MEX 8,070 154,843 1.6
Alpha, S.A. de C.V. "A" ..................................... MEX 42,200 112,533 1.1
Grupo Industrial Saltillo, S.A. de C.V. "B" ................. MEX 34,200 85,327 0.9
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS ......... BRZL 15,300 33,817 0.3
----------
670,932
----------
The accompanying notes are an integral part of the financial statements.
F9
380
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Banks-Regional (6.3%)
Uniao de Bancos Brasileiros S.A. (Unibanco) Units{\/}{=} .... BRZL 7,525,500 $ 217,299 2.2
Banco de Galicia y Buenos Aires S.A. de C.V. - ADR{\/} ...... ARG 11,543 203,447 2.0
Bansud S.A. "B"-/- .......................................... ARG 22,700 97,476 1.0
Banco de A. Edwards - ADR{\/} ............................... CHLE 5,777 63,547 0.6
Banco Latinoamericano de Exportaciones, S.A. "E"{\/} ........ PAN 2,713 45,104 0.5
----------
626,873
----------
Financial-Diversified (6.1%)
Administradora de Fondos de Peniones Provida S.A. -
ADR{\/} .................................................... CHLE 13,181 177,120 1.8
Quinenco S.A. - ADR{\/} ..................................... CHLE 14,800 118,400 1.2
Grupo Financiero Banorte, S.A. de C.V. "B"-/- ............... MEX 132,000 113,333 1.1
Grupo Financiero Banamex Accival, S.A. de C.V. (Banacci)
"B"-/- ..................................................... MEX 83,980 110,107 1.1
Credicorp Ltd. - ADR{\/}-/- ................................. PERU 9,640 86,760 0.9
----------
605,720
----------
Oil & Gas-Exploration & Production (4.3%)
Petroleo Brasileiro S.A. (Petrobras) Preferred .............. BRZL 3,347 379,541 3.8
Harken Energy Corp.-/- ...................................... US 27,890 54,037 0.5
----------
433,578
----------
Construction-Cement & Aggregates (3.8%)
Apasco, S.A. de C.V. ........................................ MEX 54,100 190,716 1.9
Corporacion GEO, S.A. de C.V. "B"-/- ........................ MEX 26,000 72,222 0.7
Grupo Cementos de Chihuahua, S.A. de C.V. "B" ............... MEX 128,500 61,654 0.6
Corporacion Venezolana de Cementos S.A.C.A.: ................ VENZ -- -- 0.5
"A" ....................................................... -- 45,516 29,860 --
"B" ....................................................... -- 30,088 20,005 --
Companhia Cimento Portland Itau-/- .......................... BRZL 68 7,740 0.1
----------
382,197
----------
Entertainment (2.8%)
Grupo Televisa S.A. - GDR{\/}-/- ............................ MEX 11,400 281,438 2.8
----------
Paper & Forest Products (2.7%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" .................. MEX 64,700 205,864 2.1
Votorantim Celulose e Papel S.A.-/- ......................... BRZL 5,700 61,341 0.6
----------
267,205
----------
Iron & Steel (2.5%)
Companhia Vale de Rio Doce "A" - Preferred .................. BRZL 17,000 218,129 2.2
Caemi Mineracao E Metalurgia S.A. - Preferred ............... BRZL 1,356 27,502 0.3
----------
245,631
----------
Chemicals (2.3%)
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} ........... CHLE 6,800 229,075 2.3
----------
The accompanying notes are an integral part of the financial statements.
F10
381
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Metal Mining (2.3%)
Industrias Penoles S.A. (CP) ................................ MEX 58,600 $ 177,576 1.8
Grupo Mexico S.A. "B" ....................................... MEX 23,100 51,333 0.5
----------
228,909
----------
Banks-Major Regional (2.0%)
Banco Rio de La Plata S.A. - ADR{\/} ........................ ARG 15,100 196,300 2.0
----------
Investment Management (1.8%)
Itausa - Investimentos Itau S.A. - Preferred ................ BRZL 317,325 176,000 1.8
----------
Telecommunications-Long Distance (1.6%)
Embratel Participacoes S.A. - Preferred-/- .................. BRZL 11,800 161,176 1.6
----------
Water Utilities (1.4%)
Companhia de Saneamento Basico do Estado de Sao Paulo -
SABESP ..................................................... BRZL 1,832 138,772 1.4
----------
Retail-Department Stores (1.4%)
Controladora Comercial Mexicana, S.A. de C.V. - UBC[.]-/- ... MEX 176,500 124,798 1.3
El Puerto de Liverpool, S.A. de C.V. ........................ MEX 4,661 6,356 0.1
----------
131,154
----------
Telecommunications-Cellular / Wireless (1.2%)
Telesp Celular S.A.: ........................................ BRZL -- -- 0.6
"B" - Preferred ........................................... -- 663 29,129 --
Common-/- ................................................. -- 1,183 26,693 --
Telepar Celular S.A. "B" - Preferred ........................ BRZL 530 33,340 0.3
Telerj Celular S.A. "B" - Preferred-/- ...................... BRZL 1,370 32,327 0.3
----------
121,489
----------
Land Development (1.1%)
IRSA Inversiones y Representaciones S.A. - GDR{\/} .......... ARG 4,089 113,713 1.1
----------
Textiles-Specialty (1.1%)
Companhia de Tecidos Norte de Minas - Preferred ............. BRZL 1,056 113,642 1.1
----------
Foods (1.0%)
Grupo Industrial Maseca, S.A. de C.V. "B" ................... MEX 128,600 103,919 1.0
----------
Beverages-Non-Alcoholic (0.9%)
Pepsi-Gemex S.A. - GDR{\/} .................................. MEX 11,200 87,500 0.9
----------
Oil & Gas-Refining & Marketing (0.8%)
Companhia Brasileira de Petroleo Ipiranga - Preferred ....... BRZL 14,594 80,944 0.8
----------
Retail-Food Chains (0.8%)
Supermercados Unimarc S.A. - ADR{\/} ........................ CHLE 18,900 79,144 0.8
----------
The accompanying notes are an integral part of the financial statements.
F11
382
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Metal Fabricators (0.6%)
Sanluis Corp., S. A. de C.V.-/- ............................. MEX 39,700 $ 57,344 0.6
----------
Lodging Hotels (0.5%)
Grupo Posadas S.A.: ......................................... MEX -- -- 0.5
"A"-/- .................................................... -- 48,400 20,533 --
"L"-/- .................................................... -- 68,100 28,891 --
----------
49,424
----------
Power Producers-Independent (0.2%)
Centrais Geradoras do Sul do Brasil S.A.: ................... BRZL -- -- 0.2
Preferred-/- .............................................. -- 10,158 12,613 --
Common-/- ................................................. -- 8,442 11,042 --
----------
23,655
----------
Airlines (0.2%)
Cintra S.A.-/- .............................................. MEX 35,600 20,353 0.2
---------- -----
TOTAL EQUITY INVESTMENTS (cost $15,614,394) ................... 9,998,145 100.6
---------- -----
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Corporate Bonds (0.0%)
Brazil (0.0%)
Companhia Vale do Rio Doce - Non Convertible (Cost $0) .... BRL 20,000 -- --
---------- -----
TOTAL INVESTMENTS (cost $15,614,394)* ......................... 9,998,145 100.6
Other Assets and Liabilities .................................. (62,888) (0.6)
---------- -----
NET ASSETS .................................................... $9,935,257 100.0
---------- -----
---------- -----
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{=} Each unit represents one preferred share of Unibanco and one
preferred "B" share of Unibanco Holdings.
[.] Each unit represents three "B" shares and one "C" share.
* For Federal income tax purposes, cost is $15,773,062 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 231,661
Unrealized depreciation: (6,006,578)
-------------
Net unrealized depreciation: $ (5,774,917)
-------------
-------------
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
Ltd--Limited
The accompanying notes are an integral part of the financial statements.
F12
383
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:
PERCENTAGE OF NET ASSETS{D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
Argentina (ARG/ARS) .................. 10.4 10.4
Brazil (BRZL/BRL) .................... 39.0 39.0
Chile (CHLE/CLP) ..................... 14.1 14.1
Luxembourg (LUX/LUF) ................. 1.2 1.2
Mexico (MEX/MXN) ..................... 31.9 31.9
Panama (PAN/PND) ..................... 0.5 0.5
Peru (PERU/PES) ...................... 0.9 0.9
United States (US/USD) ............... 0.5 (0.6) (0.1)
Venezuela (VENZ/VEB) ................. 2.1 2.1
------ ----- -----
Total ............................... 100.6 (0.6) 100.0
------ ----- -----
------ ----- -----
- --------------
{d} Percentages indicated are based on net assets of $9,935,257.
The accompanying notes are an integral part of the financial statements.
F13
384
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ---------- ------------ -------------
Finance (18.7%)
UBS A.G. ................................................... SWTZ 5,386 $ 1,655,179 3.0
BANKS-MONEY CENTER
First Tennessee National Corp. ............................. US 33,400 1,271,288 2.3
BANKS-REGIONAL
American General Corp. ..................................... US 11,950 932,100 1.7
INSURANCE - LIFE
ING Groep N.V. ............................................. NETH 14,138 861,890 1.6
OTHER FINANCIAL
First Union Corp. .......................................... US 14,000 851,375 1.5
BANKS-REGIONAL
Royal & Sun Alliance Insurance Group PLC ................... UK 98,531 803,596 1.5
INSURANCE - MULTI-LINE
Commonwealth Bank of Australia ............................. AUSL 50,000 709,135 1.3
BANKS-MONEY CENTER
National Australia Bank Ltd. ............................... AUSL 45,000 677,816 1.2
BANKS-MONEY CENTER
CGU PLC .................................................... UK 37,916 592,948 1.1
INSURANCE - MULTI-LINE
Lloyds TSB Group PLC ....................................... UK 41,571 590,692 1.1
BANKS-MONEY CENTER
National Westminister Bank PLC ............................. UK 27,000 520,058 0.9
BANKS-MONEY CENTER
Credit Suisse Group ........................................ SWTZ 3,320 519,808 0.9
BANKS-MONEY CENTER
IKB Deutsche Industriebank AG .............................. GER 19,890 410,595 0.6
BANKS-REGIONAL
Fortis AG: ................................................. BELG -- -- --
OTHER FINANCIAL
CVG-/- ................................................... -- 1,932 8,667 --
Strip VVPR-/- ............................................ -- 1,932 112 --
------------
10,405,259
------------
Consumer Non-Durables (17.1%)
Cadbury Schweppes PLC ...................................... UK 92,255 1,571,515 2.8
FOODS
Bestfoods .................................................. US 18,800 1,001,100 1.8
FOOD
Avon Products, Inc. ........................................ US 22,200 982,350 1.8
PERSONAL CARE/COSMETICS
Brown-Forman Corp. "B" ..................................... US 12,855 972,963 1.7
BEVERAGES - ALCOHOLIC
Philip Morris Cos., Inc. ................................... US 16,450 880,075 1.6
TOBACCO AND FOOD
Anheuser-Busch Cos., Inc. .................................. US 12,582 825,694 1.5
BEVERAGES - ALCOHOLIC
Pernod Ricard .............................................. FR 12,570 816,336 1.5
BEVERAGES - ALCOHOLIC
Diageo PLC ................................................. UK 69,151 786,067 1.4
BEVERAGES - ALCOHOLIC
The accompanying notes are an integral part of the financial statements.
F14
385
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ---------- ------------ -------------
Consumer Non-Durables (Continued)
Reckitt & Colman PLC ....................................... UK 53,816 $ 711,917 1.3
HOUSEHOLD PRODUCTS
Foster's Brewing Group Ltd. ................................ AUSL 230,000 622,464 1.1
BEVERAGES - ALCOHOLIC
Kellogg Co. ................................................ US 9,634 328,760 0.6
FOOD
------------
9,499,241
------------
Energy (15.0%)
Texas Utilities Co. ........................................ US 37,000 1,727,438 3.1
ELECTRIC & GAS UTILITIES
Mobil Corp. ................................................ US 19,800 1,725,075 3.1
ENERGY SOURCES
Royal Dutch Petroleum Co. .................................. NETH 24,160 1,202,726 2.2
OIL
Southern Co. ............................................... US 40,000 1,162,500 2.1
ELECTRIC & GAS UTILITIES
Electrabel S.A. ............................................ BELG 2,280 996,469 1.8
ELECTRIC & GAS UTILITIES
Reunies Electrobel & Tractebel S.A. ........................ BELG 3,815 736,499 1.3
ELECTRIC COMPANIES
RWE AG ..................................................... GER 8,170 447,379 0.8
ENERGY EQUIPMENT & SERVICES
Elf Aquitaine .............................................. FR 2,980 344,410 0.6
OIL
------------
8,342,496
------------
Services (12.4%)
Bell Atlantic Corp. ........................................ US 16,000 909,000 1.6
TELEPHONE - REGIONAL/LOCAL
McGraw-Hill, Inc. .......................................... US 8,880 904,650 1.6
BROADCASTING & PUBLISHING
Deutsche Telekom A.G. ...................................... GER 25,000 822,132 1.5
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. .................... NZ 173,200 751,315 1.4
TELEPHONE NETWORKS
Koninklijke KPN N.V. ....................................... NETH 15,005 750,969 1.3
TELEPHONE NETWORKS
Dun & Bradstreet Corp. ..................................... US 18,800 593,375 1.1
BROADCASTING & PUBLISHING
Swisscom AG-/- ............................................. SWTZ 1,414 592,084 1.1
TELEPHONE NETWORKS
EMI Group PLC .............................................. UK 87,790 586,511 1.1
LEISURE & TOURISM
Telecom Italia S.p.A. ...................................... ITL 60,000 511,890 0.9
TELEPHONE NETWORKS
TABCORP Holdings Ltd. ...................................... AUSL 46,600 285,332 0.5
LEISURE & TOURISM
The accompanying notes are an integral part of the financial statements.
F15
386
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ---------- ------------ -------------
Services (Continued)
TNT Post Group N.V.-/- ..................................... NETH 5,915 $ 190,532 0.3
TRNASPORTATION - SHIPPING
------------
6,897,790
------------
Health Care (5.6%)
Bristol-Myers Squibb Co. ................................... US 18,450 2,468,841 4.5
PHARMACEUTICALS
American Home Products Corp. ............................... US 11,000 619,438 1.1
PHARMACEUTICALS
------------
3,088,279
------------ -----
TOTAL EQUITY INVESTMENTS (cost $27,292,544) .................. 38,233,065 68.8
------------ -----
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ---------- ------------ -------------
Government & Government Agency Obligations (26.6%)
Germany (9.0%)
Deutschland Republic:
6.25% due 04/26/06 ..................................... DEM 3,120,000 2,174,532 3.9
6.25% due 01/04/24 ..................................... DEM 2,450,000 1,770,966 3.2
8.25% due 09/20/01 ..................................... DEM 1,600,000 1,081,173 1.9
United Kingdom (3.4%)
United Kingdom Treasury, 8.75% due 8/25/17 ............... GBP 730,000 1,872,987 3.4
United States (14.2%)
United States Treasury:
5.5% due 02/15/08 ...................................... USD 3,245,000 3,437,396 6.2
6% due 02/15/26 ........................................ USD 2,169,000 2,366,509 4.3
5.625% due 02/28/01 .................................... USD 2,040,000 2,084,085 3.7
------------
Total Government & Government Agency Obligations (cost
$13,997,283) ................................................ 14,787,648
------------
Corporate Bonds (0.0%)
Germany (0.0%)
IKB Deutshe Industriebank AG (Banks-Major Regional) ...... DEM 1,500 1,026 --
------------
Total Corporate Bonds (cost $869) ............................ 1,026
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $13,998,152) ............ 14,788,674 26.6
------------ -----
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ---------- ------------ -------------
Societe Generale Banque Put Warrants due 11/30/99 Tractebel
(cost $0) ................................................. BEL 763 110 --
------------ -----
BANKS-MONEY CENTER
The accompanying notes are an integral part of the financial statements.
F16
387
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ------------ -------------
Dated December 31,1998, with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50%,
collateralized by $1,700,000 U.S. Treasury Bonds, 6.25% due
8/15/23 (market value of collateral is $1,938,530,
including accrued interest). (cost $1,896,000) ........... $ 1,896,000 3.4
------------ -----
TOTAL INVESTMENTS (cost $43,186,696) * ...................... 54,917,849 98.8
Other Assets and Liabilities ................................. 662,412 1.2
------------ -----
NET ASSETS ................................................... $ 55,580,261 100.0
------------ -----
------------ -----
- --------------
-/- Non-income producing security
* For Federal income tax purposes, cost is $43,209,387 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 12,087,442
Unrealized depreciation: (378,980)
-------------
Net unrealized appreciation: $ 11,708,462
-------------
-------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
Australia (AUSL/AUD) ................. 4.1 4.1
Belgium (BELG/BEL) ................... 3.1 3.1
France (FR/FRF) ...................... 2.1 2.1
Germany (GER/DEM) .................... 2.9 9.0 11.9
Italy (ITLY/ITL) ..................... 0.9 0.9
Netherlands (NETH/NLG) ............... 5.4 5.4
New Zealand (NZ/NZD) ................. 1.4 1.4
Switzerland (SWTZ/CHF) ............... 5.0 5.0
United Kingdom (UK/GBP) .............. 11.2 3.4 14.6
United States (US/USD) ............... 32.7 14.2 4.6 51.5
------ ----- ----- -----
Total ............................... 68.8 26.6 4.6 100.0
------ ----- ----- -----
------ ----- ----- -----
- --------------
{d} Percentages indicated are based on net assets of $55,580,261.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACT OUTSTANDING
DECEMBER 31, 1998
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACT TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
British Pounds.......................... 3,646,456 1.6588 1/29/99 $ 2,904
-------------- --------------
Total Contract to Sell (Receivable
amount $3,649,360)................... 3,646,456 2,904
-------------- --------------
THE VALUE OF CONTRACT TO SELL AS
PERCENTAGE OF NET ASSETS IS 6.56%.
Total Open Forward Foreign Currency
Contract............................. $ 2,904
--------------
--------------
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F17
388
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
Telephone (31.9%)
SBC Communications ........................................ US 41,700 $ 2,236,162 3.2
Cable & Wireless PLC -ADR{\/} ............................. UK 60,000 2,205,000 3.2
Telecom Italia S.p.A. ..................................... ITLY 350,200 2,203,715 3.2
NTL Inc.{\/}-/- ........................................... UK 33,132 1,869,888 2.7
GTE Corp. ................................................. US 27,300 1,841,044 2.7
Vodafone Group PLC ........................................ UK 80,900 1,312,210 1.9
Orange PLC-/- ............................................. UK 96,200 1,116,725 1.6
Swisscom AG-/- ............................................ SWTZ 2,593 1,085,767 1.5
Bell Atlantic Corp. ....................................... US 15,200 863,550 1.2
Telefonica de Espana ...................................... SPN 17,750 788,362 1.1
BCE Inc. .................................................. CAN 19,034 719,685 1.0
Carso Global Telecom 'A1'-/- .............................. MEX 185,900 627,177 0.9
SPT Telecom-/- ............................................ CZCH 40,704 622,604 0.9
BellSouth Corp. ........................................... US 12,000 598,500 0.9
Magyar Tavkozlesi Rt. -ADR{\/} ............................ HGRY 100,000 571,999 0.8
France Telecom S.A.-/- .................................... FR 7,175 569,943 0.8
ICG Communications, Inc.-/- ............................... US 24,900 535,350 0.8
Deutsche Telekom AG ....................................... GER 16,000 526,164 0.8
SmarTone Telecommunications Holdings Ltd. ................. HK 149,500 414,897 0.6
Orckit Communications Ltd.{\/}-/- ......................... ISRL 19,200 310,800 0.4
Telecom Corporation of New Zealand Ltd. ................... NZ 133,500 291,306 0.4
Nippon Telegraph & Telephone Corp. ........................ JPN 350 270,136 0.4
NetCom ASA-/- ............................................. NOR 7,250 188,951 0.3
MetroNet Communications Corp. "B"{\/}-/- .................. CAN 5,500 184,250 0.3
Energis PLC-/- ............................................ UK 5,350 119,141 0.2
Telebras Receipts-/- ...................................... BRZL 1,240 55,431 0.1
------------
22,128,757
------------
Communications Equipment (12.9%)
Nokia Oyj A.B. "A"{\/} .................................... FIN 23,700 2,854,369 4.1
ECI Telecommunications Ltd.{\/} ........................... ISRL 47,700 1,699,313 2.4
Lucent Technologies, Inc. ................................. US 9,800 1,078,000 1.6
Tellabs, Inc.-/- .......................................... US 14,000 959,875 1.4
Tekelec-/- ................................................ US 45,800 758,563 1.1
British Telecom PLC ....................................... UK 42,700 642,571 0.9
General Instrument Corp.-/- ............................... US 17,900 607,481 0.9
Teleglobe, Inc. ........................................... CAN 9,800 352,288 0.5
------------
8,952,460
------------
Telecommunications (Cellular/Wireless) (11.0%)
Millicom International Cellular S.A.{\/}-/- ............... LUX 45,000 1,569,375 2.3
AirTouch Communications, Inc.-/- .......................... US 19,100 1,377,588 2.0
NTT Mobile Communications-/- .............................. JPN 180 740,839 1.1
Sprint Corp.-/- ........................................... US 26,100 603,563 0.9
Helsingin Puhelin Oyj (Helsinki Telphone Corp.) ........... FIN 8,750 520,209 0.7
Nextel Communications, Inc. "A"-/- ........................ US 21,800 515,025 0.7
The accompanying notes are an integral part of the financial statements.
F18
389
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
Telecommunications (Continued)
Western Wireless Corp. "A"-/- ............................. US 22,500 $ 495,000 0.7
Grupo Iusacell S.A. "L" -ADR{\/}-/- ....................... MEX 64,700 460,988 0.7
Hellenic Telecommunication Organization S.A. .............. GREC 14,761 393,127 0.6
ICO Global Communications (Holdings) Ltd.-/- .............. US 29,800 324,075 0.5
Mitec Telecom, Inc.-/- .................................... CAN 43,900 172,157 0.2
STET Hellas Telecommunications S.A. -ADR{\/}-/- ........... GREC 4,740 153,458 0.2
Microcell Telecommunications, Inc. "B"{\/}-/- ............. CAN 24,000 142,500 0.2
Sonera Group Oyj-/- ....................................... FIN 5,000 88,295 0.1
Panafon S.A.-/- ........................................... GREC 2,700 72,391 0.1
Clearnet Communications, Inc. "A"{\/}-/- .................. CAN 3,800 30,875 --
------------
7,659,465
------------
Telecommunications (Long Distance) (9.0%)
MCI WorldCom, Inc.-/- ..................................... US 30,936 2,219,658 3.2
Tel-Save Holdings, Inc.-/- ................................ US 85,000 1,423,750 2.0
WinStar Communications, Inc.-/- ........................... US 24,600 959,400 1.4
Koninklijke KPN N.V. ...................................... NETH 15,000 750,718 1.1
Esat Telecom Group PLC-ADR{\/}-/- ......................... IRE 14,700 565,950 0.8
Global Crossing Ltd.-/- ................................... BDA 7,500 338,438 0.5
------------
6,257,914
------------
Broadcasting (8.4%)
Tele-Communications, Inc. "A"-/- .......................... US 58,700 3,246,844 4.7
Comcast Corp. "A" ......................................... US 22,000 1,291,125 1.9
Univision Communications Inc.-/- .......................... US 18,000 651,375 0.9
Infinity Broadcasting Corp. "A"-/- ........................ US 16,000 438,000 0.6
United International Holdings, Inc.-/- .................... US 11,800 227,150 0.3
------------
5,854,494
------------
Computer Software & Services (3.7%)
America Online, Inc.-/- ................................... US 15,900 2,544,000 3.7
------------
Machinery (Diversified) (3.1%)
Mannesmann AG ............................................. GER 19,000 2,177,749 3.1
------------
Manufacturing (Diversified) (2.3%)
Vivendi ................................................... FR 6,100 1,582,431 2.3
------------
Entertainment (1.9%)
Viacom, Inc. "B"-/- ....................................... US 9,600 710,400 1.0
Time Warner Inc. .......................................... US 10,000 620,625 0.9
------------
1,331,025
------------
Computers (Networking) (1.7%)
3Com Corp.-/- ............................................. US 15,000 672,187 1.0
Cisco Systems, Inc.-/- .................................... US 3,800 352,687 0.5
The accompanying notes are an integral part of the financial statements.
F19
390
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
Computers (Continued)
Equant N.V.{\/}-/- ........................................ NETH 2,300 $ 155,969 0.2
------------
1,180,843
------------
Electrical Equipment (1.6%)
Uniphase Corp.-/- ......................................... US 15,700 1,089,188 1.6
------------
Services (Commercial & Consumer) (0.8%)
Securicor PLC ............................................. UK 69,057 578,420 0.8
------------
Computer Hardware (0.6%)
NEC Corp. ................................................. JPN 45,000 414,232 0.6
------------
Computers (Peripherals) (0.3%)
Performance Technologies, Inc.-/- ......................... US 15,000 196,875 0.3
------------
Personal Care (0.1%)
Globenet Communications Group Ltd. -ADR{\/}-/- ............ BDA 33,200 99,600 0.1
------------
Telecommunications (0.1%)
ING Barings Russian Regional Telecommunications Basket
Bridge Certificates{/\}-/- ............................... RUS 66 45,139 0.1
------------ -----
TOTAL EQUITY INVESTMENTS (cost $46,048,018) ................. 62,092,592 89.4
------------ -----
NO. OF VALUE % OF NET
RIGHTS COUNTRY RIGHTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
Telefonica de Espana Rights, expire 1/30/99 ............... SPN 17,750 15,742 --
------------ -----
TOTAL RIGHTS (cost $0) ...................................... 15,742 --
------------ -----
The accompanying notes are an integral part of the financial statements.
F20
391
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT
Dated December 31, 1998, with State Street Bank & Trust
Co., due January 4, 1999, for an effective yield of 4.50%,
collateralized by $6,665,000 of U.S. Treasury Bonds, 6.25%
due 8/15/23 (market value of collateral is $7,600,179,
including accrued interest). (cost $7,450,000) ........... $ 7,450,000 10.7
------------ -----
TOTAL INVESTMENTS (cost $53,498,018) * ...................... 69,558,334 100.1
Other Assets and Liabilites ................................. (98,999) (0.1)
------------ -----
NET ASSETS .................................................. $ 69,459,335 100.0
------------ -----
------------ -----
- --------------
-/- Non income producing security
{\/} U.S. currency denominated
{/\} Issued by ING Barings, the value of which is linked to the
underlying value of a basket of shares issued by Russian regional
telephone companies.
* For Federal income tax purposes, cost is $53,498,031 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 19,757,367
Unrealized depreciation: (3,697,064)
-------------
Net unrealized appreciation: $ 16,060,303
-------------
-------------
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F21
392
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:
PERCENTAGE OF NET ASSETS{D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
Bermuda (BDA/BEM) .................... 0.6 0.6
Brazil (BRZL/BRL) .................... 0.1 0.1
Canada (CAN/CAD) ..................... 2.2 2.2
Czech Republic (CZCH/CSK) ............ 0.9 0.9
Spain (ESP/ESP) ...................... 1.1 1.1
Finland (FIM/FIM) .................... 4.9 4.9
France (FR/FRF) ...................... 3.1 3.1
Germany (GER/DEM) .................... 3.9 3.9
Greece (GREC/GRD) .................... 0.9 0.9
Hong Kong (HK/HKD) ................... 0.6 0.6
Hungary (HGRY/HUF) ................... 0.8 0.8
Ireland (IRE/IEP) .................... 0.8 0.8
Israel (ISRL/ILS) .................... 2.8 2.8
Italy (ITLY/ITL) ..................... 3.2 3.2
Japan (JPN/JPY) ...................... 2.1 2.1
Luxembourg (LUX/LUF) ................. 2.3 2.3
Mexico (MEX/MXN) ..................... 1.6 1.6
Netherlands (NETH/NLG) ............... 1.3 1.3
New Zealand (NZ/NZD) ................. 0.4 0.4
Norway (NOR/NOK) ..................... 0.3 0.3
Russia (RUS/SUR) ..................... 0.1 0.1
Switzerland (SWTZ/CHF) ............... 1.5 1.5
United Kingdom (UK/GBP) .............. 11.3 11.3
United States (US/USD) ............... 42.6 10.6 53.2
------ ----- ----------
Total ............................... 89.4 10.6 100.0
------ ----- ----------
------ ----- ----------
- --------------
{d} Percentages indicated are based on net assets of $69,459,335.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1998
UNREALIZED
MARKET VALUE DELIVERY APPRECIATION
CONTRACTS TO SELL: (U.S. DOLLARS) CONTRACT PRICE DATE (DEPRECIATION)
- ---------------------------------------- ---------------- -------------- -------- ---------------
British Pounds.......................... 661,529 1.6557 2/26/99 $ 750
British Pounds.......................... 1,984,591 1.6546 2/26/99 929
Italian Liras........................... 1,090,295 1648.072 1/21/99 1,890
Japanese Yen............................ 712,023 120.11 2/10/99 (45,966)
---------------- ---------------
Total Contracts to Sell (Receivable
amount $4,406,041)................... 4,448,438 (42,397)
---------------- ---------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 6.40%.
Total Open Forward Foreign Currency
Contracts............................ $ (42,397)
---------------
---------------
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F22
393
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Services (21.4%)
Telecomunicacoes Brasileiras S.A. (Telebras) Preferred -
ADR-/- {\/} ................................................ BRZL 2,712 $ 197,129 3.5
TELEPHONE NETWORKS
Hellenic Telecommunication Organization S.A. (OTE) .......... GREC 4,977 132,552 2.3
TELEPHONE NETWORKS
Magyar Tavkozlesi Rt. - ADR{\/} ............................. HGRY 4,440 132,368 2.3
TELEPHONE NETWORKS
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ............. MEX 1,818 88,514 1.6
TELEPHONE NETWORKS
STET Hellas Telecommunications S.A. - ADR-/- {\/} ........... GREC 2,695 87,251 1.5
WIRELESS COMMUNICATIONS
Telekomunik Indonesia - ADR ................................. INDO 12,000 78,000 1.4
TELEPHONE NETWORKS
Cifra, S.A. de C.V. " V"-/- ................................. MEX 55,795 67,630 1.2
RETAILERS-OTHER
Telefonica del Peru S.A. - ADR{\/} .......................... PERU 5,200 65,975 1.2
TELEPHONE NETWORKS
Bezeq Israeli Telecommunication Corporation Ltd.-/- ......... ISRL 19,800 61,945 1.1
TELEPHONE NETWORKS
Telecomunicacoes de Sao Paulo S.A. (TELESP): ................ BRZL -- -- 1.1
TELEPHONE - REGIONAL/LOCAL
Common-/- ................................................. -- 688,200 59,249 --
Preferred ................................................. -- 12,040 1,642 --
Companhia Brasileira de Distribuicao Grupo Pao de Acucar -
ADR{\/} .................................................... BRZL 3,600 55,800 1.0
RETAILERS-FOOD
Companhia de Saneamento Basico do Estado de Sao Paulo -
SABESP ..................................................... BRZL 467,245 35,391 0.6
BUSINESS & PUBLIC SERVICES
Telefonica de Argentina S.A. - ADR{\/} ...................... ARG 1,263 35,285 0.6
TELEPHONE NETWORKS
Blue Square Chain Investments & Properties Ltd.-/- .......... ISRL 2,773 33,326 0.6
RETAILERS-FOOD
Blue Square-Israel Ltd. - ADR ............................... US 3,000 31,125 0.6
RETAILERS-FOOD
Nortel Inversora S.A. - ADR{\/} ............................. ARG 1,900 30,400 0.5
TELEPHONE NETWORKS
Panafon Hellenic Telecom S.A.-/- ............................ GREC 646 17,320 0.3
WIRELESS COMMUNICATIONS
----------
1,210,902
----------
Finance (14.8%)
Alpha Credit Bank ........................................... GREC 1,200 125,349 2.2
BANKS-REGIONAL
National Bank of Greece S.A. ................................ GREC 411 92,564 1.6
BANKS-MONEY CENTER
Liberty Life Association of Africa Ltd. ..................... SAFR 5,960 82,025 1.5
INSURANCE-LIFE
Sanlam Ltd. ................................................. SAFR 62,420 62,043 1.1
INSURANCE - MULTI-LINE
MISR International Bank - Reg S GDR{c} {\/} ................. EGPT 6,200 58,590 1.0
BANKS-MONEY CENTER
The accompanying notes are an integral part of the financial statements.
F23
394
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Finance (Continued)
Credicorp Ltd. - ADR{\/} .................................... PERU 6,180 $ 55,620 1.0
BANKS-MONEY CENTER
Uniao de Bancos Brasileiros S.A. (Unibanco): ................ BRZL -- -- 1.0
BANKS-MONEY CENTER
GDR{\/} ................................................... -- 3,840 55,440 --
Units{=} .................................................. -- 264 9 --
Turkiye Is Bankasi (Isbank) "C" ............................. TRKY 2,109,100 54,876 1.0
BANKS-MONEY CENTER
Grupo Financiero Banamex Accival, S.A. de C.V. "B"-/- ....... MEX 41,000 53,838 1.0
BANKS-MONEY CENTER
Yapi ve Kredi Bankasi AS .................................... TRKY 4,113,906 47,645 0.8
BANKS-REGIONAL
BIG Bank Gdanski S.A. - Reg S GDR{c} {\/} ................... POL 3,000 40,650 0.7
BANKS-REGIONAL
Bank Leumi Le - Israel ...................................... ISRL 26,626 37,706 0.7
BANKS-MONEY CENTER
Banco de Galicia y Buenos Aires, S.A. de C.V. - ADR{\/} ..... ARG 2,138 37,682 0.7
BANKS-MONEY CENTER
KREDYT BANK S.A. - Reg S GDR-/- {c} {\/} .................... POL 1,634 26,512 0.5
BANKS-MONEY CENTER
----------
830,549
----------
Energy (14.2%)
MOL Magyar Olaj-es Gazipari RT - Reg S GDR{c} {\/} .......... HGRY 4,880 134,810 2.4
GAS PRODUCTION & DISTRIBUTION
Petroleo Brasileiro S.A. (Petrobras) Preferred .............. BRZL 1,111,780 126,088 2.2
OIL
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ...... BRZL 5,861 110,626 2.0
ELECTRICAL & GAS UTILITIES
Enersis S.A. - ADR{\/} ...................................... CHLE 2,963 76,482 1.4
ELECTRICAL & GAS UTILITIES
Companhia Paranaense de Energia-Copel - ADR{\/} ............. BRZL 9,900 70,538 1.3
ELECTRICAL & GAS UTILITIES
YPF S.A. - ADR{\/} .......................................... ARG 2,500 69,844 1.2
ENERGY SOURCES
Huaneng Power International, Inc. - ADR-/- {\/} ............. CHNA 3,476 50,402 0.9
ELECTRICAL & GAS UTILITIES
Eletropaulo Metropolitana Preferred ......................... BRZL 1,064,101 49,329 0.9
ELECTRICAL & GAS UTILITIES
Surgutneftegaz - ADR{\/} .................................... RUS 13,910 46,946 0.8
OIL
Companhia de Eletricidade do Estado da Bahia - COELBA ....... BRZL 1,000,000 33,932 0.6
ELECTRICAL & GAS UTILITIES
Centrais Electricas de Santa Catarina S.A. .................. BRZL 60,000 26,821 0.5
ELECTRICAL & GAS UTILITIES
Pakistan State Oil Co., Ltd. ................................ PAK 880 1,387 --
OIL
----------
797,205
----------
The accompanying notes are an integral part of the financial statements.
F24
395
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Consumer Non-Durables (11.3%)
Hindustan Lever Ltd. ........................................ IND 3,800 $ 149,017 2.6
PERSONAL CARE/COSMETICS
ITC Ltd. .................................................... IND 6,500 114,922 2.0
TOBACCO
South African Breweries Ltd. ................................ SAFR 6,111 103,001 1.8
BEVERAGES - ALCOHOLIC
Fomento Economico Mexicano, S.A. de C.V. - ADR{\/} .......... MEX 3,567 94,971 1.7
BEVERAGES - NON-ALCOHOLIC
Panamerican Beverages, Inc. "A"{\/} ......................... MEX 3,000 65,438 1.2
BEVERAGES - NON-ALCOHOLIC
A-Ahram Beverages Co. S.A.E. - 144A GDR{.}{\/} .............. EGPT 1,400 40,425 0.7
BEVERAGES - ALCOHOLIC
Companhia de Tecidos Norte de Minas Preferred ............... BRZL 301,000 32,392 0.6
TEXTILES & APPAREL
Oriental Weavers "C" ........................................ EGPT 1,350 30,136 0.5
TEXTILES & APPAREL
Zaklady Piwowarskie w Zywcu S.A. (Zywiec) ................... POL 103 12,342 0.2
BEVERAGES - ALCOHOLIC
Truworths International Ltd. ................................ SAFR 3,872 2,171 --
TEXTILES & APPAREL
----------
644,815
----------
Materials/Basic Industry (9.1%)
Suez Cement Co. - Reg S GDR{c} {\/} ......................... EGPT 5,363 76,691 1.4
CEMENT
Pohang Iron & Steel Co., Ltd. - ADR{\/} ..................... KOR 4,178 70,504 1.3
METALS - STEEL
Tubos de Acero de Mexico S.A. - ADR-/- {\/} ................. MEX 10,000 64,375 1.1
METALS - STEEL
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} ........... CHLE 1,860 62,659 1.1
CHEMICALS
Anglo American Platinum Corporation Ltd. .................... SAFR 4,500 61,702 1.1
METALS - NON-FERROUS
Makhteshim-Agan Industries Ltd.-/- .......................... ISRL 24,927 54,031 1.0
CHEMICALS
Cemex "CPO", S.A. de C.V. ................................... MEX 23,247 50,134 0.9
CEMENT
Apasco, S.A. de C.V. ........................................ MEX 9,831 34,657 0.6
CEMENT
Hindalco Industries Ltd.: ................................... IND -- -- 0.6
METALS - NON-FERROUS
GDR{\/} ................................................... -- 2,400 28,140 --
Common .................................................... -- 400 4,833 --
Engro Chemicals Pakistan Ltd. ............................... PAK 1,470 2,660 --
CHEMICALS
----------
510,386
----------
The accompanying notes are an integral part of the financial statements.
F25
396
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Multi-Industry/Miscellaneous (8.3%)
GT Taiwan Fund-/- +X+ {\/} .................................. TWN 27,191 $ 277,083 4.9
COUNTRY FUNDS
Grupo Carso, S.A. de C.V. "A1" .............................. MEX 25,500 86,545 1.5
MULTI-INDUSTRY
Rembrandt Group Ltd. ........................................ SAFR 10,917 66,776 1.2
CONGLOMERATE
Haci Omer Sabanci Holding AS ................................ TRKY 2,713,497 41,758 0.7
CONGLOMERATE
----------
472,162
----------
Capital Goods (4.4%)
Heliopolis Housing .......................................... EGPT 1,271 100,067 1.8
CONSTRUCTION
NASR (El) City Company For Housing & Construction ........... EGPT 1,950 58,952 1.0
CONSTRUCTION
Corporacion GEO, S.A. de C.V. "B"-/- ........................ MEX 14,200 39,444 0.7
CONSTRUCTION
ARA, S.A. de C.V.-/- ........................................ MEX 15,200 38,384 0.7
CONSTRUCTION
Arabian International Construction-/- ....................... EGPT 1,571 10,612 0.2
CONSTRUCTION
----------
247,459
----------
Health Care (1.6%)
Teva Pharmaceutical Industries Ltd. ......................... ISRL 1,800 73,698 1.3
PHARMACEUTICALS
Ranbaxy Laboratories Ltd. ................................... IND 3,000 18,953 0.3
MEDICAL TECHNOLOGY & SUPPLIES
----------
92,651
----------
Technology (1.0%)
Telekomunikacja Polska S.A. - GDR ........................... POL 11,540 58,854 1.0
----------
SOFTWARE
Consumer Durables (0.3%)
Qingling Motors Co., Ltd.{*} ................................ CHNA 110,000 19,310 0.3
AUTOMOBILES
---------- -----
TOTAL EQUITY INVESTMENTS (cost $6,111,420) .................... 4,884,293 86.4
---------- -----
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Merrill Lynch - Kospi 200 Call Warrants, due 9/9/99.
Performance linked to equity securities. Redemption amount
100% of the final closing price of the Korean Kospi 200
Index converted to the prevailing foreign exchange rate.
(cost $163,000) ............................................ US 49,997 264,124 4.7
---------- -----
INVESTMENT MANAGEMENT
The accompanying notes are an integral part of the financial statements.
F26
397
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
NO. OF VALUE % OF NET
RIGHTS COUNTRY RIGHTS (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Companhia de Saneamento Basico do Estado de Sao Paulo -
SABESP Rights, expire 1/4/99 (cost $0) ..................... BRZL 3,019 -- --
---------- -----
BUSINESS & PUBLIC SERVICES
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
Dated December 31, 1998, with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50%,
collateralized by $490,000 U.S. Treasury Notes, 5.625% due
11/30/99 (market value of collateral is $496,635 including
accrued interest). (cost $482,000) ......................... $ 482,000 8.5
---------- -----
TOTAL INVESTMENTS (cost $6,756,420) * ........................ 5,630,417 99.6
Other Assets and Liabilities .................................. 20,993 0.4
---------- -----
NET ASSETS .................................................... $5,651,410 100.0
---------- -----
---------- -----
- --------------
{*} Denominated in Hong Kong Dollars.
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{\/} U.S. currency denominated.
{=} Each unit represents one preferred share of Unibanco and one
preferred 'B' share of Unibanco Holdings.
+X+ The GT Global Variable Emerging Markets Fund (the 'Fund') has
invested in the GT Global Taiwan Fund, a fund managed by INVESCO
Asset Management Ltd. which is an affiliate of the Fund's manager,
A I M Advisors, Inc.
* For Federal income tax purposes, cost is $6,936,812 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 381,966
Unrealized depreciation: (1,688,361)
-------------
Net unrealized depreciation: $ (1,306,395)
-------------
-------------
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F27
398
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
Argentina (ARG/ARS) .................. 3.0 3.0
Brazil (BRZL/BRL) .................... 15.3 15.3
Chile (CHLE/CLP) ..................... 2.5 2.5
China (CHNA/RMB) ..................... 1.2 1.2
Egypt (EGPT) ......................... 6.6 6.6
Greece (GREC/GRD) .................... 7.9 7.9
Hungary (HGRY/HUF) ................... 4.7 4.7
India (IND/INR) ...................... 5.5 5.5
Indonesia (INDO/IDR) ................. 1.4 1.4
Israel (ISRL/ILS) .................... 4.7 4.7
Korea (KOR/KRW) ...................... 1.3 1.3
Mexico (MEX/MXN) ..................... 12.2 12.2
Peru (PERU/PES) ...................... 2.2 2.2
Poland (POL/PLZ) ..................... 2.4 2.4
Russia (RUS/SUR) ..................... 0.8 0.8
South Africa (SAFR/ZAR) .............. 6.7 6.7
Taiwan (TWN/TWD) ..................... 4.9 4.9
Turkey (TRKY/TRL) .................... 2.5 2.5
United States (US/USD) ............... 0.6 4.7 8.9 14.2
------ ----- ----- -----
Total ............................... 86.4 4.7 8.9 100.0
------ ----- ----- -----
------ ----- ----- -----
- --------------
{d} Percentages indicated are based on net assets of $5,651,410.
The accompanying notes are an integral part of the financial statements.
F28
399
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Electrical & Gas Utilities (18.5%)
Endesa S. A. - ADR{\/} ...................................... SPN 6,700 $ 180,900 2.9
National Grid Group PLC ..................................... UK 20,000 159,460 2.5
Houston Industries, Inc. .................................... US 4,600 147,776 2.3
Dominion Resources, Inc. .................................... US 3,100 144,926 2.3
AES Corp.-/- ................................................ US 2,785 131,939 2.1
BG PLC ...................................................... UK 20,000 126,056 2.0
Edison S.p.A.-/- ............................................ ITLY 7,100 83,622 1.3
Interstate Energy Corp. ..................................... US 2,246 72,434 1.1
Pinnacle West Capital Corp. ................................. US 1,646 69,750 1.1
EVN Energie-Versorgung Niederoesterreich AG ................. ASTRI 400 56,640 0.9
----------
1,173,503
----------
Electric Companies (10.1%)
Montana Power Co. ........................................... US 1,600 90,500 1.4
Texas Utilities Co. ......................................... US 1,800 84,038 1.3
Iberdrola S.A. .............................................. SPN 4,000 74,752 1.2
FPL Group, Inc. ............................................. US 1,200 73,950 1.2
CMS Energy Corp. ............................................ US 1,300 62,969 1.0
Public Service Enterprise Group Inc. ........................ US 1,500 60,000 1.0
GPU, Inc. ................................................... US 1,300 57,444 0.9
Union Electrica Fenosa, S.A. ................................ SPN 3,000 51,840 0.8
Scottish Power PLC .......................................... UK 4,450 45,667 0.7
Korea Electric Power Corp. - ADR{\/} ........................ KOR 2,000 31,376 0.5
Fortum Corp.-/- ............................................. FIN 1,450 8,820 0.1
----------
641,356
----------
Aerospace/Defense (6.7%)
United Technologies Corp. ................................... US 1,400 152,250 2.4
General Electric Co. PLC .................................... UK 12,740 114,861 1.8
Gulfstream Aerospace Corp.-/- ............................... US 1,342 71,462 1.1
British Aerospace PLC ....................................... UK 6,500 55,038 0.9
General Dynamics Corp. ...................................... US 500 29,312 0.5
----------
422,923
----------
Telephone - Regional/Local (4.3%)
SBC Communications, Inc. .................................... US 3,000 160,875 2.5
Bell Atlantic Corp. ......................................... US 2,000 113,625 1.8
----------
274,500
----------
Manufacturing (Diversified) (3.9%)
Suez Lyonnaise des Eaux ..................................... FR 350 71,885 1.2
MAN A.G. .................................................... GER 200 58,810 0.9
Viag A.G. ................................................... GER 100 58,630 0.9
Hanson PLC - ADR{\/} ........................................ UK 1,500 58,500 0.9
----------
247,825
----------
The accompanying notes are an integral part of the financial statements.
F29
400
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Wireless Communications (3.7%)
Mannesmann A.G. ............................................. GER 1,300 $ 149,003 2.3
Vodafone Group PLC .......................................... UK 4,700 76,234 1.2
China Telecom Ltd.-/- ....................................... HK 8,000 13,837 0.2
----------
239,074
----------
Telcom Equipment (3.3%)
Nokia Oyj A.B. "A" - ADR{\/} ................................ FIN 1,000 120,437 1.9
Tekelec-/- .................................................. US 3,000 49,687 0.8
Tellabs, Inc.-/- ............................................ US 552 37,846 0.6
----------
207,970
----------
Broadcasting (Television Radio & Television) (3.1%)
Tele-Communications, Inc. "A"-/- ............................ US 3,500 193,593 3.1
----------
Consumer Services (3.0%)
Vivendi ..................................................... FR 740 191,968 3.0
----------
Airlines (3.0%)
COMAIR Holdings Inc. ........................................ US 3,200 108,000 1.7
Deutsche Lufthansa A.G. ..................................... GER 2,300 50,792 0.8
AMR Corp.-/- ................................................ US 500 29,687 0.5
----------
188,479
----------
Cement (2.7%)
Lafarge S.A. ................................................ FR 750 71,249 1.1
La Cementos Nacional, C.A. - 144A GDR{\/}-/-{c} ............. ECDR 543 61,359 1.0
Suez Cement Co - Reg S GDR{\/}{.} ........................... EGPT 2,600 37,050 0.6
----------
169,658
----------
Telephone - Long Distance (2.3%)
MCI WorldCom, Inc.-/- ....................................... US 2,000 143,500 2.3
----------
Gas Production & Distribution (2.1%)
Enron Corp. ................................................. US 2,332 133,069 2.1
----------
Telephone (2.1%)
Swisscom A. G.-/- ........................................... SWTZ 236 98,820 1.6
Tele Danmark A.S. - ADR{\/} ................................. DEN 500 33,937 0.5
----------
132,757
----------
Networking (2.0%)
Cisco Systems, Inc.-/- ...................................... US 1,394 129,380 2.0
----------
Computers Networking (2.0%)
Equant N.V.-/- .............................................. NETH 1,880 127,489 2.0
----------
The accompanying notes are an integral part of the financial statements.
F30
401
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Housing (1.8%)
Kaufman and Broad Home Corp. ................................ US 4,000 $ 115,000 1.8
----------
Shipping (1.8%)
Railtrack Group PLC ......................................... UK 2,200 57,438 0.9
Stagecoach Holdings PLC ..................................... UK 13,800 54,870 0.9
----------
112,308
----------
Construction (Cement & Aggregate) (1.7%)
CRH PLC ..................................................... UK 4,000 67,805 1.0
Southdown, Inc. ............................................. US 700 41,431 0.7
----------
109,236
----------
Telecommunications (Cellular/Wireless) (1.6%)
AirTouch Communications, Inc.-/- ............................ US 700 50,487 0.8
NTT Mobile Communications Network, Inc.-/- .................. JPN 10 41,157 0.6
Sonera Group OYJ-/- ......................................... FIN 550 9,712 0.2
----------
101,356
----------
Building Materials & Components (1.6%)
Martin Marietta Materials, Inc. ............................. US 1,619 100,682 1.6
----------
Transportation - Road & Rail (1.5%)
Brisa Auto-Estradas de Portugal, S.A. ....................... PORT 1,600 94,137 1.5
----------
Telephone Networks (1.2%)
Telecom Italia S.p.A. - Di Risp ............................. ITLY 12,500 78,660 1.2
Hellenic Telecommunication Organization S.A. (OTE) .......... GREC 11 293 --
----------
78,953
----------
Machinery & Engineering (1.2%)
Ingersoll-Rand Co. .......................................... US 1,600 75,100 1.2
----------
Homebuilding (1.1%)
Centex Corp. ................................................ US 1,600 72,100 1.1
----------
Railroads (1.0%)
Canadian National Railway Co. ............................... CAN 1,300 67,761 1.0
----------
Natural Gas (0.9%)
El Paso Energy Corp. ........................................ US 1,700 59,182 0.9
----------
Manufacturing (Specialized) (0.9%)
USEC Inc. ................................................... US 4,000 55,500 0.9
----------
Water Utilities (0.8%)
Electricidade de Portugal, S.A. ............................. PORT 2,300 50,684 0.8
----------
The accompanying notes are an integral part of the financial statements.
F31
402
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Iron & Steel (0.8%)
Pohang Iron & Steel Co. Ltd. - ADR{\/} ...................... KOR 3,000 $ 50,625 0.8
----------
Transportation - Airlines (0.7%)
Aeroporti di Roma S.p.A.-/- ................................. ITLY 5,100 44,436 0.7
----------
Telecom Technology (0.6%)
Esat Telecom Group PLC - ADR{\/}-/- ......................... IRE 800 30,800 0.5
L-3 Communications Holdings, Inc.-/- ........................ US 100 4,658 0.1
----------
35,458
----------
Auto Parts & Equipment (0.4%)
Bridgestone Corp. ........................................... JPN 1,000 22,703 0.4
---------- -----
TOTAL EQUITY INVESTMENTS (cost $4,736,767) .................... 5,862,265 92.4
---------- -----
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
Dated December 31, 1998, with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50% ,
collaterized by $410,000 U.S. Treasury Notes, 6.25% due
4/30/01 (market value of collateral is $428,450, including
accrued interest). (cost $416,000) ......................... 416,000 6.6
---------- -----
TOTAL INVESTMENTS (cost $5,152,767) * ........................ 6,278,265 99.0
Other Assets and Liabilities .................................. 63,116 1.0
---------- -----
NET ASSETS .................................................... $6,341,381 100.0
---------- -----
---------- -----
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{.} Security exempt from registration under rule 144A of the Securities
Act of 1933. These securites may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
* For Federal income tax purposes, cost is $5,152,767 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 1,226,305
Unrealized depreciation: (100,807)
-------------
Net unrealized appreciation: $ 1,125,498
-------------
-------------
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F32
403
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:
PERCENTAGE OF NET ASSETS{D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
Austria (ASTRI/ATS) .................. 0.9 0.9
Canada (CAN/CAD) ..................... 1.0 1.0
Denmark (DEN/DKK) .................... 0.5 0.5
Ecuador (ECDR/ECS) ................... 1.0 1.0
Egypt (EGPT/EGP) ..................... 0.6 0.6
Finland (FIN/FIM) .................... 2.2 2.2
France (FR/FRF) ...................... 5.3 5.3
Germany (GER/DEM) .................... 4.9 4.9
Hong Kong (HK/HKD) ................... 0.2 0.2
Ireland (IRE/IEP) .................... 0.5 0.5
Italy (ITLY/ITL) ..................... 3.2 3.2
Japan (JPN/JPY) ...................... 1.0 1.0
Korea (KOR/KRW) ...................... 1.3 1.3
Netherlands (NETH/NLG) ............... 2.0 2.0
Portugal (PORT/PTE) .................. 2.3 2.3
Spain (SPN/ESP) ...................... 4.9 4.9
Switzerland (SWTZ/CHF) ............... 1.6 1.6
United Kingdom (UK/GBP) .............. 12.8 12.8
United States (US/USD) ............... 46.2 7.6 53.8
------ --- -----
Total ............................... 92.4 7.6 100.0
------ --- -----
------ --- -----
- --------------
{d} Percentages indicated are based on net assets of $6,341,381.
The accompanying notes are an integral part of the financial statements.
F33
404
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Oil (International Integrated) (17.2%)
Mobil Corp. ................................................. US 5,600 $ 487,900 7.6
ENI S.p.A - ADR{\/} ......................................... ITLY 2,800 189,700 3.0
Amoco Corp. ................................................. US 2,600 156,975 2.5
Total Compagnie Francaise des Petroles S.A.-ADR{\/} ......... FR 3,000 149,250 2.3
Chevron Corp. ............................................... US 1,400 116,112 1.8
----------
1,099,937
----------
Construction (Cement & Aggregates) (12.9%)
Martin Marietta Materials, Inc. ............................. US 4,400 273,625 4.3
Southdown, Inc. ............................................. US 3,103 183,659 2.9
CRH PLC ..................................................... UK 8,550 144,934 2.2
Centex Construction Products, Inc. .......................... US 3,100 125,937 2.0
Lafarge Corp. ............................................... US 1,800 72,900 1.1
Doman Industries Ltd. "B"-/- ................................ CAN 23,475 27,618 0.4
----------
828,673
----------
Natural Gas (11.2%)
Coastal Corp. ............................................... US 5,400 188,662 2.9
Williams Companies, Inc. .................................... US 4,400 137,225 2.1
Questar Corp. ............................................... US 6,800 131,750 2.1
Enron Corp. ................................................. US 2,300 131,244 2.1
El Paso Energy Corp. ........................................ US 3,700 128,806 2.0
----------
717,687
----------
Manufacturing (Specialized) (5.7%)
USEC Inc.-/- ................................................ US 9,150 126,956 2.0
US Filter Corp.-/- .......................................... US 5,300 121,238 1.9
Enerflex Systems Ltd. ....................................... CAN 4,200 80,980 1.2
Coflexip -ADR{\/} ........................................... FR 1,200 38,550 0.6
----------
367,724
----------
Metals Mining (4.5%)
Freeport-McMoRan Copper & Gold, Inc. "B" .................... US 7,600 79,325 1.2
Rio Tinto PLC ............................................... UK 6,400 74,347 1.2
Cominco Ltd. ................................................ CAN 6,200 70,307 1.1
Inco Ltd.-/- ................................................ CAN 6,000 63,529 1.0
----------
287,508
----------
Chemicals (Specialty) (4.4%)
Crompton & Knowles Corp. .................................... US 6,200 128,262 2.0
Air Liquide ................................................. FR 500 91,690 1.4
W.R. Grace & Co.-/- ......................................... US 4,000 62,750 1.0
----------
282,702
----------
The accompanying notes are an integral part of the financial statements.
F34
405
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Chemicals (4.2%)
Solutia, Inc. ............................................... US 6,100 $ 136,488 2.1
Potash Corp. of Saskatchewan Inc.{\/} ....................... CAN 1,100 70,262 1.1
E.I. Du Pont de Nemours & Company ........................... US 1,200 63,675 1.0
----------
270,425
----------
Electric Companies (4.1%)
Montana Power Co. ........................................... US 3,200 181,000 2.8
PacifiCorp .................................................. US 3,400 71,613 1.1
Fortum Corp.-/- ............................................. FIN 1,550 9,428 0.2
----------
262,041
----------
Gold & Precious Metals Mining (3.9%)
Stillwater Mining Co.-/- .................................... US 4,400 180,400 2.8
Placer Dome Inc.{\/} ........................................ CAN 6,100 70,150 1.1
----------
250,550
----------
Oil & Gas (Exploration & Production) (3.7%)
Berkley Petroleum Corp.-/- .................................. CAN 20,300 153,908 2.4
Triton Energy Ltd.-/- ....................................... US 5,700 45,244 0.7
Stolt Comex Seaway, S.A. .................................... UK -- -- 0.6
Common{\/}-/- ............................................. -- 4,000 27,000 --
ADR{\/}-/- ................................................ -- 1,750 9,844 --
----------
235,996
----------
Chemicals (Diversified) (3.2%)
BASF A.G. ................................................... GER 3,300 125,948 2.0
Solvay SA ................................................... BEL 1,000 74,964 1.2
----------
200,912
----------
Homebuilding (3.0%)
Centex Corp. ................................................ US 2,800 126,175 2.0
Pulte Corp. ................................................. US 2,200 61,188 1.0
----------
187,363
----------
Building Materials (2.9%)
USG Corp. ................................................... US 3,650 185,922 2.9
----------
Iron & Steel (2.9%)
Pohang Iron & Steel Co. Ltd. ADR{\/} ........................ KOR 7,800 131,625 2.1
British Steel PLC- ADR{\/} .................................. UK 3,400 49,725 0.8
----------
181,350
----------
Engineering & Construction (2.7%)
Lafarge S.A. ................................................ FR 1,800 170,999 2.7
----------
The accompanying notes are an integral part of the financial statements.
F35
406
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Oil & Gas (Refining & Marketing) (1.6%)
Tesoro Petroleum Corp. ...................................... US 2,100 $ 25,463 0.4
Repsol S.A. ................................................. SPN 1,500 79,925 1.2
----------
105,388
----------
Oil & Gas (Drilling & Equipment) (1.5%)
Core Laboratories N.V.{\/}-/- ............................... NETH 2,600 49,725 0.8
J. Ray McDermott S.A.-/- .................................... US 2,000 48,875 0.7
----------
98,600
----------
Aluminum (1.3%)
Aluminum Company of America ................................. US 1,100 82,019 1.3
----------
Containers & Packaging (Paper) (1.2%)
Union Camp Corp. ............................................ US 1,100 74,250 1.2
----------
Foods (0.8%)
Dole Food Co., Inc. ......................................... US 1,200 36,000 0.6
Chiquita Brands International ............................... US 1,600 15,300 0.2
----------
51,300
----------
Beverages (Alcoholic) (0.8%)
Scheid Vineyards Inc.- "A" .................................. US 10,300 50,213 0.8
---------- -----
TOTAL EQUITY INVESTMENTS (cost $6,474,678) .................... 5,991,559 93.7
---------- -----
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
Dated December 31,1998 , with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50%,
collateralized by $525,000 U.S. Treasury Bills, 8.75% due
5/15/17 (market value of collateral is $734,767, including
accrued interest). (cost $716,000) ........................ 716,000 11.2
---------- -----
TOTAL INVESTMENTS (cost $7,190,678) * ......................... 6,707,559 104.9
Other Assets and Liabilities .................................. (311,959) (4.9)
---------- -----
NET ASSETS .................................................... $6,395,600 100.0
---------- -----
---------- -----
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $7,274,880 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 224,049
Unrealized depreciation: (791,370)
-------------
Net unrealized depreciation: $ (567,321)
-------------
-------------
Abbreviation:
ADR--American Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F36
407
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:
PERCENTAGE OF NET ASSETS{D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
Belgium (BEL/BEF) .................... 1.2 1.2
Canada (CAN/CAD) ..................... 8.3 8.3
Finland (FIN/FIM) .................... 0.2 0.2
France (FR/FRF) ...................... 7.0 7.0
German (GER/DEM) ..................... 2.0 2.0
Italy (ITLY/ITL) ..................... 3.0 3.0
Korea (KOR/KRW) ...................... 2.1 2.1
Netherlands (NETH/NLG) ............... 0.8 0.8
Spain (SPN/ESP) ...................... 1.2 1.2
United Kingdom (UK/GBP) .............. 4.8 4.8
United States (US/USD) ............... 63.1 6.3 69.4
------ --- -----
Total ............................... 93.7 6.3 100.0
------ --- -----
------ --- -----
- --------------
{d} Percentages indicated are based on net assets of $6,395,600.
The accompanying notes are an integral part of the financial statements.
F37
408
GT GLOBAL VARIABLE AMERICA FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Services (43.7%)
Outdoor Systems, Inc.-/- ................................... US 62,450 $ 1,873,500 4.6
BUSINESS & PUBLIC SERVICES
Clear Channel Communications, Inc.-/- ...................... US 31,038 1,691,571 4.1
BROADCASTING & PUBLISHING
Family Dollar Stores, Inc. ................................. US 68,700 1,511,400 3.7
RETAILERS - DISCOUNTERS
Chancellor Media Corp.-/- .................................. US 31,000 1,484,125 3.6
BROADCASTING & PUBLISHING
Jacor Communications, Inc.-/- .............................. US 21,200 1,364,750 3.3
BROADCASTING & PUBLISHING
Cablevision Systems Corp. "A"-/- ........................... US 19,000 953,563 2.3
BROADCASTING & PUBLISHING
Lamar Advertising Co.-/- ................................... US 20,300 756,175 1.9
BUSINESS & PUBLIC SERVICES
AnnTaylor Stores Corp.-/- .................................. US 16,500 650,719 1.6
RETAIL - SPECIALTY APPAREL
Amazon.com, Inc.-/- ........................................ US 2,000 642,500 1.6
RETAIL - SPECIALTY
Abercrombie & Fitch Co. "A"-/- ............................. US 9,000 636,750 1.6
RETAIL - SPECIALTY APPAREL
Best Buy Co., Inc.-/- ...................................... US 10,000 613,750 1.5
RETAIL - COMPUTERS & ELECTRONICS
Tricon Global Restaurants, Inc.-/- ......................... US 12,000 601,500 1.5
RESTAURANTS
DST Systems, Inc.-/- ....................................... US 10,500 599,156 1.5
DATA PROCESSING
Circuit City Stores-Circuit City Group ..................... US 11,000 549,312 1.3
RETAIL - COMPUTERS & ELECTRONICS
Office Depot, Inc.-/- ...................................... US 14,000 517,125 1.3
RETAIL - SPECIALTY
Allied Waste Industries, Inc.-/- ........................... US 21,000 496,125 1.2
WASTE MANAGEMENT
American Tower Corp.-/- .................................... US 16,500 487,781 1.2
TELECOMMUNICATIONS - CELLULAR/WIRELESS
CDW Computer Centers, Inc.-/- .............................. US 5,000 479,688 1.2
RETAIL - COMPUTERS & ELECTRONICS
Century Communications Corp.-/- ............................ US 14,600 463,094 1.1
BROADCASTING & PUBLISHING
Galileo International, Inc. ................................ US 10,000 435,000 1.1
COMMERCIAL & CONSUMER
Paychex, Inc. .............................................. US 7,400 380,638 0.9
DATA PROCESSING
USA Networks, Inc.-/- ...................................... US 10,000 331,250 0.8
BROADCASTING & PUBLISHING
Sun International Hotels Ltd.-/- ........................... US 7,000 318,062 0.8
LEISURE & TOURISM
-----------
17,837,534
-----------
The accompanying notes are an integral part of the financial statements.
F38
409
GT GLOBAL VARIABLE AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Technology (29.7%)
Software AG Systems, Inc.-/- ............................... US 48,800 $ 884,500 2.2
SOFTWARE
SunGard Data Systems, Inc.-/- .............................. US 22,000 873,125 2.0
SOFTWARE
Compuware Corp.-/- ......................................... US 9,500 742,187 1.8
SOFTWARE
Vitesse Semiconductor Corp.-/- ............................. US 16,000 730,000 1.8
ELECTRONICS - SEMICONDUCTORS
Altera Corp.-/- ............................................ US 11,500 700,063 1.7
ELECTRONICS - SEMICONDUCTORS
Xilinx, Inc.-/- ............................................ US 10,500 683,813 1.7
ELECTRONICS - SEMICONDUCTORS
Ticketmaster Online-CitySearch, Inc. "B"-/- ................ US 11,800 672,600 1.6
SOFTWARE
Netscape Communications Corp.-/- ........................... US 10,000 607,500 1.5
SOFTWARE
Lexmark International Group, Inc.-/- ....................... US 6,000 603,000 1.5
COMPUTERS - PERIPHERALS
Micron Technology, Inc.-/- ................................. US 11,200 566,300 1.4
ELECTRONICS - SEMICONDUCTORS
Jabil Circuit, Inc.-/- ..................................... US 7,000 522,375 1.3
COMPUTERS - PERIPHERALS
Concord Communications, Inc.-/- ............................ US 9,200 522,100 1.3
SOFTWARE
Policy Management Systems Corp.-/- ......................... US 9,800 494,900 1.2
SOFTWARE
Citrix Systems, Inc.-/- .................................... US 5,000 485,313 1.2
SOFTWARE
Flextronics International Ltd.-/- .......................... US 5,500 470,937 1.2
ELECTRONICS - SEMICONDUCTORS
Yahoo! Inc.-/- ............................................. US 2,000 470,125 1.1
SOFTWARE
3Com Corp.-/- .............................................. US 10,000 448,125 1.1
COMPUTERS - NETWORKING
New Era of Networks, Inc.-/- ............................... US 10,000 440,000 1.1
SOFTWARE
FORE Systems, Inc.-/- ...................................... US 23,700 434,006 1.1
COMPUTERS - NETWORKING
Learning Company, Inc. (The)-/- ............................ US 15,300 396,844 1.0
SOFTWARE
Visio Corp.-/- ............................................. US 10,500 383,906 0.9
SOFTWARE
-----------
12,131,719
-----------
Energy (3.6%)
Montana Power Co. .......................................... US 10,000 565,625 1.4
ELECTRIC COMPANIES
Anadarko Petroleum Corp. ................................... US 12,000 370,500 0.9
ENERGY SOURCES
The accompanying notes are an integral part of the financial statements.
F39
410
GT GLOBAL VARIABLE AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Energy (Continued)
BJ Services Co.-/- ......................................... US 18,500 $ 289,062 0.7
ENERGY SOURCES
Cooper Cameron Corp.-/- .................................... US 10,000 245,000 0.6
ENERGY SOURCES
-----------
1,470,187
-----------
Health Care (6.7%)
Forest Laboratories, Inc.-/- ............................... US 17,100 909,506 2.2
DRUGS - GENERIC & OTHER
Becton, Dickinson & Co. .................................... US 11,200 478,100 1.2
MEDICAL PRODUCTS & SUPPLIES
Total Renal Care Holdings, Inc.-/- ......................... US 15,000 443,437 1.1
SPECIALIZED SERVICES
Quintiles Transnational Corp.-/- ........................... US 7,500 400,312 1.0
SPECIALIZED SERVICES
BioChem Pharma, Inc.-/- .................................... CAN 10,000 286,250 0.7
BIOTECHNOLOGY
Allegiance Corp. ........................................... US 5,000 233,125 0.5
MEDICAL PRODUCTS & SUPPLIES
-----------
2,750,730
-----------
Finance (4.6%)
American Bankers Insurance Group, Inc. ..................... US 12,500 604,688 1.5
INSURANCE - MULTI-LINE
Providian Financial Corp. .................................. US 7,950 596,250 1.5
CONSUMER FINANCE
UNUM Corp. ................................................. US 10,000 583,750 1.4
INSURANCE - LIFE/HEALTH
Firstar Corp. .............................................. US 1,000 93,250 0.2
BANKS - REGIONAL
-----------
1,877,938
-----------
Consumer Non-Durables (3.8%)
JP Foodservice, Inc.-/- .................................... US 21,100 1,033,900 2.6
DISTRIBUTORS - FOOD & HEALTH
Maytag Corp. ............................................... US 8,000 498,000 1.2
HOUSEHOLD FURNITURE & APPLIANCES
-----------
1,531,900
-----------
The accompanying notes are an integral part of the financial statements.
F40
411
GT GLOBAL VARIABLE AMERICA FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Capital Goods (3.2%)
Tellabs, Inc.-/- ........................................... US 10,000 $ 685,625 1.7
COMMUNICATIONS EQUIPMENT
ADC Telecommunications, Inc.-/- ............................ US 18,000 625,500 1.5
COMMUNICATIONS EQUIPMENT
-----------
1,311,125
----------- -----
TOTAL INVESTMENTS * (cost $29,386,117) ....................... 38,911,133 95.3
Other Assets and Liabilities ................................. 1,921,899 4.7
----------- -----
NET ASSETS ................................................... $40,833,032 100.0
----------- -----
----------- -----
- --------------
-/- Non-income producing security.
* For Federal income tax purposes, cost is $29,403,605 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 9,893,798
Unrealized depreciation: (386,270)
-------------
Net unrealized appreciation: $ 9,507,528
-------------
-------------
The accompanying notes are an integral part of the financial statements.
F41
412
GT GLOBAL VARIABLE NEW PACIFIC FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Banks-Major Regional (10.9%)
Australia & New Zealand Banking Group Ltd. ................. AUSL 57,000 $ 372,745 3.4
HSBC Holdings PLC .......................................... HK 11,468 285,697 2.6
Oversea-Chinese Banking Corp. Ltd. - Foreign ............... SING 40,000 271,597 2.5
Development Bank of Singapore Ltd. - Foreign ............... SING 29,800 269,185 2.4
-----------
1,199,224
-----------
Land Development (9.2%)
Cheung Kong (Holdings) Ltd. ................................ HK 90,000 647,662 5.9
DBS Land Ltd. .............................................. SING 200,000 294,635 2.6
Sun Hung Kai Properties Ltd. ............................... HK 10,000 72,931 0.7
-----------
1,015,228
-----------
Telephone (7.7%)
Hong Kong Telecommunications Ltd. .......................... HK 200,000 349,808 3.2
Philippine Long Distance Telephone Co. ..................... PHIL 10,590 273,290 2.5
PT Telekomunikasi Indonesia ................................ INDO 250,000 86,539 0.8
Telecom Corporation of New Zealand Ltd. .................... NZ 32,400 70,699 0.6
Cable & Wireless Optus Ltd.-/- ............................. AUSL 32,800 68,886 0.6
-----------
849,222
-----------
Electric Companies (7.1%)
CLP Holdings Ltd. .......................................... HK 70,000 348,775 3.2
Electricity Generating Public Co. Ltd. - Foreign-/- ........ THAI 51,000 138,771 1.3
Korea Electric Power Corp. ................................. KOR 5,000 124,167 1.1
Hong Kong Electric Holdings Ltd. ........................... HK 40,000 121,336 1.1
YTL Power International Berhad{F} .......................... MAL 72,000 47,211 0.4
-----------
780,260
-----------
Retail-Food Chains (6.4%)
Hutchison Whampoa .......................................... HK 100,000 706,716 6.4
-----------
Banks-Foreign (5.0%)
National Australia Bank Ltd. ............................... AUSL 36,900 555,809 5.0
-----------
Telephone Networks (4.9%)
Telstra Corp. Ltd. ......................................... AUSL 105,900 494,749 4.5
Telekom Malaysia Bhd. ...................................... AUSL 17,750 38,925 0.4
-----------
533,674
-----------
Electronics-Component Distributors (4.7%)
Samsung Electronics ........................................ KOR 4,000 269,000 2.4
Samsung Display Devices Co. ................................ KOR 5,000 247,083 2.3
-----------
516,083
-----------
Insurance-Multi-line Property (4.5%)
Samsung Fire & Marine Insurance ............................ KOR 1,332 499,500 4.5
-----------
The accompanying notes are an integral part of the financial statements.
F42
413
GT GLOBAL VARIABLE NEW PACIFIC FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Engineering & Construction (4.5%)
Lend Lease Corp., Ltd. ..................................... AUSL 20,800 $ 280,189 2.5
Singapore Technologies Engineering Ltd. .................... SING 230,000 214,732 2.0
-----------
494,921
-----------
Air Freight (3.5%)
Brambles Industries Ltd. ................................... AUSL 15,800 384,555 3.5
-----------
Insurance-Life/Health (3.3%)
AMP Ltd.-/- ................................................ AUSL 28,300 358,258 3.3
-----------
Entertainment (2.9%)
News Corp., Ltd. -Preferred ................................ AUSL 53,100 322,855 2.9
-----------
Beverages-Alcoholic (2.9%)
Foster's Brewing Group Ltd. ................................ AUSL 117,200 317,186 2.9
-----------
Manufacturing-Diversified (2.6%)
Shanghai Industrial Holdings Ltd. .......................... HK 80,000 161,609 1.5
New World Development Co., Ltd. ............................ HK 50,000 125,854 1.1
-----------
287,463
-----------
Banking (2.4%)
Hang Seng Bank ............................................. HK 29,000 259,226 2.4
-----------
Electric Power (2.3%)
Manila Electric Co. "B" .................................... PHIL 78,670 253,774 2.3
-----------
Metals Mining (2.2%)
Rio Tinto Ltd. ............................................. AUSL 11,500 136,287 1.2
North Ltd. ................................................. AUSL 65,500 106,681 1.0
-----------
242,968
-----------
Publishing- Newspapers (2.0%)
Singapore Press Holdings Ltd. .............................. SING 20,562 224,381 2.0
-----------
Leisure Time Products (2.0%)
TABCORP Holdings Ltd. ...................................... AUSL 35,600 217,979 2.0
-----------
Communications Equipment (1.7%)
LG Information & Communication ............................. KOR 7,130 191,916 1.7
-----------
Oil & Gas (Exploration & Production) (1.6%)
PTT Exploration and Production Public Co., Ltd. -
Foreign-/- ................................................ THAI 13,200 93,348 0.8
Santos Ltd. ................................................ AUSL 32,400 86,893 0.8
-----------
180,241
-----------
The accompanying notes are an integral part of the financial statements.
F43
414
GT GLOBAL VARIABLE NEW PACIFIC FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Conglomerates (1.6%)
Broken Hill Proprietary Co., Ltd. .......................... AUSL 22,800 $ 167,791 1.6
-----------
Metals-Misc (1.0%)
Western Mining Corporation Holdings Ltd. ................... AUSL 36,300 109,354 1.0
-----------
Retail- Specialty (0.7%)
Woolworths Ltd. ............................................ AUSL 23,300 79,265 0.7
-----------
Shipping (0.4%)
Malaysia International Shipping Bhd. - Foreign{F} .......... MAL 37,000 40,570 0.4
-----------
Investments (0.2%)
Berjaya Sports Toto Bhd.{F} ................................ MAL 23,000 23,908 0.2
----------- -----
TOTAL EQUITY INVESTMENTS (cost $10,613,832) .................. 10,812,327 98.2
----------- -----
WARRANTS
- --------------------------------------------------------------
Merrill Lynch - Kospi 300 Call Warrants, due 3/11/99
Performance linked to equity securities. Redemption amount
100% of the final closing price of the Korean Kospi 300
Index converted to the prevailing foreign exchange rate.
(cost $97,498){\/} ........................................ KOR 39,153 206,837 1.9
----------- -----
RIGHTS
- --------------------------------------------------------------
Samsung Fire & Marine Insurance Rights, expire 1/13/99 (cost
$0) ....................................................... KOR 305 58,763 0.5
----------- -----
TOTAL INVESTMENTS (cost $10,711,330) * ...................... 11,077,927 100.6
Other Assets and Liabilities ................................. (67,902) (0.6)
----------- -----
NET ASSETS ................................................... $11,010,025 100.0
----------- -----
----------- -----
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{F} Security considered illiquid due to currency and capital controls
mandated by the Malaysian government.
* For Federal income tax purposes, cost is $10,845,065 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 1,019,395
Unrealized depreciation: (786,533)
-------------
Net unrealized appreciation: $ 232,862
-------------
-------------
The accompanying notes are an integral part of the financial statements.
F44
415
GT GLOBAL VARIABLE NEW PACIFIC FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
RIGHTS &
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
Australia (AUSL/AUD) ................. 37.3 37.3
Hong Kong (HK/HKD) ................... 28.1 28.1
Indonesia (INDO/IDR) ................. 0.8 0.8
Korea (KOR/KRW) ...................... 12.0 2.4 14.4
Malaysia (MAL/MYR) ................... 1.0 1.0
New Zealand (NZ/NZD) ................. 0.6 0.6
Philippines (PHIL/PHP) ............... 4.8 4.8
Singapore (SING/SGD) ................. 11.5 11.5
Thailand (THAI/THB) .................. 2.1 2.1
United States (US/USD) ............... (0.6) (0.6)
------ ----- ----- -----
Total ............................... 98.2 2.4 (0.6) 100.0
------ ----- ----- -----
------ ----- ----- -----
- --------------
{d} Percentages indicated are based on net assets of $11,010,025.
The accompanying notes are an integral part of the financial statements.
F45
416
GT GLOBAL VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Services (26.5%)
Orange PLC-/- .............................................. UK 83,068 $ 958,070 2.9
WIRELESS COMMUNICATIONS
TNT Post Group N.V. ........................................ NETH 27,330 880,346 2.7
TRANSPORTATION - SHIPPING
Vodafone Group PLC ......................................... UK 47,060 761,756 2.3
WIRELESS COMMUNICATIONS
MobilCom AG ................................................ GER 2,271 722,294 2.2
TELECOM - OTHER
Mannesmann AG .............................................. GER 5,698 653,095 2.0
WIRELESS COMMUNICATIONS
Telecom Italia Mobile SpA .................................. ITLY 80,799 596,594 1.8
TELEPHONE NETWORKS
Swisscom AG-/- ............................................. SWTZ 1,416 592,922 1.8
TELEPHONE NETWORKS
Telecel - Comunicacaoes Pessoais S.A. ...................... PORT 2,871 587,395 1.8
WIRELESS COMMUNICATIONS
Helsingin Puhelin Oyj (Helsinki Telephone Corp.) ........... FIN 9,643 573,301 1.8
TELEPHONE NETWORKS
Telecom Italia SpA ......................................... ITLY 64,079 545,488 1.7
TELEPHONE NETWORKS
Corporate Services Group PLC ............................... UK 200,978 506,018 1.6
BUSINESS & PUBLIC SERVICES
STET Hellas Telecommunications S.A. - ADR-/- {\/} .......... GREC 12,130 392,709 1.2
WIRELESS COMMUNICATIONS
EM.TV & Merchandising AG ................................... GER 639 364,288 1.1
BROADCASTING & PUBLISHING
ASSA Abloy AB "B" .......................................... SWDN 6,920 264,187 0.8
BUSINESS & PUBLIC SERVICES
Esat Telecom Group PLC - ADR-/- {\/} ....................... IRE 5,200 200,200 0.6
TELEPHONE NETWORKS
Panafon Hellenic Telecom S.A.-/- ........................... GREC 2,129 57,082 0.2
WIRELESS COMMUNICATIONS
-----------
8,655,745
-----------
Finance (20.4%)
Axa-UAP .................................................... FR 5,057 732,833 2.2
INSURANCE - MULTI-LINE
Zurich Allied AG ........................................... SWTZ 806 596,928 1.8
INSURANCE - MULTI-LINE
UBS AG - Registered ........................................ SWTZ 1,803 554,082 1.7
BANKS-MONEY CENTER
Unicredito Italiano SpA .................................... ITLY 93,674 553,247 1.7
OTHER FINANCIAL
Safra Republic Holdings S.A.{\/} ........................... LUX 10,052 547,834 1.7
OTHER FINANCIAL
Abbey National PLC ......................................... UK 25,271 540,513 1.7
BANKS-SUPER REGIONAL
ING Groep N.V. ............................................. NETH 8,714 531,228 1.6
OTHER FINANCIAL
The accompanying notes are an integral part of the financial statements.
F46
417
GT GLOBAL VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Finance (Continued)
Lloyds TSB Group PLC ....................................... UK 33,043 $ 468,418 1.4
BANKS-MONEY CENTER
Mediolanum SpA ............................................. ITLY 56,135 416,453 1.3
INSURANCE-LIFE
ForeningsSparbanken AB ..................................... SWDN 15,124 391,138 1.2
BANKS-REGIONAL
Nordbanken Holding AB ...................................... SWDN 60,841 389,622 1.2
BANKS-REGIONAL
Skandia Forsakrings AB Free ................................ SWDN 24,719 377,482 1.2
INSURANCE - MULTI-LINE
CGU PLC .................................................... UK 19,143 298,890 0.9
INSURANCE - MULTI-LINE
BPI-SGPS S.A. .............................................. PORT 7,742 262,968 0.8
BANKS-MONEY CENTER
-----------
6,661,636
-----------
Technology (15.2%)
Equant N.V.-/- {V} ......................................... NETH 10,543 733,549 2.3
NETWORKING
Dassault Systemes S.A. ..................................... FR 14,346 674,245 2.1
COMPUTERS & PERIPHERALS
TT Tieto Oy "B" ............................................ FIN 13,820 615,548 1.9
COMPUTERS & PERIPHERALS
Saville Systems PLC - ADR{\/} .............................. IRE 29,300 556,700 1.7
TELECOM TECHNOLOGY
SAP AG Non-Voting .......................................... GER 1,098 523,962 1.6
COMPUTERS & PERIPHERALS
Misys PLC .................................................. UK 63,701 464,746 1.4
SOFTWARE
Mobistar S.A.-/- ........................................... BEL 8,388 421,221 1.3
TELECOM TECHNOLOGY
Computacenter PLC-/- ....................................... UK 54,374 397,602 1.2
COMPUTERS & PERIPHERALS
Sonera Group Oyj-/- ........................................ FIN 13,000 229,569 0.7
TELECOM TECHNOLOGY
Energis PLC-/- ............................................. UK 9,600 214,585 0.7
TELECOM TECHNOLOGY
JBA Holdings PLC ........................................... UK 31,840 97,893 0.3
SOFTWARE
-----------
4,929,620
-----------
Health Care (10.7%)
Novartis AG ................................................ SWTZ 434 853,335 2.6
PHARMACEUTICALS
SmithKline Beecham PLC ..................................... UK 44,397 622,363 1.9
PHARMACEUTICALS
Roche Holding AG ........................................... SWTZ 50 610,253 1.9
PHARMACEUTICALS
Glaxo Wellcome PLC ......................................... UK 17,131 588,475 1.8
PHARMACEUTICALS
The accompanying notes are an integral part of the financial statements.
F47
418
GT GLOBAL VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
Health Care (Continued)
Nycomed Amersham PLC ....................................... UK 69,723 $ 480,871 1.5
PHARMACEUTICALS
Genset - ADR-/- {\/} ....................................... FR 9,348 258,239 0.8
BIOTECHNOLOGY
Primamedic Ltd.-/- ......................................... ASTRI 71,100 78,845 0.2
PHARMACEUTICALS
-----------
3,492,381
-----------
Capital Goods (6.8%)
Nokia Oyj "A" .............................................. FIN 11,321 1,377,224 4.2
TELECOM EQUIPMENT
Telefonaktiebolaget LM Ericsson "B" ........................ SWDN 31,060 738,249 2.3
TELECOM EQUIPMENT
Altran Technologies S.A. ................................... FR 344 82,961 0.3
MACHINERY & ENGINEERING
-----------
2,198,434
-----------
Consumer Non-Durables (6.6%)
Cadbury Schweppes PLC ...................................... UK 33,430 568,907 1.7
FOOD
Nestle S.A. - Registered ................................... SWTZ 259 563,946 1.7
FOOD
Tabacalera S.A. "A" ........................................ SPN 16,900 425,860 1.3
TOBACCO
Raisio Group PLC-/- ........................................ FIN 30,980 340,406 1.0
FOOD
Diageo PLC ................................................. UK 25,461 285,829 0.9
BEVERAGES - ALCOHOLIC
-----------
2,184,948
-----------
Energy (3.1%)
BP Amoco PLC ............................................... UK 27,504 410,009 1.3
OIL
Petroleum Geo-Services ASA-/- .............................. NOR 24,585 313,898 1.0
ENERGY EQUIPMENT & SERVICES
Coflexip - ADR{\/} ......................................... FR 8,587 275,857 0.8
ENERGY EQUIPMENT & SERVICES
-----------
999,764
-----------
Consumer Durables (1.5%)
Porsche AG Preferred-/- .................................... GER 216 492,559 1.5
AUTOMOBILES
----------- -----
TOTAL EQUITY INVESTMENTS (cost $25,928,330) .................. 29,615,087 90.8
----------- -----
The accompanying notes are an integral part of the financial statements.
F48
419
GT GLOBAL VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
Dated December 31, 1998, with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50%,
collateralized by $1,915,000 U.S. Treasury Bonds, 6.25% due
8/15/23 (market value of collateral is $2,183,697,
including accrued interest). (cost $2,136,000) ............ $ 2,136,000 6.5
----------- -----
TOTAL INVESTMENTS (cost $28,064,330) * ...................... 31,751,087 97.3
Other Assets and Liabilities ................................. 865,804 2.7
----------- -----
NET ASSETS ................................................... $32,616,891 100.0
----------- -----
----------- -----
- - --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{V} Security is denominated in FRF.
* For Federal income tax purposes, cost is $28,322,738 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 5,245,694
Unrealized depreciation: (1,817,345)
-------------
Net unrealized appreciation: $ 3,428,349
-------------
-------------
Abbreviation:
ADR--American Depositary Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
Austria (ASTRI/ATS) .................. 0.2 0.2
Belgium (BEL/BEF) .................... 1.3 1.3
Finland (FIN/FIM) .................... 9.6 9.6
France (FR/FRF) ...................... 6.2 6.2
Germany (GER/DEM) .................... 8.4 8.4
Greece (GREC/GRD) .................... 1.4 1.4
Ireland (IRE/IEP) .................... 2.3 2.3
Italy (ITLY/ITL) ..................... 6.5 6.5
Luxembourg (LUX/LUF) ................. 1.7 1.7
Netherlands (NETH/NLG) ............... 6.6 6.6
Norway (NOR/NOK) ..................... 1.0 1.0
Portugal (PORT/PTE) .................. 2.6 2.6
Spain (SPN/ESP) ...................... 1.3 1.3
Sweden (SWDN/SEK) .................... 6.7 6.7
Switzerland (SWTZ/CHF) ............... 11.5 11.5
United Kingdom (UK/GBP) .............. 23.5 23.5
United States (US/USD) ............... 9.2 9.2
------ ----- -----
Total ............................... 90.8 9.2 100.0
------ ----- -----
------ ----- -----
- --------------
{d} Percentages indicated are based on net assets of $32,616,891.
The accompanying notes are an integral part of the financial statements.
F49
420
GT GLOBAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
MATURITY PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS YIELD DATE AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------------- --------- --------- ----------- ----------- -------------
Commercial Paper - Discounted (45.7%)
Bellsouth Capital Funding ..................................... 5.50% 22-Jan-99 1,500,000 $ 1,495,291 4.7
Harris Trust & Savings Bank ................................... 5.64% 01-Feb-99 1,000,000 1,000,000 3.2
Wachovia Bank NA .............................................. 5.50% 29-Jan-99 1,000,000 1,000,000 3.2
H.J. Heinz Co. ................................................ 5.26% 11-Jan-99 1,000,000 998,547 3.2
Campbell Soup Co. ............................................. 5.61% 14-Jan-99 1,000,000 998,032 3.2
Hitachi America Ltd. .......................................... 5.21% 22-Jan-99 1,000,000 996,996 3.2
PepsiCo, Inc. ................................................. 5.33% 27-Jan-99 1,000,000 996,172 3.2
Monte Rosa Capital Corp. ...................................... 5.55% 28-Jan-99 1,000,000 995,875 3.2
ABB Treasury Center USA ....................................... 5.25% 18-Feb-99 1,000,000 993,067 3.1
The McGraw-Hill Cos., Inc. .................................... 5.24% 22-Feb-99 1,000,000 992,547 3.1
Caterpillar Financial Services ................................ 5.07% 23-Mar-99 1,000,000 988,863 3.1
E.I. Dupont de Nemours & Co. .................................. 5.06% 26-Mar-99 1,000,000 988,403 3.1
John Deere Capital Corp. ...................................... 5.03% 02-Apr-99 1,000,000 987,488 3.1
Ford Motor Credit Corp. ....................................... 5.07% 30-Apr-99 1,000,000 983,605 3.1
----------- -----
Total Commercial Paper - Discounted (amortized cost
$14,414,886) ................................................... 14,414,886 45.7
----------- -----
Government & Government Agency Obligations (25.8%)
Federal Home Loan Bank Discount Note .......................... 4.50% 04-Jan-99 4,091,000 4,089,466 12.9
Federal Home Loan Mortgage Corporation Discount Note .......... 4.50% 04-Jan-99 4,091,000 4,089,466 12.9
----------- -----
Total Government & Government Agency Obligations (amortized cost
$8,178,932) .................................................... 8,178,932 25.8
----------- -----
TOTAL SHORT-TERM INVESTMENTS (cost $22,593,818) ................. 22,593,818 71.5
----------- -----
VALUE % OF NET
REPURCHASE AGREEMENTS (NOTE 1) ASSETS
- ----------------------------------------------------------------- ----------- -------------
Dated December 31, 1998, with NationsBanc Montgomery
Securities, due January 4, 1999, for an effective yield of
4.25%, collateralized by $3,600,000 U.S. Treasury Bonds,
11.25% due 2/15/15 (market value of collateral is $6,118,777,
including accrued interest). ................................ 6,000,000 19.0
Dated December 31, 1998, with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50%,
collateralized by $5,370,000 U.S. Treasury Bonds, 6.25% due
8/15/23 (market value of collateral is $6,123,475, including
accrued interest). .......................................... 6,000,000 19.0
----------- -----
TOTAL REPURCHASE AGREEMENTS (cost $12,000,000) .................. 12,000,000 38.0
----------- -----
TOTAL INVESTMENTS (cost $34,593,818) * ......................... 34,593,818 109.5
Other Assets and Liabilities .................................... (3,006,087) (9.5)
----------- -----
NET ASSETS ...................................................... $31,587,731 100.0
----------- -----
----------- -----
- --------------
* For Federal income tax purposes, cost is $34,593,818.
The accompanying notes are an integral part of the financial statements.
F50
421
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Services (25.1%)
Telecom Italia S.p.A. ....................................... ITLY 19,462 $ 166,040 2.2
TELEPHONE
Vodafone Group PLC .......................................... UK 7,904 128,204 1.7
TELECOMMUNICATIONS-CELLULAR/WIRELESS
Nokia Oyj A.B. - Class A .................................... FIN 831 101,093 1.4
COMMUNICATIONS EQUIPMENT
Telecel-Comunicacaoes Pessoais, S.A. ........................ PORT 482 98,615 1.3
TELECOMMUNICATIONS-CELLULAR/WIRELESS
Wolters Kluwer N.V.-/- ...................................... NETH 450 96,268 1.3
SPECIALTY PRINTING
EMAP PLC .................................................... UK 4,800 91,737 1.3
PUBLISHING
Swisscom A.G.-/- ............................................ SWTZ 209 87,515 1.2
TELEPHONE
TNT Post Group N.V. ......................................... NETH 2,708 87,229 1.2
AIR FREIGHT
Orange PLC-/- ............................................... UK 7,200 83,580 1.1
WIRELESS TELECOMMUNICATIONS
Adecco S.A.-/- .............................................. SWTZ 180 82,188 1.1
SERVICES-COMMERCIAL & CONSUMER
Woolworths Ltd. ............................................. AUSL 23,100 78,585 1.1
RETAIL-SPECIALTY
Koninklijke Ahold N.V. ...................................... NETH 2,123 78,445 1.1
RETAIL-FOOD CHAINS
EMI Group PLC ............................................... UK 11,600 77,498 1.1
LEISURE TIME-PRODUCTS
Great Universal Stores PLC .................................. UK 6,800 71,591 1.0
RETAIL-GENERAL MERCHANDISE
Telecom Corp. of New Zealand Ltd. ........................... NZ 16,100 69,839 1.0
TELEPHONE
Vivendi ..................................................... FR 266 69,004 0.9
MANUFACTURING-DIVERSIFIED
Koninklijke KPN N.V. ........................................ NETH 1,290 64,562 0.9
TELECOMMUNICATIONS-LONG DISTANCE
Pinault-Printemps-Redoute S.A. .............................. FR 337 64,391 0.9
RETAIL-GENERAL MERCHANDISE
Reuters Group PLC ........................................... UK 6,000 62,920 0.9
SERVICES-COMMERCIAL & CONSUMER
Telecommunicacoes Brasileiras S.A.{\/} ...................... BRZL 760 55,243 0.8
TELEPHONE
Telefonica S.A. ............................................. SPN 1,144 50,810 0.7
TELEPHONE
EM.TV & Merchandising A.G.-/- ............................... GER 80 45,895 0.6
BROADCASTING-TELEVISION, RADIO, & CABLE
Hellenic Telecom Panafon S.A.-/- ............................ GREC 447 11,985 0.2
TELECOMMUNICATIONS-CELLULAR/WIRELESS
Telecom Corporation of New Zealand Ltd. ..................... NZ 2,280 4,975 0.1
TELEPHONE
The accompanying notes are an integral part of the financial statements.
F51
422
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Services (Continued)
Fast Retailing Co. Ltd. ..................................... JPN 44 $ 778 --
RETAIL-SPECIALTY APPAREL
----------
1,828,990
----------
Finance (21.4%)
Lloyds TSB Group PLC ........................................ UK 8,800 125,041 1.7
BANKS-MAJOR REGIONAL
Abbey National PLC .......................................... UK 5,400 115,499 1.6
SAVINGS & LOAN COMPANIES
Zurich Allied A.G.-/- ....................................... SWTZ 146 108,128 1.5
INSURANCE-MULTI-LINE
AXA S.A. .................................................... FR 710 102,889 1.4
INSURANCE-MULTI-LINE
UBS A.G. .................................................... SWTZ 321 98,647 1.3
BANKS-MAJOR REGIONAL
ING Groep N.V. .............................................. NETH 1,499 91,383 1.3
INSURANCE BROKERS
Royal & Sun Alliance Insurance Group PLC .................... UK 10,800 88,082 1.2
INSURANCE-MULTI-LINE
Australia & New Zealand Banking Group Ltd. .................. AUSL 11,700 76,511 1.1
BANKS-MAJOR REGIONAL
Schroders PLC ............................................... UK 4,100 74,747 1.0
BANKS-MAJOR REGIONAL
Nordbanken Holding A.B. ..................................... SWDN 10,840 69,419 1.0
BANKS-MAJOR REGIONAL
BPI-SGPS, S.A. .............................................. PORT 2,040 69,292 0.9
BANKS-REGIONAL
CGU PLC ..................................................... UK 4,400 68,809 0.9
INSURANCE BROKERS
M & G Group PLC ............................................. UK 2,660 66,089 0.9
INVESTMENT MANAGEMENT
Istituto Bancario San Paolo di Torino ....................... ITLY 3,735 65,990 0.9
BANKS-MAJOR REGIONAL
Bank of Ireland ............................................. IRE 2,705 59,205 0.8
BANKS-MAJOR REGIONAL
Safra Republic Holdings, S.A.{\/} ........................... UK 1,097 57,044 0.8
BANKS-MAJOR REGIONAL
Skandia Forsakrings A.B.-/- ................................. SWDN 3,679 56,182 0.8
INSURANCE BROKERS
Nichiei Co., Ltd. ........................................... JPN 600 47,796 0.7
BANKS-MONEY CENTERS
Royal Bank of Canada ........................................ CAN 950 47,531 0.6
BANKS-MAJOR REGIONAL
State Bank of India{\/} ..................................... IND 5,350 44,806 0.6
BANKS-MAJOR REGIONAL
United Overseas Bank Ltd. ................................... SING 5,100 32,774 0.4
BANKS-MAJOR REGIONAL
----------
1,565,864
----------
The accompanying notes are an integral part of the financial statements.
F52
423
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Health Care (7.8%)
Roche Holding A.G. .......................................... SWTZ 11 $ 134,256 1.8
HEALTHCARE-DRUGS-GENERIC & OTHER
SmithKline Beecham PLC ...................................... UK 8,600 120,056 1.6
HEALTHCARE-DIVERSIFIED
Nycomed Amersham PLC ........................................ UK 17,200 118,341 1.6
HEALTHCARE-DRUGS-GENERIC & OTHER
Novartis A.G. ............................................... SWTZ 46 90,446 1.2
HEALTHCARE-DIVERSIFIED
Takeda Chemical Industries .................................. JPN 2,000 77,005 1.1
HEALTHCARE-DRUGS-GENERIC & OTHER
Richter Gedeon Rt.-GDR{\/} .................................. HGRY 770 32,918 0.5
MEDICAL-DRUGS
----------
573,022
----------
Consumer Non-Durables (7.0%)
Nestle S.A. ................................................. SWTZ 48 104,515 1.4
FOODS
Diageo PLC .................................................. UK 8,000 90,939 1.3
BEVERAGES-ALCOHOLIC
Benckiser N.V. .............................................. NETH 1,261 82,581 1.1
HOUSEHOLD PRODUCTS/NON-DURABLES
Asahi Breweries Ltd. ........................................ JPN 4,000 58,948 0.8
BEVERAGES-ALCOHOLIC
Foster's Brewing Group Ltd. ................................. AUSL 22,000 59,540 0.8
BEVERAGES-ALCOHOLIC
United Biscuits Holdings PLC ................................ UK 13,700 53,846 0.8
FOODS
Tabacalera S.A.-/- .......................................... SPN 2,071 52,187 0.7
TOBACCO
Adidas Salomon A.G. ......................................... GER 86 9,341 0.1
FOOTWEAR
----------
511,897
----------
Capital Goods (2.7%)
Mannesmann A.G. ............................................. GER 794 91,007 1.2
MACHINERY-DIVERSIFIED
Canon, Inc. ................................................. JPN 3,000 64,126 0.9
OFFICE EQUIPMENT & SUPPLIES
Fresenius A.G. .............................................. GER 224 47,182 0.6
MACHINERY-DIVERSIFIED
----------
202,315
----------
Technology (2.1%)
SAP A.G. .................................................... GER 138 65,853 0.9
COMPUTERS-SOFTWARE & SERVICES
Equant N.V.-/- .............................................. FR 673 46,825 0.6
COMPUTERS-PERIPHERALS
The accompanying notes are an integral part of the financial statements.
F53
424
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Technology (Continued)
Matsushita-Kotobuki Electronics Industries Ltd. ............. JPN 2,000 $ 43,193 0.6
ELECTRONICS-COMPONENT DISTRIBUTORS
----------
155,871
----------
Consumer Durables (1.1%)
Futuris Corp. Ltd. .......................................... AUSL 71,500 80,992 1.1
----------
AUTOMOBILE/TRUCK PARTS & TIRES
Energy (0.9%)
Mabuchi Motor Co., Ltd. ..................................... JPN 900 68,906 0.9
ELECTRICAL EQUIPMENT
---------- -----
TOTAL EQUITY INVESTMENTS (cost $4,598,244) .................... 4,987,857 68.1
---------- -----
VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Government & Government Agency Obligations (12.9%)
Federal Home Loan Mortgage Corp., 4.50%, due 1/4/99 ......... USD 948,000 947,645 12.9
---------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $947,645) ................ 947,645
---------- -----
VALUE % OF NET
RIGHTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
Telefonica de Espana Rights, expire 1/30/99 (cost $0) ....... SPN 1,144 1,014 --
---------- -----
TELEPHONE
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
Dated December 31, 1998, with State Street Bank & Trust Co.,
due January 4, 1999, for an effective yield of 4.50%
collateralized by $1,480,000 Treasury Notes, 7.125% due
9/30/99 (market value of collateral is 2,533,650 including
accrued interest). (cost $1,500,000) ...................... 1,500,000 20.5
---------- -----
TOTAL INVESTMENTS (cost $7,045,889) * ......................... 7,436,516 101.5
Other Assets and Liabilities .................................. (109,165) (1.5)
---------- -----
NET ASSETS .................................................... $7,327,351 100.0
---------- -----
---------- -----
- --------------
-/- Non-income producing security
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $7,135,883 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 567,410
Unrealized depreciation: (266,777)
-------------
Net unrealized appreciation: $ 300,633
-------------
-------------
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F54
425
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1998, was concentrated in
the following countries:
PERCENTAGE OF NET ASSETS{D}
-------------------------------------------
FIXED INCOME SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & RIGHTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
Australia (AUSL/AUD) ................. 4.1 4.1
Brazil (BRZL/BRL) .................... 0.8 0.8
Canada (CAN/CAD) ..................... 0.6 0.6
Finland (FIM/FIM) .................... 1.4 1.4
France (FR/FRF) ...................... 3.8 3.8
Germany (GER/DEM) .................... 3.4 3.4
Greece (GREC/GRD) .................... 0.2 0.2
Hungary (HGRY/HUF) ................... 0.5 0.5
India (IND/INR) ...................... 0.6 0.6
Ireland (IRE/IEP) .................... 0.8 0.8
Italy (ITLY/ITL) ..................... 3.1 3.1
Japan (JPN/JPY) ...................... 5.0 5.0
Netherlands (NETH/NLG) ............... 6.9 6.9
New Zealand (NZ/NZD) ................. 1.1 1.1
Portugal (PORT/PTE) .................. 2.2 2.2
Singapore (SING/SGD) ................. 0.4 0.4
Spain (SPN/ESP) ...................... 1.4 1.4
Sweden (SWDN/SEK) .................... 1.8 1.8
Switzerland (SWTZ/CHF) ............... 9.5 9.5
United Kingdom (UK/GBP) .............. 20.5 20.5
United States (US/USD) ............... 12.9 19.0 31.9
------ ----- ----- -----
Total ............................... 68.1 12.9 19.0 100.0
------ ----- ----- -----
------ ----- ----- -----
- --------------
{d} Percentages indicated are based on net assets of $7,327,351.
The accompanying notes are an integral part of the financial statements.
F55
426
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1998
- --------------------------------------------------------------------------------
GT GLOBAL
------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
---------- ----------- ----------- ----------
Assets:
Investments in securities: (Note 1)
At identified cost.................. $22,542,807 $8,725,483 $7,160,482 $15,614,394
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
At value............................ $22,019,159 $8,864,031 $7,357,108 $9,998,145
Repurchase Agreement, at value and
cost (Note 1)........................ 698,000 151,000 40,000 --
U.S. currency......................... 385 401 554 1,008
Foreign currencies (cost $149,503;
$67,307; $0; $54,678; $2,510;
$287,103; $38,246; $86,970; $7,456;
$0; $939; $0; $0; $3,030,
respectively)........................ 149,625 67,106 -- 54,617
Dividends and dividend withholding tax
reclaims receivable.................. -- -- -- 13,740
Interest and interest withholding tax
reclaims receivable.................. 493,346 149,640 123,102 --
Receivable for Fund shares sold....... 5,365 -- 2,500 4,011
Receivable for open forward foreign
currency contracts, net (Note 1)..... 893 -- -- --
Receivable for securities sold........ 1,729 1,572 -- --
Receivable from A I M Advisors, Inc.
(Note 2)............................. 46,045 37,445 23,670 42,687
Miscellaneous receivable.............. -- -- -- --
---------- ----------- ----------- ----------
Total assets........................ 23,414,547 9,271,195 7,546,934 10,114,208
---------- ----------- ----------- ----------
Liabilities:
Distribution payable (Note 1)......... -- -- -- --
Payable for custodian fees............ 3,454 1,690 1,768 850
Payable for forward foreign currency
contracts -- closed (Note 1)......... -- -- -- --
Payable for fund accounting fees (Note
2)................................... 298 151 75 350
Payable for Fund shares repurchased
(Note 2)............................. 24,085 125,193 108,713 79,375
Payable for investment management and
administration fees (Note 2)......... 57,310 48,083 33,958 49,024
Payable for loan outstanding (Note
1)................................... -- -- -- 48,000
Payable for open forward foreign
currency contracts, net (Note 1)..... -- 1,842 -- --
Payable for printing and postage
expenses............................. -- 5,803 9,583 --
Payable for professional fees......... 17,081 9,670 6,912 752
Payable for registration and filing
fees................................. 782 977 965 --
Payable for securities purchased...... 1,284,969 271,820 -- --
Payable for Trustees' fees and
expenses (Note 2).................... 2,278 3,018 1,932 600
Other accrued expenses................ 2,445 2,257 1,857 --
---------- ----------- ----------- ----------
Total liabilities................... 1,392,702 470,504 165,763 178,951
---------- ----------- ----------- ----------
Net assets.............................. $22,021,845 $8,800,691 $7,381,171 $9,935,257
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Shares outstanding...................... 1,777,818 738,856 609,681 1,034,282
Net asset value per share............... $ 12.39 $ 11.91 $ 12.11 $ 9.61
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Net assets consist of:
Paid in capital (Note 4).............. $23,656,559 $9,014,285 $6,889,727 $18,494,051
Undistributed net investment income... 203,422 1,842 73,184 287,615
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... (1,321,242) (353,306) 221,634 (3,230,073)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 6,754 (678) -- (87)
Net unrealized appreciation
(depreciation) of investments........ (523,648) 138,548 196,626 (5,616,249)
---------- ----------- ----------- ----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $22,021,845 $8,800,691 $7,381,171 $9,935,257
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
The accompanying notes are an integral part of the financial statements.
F56
427
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES (cont'd)
December 31, 1998
- --------------------------------------------------------------------------------
GT GLOBAL
-----------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE NEW
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA PACIFIC
FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ----------- ---------- ---------- ----------
Assets:
Investments in securities: (Note 1)
At identified cost.................. $41,290,696 $46,048,018 $6,274,420 $4,736,767 $6,474,678 $29,386,117 $10,711,330
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
At value............................ $53,021,849 $62,108,334 $5,148,417 $5,862,265 $5,991,559 $38,911,133 $11,077,927
Repurchase Agreement, at value and
cost (Note 1)........................ 1,896,000 7,450,000 482,000 416,000 716,000 -- --
U.S. currency......................... 1,344 2,432 142 983 221 15 1,994
Foreign currencies (cost $149,503;
$67,307; $0; $54,678; $2,510;
$287,103; $38,246; $86,970; $7,456;
$0; $939; $0; $0; $3,030,
respectively)........................ 2,529 284,666 37,492 86,088 7,566 -- 939
Dividends and dividend withholding tax
reclaims receivable.................. 78,715 37,867 16,732 9,080 73,510 6,905 16,075
Interest and interest withholding tax
reclaims receivable.................. 386,293 931 60 52 90 -- --
Receivable for Fund shares sold....... 261,179 103,482 -- 330 330 2,295,522 468
Receivable for open forward foreign
currency contracts, net (Note 1)..... 2,904 -- -- -- -- -- --
Receivable for securities sold........ 9,416 21,629 -- -- 23,740 -- 9,597
Receivable from A I M Advisors, Inc.
(Note 2)............................. -- -- 84,518 -- -- -- --
Miscellaneous receivable.............. -- 582 -- -- -- -- --
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total assets........................ 55,660,229 70,009,923 5,769,361 6,374,798 6,813,016 41,213,575 11,107,000
---------- ---------- ---------- ----------- ---------- ---------- ----------
Liabilities:
Distribution payable (Note 1)......... -- -- -- -- -- -- --
Payable for custodian fees............ 1,700 5,288 9,214 1,300 1,400 2,462 5,384
Payable for forward foreign currency
contracts -- closed (Note 1)......... -- -- -- -- -- -- --
Payable for fund accounting fees (Note
2)................................... 1,335 2,600 -- 175 157 804 48
Payable for Fund shares repurchased
(Note 2)............................. 9,989 426,979 5,240 15,295 10,714 103,982 18,382
Payable for investment management and
administration fees (Note 2)......... 46,569 53,155 70,117 3,163 2,192 22,455 2,563
Payable for loan outstanding (Note
1)................................... -- -- -- -- -- 227,000 42,000
Payable for open forward foreign
currency contracts, net (Note 1)..... -- 42,397 -- -- -- -- --
Payable for printing and postage
expenses............................. 9,516 1,810 6,764 5,070 6,000 4,000 11,244
Payable for professional fees......... 10,857 4,952 18,994 8,197 9,800 11,356 11,730
Payable for registration and filing
fees................................. 2 -- 796 -- -- 1,380 1,257
Payable for securities purchased...... -- -- -- -- 371,131 -- --
Payable for Trustees' fees and
expenses (Note 2).................... -- 482 2,157 -- 200 2,542 1,202
Other accrued expenses................ -- 12,925 4,669 217 15,822 4,562 3,165
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total liabilities................... 79,968 550,588 117,951 33,417 417,416 380,543 96,975
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets.............................. $55,580,261 $69,459,335 $5,651,410 $6,341,381 $6,395,600 $40,833,032 $11,010,025
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Shares outstanding...................... 2,584,126 3,362,824 844,749 367,346 586,487 2,026,413 1,262,519
Net asset value per share............... $ 21.51 $ 20.66 $ 6.69 $ 17.26 $ 10.90 $ 20.15 $ 8.72
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets consist of:
Paid in capital (Note 4).............. $35,751,068 $46,957,472 $11,489,069 $5,388,985 $11,156,709 $32,971,320 $14,709,395
Undistributed net investment income... 721,621 -- 76,434 104,883 111,308 -- 239,972
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... 7,367,141 6,486,142 (4,787,285) (277,149) (4,389,741) (1,663,304) (4,305,840)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 9,278 (44,595) (805) (836) 443 -- (99)
Net unrealized appreciation
(depreciation) of investments........ 11,731,153 16,060,316 (1,126,003) 1,125,498 (483,119) 9,525,016 366,597
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $55,580,261 $69,459,335 $5,651,410 $6,341,381 $6,395,600 $40,833,032 $11,010,025
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
VARIABLE MONEY VARIABLE
EUROPE MARKET INTERNATIONAL
FUND FUND FUND
---------- ---------- -----------
Assets:
Investments in securities: (Note 1)
At identified cost.................. $25,928,330 $22,593,818 $5,545,889
---------- ---------- -----------
---------- ---------- -----------
At value............................ $29,615,087 $22,593,818 $5,936,516
Repurchase Agreement, at value and
cost (Note 1)........................ 2,136,000 12,000,000 1,500,000
U.S. currency......................... 96 488 826
Foreign currencies (cost $149,503;
$67,307; $0; $54,678; $2,510;
$287,103; $38,246; $86,970; $7,456;
$0; $939; $0; $0; $3,030,
respectively)........................ -- -- 3,089
Dividends and dividend withholding tax
reclaims receivable.................. 37,738 -- 7,467
Interest and interest withholding tax
reclaims receivable.................. 267 43,601 188
Receivable for Fund shares sold....... 912,029 285,901 --
Receivable for open forward foreign
currency contracts, net (Note 1)..... -- -- --
Receivable for securities sold........ -- -- --
Receivable from A I M Advisors, Inc.
(Note 2)............................. 11,804 -- --
Miscellaneous receivable.............. 173 -- --
---------- ---------- -----------
Total assets........................ 32,713,194 34,923,808 7,448,086
---------- ---------- -----------
Liabilities:
Distribution payable (Note 1)......... -- 5,739 --
Payable for custodian fees............ 429 1,499 11,120
Payable for forward foreign currency
contracts -- closed (Note 1)......... -- -- 11,872
Payable for fund accounting fees (Note
2)................................... 653 839 155
Payable for Fund shares repurchased
(Note 2)............................. 56,493 3,299,963 64,334
Payable for investment management and
administration fees (Note 2)......... 28,023 20,734 --
Payable for loan outstanding (Note
1)................................... -- -- --
Payable for open forward foreign
currency contracts, net (Note 1)..... -- -- --
Payable for printing and postage
expenses............................. 162 515 10,454
Payable for professional fees......... 4,316 4,268 22,174
Payable for registration and filing
fees................................. 2,385 588 --
Payable for securities purchased...... -- -- --
Payable for Trustees' fees and
expenses (Note 2).................... 818 290 --
Other accrued expenses................ 3,024 1,642 626
---------- ---------- -----------
Total liabilities................... 96,303 3,336,077 120,735
---------- ---------- -----------
Net assets.............................. $32,616,891 $31,587,731 $7,327,351
---------- ---------- -----------
---------- ---------- -----------
Shares outstanding...................... 1,398,753 31,587,731 617,476
Net asset value per share............... $ 23.32 $ 1.00 $ 11.87
---------- ---------- -----------
---------- ---------- -----------
Net assets consist of:
Paid in capital (Note 4).............. $20,088,530 $31,587,731 $6,552,375
Undistributed net investment income... 121,518 -- 80,404
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... 8,719,226 -- 315,666
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 860 -- (11,721)
Net unrealized appreciation
(depreciation) of investments........ 3,686,757 -- 390,627
---------- ---------- -----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $32,616,891 $31,587,731 $7,327,351
---------- ---------- -----------
---------- ---------- -----------
The accompanying notes are an integral part of the financial statements.
F57
428
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF OPERATIONS
Year ended December 31, 1998
- --------------------------------------------------------------------------------
GT GLOBAL
-------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
----------- ---------- ---------- -----------
Investment income: * (Note 1)
Dividend income....................... $ -- $ -- $ -- $ 542,574
Interest income....................... 2,039,809 584,579 457,283 7,808
Securities lending income............. 32,575 5,624 -- 11,570
----------- ---------- ---------- -----------
Total investment income............. 2,072,384 590,203 457,283 561,952
----------- ---------- ---------- -----------
Expenses:
Amortization of organization costs
(Note 1)............................. 720 720 720 720
Custodian fees (Note 1)............... 25,915 12,330 4,122 20,218
Fund accounting fees (Note 2)......... 6,780 2,376 1,917 4,156
Interest expense (Note 1)............. 39,886 5,958 4,871 22,294
Investment management and
administration fees (Note 2)......... 186,706 65,332 55,012 167,381
Printing and postage expenses......... 14,906 12,205 13,140 38,378
Professional fees..................... 57,616 29,036 19,740 20,142
Registration and filing fees.......... -- -- -- 658
Trustees' fees and expenses (Note
2)................................... 1,460 1,460 1,460 931
Other expenses........................ 1,099 1,095 908 2,719
----------- ---------- ---------- -----------
Total expenses before reimbursements
and reductions..................... 335,088 130,512 101,890 277,597
----------- ---------- ---------- -----------
Expenses reimbursed (Note 2)...... (46,045) (37,445 ) (23,670) (45,215)
Expense reductions (Note 5)....... -- -- -- --
----------- ---------- ---------- -----------
Total net expenses.................. 289,043 93,067 78,220 232,382
----------- ---------- ---------- -----------
Net investment income (loss)............ 1,783,341 497,136 379,063 329,570
----------- ---------- ---------- -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain (loss) on
investments.......................... (1,359,171) 303,460 239,229 (3,213,894)
Net realized gain (loss) on foreign
currency transactions................ 330,119 855,982 -- (41,935)
----------- ---------- ---------- -----------
Net realized gain (loss) during the
year............................... (1,029,052) 1,159,442 239,229 (3,255,829)
----------- ---------- ---------- -----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (308,728) (858,412 ) -- (192)
Net change in unrealized appreciation
(depreciation) of investments........ (606,626) 226,091 45,216 (5,882,978)
----------- ---------- ---------- -----------
Net unrealized appreciation
(depreciation) during the period... (915,354) (632,321 ) 45,216 (5,883,170)
----------- ---------- ---------- -----------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... (1,944,406) 527,121 284,445 (9,138,999)
----------- ---------- ---------- -----------
Net increase (decrease) in net assets
resulting from operations.............. $ (161,065) $1,024,257 $663,508 $(8,809,429)
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
*Net of foreign withholding tax of:.... $ -- $ -- $ -- $ 65,276
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
The accompanying notes are an integral part of the financial statements.
F58
429
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF OPERATIONS (cont'd)
Year ended December 31, 1998
- --------------------------------------------------------------------------------
GT GLOBAL
----------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA
FUND FUND FUND FUND FUND FUND
------------ ----------- ----------- -------------- ----------- -----------
Investment income: * (Note 1)
Dividend income....................... $ 1,159,850 $ 494,124 $ 262,709 $162,451 $ 231,004 $ 102,506
Interest income....................... 863,930 216,084 25,479 32,901 36,141 18,859
Securities lending income............. 33,804 52,374 5,764 2,191 1,057 23,815
------------ ----------- ----------- -------------- ----------- -----------
Total investment income............. 2,057,584 762,582 293,952 197,543 268,202 145,180
------------ ----------- ----------- -------------- ----------- -----------
Expenses:
Amortization of organization costs
(Note 1)............................. -- 3,330 -- -- -- 720
Custodian fees (Note 1)............... 30,683 37,233 62,640 11,171 13,346 9,939
Fund accounting fees (Note 2)......... 13,856 19,128 2,661 1,801 2,994 9,574
Interest expense (Note 1)............. 23,069 7,062 16,966 -- 4,560 32,363
Investment management and
administration fees (Note 2)......... 538,287 682,113 95,192 75,448 109,635 301,555
Printing and postage expenses......... 29,737 17,085 14,235 10,293 13,323 21,901
Professional fees..................... 40,472 37,251 28,470 27,376 23,960 24,900
Registration and filing fees.......... -- -- -- -- -- 424
Trustees' fees and expenses (Note
2)................................... -- 348 1,460 -- -- 2,089
Other expenses........................ 10,215 569 1,828 -- 288 10,049
------------ ----------- ----------- -------------- ----------- -----------
Total expenses before reimbursements
and reductions..................... 686,319 804,119 223,452 126,089 168,106 413,514
------------ ----------- ----------- -------------- ----------- -----------
Expenses reimbursed (Note 2)...... -- -- (84,518) (31,784) (26,493) --
Expense reductions (Note 5)....... (1,847) (4,242 ) (828) (526) (5,815) (4,222)
------------ ----------- ----------- -------------- ----------- -----------
Total net expenses.................. 684,472 799,877 138,106 93,779 135,798 409,292
------------ ----------- ----------- -------------- ----------- -----------
Net investment income (loss)............ 1,373,112 (37,295 ) 155,846 103,764 132,404 (264,112)
------------ ----------- ----------- -------------- ----------- -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain (loss) on
investments.......................... 7,390,036 6,711,384 (4,658,345) (15,219) (4,340,007) (1,560,556)
Net realized gain (loss) on foreign
currency transactions................ (143,260) (167,467 ) (77,850) (58,200) 8,585 --
------------ ----------- ----------- -------------- ----------- -----------
Net realized gain (loss) during the
year............................... 7,246,776 6,543,917 (4,736,195) (73,419) (4,331,422) (1,560,556)
------------ ----------- ----------- -------------- ----------- -----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 23,022 (236,656 ) 5,583 960 (125) --
Net change in unrealized appreciation
(depreciation) of investments........ 988,999 7,115,506 553,200 459,712 (369,811) 4,630,498
------------ ----------- ----------- -------------- ----------- -----------
Net unrealized appreciation
(depreciation) during the period... 1,012,021 6,878,850 558,783 460,672 (369,936) 4,630,498
------------ ----------- ----------- -------------- ----------- -----------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... 8,258,797 13,422,767 (4,177,412) 387,253 (4,701,358) 3,069,942
------------ ----------- ----------- -------------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.............. $ 9,631,909 $13,385,472 $(4,021,566) $491,017 $(4,568,954) $ 2,805,830
------------ ----------- ----------- -------------- ----------- -----------
------------ ----------- ----------- -------------- ----------- -----------
*Net of foreign withholding tax of:.... $ 99,105 $ 47,128 $ 14,668 $ 14,982 $ 17,802 $ 518
------------ ----------- ----------- -------------- ----------- -----------
------------ ----------- ----------- -------------- ----------- -----------
VARIABLE
NEW VARIABLE MONEY VARIABLE
PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
----------- ---------- ---------- -------------
Investment income: * (Note 1)
Dividend income....................... $ 346,496 $ 578,504 $ -- $126,338
Interest income....................... 100,665 74,905 1,739,586 63,670
Securities lending income............. 23,633 38,173 -- 5,867
----------- ---------- ---------- -------------
Total investment income............. 470,794 691,582 1,739,586 195,875
----------- ---------- ---------- -------------
Expenses:
Amortization of organization costs
(Note 1)............................. 720 720 720 --
Custodian fees (Note 1)............... 26,067 42,370 10,585 19,100
Fund accounting fees (Note 2)......... 2,857 9,969 8,812 1,897
Interest expense (Note 1)............. 2,315 118,069 -- 6,583
Investment management and
administration fees (Note 2)......... 130,473 362,517 160,063 67,875
Printing and postage expenses......... 39,857 15,390 16,965 9,273
Professional fees..................... 26,745 30,345 32,970 18,682
Registration and filing fees.......... 486 730 -- --
Trustees' fees and expenses (Note
2)................................... 2,015 1,825 1,460 167
Other expenses........................ 584 1,094 1,826 631
----------- ---------- ---------- -------------
Total expenses before reimbursements
and reductions..................... 232,119 583,029 233,401 124,208
----------- ---------- ---------- -------------
Expenses reimbursed (Note 2)...... (64,785) (11,804) -- (32,657)
Expense reductions (Note 5)....... (4,911) (1,171) -- (272)
----------- ---------- ---------- -------------
Total net expenses.................. 162,423 570,054 233,401 91,279
----------- ---------- ---------- -------------
Net investment income (loss)............ 308,371 121,528 1,506,185 104,596
----------- ---------- ---------- -------------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain (loss) on
investments.......................... (3,788,318) 8,701,423 -- 337,397
Net realized gain (loss) on foreign
currency transactions................ 181,208 20,217 -- 19,282
----------- ---------- ---------- -------------
Net realized gain (loss) during the
year............................... (3,607,110) 8,721,640 -- 356,679
----------- ---------- ---------- -------------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (105,425) 3,427 -- (47,735)
Net change in unrealized appreciation
(depreciation) of investments........ 2,848,653 (865,332) -- 137,293
----------- ---------- ---------- -------------
Net unrealized appreciation
(depreciation) during the period... 2,743,228 (861,905) -- 89,558
----------- ---------- ---------- -------------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... (863,882) 7,859,735 -- 446,237
----------- ---------- ---------- -------------
Net increase (decrease) in net assets
resulting from operations.............. $ (555,511) $7,981,263 $1,506,185 $550,833
----------- ---------- ---------- -------------
----------- ---------- ---------- -------------
*Net of foreign withholding tax of:.... $ 9,235 $ 72,293 $ -- $ 11,991
----------- ---------- ---------- -------------
----------- ---------- ---------- -------------
The accompanying notes are an integral part of the financial statements.
F59
430
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended December 31, 1998
- --------------------------------------------------------------------------------
GT GLOBAL
--------------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
------------- ------------- ------------- -----------
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 1,783,341 $ 497,136 $ 379,063 $ 329,570
Net realized gain (loss) on
investments and foreign currency
transactions......................... (1,029,052) 1,159,442 239,229 (3,255,829)
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (308,728) (858,412) -- (192)
Net change in unrealized appreciation
(depreciation) of investments........ (606,626) 226,091 45,216 (5,882,978)
------------- ------------- ------------- -----------
Net increase (decrease) in net
assets resulting from operations... (161,065) 1,024,257 663,508 (8,809,429)
------------- ------------- ------------- -----------
Distributions to shareholders: (Note 1)
From net investment income............ (1,758,665) (463,518) (375,646) (304,832)
From net realized gain on
investments.......................... -- -- (107) (147,131)
In excess of net investment income.... -- (12,065) -- --
------------- ------------- ------------- -----------
Total distributions................. (1,758,665) (475,583) (375,753) (451,963)
------------- ------------- ------------- -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 25,526,105 20,698,834 14,866,467 18,570,157
Decrease from capital shares
repurchased.......................... (30,081,222) (20,697,844) (15,145,687) (28,159,725)
------------- ------------- ------------- -----------
Net increase (decrease) from capital
share transactions................. (4,555,117) 990 (279,220) (9,589,568)
------------- ------------- ------------- -----------
Total increase (decrease) in net
assets................................. (6,474,847) 549,664 8,535 (18,850,960)
Net assets:
Beginning of year..................... 28,496,692 8,251,027 7,372,636 28,786,217
------------- ------------- ------------- -----------
End of year *......................... $ 22,021,845 $ 8,800,691 $ 7,381,171 $ 9,935,257
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
*Includes undistributed net
investment income of:................ $ 203,422 $ 1,842 $ 73,184 $ 287,615
------------- ------------- ------------- -----------
------------- ------------- ------------- -----------
For the year ended December 31, 1997
GT GLOBAL
--------------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
------------- ------------ ------------ -------------
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 2,156,400 $ 591,394 $ 312,388 $ 404,383
Net realized gain (loss) on
investments and foreign currency
transactions......................... 1,618,244 (738,174) (1,476 ) 3,569,822
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 271,762 803,351 (2,603 ) 2,156
Net change in unrealized appreciation
(depreciation) of investments........ (1,968,623) (292,630) 153,207 (244,181)
------------- ------------ ------------ -------------
Net increase (decrease) in net
assets resulting from operations... 2,077,783 363,941 461,516 3,732,180
------------- ------------ ------------ -------------
Distributions to shareholders: (Note 1)
From net investment income............ (2,041,389) (616,309) (262,504 ) --
From net realized gain on
investments.......................... -- -- (42,460 ) --
------------- ------------ ------------ -------------
Total distributions................. (2,041,389) (616,309) (304,964 ) --
------------- ------------ ------------ -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 37,352,357 4,845,991 6,057,200 50,446,691
Decrease from capital shares
repurchased.......................... (40,609,980) (6,739,965) (4,324,042 ) (48,320,307)
------------- ------------ ------------ -------------
Net increase (decrease) from capital
share transactions................. (3,257,623) (1,893,974) 1,733,158 2,126,384
------------- ------------ ------------ -------------
Total increase (decrease) in net
assets................................. (3,221,229) (2,146,342) 1,889,710 5,858,564
Net assets:
Beginning of year..................... 31,717,921 10,397,369 5,482,926 22,927,653
------------- ------------ ------------ -------------
End of year * *....................... $ 28,496,692 $ 8,251,027 $ 7,372,636 $ 28,786,217
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
* *Includes undistributed net
investment income of:................ $ 397,677 $ 98,996 $ 70,621 $ 304,812
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
The accompanying notes are an integral part of the financial statements.
F60
431
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (cont'd)
For the year ended December 31, 1998
- --------------------------------------------------------------------------------
GT GLOBAL
-------------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA
FUND FUND FUND FUND FUND FUND
------------- ------------ ------------ ------------ ------------- -------------
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 1,373,112 $ (37,295) $ 155,846 $ 103,764 $ 132,404 $ (264,112)
Net realized gain (loss) on
investments and foreign currency
transactions......................... 7,246,776 6,543,917 (4,736,195) (73,419 ) (4,331,422) (1,560,556)
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 23,022 (236,656) 5,583 960 (125) --
Net change in unrealized appreciation
(depreciation) of investments........ 988,999 7,115,506 553,200 459,712 (369,811) 4,630,498
------------- ------------ ------------ ------------ ------------- -------------
Net increase (decrease) in net
assets resulting from operations... 9,631,909 13,385,472 (4,021,566) 491,017 (4,568,954) 2,805,830
------------- ------------ ------------ ------------ ------------- -------------
Distributions to shareholders: (Note 1)
From net investment income............ (1,163,351) -- (4,648) (76,384 ) -- --
From net realized gain on
investments.......................... (689,824) (5,760,403) (832,035) -- (1,999,188) (6,036,407)
In excess of net investment income.... -- -- -- -- -- --
------------- ------------ ------------ ------------ ------------- -------------
Total distributions................. (1,853,175) (5,760,403) (836,683) (76,384 ) (1,999,188) (6,036,407)
------------- ------------ ------------ ------------ ------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 82,103,169 55,176,617 35,674,006 1,873,104 18,226,922 70,317,597
Decrease from capital shares
repurchased.......................... (84,657,906) (61,528,494) (41,673,104) (4,691,541 ) (21,972,187) (70,230,812)
------------- ------------ ------------ ------------ ------------- -------------
Net increase (decrease) from capital
share transactions................. (2,554,737) (6,351,877) (5,999,098) (2,818,437 ) (3,745,265) 86,785
------------- ------------ ------------ ------------ ------------- -------------
Total increase (decrease) in net
assets................................. 5,223,997 1,273,192 (10,857,347) (2,403,804 ) (10,313,407) (3,143,792)
Net assets:
Beginning of year..................... 50,356,264 68,186,143 16,508,757 8,745,185 16,709,007 43,976,824
------------- ------------ ------------ ------------ ------------- -------------
End of year........................... $ 55,580,261 $ 69,459,335 $ 5,651,410 $ 6,341,381 $ 6,395,600 $ 40,833,032
------------- ------------ ------------ ------------ ------------- -------------
------------- ------------ ------------ ------------ ------------- -------------
*Includes undistributed net
investment income of:................ $ 721,627 $ -- $ 76,434 $ 104,883 $ 111,308 $ --
------------- ------------ ------------ ------------ ------------- -------------
------------- ------------ ------------ ------------ ------------- -------------
VARIABLE
NEW VARIABLE MONEY VARIABLE
PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
-------------- -------------- -------------- -----------
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 308,371 $ 121,528 $ 1,506,185 $ 104,596
Net realized gain (loss) on
investments and foreign currency
transactions......................... (3,607,110) 8,721,640 -- 356,679
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (105,425) 3,427 -- (47,735 )
Net change in unrealized appreciation
(depreciation) of investments........ 2,848,653 (865,332) -- 137,293
-------------- -------------- -------------- -----------
Net increase (decrease) in net
assets resulting from operations... (555,511) 7,981,263 1,506,185 550,833
-------------- -------------- -------------- -----------
Distributions to shareholders: (Note 1)
From net investment income............ (351,881) (60,959) (1,506,185) (56,951 )
From net realized gain on
investments.......................... -- (3,918,823) -- (471,250 )
In excess of net investment income.... -- -- -- --
-------------- -------------- -------------- -----------
Total distributions................. (351,881) (3,979,782) (1,506,185) (528,201 )
-------------- -------------- -------------- -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 174,054,677 354,305,731 727,175,801 79,400,263
Decrease from capital shares
repurchased.......................... (178,627,344) (353,100,071) (722,552,277) (78,024,723)
-------------- -------------- -------------- -----------
Net increase (decrease) from capital
share transactions................. (4,572,667) 1,205,660 4,623,524 1,375,540
-------------- -------------- -------------- -----------
Total increase (decrease) in net
assets................................. (5,480,059) 5,207,141 4,623,524 1,398,172
Net assets:
Beginning of year..................... 16,490,084 27,409,750 26,964,207 5,929,179
-------------- -------------- -------------- -----------
End of year........................... $ 11,010,025 $ 32,616,891 $ 31,587,731 $7,327,351
-------------- -------------- -------------- -----------
-------------- -------------- -------------- -----------
*Includes undistributed net
investment income of:................ $ 239,972 $ 121,518 $ -- 80,404
-------------- -------------- -------------- -----------
-------------- -------------- -------------- -----------
For the year ended December 31, 1997
GT GLOBAL
---------------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA
FUND FUND FUND FUND FUND FUND
------------- ------------- ------------- ------------ ------------- -------------
Increase (decrease) in net
assets
Operations:
Net investment income
(loss)..................... $ 1,205,645 $ (68,334) $ 221,606 $ 83,258 $ (29,831) $ (142,918)
Net realized gain (loss) on
investments and foreign
currency transactions...... 1,630,452 5,806,561 492,304 (206,416 ) 2,034,294 6,277,204
Net change in unrealized
appreciation (depreciation)
on translation of assets
and liabilities in foreign
currencies................. (54,835) 167,417 (9,023) (1,800 ) 2,250 --
Net change in unrealized
appreciation (depreciation)
of investments............. 3,876,889 2,996,284 (2,699,474) 442,473 (1,935,169) (372,530)
------------- ------------- ------------- ------------ ------------- -------------
Net increase (decrease) in
net assets resulting from
operations............... 6,658,151 8,901,928 (1,994,587) 317,515 71,544 5,761,756
------------- ------------- ------------- ------------ ------------- -------------
Distributions to shareholders:
(Note 1)
From net investment
income..................... (1,300,804) -- (84,900) (47,833 ) -- (196,399)
From net realized gain on
investments................ (90,528) (7,777,355) (1,283,734) (431,226 ) (762,160) (1,554,377)
------------- ------------- ------------- ------------ ------------- -------------
Total distributions....... (1,391,332) (7,777,355) (1,368,634) (479,059 ) (762,160) (1,750,776)
------------- ------------- ------------- ------------ ------------- -------------
Capital share transactions:
(Note 4)
Increase from capital shares
sold and reinvested........ 80,082,075 53,743,901 65,386,565 6,628,609 42,957,139 51,554,136
Decrease from capital shares
repurchased................ (71,425,393) (49,940,160) (63,118,511) (3,775,850 ) (41,865,469) (53,234,901)
------------- ------------- ------------- ------------ ------------- -------------
Net increase (decrease)
from capital share
transactions............. 8,656,682 3,803,741 2,268,054 2,852,759 1,091,670 (1,680,765)
------------- ------------- ------------- ------------ ------------- -------------
Total increase (decrease) in
net assets................... 13,923,501 4,928,314 (1,095,167) 2,691,215 401,054 2,330,215
Net assets:
Beginning of year........... 36,432,763 63,257,829 17,603,924 6,053,970 16,307,953 41,646,609
------------- ------------- ------------- ------------ ------------- -------------
End of year * *............. $ 50,356,264 $ 68,186,143 $ 16,508,757 $ 8,745,185 $ 16,709,007 $ 43,976,824
------------- ------------- ------------- ------------ ------------- -------------
------------- ------------- ------------- ------------ ------------- -------------
* *Includes undistributed
net investment income
of:........................ $ 643,714 $ -- $ 168,757 $ 77,503 $ -- $ --
------------- ------------- ------------- ------------ ------------- -------------
------------- ------------- ------------- ------------ ------------- -------------
VARIABLE
NEW VARIABLE MONEY VARIABLE
PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
-------------- -------------- -------------- -------------
Increase (decrease) in net
assets
Operations:
Net investment income
(loss)..................... $ 415,628 $ 62,782 $ 1,033,856 $ 69,499
Net realized gain (loss) on
investments and foreign
currency transactions...... (100,720) 4,084,568 -- 501,515
Net change in unrealized
appreciation (depreciation)
on translation of assets
and liabilities in foreign
currencies................. 105,422 (4,948) -- 19,339
Net change in unrealized
appreciation (depreciation)
of investments............. (10,613,599) 417,896 -- (52,826)
-------------- -------------- -------------- -------------
Net increase (decrease) in
net assets resulting from
operations............... (10,193,269) 4,560,298 1,033,856 537,527
-------------- -------------- -------------- -------------
Distributions to shareholders:
(Note 1)
From net investment
income..................... (178,145) (69,048) (1,033,856) (7,912)
From net realized gain on
investments................ (128,263) (2,404,127) -- --
-------------- -------------- -------------- -------------
Total distributions....... (306,408) (2,473,175) (1,033,856) (7,912)
-------------- -------------- -------------- -------------
Capital share transactions:
(Note 4)
Increase from capital shares
sold and reinvested........ 181,437,283 147,172,457 524,518,140 35,266,039
Decrease from capital shares
repurchased................ (187,117,722) (146,386,879) (517,347,993) (34,648,323)
-------------- -------------- -------------- -------------
Net increase (decrease)
from capital share
transactions............. (5,680,439) 785,578 7,170,147 617,716
-------------- -------------- -------------- -------------
Total increase (decrease) in
net assets................... (16,180,116) 2,872,701 7,170,147 1,147,331
Net assets:
Beginning of year........... 32,670,200 24,537,049 19,794,060 4,781,848
-------------- -------------- -------------- -------------
End of year * *............. $ 16,490,084 $ 27,409,750 $ 26,964,207 $ 5,929,179
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
* *Includes undistributed
net investment income
of:........................ $ 351,912 $ 60,949 $ -- $ 56,757
-------------- -------------- -------------- -------------
-------------- -------------- -------------- -------------
The accompanying notes are an integral part of the financial statements.
F61
432
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
GT GLOBAL
------------------------------------------------------------
VARIABLE STRATEGIC INCOME FUND
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.39 $ 13.38 $ 11.86 $ 10.82 $ 14.57
-------- -------- -------- -------- --------
Net investment income (loss).......... 0.97(a) 1.00(b) 0.95(c) 1.07(d) 1.71(e)
Net realized and unrealized gain
(loss) on investments................ (1.05) (0.07) 1.50 0.93 (4.17)
-------- -------- -------- -------- --------
Net increase (decrease) resulting
from operations.................... (0.08) 0.93 2.45 2.00 (2.46)
-------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income............ (0.92) (0.92) (0.85) (0.96) (0.79)
From net realized gain on
investments.......................... -- -- (0.08) -- (0.45)
In excess of net investment income.... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- (0.05)
-------- -------- -------- -------- --------
Total distributions................. (0.92) (0.92) (0.93) (0.96) (1.29)
-------- -------- -------- -------- --------
Net asset value, end of period.......... $ 12.39 $ 13.39 $ 13.38 $ 11.86 $ 10.82
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (f)............ (0.61)% 7.14% 21.58% 19.50% (17.09)%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $22,022 $28,497 $31,718 $25,345 $23,367
Ratio of net investment income (loss) to
average net assets:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 7.16% 7.20% 7.74% 9.59% 7.58%
Without reimbursement and/or expense
reductions........................... 6.97% 7.03% 7.59% 9.35% 7.43%
Ratio of expenses to average net assets
excluding interest expense:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.00% 0.90% 0.99% 1.00% 1.00%
Without reimbursement and/or expense
reductions........................... 1.19% 1.07% 1.14% 1.24% 1.15%
Ratio of interest expense to average net
assets................................. 0.16% --% --% --% --%
Portfolio turnover...................... 282% 185% 210% 193% 313%
- --------------------------------------------------------------------------------
GT GLOBAL
--------------------------------------------------------------
VARIABLE LATIN AMERICA FUND
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- ----------
Per Share Operating Performance:
Net asset value, beginning of period................................ $ 16.95 $ 14.80 $ 12.42 $ 19.17 $ 17.68
-------- -------- -------- -------- ----------
Net investment income (loss)...................................... 0.39(a) 0.24(b) 0.27(c) 0.51(d) 0.11(e)
Net realized and unrealized gain (loss) on investments............ (7.36) 1.91 2.49 (5.10) 1.49
-------- -------- -------- -------- ----------
Net increase (decrease) resulting from operations............... (6.97) 2.15 2.76 (4.59) 1.60
-------- -------- -------- -------- ----------
Distributions to shareholders:
From net investment income........................................ (0.25) -- (0.37) (0.16) (0.04)
From net realized gain on investments............................. (0.12) -- -- (2.00) (0.07)
In excess of net investment income................................ -- -- (0.01) -- --
-------- -------- -------- -------- ----------
Total distributions............................................. (0.37) -- (0.38) (2.16) (0.11)
-------- -------- -------- -------- ----------
Net asset value, end of period...................................... $ 9.61 $ 16.95 $ 14.80 $ 12.42 $ 19.17
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Total investment return (f)........................................ (41.71)% 14.53% 22.48% (24.14)% 9.14%
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Ratios and supplemental data:
Net assets, end of period (in 000's)................................ $ 9,935 $28,786 $22,928 $19,771 $26,631
Ratio of net investment income (loss) to average net assets:
With reimbursement and/or expense reductions (Notes 2 & 5)........ 1.97% 1.36% 1.94% 4.43% 0.82%
Without reimbursement and/or expense reductions................... 1.70% 1.21% 1.69% 3.92% 0.49%
Ratio of expenses to average net assets excluding interest expense:
With reimbursement and/or expense reductions (Notes 2 & 5)........ 1.25% 1.25% 1.17% 1.18% 1.25%
Without reimbursement and/or expense reductions................... 1.52% 1.40% 1.42% 1.69% 1.58%
Ratio of interest expense to average net assets..................... 0.14% --% --% --% --%
Portfolio turnover.................................................. 43% 141% 102% 140% 185%
- ------------------------
(a) Includes reimbursement of Fund operating expenses of $0.02 for the
Variable Strategic Income Fund, $0.05 for the Variable Global
Government Income Fund, $0.04 for the Variable U.S. Government Income
Fund, $0.04 for the Variable Latin America Fund and $0.01 for the
Variable Telecommunications Fund (Note 2).
(b) Includes reimbursement of Fund operating expenses of $0.01 for the
Variable Strategic Income Fund, $0.06 for the Variable Global
Government Income Fund, $0.06 for Variable U.S. Government Income
Fund, $0.02 for the Variable Latin America Fund, and $0.00 for the
Variable Growth & Income Fund (Note 2).
(c) Includes reimbursement of Fund operating expenses of $0.02 for the
Variable Strategic Income Fund, $0.06 for the Variable Global
Government Income Fund, $0.08 for the Variable U.S. Government Income
Fund, $0.02 for the Variable Latin America Fund, and $0.01 for the
Variable Growth & Income Fund (Note 2).
(d) Includes reimbursement of Fund operating expenses of $0.03 for the
Variable Strategic Income Fund, $0.07 for the Variable Global
Government Income Fund, $0.14 for the Variable U.S. Government Income
Fund, $0.06 for the Variable Latin America Fund, $0.03 for the
Variable Growth & Income Fund, and $0.00 for the Variable
Telecommunications Fund (Note 2).
(e) Includes reimbursement of Fund operating expenses of $0.04 for the
Variable Strategic Income Fund, $0.08 for the Variable Global
Government Income Fund, $0.48 for the Variable U.S. Government Income
Fund, $0.04 for the Variable Latin America Fund, $0.03 for the
Variable Growth & Income Fund, and $0.01 for the Variable
Telecommunications Fund (Note 2).
The accompanying notes are an integral part of the financial statements.
F62
433
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
GT GLOBAL
--------------------------------------------------------
VARIABLE GLOBAL GOVERNMENT INCOME FUND
--------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.17 $ 11.43 $ 11.51 $ 10.63 $ 12.53
-------- -------- -------- -------- --------
Net investment income (loss).......... 0.67(a) 0.82(b) 0.72(c) 0.79(d) 0.77(e)
Net realized and unrealized gain
(loss) on investments................ 0.71 (0.34) (0.06) 0.84 (1.85)
-------- -------- -------- -------- --------
Net increase (decrease) resulting
from operations.................... 1.38 0.48 0.66 1.63 (1.08)
-------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income............ (0.62) (0.74) (0.74) (0.75) (0.73)
From net realized gain on
investments.......................... -- -- -- -- --
In excess of net investment income.... (0.02) -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- (0.09)
-------- -------- -------- -------- --------
Total distributions................. (0.64) (0.74) (0.74) (0.75) (0.82)
-------- -------- -------- -------- --------
Net asset value, end of period.......... $ 11.91 $ 11.17 $ 11.43 $ 11.51 $ 10.63
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (f)............ 12.69% 4.37% 6.17% 15.85% (8.70)%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 8,801 $ 8,251 $10,397 $11,944 $ 9,654
Ratio of net investment income (loss) to
average net assets:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 5.71% 6.33% 6.32% 7.03% 6.89%
Without reimbursement and/or expense
reductions........................... 5.28% 5.74% 5.80% 6.37% 6.21%
Ratio of expenses to average net assets
excluding interest expense:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.00% 0.95% 0.95% 1.00% 1.00%
Without reimbursement and/or expense
reductions........................... 1.43% 1.54% 1.47% 1.66% 1.68%
Ratio of interest expense to average net
assets................................. 0.07% --% --% --% --%
Portfolio turnover...................... 224% 235% 235% 394% 350%
GT GLOBAL
--------------------------------------------------------
VARIABLE U.S. GOVERNMENT INCOME FUND
--------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.70 $ 11.41 $ 11.74 $ 10.79 $ 12.23
-------- -------- -------- -------- --------
Net investment income (loss).......... 0.63(a) 0.63(b) 0.60(c) 0.62(d) 0.63(e)
Net realized and unrealized gain
(loss) on investments................ 0.40 0.29 (0.35) 0.93 (1.39)
-------- -------- -------- -------- --------
Net increase (decrease) resulting
from operations.................... 1.03 0.92 0.25 1.55 (0.76)
-------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income............ (0.62) (0.54) (0.58) (0.60) (0.62)
From net realized gain on
investments.......................... -- (0.09) -- -- (0.06)
In excess of net investment income.... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions................. (0.62) (0.63) (0.58) (0.60) (0.68)
-------- -------- -------- -------- --------
Net asset value, end of period.......... $ 12.11 $ 11.70 $ 11.41 $ 11.74 $ 10.79
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (f)............ 9.06% 8.30% 2.23% 14.73% (6.27)%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,381 $ 7,373 $ 5,483 $ 5,992 $ 2,415
Ratio of net investment income (loss) to
average net assets:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 5.17% 5.54% 5.24% 5.43% 5.53%
Without reimbursement and/or expense
reductions........................... 4.85% 4.92% 4.49% 3.87% 1.29%
Ratio of expenses to average net assets
excluding interest expense:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.00% 1.00% 1.00% 1.00% 0.38%
Without reimbursement and/or expense
reductions........................... 1.32% 1.62% 1.75% 2.56% 4.63%
Ratio of interest expense to average net
assets................................. 0.07% --% --% --% --%
Portfolio turnover...................... 231% 143% 49% 186% 34%
- --------------------------------------------------------------------------------
GT GLOBAL
------------------------------------------------------------
VARIABLE GROWTH & INCOME FUND
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.60 $ 16.51 $ 14.57 $ 12.99 $ 13.77
-------- -------- -------- -------- --------
Net investment income (loss).......... 0.53(a) 0.41(b) 0.53(c) 0.52(d) 0.46(e)
Net realized and unrealized gain
(loss) on investments................ 3.08 2.23 1.81 1.46 (0.85)
-------- -------- -------- -------- --------
Net increase (decrease) resulting
from operations.................... 3.61 2.64 2.34 1.98 (0.39)
-------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income............ (0.44) (0.51) (0.35) (0.40) (0.39)
From net realized gain on
investments.......................... (0.26) (0.04) (0.05) -- --
In excess of net investment income.... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions................. (0.70) (0.55) (0.40) (0.40) (0.39)
-------- -------- -------- -------- --------
Net asset value, end of period.......... $ 21.51 $ 18.60 $ 16.51 $ 14.57 $ 12.99
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (f)............ 19.60% 16.22% 16.33% 15.49% (2.85)%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $55,580 $50,356 $36,433 $30,565 $25,580
Ratio of net investment income (loss) to
average net assets:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 2.53% 2.86% 3.58% 3.87% 3.69%
Without reimbursement and/or expense
reductions........................... 2.53% 2.72% 3.48% 3.66% 3.45%
Ratio of expenses to average net assets
excluding interest expense:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.22% 1.13% 1.20% 1.23% 1.25%
Without reimbursement and/or expense
reductions........................... 1.22% 1.27% 1.30% 1.44% 1.49%
Ratio of interest expense to average net
assets................................. 0.04% --% --% --% --%
Portfolio turnover...................... 72% 60% 57% 73% 53%
GT GLOBAL
------------------------------------------------------------
VARIABLE TELECOMMUNICATIONS FUND
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.40 $ 18.14 $ 16.87 $ 13.98 $ 13.07
-------- -------- -------- -------- --------
Net investment income (loss).......... (0.01) (a) (0.02) (0.05) 0.02(d) 0.01(e)
Net realized and unrealized gain
(loss) on investments................ 3.99 2.59 3.31 3.26 0.92
-------- -------- -------- -------- --------
Net increase (decrease) resulting
from operations.................... 3.98 2.57 3.26 3.28 0.93
-------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income............ -- -- (0.02) (0.03) (0.02)
From net realized gain on
investments.......................... (1.72) (2.31) (1.97) (0.36) --
In excess of net investment income.... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions................. (1.72) (2.31) (1.99) (0.39) (0.02)
-------- -------- -------- -------- --------
Net asset value, end of period.......... $ 20.66 $ 18.40 $ 18.14 $ 16.87 $ 13.98
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (f)............ 22.11% 14.56% 19.34% 23.66% 7.15%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $69,459 $68,186 $63,258 $50,778 $36,029
Ratio of net investment income (loss) to
average net assets:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. (0.04)% (0.10)% (0.26)% 0.16% 0.31%
Without reimbursement and/or expense
reductions........................... (0.05)% (0.15)% (0.31)% 0.10% 0.07%
Ratio of expenses to average net assets
excluding interest expense:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.16% 1.11% 1.12% 1.20% 1.25%
Without reimbursement and/or expense
reductions........................... 1.17% 1.16% 1.17% 1.26% 1.49%
Ratio of interest expense to average net
assets................................. 0.01% --% --% --% --%
Portfolio turnover...................... 73% 91% 77% 70% 81%
- ------------------------
(f) Total return information does not reflect expenses that apply to the
Separate Accounts or the related insurance contracts, and inclusion of
these charges would reduce the total return figures for all periods
shown.
The accompanying notes are an integral part of the financial statements.
F63
434
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
GT GLOBAL
------------------------------------------------------------------
VARIABLE EMERGING MARKETS FUND
------------------------------------------------------------------
JULY 5, 1994
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
--------------------------------------------- DECEMBER 31,
1998 1997 1996 1995 1994
------- -------- -------- ------- ----------------
Per Share Operating Performance:
Net asset value, beginning of period............................ $11.57 $ 14.26 $ 10.88 $11.89 $12.00
------- -------- -------- ------- --------
Net investment income (loss).................................. 0.27(a) 0.15(b) 0.11(c) 0.14(d) 0.07(e)
Net realized and unrealized gain (loss) on investments........ (4.34) (1.89) 3.27 (1.04) (0.05)
------- -------- -------- ------- --------
Net increase (decrease) resulting from operations........... (4.07) (1.74) 3.38 (0.90) 0.02
------- -------- -------- ------- --------
Distributions to shareholders:
From net investment income.................................... -- (0.06) -- (0.09) (0.07)
From net realized gain on investments......................... (0.81) (0.89) -- -- --
In excess of net investment income............................ -- -- -- -- --
In excess of net realized gain on investments................. -- -- -- -- (0.06)
Return of capital............................................. -- -- -- (0.02) --
------- -------- -------- ------- --------
Total distributions......................................... (0.81) (0.95) -- (0.11) (0.13)
------- -------- -------- ------- --------
Net asset value, end of period.................................. $ 6.69 $ 11.57 $ 14.26 $10.88 $11.89
------- -------- -------- ------- --------
------- -------- -------- ------- --------
Total investment return (f) +.................................. (36.90)% (13.76)% 31.07% (7.54)% 0.12%
------- -------- -------- ------- --------
------- -------- -------- ------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's)............................ $5,651 $16,509 $17,604 $8,983 $7,267
Ratio of net investment income (loss) to average net assets:
With reimbursement and/or expense reductions (Notes 2 &
5)++......................................................... 1.61% 1.05% 0.89% 1.55% 4.10%
Without reimbursement and/or expense reductions++............. 0.72% 0.78% 0.39% 0.51% (0.20)%
Ratio of expenses to average net assets excluding interest
expense:
With reimbursement and/or expense reductions (Notes 2 &
5)++......................................................... 1.23% 1.22% 1.18% 1.18% 0.00%
Without reimbursement and/or expense reductions++............. 2.12% 1.49% 1.68% 2.22% 4.30%
Ratio of interest expense to average net assets................. 0.17% --% --% --% --%
Portfolio turnover++............................................ 110% 212% 216% 210% 117%
- --------------------------------------------------------------------------------
GT GLOBAL
--------------------------------------------------------------
VARIABLE AMERICA FUND
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- ----------
Per Share Operating Performance:
Net asset value, beginning of period................................ $ 21.68 $ 19.71 $ 19.46 $ 15.81 $ 13.75
-------- -------- -------- -------- ----------
Net investment income (loss)...................................... (0.13) (0.07) 0.12(c) 0.21(d) 0.48(e)
Net realized and unrealized gain (loss) on investments............ 1.80 2.88 3.18 3.80 2.08
-------- -------- -------- -------- ----------
Net increase (decrease) resulting from operations............... 1.67 2.81 3.30 4.01 2.56
-------- -------- -------- -------- ----------
Distributions to shareholders:
From net investment income........................................ -- (0.09) (0.30) (0.07) (0.50)
From net realized gain on investments............................. (3.20) (0.75) (2.75) (0.29) --
In excess of net investment income................................ -- -- -- -- --
In excess of net realized gain on investments..................... -- -- -- -- --
Return of capital................................................. -- -- -- -- --
-------- -------- -------- -------- ----------
Total distributions............................................. (3.20) (0.84) (3.05) (0.36) (0.50)
-------- -------- -------- -------- ----------
Net asset value, end of period...................................... $ 20.15 $ 21.68 $ 19.71 $ 19.46 $ 15.81
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Total investment return (f)........................................ 8.09% 14.88% 18.55% 25.37% 18.88%
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Ratios and supplemental data:
Net assets, end of period (in 000's)................................ $40,833 $43,977 $41,647 $37,643 $15,257
Ratio of net investment income (loss) to average net assets:
With reimbursement and/or expense reductions (Notes 2 & 5)........ (0.59)% (0.35)% 0.52% 1.66% 1.83%
Without reimbursement and/or expense reductions................... (0.59)% (0.42)% 0.46% 1.60% 0.76%
Ratio of expenses to average net assets excluding interest expense:
With reimbursement and/or expense reductions (Notes 2 & 5)........ 0.95% 0.91% 0.95% 1.00% 0.98%
Without reimbursement and/or expense reductions................... 0.95% 0.98% 1.01% 1.06% 2.05%
Ratio of interest expense to average net assets..................... 0.08% --% --% --% --%
Portfolio turnover.................................................. 181% 210% 248% 79% 139%
- ------------------------
(a) Includes reimbursement of Fund operating expenses of $0.08 for the
Variable Emerging Markets Fund, $0.09 for the Variable Infrastructure
Fund, $0.04 for the Variable Natural Resources Fund, $0.05 for the
Variable New Pacific Fund and $0.01 for the Variable Europe Fund (Note
2).
(b) Includes reimbursement of Fund operating expenses of $0.03 for the
Variable Emerging Markets Fund, $0.04 for the Variable Infrastructure
Fund, $0.03 for the Variable Natural Resources Fund, $0.02 for the
Variable New Pacific Fund, and $0.02 for the Variable Europe Fund
(Note 2).
(c) Includes reimbursement of Fund operating expenses of $0.05 for the
Variable Emerging Markets Fund, $0.19 for the Variable Infrastructure
Fund, $0.11 for the Variable Natural Resources Fund, $0.00 for the
Variable America Fund, $0.04 for the Variable New Pacific Fund, and
$0.04 for the Variable Europe Fund (Note 2).
(d) Includes reimbursement of Fund operating expenses of $0.09 for the
Variable Emerging Markets Fund, $0.42 for the Variable Infrastructure
Fund, $0.47 for the Variable Natural Resources Fund, $0.01 for the
Variable America Fund, $0.04 for the Variable New Pacific Fund, and
$0.08 for the Variable Europe Fund (Note 2).
(e) Includes reimbursement of Fund operating expenses of $0.07 for the
Variable Emerging Markets Fund, $0.28 for the Variable America Fund,
$0.03 for the Variable New Pacific Fund, and $0.04 for the Variable
Europe Fund (Note 2).
The accompanying notes are an integral part of the financial statements.
F64
435
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
GT GLOBAL
-------------------------------------------------------
VARIABLE INFRASTRUCTURE FUND
-------------------------------------------------------
JANUARY 31, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
---------------------------------- DECEMBER 31,
1998 1997 1996 1995
-------- -------- -------- ----------------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.35 $ 16.47 $ 13.27 $12.00
-------- -------- -------- --------
Net investment income (loss).......... 0.31(a) 0.12(b) 0.11(c) 0.07(d)
Net realized and unrealized gain
(loss) on investments................ 0.77 0.74 3.19 1.20
-------- -------- -------- --------
Net increase (decrease) resulting
from operations.................... 1.08 0.86 3.30 1.27
-------- -------- -------- --------
Distributions to shareholders:
From net investment income............ (0.17) (0.10) (0.03) --
From net realized gain on
investments.......................... -- (0.88) (0.07) --
In excess of net investment income.... -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- --
Return of capital..................... -- -- -- --
-------- -------- -------- --------
Total distributions................. (0.17) (0.98) (0.10) --
-------- -------- -------- --------
Net asset value, end of period.......... $ 17.26 $ 16.35 $ 16.47 $13.27
-------- -------- -------- --------
-------- -------- -------- --------
Total investment return (f)............ 6.58% 5.00% 24.88% 10.58%
-------- -------- -------- --------
-------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 6,341 $ 8,745 $ 6,054 $1,594
Ratio of net investment income (loss) to
average net assets:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.37% 0.99% 1.35% 1.24%
Without reimbursement and/or expense
reductions........................... 0.94% 0.68% 0.03% (6.11)%
Ratio of expenses to average net assets
excluding interest expense:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.25% 1.18% 1.21% 1.22%
Without reimbursement and/or expense
reductions........................... 1.68% 1.49% 2.53% 8.57%
Ratio of interest expense to average net
assets................................. --% --% --% --%
Portfolio turnover...................... 110% 46% 76% 38%
GT GLOBAL
-------------------------------------------------------
VARIABLE NATURAL RESOURCES FUND
-------------------------------------------------------
JANUARY 31, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
---------------------------------- DECEMBER 31,
1998 1997 1996 1995
-------- -------- -------- ----------------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.20 $ 20.98 $ 13.88 $12.00
-------- -------- -------- --------
Net investment income (loss).......... 0.23(a) (0.03) (b) (0.06) (c) 0.73(d)
Net realized and unrealized gain
(loss) on investments................ (6.38) 0.18 7.16 1.91
-------- -------- -------- --------
Net increase (decrease) resulting
from operations.................... (6.15) 0.15 7.10 2.64
-------- -------- -------- --------
Distributions to shareholders:
From net investment income............ -- -- -- (0.71)
From net realized gain on
investments.......................... (3.15) (0.93) -- --
In excess of net investment income.... -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- (0.05)
Return of capital..................... -- -- -- --
-------- -------- -------- --------
Total distributions................. (3.15) (0.93) -- (0.76)
-------- -------- -------- --------
Net asset value, end of period.......... $ 10.90 $ 20.20 $ 20.98 $13.88
-------- -------- -------- --------
-------- -------- -------- --------
Total investment return (f)............ (33.01)% 1.29% 51.15% 22.20%
-------- -------- -------- --------
-------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 6,396 $16,709 $16,308 $1,365
Ratio of net investment income (loss) to
average net assets:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.22% (0.16)% (0.60)% 10.87%
Without reimbursement and/or expense
reductions........................... 0.97% (0.38)% (1.30)% 2.94%
Ratio of expenses to average net assets
excluding interest expense:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.24% 1.20% 1.19% 1.14%
Without reimbursement and/or expense
reductions........................... 1.49% 1.42% 1.89% 9.07%
Ratio of interest expense to average net
assets................................. 0.04% --% --% --%
Portfolio turnover...................... 305% 315% 199% 875%
- --------------------------------------------------------------------------------
GT GLOBAL
------------------------------------------------------------
VARIABLE NEW PACIFIC FUND
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.50 $ 18.02 $ 13.92 $ 14.01 $ 16.07
-------- -------- -------- -------- --------
Net investment income (loss).......... 0.27(a) 0.26(b) 0.13(c) 0.20(d) 0.08(e)
Net realized and unrealized gain
(loss) on investments................ (1.80) (7.61) 4.16 (0.23) (2.08)
-------- -------- -------- -------- --------
Net increase (decrease) resulting
from operations.................... (1.53) (7.35) 4.29 (0.03) (2.00)
-------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income............ (0.25) (0.10) (0.19) (0.06) (0.06)
From net realized gain on
investments.......................... -- (0.07) -- -- --
In excess of net investment income.... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions................. (0.25) (0.17) (0.19) (0.06) (0.06)
-------- -------- -------- -------- --------
Net asset value, end of period.......... $ 8.72 $ 10.50 $ 18.02 $ 13.92 $ 14.01
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (f)............ (14.54)% (41.11)% 30.97% (0.21)% (12.47)%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $11,010 $16,490 $32,670 $23,025 $19,391
Ratio of net investment income (loss) to
average net assets:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 2.38% 1.50% 0.88% 1.27% 0.83%
Without reimbursement and/or expense
reductions........................... 1.85% 1.16% 0.60% 1.74% 0.48%
Ratio of expenses to average net assets
excluding interest expense:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.23% 1.09% 1.12% 1.14% 1.25%
Without reimbursement and/or expense
reductions........................... 1.76% 1.43% 1.40% 1.61% 1.60%
Ratio of interest expense to average net
assets................................. 0.02% --% --% --% --%
Portfolio turnover...................... 102% 93% 70% 67% 30%
GT GLOBAL
------------------------------------------------------------
VARIABLE EUROPE FUND
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 22.52 $ 21.34 $ 16.52 $ 15.22 $ 15.33
-------- -------- -------- -------- --------
Net investment income (loss).......... 0.08(a) 0.05(b) 0.05(c) 0.18(d) 0.16(e)
Net realized and unrealized gain
(loss) on investments................ 3.74 3.10 4.93 1.28 (0.25)
-------- -------- -------- -------- --------
Net increase (decrease) resulting
from operations.................... 3.82 3.15 4.98 1.46 (0.09)
-------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income............ (0.05) (0.06) (0.16) (0.16) --
From net realized gain on
investments.......................... (2.97) (1.91) -- -- (0.02)
In excess of net investment income.... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions................. (3.02) (1.97) (0.16) (0.16) (0.02)
-------- -------- -------- -------- --------
Net asset value, end of period.......... $ 23.32 $ 22.52 $ 21.34 $ 16.52 $ 15.22
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (f)............ 15.98% 15.15% 30.25% 9.66% (0.59)%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $32,617 $27,410 $24,537 $15,641 $15,020
Ratio of net investment income (loss) to
average net assets:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 0.34% 0.22% 0.36% 1.12% 1.48%
Without reimbursement and/or expense
reductions........................... 0.30% 0.01% 0.09% 0.60% 1.07%
Ratio of expenses to average net assets
excluding interest expense:
With reimbursement and/or expense
reductions (Notes 2 & 5)............. 1.23% 1.20% 1.20% 1.20% 1.25%
Without reimbursement and/or expense
reductions........................... 1.27% 1.41% 1.47% 1.72% 1.66%
Ratio of interest expense to average net
assets................................. 0.32% --% --% --% --%
Portfolio turnover...................... 107% 117% 56% 123% 61%
- ------------------------
(f) Total return information does not reflect expenses that apply to the
Separate Accounts or the related insurance contracts, and inclusion of
these charges would reduce the total return figures for all periods
shown.
+ Not annualized for periods of less than one year.
++ Annualized for periods of less than one year.
The accompanying notes are an integral part of the financial statements.
F65
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GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
GT GLOBAL
------------------------------------------------------------
MONEY MARKET FUND
------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Per Share Operating Performance:
Net asset value, beginning of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Net investment income (loss).................... 0.05(a) 0.05(b) 0.05(c) 0.05(d) 0.03(e)
Net realized and unrealized gain (loss) on
investments.................................... -- -- -- -- --
-------- -------- -------- -------- --------
Net increase (decrease) resulting from
operations................................... 0.05 0.05 0.05 0.05 0.03
-------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income...................... (0.05) (0.05) (0.05) (0.05) (0.03)
From net realized gain on investments........... -- -- -- -- --
-------- -------- -------- -------- --------
Total distributions........................... (0.05) (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- -------- --------
Net asset value, end of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (f)...................... 5.22% 4.96% 4.75% 5.26% 3.48%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $31,588 $26,964 $19,794 $14,891 $19,474
Ratio of net investment income (loss) to average
net assets:
With reimbursement and/or expense reductions
(Notes 2 & 5).................................. 4.70% 4.77% 4.67% 5.15% 3.70%
Without reimbursement and/or expense
reductions..................................... 4.70% 4.73% 4.57% 4.85% 3.64%
Ratio of expenses to average net assets excluding
interest expense:
With reimbursement and/or expense reductions
(Notes 2 & 5).................................. 0.73% 0.75% 0.75% 0.75% 0.75%
Without reimbursement and/or expense
reductions..................................... 0.73% 0.79% 0.85% 1.05% 0.81%
Ratio of interest expense to average net assets... N/A N/A N/A N/A N/A
Portfolio turnover................................ N/A N/A N/A N/A N/A
- --------------------------------------------------------------------------------
GT GLOBAL
--------------------------------------------------------------------
VARIABLE INTERNATIONAL FUND
--------------------------------------------------------------------
JULY 5, 1994
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------- DECEMBER 31,
1998 1997 1996 1995 1994
-------- -------- -------- -------- ----------------
Per Share Operating Performance:
Net asset value, beginning of period.............. $ 12.72 $ 11.91 $ 11.01 $ 11.25 $12.00
-------- -------- -------- -------- --------
Net investment income (loss).................... 0.10* (a) 0.15(b) 0.05(c) 0.09(d) 0.06(e)
Net realized and unrealized gain (loss) on
investments.................................... (0.11) 0.68 0.89 (0.22) (0.76)
-------- -------- -------- -------- --------
Net increase (decrease) resulting from
operations................................... (0.01) 0.83 0.94 (0.13) (0.70)
-------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income...................... (0.09) (0.02) -- (0.09) (0.05)
From net realized gain on investments........... (0.75) -- (0.04) (0.02) --
-------- -------- -------- -------- --------
Total distributions........................... (0.84) (0.02) (0.04) (0.11) (0.05)
-------- -------- -------- -------- --------
Net asset value, end of period.................... $ 11.87 $ 12.72 $ 11.91 $ 11.01 $11.25
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total investment return (f) +.................... (0.64)% 6.93% 8.52% (1.14)% (5.81)%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).............. $ 7,327 $ 5,929 $ 4,782 $ 3,663 $2,229
Ratio of net investment income (loss) to average
net assets:
With reimbursement and/or expense reductions
(Notes 2 & 5)++................................ 1.64% 1.22% 0.48% 0.93% 3.33%
Without reimbursement and/or expense
reductions++................................... 0.56% 0.05% (0.86)% (1.35)% (2.56)%
Ratio of expenses to average net assets excluding
interest expense:
With reimbursement and/or expense reductions
(Notes 2 & 5)++................................ 1.25% 1.14% 1.15% 1.25% 0.69%
Without reimbursement and/or expense
reductions++................................... 2.33% 2.31% 2.49% 3.53% 6.58%
Ratio of interest expense to average net assets... 0.09% --% --% --% --%
Portfolio turnover++.............................. 105% 112% 92% 107% 17%
- ------------------------
* Calculated based upon average shares outstanding during the period.
(a) Includes reimbursement of Fund operating expenses of $0.09 for the
Variable International Fund (Note 2).
(b) Includes reimbursement of Fund operating expenses of $0.06 for the
Variable International Fund (Note 2).
(c) Includes reimbursement of Fund operating expenses of $0.14 for the
Variable International Fund (Note 2).
(d) Includes reimbursement of Fund operating expenses of $0.22 for the
Variable International Fund (Note 2).
(e) Includes reimbursement of Fund operating expenses of $0.11 for the
Variable International Fund (Note 2).
(f) Total return information does not reflect expenses that apply to the
Separate Accounts or the related insurance contracts, and inclusion of
these charges would reduce the total return figures for all periods
shown.
+ Not annualized for periods of less than one year.
++ Annualized for periods of less than one year.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F66
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GT GLOBAL VARIABLE INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Variable Investment Series and G.T. Global Variable Investment Trust
(the "Trusts") were each organized as a Delaware business trust on May 29, 1998.
Previously they were Massachusetts business trusts organized on May 26, 1992 and
September 17, 1992, respectively. The Trusts are registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as open-end management investment
companies. The GT Global Variable Investment Series operates as a series company
currently issuing five series of shares of beneficial interest: GT Global
Variable New Pacific Fund, GT Global Variable Europe Fund, GT Global Variable
America Fund, GT Global Variable International Fund and GT Global Money Market
Fund. GT Global Variable Investment Trust operates as a series company currently
issuing nine series of shares of beneficial interest: GT Global Variable Latin
America Fund, GT Global Variable Growth & Income Fund, GT Global Variable
Strategic Income Fund, GT Global Variable Global Government Income Fund, GT
Global Variable U.S. Government Income Fund, GT Global Variable Emerging Markets
Fund, GT Global Variable Telecommunications Fund, GT Global Variable
Infrastructure Fund, and GT Global Variable Natural Resources Fund. (The series
of shares of beneficial interest for the two trusts are referred to herein
collectively as the "Funds".) Each of the Funds is classified as a diversified
management investment company, except for GT Global Variable Latin America Fund,
GT Global Variable Growth & Income Fund, GT Global Variable Strategic Income
Fund and GT Global Variable Global Government Income Fund, which are each
registered as a non-diversified management investment company under the 1940
Act.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange or on the
Nasdaq National Market System in which such securities are primarily traded as
of the close of business on the day the securities are being valued or, lacking
any sales, at the last available bid price.
Long-term debt obligations are valued at the mean of representative quoted bid
and ask prices for such investments or, if such prices are not available, at
prices for securities of comparative maturity, quality and type; however, when
A I M Advisors, Inc. (the "Manager") deems it appropriate, prices obtained from
a bond pricing service will be used. Short-term debt investments are valued at
amortized cost adjusted for foreign exchange translation and market fluctuation,
if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by, or under the direction of, each of
the Trusts' Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by, or under the direction of, each Trusts' Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Funds after translation
to U.S. dollars based on the exchange rates on that day. The cost of each
security is determined using historical exchange rates. Income and withholding
taxes are translated at prevailing exchange rates when earned or incurred.
The Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Funds' books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Funds, it is the
Funds' policy to always receive, as collateral, United States government
securities or other high quality debt securities of which
F67
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GT GLOBAL VARIABLE INVESTMENT FUNDS
the value, including accrued interest, is at least equal to the amount to be
repaid to the Funds under each agreement at its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Funds as an unrealized gain or loss. When the
Forward Contract is closed, the Funds record a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Funds' "Statements of Assets and Liabilities." The Funds
could be exposed to risk if the counterparties are unable to meet the terms of
the contracts or if the value of the currency changes unfavorably. The Funds may
enter into Forward Contracts in connection with planned purchases or sales of
securities or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When a Fund writes a call or put option, an amount equal to the premium received
is included in the Fund's "Statements of Assets and Liabilities" as an asset and
an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if a Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium received. A Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying securities
and, for a put, requires the Fund to set aside cash, U.S. government securities
or other liquid securities in an amount not less than the exercise price or
otherwise provide adequate cover at all times while the put option is
outstanding. The Funds may use options to manage their exposure to the stock or
bond markets and to fluctuations in currency values or interest rates.
The premium paid by a Fund for the purchase of a call or put option is included
in the Fund's "Statements of Assets and Liabilities" as an investment and
subsequently "marked-to-market" to reflect the current market value of the
option. If an option which a Fund has purchased expires on the stipulated
expiration date, the Fund would realize a loss in the amount of the cost of the
option. If a Fund enters into a closing sale transaction, the Fund would realize
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract a
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
A Fund may use futures contracts to manage its exposure to the stock or bond
markets and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to the collection of withholding tax rebate,
income is recorded net of all withholding tax with any rebate recorded when
received. A Fund may trade securities on other than normal settlement terms.
This may increase the risk if the other party to the transaction fails to
deliver and causes the Fund to subsequently invest at less advantageous prices.
(H) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each Fund on the ex-date. For the
Money Market Fund, dividends are declared daily and paid monthly from net
investment income. The Variable Strategic Income Fund, Variable Global
Government Income Fund and Variable U.S. Government Income Fund declare and pay
dividends from net investment income, if any, monthly. The Variable Growth &
Income
F68
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GT GLOBAL VARIABLE INVESTMENT FUNDS
Fund declares and pays dividends from net investment income, if any, quarterly.
The Variable Latin America Fund, Variable Telecommunications Fund, Variable New
Pacific Fund, Variable Europe Fund, Variable Emerging Markets Fund, Variable
International Fund, Variable America Fund, Variable Infrastructure Fund, and
Variable Natural Resources Fund declare and pay dividends from net investment
income, if any, annually. With respect to each Fund, dividends from net realized
capital gains, if any, are normally declared and paid annually.
Income and capital gain distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Fund and timing
differences.
(I) TAXES
It is the policy of the Funds to continue to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the intention of the Funds to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, or unrealized appreciation of securities held, or for
excise tax on income and capital gains. The following funds have capital loss
carry-
forwards.
CAPITAL LOSS EXPIRES IN
GT GLOBAL FUNDS CARRYFORWARD YEAR
- ------------------------------------------------------------ ------------ ----------
Variable Strategic Income................................... $ 190,054 2003
............................................................ 972,721 2006
Variable Global Government Income........................... 353,306 2002
Variable Latin America...................................... 3,071,451 2006
Variable Emerging Markets................................... 4,606,893 2006
Variable Infrastructure..................................... 277,239 2006
Variable Natural Resources.................................. 4,305,511 2006
Variable America............................................ 1,644,845 2006
Variable New Pacific........................................ 4,172,104 2006
Money Market................................................ 144 2006
(J) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Funds' investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(K) INDEXED SECURITIES
The Funds may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(L) RESTRICTED SECURITIES
Certain of the Funds are permitted to invest in a limited amount of privately
placed restricted securities. These securities may be resold in transactions
exempt from registration or to the public if the securities are registered.
Disposal of these securities may involve time-consuming negotiations and
expense, and prompt sale at an acceptable price may be difficult. At the end of
the year, restricted securities (excluding 144A issues) are shown at the end of
the Portfolio of Investments for each Fund, if any.
(M) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
A Fund may trade securities on a when-issued or forward commitment basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be less than the trade date purchase price. Although the Fund will generally
purchase these securities with the intention of acquiring such securities, they
may sell such securities before the settlement date. These securities, if any,
are identified on the accompanying Portfolio of Investments. The Variable
Strategic Income Fund and the Variable Government Income Fund have set aside
sufficient cash or liquid high grade debt securities as collateral for these
purchase commitments.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
(N) PORTFOLIO SECURITIES LOANED
At December 31, 1998, stocks with an aggregate value listed below were on loan
to brokers. The loans were secured by cash collateral receive by the Fund:
YEAR
ENDED
DECEMBER
31,
DECEMBER 31, 1998 1998
---------------------------- --------
AGGREGATE VALUE CASH FEES
GT GLOBAL ON LOAN COLLATERAL RECEIVED
- ------------------------------------------------------------ --------------- ---------- --------
Variable Strategic Income Fund.............................. $ 313,172 $ 332,671 $32,575
Variable Global Government Income Fund...................... 122,069 125,666 5,624
Variable U.S. Government Income Fund........................ -- -- --
Variable Latin America Fund................................. 1,912,734 1,956,038 11,570
Variable Growth & Income Fund............................... 764,768 822,148 33,804
Variable Telecommunications Fund............................ 6,333,925 6,425,465 52,374
Variable Emerging Markets Fund.............................. 62,385 66,413 5,764
Variable Infrastructure Fund................................ 23,532 23,986 2,191
Variable Natural Resources Fund............................. -- -- 1,057
Variable America Fund....................................... 4,403,404 4,438,785 23,815
Variable New Pacific Fund................................... 140,827 148,825 23,633
Variable Europe Fund........................................ 1,212,962 1,283,449 38,173
Money Market Fund........................................... -- -- --
Variable International Fund................................. 29,474 30,500 5,867
For international securities, cash collateral is received by a Fund against
loaned securities in an amount at least equal to 105% of the market value of the
loaned securities at the inception of each loan. This collateral must be
maintained at not less than 103% of the market value of the loaned securities
during the period of the loan. For domestic securities, cash collateral is
received by a Fund against loaned securities in an amount at least equal to 102%
of the market value of the loaned securities at the inception of each loan. This
collateral must be maintained at not less than 100% of the market value of the
loaned securities during the period of the loan. The cash collateral is invested
in a securities lending trust which consists of a portfolio of high quality
short duration securities whose average effective duration is restricted to 120
days or less.
(O) LINE OF CREDIT
The Funds, along with certain other funds advised and/or administered by the
Manager, have a line of credit with BankBoston and State Street Bank and Trust
Company. The arrangements with the banks allow the Funds and certain other funds
to borrow, on a first come, first served basis, an aggregate maximum amount of
$250,000,000. The Funds are limited to borrowing up to 33 1/3% of the value of
the Fund's total assets. On December 31, 1998, outstanding loan balances are as
follows:
GT GLOBAL
- ------------------------------------------------------------
Variable Latin America...................................... $ 48,000
Variable America............................................ 227,000
Variable New Pacific........................................ 42,000
For the year ended December 31, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding),
the weighted average interest rate, interest expense for loans and other
interest expense are as follows:
YEAR ENDED DECEMBER 31, 1998
---------------------------------------------------------------------
AVERAGE AVERAGE DAILY
GT GLOBAL OUTSTANDING DAILY BALANCE INTEREST RATE INTEREST EXPENSE
- ------------------------------------------------------------ ------------------------------ ---------------- -------------------
Variable Strategic Income Fund.............................. $ 1,335,329 6.29% $ 38,936
Variable Global Government Income Fund...................... 137,155 6.11% 3,746
Variable U.S. Government Income Fund........................ 326,945 5.89% 4,871
Variable Latin America Fund................................. 519,080 6.18% 22,260
Variable Growth & Income Fund............................... 1,800,436 6.18% 23,031
Variable Telecommunications Fund............................ 1,272,621 5.98% 7,062
Variable Emerging Markets Fund.............................. 486,968 6.25% 15,969
Variable Infrastructure Fund................................ -- -- --
Variable Natural Resources Fund............................. 476,745 6.26% 4,560
Variable America Fund....................................... 850,226 6.22% 32,363
Variable New Pacific Fund................................... 763,684 5.67% 2,258
Variable Europe Fund........................................ 2,927,500 6.23% 117,469
Money Market Fund........................................... -- -- --
Variable International Fund................................. 470,038 6.34% 5,472
GT GLOBAL OTHER INTEREST
- ------------------------------------------------------------ ----------------
Variable Strategic Income Fund.............................. $ 950
Variable Global Government Income Fund...................... 2,212
Variable U.S. Government Income Fund........................ --
Variable Latin America Fund................................. 34
Variable Growth & Income Fund............................... 38
Variable Telecommunications Fund............................ --
Variable Emerging Markets Fund.............................. 997
Variable Infrastructure Fund................................ --
Variable Natural Resources Fund............................. --
Variable America Fund....................................... --
Variable New Pacific Fund................................... 57
Variable Europe Fund........................................ 600
Money Market Fund........................................... --
Variable International Fund................................. 1,111
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GT GLOBAL VARIABLE INVESTMENT FUNDS
2. RELATED PARTIES
A I M Advisors, Inc. (the "Manager") is the Funds' investment manager and
administrator. INVESCO (NY), Inc., (formerly, Chancellor LGT Asset Management,
Inc.) is the investment sub-advisor and sub-administrator for the GT Global
Variable New Pacific Fund, GT Global Variable America Fund, GT Global Money
Market Fund, GT Global Variable Strategic Income Fund, and GT Global Variable
U.S. Government Income Fund. INVESCO Asset Management Ltd. is the investment
sub-advisor and sub-administrator for the GT Global Variable Europe Fund, GT
Global Variable International Fund, GT Global Variable Latin America Fund, GT
Global Variable Growth & Income Fund, GT Global Variable Global Government
Income Fund, and GT Global Variable Emerging Markets Fund. As of the close of
business on May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the former
indirect parent organization of Chancellor LGT Asset Management, Inc.
("Chancellor LGT"), consummated a purchase agreement with AMVESCAP PLC pursuant
to which AMVESCAP PLC acquired LGT's Asset Management Division, which included
Chancellor LGT and certain other affiliates. As a result of this transaction,
Chancellor LGT was renamed INVESCO (NY), Inc., and is now an indirect
wholly-owned subsidiary of AMVESCAP PLC. Effective September 8, 1998, A I M Fund
Services, Inc., a wholly owned subsidiary of the Manager and a registered
transfer agent, became the exclusive transfer agent of the Funds, replacing GT
Global Investor Services, Inc. ("GT Services").
The Money Market Fund pays the Manager an investment management and
administration fee at the annualized rate of 0.50% of that Fund's average daily
net assets. The Variable Strategic Income Fund, Variable Global Government
Income Fund, Variable U.S. Government Income Fund and Variable America Fund each
pays the Manager an investment management and administration fee at the
annualized rate of 0.75% of the Fund's average daily net assets. The Variable
Growth & Income Fund, Variable Latin America Fund, Variable Telecommunications
Fund, Variable New Pacific Fund, Variable Emerging Markets Fund, Variable
International Fund, Variable Europe Fund, Variable Infrastructure Fund, and
Variable Natural Resources Fund each pays the Manager an investment management
and administration fee at the annualized rate of 1.00% of its average daily net
assets. All fees are computed daily and paid monthly.
The Manager has undertaken to limit the total operating expenses (exclusive of
brokerage commissions, interest, taxes and extraordinary items) of each of the
Variable New Pacific Fund, Variable Europe Fund, Variable Latin America Fund,
Variable Telecommunications Fund, Variable Emerging Markets Fund, Variable
International Fund, Variable Infrastructure Fund, Variable Natural Resources
Fund, and the Variable Growth & Income Fund to 1.25% of their respective average
daily net assets. In addition, the Manager has undertaken to limit the total
operating expenses (exclusive of brokerage commissions, interest, taxes and
extraordinary items) of each of the Variable Strategic Income Fund, The Variable
Global Government Income Fund, the Variable U.S. Government Income Fund, and the
Variable America Fund to 1.00% of their respective average daily net assets.
Likewise, the Manager has undertaken to limit the total operating expenses
(exclusive of brokerage commissions, interest, taxes and extraordinary items) of
the Money Market Fund to 0.75% of its average daily net assets. From time to
time, the Manager in its sole discretion may waive its fees and/or voluntarily
assume certain Fund expenses.
All general expenses of the Trusts and joint expenses of the Funds are allocated
among the Funds on a basis deemed fair and equitable.
GT Global is the principal underwriter of the Variable Annuity Contracts.
Underwriter commissions of $110,571 were retained by GT Global for the fiscal
year ended December 31, 1998.
The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived based on
the aggregate net assets of the funds which comprise the following investment
companies: AIM Growth Series, AIM Investment Funds, AIM Investment Portfolios,
AIM Series Trust, G.T. Global Variable Investment Series and G.T. Global
Variable Investment Trust. The fee is calculated at the rate of 0.03% to the
first $5 billion of assets and 0.02% to the assets in excess of $5 billion. An
amount is allocated to and paid by each such fund based on its relative average
daily net assets.
Each trustee who is not a director, officer or employee of the Sub-Advisor or
any affiliated company is paid an annual retainer of $2,000 by the G.T. Global
Variable Investment Series and $3,000 by The G.T. Global Variable Investment
Trust.
3. PURCHASES AND SALES OF SECURITIES
The following summarizes purchases and sales of investment securities, other
than short-term investments, by Fund, for the year ended December 31, 1998:
PURCHASES AND SALES OF SECURITIES
PURCHASES
------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------ --------------- ------------
Variable Strategic Income Fund.............................. $23,554,195 42,765,852
Variable Global Government Income Fund...................... 7,152,128 11,647,260
Variable U.S. Government Income Fund........................ 11,145,521 6,250,274
Variable Latin America Fund................................. -- 7,225,850
Variable Growth & Income Fund............................... 8,061,349 29,281,948
Variable Telecommunications Fund............................ -- 46,858,721
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GT GLOBAL VARIABLE INVESTMENT FUNDS
Variable Emerging Markets Fund.............................. -- 10,389,254
Variable Infrastructure Fund................................ -- 7,492,685
Variable Natural Resources Fund............................. -- 31,609,298
Variable America Fund....................................... -- 73,409,469
Variable New Pacific Fund................................... -- 11,503,362
Variable Europe Fund........................................ -- 37,890,302
Money Market Fund........................................... -- --
Variable International Fund................................. -- 6,062,304
SALES
------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------ --------------- ------------
Variable Strategic Income Fund.............................. $25,022,246 43,757,504
Variable Global Government Income Fund...................... 5,876,417 12,109,900
Variable U.S. Government Income Fund........................ 8,508,852 8,065,822
Variable Latin America Fund................................. -- 15,899,529
Variable Growth & Income Fund............................... 7,133,351 34,629,475
Variable Telecommunications Fund............................ -- 60,618,507
Variable Emerging Markets Fund.............................. -- 15,482,461
Variable Infrastructure Fund................................ -- 9,932,794
Variable Natural Resources Fund............................. -- 37,024,539
Variable America Fund....................................... -- 82,068,537
Variable New Pacific Fund................................... -- 17,716,415
Variable Europe Fund........................................ -- 44,495,204
Money Market Fund........................................... -- --
Variable International Fund................................. -- 7,529,514
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GT GLOBAL VARIABLE INVESTMENT FUNDS
4. CAPITAL SHARES
At December 31, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------------- --------------------------------
GT GLOBAL VARIABLE STRATEGIC INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 1,816,625 $ 23,767,440 2,611,339 $ 35,310,968
Shares issued in connection with reinvestment of
distributions............................................. 136,638 1,758,665 151,821 2,041,389
-------------- --------------- --------------- ---------------
1,953,263 25,526,105 2,763,160 37,352,357
Shares repurchased.......................................... (2,303,971) (30,081,222) (3,005,617) (40,609,980)
-------------- --------------- --------------- ---------------
Net decrease................................................ (350,708) $ (4,555,117) (242,457) $ (3,257,623)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 1,715,212 $ 20,223,251 380,383 $ 4,229,682
Shares issued in connection with reinvestment of
distributions............................................. 41,526 475,583 55,693 616,309
-------------- --------------- --------------- ---------------
1,756,738 20,698,834 436,076 4,845,991
Shares repurchased.......................................... (1,756,512) (20,697,844) (606,738) (6,739,965)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... 226 $ 990 (170,662) $ (1,893,974)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 1,208,175 $ 14,490,714 498,606 $ 5,752,236
Shares issued in connection with reinvestment of
distributions............................................. 31,559 375,753 26,692 304,964
-------------- --------------- --------------- ---------------
1,239,734 14,866,467 525,298 6,057,200
Shares repurchased.......................................... (1,259,952) (15,145,687) (375,888) (4,324,042)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (20,218) $ (279,220) 149,410 $ 1,733,158
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE LATIN AMERICA FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 1,541,263 $ 18,118,194 2,970,336 $ 50,446,691
Shares issued in connection with reinvestment of
distributions............................................. 34,214 451,963 -- --
-------------- --------------- --------------- ---------------
1,575,477 18,570,157 2,970,336 50,446,691
Shares repurchased.......................................... (2,239,082) (28,159,725) (2,821,639) (48,320,307)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (663,605) $ (9,589,568) 148,697 $ 2,126,384
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE GROWTH & INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 3,937,752 $ 80,249,994 4,454,366 $ 78,690,743
Shares issued in connection with reinvestment of
distributions............................................. 90,392 1,853,175 78,960 1,391,332
-------------- --------------- --------------- ---------------
4,028,144 82,103,169 4,533,326 80,082,075
Shares repurchased.......................................... (4,150,799) (84,657,906) (4,032,695) (71,425,393)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (122,655) $ (2,554,737) 500,631 $ 8,656,682
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 2,494,268 $ 49,416,214 2,426,702 $ 45,966,546
Shares issued in connection with reinvestment of
distributions............................................. 293,286 5,760,403 435,369 7,777,355
-------------- --------------- --------------- ---------------
2,787,554 55,176,617 2,862,071 53,743,901
Shares repurchased.......................................... (3,130,421) (61,528,494) (2,644,456) (49,940,160)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (342,867) $ (6,351,877) 217,615 $ 3,803,741
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE EMERGING MARKETS FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 3,892,065 $ 34,837,323 4,408,199 $ 64,017,931
Shares issued in connection with reinvestment of
distributions............................................. 93,799 836,683 90,221 1,368,634
-------------- --------------- --------------- ---------------
3,985,864 35,674,006 4,498,420 65,386,565
Shares repurchased.......................................... (4,568,030) (41,673,104) (4,305,787) (63,118,511)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (582,166) $ (5,999,098) 192,633 $ 2,268,054
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
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GT GLOBAL VARIABLE INVESTMENT FUNDS
YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------------- --------------------------------
GT GLOBAL VARIABLE INFRASTRUCTURE FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 105,509 $ 1,796,719 361,007 $ 6,149,550
Shares issued in connection with reinvestment of
distributions............................................. 4,325 76,385 28,498 479,059
-------------- --------------- --------------- ---------------
109,834 1,873,104 389,505 6,628,609
Shares repurchased.......................................... (277,458) (4,691,541) (222,095) (3,775,850)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (167,624) $ (2,818,437) 167,410 $ 2,852,759
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE NATURAL RESOURCES FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 922,163 $ 16,227,734 2,023,682 $ 42,194,979
Shares issued in connection with reinvestment of
distributions............................................. 153,430 1,999,188 42,776 762,160
-------------- --------------- --------------- ---------------
1,075,593 18,226,922 2,066,458 42,957,139
Shares repurchased.......................................... (1,316,239) (21,972,187) (2,016,632) (41,865,469)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (240,646) $ (3,745,265) 49,826 $ 1,091,670
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE AMERICA FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 3,186,300 $ 64,281,189 2,483,444 $ 49,803,360
Shares issued in connection with reinvestment of
distributions............................................. 307,353 6,036,408 93,176 1,750,776
-------------- --------------- --------------- ---------------
3,493,653 70,317,597 2,576,620 51,554,136
Shares repurchased.......................................... (3,495,956) (70,230,812) (2,660,773) (53,234,901)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (2,303) $ 86,785 (84,153) $ (1,680,765)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE NEW PACIFIC FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 20,013,836 $ 173,702,796 11,514,400 $ 181,130,875
Shares issued in connection with reinvestment of
distributions............................................. 42,293 351,881 17,420 306,408
-------------- --------------- --------------- ---------------
20,056,129 174,054,677 11,531,820 181,437,283
Shares repurchased.......................................... (20,363,468) (178,627,344) (11,774,960) (187,117,722)
-------------- --------------- --------------- ---------------
Net decrease................................................ (307,339) $ (4,572,667) (243,140) $ (5,680,439)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE EUROPE FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 14,680,383 $ 350,325,948 6,563,342 $ 144,699,282
Shares issued in connection with reinvestment of
distributions............................................. 158,305 3,979,783 115,031 2,473,175
-------------- --------------- --------------- ---------------
14,838,688 354,305,731 6,678,373 147,172,457
Shares repurchased (14,656,866) (353,100,071) (6,610,990) (146,386,879)
-------------- --------------- --------------- ---------------
Net increase................................................ 181,822 $ 1,205,660 67,383 $ 785,578
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL MONEY MARKET FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 725,552,665 $ 725,552,665 523,529,726 $ 523,529,726
Shares issued in connection with reinvestment of
distributions............................................. 1,623,136 1,623,136 988,414 988,414
-------------- --------------- --------------- ---------------
727,175,801 727,175,801 524,518,140 524,518,140
Shares repurchased.......................................... (722,552,277) (722,552,277) (517,347,993) (517,347,993)
-------------- --------------- --------------- ---------------
Net increase................................................ 4,623,524 $ 4,623,524 7,170,147 $ 7,170,147
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
GT GLOBAL VARIABLE INTERNATIONAL FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 6,352,235 $ 78,872,062 2,840,820 $ 35,258,127
Shares issued in connection with reinvestment of
distributions............................................. 40,537 528,201 621 7,912
-------------- --------------- --------------- ---------------
6,392,772 79,400,263 2,841,441 35,266,039
Shares repurchased.......................................... (6,241,572) (78,024,723) (2,776,796) (34,648,323)
-------------- --------------- --------------- ---------------
Net increase................................................ 151,200 $ 1,375,540 64,645 $ 617,716
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
F74
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GT GLOBAL VARIABLE INVESTMENT FUNDS
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Funds' expenses. The Funds' expenses were reduced as follows
under these arrangements:
YEAR ENDED
GT GLOBAL DECEMBER 31, 1998
- ------------------------------------------------------------ -----------------
Variable Strategic Income Fund.............................. $ --
Variable Global Government Income Fund...................... --
Variable U.S. Government Income Fund........................ --
Variable Latin America Fund................................. --
Variable Growth & Income Fund............................... 1,847
Variable Telecommunications Fund............................ 4,242
Variable Emerging Markets Fund.............................. 828
Variable Infrastructure Fund................................ 526
Variable Natural Resources Fund............................. 5,815
Variable America Fund....................................... 4,222
Variable New Pacific Fund................................... 4,911
Variable Europe Fund........................................ 1,171
Money Market Fund........................................... --
Variable International Fund................................. 272
- --------------
FEDERAL TAX INFORMATION (UNAUDITED)
Pursuant to Section 852 of the Internal Revenue Code, the Funds designate the
following amounts as capital gain dividends for the fiscal year ended December
31, 1998:
CAPITAL
GAIN
FUND DIVIDEND
- ----------------------------------------------------------------------------------------------------------------------- -----------
GT Global Variable Latin America Fund.................................................................................. $ 147,131
GT Global Variable Growth & Income Fund................................................................................ 689,824
GT Global Variable Telecommunications Fund............................................................................. 3,325,289
GT Global Variable Emerging Markets Fund............................................................................... 832,035
GT Global Variable Natural Resources Fund.............................................................................. 348,549
GT Global Variable America Fund........................................................................................ 661,911
GT Global Variable Europe Fund......................................................................................... 1,622,947
GT Global Variable International Fund.................................................................................. 161,464
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GT GLOBAL VARIABLE INVESTMENT FUNDS
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Trustees of the GT Global Variable Investment
Trust comprising the following Funds: GT Global Variable Strategic Income Fund,
GT Global Variable Global Government Income Fund, GT Global Variable U.S.
Government Income Fund, GT Global Variable Latin America Fund, GT Global
Variable Growth & Income Fund, GT Global Variable Telecommunications Fund, GT
Global Variable Emerging Markets Fund, GT Global Variable Infrastructure Fund,
GT Global Variable Natural Resources Fund, and the GT Global Variable Investment
Series comprising the following Funds: GT Global Variable America Fund, GT
Global Variable New Pacific Fund, GT Global Variable Europe Fund, GT Global
Money Market Fund, and GT Global Variable International Fund (collectively, "the
Funds"):
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Funds at December 31, 1998, and
the results of their operations, the changes in their net assets and the
financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
BOSTON, MASSACHUSETTS
FEBRUARY 19, 1999
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PROXY RESULTS (UNAUDITED)
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Trust, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 13,497,079 N/A 59,438
Frank S. Bayley............................................. 13,497,079 N/A 59,438
William J. Guilfoyle........................................ 13,497,079 N/A 59,438
Arthur C. Patterson......................................... 13,497,079 N/A 59,438
Ruth H. Quigley............................................. 13,497,079 N/A 59,438
(2)(a) Approval of investment management and administration
contract................................................... 1,868,938 67,524 119,009
(2)(b) Approval of sub-advisory and sub-administration contract.... 1,877,403 44,742 133,325
(3)(a) Modification of Fundamental Restriction on Concentration.... 1,851,158 95,604 108,708
(3)(b) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 1,851,581 95,181 108,708
(3)(c) Modification of Fundamental Restriction on Making Loans..... 1,851,581 95,181 108,708
(3)(d) Modification of Fundamental Restriction on Underwriting
Securities................................................. 1,851,581 95,181 108,708
(3)(e) Modification of Fundamental Restriction on Real Estate
Investments................................................ 1,851,581 95,181 108,708
(3)(f) Modification of Fundamental Restriction on Investing in
Commodities................................................ 1,851,581 95,181 108,708
(3)(g) Elimination of Fundamental Restriction on Margin
Transactions............................................... 1,851,581 95,181 108,708
(3)(h) Elimination of Fundamental Restriction on Investing in
Futures Contracts.......................................... 1,851,581 95,181 108,708
(3)(i) Elimination of Fundamental Restriction on Pledging Assets... 1,851,581 95,181 108,708
(3)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 1,851,581 95,181 108,708
(3)(k) Elimination of Fundamental Restriction on Investing for the
Purpose of Control......................................... 1,851,581 95,181 108,708
(3)(l) Elimination of Fundamental Restriction on Purchasing
Securities of Issuers in Which Officers and Trustees of
Each Company and Its Affiliates Own Securities............. 1,851,581 95,181 108,708
(3)(m) Elimination of Fundamental Restriction on Investing in
Securities of Companies That Have Been in Operation for
Less than Three Years...................................... 1,851,581 95,181 108,708
(3)(n) Elimination of Fundamental Restriction on Selling Securities
Short...................................................... 1,851,581 95,181 108,708
(3)(o) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 1,851,581 95,181 108,708
(4) Approval of an agreement and plan of conversion and
termination with respect to the Company.................... 12,388,320 463,230 704,970
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 12,978,161 134,974 443,384
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Trust, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
F77
448
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 13,497,079 N/A 59,438
Frank S. Bayley............................................. 13,497,079 N/A 59,438
William J. Guilfoyle........................................ 13,497,079 N/A 59,438
Arthur C. Patterson......................................... 13,497,079 N/A 59,438
Ruth H. Quigley............................................. 13,497,079 N/A 59,438
(2)(a) Approval of investment management and administration
contract................................................... 673,057 150 33,643
(2)(b) Approval of sub-advisory and sub-administration contract.... 652,299 2,800 51,750
(3)(a) Modification of Fundamental Restriction on Concentration.... 660,363 4,101 42,385
(3)(b) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 660,363 4,101 42,385
(3)(c) Modification of Fundamental Restriction on Making Loans..... 660,363 4,101 42,385
(3)(d) Modification of Fundamental Restriction on Underwriting
Securities................................................. 660,363 4,101 42,385
(3)(e) Modification of Fundamental Restriction on Real Estate
Investments................................................ 660,363 4,101 42,385
(3)(f) Modification of Fundamental Restriction on Investing in
Commodities................................................ 660,363 4,101 42,385
(3)(g) Elimination of Fundamental Restriction on Margin
Transactions............................................... 660,363 4,101 42,385
(3)(h) Elimination of Fundamental Restriction on Investing in
Futures Contracts.......................................... 660,363 4,101 42,385
(3)(i) Elimination of Fundamental Restriction on Investing in
Illiquid Securities........................................ 660,363 4,101 42,385
(3)(j) Elimination of Fundamental Restriction on Pledging Assets... 660,363 4,101 42,385
(3)(k) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 660,363 4,101 42,385
(3)(l) Elimination of Fundamental Restriction on Investing for the
Purpose of Control......................................... 660,363 4,101 42,385
(3)(m) Elimination of Fundamental Restriction on Purchasing
Securities of Issuers in Which Officers and Trustees of
Each Company and Its Affiliates Own Securities............. 660,363 4,101 42,385
(3)(n) Elimination of Fundamental Restriction on Investing in
Securities of Companies That Have Been in Operation for
Less than Three Years...................................... 660,363 4,101 42,385
(3)(o) Elimination of Fundamental Restriction on Selling Securities
Short...................................................... 660,363 4,101 42,385
(3)(p) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 660,363 4,101 42,385
(4) To approve an agreement and plan of conversion and
termination for the Trust.................................. 12,388,320 463,230 704,970
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 12,978,161 134,974 443,384
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Trust, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 13,497,079 N/A 59,438
Frank S. Bayley............................................. 13,497,079 N/A 59,438
William J. Guilfoyle........................................ 13,497,079 N/A 59,438
Arthur C. Patterson......................................... 13,497,079 N/A 59,438
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449
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
Ruth H. Quigley............................................. 13,497,079 N/A 59,438
(2)(a) Approval of investment management and administration
contract................................................... 460,038 2,897 51,129
(2)(b) Approval of sub-advisory and sub-administration contract.... 447,559 1,614 64,891
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 456,306 14,492 43,266
(3)(b) Modification of Fundamental Restriction on Concentration.... 456,306 14,492 43,266
(3)(c) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 456,306 14,492 43,266
(3)(d) Modification of Fundamental Restriction on Making Loans..... 456,306 14,492 43,266
(3)(e) Modification of Fundamental Restriction on Underwriting
Securities................................................. 456,306 14,492 43,266
(3)(f) Modification of Fundamental Restriction on Real Estate
Investments................................................ 456,306 14,492 43,266
(3)(g) Modification of Fundamental Restriction on Investing in
Commodities................................................ 456,306 14,492 43,266
(3)(h) Elimination of Fundamental Restriction on Margin
Transactions............................................... 456,306 14,492 43,266
(3)(i) Elimination of Fundamental Restriction on Pledging Assets... 456,306 14,492 43,266
(3)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 456,306 14,492 43,266
(3)(k) Elimination of Fundamental Restriction on Purchasing
Securities on Selling Securities Short..................... 456,306 14,492 43,266
(3)(l) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 456,306 14,492 43,266
(4) Approval of an agreement and plan of conversion and
termination with respect to the Company.................... 12,388,320 463,230 704,970
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 12,978,161 134,974 443,384
GT GLOBAL VARIABLE LATIN AMERICA FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Trust, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 13,497,079 N/A 59,438
Frank S. Bayley............................................. 13,497,079 N/A 59,438
William J. Guilfoyle........................................ 13,497,079 N/A 59,438
Arthur C. Patterson......................................... 13,497,079 N/A 59,438
Ruth H. Quigley............................................. 13,497,079 N/A 59,438
(2)(a) Approval of investment management and administration
contract................................................... 1,326,283 48,620 68,505
(2)(b) Approval of sub-advisory and sub-administration contract.... 1,326,982 37,363 79,063
(3)(a) Modification of Fundamental Restriction on Concentration.... 1,319,737 38,282 85,388
(3)(b) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 1,320,031 37,988 85,388
(3)(c) Modification of Fundamental Restriction on Making Loans..... 1,320,031 37,988 85,388
(3)(d) Modification of Fundamental Restriction on Underwriting
Securities................................................. 1,320,031 37,988 85,388
(3)(e) Modification of Fundamental Restriction on Real Estate
Investments................................................ 1,320,031 37,988 85,388
(3)(f) Modification of Fundamental Restriction on Investing in
Commodities................................................ 1,320,031 37,988 85,388
(3)(g) Elimination of Fundamental Restriction on Margin
Transactions............................................... 1,320,031 37,988 85,388
(3)(h) Elimination of Fundamental Restriction on Pledging Assets... 1,320,031 37,988 85,388
(3)(i) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 1,320,031 37,988 85,388
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VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(3)(j) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 1,320,031 37,988 85,388
(4) Approval of an agreement and plan of conversion and
termination with respect to the Company.................... 12,388,320 463,230 704,970
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 12,978,161 134,974 443,384
GT GLOBAL VARIABLE GROWTH & INCOME FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Trust, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 13,497,079 N/A 59,438
Frank S. Bayley............................................. 13,497,079 N/A 59,438
William J. Guilfoyle........................................ 13,497,079 N/A 59,438
Arthur C. Patterson......................................... 13,497,079 N/A 59,438
Ruth H. Quigley............................................. 13,497,079 N/A 59,438
(2)(a) Approval of investment management and administration
contract................................................... 2,536,910 52,215 111,271
(2)(b) Approval of sub-advisory and sub-administration contract.... 2,487,625 64,599 148,172
(3)(a) Modification of Fundamental Restriction on Concentration.... 2,491,633 80,073 128,689
(3)(b) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 2,491,633 80,073 128,689
(3)(c) Modification of Fundamental Restriction on Making Loans..... 2,491,633 80,073 128,689
(3)(d) Modification of Fundamental Restriction on Underwriting
Securities................................................. 2,491,633 80,073 128,689
(3)(e) Modification of Fundamental Restriction on Real Estate
Investments................................................ 2,491,633 80,073 128,689
(3)(f) Modification of Fundamental Restriction on Investing in
Commodities................................................ 2,491,633 80,073 128,689
(3)(g) Elimination of Fundamental Restriction on Margin
Transactions............................................... 2,491,633 80,073 128,689
(3)(h) Elimination of Fundamental Restriction on Investing in
Illiquid Securities........................................ 2,491,633 80,073 128,689
(3)(i) Elimination of Fundamental Restriction on Pledging Assets... 2,491,633 80,073 128,689
(3)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 2,491,633 80,073 128,689
(3)(k) Elimination of Fundamental Restriction on Investing for the
Purpose of Control......................................... 2,491,633 80,073 128,689
(3)(l) Elimination of Fundamental Restriction on Purchasing
Securities of Issuers in Which Officers and Trustees of
Each Company and Its Affiliates Own Securities............. 2,491,633 80,073 128,689
(3)(m) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 2,491,633 80,073 128,689
(4) Approval of an agreement and plan of conversion and
termination with respect to the Company.................... 12,388,320 463,230 704,970
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 12,978,161 134,974 443,384
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Trust, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
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(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 13,497,079 N/A 59,438
Frank S. Bayley............................................. 13,497,079 N/A 59,438
William J. Guilfoyle........................................ 13,497,079 N/A 59,438
Arthur C. Patterson......................................... 13,497,079 N/A 59,438
Ruth H. Quigley............................................. 13,497,079 N/A 59,438
(2)(a) Approval of investment management and administration
contract................................................... 3,354,622 159,017 135,507
(2)(b) Approval of sub-advisory and sub-administration contract.... 3,346,683 126,728 175,734
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 3,295,419 169,309 184,418
(3)(b) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 3,295,419 169,309 184,418
(3)(c) Modification of Fundamental Restriction on Making Loans..... 3,296,306 168,422 184,418
(3)(d) Modification of Fundamental Restriction on Underwriting
Securities................................................. 3,296,306 168,422 184,418
(3)(e) Modification of Fundamental Restriction on Real Estate
Investments................................................ 3,296,306 168,422 184,418
(3)(f) Modification of Fundamental Restriction on Investing in
Commodities................................................ 3,296,306 168,422 184,418
(3)(g) Elimination of Fundamental Restriction on Margin
Transactions............................................... 3,296,306 168,422 184,418
(3)(h) Elimination of Fundamental Restriction on Pledging Assets... 3,296,306 168,422 184,418
(3)(i) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 3,296,306 168,422 184,418
(3)(j) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 3,296,306 168,422 184,418
(4) Approval of an agreement and plan of conversion and
termination with respect to the Company.................... 12,388,320 463,230 704,970
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 12,978,161 134,974 443,384
GT GLOBAL VARIABLE EMERGING MARKETS FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Trust, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 13,497,079 N/A 59,438
Frank S. Bayley............................................. 13,497,079 N/A 59,438
William J. Guilfoyle........................................ 13,497,079 N/A 59,438
Arthur C. Patterson......................................... 13,497,079 N/A 59,438
Ruth H. Quigley............................................. 13,497,079 N/A 59,438
(2)(a) Approval of investment management and administration
contract................................................... 1,055,770 102,810 27,604
(2)(b) Approval of sub-advisory and sub-administration contract.... 1,080,670 78,578 26,940
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 1,082,600 71,119 32,469
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VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(3)(b) Modification of Fundamental Restriction on Concentration.... 1,082,600 71,119 32,469
(3)(c) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 1,082,600 71,119 32,469
(3)(d) Modification of Fundamental Restriction on Making Loans..... 1,082,600 71,119 32,469
(3)(e) Modification of Fundamental Restriction on Underwriting
Securities................................................. 1,082,600 71,119 32,469
(3)(f) Modification of Fundamental Restriction on Real Estate
Investments................................................ 1,082,600 71,119 32,469
(3)(g) Modification of Fundamental Restriction on Investing in
Commodities................................................ 1,081,522 70,071 32,469
(3)(h) Elimination of Fundamental Restriction on Margin
Transactions............................................... 1,082,600 71,119 32,469
(3)(i) Elimination of Fundamental Restriction on Pledging Assets... 1,082,600 71,119 32,469
(3)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 1,082,600 71,119 32,469
(3)(k) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 1,082,600 71,119 32,469
(4) Approval of an agreement and plan of conversion and
termination with respect to the Company.................... 12,388,320 463,230 704,970
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 12,978,161 134,974 443,384
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Trust, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
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The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 13,497,079 N/A 59,438
Frank S. Bayley............................................. 13,497,079 N/A 59,438
William J. Guilfoyle........................................ 13,497,079 N/A 59,438
Arthur C. Patterson......................................... 13,497,079 N/A 59,438
Ruth H. Quigley............................................. 13,497,079 N/A 59,438
(2)(a) Approval of investment management and administration
contract................................................... 440,335 29,160 16,293
(2)(b) Approval of sub-advisory and sub-administration contract.... 458,117 12,175 15,496
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 458,203 7,380 20,204
(3)(b) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 458,203 7,380 20,204
(3)(c) Modification of Fundamental Restriction on Making Loans..... 458,203 7,380 20,204
(3)(d) Modification of Fundamental Restriction on Underwriting
Securities................................................. 458,203 7,380 20,204
(3)(e) Modification of Fundamental Restriction on Real Estate
Investments................................................ 458,203 7,380 20,204
(3)(f) Modification of Fundamental Restriction on Investing in
Commodities................................................ 458,203 7,380 20,204
(3)(g) Elimination of Fundamental Restriction on Margin
Transactions............................................... 458,203 7,380 20,204
(3)(h) Elimination of Fundamental Restriction on Pledging Assets... 458,203 7,380 20,204
(3)(I) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 458,203 7,380 20,204
(3)(j) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 458,203 7,380 20,204
(4) Approval of an agreement and plan of conversion and
termination with respect to the Company.................... 12,388,320 463,230 704,970
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 12,978,161 134,974 443,384
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Trust, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 13,497,079 N/A 59,438
Frank S. Bayley............................................. 13,497,079 N/A 59,438
William J. Guilfoyle........................................ 13,497,079 N/A 59,438
Arthur C. Patterson......................................... 13,497,079 N/A 59,438
Ruth H. Quigley............................................. 13,497,079 N/A 59,438
(2)(a) Approval of investment management and administration
contract................................................... 745,488 44,943 24,780
(2)(b) Approval of sub-advisory and sub-administration contract.... 757,424 32,728 25,060
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 737,334 51,321 26,557
(3)(b) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 737,334 51,321 26,557
(3)(c) Modification of Fundamental Restriction on Making Loans..... 737,334 51,321 26,557
(3)(d) Modification of Fundamental Restriction on Underwriting
Securities................................................. 737,334 51,321 26,557
(3)(e) Modification of Fundamental Restriction on Real Estate
Investments................................................ 737,334 51,321 26,557
(3)(f) Modification of Fundamental Restriction on Investing in
Commodities................................................ 737,334 51,321 26,557
(3)(g) Elimination of Fundamental Restriction on Margin
Transactions............................................... 737,334 51,321 26,557
(3)(h) Elimination of Fundamental Restriction on Pledging Assets... 737,334 51,321 26,557
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VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(3)(i) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 737,334 51,321 26,557
(3)(j) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Funds' Assets in an Open-End
Fund....................................................... 737,334 51,321 26,557
(4) Approval of an agreement and plan of conversion and
termination with respect to the Company.................... 12,388,320 463,230 704,970
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 12,978,161 134,974 443,384
GT GLOBAL VARIABLE AMERICA FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Series, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 30,675,312 N/A 107,155
Frank S. Bayley............................................. 30,675,312 N/A 107,155
William J. Guilfoyle........................................ 30,675,312 N/A 107,155
Arthur C. Patterson......................................... 30,675,312 N/A 107,155
Ruth H. Quigley............................................. 30,675,312 N/A 107,155
(2)(a) Approval of investment management and administration
contract................................................... 1,788,825 81,568 87,819
(2)(b) Approval of sub-advisory and sub-administration contract.... 1,762,680 90,164 105,368
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 1,755,584 104,333 98,295
(3)(b) Modification of Fundamental Restriction on Concentration.... 1,755,584 104,333 98,295
(3)(c) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 1,755,584 104,333 98,295
(3)(d) Modification of Fundamental Restriction on Making Loans..... 1,755,584 104,333 98,295
(3)(e) Modification of Fundamental Restriction on Underwriting
Securities................................................. 1,755,584 104,333 98,295
(3)(f) Modification of Fundamental Restriction on Real Estate
Investments................................................ 1,755,584 104,333 98,295
(3)(g) Modification of Fundamental Restriction on Investing in
Commodities................................................ 1,755,584 104,333 98,295
(3)(h) Elimination of Fundamental Restriction on Margin
Transactions............................................... 1,755,584 104,333 98,295
(3)(i) Elimination of Fundamental Restriction on Pledging Assets... 1,755,584 104,333 98,295
(3)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 1,755,584 104,333 98,295
(3)(k) Elimination of Fundamental Restriction on Investing for the
Purpose of Control......................................... 1,755,584 104,333 98,295
(3)(l) Elimination of Fundamental Restriction on Purchasing
Securities of Issuers in Which Officers and Trustees of
Each Company and Its Affiliates Own Securities............. 1,755,584 104,333 98,295
(3)(m) Elimination of Fundamental Restriction on Selling Securities
Short...................................................... 1,755,584 104,333 98,295
(3)(n) Elimination of Fundamental Restriction on Joint
Participation in a Securities Trading Account.............. 1,755,584 104,333 98,295
(3)(o) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 1,755,584 104,333 98,295
(4) Approval of an agreement and plan of conversion and
termination with respect to the Trust...................... 28,296,983 1,736,005 749,478
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
Independent Public Accountants............................. 29,939,863 217,835 624,768
F84
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GT GLOBAL VARIABLE NEW PACIFIC FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Series, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 30,675,312 N/A 107,155
Frank S. Bayley............................................. 30,675,312 N/A 107,155
William J. Guilfoyle........................................ 30,675,312 N/A 107,155
Arthur C. Patterson......................................... 30,675,312 N/A 107,155
Ruth H. Quigley............................................. 30,675,312 N/A 107,155
(2)(a) Approval of investment management and administration
contract................................................... 1,411,748 18,040 75,926
(2)(b) Approval of sub-advisory and sub-administration contract.... 1,395,385 21,977 88,351
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 1,392,638 21,406 91,670
(3)(b) Modification of Fundamental Restriction on Concentration.... 1,392,638 21,406 91,670
(3)(c) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 1,393,989 20,055 91,670
(3)(d) Modification of Fundamental Restriction on Making Loans..... 1,393,989 20,055 91,670
(3)(e) Modification of Fundamental Restriction on Underwriting
Securities................................................. 1,393,989 20,055 91,670
(3)(f) Modification of Fundamental Restriction on Real Estate
Investments................................................ 1,393,989 20,055 91,670
(3)(g) Modification of Fundamental Restriction on Investing in
Commodities................................................ 1,393,317 20,727 91,670
(3)(h) Elimination of Fundamental Restriction on Margin
Transactions............................................... 1,393,989 20,055 91,670
(3)(i) Elimination of Fundamental Restriction on Pledging Assets... 1,393,989 20,055 91,670
(3)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 1,393,989 20,055 91,670
(3)(k) Elimination of Fundamental Restriction on Investing for the
Purpose of Control......................................... 1,393,989 20,055 91,670
(3)(l) Elimination of Fundamental Restriction on Purchasing
Securities of Issuers in Which Officers and Trustees of
Each Company and Its Affiliates Own Securities............. 1,393,989 20,055 91,670
(3)(m) Elimination of Fundamental Restriction on Selling Securities
Short...................................................... 1,393,989 20,055 91,670
(3)(n) Elimination of Fundamental Restriction on Joint
Participation in a Securities Trading Account.............. 1,393,989 20,055 91,670
(3)(o) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 1,393,989 20,055 91,670
(4) Approval of an agreement and plan of conversion and
termination with respect to the Trust...................... 28,296,983 1,736,005 749,478
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
Independent Public Accountants............................. 29,939,863 217,835 624,768
GT GLOBAL VARIABLE EUROPE FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Series, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
F85
456
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 30,675,312 N/A 107,155
Frank S. Bayley............................................. 30,675,312 N/A 107,155
William J. Guilfoyle........................................ 30,675,312 N/A 107,155
Arthur C. Patterson......................................... 30,675,312 N/A 107,155
Ruth H. Quigley............................................. 30,675,312 N/A 107,155
(2)(a) Approval of investment management and administration
contract................................................... 1,233,767 161,602 62,931
(2)(b) Approval of sub-advisory and sub-administration contract.... 1,259,540 132,443 66,316
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 1,271,515 134,156 52,629
(3)(b) Modification of Fundamental Restriction on Concentration.... 1,271,515 134,156 52,629
(3)(c) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 1,271,799 133,872 52,629
(3)(d) Modification of Fundamental Restriction on Making Loans..... 1,271,799 133,872 52,629
(3)(e) Modification of Fundamental Restriction on Underwriting
Securities................................................. 1,271,799 133,872 52,629
(3)(f) Modification of Fundamental Restriction on Real Estate
Investments................................................ 1,271,799 133,872 52,629
(3)(g) Modification of Fundamental Restriction on Investing in
Commodities................................................ 1,271,799 133,872 52,629
(3)(h) Elimination of Fundamental Restriction on Margin
Transactions............................................... 1,271,799 133,872 52,629
(3)(i) Elimination of Fundamental Restriction on Pledging Assets... 1,271,799 133,872 52,629
(3)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 1,271,799 133,872 52,629
(3)(k) Elimination of Fundamental Restriction on Investing for the
Purpose of Control......................................... 1,271,799 133,872 52,629
(3)(l) Elimination of Fundamental Restriction on Purchasing
Securities of Issuers in Which Officers and Trustees of
Each Company and Its Affiliates Own Securities............. 1,271,799 133,872 52,629
(3)(m) Elimination of Fundamental Restriction on Selling Securities
Short...................................................... 1,271,799 133,872 52,629
(3)(n) Elimination of Fundamental Restriction on Joint
Participation in a Securities Trading Account.............. 1,271,799 133,872 52,629
(3)(o) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 1,271,799 133,872 52,629
(4) Approval of an agreement and plan of conversion and
termination with respect to the Trust...................... 28,296,983 1,736,005 749,478
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
Independent Public Accountants............................. 29,939,863 217,835 624,768
GT GLOBAL MONEY MARKET FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Series, a
Delaware business trust (the "Trust"), was held on May 20, 1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 30,675,312 N/A 107,155
Frank S. Bayley............................................. 30,675,312 N/A 107,155
William J. Guilfoyle........................................ 30,675,312 N/A 107,155
Arthur C. Patterson......................................... 30,675,312 N/A 107,155
Ruth H. Quigley............................................. 30,675,312 N/A 107,155
(2)(a) Approval of investment management and administration
contract................................................... 23,433,757 1,207,976 665,520
(2)(b) Approval of sub-advisory and sub-administration contract.... 23,254,811 1,533,338 519,105
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 23,500,814 1,198,798 607,641
(3)(b) Modification of Fundamental Restriction on Concentration.... 23,500,814 1,198,798 607,641
F86
457
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(3)(c) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 23,500,814 1,198,798 607,641
(3)(d) Modification of Fundamental Restriction on Making Loans..... 23,500,814 1,198,798 607,641
(3)(e) Modification of Fundamental Restriction on Underwriting
Securities................................................. 23,500,814 1,198,798 607,641
(3)(f) Modification of Fundamental Restriction on Real Estate
Investments................................................ 23,500,814 1,198,798 607,641
(3)(g) Modification of Fundamental Restriction on Investing in
Commodities................................................ 23,500,814 1,198,798 607,641
(3)(h) Elimination of Fundamental Restriction on Margin
Transactions............................................... 23,500,814 1,198,798 607,641
(3)(i) Elimination of Fundamental Restriction on Pledging Assets... 23,500,814 1,198,798 607,641
(3)(j) Elimination of Fundamental Restriction on Purchasing
Securities Issued By Other Investment Companies............ 23,500,814 1,198,798 607,641
(3)(k) Elimination of Fundamental Restriction on Purchasing Common
Stocks, Preferred Stocks, Warrants or Other Equity
Securities................................................. 23,500,814 1,198,798 607,641
(3)(l) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 23,500,814 1,198,798 607,641
(3)(m) Elimination of Fundamental Restriction on Selling Securities
Short...................................................... 23,500,814 1,198,798 607,641
(3)(n) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 23,500,814 1,198,798 607,641
(4) Approval of an agreement and plan of conversion and
termination with respect to the Trust...................... 28,296,983 1,736,005 749,478
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
Independent Public Accountants............................. 29,939,863 217,835 624,768
GT GLOBAL VARIABLE INTERNATIONAL FUND
A Special Meeting of Shareholders of G.T. Global Variable Investment Series, a
Delaware business trust (the "Trust"), was held on May 20,1998. The meeting was
held for the following purposes:
(1) To elect Trustees as follows: C. Derek Anderson, Frank S. Bayley, William J.
Guilfoyle, Arthur C. Patterson and Ruth H. Quigley.
(2) To approve a new investment management and administration contract and
sub-advisory and sub-administration contract with respect to each series of
the Trust (each, a "Fund," and collectively, the "Funds").
(3) To approve changes to the fundamental investment restrictions of the Fund.
(4) To approve an agreement and plan of conversion and termination for the
Trust.
(5) To ratify the selection of Coopers & Lybrand L.L.P., now known as
PricewaterhouseCoopers LLP, as the Trust's independent public accountants.
The results of the proxy solicitation on the above matters were as follows:
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(1) C. Derek Anderson........................................... 30,675,312 N/A 107,155
Frank S. Bayley............................................. 30,675,312 N/A 107,155
William J. Guilfoyle........................................ 30,675,312 N/A 107,155
Arthur C. Patterson......................................... 30,675,312 N/A 107,155
Ruth H. Quigley............................................. 30,675,312 N/A 107,155
(2)(a) Approval of investment management and administration
contract................................................... 463,759 78,898 10,331
(2)(b) Approval of sub-advisory and sub-administration contract.... 463,759 78,898 10,331
(3)(a) Addition of Fundamental Restriction on Portfolio
Diversification............................................ 455,240 83,921 13,827
(3)(b) Modification of Fundamental Restriction on Concentration.... 455,240 83,921 13,827
(3)(c) Modification of Fundamental Restriction on Issuing Senior
Securities and Borrowing Money............................. 455,240 83,921 13,827
(3)(d) Modification of Fundamental Restriction on Making Loans..... 455,240 83,921 13,827
(3)(e) Modification of Fundamental Restriction on Underwriting
Securities................................................. 455,240 83,921 13,827
(3)(f) Modification of Fundamental Restriction on Real Estate
Investments................................................ 455,240 83,921 13,827
(3)(g) Modification of Fundamental Restriction on Investing in
Commodities................................................ 455,240 83,921 13,827
(3)(h) Elimination of Fundamental Restriction on Margin
Transactions............................................... 455,240 83,921 13,827
(3)(i) Elimination of Fundamental Restriction on Pledging Assets... 455,240 83,921 13,827
(3)(j) Elimination of Fundamental Restriction on Investments in
Oil, Gas and Mineral Leases and Programs................... 455,240 83,921 13,827
(3)(k) Elimination of Fundamental Restriction on Investing for the
Purpose of Control......................................... 455,240 83,921 13,827
F87
458
VOTES WITHHELD/
TRUSTEE/MATTER VOTES FOR AGAINST ABSTENTIONS
------------------------------------------------------------ -------------- ------------ -------------
(3)(l) Elimination of Fundamental Restriction on Purchasing
Securities of Issuers in Which Officers and Trustees of
Each Company and Its Affiliates Own Securities............. 455,240 83,921 13,827
(3)(m) Elimination of Fundamental Restriction on Selling Securities
Short...................................................... 455,240 83,921 13,827
(3)(n) Elimination of Fundamental Restriction on Joint
Participation in a Securities Trading Account.............. 455,240 83,921 13,827
(3)(o) Approval of New Fundamental Investment Policy Regarding
Investment of All of Each Fund's Assets in an Open-End
Fund....................................................... 455,240 83,921 13,827
(4) Approval of an agreement and plan of conversion and
termination with respect to the Trust...................... 28,296,983 1,736,005 749,478
(5) Ratification of the selection of Coopers and Lybrand L.L.P.,
now known as PricewaterhouseCoopers LLP, as the Trust's
independent public accountants............................. 29,939,863 217,835 624,768
F88
459
AIM V.I. International Equity Fund
GT Global Variable International Fund
GT Global Variable Europe Fund
GT Global Variable Natural Resources Fund
GT Global Variable Infrastructure Fund
GT Global Variable New Pacific Fund
GT Global Variable Latin America Fund
GT Global Variable Emerging Markets Fund
Pro Forma Combining Schedule of Investments
December 31, 1998
(Unaudited)
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
FOREIGN STOCKS & OTHER EQUITY INTERESTS--91.61%
ARGENTINA--1.21%
Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 2,138
Banco Rio de La Plata S.A. (Banks-Major Regional)
Bansud S.A. (Banks-Regional) (a)
IRSA Inversiones y Representaciones S.A. (Land Development)
Nortel Inversora S.A. (Telephone) 1,900
Telefonica de Argentina S.A.-ADR (Telephone) 1,263
YPF Sociedad Anonima-ADR (Oil-International Integrated) 2,500
AUSTRALIA--2.06%
AMP Ltd. (Insurance-Life/Health) (a)
Australia & New Zealand Banking Group Ltd. (Banks-Major Regional)
Brambles Industries Ltd. (Air Freight)
Broken Hill Proprietary Co. Ltd. (Conglomerates)
Cable & Wireless Optus, Ltd. (Telephone)(a)
EVN A.G. (Electric Companies) 400
Foster's Brewing Group Ltd. (Beverages-Alcoholic)
Futuris Corp. Ltd. (Automobile/Truck Parts & Tires)
Lend Lease Corp. Ltd. (Engineering & Construction)
National Australia Bank Ltd. (Banks-Foreign)
News Corp. Ltd. (Entertainment)
North Ltd. (Metals Mining)
Primamedic Ltd. (Pharmaceuticals)(a) 71,100
Rio Tinto Ltd. (Metals Mining)
Santos Ltd. (Oil & Gas-Exploration & Production)
TABCORP Holdings Ltd. (Leisure Time Products)
Telstra Corporation Ltd. (Telephone)
WMC Ltd. (Metals-Miscellaneous)
Woolworths Ltd. (Retail-Specialty)
BELGIUM--2.60%
Barco N.V. (Manufacturing-Diversified)
Colruyt N.V. (Retail-Food Chains)
Delhaize-Le Lion, S.A. (Retail-Food & Drug)(a)
Mobistar S.A. (Telecommunications-Cellular/Wireless)(a) 8,388
Solvay S.A. (Chemicals-Diversified) 1,000
UCB S.A. (Manufacturing-Diversified)
BRAZIL--2.21%
Caemi Mineracao E Metalurgia S.A.-Pfd. (Iron & Steel)
Centrais Eletricas de Santa Catarina S.A. (Electric Companies) 60,000
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a)
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a)
Companhia Brasileira de Distribuicao Grupo Pao de Acucar-Pfd. (Retail-Food Chains) 3,600
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
FOREIGN STOCKS & OTHER EQUITY INTERESTS--91.61%
ARGENTINA--1.21%
Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 11,543
Banco Rio de La Plata S.A. (Banks-Major Regional) 15,100
Bansud S.A. (Banks-Regional) (a) 22,700
IRSA Inversiones y Representaciones S.A. (Land Development) 4,089
Nortel Inversora S.A. (Telephone) 19,400
Telefonica de Argentina S.A.-ADR (Telephone) 4,300
YPF Sociedad Anonima-ADR (Oil-International Integrated)
AUSTRALIA--2.06%
AMP Ltd. (Insurance-Life/Health) (a) 28,300
Australia & New Zealand Banking Group Ltd. (Banks-Major Regional) 11,700 57,000
Brambles Industries Ltd. (Air Freight) 15,800
Broken Hill Proprietary Co. Ltd. (Conglomerates) 22,800
Cable & Wireless Optus, Ltd. (Telephone) (a) 32,800
EVN A.G. (Electric Companies)
Foster's Brewing Group Ltd. (Beverages-Alcoholic) 22,000 117,200
Futuris Corp. Ltd. (Automobile/Truck Parts & Tires) 71,500
Lend Lease Corp. Ltd. (Engineering & Construction) 20,800
National Australia Bank Ltd. (Banks-Foreign) 36,900
News Corp. Ltd. (Entertainment) 53,100
North Ltd. (Metals Mining) 65,500
Primamedic Ltd. (Pharmaceuticals) (a)
Rio Tinto Ltd. (Metals Mining) 11,500
Santos Ltd. (Oil & Gas-Exploration & Production) 32,400
TABCORP Holdings Ltd. (Leisure Time Products) 35,600
Telstra Corporation Ltd. (Telephone) 105,900
WMC Ltd. (Metals-Miscellaneous) 36,300
Woolworths Ltd. (Retail-Specialty) 23,100 23,300
BELGIUM--2.60%
Barco N.V. (Manufacturing-Diversified)
Colruyt N.V. (Retail-Food Chains)
Delhaize-Le Lion, S.A. (Retail-Food & Drug) (a)
Mobistar S.A. (Telecommunications-Cellular/Wireless) (a)
Solvay S.A. (Chemicals-Diversified)
UCB S.A. (Manufacturing-Diversified)
BRAZIL--2.21%
Caemi Mineracao E Metalurgia S.A.-Pfd. (Iron & Steel) 1,356
Centrais Eletricas de Santa Catarina S.A. (Electric Companies)
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a) 8,442
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a) 10,158
Companhia Brasileira de Distribuicao Grupo Pao de Acucar-Pfd. (Retail-Food Chains)
AIM V.I.
International Pro Forma
Equity Combining
FOREIGN STOCKS & OTHER EQUITY INTERESTS--91.61%
ARGENTINA--1.21%
Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 13,681
Banco Rio de La Plata S.A. (Banks-Major Regional) 15,100
Bansud S.A. (Banks-Regional) (a) 22,700
IRSA Inversiones y Representaciones S.A. (Land Development) 4,089
Nortel Inversora S.A. (Telephone) 21,300
Telefonica de Argentina S.A.-ADR (Telephone) 29,300 34,863
YPF Sociedad Anonima-ADR (Oil-International Integrated) 65,900 68,400
AUSTRALIA--2.06%
AMP Ltd. (Insurance-Life/Health) (a) 120,800 149,100
Australia & New Zealand Banking Group Ltd. (Banks-Major Regional) 68,700
Brambles Industries Ltd. (Air Freight) 15,800
Broken Hill Proprietary Co. Ltd. (Conglomerates) 22,800
Cable & Wireless Optus, Ltd. (Telephone) (a) 268,000 300,800
EVN A.G. (Electric Companies) 400
Foster's Brewing Group Ltd. (Beverages-Alcoholic) 139,200
Futuris Corp. Ltd. (Automobile/Truck Parts & Tires) 71,500
Lend Lease Corp. Ltd. (Engineering & Construction) 20,800
National Australia Bank Ltd. (Banks-Foreign) 36,900
News Corp. Ltd. (Entertainment) 53,100
North Ltd. (Metals Mining) 65,500
Primamedic Ltd. (Pharmaceuticals) (a) 71,100
Rio Tinto Ltd. (Metals Mining) 11,500
Santos Ltd. (Oil & Gas-Exploration & Production) 32,400
TABCORP Holdings Ltd. (Leisure Time Products) 35,600
Telstra Corporation Ltd. (Telephone) 105,900
WMC Ltd. (Metals-Miscellaneous) 36,300
Woolworths Ltd. (Retail-Specialty) 46,400
BELGIUM--2.60%
Barco N.V. (Manufacturing-Diversified) 4,000 4,000
Colruyt N.V. (Retail-Food Chains) 2,600 2,600
Delhaize-Le Lion, S.A. (Retail-Food & Drug) (a) 29,000 29,000
Mobistar S.A. (Telecommunications-Cellular/Wireless) (a) 8,388
Solvay S.A. (Chemicals-Diversified) 1,000
UCB S.A. (Manufacturing-Diversified) 320 320
BRAZIL--2.21%
Caemi Mineracao E Metalurgia S.A.-Pfd. (Iron & Steel) 1,356
Centrais Eletricas de Santa Catarina S.A. (Electric Companies) 60,000
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a) 8,442
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a) 10,158
Companhia Brasileira de Distribuicao Grupo Pao de Acucar-Pfd. (Retail-Food Chains) 57,700 61,300
460
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
Companhia Brasileira de Petroleo Ipiranga (Oil & Gas-Refining & Marketing)
Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP Rights, expire
01/04/99 (Cost $0) (Business & Public Services) 3,019
Companhia Cimento Portland Itau (Construction-Cement & Aggregates) (a)
Companhia de Eletricidade do Estado da Bahia (Electric Companies) 1,000,000
Companhia de Saneamento Basico do Estado de Sao Paulo (Water Utilities) 467,245
Companhia de Tecidos Norte de Minas (Textiles-Specialty) 301,000
Companhia Energetica de Minas Gerais (Electric Companies) 5,861
Companhia Energetica de Minas Gerais (Electric Companies)
Companhia Paranaense de Energia (Electric Companies) 9,900
Companhia Paranaense de Energia-Copel (Electric Companies)
Companhia Paulista de Forca e Luz (Electric Companies) (a)
Companhia Vale de Rio Doce-Pfd. A (Iron & Steel)
Eletricidade de Sao Paulo S.A. (Electric Companies) 1,064,101
Embratel Participacoes S.A. ADR (Telephone) (a)
Embratel Participacoes S.A. (Telephone) (a)
Empresa Bandeirante de Energia S.A. (Electric Companies) (a)
Itausa - Investimentos Itau S.A. (Investment Management)
Light - Servicos de Eletricidade S.A. (Electric Companies)
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 1,111,780
Tele Centro Sul Participacoes S.A. (Telephone) (a)
Tele Norte Leste Participacoes S.A. (Telephone) (a)
Tele Sudeste Celular Participacoes S.A. (Telecommunications-Cellular/Wireless)
Telebras- ADR Pfd. (Telephone) (a) 2,712
Tele Celular Sul Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
Tele Centro Oeste Celular Participacoes S.A.
(Telecommunication-Cellular/Wireless)(a)
Telecommunicacoes de Sao Paulo S.A. (Telephone) (a) 688,200
Telecomunicacoes Brasileiras S.A. (Telephone)
Telecomunicacoes Brasileiras S.A.-ADR (Telephone)
Telecomunicacoes de Sao Paulo S.A.-TELESP-Pfd. (Telephone) 12,040
Telepar Celular S.A.-Pfd. (Telecommunications-Cellular/Wireless)
Telerj Celular S.A. (Telecommunications-Cellular/Wireless) (a)
Telesp Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a)
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a)
Telesp Participacoes S.A. (Telephone)
Telesp Participacoes S.A.-ADR (Telephone)
Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional) (b) 3,840
Unibanco - Uniao de Bancos Brasileiros S.A. (Banks-Major Regional) (b) 264
Usinas Siderurgicas de Minas Gerais S.A. (Manufacturing-Diversified)
Votorantim Celulose e Papel S.A. (Paper & Forest Products) (a)
CANADA--4.38%
ATI Technologies, Inc. (Computers-Hardware) (a)
Bank of Montreal (Banks-Major Regional)
BCE Inc. (Telephone)
Berkley Petroleum Corp. (Oil & Gas-Exploration & Production) (a) 20,300
Bombardier Inc. (Aerospace/Defense)
Canadian National Railway Co. (Railroads) 1,300
Cominco Ltd. (Metals Mining) 6,200
Doman Industries Ltd. (Construction-Cement & Aggregates) (a) 23,475
Enerflex Systems Ltd. (Manufacturing-Specialized) 4,200
Imasco Ltd. (Manufacturing-Diversified)
Inco Ltd. (Metals Mining) (a) 6,000
Northern Telecom Ltd.-ADR (Communications Equipment)
Placer Dome Inc. (Gold & Precious Metals Mining) 6,100
Potash Corp. of Saskatchewan Inc. (Chemicals) 1,100
Royal Bank of Canada (Banks-Major Regional)
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
Companhia Brasileira de Petroleo Ipiranga (Oil & Gas-Refining & Marketing) 14,594
Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP Rights, expire
01/04/99 (Cost $0) (Business & Public Services)
Companhia Cimento Portland Itau (Construction-Cement & Aggregates) (a) 68
Companhia de Eletricidade do Estado da Bahia (Electric Companies) 4,960
Companhia de Saneamento Basico do Estado de Sao Paulo (Water Utilities) 1,832
Companhia de Tecidos Norte de Minas (Textiles-Specialty) 1,056
Companhia Energetica de Minas Gerais (Electric Companies) 12,583
Companhia Energetica de Minas Gerais (Electric Companies)
Companhia Paranaense de Energia (Electric Companies) 13,673
Companhia Paranaense de Energia-Copel (Electric Companies) 11,938
Companhia Paulista de Forca e Luz (Electric Companies) (a) 430
Companhia Vale de Rio Doce-Pfd. A (Iron & Steel) 17,000
Eletricidade de Sao Paulo S.A. (Electric Companies) 2,900
Embratel Participacoes S.A. ADR (Telephone) (a)
Embratel Participacoes S.A. (Telephone) (a) 11,800
Empresa Bandeirante de Energia S.A. (Electric Companies) (a) 1,336
Itausa - Investimentos Itau S.A. (Investment Management) 317,325
Light - Servicos de Eletricidade S.A. (Electric Companies) 572
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 3,347
Tele Centro Sul Participacoes S.A. (Telephone) (a) 2,500
Tele Norte Leste Participacoes S.A. (Telephone) (a) 5,165
Tele Sudeste Celular Participacoes S.A. (Telecommunications-Cellular/Wireless)
Telebras- ADR Pfd. (Telephone) (a) 760 5,740
Tele Celular Sul Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
Tele Centro Oeste Celular Participacoes S.A.
(Telecommunication-Cellular/Wireless)(a)
Telecommunicacoes de Sao Paulo S.A. (Telephone) (a) 1,428
Telecomunicacoes Brasileiras S.A. (Telephone) 8,793
Telecomunicacoes Brasileiras S.A.-ADR (Telephone)
Telecomunicacoes de Sao Paulo S.A.-TELESP-Pfd. (Telephone) 736
Telepar Celular S.A.-Pfd. (Telecommunications-Cellular/Wireless) 530
Telerj Celular S.A. (Telecommunications-Cellular/Wireless) (a) 1,370
Telesp Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a) 1,183
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a) 663
Telesp Participacoes S.A. (Telephone) 7,365
Telesp Participacoes S.A.-ADR (Telephone)
Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional) (b) 7,525,500
Unibanco - Uniao de Bancos Brasileiros S.A. (Banks-Major Regional) (b)
Usinas Siderurgicas de Minas Gerais S.A. (Manufacturing-Diversified) 15,300
Votorantim Celulose e Papel S.A. (Paper & Forest Products) (a) 5,700
CANADA--4.38%
ATI Technologies, Inc. (Computers-Hardware) (a)
Bank of Montreal (Banks-Major Regional)
BCE Inc. (Telephone)
Berkley Petroleum Corp. (Oil & Gas-Exploration & Production) (a)
Bombardier Inc. (Aerospace/Defense)
Canadian National Railway Co. (Railroads)
Cominco Ltd. (Metals Mining)
Doman Industries Ltd. (Construction-Cement & Aggregates) (a)
Enerflex Systems Ltd. (Manufacturing-Specialized)
Imasco Ltd. (Manufacturing-Diversified)
Inco Ltd. (Metals Mining) (a)
Northern Telecom Ltd.-ADR (Communications Equipment)
Placer Dome Inc. (Gold & Precious Metals Mining)
Potash Corp. of Saskatchewan Inc. (Chemicals)
Royal Bank of Canada (Banks-Major Regional) 950
AIM V.I.
International Pro Forma
Equity Combining
Companhia Brasileira de Petroleo Ipiranga (Oil & Gas-Refining & Marketing) 14,594
Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP Rights, expire
01/04/99 (Cost $0) (Business & Public Services) 3,019
Companhia Cimento Portland Itau (Construction-Cement & Aggregates) (a) 68
Companhia de Eletricidade do Estado da Bahia (Electric Companies) 1,004,960
Companhia de Saneamento Basico do Estado de Sao Paulo (Water Utilities) 469,077
Companhia de Tecidos Norte de Minas (Textiles-Specialty) 302,056
Companhia Energetica de Minas Gerais (Electric Companies) 18,444
Companhia Energetica de Minas Gerais (Electric Companies) 0 0
Companhia Paranaense de Energia (Electric Companies) 23,573
Companhia Paranaense de Energia-Copel (Electric Companies) 11,938
Companhia Paulista de Forca e Luz (Electric Companies) (a) 430
Companhia Vale de Rio Doce-Pfd. A (Iron & Steel) 17,000
Eletricidade de Sao Paulo S.A. (Electric Companies) 1,067,001
Embratel Participacoes S.A. ADR (Telephone) (a) 14,100 14,100
Embratel Participacoes S.A. (Telephone) (a) 11,800
Empresa Bandeirante de Energia S.A. (Electric Companies) (a) 1,336
Itausa - Investimentos Itau S.A. (Investment Management) 317,325
Light - Servicos de Eletricidade S.A. (Electric Companies) 572
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 3,013 1,118,140
Tele Centro Sul Participacoes S.A. (Telephone) (a) 2,820 5,320
Tele Norte Leste Participacoes S.A. (Telephone) (a) 5,165
Tele Sudeste Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) 2,820 2,820
Telebras- ADR Pfd. (Telephone) (a) 9,212
Tele Celular Sul Participacoes S.A. (Telecommunications-Cellular/Wireless) (a) 1,410 1,410
Tele Centro Oeste Celular Participacoes S.A.
(Telecommunication-Cellular/Wireless)(a) 1 1
Telecommunicacoes de Sao Paulo S.A. (Telephone) (a) 689,628
Telecomunicacoes Brasileiras S.A. (Telephone) 8,793
Telecomunicacoes Brasileiras S.A.-ADR (Telephone) 14,100 14,100
Telecomunicacoes de Sao Paulo S.A.-TELESP-Pfd. (Telephone) 12,776
Telepar Celular S.A.-Pfd. (Telecommunications-Cellular/Wireless) 530
Telerj Celular S.A. (Telecommunications-Cellular/Wireless) (a) 1,370
Telesp Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) (a) 5,640 5,640
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a) 1,183
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a) 5,500 6,163
Telesp Participacoes S.A. (Telephone) 7,365
Telesp Participacoes S.A.-ADR (Telephone) 14,100 14,100
Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional) (b) 7,529,340
Unibanco - Uniao de Bancos Brasileiros S.A. (Banks-Major Regional) (b) 264
Usinas Siderurgicas de Minas Gerais S.A. (Manufacturing-Diversified) 15,300
Votorantim Celulose e Papel S.A. (Paper & Forest Products) (a) 5,700
CANADA--4.38%
ATI Technologies, Inc. (Computers-Hardware) (a) 43,100 43,100
Bank of Montreal (Banks-Major Regional) 35,000 35,000
BCE Inc. (Telephone) 32,300 32,300
Berkley Petroleum Corp. (Oil & Gas-Exploration & Production) (a) 20,300
Bombardier Inc. (Aerospace/Defense) 137,600 137,600
Canadian National Railway Co. (Railroads) 9,000 10,300
Cominco Ltd. (Metals Mining) 6,200
Doman Industries Ltd. (Construction-Cement & Aggregates) (a) 23,475
Enerflex Systems Ltd. (Manufacturing-Specialized) 4,200
Imasco Ltd. (Manufacturing-Diversified) 95,600 95,600
Inco Ltd. (Metals Mining) (a) 6,000
Northern Telecom Ltd.-ADR (Communications Equipment) 10,917 10,917
Placer Dome Inc. (Gold & Precious Metals Mining) 6,100
Potash Corp. of Saskatchewan Inc. (Chemicals) 1,100
Royal Bank of Canada (Banks-Major Regional) 32,500 33,450
461
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
Suncor Energy, Inc. (Oil-International Integrated)
Teleglobe, Inc. (Telecommunications)
Toronto-Dominion Bank (Banks-Regional)
CHILE--0.48%
Administradora de Fondos de Peniones Provida (Financial-Diversified)
Banco de A. Edwards (Banks-Regional)
Compania Cervecerias Unidas S.A.-ADR (Beverages-Alcoholic)
Empresa Nacional de Electricidad S.A.-ADR (Electric Companies)
Enersis S.A.-ADR (Electric Companies) 2,963
Gener S.A. (Electric Companies)
Quinenco S.A.-ADR (Financial-Diversified)
Sociedad Quimica y Minera de Chile S.A. (Chemicals) 1,860
Sociedad Quimica y Minera de Chile S.A. (Chemicals)
Supermercados Unimarc S.A. (Retail-Food Chains)
CHINA--0.02%
Huaneng Power International, Inc. (Electric Companies) (a) 3,476
CROATIA--0.19%
Pliva DD (Health Care - Drugs-Major Pharmaceutical) (c)
DENMARK--0.01%
Tele Danmark A.S.-ADR (Telephone) 500
ECUADOR--0.02%
La Cemento Nacional-GDR (Construction-Cement & Aggregates) (a)(c) 543
EGYPT--0.13%
Arabian International Construction (Construction) (a) 1,571
Al-Ahram Beverages Co. S.A.E.-GDR 144A (Beverages-Alcoholic) 1,400
Madinet Nasr for Housing & Development Co. (Services-Commercial & Consumer) 1,950
Misr Elgadida for Housing and Reconstruction (Building Materials) 1,271
Misr International Bank (Banks-Major Regional) (c) 6,200
Oriental Weavers "C" (Textiles & Apparel) 1,350
Suez Cement Co. (Building Materials) (c) 5,363 2,600
FINLAND--2.42%
Fortum Corp. (Electric Companies) (a) 1,550 1,450
Helsingin Puhelin Oyj (Telecommunications-Cellular/Wireless) 9,643
Nokia Oyj A.B.-Class A (Communications Equipment) 11,321
Nokia Oyj A.B.-Class A-ADR (Communications Equipment) 1,000
Raisio Group PLC (Food) (a) 30,980
Sonera Group OYJ (Telecommunications-Cellular/Wireless) (a)(c) 13,000 550
Tieto Corp. (Computers-Software & Services) 13,820
FRANCE--13.31%
Accor S.A. (Lodging-Hotels)
Air Liquide (Chemicals-Specialty) 500
Altran Technologies, S.A. (Services-Commercial & Consumer) 344
AXA S.A. (Insurance-Multi-Line) 5,057
Banque Nationale de Paris (Banks - Major Regional)
Cap Gemini Sogeti S.A. (Computer-Software & Services)
Coflexip S.A.-ADR(Manufacturing-Specialized) 1,200 8,587
Compagnie Generale des Eaux (Manufacturing-Diversified) 740
Danone (Foods)
Dassault Systemes S.A. (Computers & Peripherals) 14,346
Elf Aquitaine S.A. (Oil & Gas - Refining & Marketing)
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
Suncor Energy, Inc. (Oil-International Integrated)
Teleglobe, Inc. (Telecommunications)
Toronto-Dominion Bank (Banks-Regional)
CHILE--0.48%
Administradora de Fondos de Peniones Provida (Financial-Diversified) 13,181
Banco de A. Edwards (Banks-Regional) 5,777
Compania Cervecerias Unidas S.A.-ADR (Beverages-Alcoholic) 10,300
Empresa Nacional de Electricidad S.A.-ADR (Electric Companies) 9,100
Enersis S.A.-ADR (Electric Companies) 11,800
Gener S.A. (Electric Companies) 7,764
Quinenco S.A.-ADR (Financial-Diversified) 14,800
Sociedad Quimica y Minera de Chile S.A. (Chemicals)
Sociedad Quimica y Minera de Chile S.A. (Chemicals) 6,800
Supermercados Unimarc S.A. (Retail-Food Chains) 18,900
CHINA--0.02%
Huaneng Power International, Inc. (Electric Companies) (a)
CROATIA--0.19%
Pliva DD (Health Care - Drugs-Major Pharmaceutical) (c)
DENMARK--0.01%
Tele Danmark A.S.-ADR (Telephone)
ECUADOR--0.02%
La Cemento Nacional-GDR (Construction-Cement & Aggregates) (a)(c)
EGYPT--0.13%
Arabian International Construction (Construction) (a)
Al-Ahram Beverages Co. S.A.E.-GDR 144A (Beverages-Alcoholic)
Madinet Nasr for Housing & Development Co. (Services-Commercial & Consumer)
Misr Elgadida for Housing and Reconstruction (Building Materials)
Misr International Bank (Banks-Major Regional) (c)
Oriental Weavers "C" (Textiles & Apparel)
Suez Cement Co. (Building Materials) (c)
FINLAND--2.42%
Fortum Corp. (Electric Companies) (a)
Helsingin Puhelin Oyj (Telecommunications-Cellular/Wireless)
Nokia Oyj A.B.-Class A (Communications Equipment) 831
Nokia Oyj A.B.-Class A-ADR (Communications Equipment)
Raisio Group PLC (Food) (a)
Sonera Group OYJ (Telecommunications-Cellular/Wireless) (a)(c)
Tieto Corp. (Computers-Software & Services)
FRANCE--13.31%
Accor S.A. (Lodging-Hotels)
Air Liquide (Chemicals-Specialty)
Altran Technologies, S.A. (Services-Commercial & Consumer)
AXA S.A. (Insurance-Multi-Line) 710
Banque Nationale de Paris (Banks - Major Regional)
Cap Gemini Sogeti S.A. (Computer-Software & Services)
Coflexip S.A.-ADR(Manufacturing-Specialized)
Compagnie Generale des Eaux (Manufacturing-Diversified) 266
Danone (Foods)
Dassault Systemes S.A. (Computers & Peripherals)
Elf Aquitaine S.A. (Oil & Gas - Refining & Marketing)
AIM V.I.
International Pro Forma
Equity Combining
Suncor Energy, Inc. (Oil-International Integrated) 38,000 38,000
Teleglobe, Inc. (Telecommunications) 39,500 39,500
Toronto-Dominion Bank (Banks-Regional) 28,100 28,100
CHILE--0.48%
Administradora de Fondos de Peniones Provida (Financial-Diversified) 13,181
Banco de A. Edwards (Banks-Regional) 5,777
Compania Cervecerias Unidas S.A.-ADR (Beverages-Alcoholic) 10,300
Empresa Nacional de Electricidad S.A.-ADR (Electric Companies) 9,100
Enersis S.A.-ADR (Electric Companies) 14,763
Gener S.A. (Electric Companies) 7,764
Quinenco S.A.-ADR (Financial-Diversified) 14,800
Sociedad Quimica y Minera de Chile S.A. (Chemicals) 1,860
Sociedad Quimica y Minera de Chile S.A. (Chemicals) 6,800
Supermercados Unimarc S.A. (Retail-Food Chains) 18,900
CHINA--0.02%
Huaneng Power International, Inc. (Electric Companies) (a) 3,476
CROATIA--0.19%
Pliva DD (Health Care - Drugs-Major Pharmaceutical) (c) 36,000 36,000
DENMARK--0.01%
Tele Danmark A.S.-ADR (Telephone) 500
ECUADOR--0.02%
La Cemento Nacional-GDR (Construction-Cement & Aggregates) (a)(c) 543
EGYPT--0.13%
Arabian International Construction (Construction) (a) 1,571
Al-Ahram Beverages Co. S.A.E.-GDR 144A (Beverages-Alcoholic) 1,400
Madinet Nasr for Housing & Development Co. (Services-Commercial & Consumer) 1,950
Misr Elgadida for Housing and Reconstruction (Building Materials) 1,271
Misr International Bank (Banks-Major Regional) (c) 6,200
Oriental Weavers "C" (Textiles & Apparel) 1,350
Suez Cement Co. (Building Materials) (c) 7,963
FINLAND--2.42%
Fortum Corp. (Electric Companies) (a) 3,000
Helsingin Puhelin Oyj (Telecommunications-Cellular/Wireless) 9,643
Nokia Oyj A.B.-Class A (Communications Equipment) 26,200 38,352
Nokia Oyj A.B.-Class A-ADR (Communications Equipment) 1,000
Raisio Group PLC (Food) (a) 30,980
Sonera Group OYJ (Telecommunications-Cellular/Wireless) (a)(c) 65,250 78,800
Tieto Corp. (Computers-Software & Services) 13,820
FRANCE--13.31%
Accor S.A. (Lodging-Hotels) 5,500 5,500
Air Liquide (Chemicals-Specialty) 500
Altran Technologies, S.A. (Services-Commercial & Consumer) 3,900 4,244
AXA S.A. (Insurance-Multi-Line) 13,000 18,767
Banque Nationale de Paris (Banks - Major Regional) 36,000 36,000
Cap Gemini Sogeti S.A. (Computer-Software & Services) 20,800 20,800
Coflexip S.A.-ADR(Manufacturing-Specialized) 9,787
Compagnie Generale des Eaux (Manufacturing-Diversified) 1,006
Danone (Foods) 8,000 8,000
Dassault Systemes S.A. (Computers & Peripherals) 14,346
Elf Aquitaine S.A. (Oil & Gas - Refining & Marketing) 19,500 19,500
462
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
Equant N.V. (Computers-Peripherals) (a) 10,543
Essilor International S.A. (Manufacturing-Specialized)
Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) (a)
Genset - ADR (Biotechnology) (a) 9,348
Lafarge S.A. (Engineering & Construction) 1,800 750
Legrand S.A. (Housewares)
Pinault-Printemps-Redoute S.A. (Retail-General Merchandise)
Promodes (Retail-Food Chains)
PSA Peugeot Citreon (Automobiles)
Renault S.A. (Automobiles)
Rexal S.A. (Distributors-Food & Health)
Rhone-Poulenc - Class A (Chemicals-Diversified)
Societe Generale (Banks - Major Regional)
Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable)
Suez Lyonnaise des Eaux (Manufacturing-Diversified) 350
Total S.A. - Class B (Oil & Gas-Refining & Marketing)
Total S.A.-ADR (Oil-International Integrated) 3,000
Valeo S.A. (Auto Parts & Equipment)
GERMANY--4.94%
Adidas Salomon A.G. (Footwear)
Allianz A.G. (Insurance-Multi-Line)
BASF A.G. (Chemicals-Diversified) 3,300
Bayerische Vereinsbank A.G. (Banks-Major Regional)
BHF-Bank A.G. (Banks-Major Regional)
DaimlerChrysler A.G. (Automobiles)
Deutsche Lufthansa A.G. (Airlines) 2,300
Dresdner Bank A.G. (Banks-Major Regional)
EM.TV & Merchandising A.G. (Broadcasting-Television, Radio, & Cable) (a) 639
Fresenius A.G.-Pfd. (Machinery-Diversified)
Karstadt A.G. (Retail-Department Stores)
MAN A.G. (Manufacturing-Diversified) 200
Mannesmann A.G. (Machinery-Diversifies) 5,698 1,300
MobilCom A.G. (Telecommunications-Cellular/Wireless) 2,271
Porsche A.G. (Automobiles) (a) 216
SAP A.G. - Pfd. (Computers-Software & Services) 1,098
Viag A.G. (Manufacturing-Diversified) 100
GREECE--0.29%
Alpha Credit Bank (Banks-Regional) 1,200
Hellenic Telecommunication Organization S.A.
(Telecommunication-Cellular/Wireless) (a) 4,977 11
National Bank of Greece S.A. (Banks-Money Center) 411
Panafon S.A. (Telecommunications-Cellular/Wireless) (a) 646 2,129
STET Hellas Telecommunications S.A. (Telecommunications-Cellular/Wireless) (a) 2,695 12,130
HONG KONG--2.27%
Cheung Kong (Holdings) Ltd. (Land Development)
China Telecom Ltd. (Telecommunications - Cellular/Wireless) (a) 8,000
CLP Holdings Ltd. (Electric Companies)
Cosco Pacific Ltd. (Financial-Diversified)
Hang Seng Bank Ltd. (Banking)
Hong Kong Telecommunications Ltd. (Telephone)
Hongkong Electric Holdings Ltd. (Electric Companies)
HSBC Holdings PLC (Banks - Major Regional)
Hutchison Whampoa Ltd. (Retail-Food Chains)
New World Development Co. Ltd. (Manufacturing-Diversified)
Ng Fung Hong Ltd. (Foods)
Qingling Motors Co. (Trucks & Parts) 110,000
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
Equant N.V. (Computers-Peripherals) (a) 673
Essilor International S.A. (Manufacturing-Specialized)
Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) (a)
Genset - ADR (Biotechnology) (a)
Lafarge S.A. (Engineering & Construction)
Legrand S.A. (Housewares)
Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 337
Promodes (Retail-Food Chains)
PSA Peugeot Citreon (Automobiles)
Renault S.A. (Automobiles)
Rexal S.A. (Distributors-Food & Health)
Rhone-Poulenc - Class A (Chemicals-Diversified)
Societe Generale (Banks - Major Regional)
Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable)
Suez Lyonnaise des Eaux (Manufacturing-Diversified)
Total S.A. - Class B (Oil & Gas-Refining & Marketing)
Total S.A.-ADR (Oil-International Integrated)
Valeo S.A. (Auto Parts & Equipment)
GERMANY--4.94%
Adidas Salomon A.G. (Footwear) 86
Allianz A.G. (Insurance-Multi-Line)
BASF A.G. (Chemicals-Diversified)
Bayerische Vereinsbank A.G. (Banks-Major Regional)
BHF-Bank A.G. (Banks-Major Regional)
DaimlerChrysler A.G. (Automobiles)
Deutsche Lufthansa A.G. (Airlines)
Dresdner Bank A.G. (Banks-Major Regional)
EM.TV & Merchandising A.G. (Broadcasting-Television, Radio, & Cable) (a) 80
Fresenius A.G.-Pfd. (Machinery-Diversified) 224
Karstadt A.G. (Retail-Department Stores)
MAN A.G. (Manufacturing-Diversified)
Mannesmann A.G. (Machinery-Diversifies) 794
MobilCom A.G. (Telecommunications-Cellular/Wireless)
Porsche A.G. (Automobiles) (a)
SAP A.G. - Pfd. (Computers-Software & Services) 138
Viag A.G. (Manufacturing-Diversified)
GREECE--0.29%
Alpha Credit Bank (Banks-Regional)
Hellenic Telecommunication Organization S.A.
(Telecommunication-Cellular/Wireless) (a)
National Bank of Greece S.A. (Banks-Money Center)
Panafon S.A. (Telecommunications-Cellular/Wireless) (a) 447
STET Hellas Telecommunications S.A. (Telecommunications-Cellular/Wireless) (a)
HONG KONG--2.27%
Cheung Kong (Holdings) Ltd. (Land Development) 90,000
China Telecom Ltd. (Telecommunications - Cellular/Wireless) (a)
CLP Holdings Ltd. (Electric Companies) 70,000
Cosco Pacific Ltd. (Financial-Diversified)
Hang Seng Bank Ltd. (Banking) 29,000
Hong Kong Telecommunications Ltd. (Telephone) 200,000
Hongkong Electric Holdings Ltd. (Electric Companies) 40,000
HSBC Holdings PLC (Banks - Major Regional) 11,468
Hutchison Whampoa Ltd. (Retail-Food Chains) 100,000
New World Development Co. Ltd. (Manufacturing-Diversified) 50,000
Ng Fung Hong Ltd. (Foods)
Qingling Motors Co. (Trucks & Parts)
AIM V.I.
International Pro Forma
Equity Combining
Equant N.V. (Computers-Peripherals) (a) 11,216
Essilor International S.A. (Manufacturing-Specialized) 2,275 2,275
Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) (a) 20,400 20,400
Genset - ADR (Biotechnology) (a) 9,348
Lafarge S.A. (Engineering & Construction) 2,550
Legrand S.A. (Housewares) 6,900 6,900
Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 17,800 18,137
Promodes (Retail-Food Chains) 3,650 3,650
PSA Peugeot Citreon (Automobiles) 7,000 7,000
Renault S.A. (Automobiles) 49,000 49,000
Rexal S.A. (Distributors-Food & Health) 13,600 13,600
Rhone-Poulenc - Class A (Chemicals-Diversified) 25,100 25,100
Societe Generale (Banks - Major Regional) 8,550 8,550
Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable) 6,600 6,600
Suez Lyonnaise des Eaux (Manufacturing-Diversified) 11,600 11,950
Total S.A. - Class B (Oil & Gas-Refining & Marketing) 9,500 9,500
Total S.A.-ADR (Oil-International Integrated) 3,000
Valeo S.A. (Auto Parts & Equipment) 15,000 15,000
GERMANY--4.94%
Adidas Salomon A.G. (Footwear) 86
Allianz A.G. (Insurance-Multi-Line) 7,600 7,600
BASF A.G. (Chemicals-Diversified) 3,300
Bayerische Vereinsbank A.G. (Banks-Major Regional) 27,000 27,000
BHF-Bank A.G. (Banks-Major Regional) 15,000 15,000
DaimlerChrysler A.G. (Automobiles) 12,964 12,964
Deutsche Lufthansa A.G. (Airlines) 2,300
Dresdner Bank A.G. (Banks-Major Regional) 38,500 38,500
EM.TV & Merchandising A.G. (Broadcasting-Television, Radio, & Cable) (a) 719
Fresenius A.G.-Pfd. (Machinery-Diversified) 224
Karstadt A.G. (Retail-Department Stores) 6,200 6,200
MAN A.G. (Manufacturing-Diversified) 200
Mannesmann A.G. (Machinery-Diversifies) 7,792
MobilCom A.G. (Telecommunications-Cellular/Wireless) 2,271
Porsche A.G. (Automobiles) (a) 300 516
SAP A.G. - Pfd. (Computers-Software & Services) 1,236
Viag A.G. (Manufacturing-Diversified) 100
GREECE--0.29%
Alpha Credit Bank (Banks-Regional) 1,200
Hellenic Telecommunication Organization S.A.
(Telecommunication-Cellular/Wireless) (a) 4,988
National Bank of Greece S.A. (Banks-Money Center) 411
Panafon S.A. (Telecommunications-Cellular/Wireless) (a) 3,222
STET Hellas Telecommunications S.A. (Telecommunications-Cellular/Wireless) (a) 14,825
HONG KONG--2.27%
Cheung Kong (Holdings) Ltd. (Land Development) 90,000
China Telecom Ltd. (Telecommunications - Cellular/Wireless) (a) 582,000 590,000
CLP Holdings Ltd. (Electric Companies) 70,000
Cosco Pacific Ltd. (Financial-Diversified) 2,444,000 2,444,000
Hang Seng Bank Ltd. (Banking) 29,000
Hong Kong Telecommunications Ltd. (Telephone) 200,000
Hongkong Electric Holdings Ltd. (Electric Companies) 40,000
HSBC Holdings PLC (Banks - Major Regional) 11,468
Hutchison Whampoa Ltd. (Retail-Food Chains) 242,000 342,000
New World Development Co. Ltd. (Manufacturing-Diversified) 50,000
Ng Fung Hong Ltd. (Foods) 460,000 460,000
Qingling Motors Co. (Trucks & Parts) 110,000
463
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
Shanghai Industrial Holdings Ltd. (Manufacturing-Diversified)
Sun Hung Kai Properties Ltd. (Land Development)
HUNGARY--0.09%
Magyar Tavkozlesi ADR (Telecommunications-Long Distance) 4,440
MOL Magyar Olaj-es Gazipari Rt. (Oil-Domestic Integrated) (c) 4,880
Richter Gedeon Rt.-GDR (Medical-Drugs)
INDIA--0.11%
Hindalco Industries Ltd.: (Metals - Non-Ferrous)
GDR 2,400
Common 400
Hindustan Lever Ltd. (Personal Care) 3,800
ITC Ltd. (Tobacco) 6,500
Ranbaxy Laboratories Ltd. (Health Care-Drugs-Generic & Other) 3,000
State Bank of India (Banks-Major Regional)
INDONESIA--0.29%
Gulf Indonesia Resources Ltd. (Oil-International Integrated) (a)
PT Telekomunikasi Indonesia (Telephone) (a)
IRELAND--1.73%
Allied Irish Banks PLC (Banks-Regional)
Bank of Ireland (Banks-Major Regional)
Esat Telecom Group PLC-ADR (Telecommunications-Long Distance) (a) 5,200 800
Saville Systems Ireland PLC-ADR (Services-Data Processing) 29,300
ISRAEL--0.09%
Bank Leumi Le-Isreal (Banks-Money Center) 26,626
Bezeq Israe;o Telecommunications Corp. Ltd.
(Telecommunication-Cellular/Wireless) (a) 19,800
Blue Square Chain Investments and Properties Ltd. (Retail-Food Chains) (a) 2,773
Blue Square-Israel Ltd.-ADR (Retail-Food Chains) 3,000
Makhteshim-Agan Industries Ltd. (Investment Management) (a) 24,927
Teva Pharmaceutical Industries Ltd. (Health Care-Drugs-Generic & Other) 1,800
ITALY--5.55%
Aeroporti di Roma S.p.A. (Aerospace/Defense) (a) 5,100
Assicurazioni Generali (Insurance-Multi-Line)
Banca Commerciale Italiana (Banks-Major Regional)
Banca di Roma (Banks-Major Regional) (a)
Credito Italiano S.p.A. (Banks-Major Regional) 93,674
Edison S.p.A. (Electric Power) (a) 7,100
ENI S.p.A - ADR (Oil-International Integrated) 2,800
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing)
Mediolanum (Insurance - Life) 56,135
Olivetti S.p.A. (Telecommunications-(Cellular/Wireless) (a)
San Paolo-IMI S.p.A. (Banks-Major Regional)
Telecom Italia Mobile S.p.A. (Telecommunications - Cellular/Wireless) 80,799
Telecom Italia S.p.A. (Telephone) 12,500
Telecom Italia S.p.A. (Telephone) 64,079
JAPAN--5.91%
Advantest Corp. (Electronics-Instrumentation) (a)
Alps Electric Co., Ltd. (Electronics-Component Distributors) (a)
Asahi Breweries Ltd. (Beverages-Alcoholic)
Bridgestone Corp. (Auto Parts & Equipment) 1,000
Canon, Inc. (Office Equipment & Supplies)
Fast Retailing Co. Ltd. (Retail-Specialty Apparel)
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
Shanghai Industrial Holdings Ltd. (Manufacturing-Diversified) 80,000
Sun Hung Kai Properties Ltd. (Land Development) 10,000
HUNGARY--0.09%
Magyar Tavkozlesi ADR (Telecommunications-Long Distance)
MOL Magyar Olaj-es Gazipari Rt. (Oil-Domestic Integrated) (c)
Richter Gedeon Rt.-GDR (Medical-Drugs) 770
INDIA--0.11%
Hindalco Industries Ltd.: (Metals - Non-Ferrous)
GDR
Common
Hindustan Lever Ltd. (Personal Care)
ITC Ltd. (Tobacco)
Ranbaxy Laboratories Ltd. (Health Care-Drugs-Generic & Other)
State Bank of India (Banks-Major Regional) 5,350
INDONESIA--0.29%
Gulf Indonesia Resources Ltd. (Oil-International Integrated) (a)
PT Telekomunikasi Indonesia (Telephone) (a) 250,000
IRELAND--1.73%
Allied Irish Banks PLC (Banks-Regional)
Bank of Ireland (Banks-Major Regional) 2,705
Esat Telecom Group PLC-ADR (Telecommunications-Long Distance) (a)
Saville Systems Ireland PLC-ADR (Services-Data Processing)
ISRAEL--0.09%
Bank Leumi Le-Isreal (Banks-Money Center)
Bezeq Israe;o Telecommunications Corp. Ltd.
(Telecommunication-Cellular/Wireless) (a)
Blue Square Chain Investments and Properties Ltd. (Retail-Food Chains) (a)
Blue Square-Israel Ltd.-ADR (Retail-Food Chains)
Makhteshim-Agan Industries Ltd. (Investment Management) (a)
Teva Pharmaceutical Industries Ltd. (Health Care-Drugs-Generic & Other)
ITALY--5.55%
Aeroporti di Roma S.p.A. (Aerospace/Defense) (a)
Assicurazioni Generali (Insurance-Multi-Line)
Banca Commerciale Italiana (Banks-Major Regional)
Banca di Roma (Banks-Major Regional) (a)
Credito Italiano S.p.A. (Banks-Major Regional)
Edison S.p.A. (Electric Power) (a)
ENI S.p.A - ADR (Oil-International Integrated)
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing)
Mediolanum (Insurance - Life)
Olivetti S.p.A. (Telecommunications-(Cellular/Wireless) (a)
San Paolo-IMI S.p.A. (Banks-Major Regional) 3,735
Telecom Italia Mobile S.p.A. (Telecommunications - Cellular/Wireless)
Telecom Italia S.p.A. (Telephone)
Telecom Italia S.p.A. (Telephone) 19,462
JAPAN--5.91%
Advantest Corp. (Electronics-Instrumentation) (a)
Alps Electric Co., Ltd. (Electronics-Component Distributors) (a)
Asahi Breweries Ltd. (Beverages-Alcoholic) 4,000
Bridgestone Corp. (Auto Parts & Equipment)
Canon, Inc. (Office Equipment & Supplies) 3,000
Fast Retailing Co. Ltd. (Retail-Specialty Apparel) 44
AIM V.I.
International Pro Forma
Equity Combining
Shanghai Industrial Holdings Ltd. (Manufacturing-Diversified) 80,000
Sun Hung Kai Properties Ltd. (Land Development) 10,000
HUNGARY--0.09%
Magyar Tavkozlesi ADR (Telecommunications-Long Distance) 4,440
MOL Magyar Olaj-es Gazipari Rt. (Oil-Domestic Integrated) (c) 4,880
Richter Gedeon Rt.-GDR (Medical-Drugs) 770
INDIA--0.11%
Hindalco Industries Ltd.: (Metals - Non-Ferrous)
GDR 2,400
Common 400
Hindustan Lever Ltd. (Personal Care) 3,800
ITC Ltd. (Tobacco) 6,500
Ranbaxy Laboratories Ltd. (Health Care-Drugs-Generic & Other) 3,000
State Bank of India (Banks-Major Regional) 5,350
INDONESIA--0.29%
Gulf Indonesia Resources Ltd. (Oil-International Integrated) (a) 127,400 127,400
PT Telekomunikasi Indonesia (Telephone) (a) 250,000
IRELAND--1.73%
Allied Irish Banks PLC (Banks-Regional) 176,500 176,500
Bank of Ireland (Banks-Major Regional) 70,500 73,205
Esat Telecom Group PLC-ADR (Telecommunications-Long Distance) (a) 6,000
Saville Systems Ireland PLC-ADR (Services-Data Processing) 29,300
ISRAEL--0.09%
Bank Leumi Le-Isreal (Banks-Money Center) 26,626
Bezeq Israe;o Telecommunications Corp. Ltd.
(Telecommunication-Cellular/Wireless) (a) 19,800
Blue Square Chain Investments and Properties Ltd. (Retail-Food Chains) (a) 2,773
Blue Square-Israel Ltd.-ADR (Retail-Food Chains) 3,000
Makhteshim-Agan Industries Ltd. (Investment Management) (a) 24,927
Teva Pharmaceutical Industries Ltd. (Health Care-Drugs-Generic & Other) 1,800
ITALY--5.55%
Aeroporti di Roma S.p.A. (Aerospace/Defense) (a) 5,100
Assicurazioni Generali (Insurance-Multi-Line) 49,100 49,100
Banca Commerciale Italiana (Banks-Major Regional) 109,300 109,300
Banca di Roma (Banks-Major Regional) (a) 972,000 972,000
Credito Italiano S.p.A. (Banks-Major Regional) 333,400 427,074
Edison S.p.A. (Electric Power) (a) 7,100
ENI S.p.A - ADR (Oil-International Integrated) 2,800
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing) 189,000 189,000
Mediolanum (Insurance - Life) 56,135
Olivetti S.p.A. (Telecommunications-(Cellular/Wireless) (a) 378,000 378,000
San Paolo-IMI S.p.A. (Banks-Major Regional) 122,160 125,895
Telecom Italia Mobile S.p.A. (Telecommunications - Cellular/Wireless) 271,000 351,799
Telecom Italia S.p.A. (Telephone) 12,500
Telecom Italia S.p.A. (Telephone) 217,500 301,041
JAPAN--5.91%
Advantest Corp. (Electronics-Instrumentation) (a) 34,700 34,700
Alps Electric Co., Ltd. (Electronics-Component Distributors) (a) 47,000 47,000
Asahi Breweries Ltd. (Beverages-Alcoholic) 4,000
Bridgestone Corp. (Auto Parts & Equipment) 1,000
Canon, Inc. (Office Equipment & Supplies) 3,000
Fast Retailing Co. Ltd. (Retail-Specialty Apparel) 44
464
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
Hoya Corp.(Manufacturing-Specialized) (a)
Mabuchi Motor Co., Ltd. (Electrical Equipment)
Matsushita Communication Industrial Co., Ltd. (Telephone) (a)
Matsushita-Kotobuki Electronics Industries Ltd. (Electronics-Component Distributors)
Murata Manufacturing Co., Ltd. (Electronics- Component Distributors)
Nichiei Co., Ltd. (Banks-Money Center)
Nippon Telegraph & Telephone Corp. (Telephone)
Nippon Television Network Corp. (Broadcasting-Television, Radio & Cable)
NTT Data Corp. (Computers-Software & Services) (a)
NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) (a) 10
Okuma Corp. (Machine Tools) (a)
Omron Corp. (Electronics- Component Distributors) (a)
SMC Corp. (Machinery-Diversified)
Sony Corp. (Electronics-Component Distributors)
Takeda Chemical Industries (Health Care-Drugs-Generic & Other)
TDK Corp. (Electrical Equipment)
Tokyo Electron Ltd. (Electronics-Semiconductors) (a)
LUXEMBOURG--0.04%
Quilmes Industrial S.A. (Beverages-Alcoholic)
MALAYSIA--0.05%
Berjaya Sports Toto Berhad (Investments) (d)
Malaysia International Shipping Berhad (Shipping) (d)
Telekom Malaysia Berhad (Telephone)
YTL Power International Berhad (Electric Companies) (d)
MEXICO--2.79%
Alpha S.A. de C.V. (Manufacturing-Diversified)
Apasco S.A. de C.V. (Construction-Cement & Aggregates) 9,831
ARA, S.A. de C.V. (Homebuilding) (a) 15,200
Carso Global Telecom (Telephone) (a)
Cemex S.A. de CV (Construction-Cement & Aggregates) 23,247
Cifra S.A. de C.V. (Retail-General Merchandise) (a) 55,795
Cintra S.A. (Airlines) (a)
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic)
Controladora Comercial Mexicana S.A. de C.V. (Retail-Department Stores) (a)(e)
Corporacion GEO S.A. de C.V. (Construction-Cement & Aggregates) (a) 14,200
Desc S.A. de C.V. (Manufacturing-Diversified)
El Puerto de Liverpool S.A. de C.V. (Retail-Department Stores)
Formento Economico Mexicano, S.A. de C.V. (Beverages-Alcoholic) 3,567
Grupo Carso S.A. de C.V. (Manufacturing-Diversified) (a) 25,500
Grupo Cementos de Chihuahua S.A. de C.V. (Construction-Cement & Aggregates)
Grupo Financiero Banamex Accival, S.A. de C.V. (Financial-Diversified) (a) 41,000
Grupo Financiero Banorte S.A. de C.V. (Financial-Diversified) (a)
Grupo Industrial Maseca S.A. de C.V.-Class B (Foods)
Grupo Industrial Saltillo, S.A. de C.V. (Shipping)
Grupo Mexico S.A. (Metals Mining)
Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic)
Grupo Posadas S.A. (Lodging-Hotels) (a)
Grupo Posadas S.A. (Lodging-Hotels) (a)
Grupo Televisa S.A.-GDR (Entertainment) (a)
Industrias Penoles S.A. (Metals Mining)
Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products)
Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic) 3,000
Pepsi-Gemex S.A. (Beverages-Non-alcoholic)
Sanluis Corporacion S.A. de C.V. (Metal Fabricators) (a)
Telefonos de Mexico S.A.-ADR (Telephone) 1,818
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
Hoya Corp.(Manufacturing-Specialized) (a)
Mabuchi Motor Co., Ltd. (Electrical Equipment) 900
Matsushita Communication Industrial Co., Ltd. (Telephone) (a)
Matsushita-Kotobuki Electronics Industries Ltd. (Electronics-Component Distributors) 2,000
Murata Manufacturing Co., Ltd. (Electronics- Component Distributors)
Nichiei Co., Ltd. (Banks-Money Center) 600
Nippon Telegraph & Telephone Corp. (Telephone)
Nippon Television Network Corp. (Broadcasting-Television, Radio & Cable)
NTT Data Corp. (Computers-Software & Services) (a)
NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) (a)
Okuma Corp. (Machine Tools) (a)
Omron Corp. (Electronics- Component Distributors) (a)
SMC Corp. (Machinery-Diversified)
Sony Corp. (Electronics-Component Distributors)
Takeda Chemical Industries (Health Care-Drugs-Generic & Other) 2,000
TDK Corp. (Electrical Equipment)
Tokyo Electron Ltd. (Electronics-Semiconductors) (a)
LUXEMBOURG--0.04%
Quilmes Industrial S.A. (Beverages-Alcoholic) 13,300
MALAYSIA--0.05%
Berjaya Sports Toto Berhad (Investments) (d) 23,000
Malaysia International Shipping Berhad (Shipping) (d) 37,000
Telekom Malaysia Berhad (Telephone) 17,750
YTL Power International Berhad (Electric Companies) (d) 72,000
MEXICO--2.79%
Alpha S.A. de C.V. (Manufacturing-Diversified) 42,200
Apasco S.A. de C.V. (Construction-Cement & Aggregates) 54,100
ARA, S.A. de C.V. (Homebuilding) (a)
Carso Global Telecom (Telephone) (a) 96,300
Cemex S.A. de CV (Construction-Cement & Aggregates)
Cifra S.A. de C.V. (Retail-General Merchandise) (a)
Cintra S.A. (Airlines) (a) 35,600
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic)
Controladora Comercial Mexicana S.A. de C.V. (Retail-Department Stores) (a)(e) 176,500
Corporacion GEO S.A. de C.V. (Construction-Cement & Aggregates) (a) 26,000
Desc S.A. de C.V. (Manufacturing-Diversified) 8,070
El Puerto de Liverpool S.A. de C.V. (Retail-Department Stores) 4,661
Formento Economico Mexicano, S.A. de C.V. (Beverages-Alcoholic) 18,100
Grupo Carso S.A. de C.V. (Manufacturing-Diversified) (a) 83,800
Grupo Cementos de Chihuahua S.A. de C.V. (Construction-Cement & Aggregates) 128,500
Grupo Financiero Banamex Accival, S.A. de C.V. (Financial-Diversified) (a) 83,980
Grupo Financiero Banorte S.A. de C.V. (Financial-Diversified) (a) 132,000
Grupo Industrial Maseca S.A. de C.V.-Class B (Foods) 128,600
Grupo Industrial Saltillo, S.A. de C.V. (Shipping) 34,200
Grupo Mexico S.A. (Metals Mining) 23,100
Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic)
Grupo Posadas S.A. (Lodging-Hotels) (a) 68,100
Grupo Posadas S.A. (Lodging-Hotels) (a) 48,400
Grupo Televisa S.A.-GDR (Entertainment) (a) 11,400
Industrias Penoles S.A. (Metals Mining) 58,600
Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 64,700
Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic)
Pepsi-Gemex S.A. (Beverages-Non-alcoholic) 11,200
Sanluis Corporacion S.A. de C.V. (Metal Fabricators) (a) 39,700
Telefonos de Mexico S.A.-ADR (Telephone)
AIM V.I.
International Pro Forma
Equity Combining
Hoya Corp.(Manufacturing-Specialized) (a) 17,000 17,000
Mabuchi Motor Co., Ltd. (Electrical Equipment) 900
Matsushita Communication Industrial Co., Ltd. (Telephone) (a) 16,000 16,000
Matsushita-Kotobuki Electronics Industries Ltd. (Electronics-Component Distributors) 2,000
Murata Manufacturing Co., Ltd. (Electronics- Component Distributors) 20,000 20,000
Nichiei Co., Ltd. (Banks-Money Center) 600
Nippon Telegraph & Telephone Corp. (Telephone) 1,500 1,500
Nippon Television Network Corp. (Broadcasting-Television, Radio & Cable) 2,690 2,690
NTT Data Corp. (Computers-Software & Services) (a) 365 365
NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) (a) 10
Okuma Corp. (Machine Tools) (a) 205,000 205,000
Omron Corp. (Electronics- Component Distributors) (a) 57,000 57,000
SMC Corp. (Machinery-Diversified) 5,900 5,900
Sony Corp. (Electronics-Component Distributors) 16,800 16,800
Takeda Chemical Industries (Health Care-Drugs-Generic & Other) 53,000 55,000
TDK Corp. (Electrical Equipment) 17,000 17,000
Tokyo Electron Ltd. (Electronics-Semiconductors) (a) 55,000 55,000
LUXEMBOURG--0.04%
Quilmes Industrial S.A. (Beverages-Alcoholic) 13,300
MALAYSIA--0.05%
Berjaya Sports Toto Berhad (Investments) (d) 23,000
Malaysia International Shipping Berhad (Shipping) (d) 37,000
Telekom Malaysia Berhad (Telephone) 17,750
YTL Power International Berhad (Electric Companies) (d) 72,000
MEXICO--2.79%
Alpha S.A. de C.V. (Manufacturing-Diversified) 42,200
Apasco S.A. de C.V. (Construction-Cement & Aggregates) 63,931
ARA, S.A. de C.V. (Homebuilding) (a) 15,200
Carso Global Telecom (Telephone) (a) 96,300
Cemex S.A. de CV (Construction-Cement & Aggregates) 23,247
Cifra S.A. de C.V. (Retail-General Merchandise) (a) 55,795
Cintra S.A. (Airlines) (a) 35,600
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 39,800 39,800
Controladora Comercial Mexicana S.A. de C.V. (Retail-Department Stores) (a)(e) 176,500
Corporacion GEO S.A. de C.V. (Construction-Cement & Aggregates) (a) 40,200
Desc S.A. de C.V. (Manufacturing-Diversified) 8,070
El Puerto de Liverpool S.A. de C.V. (Retail-Department Stores) 4,661
Formento Economico Mexicano, S.A. de C.V. (Beverages-Alcoholic) 70,720 92,387
Grupo Carso S.A. de C.V. (Manufacturing-Diversified) (a) 109,300
Grupo Cementos de Chihuahua S.A. de C.V. (Construction-Cement & Aggregates) 128,500
Grupo Financiero Banamex Accival, S.A. de C.V. (Financial-Diversified) (a) 767,000 891,980
Grupo Financiero Banorte S.A. de C.V. (Financial-Diversified) (a) 132,000
Grupo Industrial Maseca S.A. de C.V.-Class B (Foods) 128,600
Grupo Industrial Saltillo, S.A. de C.V. (Shipping) 34,200
Grupo Mexico S.A. (Metals Mining) 23,100
Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic) 387,000 387,000
Grupo Posadas S.A. (Lodging-Hotels) (a) 68,100
Grupo Posadas S.A. (Lodging-Hotels) (a) 48,400
Grupo Televisa S.A.-GDR (Entertainment) (a) 33,700 45,100
Industrias Penoles S.A. (Metals Mining) 58,600
Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 64,700
Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic) 3,000
Pepsi-Gemex S.A. (Beverages-Non-alcoholic) 11,200
Sanluis Corporacion S.A. de C.V. (Metal Fabricators) (a) 39,700
Telefonos de Mexico S.A.-ADR (Telephone) 1,818
465
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
Tubos de Acero de Mexico S.A. (Oil & Gas-Drilling & Equipment) (a) 10,000
NETHERLANDS--5.87%
Benckiser N.V. (Household Products/Non-durables)
Core Laboratories N.V. (Oil & Gas-Drilling & Equipment) (a) 2,600
Equant N.V. (Computers-Networking) (a) 1,880
Getronics N.V. (Computers-Software & Services)
Heineken N.V. (Beverages-Alcoholic)
IHC Caland N.V. (Manufacturing-Specialized)
ING Groep N.V. (Insurance Brokers) 8,714
Koninklijke Ahold N.V. (Retail-Food Chains)
Koninklijke KPN N.V. (Telecommunications-Long Distance)
Koninklijke Numico N.V. (Foods)
Laurus N.V. (Retail-General Merchandise)
Randstad Holdings N.V. (Services-Commercial & Consumer)
TNT Post Group N.V. (Air Freight) 27,330
Vendex N.V. (Retail-General Merchandise)
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing)
Wolters Kluwer N.V. (Specialty Printing) (a)
NEW ZEALAND--0.05%
Telecom Corp. of New Zealand Ltd. (Telephone)
Telecom Corporation of New Zealand Ltd. (Telephone)
NORWAY--0.23%
Merkantildata A.S.A (Services-Commercial & Consumer)
Petroleum Geo-Services ASA (Energy Equipment & Services) (a) 24,585
PAKISTAN--0.00%
Engro Chemicals Pakistan Ltd. (Chemicals) 1,470
Pakistan State Oil Co. Ltd. (Oil-International Integrated) 880
PERU--0.07%
Credicorp Limited (Financial-Diversified) (a)
Credicorp Ltd. (Financial-Diversified) 6,180
Telefonica del Peru S.A.-ADR (Telecommunications-Long Distance) 5,200
Cerveceria Backus & Johnston S.A. (Beverages-Alcoholic)
PHILIPPINES--0.39%
Manila Electric Co. (Electric Power)
Philippine Long Distance Telephone Co. (Telephone)
Philippine Long Distance Telephone Co.-ADR (Telephone)
POLAND--0.04%
BIG Bank Gdanski S.A. - Reg S GDR (Banks - Regional) (c) 3,000
Kredyt Bank PBI S.A. (Banks-Regional) (a)(c) 1,634
Telekomunikacja Polsha S.A. (Telephone) 11,540
Zaklady Piwowarskie w Zywcu S.A. (Beverages-Alcoholic) 103
PORTUGAL--2.20%
Banco Comercial Portugues, S.A. (Banks-Major Regional)
BPI-SGPS S.A. (Banks-Regional) 7,742
Brisa Auto-Estradas de Portugal, S.A. (Engineering & Construction) 1,600
Electricidade de Portugal, S.A.-ADR (Electric Companies)
Electricidade de Portugal, S.A. (Water Utilities) 2,300
Portugal Telecom S.A. (Telephone)
Telecel-Comunicacaoes Pessoais, S.A. (Telecommunications-Cellular/Wireless) 2,871
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
Tubos de Acero de Mexico S.A. (Oil & Gas-Drilling & Equipment) (a)
NETHERLANDS--5.87%
Benckiser N.V. (Household Products/Non-durables) 1,261
Core Laboratories N.V. (Oil & Gas-Drilling & Equipment) (a)
Equant N.V. (Computers-Networking) (a)
Getronics N.V. (Computers-Software & Services)
Heineken N.V. (Beverages-Alcoholic)
IHC Caland N.V. (Manufacturing-Specialized)
ING Groep N.V. (Insurance Brokers) 1,499
Koninklijke Ahold N.V. (Retail-Food Chains) 2,123
Koninklijke KPN N.V. (Telecommunications-Long Distance) 1,290
Koninklijke Numico N.V. (Foods)
Laurus N.V. (Retail-General Merchandise)
Randstad Holdings N.V. (Services-Commercial & Consumer)
TNT Post Group N.V. (Air Freight) 2,708
Vendex N.V. (Retail-General Merchandise)
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing)
Wolters Kluwer N.V. (Specialty Printing) (a) 450
NEW ZEALAND--0.05%
Telecom Corp. of New Zealand Ltd. (Telephone) 16,100
Telecom Corporation of New Zealand Ltd. (Telephone) 2,280 32,400
NORWAY--0.23%
Merkantildata A.S.A (Services-Commercial & Consumer)
Petroleum Geo-Services ASA (Energy Equipment & Services) (a)
PAKISTAN--0.00%
Engro Chemicals Pakistan Ltd. (Chemicals)
Pakistan State Oil Co. Ltd. (Oil-International Integrated)
PERU--0.07%
Credicorp Limited (Financial-Diversified) (a) 9,640
Credicorp Ltd. (Financial-Diversified)
Telefonica del Peru S.A.-ADR (Telecommunications-Long Distance)
Cerveceria Backus & Johnston S.A. (Beverages-Alcoholic) 6,244
PHILIPPINES--0.39%
Manila Electric Co. (Electric Power) 78,670
Philippine Long Distance Telephone Co. (Telephone) 10,590
Philippine Long Distance Telephone Co.-ADR (Telephone)
POLAND--0.04%
BIG Bank Gdanski S.A. - Reg S GDR (Banks - Regional) (c)
Kredyt Bank PBI S.A. (Banks-Regional) (a)(c)
Telekomunikacja Polsha S.A. (Telephone)
Zaklady Piwowarskie w Zywcu S.A. (Beverages-Alcoholic)
PORTUGAL--2.20%
Banco Comercial Portugues, S.A. (Banks-Major Regional)
BPI-SGPS S.A. (Banks-Regional) 2,040
Brisa Auto-Estradas de Portugal, S.A. (Engineering & Construction)
Electricidade de Portugal, S.A.-ADR (Electric Companies)
Electricidade de Portugal, S.A. (Water Utilities)
Portugal Telecom S.A. (Telephone)
Telecel-Comunicacaoes Pessoais, S.A. (Telecommunications-Cellular/Wireless) 482
AIM V.I.
International Pro Forma
Equity Combining
Tubos de Acero de Mexico S.A. (Oil & Gas-Drilling & Equipment) (a) 10,000
NETHERLANDS--5.87%
Benckiser N.V. (Household Products/Non-durables) 1,261
Core Laboratories N.V. (Oil & Gas-Drilling & Equipment) (a) 2,600
Equant N.V. (Computers-Networking) (a) 1,880
Getronics N.V. (Computers-Software & Services) 42,500 42,500
Heineken N.V. (Beverages-Alcoholic) 46,800 46,800
IHC Caland N.V. (Manufacturing-Specialized) 11,100 11,100
ING Groep N.V. (Insurance Brokers) 10,213
Koninklijke Ahold N.V. (Retail-Food Chains) 51,800 53,923
Koninklijke KPN N.V. (Telecommunications-Long Distance) 1,290
Koninklijke Numico N.V. (Foods) 26,000 26,000
Laurus N.V. (Retail-General Merchandise) 23,380 23,380
Randstad Holdings N.V. (Services-Commercial & Consumer) 13,000 13,000
TNT Post Group N.V. (Air Freight) 30,038
Vendex N.V. (Retail-General Merchandise) 33,400 33,400
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing) 90,100 90,100
Wolters Kluwer N.V. (Specialty Printing) (a) 12,350 12,800
NEW ZEALAND--0.05%
Telecom Corp. of New Zealand Ltd. (Telephone) 16,100
Telecom Corporation of New Zealand Ltd. (Telephone) 34,680
NORWAY--0.23%
Merkantildata A.S.A (Services-Commercial & Consumer) 44,000 44,000
Petroleum Geo-Services ASA (Energy Equipment & Services) (a) 24,585
PAKISTAN--0.00%
Engro Chemicals Pakistan Ltd. (Chemicals) 1,470
Pakistan State Oil Co. Ltd. (Oil-International Integrated) 880
PERU--0.07%
Credicorp Limited (Financial-Diversified) (a) 9,640
Credicorp Ltd. (Financial-Diversified) 6,180
Telefonica del Peru S.A.-ADR (Telecommunications-Long Distance) 5,200
Cerveceria Backus & Johnston S.A. (Beverages-Alcoholic) 6,244
PHILIPPINES--0.39%
Manila Electric Co. (Electric Power) 78,670
Philippine Long Distance Telephone Co. (Telephone) 16,660 27,250
Philippine Long Distance Telephone Co.-ADR (Telephone) 11,600 11,600
POLAND--0.04%
BIG Bank Gdanski S.A. - Reg S GDR (Banks - Regional) (c) 3,000
Kredyt Bank PBI S.A. (Banks-Regional) (a)(c) 1,634
Telekomunikacja Polsha S.A. (Telephone) 11,540
Zaklady Piwowarskie w Zywcu S.A. (Beverages-Alcoholic) 103
PORTUGAL--2.20%
Banco Comercial Portugues, S.A. (Banks-Major Regional) 66,200 66,200
BPI-SGPS S.A. (Banks-Regional) 9,782
Brisa Auto-Estradas de Portugal, S.A. (Engineering & Construction) 1,600
Electricidade de Portugal, S.A.-ADR (Electric Companies) 13,800 13,800
Electricidade de Portugal, S.A. (Water Utilities) 25,000 27,300
Portugal Telecom S.A. (Telephone) 35,900 35,900
Telecel-Comunicacaoes Pessoais, S.A. (Telecommunications-Cellular/Wireless) 5,000 8,353
466
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
RUSSIA--0.01%
Surgutneftegaz ADR (Oil-International Integrated) 13,910
SINGAPORE--0.57%
DBS Land Ltd. (Land Development)
Development Bank of Singapore Ltd. (Banks-Major Regional)
Keppel Corp. Ltd. (Engineering & Construction)(a)
Oversea-Chinese Banking Corp. Ltd.(Banks-Major Regional)
Singapore Press Holdings Ltd. (Publishing-Newspapers)
Singapore Technologies Engineering Ltd. (Engineering & Construction)
United Overseas Bank Ltd. (Banks-Major Regional)
SOUTH AFRICA--0.12%
Anglo American Platinum Corp. Ltd. (Metals Mining) 4,500
Liberty Life Association of Africa Ltd. (Insurance Brokers) 5,960
Rembrandt Group Ltd. (Investment Management) 10,917
Sanlam Ltd. (Insurance-Life/Health) 62,420
South African Breweries Ltd. (Beverages-Alcoholic) 6,111
Truworths International Ltd. (Textiles-Apparel) 3,872
SOUTH KOREA--0.57%
Korea Electric Power Corp. (Electric Companies)
Korea Electric Power Corp.-ADR (Electric Companies) 2,000
LG Information & Communication (Communications Equipment)
ML-Kospi200 Call Warrant
Pohang Iron & Steel Co. Ltd. ADR (Iron & Steel) 7,800 4,178 3,000
Samsung Display Devices Co. (Electronics-Component Distributors)
Samsung Electronics (Electronics-Component Distributors)
Samsung Fire & Marine Insurance (Insurance-Multi-line Property)
Samsung Fire & Marine Insurance (Electronics Component Distributors)
Rights, expire 01/13/99 (cost $0)
SPAIN--2.51%
Corp. Financiera Reunida, S.A. (Investment Management)(a)
Endesa S.A. (Electric Companies)
Endesa S.A.-ADR (Electric Companies) 6,700
Iberdrola S.A. (Electric Companies) 4,000
Repsol S.A. (Oil & Gas-Refining & Marketing) 1,500
Tabacalera S.A. (Tobacco)(a) 16,900
Telefonica de Espana (Telephone)
Telefonica de Espana Rights, expiring 01/30/99 (Telephone)
Union Electrica Fenosa, S.A. (Electric Companies) 3,000
SWEDEN--1.54%
Assa Abloy A.B.-Class B (Metal Fabricators) 6,920
ForeningsSparbanken A.B.-Class A (Banks-Major Regional) 15,124
Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel)
Nordbanken Holding A.B. (Banks-Major Regional) 60,841
Skandia Forsakrings A.B. (Insurance Brokers)(a) 24,719
Telefonaktiebolaget LM Ericsson-Class B (Communications Equipment) 31,060
WM-Data A.B. (Computers-Software & Services)
SWITZERLAND--4.70%
Adecco S.A. (Services-Commercial & Consumer)(a)
Julius Baer Holding A.G. (Banks-Major Regional)(a)
Nestle S.A. (Foods) 259
Novartis A.G. (Health Care-Diversified) 434
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
RUSSIA--0.01%
Surgutneftegaz ADR (Oil-International Integrated) 13,910
SINGAPORE--0.57%
DBS Land Ltd. (Land Development) 200,000
Development Bank of Singapore Ltd. (Banks-Major Regional) 29,800
Keppel Corp. Ltd. (Engineering & Construction)(a)
Oversea-Chinese Banking Corp. Ltd.(Banks Major Regional) 40,000
Singapore Press Holdings Ltd. (Publishing-Newspapers) 20,562
Singapore Technologies Engineering Ltd. (Engineering & Construction) 230,000
United Overseas Bank Ltd. (Banks-Major Regional) 5,100
SOUTH AFRICA--0.12%
Anglo American Platinum Corp. Ltd. (Metals Mining)
Liberty Life Association of Africa Ltd. (Insurance Brokers)
Rembrandt Group Ltd. (Investment Management)
Sanlam Ltd. (Insurance-Life/Health)
South African Breweries Ltd. (Beverages-Alcoholic)
Truworths International Ltd. (Textiles-Apparel)
SOUTH KOREA--0.57%
Korea Electric Power Corp. (Electric Companies) 5,000
Korea Electric Power Corp.-ADR (Electric Companies)
LG Information & Communication (Communications Equipment) 7,130
ML-Kospi200 Call Warrant 39,153
Pohang Iron & Steel Co. Ltd. ADR (Iron & Steel)
Samsung Display Devices Co. (Electronics-Component Distributors) 5,000
Samsung Electronics (Electronics-Component Distributors) 4,000
Samsung Fire & Marine Insurance (Insurance-Multi-line Property) 1,332
Samsung Fire & Marine Insurance (Electronics Component Distributors)
Rights, expire 01/13/99 (cost $0) 305
SPAIN--2.51%
Corp. Financiera Reunida, S.A. (Investment Management)(a)
Endesa S.A. (Electric Companies)
Endesa S.A.-ADR (Electric Companies)
Iberdrola S.A. (Electric Companies)
Repsol S.A. (Oil & Gas-Refining & Marketing)
Tabacalera S.A. (Tobacco)(a) 2,071
Telefonica de Espana (Telephone) 1,144
Telefonica de Espana Rights, expiring 01/30/99 (Telephone) 1,144
Union Electrica Fenosa, S.A. (Electric Companies)
SWEDEN--1.54%
Assa Abloy A.B.-Class B (Metal Fabricators)
ForeningsSparbanken A.B.-Class A (Banks-Major Regional)
Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel)
Nordbanken Holding A.B. (Banks-Major Regional) 10,840
Skandia Forsakrings A.B. (Insurance Brokers)(a) 3,679
Telefonaktiebolaget LM Ericsson-Class B (Communications Equipment)
WM-Data A.B. (Computers-Software & Services)
SWITZERLAND--4.70%
Adecco S.A. (Services-Commercial & Consumer)(a) 180
Julius Baer Holding A.G. (Banks-Major Regional)(a)
Nestle S.A. (Foods) 48
Novartis A.G. (Health Care-Diversified) 46
AIM V.I.
International Pro Forma
Equity Combining
RUSSIA--0.01%
Surgutneftegaz ADR (Oil-International Integrated) 13,910
SINGAPORE--0.57%
DBS Land Ltd. (Land Development) 200,000
Development Bank of Singapore Ltd. (Banks-Major Regional) 29,800
Keppel Corp. Ltd. (Engineering & Construction)(a) 217,000 217,000
Oversea-Chinese Banking Corp. Ltd.(Banks-Major Regional) 40,000
Singapore Press Holdings Ltd. (Publishing-Newspapers) 20,562
Singapore Technologies Engineering Ltd. (Engineering & Construction) 230,000
United Overseas Bank Ltd. (Banks-Major Regional) 5,100
SOUTH AFRICA--0.12%
Anglo American Platinum Corp. Ltd. (Metals Mining) 4,500
Liberty Life Association of Africa Ltd. (Insurance Brokers) 5,960
Rembrandt Group Ltd. (Investment Management) 10,917
Sanlam Ltd. (Insurance-Life/Health) 62,420
South African Breweries Ltd. (Beverages-Alcoholic) 6,111
Truworths International Ltd. (Textiles-Apparel) 3,872
SOUTH KOREA--0.57%
Korea Electric Power Corp. (Electric Companies) 5,000
Korea Electric Power Corp.-ADR (Electric Companies) 2,000
LG Information & Communication (Communications Equipment) 7,130
ML-Kospi200 Call Warrant 39,153
Pohang Iron & Steel Co. Ltd. ADR (Iron & Steel) 14,978
Samsung Display Devices Co. (Electronics-Component Distributors) 5,000
Samsung Electronics (Electronics-Component Distributors) 4,000
Samsung Fire & Marine Insurance (Insurance-Multi-line Property) 1,332
Samsung Fire & Marine Insurance (Electronics Component Distributors)
Rights, expire 01/13/99 (cost $0) 305
SPAIN--2.51%
Corp. Financiera Reunida, S.A. (Investment Management)(a) 49,400 49,400
Endesa S.A. (Electric Companies) 49,200 49,200
Endesa S.A.-ADR (Electric Companies) 6,700
Iberdrola S.A. (Electric Companies) 148,000 152,000
Repsol S.A. (Oil & Gas-Refining & Marketing) 1,500
Tabacalera S.A. (Tobacco)(a) 18,971
Telefonica de Espana (Telephone) 50,900 52,044
Telefonica de Espana Rights, expiring 01/30/99 (Telephone) 50,900 52,044
Union Electrica Fenosa, S.A. (Electric Companies) 3,000
SWEDEN--1.54%
Assa Abloy A.B.-Class B (Metal Fabricators) 6,920
ForeningsSparbanken A.B.-Class A (Banks-Major Regional) 15,124
Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel) 21,494 21,494
Nordbanken Holding A.B. (Banks-Major Regional) 71,681
Skandia Forsakrings A.B. (Insurance Brokers)(a) 28,398
Telefonaktiebolaget LM Ericsson-Class B (Communications Equipment) 31,060
WM-Data A.B. (Computers-Software & Services) 20,500 20,500
SWITZERLAND--4.70%
Adecco S.A. (Services-Commercial & Consumer)(a) 2,600 2,780
Julius Baer Holding A.G. (Banks-Major Regional)(a) 230 230
Nestle S.A. (Foods) 800 1,107
Novartis A.G. (Health Care-Diversified) 1,380 1,860
467
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
Roche Holding A.G. (Conglomerates) 50
Swisscom A. G. (Telephone) (a) 1,416 236
UBS A.G. (Banks-Major Regional) 1,803
Zurich Allied A.G. (Insurance-Multi-Line) (a) 806
THAILAND--0.07%
Electricity Generating Public Co. Ltd. (Electric Companies) (a)
PTT Exploration and Production Public Co. Ltd.
(Oil & Gas-Exploration & Production) (a)
TAIWAN--0.09%
GT Taiwan Fund (Country Funds) (a)(g) 27,191
TURKEY--0.05%
Haci Omer Sabanci Holding A.S. (Investment Management) 2,713,497
Turkiye Is Bankasi (Isbank) (Banks-Money Center) 2,109,100
Yapi ve Kredi Bankasi A.S. (Banks-Money Center)| 4,113,906
U.S.A.--2.32%
AES Corp. (Power Producers-Independent) (a) 2,785
AirTouch Communications, Inc. (Telecommunications-Cellualar & Wireless) (a) 700
Aluminum Company of America (Aluminum) 1,100
Amoco Corp. (Oil-International Integrated) 2,600
AMR Corp. (Airlines) (a) 500
Banco Latinoamericano de Exportaciones, S.A. (Banking)
Bell Atlantic Corp. (Telephone) 2,000
Centex Construction Products, Inc. (Construction-Cement & Aggregates) 3,100
Centex Corp. (Homebuilding) 2,800 1,600
Chevron Corp. (Oil-International Integrated) 1,400
Chiquita Brands International (Foods) 1,600
Cisco Systems, Inc. (Computers-Networking) (a) 1,394
CMS Energy Corp. (Electric Companies) 1,300
Coastal Corp. (The) (Natural Gas) 5,400
COMAIR Holdings Inc. (Airlines) 3,200
Crompton & Knowles Corp. (Chemicals-Specialty) 6,200
Dole Food Co., Inc. (Foods) 1,200
Dominion Resources, Inc. (Electric Companies) 3,100
Du Pont (E.I.) de Nemours & Co. (Chemicals) 1,200
El Paso Energy Corp. (Natural Gas) 3,700 1,700
Enron Corp. (Natural Gas) 2,300 2,332
FPL Group, Inc. (Electric Companies) 1,200
Freeport-McMoRan Copper & Gold, Inc. (Metals Mining) 7,600
General Dynamics Corp. (Aerospace/Defense) 500
GPU, Inc. (Electric Companies) 1,300
Gulfstream Aerospace Corp. (Aerospace/Defense) (a) 1,342
Harken Energy Corp. (Oil & Gas-Exploration & Production) (a)
Houston Industries, Inc. (Electric Companies) 4,600
Ingersoll-Rand Co. (Machinery-Diversified) 1,600
Interstate Energy Corp. (Electric Companies) 2,246
J. Ray McDermott, S.A. (Oil & Gas-Drilling & Equipment) (a) 2,000
Kaufman and Broad Home Corporation (Home Building) 4,000
L-3 Communications Holdings, Inc. (Communications Equipment) (a) 100
Lafarge Corp. (Construciton-Cement & Aggregates) 1,800
Martin Marietta Materials, Inc. (Construction-Cement & Aggregates) 4,400 1,619
MCI WorldCom, Inc. (Telecommunications-Long Distance) (a) 2,000
Merrill Lynch International & Co. KOSPI 200 - Wts.
(Investment-Banking/Brockerage), expiring 09/09/99 49,997
Mobil Corp. (Oil-International Integrated) 5,600
Montana Power Co. (Electric Companies) 3,200 1,600
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
Roche Holding A.G. (Conglomerates) 11
Swisscom A. G. (Telephone) (a) 209
UBS A.G. (Banks-Major Regional) 321
Zurich Allied A.G. (Insurance-Multi-Line) (a) 146
THAILAND--0.07%
Electricity Generating Public Co. Ltd. (Electric Companies) (a) 51,000
PTT Exploration and Production Public Co. Ltd.
(Oil & Gas-Exploration & Production) (a) 13,200
TAIWAN--0.09%
GT Taiwan Fund (Country Funds) (a)(g)
TURKEY--0.05%
Haci Omer Sabanci Holding A.S. (Investment Management)
Turkiye Is Bankasi (Isbank) (Banks-Money Center)
Yapi ve Kredi Bankasi A.S. (Banks-Money Center)|
U.S.A.--2.32%
AES Corp. (Power Producers-Independent) (a)
AirTouch Communications, Inc. (Telecommunications-Cellualar & Wireless) (a)
Aluminum Company of America (Aluminum)
Amoco Corp. (Oil-International Integrated)
AMR Corp. (Airlines) (a)
Banco Latinoamericano de Exportaciones, S.A. (Banking) 2,713
Bell Atlantic Corp. (Telephone)
Centex Construction Products, Inc. (Construction-Cement & Aggregates)
Centex Corp. (Homebuilding)
Chevron Corp. (Oil-International Integrated)
Chiquita Brands International (Foods)
Cisco Systems, Inc. (Computers-Networking) (a)
CMS Energy Corp. (Electric Companies)
Coastal Corp. (The) (Natural Gas)
COMAIR Holdings Inc. (Airlines)
Crompton & Knowles Corp. (Chemicals-Specialty)
Dole Food Co., Inc. (Foods)
Dominion Resources, Inc. (Electric Companies)
Du Pont (E.I.) de Nemours & Co. (Chemicals)
El Paso Energy Corp. (Natural Gas)
Enron Corp. (Natural Gas)
FPL Group, Inc. (Electric Companies)
Freeport-McMoRan Copper & Gold, Inc. (Metals Mining)
General Dynamics Corp. (Aerospace/Defense)
GPU, Inc. (Electric Companies)
Gulfstream Aerospace Corp. (Aerospace/Defense) (a)
Harken Energy Corp. (Oil & Gas-Exploration & Production) (a) 27,890
Houston Industries, Inc. (Electric Companies)
Ingersoll-Rand Co. (Machinery-Diversified)
Interstate Energy Corp. (Electric Companies)
J. Ray McDermott, S.A. (Oil & Gas-Drilling & Equipment) (a)
Kaufman and Broad Home Corporation (Home Building)
L-3 Communications Holdings, Inc. (Communications Equipment) (a)
Lafarge Corp. (Construciton-Cement & Aggregates)
Martin Marietta Materials, Inc. (Construction-Cement & Aggregates)
MCI WorldCom, Inc. (Telecommunications-Long Distance) (a)
Merrill Lynch International & Co. KOSPI 200 - Wts.
(Investment-Banking/Brockerage), expiring 09/09/99
Mobil Corp. (Oil-International Integrated)
Montana Power Co. (Electric Companies)
AIM V.I.
International Pro Forma
Equity Combining
Roche Holding A.G. (Conglomerates) 61
Swisscom A. G. (Telephone) (a) 1,861
UBS A.G. (Banks-Major Regional) 7,107 9,231
Zurich Allied A.G. (Insurance-Multi-Line) (a) 2,500 3,452
THAILAND--0.07%
Electricity Generating Public Co. Ltd. (Electric Companies) (a) 51,000
PTT Exploration and Production Public Co. Ltd.
(Oil & Gas-Exploration & Production) (a) 13,200
TAIWAN--0.09%
GT Taiwan Fund (Country Funds) (a)(g) 27,191
TURKEY--0.05%
Haci Omer Sabanci Holding A.S. (Investment Management) 2,713,497
Turkiye Is Bankasi (Isbank) (Banks-Money Center) 2,109,100
Yapi ve Kredi Bankasi A.S. (Banks-Money Center)| 4,113,906
U.S.A.--2.32%
AES Corp. (Power Producers-Independent) (a) 2,785
AirTouch Communications, Inc. (Telecommunications-Cellualar & Wireless) (a) 700
Aluminum Company of America (Aluminum) 1,100
Amoco Corp. (Oil-International Integrated) 2,600
AMR Corp. (Airlines) (a) 500
Banco Latinoamericano de Exportaciones, S.A. (Banking) 2,713
Bell Atlantic Corp. (Telephone) 2,000
Centex Construction Products, Inc. (Construction-Cement & Aggregates) 3,100
Centex Corp. (Homebuilding) 4,400
Chevron Corp. (Oil-International Integrated) 1,400
Chiquita Brands International (Foods) 1,600
Cisco Systems, Inc. (Computers-Networking) (a) 1,394
CMS Energy Corp. (Electric Companies) 1,300
Coastal Corp. (The) (Natural Gas) 5,400
COMAIR Holdings Inc. (Airlines) 3,200
Crompton & Knowles Corp. (Chemicals-Specialty) 6,200
Dole Food Co., Inc. (Foods) 1,200
Dominion Resources, Inc. (Electric Companies) 3,100
Du Pont (E.I.) de Nemours & Co. (Chemicals) 1,200
El Paso Energy Corp. (Natural Gas) 5,400
Enron Corp. (Natural Gas) 4,632
FPL Group, Inc. (Electric Companies) 1,200
Freeport-McMoRan Copper & Gold, Inc. (Metals Mining) 7,600
General Dynamics Corp. (Aerospace/Defense) 500
GPU, Inc. (Electric Companies) 1,300
Gulfstream Aerospace Corp. (Aerospace/Defense) (a) 1,342
Harken Energy Corp. (Oil & Gas-Exploration & Production) (a) 27,890
Houston Industries, Inc. (Electric Companies) 4,600
Ingersoll-Rand Co. (Machinery-Diversified) 1,600
Interstate Energy Corp. (Electric Companies) 2,246
J. Ray McDermott, S.A. (Oil & Gas-Drilling & Equipment) (a) 2,000
Kaufman and Broad Home Corporation (Home Building) 4,000
L-3 Communications Holdings, Inc. (Communications Equipment) (a) 100
Lafarge Corp. (Construciton-Cement & Aggregates) 1,800
Martin Marietta Materials, Inc. (Construction-Cement & Aggregates) 6,019
MCI WorldCom, Inc. (Telecommunications-Long Distance) (a) 2,000
Merrill Lynch International & Co. KOSPI 200 - Wts.
(Investment-Banking/Brockerage), expiring 09/09/99 49,997
Mobil Corp. (Oil-International Integrated) 5,600
Montana Power Co. (Electric Companies) 4,800
468
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
PacifiCorp (Electric Companies) 3,400
Pinnacle West Capital Corp. (Electric Companies) 1,646
PT Telekomunikasi Indonesia (Telephone) 12,000
Public Service Enterprise Group Inc. (Electric Companies) 1,500
Pulte Corp. (Homebuilding) 2,200
Questar Corp. (Natural Gas) 6,800
SBC Communications, Inc. (Telephone-Regional/Local) 3,000
Scheid Vineyards Inc.-Class A (Beverages-Alcoholic) 10,300
Solutia Inc. (Chemicals) 6,100
Southdown, Inc. (Construction-Cement & Aggregates) 3,103 700
Stillwater Mining Co. (Gold & Precious Metals Mining)(a) 4,400
Tekelec (Communications Equipment)(a) 3,000
Tele-Communications, Inc.-Class A (Broadcasting-Television, Radio & Cable)(a) 3,500
Tellabs, Inc. (Communications Equipment)(a) 552
Tesoro Petroleum Corp. (Oil & Gas-Refining & Marketing) 2,100
Texas Utilities Co. (Electric Companies) 1,800
Triton Energy Ltd. (Oil & Gas-Exploration & Production)(a) 5,700
Union Camp Corp. (Containers & Packaging-Paper) 1,100
United Technologies Corp. (Manufacturing-Diversified) 1,400
USEC Inc. (Manufacturing-Specialized)(a) 9,150 4,000
US Filter Corp. (Manufacturing-Specialized)(a) 5,300
USG Corp. (Building Materials) 3,650
Williams Companies, Inc. (The) (Natural Gas) 4,400
W.R. Grace & Co. (Chemicals-Specialty)(a) 4,000
United Kingdom--16.93%
Abbey National PLC (Savings & Loan Companies) 25,271
Airtours PLC (Services-Commercial & Consumer)
BG PLC (Oil & Gas-Exploration & Production) 20,000
Bodycote International PLC (Chemicals-Specialty)
British Aerospace PLC (Aerospace/Defense) 6,500
British Energy PLC (Electric Companies)
British Petroleum Co. PLC (Oil & Gas-Refining & Marketing) 27,504
British Steel PLC- ADR (Iron & Steel) 3,400
Cable & Wireless PLC (Telecommunications-Cellular\Wireless)
Cadbury Schweppes PLC (Foods) 33,430
CGU PLC (Insurance Brokers) 19,143
Compass Group PLC (Services-Commercial & Consumer)
Computacenter PLC (Computers & Peripherals(a) 54,374
Corporate Services Group PLC (Business & Public Services) 200,978
CRH PLC (Construction-Cement & Aggregates) 8,550 4,000
Diageo PLC (Beverages-Alcoholic) 25,461
EMAP PLC (Publishing)
EMI Group PLC (Leisure Time-Products)
Energis PLC (Telephone)(a) 9,600
General Electric Co. PLC (Manufacturing-Diversified) 12,740
GKN PLC (Manufacturing-Diversified)
Glaxo Wellcome PLC (Health Care-Drugs-Generic & Other) 17,131
Great Universal Stores PLC (Retail-General Merchandise)
Hanson PLC - ADR (Manufacturing - Diversified) 1,500
Hays PLC (Services-Commercial & Consumer)
JBA Holdings PLC (Computer Software/Services) 31,840
Kingfisher PLC (Retail-Department Stores)
S|Ladbroke Group PLC (Leisure Time-Products)
Lloyds TSB Group PLC (Banks-Major Regional) 33,043
Logica PLC (Computer Software/Services)
M & G Group PLC (Investment Management)
S|Misys PLC (Services-Commercial & Consumer) 63,701
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
PacifiCorp (Electric Companies)
Pinnacle West Capital Corp. (Electric Companies)
PT Telekomunikasi Indonesia (Telephone)
Public Service Enterprise Group Inc. (Electric Companies)
Pulte Corp. (Homebuilding)
Questar Corp. (Natural Gas)
SBC Communications, Inc. (Telephone-Regional/Local)
Scheid Vineyards Inc.-Class A (Beverages-Alcoholic)
Solutia Inc. (Chemicals)
Southdown, Inc. (Construction-Cement & Aggregates)
Stillwater Mining Co. (Gold & Precious Metals Mining)(a)
Tekelec (Communications Equipment)(a)
Tele-Communications, Inc.-Class A (Broadcasting-Television, Radio & Cable)(a)
Tellabs, Inc. (Communications Equipment)(a)
Tesoro Petroleum Corp. (Oil & Gas-Refining & Marketing)
Texas Utilities Co. (Electric Companies)
Triton Energy Ltd. (Oil & Gas-Exploration & Production)(a)
Union Camp Corp. (Containers & Packaging-Paper)
United Technologies Corp. (Manufacturing-Diversified)
USEC Inc. (Manufacturing-Specialized)(a)
US Filter Corp. (Manufacturing -Specialized)(a)
USG Corp. (Building Materials)
Williams Companies, Inc. (The) (Natural Gas)
W.R. Grace & Co. (Chemicals-Specialty)(a)
United Kingdom--16.93%
Abbey National PLC (Savings & Loan Companies) 5,400
Airtours PLC (Services-Commercial & Consumer)
BG PLC (Oil & Gas-Exploration & Production)
Bodycote International PLC (Chemicals-Specialty)
British Aerospace PLC (Aerospace/Defense)
British Energy PLC (Electric Companies)
British Petroleum Co. PLC (Oil & Gas-Refining & Marketing)
British Steel PLC- ADR (Iron & Steel)
Cable & Wireless PLC (Telecommunications-Cellular\Wireless)
Cadbury Schweppes PLC (Foods)
CGU PLC (Insurance Brokers) 4,400
Compass Group PLC (Services-Commercial & Consumer)
Computacenter PLC (Computers & Peripherals(a)
Corporate Services Group PLC (Business & Public Services)
CRH PLC (Construction-Cement & Aggregates)
Diageo PLC (Beverages-Alcoholic) 8,000
EMAP PLC (Publishing) 4,800
EMI Group PLC (Leisure Time-Products) 11,600
Energis PLC (Telephone)(a)
General Electric Co. PLC (Manufacturing-Diversified)
GKN PLC (Manufacturing-Diversified)
Glaxo Wellcome PLC (Health Care-Drugs-Generic & Other)
Great Universal Stores PLC (Retail-General Merchandise) 6,800
Hanson PLC - ADR (Manufacturing - Diversified)
Hays PLC (Services-Commercial & Consumer)
JBA Holdings PLC (Computer Software/Services)
Kingfisher PLC (Retail-Department Stores)
S|Ladbroke Group PLC (Leisure Time-Products)
Lloyds TSB Group PLC (Banks-Major Regional) 8,800
Logica PLC (Computer Software/Services)
M & G Group PLC (Investment Management) 2,660
S|Misys PLC (Services-Commercial & Consumer)
AIM V.I.
International Pro Forma
Equity Combining
PacifiCorp (Electric Companies) 3,400
Pinnacle West Capital Corp. (Electric Companies) 1,646
PT Telekomunikasi Indonesia (Telephone) 12,000
Public Service Enterprise Group Inc. (Electric Companies) 1,500
Pulte Corp. (Homebuilding) 2,200
Questar Corp. (Natural Gas) 6,800
SBC Communications, Inc. (Telephone-Regional/Local) 3,000
Scheid Vineyards Inc.-Class A (Beverages-Alcoholic) 10,300
Solutia Inc. (Chemicals) 6,100
Southdown, Inc. (Construction-Cement & Aggregates) 3,803
Stillwater Mining Co. (Gold & Precious Metals Mining)(a) 4,400
Tekelec (Communications Equipment)(a) 3,000
Tele-Communications, Inc.-Class A (Broadcasting-Television, Radio & Cable)(a) 3,500
Tellabs, Inc. (Communications Equipment)(a) 552
Tesoro Petroleum Corp. (Oil & Gas-Refining & Marketing) 2,100
Texas Utilities Co. (Electric Companies) 1,800
Triton Energy Ltd. (Oil & Gas-Exploration & Production)(a) 5,700
Union Camp Corp. (Containers & Packaging-Paper) 1,100
United Technologies Corp. (Manufacturing-Diversified) 1,400
USEC Inc. (Manufacturing-Specialized)(a) 13,150
US Filter Corp. (Manufacturing-Specialized)(a) 5,300
USG Corp. (Building Materials) 3,650
Williams Companies, Inc. (The) (Natural Gas) 4,400
W.R. Grace & Co. (Chemicals-Specialty)(a) 4,000
United Kingdom--16.93%
Abbey National PLC (Savings & Loan Companies) 30,671
Airtours PLC (Services-Commercial & Consumer) 135,450 135,450
BG PLC (Oil & Gas-Exploration & Production) 20,000
Bodycote International PLC (Chemicals-Specialty) 40,500 40,500
British Aerospace PLC (Aerospace/Defense) 226,200 232,700
British Energy PLC (Electric Companies) 219,000 219,000
British Petroleum Co. PLC (Oil & Gas-Refining & Marketing) 113,800 141,304
British Steel PLC- ADR (Iron & Steel) 3,400
Cable & Wireless PLC (Telecommunications-Cellular\Wireless) 107,810 107,810
Cadbury Schweppes PLC (Foods) 33,430
CGU PLC (Insurance Brokers) 23,543
Compass Group PLC (Services-Commercial & Consumer) 156,000 156,000
Computacenter PLC (Computers & Peripherals(a) 54,374
Corporate Services Group PLC (Business & Public Services) 200,978
CRH PLC (Construction-Cement & Aggregates) 12,550
Diageo PLC (Beverages-Alcoholic) 33,461
EMAP PLC (Publishing) 93,100 97,900
EMI Group PLC (Leisure Time-Products) 11,600
Energis PLC (Telephone)(a) 9,600
General Electric Co. PLC (Manufacturing-Diversified) 262,600 275,340
GKN PLC (Manufacturing-Diversified) 100,000 100,000
Glaxo Wellcome PLC (Health Care-Drugs-Generic & Other) 17,131
Great Universal Stores PLC (Retail-General Merchandise) 6,800
Hanson PLC - ADR (Manufacturing - Diversified) 1,500
Hays PLC (Services-Commercial & Consumer) 278,800 278,800
JBA Holdings PLC (Computer Software/Services) 31,840
Kingfisher PLC (Retail-Department Stores) 261,000 261,000
S|Ladbroke Group PLC (Leisure Time-Products) 234,000 234,000
Lloyds TSB Group PLC (Banks-Major Regional) 41,843
Logica PLC (Computer Software/Services) 92,500 92,500
M & G Group PLC (Investment Management) 2,660
S|Misys PLC (Services-Commercial & Consumer) 127,500 191,201
469
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
National Grid Group PLC (Electric Companies) 20,000
Nycomed Amersham PLC. (Healthcare-Drugs-Generic & Other) 69,723
Orange PLC (Telecommunications) (a) 83,068
Pearson PLC (Specialty Printing)
Provident Financial PLC (Consumer Finance)
Railtrack Group PLC (Shipping) 2,200
Rentokil Initial PLC (Services-Commercial & Consumer)
Reuters Group PLC. (Services-Commercial & Consumer)
Rio Tinto PLC (Metals Mining) 6,400
Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line)
Safra Republic Holdings, S.A. (Banks-Major Regional) 10,052
Schroders PLC (Banks-Regional)
Scottish Power PLC (Electric Companies) 4,450
Seton Scholl Healthcare PLC (Health Care-Diversified) (a)
SmithKline Beecham PLC (Healthcare-Diversified) 44,397
Somerfield PLC (Retail-Food Chains)
Stagecoach Holdings PLC (Shipping) 13,800
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration & Production) (a) 4,000
Stolt Comex Seaway, S.A. (Oil & Gas-Exploration & Production) (a) 1,750
Unilever PLC (Foods)
United Biscuits Holdings PLC. (Foods)
Vodafone Group PLC (Telecommunications-Cellular/Wireless) 47,060 4,700
WPP Group PLC (Services-Advertising/Marketing)
VENEZUELA-0.07%
C.A. La Electricidad de Caracas (Electric Companies)
C.A. La Electricidad de Caracas (Electric Companies)
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates)
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates)
FIXED INCOME SECURITIES--.62%
BRAZIL--0.00%
Cvrd. Nonconv. 12/99
Companhia Vale do Rio Doce - Non Convertible (Cost $0)
HONG KONG--0.05%
Cosco Tresury Co. Ltd. (Financial Diversified), Conv. Gtd. Bonds,
1.00%, 03/13/03
UNITED KINGDOM--0.27%
Airtours PLC, Conv. Sub. Notes, 5.75%, 01/05/04 (f)
U.S.A.--0.30%
Federal Home Loan Mortgage Corp., 4.50%, due 01/04/99
REPURCHASE AGREEMENTS--7.25% (g)
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collateralized by
$525,000 U.S. Treasury Bills, 8.75% due 05/15/17 (Market value of
collateral is $734,767 including accrued interest). (cost $716,000) 716,000
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collateralized by
$490,000 U.S. Treasury Notes, 5.625% due 11/30/99 (Market value of
collateral is $496,635 including accrued interest). (cost $482,000) 482,000
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collateralized by
$410,000 U.S. Treasury Notes, 6.25% due 04/30/01 (Market value of
collateral is $428,450, including accrued interest). (cost $416,000) 416,000
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
National Grid Group PLC (Electric Companies)
Nycomed Amersham PLC. (Healthcare-Drugs-Generic & Other) 17,200
Orange PLC (Telecommunications) (a) 7,200
Pearson PLC (Specialty Printing)
Provident Financial PLC (Consumer Finance)
Railtrack Group PLC (Shipping)
Rentokil Initial PLC (Services-Commercial & Consumer)
Reuters Group PLC. (Services-Commercial & Consumer) 6,000
Rio Tinto PLC (Metals Mining)
Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line) 10,800
Safra Republic Holdings, S.A. (Banks-Major Regional) 1,097
Schroders PLC (Banks-Regional) 4,100
Scottish Power PLC (Electric Companies)
Seton Scholl Healthcare PLC (Health Care-Diversified) (a)
SmithKline Beecham PLC (Healthcare-Diversified) 8,600
Somerfield PLC (Retail-Food Chains)
Stagecoach Holdings PLC (Shipping)
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration & Production) (a)
Stolt Comex Seaway, S.A. (Oil & Gas-Exploration & Production) (a)
Unilever PLC (Foods)
United Biscuits Holdings PLC. (Foods) 13,700
Vodafone Group PLC (Telecommunications-Cellular/Wireless) 7,904
WPP Group PLC (Services-Advertising/Marketing)
VENEZUELA-0.07%
C.A. La Electricidad de Caracas (Electric Companies) 7,153
C.A. La Electricidad de Caracas (Electric Companies) 14,348
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates) 45,516
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates) 30,088
FIXED INCOME SECURITIES--.62%
BRAZIL--0.00%
Cvrd. Nonconv. 12/99 200
Companhia Vale do Rio Doce - Non Convertible (Cost $0) 20,000
HONG KONG--0.05%
Cosco Tresury Co. Ltd. (Financial Diversified), Conv. Gtd. Bonds,
1.00%, 03/13/03
UNITED KINGDOM--0.27%
Airtours PLC, Conv. Sub. Notes, 5.75%, 01/05/04 (f)
U.S.A.--0.30%
Federal Home Loan Mortgage Corp., 4.50%, due 01/04/99 948,000
REPURCHASE AGREEMENTS--7.25% (g)
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collateralized by
$525,000 U.S. Treasury Bills, 8.75% due 05/15/17 (Market value of
collateral is $734,767 including accrued interest). (cost $716,000)
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collateralized by
$490,000 U.S. Treasury Notes, 5.625% due 11/30/99 (Market value of
collateral is $496,635 including accrued interest). (cost $482,000)
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collateralized by
$410,000 U.S. Treasury Notes, 6.25% due 04/30/01 (Market value of
collateral is $428,450, including accrued interest). (cost $416,000)
AIM V.I.
International Pro Forma
Equity Combining
National Grid Group PLC (Electric Companies) 20,000
Nycomed Amersham PLC. (Healthcare-Drugs-Generic & Other) 86,923
Orange PLC (Telecommunications) (a) 172,000 262,268
Pearson PLC (Specialty Printing) 106,300 106,300
Provident Financial PLC (Consumer Finance) 89,543 89,543
Railtrack Group PLC (Shipping) 78,644 80,844
Rentokil Initial PLC (Services-Commercial & Consumer) 375,000 375,000
Reuters Group PLC. (Services-Commercial & Consumer) 6,000
Rio Tinto PLC (Metals Mining) 6,400
Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line) 10,800
Safra Republic Holdings, S.A. (Banks-Major Regional) 11,149
Schroders PLC (Banks-Regional) 4,100
Scottish Power PLC (Electric Companies) 4,450
Seton Scholl Healthcare PLC (Health Care-Diversified) (a) 42,000 42,000
SmithKline Beecham PLC (Healthcare-Diversified) 52,997
Somerfield PLC (Retail-Food Chains) 145,000 145,000
Stagecoach Holdings PLC (Shipping) 145,000 158,800
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration & Production) (a) 4,000
Stolt Comex Seaway, S.A. (Oil & Gas-Exploration & Production) (a) 1,750
Unilever PLC (Foods) 208,000 208,000
United Biscuits Holdings PLC. (Foods) 13,700
Vodafone Group PLC (Telecommunications-Cellular/Wireless) 185,000 244,664
WPP Group PLC (Services-Advertising/Marketing) 240,000 240,000
VENEZUELA-0.07%
C.A. La Electricidad de Caracas (Electric Companies) 7,153
C.A. La Electricidad de Caracas (Electric Companies) 14,348
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates) 45,516
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates) 30,088
FIXED INCOME SECURITIES--.62%
BRAZIL--0.00%
Cvrd. Nonconv. 12/99 200
Companhia Vale do Rio Doce - Non Convertible (Cost $0) 20,000
HONG KONG--0.05%
Cosco Tresury Co. Ltd. (Financial Diversified), Conv. Gtd. Bonds,
1.00%, 03/13/03 246,000 246,000
UNITED KINGDOM--0.27%
Airtours PLC, Conv. Sub. Notes, 5.75%, 01/05/04 (f) 498,000 498,000
U.S.A.--0.30%
Federal Home Loan Mortgage Corp., 4.50%, due 01/04/99 948,000
REPURCHASE AGREEMENTS--7.25% (g)
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collateralized by
$525,000 U.S. Treasury Bills, 8.75% due 05/15/17 (Market value of
collateral is $734,767 including accrued interest). (cost $716,000) 716,000
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collateralized by
$490,000 U.S. Treasury Notes, 5.625% due 11/30/99 (Market value of
collateral is $496,635 including accrued interest). (cost $482,000) 482,000
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collateralized by
$410,000 U.S. Treasury Notes, 6.25% due 04/30/01 (Market value of
collateral is $428,450, including accrued interest). (cost $416,000) 416,000
470
Shares
GT Global GT Global
Variable Variable GT Global GT Global
Natural Emerging Variable Variable
Resources Markets Europe Infrastructure
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50% collaterized by
$1,915,000 U.S. Treasury Notes, 6.25% due 08/15/23 (Market value of
collateral is $2,183,697, including accrued interest). (cost $2,136,000) 2,136,000
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collaterized by
$1,480,000 U.S. Treasury Notes, 7.125% due 09/30/99 (Market value of
collateral is $2,533,650, including accrued interest). (cost $1,500,000)
Goldman, Sachs & Co., 4.40%, 01/04/99 (Cost $17,938,040)
GT Global GT Global GT Global
Variable Variable Variable
International Latin America New Pacific
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50% collaterized by
$1,915,000 U.S. Treasury Notes, 6.25% due 08/15/23 (Market value of
collateral is $2,183,697, including accrued interest). (cost $2,136,000)
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collaterized by
$1,480,000 U.S. Treasury Notes, 7.125% due 09/30/99 (Market value of
collateral is $2,533,650, including accrued interest). (cost $1,500,000) 1,500,000
Goldman, Sachs & Co., 4.40%, 01/04/99 (Cost $17,938,040)
AIM V.I.
International Pro Forma
Equity Combining
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50% collaterized by
$1,915,000 U.S. Treasury Notes, 6.25% due 08/15/23 (Market value of
collateral is $2,183,697, including accrued interest). (cost $2,136,000) 2,136,000
Dated December 31, 1998, with State Street Bank & Trust Co., due
January 4, 1999, for an effective yield of 4.50%, collaterized by
$1,480,000 U.S. Treasury Notes, 7.125% due 09/30/99 (Market value of
collateral is $2,533,650, including accrued interest). (cost $1,500,000) 1,500,000
Goldman, Sachs & Co., 4.40%, 01/04/99 (Cost $17,938,040) 17,938,040 17,938,040
471
AIM V.I. International Equity Fund
GT Global Variable International Fund
GT Global Variable Europe Fund
GT Global Variable Natural Resources Fund
GT Global Variable Infrastructure Fund
GT Global Variable New Pacific Fund
GT Global Variable Latin America Fund
GT Global Variable Emerging Markets Fund
Pro Forma Combining Schedule of Investments
December 31, 1998
(Unaudited)
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS--91.61%
ARGENTINA--1.21%
---------- ----------
Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 37,682
---------- ----------
Banco Rio de La Plata S.A. (Banks-Major Regional)
---------- ----------
Bansud S.A. (Banks-Regional) (a)
---------- ----------
IRSA Inversiones y Representaciones S.A. (Land Development)
---------- ----------
Nortel Inversora S.A. (Telephone) 30,400
---------- ----------
Telefonica de Argentina S.A.-ADR (Telephone) 35,285
---------- ----------
YPF Sociedad Anonima-ADR (Oil-International Integrated) 69,844
---------- ----------
---------- ----------
AUSTRALIA--2.06%
---------- ----------
AMP Ltd. (Insurance-Life/Health) (a)
---------- ----------
Australia & New Zealand Banking Group Ltd. (Banks-Major Regional)
---------- ----------
Brambles Industries Ltd. (Air Freight)
---------- ----------
Broken Hill Proprietary Co. Ltd. (Conglomerates)
---------- ----------
Cable & Wireless Optus, Ltd. (Telephone) (a)
---------- ----------
EVN A.G. (Electric Companies)
---------- ----------
Foster's Brewing Group Ltd. (Beverages-Alcoholic)
---------- ----------
Futuris Corp. Ltd. (Automobile/Truck Parts & Tires)
---------- ----------
Lend Lease Corp. Ltd. (Engineering & Construction)
---------- ----------
National Australia Bank Ltd. (Banks-Foreign)
---------- ----------
News Corp. Ltd. (Entertainment)
---------- ----------
North Ltd. (Metals Mining)
---------- ----------
Primamedic Ltd. (Pharmaceuticals) (a)
---------- ----------
Rio Tinto Ltd. (Metals Mining)
---------- ----------
Santos Ltd. (Oil & Gas-Exploration & Production)
---------- ----------
TABCORP Holdings Ltd. (Leisure Time Products)
---------- ----------
Telstra Corporation Ltd. (Telephone)
---------- ----------
WMC Ltd. (Metals-Miscellaneous)
---------- ----------
Woolworths Ltd. (Retail-Specialty)
---------- ----------
---------- ----------
BELGIUM--2.60%
---------- ----------
Barco N.V. (Manufacturing-Diversified)
---------- ----------
Colruyt N.V. (Retail-Food Chains)
---------- ----------
Delhaize-Le Lion, S.A. (Retail-Food & Drug) (a)
---------- ----------
Mobistar S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Solvay S.A. (Chemicals-Diversified) 74,964
---------- ----------
UCB S.A. (Manufacturing-Diversified)
---------- ----------
---------- ----------
BRAZIL--2.21%
---------- ----------
Caemi Mineracao E Metalurgia S.A.-Pfd. (Iron & Steel)
---------- ----------
Centrais Eletricas de Santa Catarina S.A. (Electric Companies) 26,821
---------- ----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a)
---------- ----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a)
---------- ----------
Companhia Brasileira de Distribuicao Grupo Pao de Acucar-Pfd. (Retail-Food Chains) 55,800
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS--91.61%
ARGENTINA--1.21%
---------- ----------
Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional)
---------- ----------
Banco Rio de La Plata S.A. (Banks-Major Regional)
---------- ----------
Bansud S.A. (Banks-Regional) (a)
---------- ----------
IRSA Inversiones y Representaciones S.A. (Land Development)
---------- ----------
Nortel Inversora S.A. (Telephone)
---------- ----------
Telefonica de Argentina S.A.-ADR (Telephone)
---------- ----------
YPF Sociedad Anonima-ADR (Oil-International Integrated)
---------- ----------
---------- ----------
AUSTRALIA--2.06%
---------- ----------
AMP Ltd. (Insurance-Life/Health) (a)
---------- ----------
Australia & New Zealand Banking Group Ltd. (Banks-Major Regional)
---------- ----------
Brambles Industries Ltd. (Air Freight)
---------- ----------
Broken Hill Proprietary Co. Ltd. (Conglomerates)
---------- ----------
Cable & Wireless Optus, Ltd. (Telephone) (a)
---------- ----------
EVN A.G. (Electric Companies)
---------- ----------
Foster's Brewing Group Ltd. (Beverages-Alcoholic)
---------- ----------
Futuris Corp. Ltd. (Automobile/Truck Parts & Tires)
---------- ----------
Lend Lease Corp. Ltd. (Engineering & Construction)
---------- ----------
National Australia Bank Ltd. (Banks-Foreign)
---------- ----------
News Corp. Ltd. (Entertainment)
---------- ----------
North Ltd. (Metals Mining)
---------- ----------
Primamedic Ltd. (Pharmaceuticals) (a) 78,845
---------- ----------
Rio Tinto Ltd. (Metals Mining)
---------- ----------
Santos Ltd. (Oil & Gas-Exploration & Production)
---------- ----------
TABCORP Holdings Ltd. (Leisure Time Products)
---------- ----------
Telstra Corporation Ltd. (Telephone)
---------- ----------
WMC Ltd. (Metals-Miscellaneous)
---------- ----------
Woolworths Ltd. (Retail-Specialty) 56,641
---------- ----------
---------- ----------
BELGIUM--2.60%
---------- ----------
Barco N.V. (Manufacturing-Diversified)
---------- ----------
Colruyt N.V. (Retail-Food Chains)
---------- ----------
Delhaize-Le Lion, S.A. (Retail-Food & Drug) (a)
---------- ----------
Mobistar S.A. (Telecommunications-Cellular/Wireless) (a) 421,221
---------- ----------
Solvay S.A. (Chemicals-Diversified)
---------- ----------
UCB S.A. (Manufacturing-Diversified)
---------- ----------
---------- ----------
BRAZIL--2.21%
---------- ----------
Caemi Mineracao E Metalurgia S.A.-Pfd. (Iron & Steel)
---------- ----------
Centrais Eletricas de Santa Catarina S.A. (Electric Companies)
---------- ----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a)
---------- ----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a)
---------- ----------
Companhia Brasileira de Distribuicao Grupo Pao de Acucar-Pfd. (Retail-Food Chains)
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS--91.61%
ARGENTINA--1.21%
---------- ----------
Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 203,447
---------- ----------
Banco Rio de La Plata S.A. (Banks-Major Regional) 196,300
---------- ----------
Bansud S.A. (Banks-Regional) (a) 97,476
---------- ----------
IRSA Inversiones y Representaciones S.A. (Land Development) 113,713
---------- ----------
Nortel Inversora S.A. (Telephone) 310,400
---------- ----------
Telefonica de Argentina S.A.-ADR (Telephone) 120,131
---------- ----------
YPF Sociedad Anonima-ADR (Oil-International Integrated)
---------- ----------
---------- ----------
AUSTRALIA--2.06%
---------- ----------
AMP Ltd. (Insurance-Life/Health) (a)
---------- ----------
Australia & New Zealand Banking Group Ltd. (Banks-Major Regional) 76,511
---------- ----------
Brambles Industries Ltd. (Air Freight)
---------- ----------
Broken Hill Proprietary Co. Ltd. (Conglomerates)
---------- ----------
Cable & Wireless Optus, Ltd. (Telephone) (a)
---------- ----------
EVN A.G. (Electric Companies) 59,540
---------- ----------
Foster's Brewing Group Ltd. (Beverages-Alcoholic) 80,992
---------- ----------
Futuris Corp. Ltd. (Automobile/Truck Parts & Tires)
---------- ----------
Lend Lease Corp. Ltd. (Engineering & Construction)
---------- ----------
National Australia Bank Ltd. (Banks-Foreign)
---------- ----------
News Corp. Ltd. (Entertainment)
---------- ----------
North Ltd. (Metals Mining)
---------- ----------
Primamedic Ltd. (Pharmaceuticals) (a)
---------- ----------
Rio Tinto Ltd. (Metals Mining)
---------- ----------
Santos Ltd. (Oil & Gas-Exploration & Production)
---------- ----------
TABCORP Holdings Ltd. (Leisure Time Products)
---------- ----------
Telstra Corporation Ltd. (Telephone)
---------- ----------
WMC Ltd. (Metals-Miscellaneous) 78,585
---------- ----------
Woolworths Ltd. (Retail-Specialty)
---------- ----------
---------- ----------
BELGIUM--2.60%
---------- ----------
Barco N.V. (Manufacturing-Diversified)
---------- ----------
Colruyt N.V. (Retail-Food Chains)
---------- ----------
Delhaize-Le Lion, S.A. (Retail-Food & Drug) (a)
---------- ----------
Mobistar S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Solvay S.A. (Chemicals-Diversified)
---------- ----------
UCB S.A. (Manufacturing-Diversified)
---------- ----------
---------- ----------
BRAZIL--2.21%
---------- ----------
Caemi Mineracao E Metalurgia S.A.-Pfd. (Iron & Steel) 27,502
---------- ----------
Centrais Eletricas de Santa Catarina S.A. (Electric Companies)
---------- ----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a) 11,041
---------- ----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a) 12,613
---------- ----------
Companhia Brasileira de Distribuicao Grupo Pao de Acucar-Pfd. (Retail-Food Chains)
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS--91.61%
ARGENTINA--1.21%
---------- ----------
Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional)
---------- ----------
Banco Rio de La Plata S.A. (Banks-Major Regional)
---------- ----------
Bansud S.A. (Banks-Regional) (a)
---------- ----------
IRSA Inversiones y Representaciones S.A. (Land Development)
---------- ----------
Nortel Inversora S.A. (Telephone)
---------- ----------
Telefonica de Argentina S.A.-ADR (Telephone) 818,569
---------- ----------
YPF Sociedad Anonima-ADR (Oil-International Integrated) 1,841,081
---------- ----------
---------- ----------
AUSTRALIA--2.06%
---------- ----------
AMP Ltd. (Insurance-Life/Health) (a) 358,258 1,529,244
---------- ----------
Australia & New Zealand Banking Group Ltd. (Banks-Major Regional) 372,744
---------- ----------
Brambles Industries Ltd. (Air Freight) 384,555
---------- ----------
Broken Hill Proprietary Co. Ltd. (Conglomerates) 167,791
---------- ----------
Cable & Wireless Optus, Ltd. (Telephone) (a) 68,886 562,851
---------- ----------
EVN A.G. (Electric Companies) 317,186
---------- ----------
Foster's Brewing Group Ltd. (Beverages-Alcoholic)
---------- ----------
Futuris Corp. Ltd. (Automobile/Truck Parts & Tires) 280,189
---------- ----------
Lend Lease Corp. Ltd. (Engineering & Construction) 555,809
---------- ----------
National Australia Bank Ltd. (Banks-Foreign) 322,855
---------- ----------
News Corp. Ltd. (Entertainment) 106,681
---------- ----------
North Ltd. (Metals Mining) 136,287
---------- ----------
Primamedic Ltd. (Pharmaceuticals) (a)
---------- ----------
Rio Tinto Ltd. (Metals Mining) 86,893
---------- ----------
Santos Ltd. (Oil & Gas-Exploration & Production) 217,979
---------- ----------
TABCORP Holdings Ltd. (Leisure Time Products) 494,749
---------- ----------
Telstra Corporation Ltd. (Telephone) 109,354
---------- ----------
WMC Ltd. (Metals-Miscellaneous) 79,265
---------- ----------
Woolworths Ltd. (Retail-Specialty)
---------- ----------
---------- ----------
BELGIUM--2.60%
---------- ----------
Barco N.V. (Manufacturing-Diversified) 1,123,010
---------- ----------
Colruyt N.V. (Retail-Food Chains) 2,167,294
---------- ----------
Delhaize-Le Lion, S.A. (Retail-Food & Drug) (a) 2,551,664
---------- ----------
Mobistar S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Solvay S.A. (Chemicals-Diversified)
---------- ----------
UCB S.A. (Manufacturing-Diversified) 1,963,531
---------- ----------
---------- ----------
BRAZIL--2.21%
---------- ----------
Caemi Mineracao E Metalurgia S.A.-Pfd. (Iron & Steel)
---------- ----------
Centrais Eletricas de Santa Catarina S.A. (Electric Companies)
---------- ----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a)
---------- ----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a)
---------- ----------
Companhia Brasileira de Distribuicao Grupo Pao de Acucar-Pfd. (Retail-Food Chains) 894,350
---------- ----------
Pro Forma
Combining
---------
FOREIGN STOCKS & OTHER EQUITY INTERESTS--91.61%
ARGENTINA--1.21%
----------
Banco de Galicia y Buenos Aires S.A. de C.V.-ADR (Banks-Regional) 241,129
----------
Banco Rio de La Plata S.A. (Banks-Major Regional) 196,300
----------
Bansud S.A. (Banks-Regional) (a) 97,476
----------
IRSA Inversiones y Representaciones S.A. (Land Development) 113,713
----------
Nortel Inversora S.A. (Telephone) 340,800
----------
Telefonica de Argentina S.A.-ADR (Telephone) 973,985
----------
YPF Sociedad Anonima-ADR (Oil-International Integrated) 1,910,925
----------
3,874,328
----------
AUSTRALIA--2.06%
----------
AMP Ltd. (Insurance-Life/Health) (a) 1,887,502
----------
Australia & New Zealand Banking Group Ltd. (Banks-Major Regional) 449,254
----------
Brambles Industries Ltd. (Air Freight) 384,555
----------
Broken Hill Proprietary Co. Ltd. (Conglomerates) 167,791
----------
Cable & Wireless Optus, Ltd. (Telephone) (a) 631,737
----------
EVN A.G. (Electric Companies) 376,726
----------
Foster's Brewing Group Ltd. (Beverages-Alcoholic) 80,992
----------
Futuris Corp. Ltd. (Automobile/Truck Parts & Tires) 280,189
----------
Lend Lease Corp. Ltd. (Engineering & Construction) 555,809
----------
National Australia Bank Ltd. (Banks-Foreign) 322,855
----------
News Corp. Ltd. (Entertainment) 106,681
----------
North Ltd. (Metals Mining) 136,287
----------
Primamedic Ltd. (Pharmaceuticals) (a) 78,845
----------
Rio Tinto Ltd. (Metals Mining) 86,893
----------
Santos Ltd. (Oil & Gas-Exploration & Production) 217,979
----------
TABCORP Holdings Ltd. (Leisure Time Products) 494,749
----------
Telstra Corporation Ltd. (Telephone) 109,354
----------
WMC Ltd. (Metals-Miscellaneous) 157,850
----------
Woolworths Ltd. (Retail-Specialty) 56,641
----------
6,582,690
----------
BELGIUM--2.60% 78,845
----------
Barco N.V. (Manufacturing-Diversified) 1,123,010
----------
Colruyt N.V. (Retail-Food Chains) 2,167,294
----------
Delhaize-Le Lion, S.A. (Retail-Food & Drug) (a) 2,551,664
----------
Mobistar S.A. (Telecommunications-Cellular/Wireless) (a) 421,221
----------
Solvay S.A. (Chemicals-Diversified) 74,964
----------
UCB S.A. (Manufacturing-Diversified) 1,963,531
----------
8,301,684
----------
BRAZIL--2.21%
----------
Caemi Mineracao E Metalurgia S.A.-Pfd. (Iron & Steel) 27,502
----------
Centrais Eletricas de Santa Catarina S.A. (Electric Companies) 26,821
----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a) 11,041
----------
Centrais Geradoras do Sul do Brasil S.A. (Power Producers-Independent) (a) 12,613
----------
Companhia Brasileira de Distribuicao Grupo Pao de Acucar-Pfd. (Retail-Food Chains) 950,150
----------
472
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
Companhia Brasileira de Petroleo Ipiranga (Oil & Gas-Refining & Marketing)
---------- ----------
Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP Rights, expire 01/04/99
(Cost $0) (Business & Public Services) 0
---------- ----------
Companhia Cimento Portland Itau (Construction-Cement & Aggregates) (a)
---------- ----------
Companhia de Eletricidade do Estado da Bahia (Electric Companies) 33,932
---------- ----------
Companhia de Saneamento Basico do Estado de Sao Paulo (Water Utilities) 35,391
---------- ----------
Companhia de Tecidos Norte de Minas (Textiles-Specialty) 32,391
---------- ----------
Companhia Energetica de Minas Gerais (Electric Companies) 110,626
---------- ----------
Companhia Energetica de Minas Gerais (Electric Companies)
---------- ----------
Companhia Paranaense de Energia (Electric Companies) 70,538
---------- ----------
Companhia Paranaense de Energia-Copel (Electric Companies)
---------- ----------
Companhia Paulista de Forca e Luz (Electric Companies) (a)
---------- ----------
Companhia Vale de Rio Doce-Pfd. A (Iron & Steel)
---------- ----------
Eletricidade de Sao Paulo S.A. (Electric Companies) 49,329
---------- ----------
Embratel Participacoes S.A. ADR (Telephone) (a)
---------- ----------
Embratel Participacoes S.A. (Telephone) (a)
---------- ----------
Empresa Bandeirante de Energia S.A. (Electric Companies) (a)
---------- ----------
Itausa - Investimentos Itau S.A. (Investment Management)
---------- ----------
Light - Servicos de Eletricidade S.A. (Electric Companies)
---------- ----------
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 126,088
---------- ----------
Tele Centro Sul Participacoes S.A. (Telephone) (a)
---------- ----------
Tele Norte Leste Participacoes S.A. (Telephone) (a)
---------- ----------
Tele Sudeste Celular Participacoes S.A. (Telecommunications-Cellular/Wireless)
---------- ----------
Telebras- ADR Pfd. (Telephone) (a) 197,129
---------- ----------
Tele Celular Sul Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Tele Centro Oeste Celular Participacoes S.A. (Telecommunication-Cellular/Wireless)(a)
---------- ----------
Telecommunicacoes de Sao Paulo S.A. (Telephone) (a) 59,249
---------- ----------
Telecomunicacoes Brasileiras S.A. (Telephone)
---------- ----------
Telecomunicacoes Brasileiras S.A.-ADR (Telephone)
---------- ----------
Telecomunicacoes de Sao Paulo S.A.-TELESP-Pfd. (Telephone) 1,642
---------- ----------
Telepar Celular S.A.-Pfd. (Telecommunications-Cellular/Wireless)
---------- ----------
Telerj Celular S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Participacoes S.A. (Telephone)
---------- ----------
Telesp Participacoes S.A.-ADR (Telephone)
---------- ----------
Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional) (b) 55,440
---------- ----------
Unibanco - Uniao de Bancos Brasileiros S.A. (Banks-Major Regional) (b) 9
---------- ----------
Usinas Siderurgicas de Minas Gerais S.A. (Manufacturing-Diversified)
---------- ----------
Votorantim Celulose e Papel S.A. (Paper & Forest Products) (a)
---------- ----------
---------- ----------
CANADA--4.38%
---------- ----------
ATI Technologies, Inc. (Computers-Hardware) (a)
---------- ----------
Bank of Montreal (Banks-Major Regional)
---------- ----------
BCE Inc. (Telephone)
---------- ----------
Berkley Petroleum Corp. (Oil & Gas-Exploration & Production) (a) 153,909
---------- ----------
Bombardier Inc. (Aerospace/Defense)
---------- ----------
Canadian National Railway Co. (Railroads)
---------- ----------
Cominco Ltd. (Metals Mining) 70,307
---------- ----------
Doman Industries Ltd. (Construction-Cement & Aggregates) (a) 27,618
---------- ----------
Enerflex Systems Ltd. (Manufacturing-Specialized) 80,980
---------- ----------
Imasco Ltd. (Manufacturing-Diversified)
---------- ----------
Inco Ltd. (Metals Mining) (a) 63,529
---------- ----------
Northern Telecom Ltd.-ADR (Communications Equipment)
---------- ----------
Placer Dome Inc. (Gold & Precious Metals Mining) 70,150
---------- ----------
Potash Corp. of Saskatchewan Inc. (Chemicals) 70,263
---------- ----------
Royal Bank of Canada (Banks-Major Regional)
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
Companhia Brasileira de Petroleo Ipiranga (Oil & Gas-Refining & Marketing)
---------- ----------
Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP Rights, expire 01/04/99
(Cost $0) (Business & Public Services)
---------- ----------
Companhia Cimento Portland Itau (Construction-Cement & Aggregates) (a)
---------- ----------
Companhia de Eletricidade do Estado da Bahia (Electric Companies)
---------- ----------
Companhia de Saneamento Basico do Estado de Sao Paulo (Water Utilities)
---------- ----------
Companhia de Tecidos Norte de Minas (Textiles-Specialty)
---------- ----------
Companhia Energetica de Minas Gerais (Electric Companies)
---------- ----------
Companhia Energetica de Minas Gerais (Electric Companies)
---------- ----------
Companhia Paranaense de Energia (Electric Companies)
---------- ----------
Companhia Paranaense de Energia-Copel (Electric Companies)
---------- ----------
Companhia Paulista de Forca e Luz (Electric Companies) (a)
---------- ----------
Companhia Vale de Rio Doce-Pfd. A (Iron & Steel)
---------- ----------
Eletricidade de Sao Paulo S.A. (Electric Companies)
---------- ----------
Embratel Participacoes S.A. ADR (Telephone) (a)
---------- ----------
Embratel Participacoes S.A. (Telephone) (a)
---------- ----------
Empresa Bandeirante de Energia S.A. (Electric Companies) (a)
---------- ----------
Itausa - Investimentos Itau S.A. (Investment Management)
---------- ----------
Light - Servicos de Eletricidade S.A. (Electric Companies)
---------- ----------
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production)
---------- ----------
Tele Centro Sul Participacoes S.A. (Telephone) (a)
---------- ----------
Tele Norte Leste Participacoes S.A. (Telephone) (a)
---------- ----------
Tele Sudeste Celular Participacoes S.A. (Telecommunications-Cellular/Wireless)
---------- ----------
Telebras- ADR Pfd. (Telephone) (a)
---------- ----------
Tele Celular Sul Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Tele Centro Oeste Celular Participacoes S.A. (Telecommunication-Cellular/Wireless)(a)
---------- ----------
Telecommunicacoes de Sao Paulo S.A. (Telephone) (a)
---------- ----------
Telecomunicacoes Brasileiras S.A. (Telephone)
---------- ----------
Telecomunicacoes Brasileiras S.A.-ADR (Telephone)
---------- ----------
Telecomunicacoes de Sao Paulo S.A.-TELESP-Pfd. (Telephone)
---------- ----------
Telepar Celular S.A.-Pfd. (Telecommunications-Cellular/Wireless)
---------- ----------
Telerj Celular S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Participacoes S.A. (Telephone)
---------- ----------
Telesp Participacoes S.A.-ADR (Telephone)
---------- ----------
Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional) (b)
---------- ----------
Unibanco - Uniao de Bancos Brasileiros S.A. (Banks-Major Regional) (b)
---------- ----------
Usinas Siderurgicas de Minas Gerais S.A. (Manufacturing-Diversified)
---------- ----------
Votorantim Celulose e Papel S.A. (Paper & Forest Products) (a)
---------- ----------
---------- ----------
CANADA--4.38%
---------- ----------
ATI Technologies, Inc. (Computers-Hardware) (a)
---------- ----------
Bank of Montreal (Banks-Major Regional)
---------- ----------
BCE Inc. (Telephone)
---------- ----------
Berkley Petroleum Corp. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Bombardier Inc. (Aerospace/Defense)
---------- ----------
Canadian National Railway Co. (Railroads) 67,761
---------- ----------
Cominco Ltd. (Metals Mining)
---------- ----------
Doman Industries Ltd. (Construction-Cement & Aggregates) (a)
---------- ----------
Enerflex Systems Ltd. (Manufacturing-Specialized)
---------- ----------
Imasco Ltd. (Manufacturing-Diversified)
---------- ----------
Inco Ltd. (Metals Mining) (a)
---------- ----------
Northern Telecom Ltd.-ADR (Communications Equipment)
---------- ----------
Placer Dome Inc. (Gold & Precious Metals Mining)
---------- ----------
Potash Corp. of Saskatchewan Inc. (Chemicals)
---------- ----------
Royal Bank of Canada (Banks-Major Regional)
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
Companhia Brasileira de Petroleo Ipiranga (Oil & Gas-Refining & Marketing) 80,944
---------- ----------
Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP Rights, expire 01/04/99
(Cost $0) (Business & Public Services)
---------- ----------
Companhia Cimento Portland Itau (Construction-Cement & Aggregates) (a) 7,740
---------- ----------
Companhia de Eletricidade do Estado da Bahia (Electric Companies) 168,303
---------- ----------
Companhia de Saneamento Basico do Estado de Sao Paulo (Water Utilities) 138,772
---------- ----------
Companhia de Tecidos Norte de Minas (Textiles-Specialty) 113,642
---------- ----------
Companhia Energetica de Minas Gerais (Electric Companies) 239,538
---------- ----------
Companhia Energetica de Minas Gerais (Electric Companies)
---------- ----------
Companhia Paranaense de Energia (Electric Companies) 97,420
---------- ----------
Companhia Paranaense de Energia-Copel (Electric Companies) 68,189
---------- ----------
Companhia Paulista de Forca e Luz (Electric Companies) (a) 30,969
---------- ----------
Companhia Vale de Rio Doce-Pfd. A (Iron & Steel) 218,129
---------- ----------
Eletricidade de Sao Paulo S.A. (Electric Companies) 134,454
---------- ----------
Embratel Participacoes S.A. ADR (Telephone) (a)
---------- ----------
Embratel Participacoes S.A. (Telephone) (a) 161,176
---------- ----------
Empresa Bandeirante de Energia S.A. (Electric Companies) (a) 14,381
---------- ----------
Itausa - Investimentos Itau S.A. (Investment Management) 176,000
---------- ----------
Light - Servicos de Eletricidade S.A. (Electric Companies) 69,582
---------- ----------
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 379,541
---------- ----------
Tele Centro Sul Participacoes S.A. (Telephone) (a) 104,531
---------- ----------
Tele Norte Leste Participacoes S.A. (Telephone) (a) 64,563
---------- ----------
Tele Sudeste Celular Participacoes S.A. (Telecommunications-Cellular/Wireless)
---------- ----------
Telebras- ADR Pfd. (Telephone) (a) 55,243 417,226
---------- ----------
Tele Celular Sul Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Tele Centro Oeste Celular Participacoes S.A. (Telecommunication-Cellular/Wireless)(a)
---------- ----------
Telecommunicacoes de Sao Paulo S.A. (Telephone) (a) 122,940
---------- ----------
Telecomunicacoes Brasileiras S.A. (Telephone) 393,043
---------- ----------
Telecomunicacoes Brasileiras S.A.-ADR (Telephone)
---------- ----------
Telecomunicacoes de Sao Paulo S.A.-TELESP-Pfd. (Telephone) 100,375
---------- ----------
Telepar Celular S.A.-Pfd. (Telecommunications-Cellular/Wireless) 33,340
---------- ----------
Telerj Celular S.A. (Telecommunications-Cellular/Wireless) (a) 32,327
---------- ----------
Telesp Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a) 26,693
---------- ----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a) 29,129
---------- ----------
Telesp Participacoes S.A. (Telephone) 94,495
---------- ----------
Telesp Participacoes S.A.-ADR (Telephone)
---------- ----------
Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional) (b) 217,299
---------- ----------
Unibanco - Uniao de Bancos Brasileiros S.A. (Banks-Major Regional) (b)
---------- ----------
Usinas Siderurgicas de Minas Gerais S.A. (Manufacturing-Diversified) 33,817
---------- ----------
Votorantim Celulose e Papel S.A. (Paper & Forest Products) (a) 61,341
---------- ----------
---------- ----------
CANADA--4.38%
---------- ----------
ATI Technologies, Inc. (Computers-Hardware) (a)
---------- ----------
Bank of Montreal (Banks-Major Regional)
---------- ----------
BCE Inc. (Telephone)
---------- ----------
Berkley Petroleum Corp. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Bombardier Inc. (Aerospace/Defense)
---------- ----------
Canadian National Railway Co. (Railroads)
---------- ----------
Cominco Ltd. (Metals Mining)
---------- ----------
Doman Industries Ltd. (Construction-Cement & Aggregates) (a)
---------- ----------
Enerflex Systems Ltd. (Manufacturing-Specialized)
---------- ----------
Imasco Ltd. (Manufacturing-Diversified)
---------- ----------
Inco Ltd. (Metals Mining) (a)
---------- ----------
Northern Telecom Ltd.-ADR (Communications Equipment)
---------- ----------
Placer Dome Inc. (Gold & Precious Metals Mining)
---------- ----------
Potash Corp. of Saskatchewan Inc. (Chemicals)
---------- ----------
Royal Bank of Canada (Banks-Major Regional) 47,531
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
Companhia Brasileira de Petroleo Ipiranga (Oil & Gas-Refining & Marketing)
---------- ----------
Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP Rights, expire 01/04/99
(Cost $0) (Business & Public Services)
---------- ----------
Companhia Cimento Portland Itau (Construction-Cement & Aggregates) (a)
---------- ----------
Companhia de Eletricidade do Estado da Bahia (Electric Companies)
---------- ----------
Companhia de Saneamento Basico do Estado de Sao Paulo (Water Utilities)
---------- ----------
Companhia de Tecidos Norte de Minas (Textiles-Specialty)
---------- ----------
Companhia Energetica de Minas Gerais (Electric Companies)
---------- ----------
Companhia Energetica de Minas Gerais (Electric Companies) 2
---------- ----------
Companhia Paranaense de Energia (Electric Companies)
---------- ----------
Companhia Paranaense de Energia-Copel (Electric Companies)
---------- ----------
Companhia Paulista de Forca e Luz (Electric Companies) (a)
---------- ----------
Companhia Vale de Rio Doce-Pfd. A (Iron & Steel)
---------- ----------
Eletricidade de Sao Paulo S.A. (Electric Companies)
---------- ----------
Embratel Participacoes S.A. ADR (Telephone) (a) 196,519
---------- ----------
Embratel Participacoes S.A. (Telephone) (a)
---------- ----------
Empresa Bandeirante de Energia S.A. (Electric Companies) (a)
---------- ----------
Itausa - Investimentos Itau S.A. (Investment Management)
---------- ----------
Light - Servicos de Eletricidade S.A. (Electric Companies)
---------- ----------
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 341,717
---------- ----------
Tele Centro Sul Participacoes S.A. (Telephone) (a) 117,911
---------- ----------
Tele Norte Leste Participacoes S.A. (Telephone) (a)
---------- ----------
Tele Sudeste Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) 58,339
---------- ----------
Telebras- ADR Pfd. (Telephone) (a)
---------- ----------
Tele Celular Sul Participacoes S.A. (Telecommunications-Cellular/Wireless) (a) 24,587
---------- ----------
Tele Centro Oeste Celular Participacoes S.A. (Telecommunication-Cellular/Wireless)(a) 3
---------- ----------
Telecommunicacoes de Sao Paulo S.A. (Telephone) (a)
---------- ----------
Telecomunicacoes Brasileiras S.A. (Telephone)
---------- ----------
Telecomunicacoes Brasileiras S.A.-ADR (Telephone) 1,542
---------- ----------
Telecomunicacoes de Sao Paulo S.A.-TELESP-Pfd. (Telephone)
---------- ----------
Telepar Celular S.A.-Pfd. (Telecommunications-Cellular/Wireless)
---------- ----------
Telerj Celular S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) (a) 98,700
---------- ----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a) 241,763
---------- ----------
Telesp Participacoes S.A. (Telephone)
---------- ----------
Telesp Participacoes S.A.-ADR (Telephone) 311,963
---------- ----------
Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional) (b)
---------- ----------
Unibanco - Uniao de Bancos Brasileiros S.A. (Banks-Major Regional) (b)
---------- ----------
Usinas Siderurgicas de Minas Gerais S.A. (Manufacturing-Diversified)
---------- ----------
Votorantim Celulose e Papel S.A. (Paper & Forest Products) (a)
---------- ----------
---------- ----------
CANADA--4.38%
---------- ----------
ATI Technologies, Inc. (Computers-Hardware) (a) 491,565
---------- ----------
Bank of Montreal (Banks-Major Regional) 1,411,438
---------- ----------
BCE Inc. (Telephone) 1,221,278
---------- ----------
Berkley Petroleum Corp. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Bombardier Inc. (Aerospace/Defense) 1,978,562
---------- ----------
Canadian National Railway Co. (Railroads) 466,875
---------- ----------
Cominco Ltd. (Metals Mining)
---------- ----------
Doman Industries Ltd. (Construction-Cement & Aggregates) (a)
---------- ----------
Enerflex Systems Ltd. (Manufacturing-Specialized)
---------- ----------
Imasco Ltd. (Manufacturing-Diversified) 2,043,216
---------- ----------
Inco Ltd. (Metals Mining) (a)
---------- ----------
Northern Telecom Ltd.-ADR (Communications Equipment) 547,215
---------- ----------
Placer Dome Inc. (Gold & Precious Metals Mining)
---------- ----------
Potash Corp. of Saskatchewan Inc. (Chemicals)
---------- ----------
Royal Bank of Canada (Banks-Major Regional) 1,626,062
---------- ----------
Pro Forma
Combining
---------
Companhia Brasileira de Petroleo Ipiranga (Oil & Gas-Refining & Marketing) 80,944
----------
Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP Rights, expire 01/04/99
(Cost $0) (Business & Public Services) 0
----------
Companhia Cimento Portland Itau (Construction-Cement & Aggregates) (a) 7,740
----------
Companhia de Eletricidade do Estado da Bahia (Electric Companies) 202,235
----------
Companhia de Saneamento Basico do Estado de Sao Paulo (Water Utilities) 174,164
----------
Companhia de Tecidos Norte de Minas (Textiles-Specialty) 146,033
----------
Companhia Energetica de Minas Gerais (Electric Companies) 350,164
----------
Companhia Energetica de Minas Gerais (Electric Companies) 2
----------
Companhia Paranaense de Energia (Electric Companies) 167,958
----------
Companhia Paranaense de Energia-Copel (Electric Companies) 68,189
----------
Companhia Paulista de Forca e Luz (Electric Companies) (a) 30,969
----------
Companhia Vale de Rio Doce-Pfd. A (Iron & Steel) 218,129
----------
Eletricidade de Sao Paulo S.A. (Electric Companies) 183,783
----------
Embratel Participacoes S.A. ADR (Telephone) (a) 196,519
----------
Embratel Participacoes S.A. (Telephone) (a) 161,176
----------
Empresa Bandeirante de Energia S.A. (Electric Companies) (a) 14,381
----------
Itausa - Investimentos Itau S.A. (Investment Management) 176,000
----------
Light - Servicos de Eletricidade S.A. (Electric Companies) 69,582
----------
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 847,346
----------
Tele Centro Sul Participacoes S.A. (Telephone) (a) 222,443
----------
Tele Norte Leste Participacoes S.A. (Telephone) (a) 64,563
----------
Tele Sudeste Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) 58,339
----------
Telebras- ADR Pfd. (Telephone) (a) 669,597
----------
Tele Celular Sul Participacoes S.A. (Telecommunications-Cellular/Wireless) (a) 24,587
----------
Tele Centro Oeste Celular Participacoes S.A. (Telecommunication-Cellular/Wireless)(a) 3
----------
Telecommunicacoes de Sao Paulo S.A. (Telephone) (a) 182,189
----------
Telecomunicacoes Brasileiras S.A. (Telephone) 393,043
----------
Telecomunicacoes Brasileiras S.A.-ADR (Telephone) 1,542
----------
Telecomunicacoes de Sao Paulo S.A.-TELESP-Pfd. (Telephone) 102,016
----------
Telepar Celular S.A.-Pfd. (Telecommunications-Cellular/Wireless) 33,340
----------
Telerj Celular S.A. (Telecommunications-Cellular/Wireless) (a) 32,327
----------
Telesp Celular Participacoes S.A. (Telecommunications-Cellular/Wireless) (a) 98,700
----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a) 26,693
----------
Telesp Celular S.A. (Telecommunications-Cellular/Wireless) (a) 270,892
----------
Telesp Participacoes S.A. (Telephone) 94,495
----------
Telesp Participacoes S.A.-ADR (Telephone) 311,963
----------
Uniao de Bancos Brasileiros S.A.-GDR (Banks-Regional) (b) 272,739
----------
Unibanco - Uniao de Bancos Brasileiros S.A. (Banks-Major Regional) (b) 9
----------
Usinas Siderurgicas de Minas Gerais S.A. (Manufacturing-Diversified) 33,817
----------
Votorantim Celulose e Papel S.A. (Paper & Forest Products) (a) 61,341
----------
7,078,078
----------
CANADA--4.38%
----------
ATI Technologies, Inc. (Computers-Hardware) (a) 491,565
----------
Bank of Montreal (Banks-Major Regional) 1,411,438
----------
BCE Inc. (Telephone) 1,221,278
----------
Berkley Petroleum Corp. (Oil & Gas-Exploration & Production) (a) 153,909
----------
Bombardier Inc. (Aerospace/Defense) 1,978,562
----------
Canadian National Railway Co. (Railroads) 534,636
----------
Cominco Ltd. (Metals Mining) 70,307
----------
Doman Industries Ltd. (Construction-Cement & Aggregates) (a) 27,618
----------
Enerflex Systems Ltd. (Manufacturing-Specialized) 80,980
----------
Imasco Ltd. (Manufacturing-Diversified) 2,043,216
----------
Inco Ltd. (Metals Mining) (a) 63,529
----------
Northern Telecom Ltd.-ADR (Communications Equipment) 547,215
----------
Placer Dome Inc. (Gold & Precious Metals Mining) 70,150
----------
Potash Corp. of Saskatchewan Inc. (Chemicals) 70,263
----------
Royal Bank of Canada (Banks-Major Regional) 1,673,593
----------
473
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
Suncor Energy, Inc. (Oil-International Integrated)
---------- ----------
Teleglobe, Inc. (Telecommunications)
---------- ----------
Toronto-Dominion Bank (Banks-Regional)
---------- ----------
---------- ----------
CHILE--0.48%
---------- ----------
Administradora de Fondos de Peniones Provida (Financial-Diversified)
---------- ----------
Banco de A. Edwards (Banks-Regional)
---------- ----------
Compania Cervecerias Unidas S.A.-ADR (Beverages-Alcoholic)
---------- ----------
Empresa Nacional de Electricidad S.A.-ADR (Electric Companies)
---------- ----------
Enersis S.A.-ADR (Electric Companies) 76,482
---------- ----------
Gener S.A. (Electric Companies)
---------- ----------
Quinenco S.A.-ADR (Financial-Diversified)
---------- ----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals) 62,659
---------- ----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals)
---------- ----------
Supermercados Unimarc S.A. (Retail-Food Chains)
---------- ----------
---------- ----------
CHINA--0.02%
---------- ----------
Huaneng Power International, Inc. (Electric Companies) (a) 50,402
---------- ----------
---------- ----------
CROATIA--0.19%
---------- ----------
Pliva DD (Health Care - Drugs-Major Pharmaceutical) (c)
---------- ----------
---------- ----------
DENMARK--0.01%
---------- ----------
Tele Danmark A.S.-ADR (Telephone)
---------- ----------
---------- ----------
ECUADOR--0.02%
---------- ----------
La Cemento Nacional-GDR (Construction-Cement & Aggregates) (a)(c)
---------- ----------
---------- ----------
EGYPT--0.13%
---------- ----------
Arabian International Construction (Construction) (a) 10,612
---------- ----------
Al-Ahram Beverages Co. S.A.E.-GDR 144A (Beverages-Alcoholic) 40,425
---------- ----------
Madinet Nasr for Housing & Development Co. (Services-Commercial & Consumer) 58,952
---------- ----------
Misr Elgadida for Housing and Reconstruction (Building Materials) 100,067
---------- ----------
Misr International Bank (Banks-Major Regional) (c) 58,590
---------- ----------
Oriental Weavers "C" (Textiles & Apparel) 30,136
---------- ----------
Suez Cement Co. (Building Materials) (c) 76,691
---------- ----------
---------- ----------
FINLAND--2.42%
---------- ----------
Fortum Corp. (Electric Companies) (a) 9,428
---------- ----------
Helsingin Puhelin Oyj (Telecommunications-Cellular/Wireless)
---------- ----------
Nokia Oyj A.B.-Class A (Communications Equipment)
---------- ----------
Nokia Oyj A.B.-Class A-ADR (Communications Equipment)
---------- ----------
Raisio Group PLC (Food) (a)
---------- ----------
Sonera Group OYJ (Telecommunications-Cellular/Wireless) (a)(c)
---------- ----------
Tieto Corp. (Computers-Software & Services)
---------- ----------
---------- ----------
FRANCE--13.31%
---------- ----------
Accor S.A. (Lodging-Hotels)
---------- ----------
Air Liquide (Chemicals-Specialty) 91,690
---------- ----------
Altran Technologies, S.A. (Services-Commercial & Consumer)
---------- ----------
AXA S.A. (Insurance-Multi-Line)
---------- ----------
Banque Nationale de Paris (Banks - Major Regional)
---------- ----------
Cap Gemini Sogeti S.A. (Computer-Software & Services)
---------- ----------
Coflexip S.A.-ADR(Manufacturing-Specialized) 38,550
---------- ----------
Compagnie Generale des Eaux (Manufacturing-Diversified)
---------- ----------
Danone (Foods)
---------- ----------
Dassault Systemes S.A. (Computers & Peripherals)
---------- ----------
Elf Aquitaine S.A. (Oil & Gas - Refining & Marketing)
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
Suncor Energy, Inc. (Oil-International Integrated)
---------- ----------
Teleglobe, Inc. (Telecommunications)
---------- ----------
Toronto-Dominion Bank (Banks-Regional)
---------- ----------
---------- ----------
CHILE--0.48%
---------- ----------
Administradora de Fondos de Peniones Provida (Financial-Diversified)
---------- ----------
Banco de A. Edwards (Banks-Regional)
---------- ----------
Compania Cervecerias Unidas S.A.-ADR (Beverages-Alcoholic)
---------- ----------
Empresa Nacional de Electricidad S.A.-ADR (Electric Companies)
---------- ----------
Enersis S.A.-ADR (Electric Companies)
---------- ----------
Gener S.A. (Electric Companies)
---------- ----------
Quinenco S.A.-ADR (Financial-Diversified)
---------- ----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals)
---------- ----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals)
---------- ----------
Supermercados Unimarc S.A. (Retail-Food Chains)
---------- ----------
---------- ----------
CHINA--0.02%
---------- ----------
Huaneng Power International, Inc. (Electric Companies) (a)
---------- ----------
---------- ----------
CROATIA--0.19%
---------- ----------
Pliva DD (Health Care - Drugs-Major Pharmaceutical) (c)
---------- ----------
---------- ----------
DENMARK--0.01%
---------- ----------
Tele Danmark A.S.-ADR (Telephone) 33,938
---------- ----------
---------- ----------
ECUADOR--0.02%
---------- ----------
La Cemento Nacional-GDR (Construction-Cement & Aggregates) (a)(c) 61,359
---------- ----------
---------- ----------
EGYPT--0.13%
---------- ----------
Arabian International Construction (Construction) (a)
---------- ----------
Al-Ahram Beverages Co. S.A.E.-GDR 144A (Beverages-Alcoholic)
---------- ----------
Madinet Nasr for Housing & Development Co. (Services-Commercial & Consumer)
---------- ----------
Misr Elgadida for Housing and Reconstruction (Building Materials)
---------- ----------
Misr International Bank (Banks-Major Regional) (c)
---------- ----------
Oriental Weavers "C" (Textiles & Apparel)
---------- ----------
Suez Cement Co. (Building Materials) (c) 37,050
---------- ----------
---------- ----------
FINLAND--2.42%
---------- ----------
Fortum Corp. (Electric Companies) (a) 8,820
---------- ----------
Helsingin Puhelin Oyj (Telecommunications-Cellular/Wireless) 573,301
---------- ----------
Nokia Oyj A.B.-Class A (Communications Equipment) 1,377,224
---------- ----------
Nokia Oyj A.B.-Class A-ADR (Communications Equipment) 120,438
---------- ----------
Raisio Group PLC (Food) (a) 340,406
---------- ----------
Sonera Group OYJ (Telecommunications-Cellular/Wireless) (a)(c) 229,569 9,713
---------- ----------
Tieto Corp. (Computers-Software & Services) 615,548
---------- ----------
---------- ----------
FRANCE--13.31%
---------- ----------
Accor S.A. (Lodging-Hotels)
---------- ----------
Air Liquide (Chemicals-Specialty)
---------- ----------
Altran Technologies, S.A. (Services-Commercial & Consumer) 82,961
---------- ----------
AXA S.A. (Insurance-Multi-Line) 732,833
---------- ----------
Banque Nationale de Paris (Banks - Major Regional)
---------- ----------
Cap Gemini Sogeti S.A. (Computer-Software & Services)
---------- ----------
Coflexip S.A.-ADR(Manufacturing-Specialized) 275,857
---------- ----------
Compagnie Generale des Eaux (Manufacturing-Diversified) 191,967
---------- ----------
Danone (Foods)
---------- ----------
Dassault Systemes S.A. (Computers & Peripherals) 674,245
---------- ----------
Elf Aquitaine S.A. (Oil & Gas - Refining & Marketing)
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
Suncor Energy, Inc. (Oil-International Integrated)
---------- ----------
Teleglobe, Inc. (Telecommunications)
---------- ----------
Toronto-Dominion Bank (Banks-Regional)
---------- ----------
---------- ----------
CHILE--0.48%
---------- ----------
Administradora de Fondos de Peniones Provida (Financial-Diversified) 177,120
---------- ----------
Banco de A. Edwards (Banks-Regional) 63,547
---------- ----------
Compania Cervecerias Unidas S.A.-ADR (Beverages-Alcoholic) 198,275
---------- ----------
Empresa Nacional de Electricidad S.A.-ADR (Electric Companies) 103,513
---------- ----------
Enersis S.A.-ADR (Electric Companies) 304,588
---------- ----------
Gener S.A. (Electric Companies) 124,224
---------- ----------
Quinenco S.A.-ADR (Financial-Diversified) 118,400
---------- ----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals)
---------- ----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals) 229,075
---------- ----------
Supermercados Unimarc S.A. (Retail-Food Chains) 79,144
---------- ----------
---------- ----------
CHINA--0.02%
---------- ----------
Huaneng Power International, Inc. (Electric Companies) (a)
---------- ----------
---------- ----------
CROATIA--0.19%
---------- ----------
Pliva DD (Health Care - Drugs-Major Pharmaceutical) (c)
---------- ----------
---------- ----------
DENMARK--0.01%
---------- ----------
Tele Danmark A.S.-ADR (Telephone)
---------- ----------
---------- ----------
ECUADOR--0.02%
---------- ----------
La Cemento Nacional-GDR (Construction-Cement & Aggregates) (a)(c)
---------- ----------
---------- ----------
EGYPT--0.13%
---------- ----------
Arabian International Construction (Construction) (a)
---------- ----------
Al-Ahram Beverages Co. S.A.E.-GDR 144A (Beverages-Alcoholic)
---------- ----------
Madinet Nasr for Housing & Development Co. (Services-Commercial & Consumer)
---------- ----------
Misr Elgadida for Housing and Reconstruction (Building Materials)
---------- ----------
Misr International Bank (Banks-Major Regional) (c)
---------- ----------
Oriental Weavers "C" (Textiles & Apparel)
---------- ----------
Suez Cement Co. (Building Materials) (c)
---------- ----------
---------- ----------
FINLAND--2.42%
---------- ----------
Fortum Corp. (Electric Companies) (a)
---------- ----------
Helsingin Puhelin Oyj (Telecommunications-Cellular/Wireless)
---------- ----------
Nokia Oyj A.B.-Class A (Communications Equipment) 101,093
---------- ----------
Nokia Oyj A.B.-Class A-ADR (Communications Equipment)
---------- ----------
Raisio Group PLC (Food) (a)
---------- ----------
Sonera Group OYJ (Telecommunications-Cellular/Wireless) (a)(c)
---------- ----------
Tieto Corp. (Computers-Software & Services)
---------- ----------
---------- ----------
FRANCE--13.31%
---------- ----------
Accor S.A. (Lodging-Hotels)
---------- ----------
Air Liquide (Chemicals-Specialty)
---------- ----------
Altran Technologies, S.A. (Services-Commercial & Consumer)
---------- ----------
AXA S.A. (Insurance-Multi-Line) 102,889
---------- ----------
Banque Nationale de Paris (Banks - Major Regional)
---------- ----------
Cap Gemini Sogeti S.A. (Computer-Software & Services)
---------- ----------
Coflexip S.A.-ADR(Manufacturing-Specialized)
---------- ----------
Compagnie Generale des Eaux (Manufacturing-Diversified) 69,004
---------- ----------
Danone (Foods)
---------- ----------
Dassault Systemes S.A. (Computers & Peripherals)
---------- ----------
Elf Aquitaine S.A. (Oil & Gas - Refining & Marketing)
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
Suncor Energy, Inc. (Oil-International Integrated) 1,142,484
---------- ----------
Teleglobe, Inc. (Telecommunications) 1,419,935
---------- ----------
Toronto-Dominion Bank (Banks-Regional) 988,092
---------- ----------
---------- ----------
CHILE--0.48%
---------- ----------
Administradora de Fondos de Peniones Provida (Financial-Diversified)
---------- ----------
Banco de A. Edwards (Banks-Regional)
---------- ----------
Compania Cervecerias Unidas S.A.-ADR (Beverages-Alcoholic)
---------- ----------
Empresa Nacional de Electricidad S.A.-ADR (Electric Companies)
---------- ----------
Enersis S.A.-ADR (Electric Companies)
---------- ----------
Gener S.A. (Electric Companies)
---------- ----------
Quinenco S.A.-ADR (Financial-Diversified)
---------- ----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals)
---------- ----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals)
---------- ----------
Supermercados Unimarc S.A. (Retail-Food Chains)
---------- ----------
---------- ----------
CHINA--0.02%
---------- ----------
Huaneng Power International, Inc. (Electric Companies) (a)
---------- ----------
---------- ----------
CROATIA--0.19%
---------- ----------
Pliva DD (Health Care - Drugs-Major Pharmaceutical) (c) 597,600
---------- ----------
---------- ----------
DENMARK--0.01%
---------- ----------
Tele Danmark A.S.-ADR (Telephone)
---------- ----------
---------- ----------
ECUADOR--0.02%
---------- ----------
La Cemento Nacional-GDR (Construction-Cement & Aggregates) (a)(c)
---------- ----------
---------- ----------
EGYPT--0.13%
---------- ----------
Arabian International Construction (Construction) (a)
---------- ----------
Al-Ahram Beverages Co. S.A.E.-GDR 144A (Beverages-Alcoholic)
---------- ----------
Madinet Nasr for Housing & Development Co. (Services-Commercial & Consumer)
---------- ----------
Misr Elgadida for Housing and Reconstruction (Building Materials)
---------- ----------
Misr International Bank (Banks-Major Regional) (c)
---------- ----------
Oriental Weavers "C" (Textiles & Apparel)
---------- ----------
Suez Cement Co. (Building Materials) (c)
---------- ----------
---------- ----------
FINLAND--2.42%
---------- ----------
Fortum Corp. (Electric Companies) (a)
---------- ----------
Helsingin Puhelin Oyj (Telecommunications-Cellular/Wireless)
---------- ----------
Nokia Oyj A.B.-Class A (Communications Equipment) 3,187,285
---------- ----------
Nokia Oyj A.B.-Class A-ADR (Communications Equipment)
---------- ----------
Raisio Group PLC (Food) (a)
---------- ----------
Sonera Group OYJ (Telecommunications-Cellular/Wireless) (a)(c) 1,152,261
---------- ----------
Tieto Corp. (Computers-Software & Services)
---------- ----------
---------- ----------
FRANCE--13.31%
---------- ----------
Accor S.A. (Lodging-Hotels) 1,190,625
---------- ----------
Air Liquide (Chemicals-Specialty)
---------- ----------
Altran Technologies, S.A. (Services-Commercial & Consumer) 940,549
---------- ----------
AXA S.A. (Insurance-Multi-Line) 1,883,889
---------- ----------
Banque Nationale de Paris (Banks - Major Regional) 2,963,986
---------- ----------
Cap Gemini Sogeti S.A. (Computer-Software & Services) 3,337,973
---------- ----------
Coflexip S.A.-ADR(Manufacturing-Specialized)
---------- ----------
Compagnie Generale des Eaux (Manufacturing-Diversified)
---------- ----------
Danone (Foods) 2,290,008
---------- ----------
Dassault Systemes S.A. (Computers & Peripherals)
---------- ----------
Elf Aquitaine S.A. (Oil & Gas - Refining & Marketing) 2,253,690
---------- ----------
Pro Forma
Combining
---------
Suncor Energy, Inc. (Oil-International Integrated) 1,142,484
----------
Teleglobe, Inc. (Telecommunications) 1,419,935
----------
Toronto-Dominion Bank (Banks-Regional) 988,092
----------
13,988,768
----------
CHILE--0.48%
----------
Administradora de Fondos de Peniones Provida (Financial-Diversified) 177,120
----------
Banco de A. Edwards (Banks-Regional) 63,547
----------
Compania Cervecerias Unidas S.A.-ADR (Beverages-Alcoholic) 198,275
----------
Empresa Nacional de Electricidad S.A.-ADR (Electric Companies) 103,513
----------
Enersis S.A.-ADR (Electric Companies) 381,070
----------
Gener S.A. (Electric Companies) 124,224
----------
Quinenco S.A.-ADR (Financial-Diversified) 118,400
----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals) 62,659
----------
Sociedad Quimica y Minera de Chile S.A. (Chemicals) 229,075
----------
Supermercados Unimarc S.A. (Retail-Food Chains) 79,144
----------
1,537,026
----------
CHINA--0.02%
----------
Huaneng Power International, Inc. (Electric Companies) (a) 50,402
----------
----------
CROATIA--0.19%
----------
Pliva DD (Health Care - Drugs-Major Pharmaceutical) (c) 597,600
----------
----------
DENMARK--0.01%
----------
Tele Danmark A.S.-ADR (Telephone) 33,938
----------
----------
ECUADOR--0.02%
----------
La Cemento Nacional-GDR (Construction-Cement & Aggregates) (a)(c) 61,359
----------
----------
EGYPT--0.13%
----------
Arabian International Construction (Construction) (a) 10,612
----------
Al-Ahram Beverages Co. S.A.E.-GDR 144A (Beverages-Alcoholic) 40,425
----------
Madinet Nasr for Housing & Development Co. (Services-Commercial & Consumer) 58,952
----------
Misr Elgadida for Housing and Reconstruction (Building Materials) 100,067
----------
Misr International Bank (Banks-Major Regional) (c) 58,590
----------
Oriental Weavers "C" (Textiles & Apparel) 30,136
----------
Suez Cement Co. (Building Materials) (c) 113,741
----------
412,524
----------
FINLAND--2.42%
----------
Fortum Corp. (Electric Companies) (a) 18,248
----------
Helsingin Puhelin Oyj (Telecommunications-Cellular/Wireless) 573,301
----------
Nokia Oyj A.B.-Class A (Communications Equipment) 4,665,602
----------
Nokia Oyj A.B.-Class A-ADR (Communications Equipment) 120,438
----------
Raisio Group PLC (Food) (a) 340,406
----------
Sonera Group OYJ (Telecommunications-Cellular/Wireless) (a)(c) 1,391,543
----------
Tieto Corp. (Computers-Software & Services) 615,548
----------
----------
FRANCE--13.31% 7,725,085
----------
Accor S.A. (Lodging-Hotels) 1,190,625
----------
Air Liquide (Chemicals-Specialty) 91,690
----------
Altran Technologies, S.A. (Services-Commercial & Consumer) 1,023,511
----------
AXA S.A. (Insurance-Multi-Line) 2,719,612
----------
Banque Nationale de Paris (Banks - Major Regional) 2,963,986
----------
Cap Gemini Sogeti S.A. (Computer-Software & Services) 3,337,973
----------
Coflexip S.A.-ADR(Manufacturing-Specialized) 314,407
----------
Compagnie Generale des Eaux (Manufacturing-Diversified) 260,971
----------
Danone (Foods) 2,290,008
----------
Dassault Systemes S.A. (Computers & Peripherals) 674,245
----------
Elf Aquitaine S.A. (Oil & Gas - Refining & Marketing) 2,253,690
----------
474
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
Equant N.V. (Computers-Peripherals) (a)
---------- ----------
Essilor International S.A. (Manufacturing-Specialized)
---------- ----------
Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) (a)
---------- ----------
Genset - ADR (Biotechnology) (a)
---------- ----------
Lafarge S.A. (Engineering & Construction) 170,999
---------- ----------
Legrand S.A. (Housewares)
---------- ----------
Pinault-Printemps-Redoute S.A. (Retail-General Merchandise)
---------- ----------
Promodes (Retail-Food Chains)
---------- ----------
PSA Peugeot Citreon (Automobiles)
---------- ----------
Renault S.A. (Automobiles)
---------- ----------
Rexal S.A. (Distributors-Food & Health)
---------- ----------
Rhone-Poulenc - Class A (Chemicals-Diversified)
---------- ----------
Societe Generale (Banks - Major Regional)
---------- ----------
Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable)
---------- ----------
Suez Lyonnaise des Eaux (Manufacturing-Diversified)
---------- ----------
Total S.A. - Class B (Oil & Gas-Refining & Marketing)
---------- ----------
Total S.A.-ADR (Oil-International Integrated) 149,250
---------- ----------
Valeo S.A. (Auto Parts & Equipment)
---------- ----------
---------- ----------
GERMANY--4.94%
---------- ----------
Adidas Salomon A.G. (Footwear)
---------- ----------
Allianz A.G. (Insurance-Multi-Line)
---------- ----------
BASF A.G. (Chemicals-Diversified) 125,948
---------- ----------
Bayerische Vereinsbank A.G. (Banks-Major Regional)
---------- ----------
BHF-Bank A.G. (Banks-Major Regional)
---------- ----------
DaimlerChrysler A.G. (Automobiles)
---------- ----------
Deutsche Lufthansa A.G. (Airlines)
---------- ----------
Dresdner Bank A.G. (Banks-Major Regional)
---------- ----------
EM.TV & Merchandising A.G. (Broadcasting-Television, Radio, & Cable) (a)
---------- ----------
Fresenius A.G.-Pfd. (Machinery-Diversified)
---------- ----------
Karstadt A.G. (Retail-Department Stores)
---------- ----------
MAN A.G. (Manufacturing-Diversified)
---------- ----------
Mannesmann A.G. (Machinery-Diversifies)
---------- ----------
MobilCom A.G. (Telecommunications-Cellular/Wireless)
---------- ----------
Porsche A.G. (Automobiles) (a)
---------- ----------
SAP A.G. - Pfd. (Computers-Software & Services)
---------- ----------
Viag A.G. (Manufacturing-Diversified)
---------- ----------
---------- ----------
GREECE--0.29%
---------- ----------
Alpha Credit Bank (Banks-Regional) 125,349
---------- ----------
Hellenic Telecommunication Organization S.A. (Telecommunication-Cellular/Wireless) (a) 132,552
---------- ----------
National Bank of Greece S.A. (Banks-Money Center) 92,564
---------- ----------
Panafon S.A. (Telecommunications-Cellular/Wireless) (a) 17,320
---------- ----------
STET Hellas Telecommunications S.A. (Telecommunications-Cellular/Wireless) (a) 87,251
---------- ----------
---------- ----------
HONG KONG--2.27%
---------- ----------
Cheung Kong (Holdings) Ltd. (Land Development)
---------- ----------
China Telecom Ltd. (Telecommunications - Cellular/Wireless) (a)
---------- ----------
CLP Holdings Ltd. (Electric Companies)
---------- ----------
Cosco Pacific Ltd. (Financial-Diversified)
---------- ----------
Hang Seng Bank Ltd. (Banking)
---------- ----------
Hong Kong Telecommunications Ltd. (Telephone)
---------- ----------
Hongkong Electric Holdings Ltd. (Electric Companies)
---------- ----------
HSBC Holdings PLC (Banks - Major Regional)
---------- ----------
Hutchison Whampoa Ltd. (Retail-Food Chains)
---------- ----------
New World Development Co. Ltd. (Manufacturing-Diversified)
---------- ----------
Ng Fung Hong Ltd. (Foods)
---------- ----------
Qingling Motors Co. (Trucks & Parts) 19,310
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
Equant N.V. (Computers-Peripherals) (a) 733,549
---------- ----------
Essilor International S.A. (Manufacturing-Specialized)
---------- ----------
Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) (a)
---------- ----------
Genset - ADR (Biotechnology) (a) 258,239
---------- ----------
Lafarge S.A. (Engineering & Construction) 71,250
---------- ----------
Legrand S.A. (Housewares)
---------- ----------
Pinault-Printemps-Redoute S.A. (Retail-General Merchandise)
---------- ----------
Promodes (Retail-Food Chains)
---------- ----------
PSA Peugeot Citreon (Automobiles)
---------- ----------
Renault S.A. (Automobiles)
---------- ----------
Rexal S.A. (Distributors-Food & Health)
---------- ----------
Rhone-Poulenc - Class A (Chemicals-Diversified)
---------- ----------
Societe Generale (Banks - Major Regional)
---------- ----------
Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable)
---------- ----------
Suez Lyonnaise des Eaux (Manufacturing-Diversified) 71,885
---------- ----------
Total S.A. - Class B (Oil & Gas-Refining & Marketing)
---------- ----------
Total S.A.-ADR (Oil-International Integrated)
---------- ----------
Valeo S.A. (Auto Parts & Equipment)
---------- ----------
---------- ----------
GERMANY--4.94%
---------- ----------
Adidas Salomon A.G. (Footwear)
---------- ----------
Allianz A.G. (Insurance-Multi-Line)
---------- ----------
BASF A.G. (Chemicals-Diversified)
---------- ----------
Bayerische Vereinsbank A.G. (Banks-Major Regional)
---------- ----------
BHF-Bank A.G. (Banks-Major Regional)
---------- ----------
DaimlerChrysler A.G. (Automobiles)
---------- ----------
Deutsche Lufthansa A.G. (Airlines) 50,792
---------- ----------
Dresdner Bank A.G. (Banks-Major Regional)
---------- ----------
EM.TV & Merchandising A.G. (Broadcasting-Television, Radio, & Cable) (a) 364,288
---------- ----------
Fresenius A.G.-Pfd. (Machinery-Diversified)
---------- ----------
Karstadt A.G. (Retail-Department Stores)
---------- ----------
MAN A.G. (Manufacturing-Diversified) 58,809
---------- ----------
Mannesmann A.G. (Machinery-Diversifies) 653,095 149,004
---------- ----------
MobilCom A.G. (Telecommunications-Cellular/Wireless) 722,294
---------- ----------
Porsche A.G. (Automobiles) (a) 492,559
---------- ----------
SAP A.G. - Pfd. (Computers-Software & Services) 523,962
---------- ----------
Viag A.G. (Manufacturing-Diversified) 58,629
---------- ----------
---------- ----------
GREECE--0.29%
---------- ----------
Alpha Credit Bank (Banks-Regional)
---------- ----------
Hellenic Telecommunication Organization S.A. (Telecommunication-Cellular/Wireless) (a) 293
---------- ----------
National Bank of Greece S.A. (Banks-Money Center)
---------- ----------
Panafon S.A. (Telecommunications-Cellular/Wireless) (a) 57,082
---------- ----------
STET Hellas Telecommunications S.A. (Telecommunications-Cellular/Wireless) (a) 392,709
---------- ----------
---------- ----------
HONG KONG--2.27%
---------- ----------
Cheung Kong (Holdings) Ltd. (Land Development)
---------- ----------
China Telecom Ltd. (Telecommunications - Cellular/Wireless) (a) 13,837
---------- ----------
CLP Holdings Ltd. (Electric Companies)
---------- ----------
Cosco Pacific Ltd. (Financial-Diversified)
---------- ----------
Hang Seng Bank Ltd. (Banking)
---------- ----------
Hong Kong Telecommunications Ltd. (Telephone)
---------- ----------
Hongkong Electric Holdings Ltd. (Electric Companies)
---------- ----------
HSBC Holdings PLC (Banks - Major Regional)
---------- ----------
Hutchison Whampoa Ltd. (Retail-Food Chains)
---------- ----------
New World Development Co. Ltd. (Manufacturing-Diversified)
---------- ----------
Ng Fung Hong Ltd. (Foods)
---------- ----------
Qingling Motors Co. (Trucks & Parts)
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
Equant N.V. (Computers-Peripherals) (a) 46,825
---------- ----------
Essilor International S.A. (Manufacturing-Specialized)
---------- ----------
Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) (a)
---------- ----------
Genset - ADR (Biotechnology) (a)
---------- ----------
Lafarge S.A. (Engineering & Construction)
---------- ----------
Legrand S.A. (Housewares)
---------- ----------
Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 64,391
---------- ----------
Promodes (Retail-Food Chains)
---------- ----------
PSA Peugeot Citreon (Automobiles)
---------- ----------
Renault S.A. (Automobiles)
---------- ----------
Rexal S.A. (Distributors-Food & Health)
---------- ----------
Rhone-Poulenc - Class A (Chemicals-Diversified)
---------- ----------
Societe Generale (Banks - Major Regional)
---------- ----------
Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable)
---------- ----------
Suez Lyonnaise des Eaux (Manufacturing-Diversified)
---------- ----------
Total S.A. - Class B (Oil & Gas-Refining & Marketing)
---------- ----------
Total S.A.-ADR (Oil-International Integrated)
---------- ----------
Valeo S.A. (Auto Parts & Equipment)
---------- ----------
---------- ----------
GERMANY--4.94%
---------- ----------
Adidas Salomon A.G. (Footwear) 9,341
---------- ----------
Allianz A.G. (Insurance-Multi-Line)
---------- ----------
BASF A.G. (Chemicals-Diversified)
---------- ----------
Bayerische Vereinsbank A.G. (Banks-Major Regional)
---------- ----------
BHF-Bank A.G. (Banks-Major Regional)
---------- ----------
DaimlerChrysler A.G. (Automobiles)
---------- ----------
Deutsche Lufthansa A.G. (Airlines)
---------- ----------
Dresdner Bank A.G. (Banks-Major Regional)
---------- ----------
EM.TV & Merchandising A.G. (Broadcasting-Television, Radio, & Cable) (a) 45,895
---------- ----------
Fresenius A.G.-Pfd. (Machinery-Diversified) 47,182
---------- ----------
Karstadt A.G. (Retail-Department Stores)
---------- ----------
MAN A.G. (Manufacturing-Diversified)
---------- ----------
Mannesmann A.G. (Machinery-Diversifies) 91,007
---------- ----------
MobilCom A.G. (Telecommunications-Cellular/Wireless)
---------- ----------
Porsche A.G. (Automobiles) (a)
---------- ----------
SAP A.G. - Pfd. (Computers-Software & Services) 65,853
---------- ----------
Viag A.G. (Manufacturing-Diversified)
---------- ----------
---------- ----------
GREECE--0.29%
---------- ----------
Alpha Credit Bank (Banks-Regional)
---------- ----------
Hellenic Telecommunication Organization S.A. (Telecommunication-Cellular/Wireless) (a)
---------- ----------
National Bank of Greece S.A. (Banks-Money Center)
---------- ----------
Panafon S.A. (Telecommunications-Cellular/Wireless) (a) 11,985
---------- ----------
STET Hellas Telecommunications S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
---------- ----------
HONG KONG--2.27%
---------- ----------
Cheung Kong (Holdings) Ltd. (Land Development)
---------- ----------
China Telecom Ltd. (Telecommunications - Cellular/Wireless) (a)
---------- ----------
CLP Holdings Ltd. (Electric Companies)
---------- ----------
Cosco Pacific Ltd. (Financial-Diversified)
---------- ----------
Hang Seng Bank Ltd. (Banking)
---------- ----------
Hong Kong Telecommunications Ltd. (Telephone)
---------- ----------
Hongkong Electric Holdings Ltd. (Electric Companies)
---------- ----------
HSBC Holdings PLC (Banks - Major Regional)
---------- ----------
Hutchison Whampoa Ltd. (Retail-Food Chains)
---------- ----------
New World Development Co. Ltd. (Manufacturing-Diversified)
---------- ----------
Ng Fung Hong Ltd. (Foods)
---------- ----------
Qingling Motors Co. (Trucks & Parts)
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
Equant N.V. (Computers-Peripherals) (a)
---------- ----------
Essilor International S.A. (Manufacturing-Specialized) 895,429
---------- ----------
Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) (a) 2,124,126
---------- ----------
Genset - ADR (Biotechnology) (a)
---------- ----------
Lafarge S.A. (Engineering & Construction)
---------- ----------
Legrand S.A. (Housewares) 1,828,232
---------- ----------
Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 3,401,091
---------- ----------
Promodes (Retail-Food Chains) 2,653,833
---------- ----------
PSA Peugeot Citreon (Automobiles) 1,083,281
---------- ----------
Renault S.A. (Automobiles) 2,200,376
---------- ----------
Rexal S.A. (Distributors-Food & Health) 1,291,994
---------- ----------
Rhone-Poulenc - Class A (Chemicals-Diversified) 1,291,486
---------- ----------
Societe Generale (Banks - Major Regional) 1,384,337
---------- ----------
Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable) 1,174,881
---------- ----------
Suez Lyonnaise des Eaux (Manufacturing-Diversified) 2,382,467
---------- ----------
Total S.A. - Class B (Oil & Gas-Refining & Marketing) 961,982
---------- ----------
Total S.A.-ADR (Oil-International Integrated)
---------- ----------
Valeo S.A. (Auto Parts & Equipment) 1,181,859
---------- ----------
---------- ----------
GERMANY--4.94%
---------- ----------
Adidas Salomon A.G. (Footwear)
---------- ----------
Allianz A.G. (Insurance-Multi-Line) 2,786,606
---------- ----------
BASF A.G. (Chemicals-Diversified)
---------- ----------
Bayerische Vereinsbank A.G. (Banks-Major Regional) 2,114,438
---------- ----------
BHF-Bank A.G. (Banks-Major Regional) 603,097
---------- ----------
DaimlerChrysler A.G. (Automobiles) 1,279,752
---------- ----------
Deutsche Lufthansa A.G. (Airlines)
---------- ----------
Dresdner Bank A.G. (Banks-Major Regional) 1,617,259
---------- ----------
EM.TV & Merchandising A.G. (Broadcasting-Television, Radio, & Cable) (a)
---------- ----------
Fresenius A.G.-Pfd. (Machinery-Diversified)
---------- ----------
Karstadt A.G. (Retail-Department Stores) 3,236,918
---------- ----------
MAN A.G. (Manufacturing-Diversified)
---------- ----------
Mannesmann A.G. (Machinery-Diversifies)
---------- ----------
MobilCom A.G. (Telecommunications-Cellular/Wireless)
---------- ----------
Porsche A.G. (Automobiles) (a) 684,109
---------- ----------
SAP A.G. - Pfd. (Computers-Software & Services)
---------- ----------
Viag A.G. (Manufacturing-Diversified)
---------- ----------
---------- ----------
GREECE--0.29%
---------- ----------
Alpha Credit Bank (Banks-Regional)
---------- ----------
Hellenic Telecommunication Organization S.A. (Telecommunication-Cellular/Wireless) (a)
---------- ----------
National Bank of Greece S.A. (Banks-Money Center)
---------- ----------
Panafon S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
STET Hellas Telecommunications S.A. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
---------- ----------
HONG KONG--2.27%
---------- ----------
Cheung Kong (Holdings) Ltd. (Land Development) 647,662
---------- ----------
China Telecom Ltd. (Telecommunications - Cellular/Wireless) (a) 1,006,673
---------- ----------
CLP Holdings Ltd. (Electric Companies) 348,776
---------- ----------
Cosco Pacific Ltd. (Financial-Diversified) 1,017,400
---------- ----------
Hang Seng Bank Ltd. (Banking) 259,226
---------- ----------
Hong Kong Telecommunications Ltd. (Telephone) 349,808
---------- ----------
Hongkong Electric Holdings Ltd. (Electric Companies) 121,336
---------- ----------
HSBC Holdings PLC (Banks - Major Regional) 285,697
---------- ----------
Hutchison Whampoa Ltd. (Retail-Food Chains) 706,716 1,710,253
---------- ----------
New World Development Co. Ltd. (Manufacturing-Diversified) 125,854
---------- ----------
Ng Fung Hong Ltd. (Foods) 412,671
---------- ----------
Qingling Motors Co. (Trucks & Parts)
---------- ----------
Pro Forma
Combining
---------
Equant N.V. (Computers-Peripherals) (a) 780,374
----------
Essilor International S.A. (Manufacturing-Specialized) 895,429
----------
Etablissements Economiques du Casino Guichard-Perrachon (Retail-Food Chains) (a) 2,124,126
----------
Genset - ADR (Biotechnology) (a) 258,239
----------
Lafarge S.A. (Engineering & Construction) 242,249
----------
Legrand S.A. (Housewares) 1,828,232
----------
Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 3,465,483
----------
Promodes (Retail-Food Chains) 2,653,833
----------
PSA Peugeot Citreon (Automobiles) 1,083,281
----------
Renault S.A. (Automobiles) 2,200,376
----------
Rexal S.A. (Distributors-Food & Health) 1,291,994
----------
Rhone-Poulenc - Class A (Chemicals-Diversified) 1,291,486
----------
Societe Generale (Banks - Major Regional) 1,384,337
----------
Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable) 1,174,881
----------
Suez Lyonnaise des Eaux (Manufacturing-Diversified) 2,454,352
----------
Total S.A. - Class B (Oil & Gas-Refining & Marketing) 961,982
----------
Total S.A.-ADR (Oil-International Integrated) 149,250
----------
Valeo S.A. (Auto Parts & Equipment) 1,181,859
----------
42,542,480
----------
GERMANY--4.94%
----------
Adidas Salomon A.G. (Footwear) 9,341
----------
Allianz A.G. (Insurance-Multi-Line) 2,786,606
----------
BASF A.G. (Chemicals-Diversified) 125,948
----------
Bayerische Vereinsbank A.G. (Banks-Major Regional) 2,114,438
----------
BHF-Bank A.G. (Banks-Major Regional) 603,097
----------
DaimlerChrysler A.G. (Automobiles) 1,279,752
----------
Deutsche Lufthansa A.G. (Airlines) 50,792
----------
Dresdner Bank A.G. (Banks-Major Regional) 1,617,259
----------
EM.TV & Merchandising A.G. (Broadcasting-Television, Radio, & Cable) (a) 410,184
----------
Fresenius A.G.-Pfd. (Machinery-Diversified) 47,182
----------
Karstadt A.G. (Retail-Department Stores) 3,236,918
----------
MAN A.G. (Manufacturing-Diversified) 58,809
----------
Mannesmann A.G. (Machinery-Diversifies) 893,106
----------
MobilCom A.G. (Telecommunications-Cellular/Wireless) 722,294
----------
Porsche A.G. (Automobiles) (a) 1,176,668
----------
SAP A.G. - Pfd. (Computers-Software & Services) 589,815
----------
Viag A.G. (Manufacturing-Diversified) 58,629
----------
15,780,837
----------
GREECE--0.29%
----------
Alpha Credit Bank (Banks-Regional) 125,349
----------
Hellenic Telecommunication Organization S.A. (Telecommunication-Cellular/Wireless) (a) 132,845
----------
National Bank of Greece S.A. (Banks-Money Center) 92,564
----------
Panafon S.A. (Telecommunications-Cellular/Wireless) (a) 86,387
----------
STET Hellas Telecommunications S.A. (Telecommunications-Cellular/Wireless) (a) 479,959
----------
917,104
----------
HONG KONG--2.27%
----------
Cheung Kong (Holdings) Ltd. (Land Development) 647,662
----------
China Telecom Ltd. (Telecommunications - Cellular/Wireless) (a) 1,020,511
----------
CLP Holdings Ltd. (Electric Companies) 348,776
----------
Cosco Pacific Ltd. (Financial-Diversified) 1,017,400
----------
Hang Seng Bank Ltd. (Banking) 259,226
----------
Hong Kong Telecommunications Ltd. (Telephone) 349,808
----------
Hongkong Electric Holdings Ltd. (Electric Companies) 121,336
----------
HSBC Holdings PLC (Banks - Major Regional) 285,697
----------
Hutchison Whampoa Ltd. (Retail-Food Chains) 2,416,969
----------
New World Development Co. Ltd. (Manufacturing-Diversified) 125,854
----------
Ng Fung Hong Ltd. (Foods) 412,671
----------
Qingling Motors Co. (Trucks & Parts) 19,310
----------
475
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
Shanghai Industrial Holdings Ltd. (Manufacturing-Diversified)
---------- ----------
Sun Hung Kai Properties Ltd. (Land Development)
---------- ----------
---------- ----------
HUNGARY--0.09%
---------- ----------
Magyar Tavkozlesi ADR (Telecommunications-Long Distance) 132,368
---------- ----------
MOL Magyar Olaj-es Gazipari Rt. (Oil-Domestic Integrated) (c) 134,810
---------- ----------
Richter Gedeon Rt.-GDR (Medical-Drugs)
---------- ----------
---------- ----------
INDIA--0.11%
---------- ----------
Hindalco Industries Ltd.: (Metals - Non-Ferrous)
---------- ----------
GDR 28,140
---------- ----------
Common 4,833
---------- ----------
Hindustan Lever Ltd. (Personal Care) 149,017
---------- ----------
ITC Ltd. (Tobacco) 114,922
---------- ----------
Ranbaxy Laboratories Ltd. (Health Care-Drugs-Generic & Other) 18,953
---------- ----------
State Bank of India (Banks-Major Regional)
---------- ----------
---------- ----------
INDONESIA--0.29%
---------- ----------
Gulf Indonesia Resources Ltd. (Oil-International Integrated) (a)
---------- ----------
PT Telekomunikasi Indonesia (Telephone) (a)
---------- ----------
---------- ----------
IRELAND--1.73%
---------- ----------
Allied Irish Banks PLC (Banks-Regional)
---------- ----------
Bank of Ireland (Banks-Major Regional)
---------- ----------
Esat Telecom Group PLC-ADR (Telecommunications-Long Distance) (a)
---------- ----------
Saville Systems Ireland PLC-ADR (Services-Data Processing)
---------- ----------
---------- ----------
ISRAEL--0.09%
---------- ----------
Bank Leumi Le-Isreal (Banks-Money Center) 37,706
---------- ----------
Bezeq Israe;o Telecommunications Corp. Ltd. (Telecommunication-Cellular/Wireless) (a) 61,945
---------- ----------
Blue Square Chain Investments and Properties Ltd. (Retail-Food Chains) (a) 33,326
---------- ----------
Blue Square-Israel Ltd.-ADR (Retail-Food Chains) 31,125
---------- ----------
Makhteshim-Agan Industries Ltd. (Investment Management) (a) 54,031
---------- ----------
Teva Pharmaceutical Industries Ltd. (Health Care-Drugs-Generic & Other) 73,698
---------- ----------
---------- ----------
ITALY--5.55%
---------- ----------
Aeroporti di Roma S.p.A. (Aerospace/Defense) (a)
---------- ----------
Assicurazioni Generali (Insurance-Multi-Line)
---------- ----------
Banca Commerciale Italiana (Banks-Major Regional)
---------- ----------
Banca di Roma (Banks-Major Regional) (a)
---------- ----------
Credito Italiano S.p.A. (Banks-Major Regional)
---------- ----------
Edison S.p.A. (Electric Power) (a)
---------- ----------
ENI S.p.A - ADR (Oil-International Integrated) 189,700
---------- ----------
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing)
---------- ----------
Mediolanum (Insurance - Life)
---------- ----------
Olivetti S.p.A. (Telecommunications-(Cellular/Wireless) (a)
---------- ----------
San Paolo-IMI S.p.A. (Banks-Major Regional)
---------- ----------
Telecom Italia Mobile S.p.A. (Telecommunications - Cellular/Wireless)
---------- ----------
Telecom Italia S.p.A. (Telephone)
---------- ----------
Telecom Italia S.p.A. (Telephone)
---------- ----------
---------- ----------
JAPAN--5.91%
---------- ----------
Advantest Corp. (Electronics-Instrumentation) (a)
---------- ----------
Alps Electric Co., Ltd. (Electronics-Component Distributors) (a)
---------- ----------
Asahi Breweries Ltd. (Beverages-Alcoholic)
---------- ----------
Bridgestone Corp. (Auto Parts & Equipment)
---------- ----------
Canon, Inc. (Office Equipment & Supplies)
---------- ----------
Fast Retailing Co. Ltd. (Retail-Specialty Apparel)
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
Shanghai Industrial Holdings Ltd. (Manufacturing-Diversified)
---------- ----------
Sun Hung Kai Properties Ltd. (Land Development)
---------- ----------
---------- ----------
HUNGARY--0.09%
---------- ----------
Magyar Tavkozlesi ADR (Telecommunications-Long Distance)
---------- ----------
MOL Magyar Olaj-es Gazipari Rt. (Oil-Domestic Integrated) (c)
---------- ----------
Richter Gedeon Rt.-GDR (Medical-Drugs)
---------- ----------
---------- ----------
INDIA--0.11%
---------- ----------
Hindalco Industries Ltd.: (Metals - Non-Ferrous)
---------- ----------
GDR
---------- ----------
Common
---------- ----------
Hindustan Lever Ltd. (Personal Care)
---------- ----------
ITC Ltd. (Tobacco)
---------- ----------
Ranbaxy Laboratories Ltd. (Health Care-Drugs-Generic & Other)
---------- ----------
State Bank of India (Banks-Major Regional)
---------- ----------
---------- ----------
INDONESIA--0.29%
---------- ----------
Gulf Indonesia Resources Ltd. (Oil-International Integrated) (a)
---------- ----------
PT Telekomunikasi Indonesia (Telephone) (a)
---------- ----------
---------- ----------
IRELAND--1.73%
---------- ----------
Allied Irish Banks PLC (Banks-Regional)
---------- ----------
Bank of Ireland (Banks-Major Regional)
---------- ----------
Esat Telecom Group PLC-ADR (Telecommunications-Long Distance) (a) 200,200 30,800
---------- ----------
Saville Systems Ireland PLC-ADR (Services-Data Processing) 556,700
---------- ----------
---------- ----------
ISRAEL--0.09%
---------- ----------
Bank Leumi Le-Isreal (Banks-Money Center)
---------- ----------
Bezeq Israe;o Telecommunications Corp. Ltd. (Telecommunication-Cellular/Wireless) (a)
---------- ----------
Blue Square Chain Investments and Properties Ltd. (Retail-Food Chains) (a)
---------- ----------
Blue Square-Israel Ltd.-ADR (Retail-Food Chains)
---------- ----------
Makhteshim-Agan Industries Ltd. (Investment Management) (a)
---------- ----------
Teva Pharmaceutical Industries Ltd. (Health Care-Drugs-Generic & Other)
---------- ----------
---------- ----------
ITALY--5.55%
---------- ----------
Aeroporti di Roma S.p.A. (Aerospace/Defense) (a) 44,436
---------- ----------
Assicurazioni Generali (Insurance-Multi-Line)
---------- ----------
Banca Commerciale Italiana (Banks-Major Regional)
---------- ----------
Banca di Roma (Banks-Major Regional) (a)
---------- ----------
Credito Italiano S.p.A. (Banks-Major Regional) 553,247
---------- ----------
Edison S.p.A. (Electric Power) (a) 83,622
---------- ----------
ENI S.p.A - ADR (Oil-International Integrated)
---------- ----------
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing)
---------- ----------
Mediolanum (Insurance - Life) 416,453
---------- ----------
Olivetti S.p.A. (Telecommunications-(Cellular/Wireless) (a)
---------- ----------
San Paolo-IMI S.p.A. (Banks-Major Regional)
---------- ----------
Telecom Italia Mobile S.p.A. (Telecommunications - Cellular/Wireless) 596,594
---------- ----------
Telecom Italia S.p.A. (Telephone) 78,659
---------- ----------
Telecom Italia S.p.A. (Telephone) 545,488
---------- ----------
---------- ----------
JAPAN--5.91%
---------- ----------
Advantest Corp. (Electronics-Instrumentation) (a)
---------- ----------
Alps Electric Co., Ltd. (Electronics-Component Distributors) (a)
---------- ----------
Asahi Breweries Ltd. (Beverages-Alcoholic)
---------- ----------
Bridgestone Corp. (Auto Parts & Equipment) 22,703
---------- ----------
Canon, Inc. (Office Equipment & Supplies)
---------- ----------
Fast Retailing Co. Ltd. (Retail-Specialty Apparel)
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
Shanghai Industrial Holdings Ltd. (Manufacturing-Diversified)
---------- ----------
Sun Hung Kai Properties Ltd. (Land Development)
---------- ----------
---------- ----------
HUNGARY--0.09%
---------- ----------
Magyar Tavkozlesi ADR (Telecommunications-Long Distance)
---------- ----------
MOL Magyar Olaj-es Gazipari Rt. (Oil-Domestic Integrated) (c)
---------- ----------
Richter Gedeon Rt.-GDR (Medical-Drugs) 32,918
---------- ----------
---------- ----------
INDIA--0.11%
---------- ----------
Hindalco Industries Ltd.: (Metals - Non-Ferrous)
---------- ----------
GDR
---------- ----------
Common
---------- ----------
Hindustan Lever Ltd. (Personal Care)
---------- ----------
ITC Ltd. (Tobacco)
---------- ----------
Ranbaxy Laboratories Ltd. (Health Care-Drugs-Generic & Other)
---------- ----------
State Bank of India (Banks-Major Regional) 44,806
---------- ----------
---------- ----------
INDONESIA--0.29%
---------- ----------
Gulf Indonesia Resources Ltd. (Oil-International Integrated) (a)
---------- ----------
PT Telekomunikasi Indonesia (Telephone) (a)
---------- ----------
---------- ----------
IRELAND--1.73%
---------- ----------
Allied Irish Banks PLC (Banks-Regional)
---------- ----------
Bank of Ireland (Banks-Major Regional) 59,205
---------- ----------
Esat Telecom Group PLC-ADR (Telecommunications-Long Distance) (a)
---------- ----------
Saville Systems Ireland PLC-ADR (Services-Data Processing)
---------- ----------
---------- ----------
ISRAEL--0.09%
---------- ----------
Bank Leumi Le-Isreal (Banks-Money Center)
---------- ----------
Bezeq Israe;o Telecommunications Corp. Ltd. (Telecommunication-Cellular/Wireless) (a)
---------- ----------
Blue Square Chain Investments and Properties Ltd. (Retail-Food Chains) (a)
---------- ----------
Blue Square-Israel Ltd.-ADR (Retail-Food Chains)
---------- ----------
Makhteshim-Agan Industries Ltd. (Investment Management) (a)
---------- ----------
Teva Pharmaceutical Industries Ltd. (Health Care-Drugs-Generic & Other)
---------- ----------
---------- ----------
ITALY--5.55%
---------- ----------
Aeroporti di Roma S.p.A. (Aerospace/Defense) (a)
---------- ----------
Assicurazioni Generali (Insurance-Multi-Line)
---------- ----------
Banca Commerciale Italiana (Banks-Major Regional)
---------- ----------
Banca di Roma (Banks-Major Regional) (a)
---------- ----------
Credito Italiano S.p.A. (Banks-Major Regional)
---------- ----------
Edison S.p.A. (Electric Power) (a)
---------- ----------
ENI S.p.A - ADR (Oil-International Integrated)
---------- ----------
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing)
---------- ----------
Mediolanum (Insurance - Life)
---------- ----------
Olivetti S.p.A. (Telecommunications-(Cellular/Wireless) (a)
---------- ----------
San Paolo-IMI S.p.A. (Banks-Major Regional) 65,990
---------- ----------
Telecom Italia Mobile S.p.A. (Telecommunications - Cellular/Wireless)
---------- ----------
Telecom Italia S.p.A. (Telephone)
---------- ----------
Telecom Italia S.p.A. (Telephone) 166,040
---------- ----------
---------- ----------
JAPAN--5.91%
---------- ----------
Advantest Corp. (Electronics-Instrumentation) (a)
---------- ----------
Alps Electric Co., Ltd. (Electronics-Component Distributors) (a)
---------- ----------
Asahi Breweries Ltd. (Beverages-Alcoholic) 58,948
---------- ----------
Bridgestone Corp. (Auto Parts & Equipment)
---------- ----------
Canon, Inc. (Office Equipment & Supplies) 64,126
---------- ----------
Fast Retailing Co. Ltd. (Retail-Specialty Apparel) 778
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
Shanghai Industrial Holdings Ltd. (Manufacturing-Diversified) 161,609
---------- ----------
Sun Hung Kai Properties Ltd. (Land Development) 72,931
---------- ----------
---------- ----------
HUNGARY--0.09%
---------- ----------
Magyar Tavkozlesi ADR (Telecommunications-Long Distance)
---------- ----------
MOL Magyar Olaj-es Gazipari Rt. (Oil-Domestic Integrated) (c)
---------- ----------
Richter Gedeon Rt.-GDR (Medical-Drugs)
---------- ----------
---------- ----------
INDIA--0.11%
---------- ----------
Hindalco Industries Ltd.: (Metals - Non-Ferrous)
---------- ----------
GDR
---------- ----------
Common
---------- ----------
Hindustan Lever Ltd. (Personal Care)
---------- ----------
ITC Ltd. (Tobacco)
---------- ----------
Ranbaxy Laboratories Ltd. (Health Care-Drugs-Generic & Other)
---------- ----------
State Bank of India (Banks-Major Regional)
---------- ----------
---------- ----------
INDONESIA--0.29%
---------- ----------
Gulf Indonesia Resources Ltd. (Oil-International Integrated) (a) 828,100
---------- ----------
PT Telekomunikasi Indonesia (Telephone) (a) 86,538
---------- ----------
---------- ----------
IRELAND--1.73%
---------- ----------
Allied Irish Banks PLC (Banks-Regional) 3,144,447
---------- ----------
Bank of Ireland (Banks-Major Regional) 1,543,049
---------- ----------
Esat Telecom Group PLC-ADR (Telecommunications-Long Distance) (a)
---------- ----------
Saville Systems Ireland PLC-ADR (Services-Data Processing)
---------- ----------
---------- ----------
ISRAEL--0.09%
---------- ----------
Bank Leumi Le-Isreal (Banks-Money Center)
---------- ----------
Bezeq Israe;o Telecommunications Corp. Ltd. (Telecommunication-Cellular/Wireless) (a)
---------- ----------
Blue Square Chain Investments and Properties Ltd. (Retail-Food Chains) (a)
---------- ----------
Blue Square-Israel Ltd.-ADR (Retail-Food Chains)
---------- ----------
Makhteshim-Agan Industries Ltd. (Investment Management) (a)
---------- ----------
Teva Pharmaceutical Industries Ltd. (Health Care-Drugs-Generic & Other)
---------- ----------
---------- ----------
ITALY--5.55%
---------- ----------
Aeroporti di Roma S.p.A. (Aerospace/Defense) (a)
---------- ----------
Assicurazioni Generali (Insurance-Multi-Line) 2,049,918
---------- ----------
Banca Commerciale Italiana (Banks-Major Regional) 753,930
---------- ----------
Banca di Roma (Banks-Major Regional) (a) 1,646,760
---------- ----------
Credito Italiano S.p.A. (Banks-Major Regional) 1,975,950
---------- ----------
Edison S.p.A. (Electric Power) (a)
---------- ----------
ENI S.p.A - ADR (Oil-International Integrated)
---------- ----------
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing) 1,235,070
---------- ----------
Mediolanum (Insurance - Life)
---------- ----------
Olivetti S.p.A. (Telecommunications-(Cellular/Wireless) (a) 1,315,121
---------- ----------
San Paolo-IMI S.p.A. (Banks-Major Regional) 2,158,330
---------- ----------
Telecom Italia Mobile S.p.A. (Telecommunications - Cellular/Wireless) 2,000,484
---------- ----------
Telecom Italia S.p.A. (Telephone)
---------- ----------
Telecom Italia S.p.A. (Telephone) 1,855,600
---------- ----------
---------- ----------
JAPAN--5.91%
---------- ----------
Advantest Corp. (Electronics-Instrumentation) (a) 2,199,079
---------- ----------
Alps Electric Co., Ltd. (Electronics-Component Distributors) (a) 863,206
---------- ----------
Asahi Breweries Ltd. (Beverages-Alcoholic)
---------- ----------
Bridgestone Corp. (Auto Parts & Equipment)
---------- ----------
Canon, Inc. (Office Equipment & Supplies)
---------- ----------
Fast Retailing Co. Ltd. (Retail-Specialty Apparel)
---------- ----------
Pro Forma
Combining
---------
Shanghai Industrial Holdings Ltd. (Manufacturing-Diversified) 161,609
----------
Sun Hung Kai Properties Ltd. (Land Development) 72,931
----------
7,259,758
----------
HUNGARY--0.09%
----------
Magyar Tavkozlesi ADR (Telecommunications-Long Distance) 132,368
----------
MOL Magyar Olaj-es Gazipari Rt. (Oil-Domestic Integrated) (c) 134,810
----------
Richter Gedeon Rt.-GDR (Medical-Drugs) 32,918
----------
300,095
----------
INDIA--0.11%
----------
Hindalco Industries Ltd.: (Metals - Non-Ferrous)
----------
GDR 28,140
----------
Common 4,833
----------
Hindustan Lever Ltd. (Personal Care) 149,017
----------
ITC Ltd. (Tobacco) 114,922
----------
Ranbaxy Laboratories Ltd. (Health Care-Drugs-Generic & Other) 18,953
----------
State Bank of India (Banks-Major Regional) 44,806
----------
360,672
----------
INDONESIA--0.29%
----------
Gulf Indonesia Resources Ltd. (Oil-International Integrated) (a) 828,100
----------
PT Telekomunikasi Indonesia (Telephone) (a) 86,538
----------
914,638
----------
IRELAND--1.73%
----------
Allied Irish Banks PLC (Banks-Regional) 3,144,447
----------
Bank of Ireland (Banks-Major Regional) 1,602,254
----------
Esat Telecom Group PLC-ADR (Telecommunications-Long Distance) (a) 231,000
----------
Saville Systems Ireland PLC-ADR (Services-Data Processing) 556,700
----------
5,534,401
----------
ISRAEL--0.09%
----------
Bank Leumi Le-Isreal (Banks-Money Center) 37,706
----------
Bezeq Israe;o Telecommunications Corp. Ltd. (Telecommunication-Cellular/Wireless) (a) 61,945
----------
Blue Square Chain Investments and Properties Ltd. (Retail-Food Chains) (a) 33,326
----------
Blue Square-Israel Ltd.-ADR (Retail-Food Chains) 31,125
----------
Makhteshim-Agan Industries Ltd. (Investment Management) (a) 54,031
----------
Teva Pharmaceutical Industries Ltd. (Health Care-Drugs-Generic & Other) 73,698
----------
291,831
----------
ITALY--5.55%
----------
Aeroporti di Roma S.p.A. (Aerospace/Defense) (a) 44,436
----------
Assicurazioni Generali (Insurance-Multi-Line) 2,049,918
----------
Banca Commerciale Italiana (Banks-Major Regional) 753,930
----------
Banca di Roma (Banks-Major Regional) (a) 1,646,760
----------
Credito Italiano S.p.A. (Banks-Major Regional) 2,529,198
----------
Edison S.p.A. (Electric Power) (a) 83,622
----------
ENI S.p.A - ADR (Oil-International Integrated) 189,700
----------
Ente Nazionale Idrocarburi S.p.A. (Oil & Gas-Refining & Marketing) 1,235,070
----------
Mediolanum (Insurance - Life) 416,453
----------
Olivetti S.p.A. (Telecommunications-(Cellular/Wireless) (a) 1,315,121
----------
San Paolo-IMI S.p.A. (Banks-Major Regional) 2,224,320
----------
Telecom Italia Mobile S.p.A. (Telecommunications - Cellular/Wireless) 2,597,078
----------
Telecom Italia S.p.A. (Telephone) 78,659
----------
Telecom Italia S.p.A. (Telephone) 2,567,128
----------
17,731,392
----------
JAPAN--5.91%
----------
Advantest Corp. (Electronics-Instrumentation) (a) 2,199,079
----------
Alps Electric Co., Ltd. (Electronics-Component Distributors) (a) 863,206
----------
Asahi Breweries Ltd. (Beverages-Alcoholic) 58,948
----------
Bridgestone Corp. (Auto Parts & Equipment) 22,703
----------
Canon, Inc. (Office Equipment & Supplies) 64,126
----------
Fast Retailing Co. Ltd. (Retail-Specialty Apparel) 778
----------
476
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
Hoya Corp.(Manufacturing-Specialized) (a)
---------- ----------
Mabuchi Motor Co., Ltd. (Electrical Equipment)
---------- ----------
Matsushita Communication Industrial Co., Ltd. (Telephone) (a)
---------- ----------
Matsushita-Kotobuki Electronics Industries Ltd. (Electronics-Component Distributors)
---------- ----------
Murata Manufacturing Co., Ltd. (Electronics- Component Distributors)
---------- ----------
Nichiei Co., Ltd. (Banks-Money Center)
---------- ----------
Nippon Telegraph & Telephone Corp. (Telephone)
---------- ----------
Nippon Television Network Corp. (Broadcasting-Television, Radio & Cable)
---------- ----------
NTT Data Corp. (Computers-Software & Services) (a)
---------- ----------
NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Okuma Corp. (Machine Tools) (a)
---------- ----------
Omron Corp. (Electronics- Component Distributors) (a)
---------- ----------
SMC Corp. (Machinery-Diversified)
---------- ----------
Sony Corp. (Electronics-Component Distributors)
---------- ----------
Takeda Chemical Industries (Health Care-Drugs-Generic & Other)
---------- ----------
TDK Corp. (Electrical Equipment)
---------- ----------
Tokyo Electron Ltd. (Electronics-Semiconductors) (a)
---------- ----------
---------- ----------
LUXEMBOURG--0.04%
---------- ----------
Quilmes Industrial S.A. (Beverages-Alcoholic)
---------- ----------
---------- ----------
MALAYSIA--0.05%
---------- ----------
Berjaya Sports Toto Berhad (Investments) (d)
---------- ----------
Malaysia International Shipping Berhad (Shipping) (d)
---------- ----------
Telekom Malaysia Berhad (Telephone)
---------- ----------
YTL Power International Berhad (Electric Companies) (d)
---------- ----------
---------- ----------
MEXICO--2.79%
---------- ----------
Alpha S.A. de C.V. (Manufacturing-Diversified)
---------- ----------
Apasco S.A. de C.V. (Construction-Cement & Aggregates) 34,657
---------- ----------
ARA, S.A. de C.V. (Homebuilding) (a) 38,384
---------- ----------
Carso Global Telecom (Telephone) (a)
---------- ----------
Cemex S.A. de CV (Construction-Cement & Aggregates) 50,133
---------- ----------
Cifra S.A. de C.V. (Retail-General Merchandise) (a) 67,630
---------- ----------
Cintra S.A. (Airlines) (a)
---------- ----------
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic)
---------- ----------
Controladora Comercial Mexicana S.A. de C.V. (Retail-Department Stores) (a)(e)
---------- ----------
Corporacion GEO S.A. de C.V. (Construction-Cement & Aggregates) (a) 39,444
---------- ----------
Desc S.A. de C.V. (Manufacturing-Diversified)
---------- ----------
El Puerto de Liverpool S.A. de C.V. (Retail-Department Stores)
---------- ----------
Formento Economico Mexicano, S.A. de C.V. (Beverages-Alcoholic) 94,971
---------- ----------
Grupo Carso S.A. de C.V. (Manufacturing-Diversified) (a) 86,545
---------- ----------
Grupo Cementos de Chihuahua S.A. de C.V. (Construction-Cement & Aggregates)
---------- ----------
Grupo Financiero Banamex Accival, S.A. de C.V. (Financial-Diversified) (a) 53,838
---------- ----------
Grupo Financiero Banorte S.A. de C.V. (Financial-Diversified) (a)
---------- ----------
Grupo Industrial Maseca S.A. de C.V.-Class B (Foods)
---------- ----------
Grupo Industrial Saltillo, S.A. de C.V. (Shipping)
---------- ----------
Grupo Mexico S.A. (Metals Mining)
---------- ----------
Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic)
---------- ----------
Grupo Posadas S.A. (Lodging-Hotels) (a)
---------- ----------
Grupo Posadas S.A. (Lodging-Hotels) (a)
---------- ----------
Grupo Televisa S.A.-GDR (Entertainment) (a)
---------- ----------
Industrias Penoles S.A. (Metals Mining)
---------- ----------
Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products)
---------- ----------
Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic) 65,437
---------- ----------
Pepsi-Gemex S.A. (Beverages-Non-alcoholic)
---------- ----------
Sanluis Corporacion S.A. de C.V. (Metal Fabricators) (a)
---------- ----------
Telefonos de Mexico S.A.-ADR (Telephone) 88,514
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
Hoya Corp.(Manufacturing-Specialized) (a)
---------- ----------
Mabuchi Motor Co., Ltd. (Electrical Equipment)
---------- ----------
Matsushita Communication Industrial Co., Ltd. (Telephone) (a)
---------- ----------
Matsushita-Kotobuki Electronics Industries Ltd. (Electronics-Component Distributors)
---------- ----------
Murata Manufacturing Co., Ltd. (Electronics- Component Distributors)
---------- ----------
Nichiei Co., Ltd. (Banks-Money Center)
---------- ----------
Nippon Telegraph & Telephone Corp. (Telephone)
---------- ----------
Nippon Television Network Corp. (Broadcasting-Television, Radio & Cable)
---------- ----------
NTT Data Corp. (Computers-Software & Services) (a)
---------- ----------
NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) (a) 41,158
---------- ----------
Okuma Corp. (Machine Tools) (a)
---------- ----------
Omron Corp. (Electronics- Component Distributors) (a)
---------- ----------
SMC Corp. (Machinery-Diversified)
---------- ----------
Sony Corp. (Electronics-Component Distributors)
---------- ----------
Takeda Chemical Industries (Health Care-Drugs-Generic & Other)
---------- ----------
TDK Corp. (Electrical Equipment)
---------- ----------
Tokyo Electron Ltd. (Electronics-Semiconductors) (a)
---------- ----------
---------- ----------
LUXEMBOURG--0.04%
---------- ----------
Quilmes Industrial S.A. (Beverages-Alcoholic)
---------- ----------
---------- ----------
MALAYSIA--0.05%
---------- ----------
Berjaya Sports Toto Berhad (Investments) (d)
---------- ----------
Malaysia International Shipping Berhad (Shipping) (d)
---------- ----------
Telekom Malaysia Berhad (Telephone)
---------- ----------
YTL Power International Berhad (Electric Companies) (d)
---------- ----------
---------- ----------
MEXICO--2.79%
---------- ----------
Alpha S.A. de C.V. (Manufacturing-Diversified)
---------- ----------
Apasco S.A. de C.V. (Construction-Cement & Aggregates)
---------- ----------
ARA, S.A. de C.V. (Homebuilding) (a)
---------- ----------
Carso Global Telecom (Telephone) (a)
---------- ----------
Cemex S.A. de CV (Construction-Cement & Aggregates)
---------- ----------
Cifra S.A. de C.V. (Retail-General Merchandise) (a)
---------- ----------
Cintra S.A. (Airlines) (a)
---------- ----------
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic)
---------- ----------
Controladora Comercial Mexicana S.A. de C.V. (Retail-Department Stores) (a)(e)
---------- ----------
Corporacion GEO S.A. de C.V. (Construction-Cement & Aggregates) (a)
---------- ----------
Desc S.A. de C.V. (Manufacturing-Diversified)
---------- ----------
El Puerto de Liverpool S.A. de C.V. (Retail-Department Stores)
---------- ----------
Formento Economico Mexicano, S.A. de C.V. (Beverages-Alcoholic)
---------- ----------
Grupo Carso S.A. de C.V. (Manufacturing-Diversified) (a)
---------- ----------
Grupo Cementos de Chihuahua S.A. de C.V. (Construction-Cement & Aggregates)
---------- ----------
Grupo Financiero Banamex Accival, S.A. de C.V. (Financial-Diversified) (a)
---------- ----------
Grupo Financiero Banorte S.A. de C.V. (Financial-Diversified) (a)
---------- ----------
Grupo Industrial Maseca S.A. de C.V.-Class B (Foods)
---------- ----------
Grupo Industrial Saltillo, S.A. de C.V. (Shipping)
---------- ----------
Grupo Mexico S.A. (Metals Mining)
---------- ----------
Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic)
---------- ----------
Grupo Posadas S.A. (Lodging-Hotels) (a)
---------- ----------
Grupo Posadas S.A. (Lodging-Hotels) (a)
---------- ----------
Grupo Televisa S.A.-GDR (Entertainment) (a)
---------- ----------
Industrias Penoles S.A. (Metals Mining)
---------- ----------
Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products)
---------- ----------
Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic)
---------- ----------
Pepsi-Gemex S.A. (Beverages-Non-alcoholic)
---------- ----------
Sanluis Corporacion S.A. de C.V. (Metal Fabricators) (a)
---------- ----------
Telefonos de Mexico S.A.-ADR (Telephone)
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
Hoya Corp.(Manufacturing-Specialized) (a)
---------- ----------
Mabuchi Motor Co., Ltd. (Electrical Equipment) 68,906
---------- ----------
Matsushita Communication Industrial Co., Ltd. (Telephone) (a)
---------- ----------
Matsushita-Kotobuki Electronics Industries Ltd. (Electronics-Component Distributors) 43,193
---------- ----------
Murata Manufacturing Co., Ltd. (Electronics- Component Distributors)
---------- ----------
Nichiei Co., Ltd. (Banks-Money Center) 47,796
---------- ----------
Nippon Telegraph & Telephone Corp. (Telephone)
---------- ----------
Nippon Television Network Corp. (Broadcasting-Television, Radio & Cable)
---------- ----------
NTT Data Corp. (Computers-Software & Services) (a)
---------- ----------
NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Okuma Corp. (Machine Tools) (a)
---------- ----------
Omron Corp. (Electronics- Component Distributors) (a)
---------- ----------
SMC Corp. (Machinery-Diversified)
---------- ----------
Sony Corp. (Electronics-Component Distributors)
---------- ----------
Takeda Chemical Industries (Health Care-Drugs-Generic & Other) 77,005
---------- ----------
TDK Corp. (Electrical Equipment)
---------- ----------
Tokyo Electron Ltd. (Electronics-Semiconductors) (a)
---------- ----------
---------- ----------
LUXEMBOURG--0.04%
---------- ----------
Quilmes Industrial S.A. (Beverages-Alcoholic) 123,856
---------- ----------
---------- ----------
MALAYSIA--0.05%
---------- ----------
Berjaya Sports Toto Berhad (Investments) (d)
---------- ----------
Malaysia International Shipping Berhad (Shipping) (d)
---------- ----------
Telekom Malaysia Berhad (Telephone)
---------- ----------
YTL Power International Berhad (Electric Companies) (d)
---------- ----------
---------- ----------
MEXICO--2.79%
---------- ----------
Alpha S.A. de C.V. (Manufacturing-Diversified) 112,533
---------- ----------
Apasco S.A. de C.V. (Construction-Cement & Aggregates) 190,716
---------- ----------
ARA, S.A. de C.V. (Homebuilding) (a)
---------- ----------
Carso Global Telecom (Telephone) (a) 324,891
---------- ----------
Cemex S.A. de CV (Construction-Cement & Aggregates)
---------- ----------
Cifra S.A. de C.V. (Retail-General Merchandise) (a)
---------- ----------
Cintra S.A. (Airlines) (a) 20,353
---------- ----------
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic)
---------- ----------
Controladora Comercial Mexicana S.A. de C.V. (Retail-Department Stores) (a)(e) 124,798
---------- ----------
Corporacion GEO S.A. de C.V. (Construction-Cement & Aggregates) (a) 72,222
---------- ----------
Desc S.A. de C.V. (Manufacturing-Diversified) 154,843
---------- ----------
El Puerto de Liverpool S.A. de C.V. (Retail-Department Stores) 6,356
---------- ----------
Formento Economico Mexicano, S.A. de C.V. (Beverages-Alcoholic) 481,913
---------- ----------
Grupo Carso S.A. de C.V. (Manufacturing-Diversified) (a) 284,412
---------- ----------
Grupo Cementos de Chihuahua S.A. de C.V. (Construction-Cement & Aggregates) 61,654
---------- ----------
Grupo Financiero Banamex Accival, S.A. de C.V. (Financial-Diversified) (a) 110,107
---------- ----------
Grupo Financiero Banorte S.A. de C.V. (Financial-Diversified) (a) 113,333
---------- ----------
Grupo Industrial Maseca S.A. de C.V.-Class B (Foods) 103,919
---------- ----------
Grupo Industrial Saltillo, S.A. de C.V. (Shipping) 85,327
---------- ----------
Grupo Mexico S.A. (Metals Mining) 51,333
---------- ----------
Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic)
---------- ----------
Grupo Posadas S.A. (Lodging-Hotels) (a) 28,891
---------- ----------
Grupo Posadas S.A. (Lodging-Hotels) (a) 20,533
---------- ----------
Grupo Televisa S.A.-GDR (Entertainment) (a) 281,438
---------- ----------
Industrias Penoles S.A. (Metals Mining) 177,576
---------- ----------
Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 205,864
---------- ----------
Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic)
---------- ----------
Pepsi-Gemex S.A. (Beverages-Non-alcoholic) 87,500
---------- ----------
Sanluis Corporacion S.A. de C.V. (Metal Fabricators) (a) 57,344
---------- ----------
Telefonos de Mexico S.A.-ADR (Telephone)
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
Hoya Corp.(Manufacturing-Specialized) (a) 827,580
---------- ----------
Mabuchi Motor Co., Ltd. (Electrical Equipment)
---------- ----------
Matsushita Communication Industrial Co., Ltd. (Telephone) (a) 754,824
---------- ----------
Matsushita-Kotobuki Electronics Industries Ltd. (Electronics-Component Distributors)
---------- ----------
Murata Manufacturing Co., Ltd. (Electronics- Component Distributors) 830,235
---------- ----------
Nichiei Co., Ltd. (Banks-Money Center)
---------- ----------
Nippon Telegraph & Telephone Corp. (Telephone) 1,157,727
---------- ----------
Nippon Television Network Corp. (Broadcasting-Television, Radio & Cable) 792,857
---------- ----------
NTT Data Corp. (Computers-Software & Services) (a) 1,812,400
---------- ----------
NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) (a)
---------- ----------
Okuma Corp. (Machine Tools) (a) 1,066,915
---------- ----------
Omron Corp. (Electronics- Component Distributors) (a) 780,988
---------- ----------
SMC Corp. (Machinery-Diversified) 471,039
---------- ----------
Sony Corp. (Electronics-Component Distributors) 1,223,792
---------- ----------
Takeda Chemical Industries (Health Care-Drugs-Generic & Other) 2,040,627
---------- ----------
TDK Corp. (Electrical Equipment) 1,554,346
---------- ----------
Tokyo Electron Ltd. (Electronics-Semiconductors) (a) 2,088,423
---------- ----------
---------- ----------
LUXEMBOURG--0.04%
---------- ----------
Quilmes Industrial S.A. (Beverages-Alcoholic)
---------- ----------
---------- ----------
MALAYSIA--0.05%
---------- ----------
Berjaya Sports Toto Berhad (Investments) (d) 23,908
---------- ----------
Malaysia International Shipping Berhad (Shipping) (d) 40,570
---------- ----------
Telekom Malaysia Berhad (Telephone) 38,925
---------- ----------
YTL Power International Berhad (Electric Companies) (d) 47,211
---------- ----------
---------- ----------
MEXICO--2.79%
---------- ----------
Alpha S.A. de C.V. (Manufacturing-Diversified)
---------- ----------
Apasco S.A. de C.V. (Construction-Cement & Aggregates)
---------- ----------
ARA, S.A. de C.V. (Homebuilding) (a)
---------- ----------
Carso Global Telecom (Telephone) (a)
---------- ----------
Cemex S.A. de CV (Construction-Cement & Aggregates)
---------- ----------
Cifra S.A. de C.V. (Retail-General Merchandise) (a)
---------- ----------
Cintra S.A. (Airlines) (a)
---------- ----------
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 527,350
---------- ----------
Controladora Comercial Mexicana S.A. de C.V. (Retail-Department Stores) (a)(e)
---------- ----------
Corporacion GEO S.A. de C.V. (Construction-Cement & Aggregates) (a)
---------- ----------
Desc S.A. de C.V. (Manufacturing-Diversified)
---------- ----------
El Puerto de Liverpool S.A. de C.V. (Retail-Department Stores)
---------- ----------
Formento Economico Mexicano, S.A. de C.V. (Beverages-Alcoholic) 1,882,920
---------- ----------
Grupo Carso S.A. de C.V. (Manufacturing-Diversified) (a)
---------- ----------
Grupo Cementos de Chihuahua S.A. de C.V. (Construction-Cement & Aggregates)
---------- ----------
Grupo Financiero Banamex Accival, S.A. de C.V. (Financial-Diversified) (a) 1,005,622
---------- ----------
Grupo Financiero Banorte S.A. de C.V. (Financial-Diversified) (a)
---------- ----------
Grupo Industrial Maseca S.A. de C.V.-Class B (Foods)
---------- ----------
Grupo Industrial Saltillo, S.A. de C.V. (Shipping)
---------- ----------
Grupo Mexico S.A. (Metals Mining)
---------- ----------
Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic) 818,955
---------- ----------
Grupo Posadas S.A. (Lodging-Hotels) (a)
---------- ----------
Grupo Posadas S.A. (Lodging-Hotels) (a)
---------- ----------
Grupo Televisa S.A.-GDR (Entertainment) (a) 831,969
---------- ----------
Industrias Penoles S.A. (Metals Mining)
---------- ----------
Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products)
---------- ----------
Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic)
---------- ----------
Pepsi-Gemex S.A. (Beverages-Non-alcoholic)
---------- ----------
Sanluis Corporacion S.A. de C.V. (Metal Fabricators) (a)
---------- ----------
Telefonos de Mexico S.A.-ADR (Telephone)
---------- ----------
Pro Forma
Combining
---------
Hoya Corp.(Manufacturing-Specialized) (a) 827,580
----------
Mabuchi Motor Co., Ltd. (Electrical Equipment) 68,906
----------
Matsushita Communication Industrial Co., Ltd. (Telephone) (a) 754,824
----------
Matsushita-Kotobuki Electronics Industries Ltd. (Electronics-Component Distributors) 43,193
----------
Murata Manufacturing Co., Ltd. (Electronics- Component Distributors) 830,235
----------
Nichiei Co., Ltd. (Banks-Money Center) 47,796
----------
Nippon Telegraph & Telephone Corp. (Telephone) 1,157,727
----------
Nippon Television Network Corp. (Broadcasting-Television, Radio & Cable) 792,857
----------
NTT Data Corp. (Computers-Software & Services) (a) 1,812,400
----------
NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) (a) 41,158
----------
Okuma Corp. (Machine Tools) (a) 1,066,915
----------
Omron Corp. (Electronics- Component Distributors) (a) 780,988
----------
SMC Corp. (Machinery-Diversified) 471,039
----------
Sony Corp. (Electronics-Component Distributors) 1,223,792
----------
Takeda Chemical Industries (Health Care-Drugs-Generic & Other) 2,117,631
----------
TDK Corp. (Electrical Equipment) 1,554,346
----------
Tokyo Electron Ltd. (Electronics-Semiconductors) (a) 2,088,423
----------
18,888,652
----------
LUXEMBOURG--0.04%
----------
Quilmes Industrial S.A. (Beverages-Alcoholic) 123,856
----------
----------
MALAYSIA--0.05%
----------
Berjaya Sports Toto Berhad (Investments) (d) 23,908
----------
Malaysia International Shipping Berhad (Shipping) (d) 40,570
----------
Telekom Malaysia Berhad (Telephone) 38,925
----------
YTL Power International Berhad (Electric Companies) (d) 47,211
----------
150,614
----------
MEXICO--2.79%
----------
Alpha S.A. de C.V. (Manufacturing-Diversified) 112,533
----------
Apasco S.A. de C.V. (Construction-Cement & Aggregates) 225,373
----------
ARA, S.A. de C.V. (Homebuilding) (a) 38,384
----------
Carso Global Telecom (Telephone) (a) 324,891
----------
Cemex S.A. de CV (Construction-Cement & Aggregates) 50,133
----------
Cifra S.A. de C.V. (Retail-General Merchandise) (a) 67,630
----------
Cintra S.A. (Airlines) (a) 20,353
----------
Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 527,350
----------
Controladora Comercial Mexicana S.A. de C.V. (Retail-Department Stores) (a)(e) 124,798
----------
Corporacion GEO S.A. de C.V. (Construction-Cement & Aggregates) (a) 111,667
----------
Desc S.A. de C.V. (Manufacturing-Diversified) 154,843
----------
El Puerto de Liverpool S.A. de C.V. (Retail-Department Stores) 6,356
----------
Formento Economico Mexicano, S.A. de C.V. (Beverages-Alcoholic) 2,459,804
----------
Grupo Carso S.A. de C.V. (Manufacturing-Diversified) (a) 370,958
----------
Grupo Cementos de Chihuahua S.A. de C.V. (Construction-Cement & Aggregates) 61,654
----------
Grupo Financiero Banamex Accival, S.A. de C.V. (Financial-Diversified) (a) 1,169,568
----------
Grupo Financiero Banorte S.A. de C.V. (Financial-Diversified) (a) 113,333
----------
Grupo Industrial Maseca S.A. de C.V.-Class B (Foods) 103,919
----------
Grupo Industrial Saltillo, S.A. de C.V. (Shipping) 85,327
----------
Grupo Mexico S.A. (Metals Mining) 51,333
----------
Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic) 818,955
----------
Grupo Posadas S.A. (Lodging-Hotels) (a) 28,891
----------
Grupo Posadas S.A. (Lodging-Hotels) (a) 20,533
----------
Grupo Televisa S.A.-GDR (Entertainment) (a) 1,113,406
----------
Industrias Penoles S.A. (Metals Mining) 177,576
----------
Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 205,864
----------
Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic) 65,437
----------
Pepsi-Gemex S.A. (Beverages-Non-alcoholic) 87,500
----------
Sanluis Corporacion S.A. de C.V. (Metal Fabricators) (a) 57,344
----------
Telefonos de Mexico S.A.-ADR (Telephone) 88,514
----------
477
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
Tubos de Acero de Mexico S.A. (Oil & Gas-Drilling & Equipment) (a) 64,375
---------- ----------
---------- ----------
NETHERLANDS--5.87%
---------- ----------
Benckiser N.V. (Household Products/Non-durables)
---------- ----------
Core Laboratories N.V. (Oil & Gas-Drilling & Equipment) (a) 49,725
---------- ----------
Equant N.V. (Computers-Networking) (a)
---------- ----------
Getronics N.V. (Computers-Software & Services)
---------- ----------
Heineken N.V. (Beverages-Alcoholic)
---------- ----------
IHC Caland N.V. (Manufacturing-Specialized)
---------- ----------
ING Groep N.V. (Insurance Brokers)
---------- ----------
Koninklijke Ahold N.V. (Retail-Food Chains)
---------- ----------
Koninklijke KPN N.V. (Telecommunications-Long Distance)
---------- ----------
Koninklijke Numico N.V. (Foods)
---------- ----------
Laurus N.V. (Retail-General Merchandise)
---------- ----------
Randstad Holdings N.V. (Services-Commercial & Consumer)
---------- ----------
TNT Post Group N.V. (Air Freight)
---------- ----------
Vendex N.V. (Retail-General Merchandise)
---------- ----------
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing)
---------- ----------
Wolters Kluwer N.V. (Specialty Printing) (a)
---------- ----------
---------- ----------
NEW ZEALAND--0.05%
---------- ----------
Telecom Corp. of New Zealand Ltd. (Telephone)
---------- ----------
Telecom Corporation of New Zealand Ltd. (Telephone)
---------- ----------
---------- ----------
NORWAY--0.23%
---------- ----------
Merkantildata A.S.A (Services-Commercial & Consumer)
---------- ----------
Petroleum Geo-Services ASA (Energy Equipment & Services) (a)
---------- ----------
---------- ----------
PAKISTAN--0.00%
---------- ----------
Engro Chemicals Pakistan Ltd. (Chemicals) 2,660
---------- ----------
Pakistan State Oil Co. Ltd. (Oil-International Integrated) 1,387
---------- ----------
---------- ----------
PERU--0.07%
---------- ----------
Credicorp Limited (Financial-Diversified) (a)
---------- ----------
Credicorp Ltd. (Financial-Diversified) 55,620
---------- ----------
Telefonica del Peru S.A.-ADR (Telecommunications-Long Distance) 65,975
---------- ----------
Cerveceria Backus & Johnston S.A. (Beverages-Alcoholic)
---------- ----------
---------- ----------
PHILIPPINES--0.39%
---------- ----------
Manila Electric Co. (Electric Power)
---------- ----------
Philippine Long Distance Telephone Co. (Telephone)
---------- ----------
Philippine Long Distance Telephone Co.-ADR (Telephone)
---------- ----------
---------- ----------
POLAND--0.04%
---------- ----------
BIG Bank Gdanski S.A. - Reg S GDR (Banks - Regional) (c) 40,650
---------- ----------
Kredyt Bank PBI S.A. (Banks-Regional) (a)(c) 26,512
---------- ----------
Telekomunikacja Polsha S.A. (Telephone) 58,854
---------- ----------
Zaklady Piwowarskie w Zywcu S.A. (Beverages-Alcoholic) 12,342
---------- ----------
---------- ----------
PORTUGAL--2.20%
---------- ----------
Banco Comercial Portugues, S.A. (Banks-Major Regional)
---------- ----------
BPI-SGPS S.A. (Banks-Regional)
---------- ----------
Brisa Auto-Estradas de Portugal, S.A. (Engineering & Construction)
---------- ----------
Electricidade de Portugal, S.A.-ADR (Electric Companies)
---------- ----------
Electricidade de Portugal, S.A. (Water Utilities)
---------- ----------
Portugal Telecom S.A. (Telephone)
---------- ----------
Telecel-Comunicacaoes Pessoais, S.A. (Telecommunications-Cellular/Wireless)
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
Tubos de Acero de Mexico S.A. (Oil & Gas-Drilling & Equipment) (a)
---------- ----------
---------- ----------
NETHERLANDS--5.87%
---------- ----------
Benckiser N.V. (Household Products/Non-durables)
---------- ----------
Core Laboratories N.V. (Oil & Gas-Drilling & Equipment) (a)
---------- ----------
Equant N.V. (Computers-Networking) (a) 127,488
---------- ----------
Getronics N.V. (Computers-Software & Services)
---------- ----------
Heineken N.V. (Beverages-Alcoholic)
---------- ----------
IHC Caland N.V. (Manufacturing-Specialized)
---------- ----------
ING Groep N.V. (Insurance Brokers) 531,228
---------- ----------
Koninklijke Ahold N.V. (Retail-Food Chains)
---------- ----------
Koninklijke KPN N.V. (Telecommunications-Long Distance)
---------- ----------
Koninklijke Numico N.V. (Foods)
---------- ----------
Laurus N.V. (Retail-General Merchandise)
---------- ----------
Randstad Holdings N.V. (Services-Commercial & Consumer)
---------- ----------
TNT Post Group N.V. (Air Freight) 880,346
---------- ----------
Vendex N.V. (Retail-General Merchandise)
---------- ----------
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing)
---------- ----------
Wolters Kluwer N.V. (Specialty Printing) (a)
---------- ----------
---------- ----------
NEW ZEALAND--0.05%
---------- ----------
Telecom Corp. of New Zealand Ltd. (Telephone)
---------- ----------
Telecom Corporation of New Zealand Ltd. (Telephone)
---------- ----------
---------- ----------
NORWAY--0.23%
---------- ----------
Merkantildata A.S.A (Services-Commercial & Consumer)
---------- ----------
Petroleum Geo-Services ASA (Energy Equipment & Services) (a) 313,898
---------- ----------
---------- ----------
PAKISTAN--0.00%
---------- ----------
Engro Chemicals Pakistan Ltd. (Chemicals)
---------- ----------
Pakistan State Oil Co. Ltd. (Oil-International Integrated)
---------- ----------
---------- ----------
PERU--0.07%
---------- ----------
Credicorp Limited (Financial-Diversified) (a)
---------- ----------
Credicorp Ltd. (Financial-Diversified)
---------- ----------
Telefonica del Peru S.A.-ADR (Telecommunications-Long Distance)
---------- ----------
Cerveceria Backus & Johnston S.A. (Beverages-Alcoholic)
---------- ----------
---------- ----------
PHILIPPINES--0.39%
---------- ----------
Manila Electric Co. (Electric Power)
---------- ----------
Philippine Long Distance Telephone Co. (Telephone)
---------- ----------
Philippine Long Distance Telephone Co.-ADR (Telephone)
---------- ----------
---------- ----------
POLAND--0.04%
---------- ----------
BIG Bank Gdanski S.A. - Reg S GDR (Banks - Regional) (c)
---------- ----------
Kredyt Bank PBI S.A. (Banks-Regional) (a)(c)
---------- ----------
Telekomunikacja Polsha S.A. (Telephone)
---------- ----------
Zaklady Piwowarskie w Zywcu S.A. (Beverages-Alcoholic)
---------- ----------
---------- ----------
PORTUGAL--2.20%
---------- ----------
Banco Comercial Portugues, S.A. (Banks-Major Regional)
---------- ----------
BPI-SGPS S.A. (Banks-Regional) 262,968
---------- ----------
Brisa Auto-Estradas de Portugal, S.A. (Engineering & Construction) 94,137
---------- ----------
Electricidade de Portugal, S.A.-ADR (Electric Companies)
---------- ----------
Electricidade de Portugal, S.A. (Water Utilities) 50,684
---------- ----------
Portugal Telecom S.A. (Telephone)
---------- ----------
Telecel-Comunicacaoes Pessoais, S.A. (Telecommunications-Cellular/Wireless) 587,395
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
Tubos de Acero de Mexico S.A. (Oil & Gas-Drilling & Equipment) (a)
---------- ----------
---------- ----------
NETHERLANDS--5.87%
---------- ----------
Benckiser N.V. (Household Products/Non-durables) 82,581
---------- ----------
Core Laboratories N.V. (Oil & Gas-Drilling & Equipment) (a)
---------- ----------
Equant N.V. (Computers-Networking) (a)
---------- ----------
Getronics N.V. (Computers-Software & Services)
---------- ----------
Heineken N.V. (Beverages-Alcoholic)
---------- ----------
IHC Caland N.V. (Manufacturing-Specialized)
---------- ----------
ING Groep N.V. (Insurance Brokers) 91,383
---------- ----------
Koninklijke Ahold N.V. (Retail-Food Chains) 78,445
---------- ----------
Koninklijke KPN N.V. (Telecommunications-Long Distance) 64,562
---------- ----------
Koninklijke Numico N.V. (Foods)
---------- ----------
Laurus N.V. (Retail-General Merchandise)
---------- ----------
Randstad Holdings N.V. (Services-Commercial & Consumer)
---------- ----------
TNT Post Group N.V. (Air Freight) 87,229
---------- ----------
Vendex N.V. (Retail-General Merchandise)
---------- ----------
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing)
---------- ----------
Wolters Kluwer N.V. (Specialty Printing) (a) 96,268
---------- ----------
---------- ----------
NEW ZEALAND--0.05%
---------- ----------
Telecom Corp. of New Zealand Ltd. (Telephone) 69,839
---------- ----------
Telecom Corporation of New Zealand Ltd. (Telephone) 4,975
---------- ----------
---------- ----------
NORWAY--0.23%
---------- ----------
Merkantildata A.S.A (Services-Commercial & Consumer)
---------- ----------
Petroleum Geo-Services ASA (Energy Equipment & Services) (a)
---------- ----------
---------- ----------
PAKISTAN--0.00%
---------- ----------
Engro Chemicals Pakistan Ltd. (Chemicals)
---------- ----------
Pakistan State Oil Co. Ltd. (Oil-International Integrated)
---------- ----------
---------- ----------
PERU--0.07%
---------- ----------
Credicorp Limited (Financial-Diversified) (a) 86,760
---------- ----------
Credicorp Ltd. (Financial-Diversified)
---------- ----------
Telefonica del Peru S.A.-ADR (Telecommunications-Long Distance)
---------- ----------
Cerveceria Backus & Johnston S.A. (Beverages-Alcoholic) 2,058
---------- ----------
---------- ----------
PHILIPPINES--0.39%
---------- ----------
Manila Electric Co. (Electric Power)
---------- ----------
Philippine Long Distance Telephone Co. (Telephone)
---------- ----------
Philippine Long Distance Telephone Co.-ADR (Telephone)
---------- ----------
---------- ----------
POLAND--0.04%
---------- ----------
BIG Bank Gdanski S.A. - Reg S GDR (Banks - Regional) (c)
---------- ----------
Kredyt Bank PBI S.A. (Banks-Regional) (a)(c)
---------- ----------
Telekomunikacja Polsha S.A. (Telephone)
---------- ----------
Zaklady Piwowarskie w Zywcu S.A. (Beverages-Alcoholic)
---------- ----------
---------- ----------
PORTUGAL--2.20%
---------- ----------
Banco Comercial Portugues, S.A. (Banks-Major Regional)
---------- ----------
BPI-SGPS S.A. (Banks-Regional) 69,292
---------- ----------
Brisa Auto-Estradas de Portugal, S.A. (Engineering & Construction)
---------- ----------
Electricidade de Portugal, S.A.-ADR (Electric Companies)
---------- ----------
Electricidade de Portugal, S.A. (Water Utilities)
---------- ----------
Portugal Telecom S.A. (Telephone)
---------- ----------
Telecel-Comunicacaoes Pessoais, S.A. (Telecommunications-Cellular/Wireless) 98,615
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
Tubos de Acero de Mexico S.A. (Oil & Gas-Drilling & Equipment) (a)
---------- ----------
---------- ----------
NETHERLANDS--5.87%
---------- ----------
Benckiser N.V. (Household Products/Non-durables)
---------- ----------
Core Laboratories N.V. (Oil & Gas-Drilling & Equipment) (a)
---------- ----------
Equant N.V. (Computers-Networking) (a)
---------- ----------
Getronics N.V. (Computers-Software & Services) 2,104,408
---------- ----------
Heineken N.V. (Beverages-Alcoholic) 2,815,675
---------- ----------
IHC Caland N.V. (Manufacturing-Specialized) 460,973
---------- ----------
ING Groep N.V. (Insurance Brokers)
---------- ----------
Koninklijke Ahold N.V. (Retail-Food Chains) 1,914,024
---------- ----------
Koninklijke KPN N.V. (Telecommunications-Long Distance)
---------- ----------
Koninklijke Numico N.V. (Foods) 1,238,952
---------- ----------
Laurus N.V. (Retail-General Merchandise) 590,039
---------- ----------
Randstad Holdings N.V. (Services-Commercial & Consumer) 699,074
---------- ----------
TNT Post Group N.V. (Air Freight)
---------- ----------
Vendex N.V. (Retail-General Merchandise) 810,904
---------- ----------
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing) 3,396,380
---------- ----------
Wolters Kluwer N.V. (Specialty Printing) (a) 2,642,014
---------- ----------
---------- ----------
NEW ZEALAND--0.05%
---------- ----------
Telecom Corp. of New Zealand Ltd. (Telephone)
---------- ----------
Telecom Corporation of New Zealand Ltd. (Telephone) 70,699
---------- ----------
---------- ----------
NORWAY--0.23%
---------- ----------
Merkantildata A.S.A (Services-Commercial & Consumer) 434,371
---------- ----------
Petroleum Geo-Services ASA (Energy Equipment & Services) (a)
---------- ----------
---------- ----------
PAKISTAN--0.00%
---------- ----------
Engro Chemicals Pakistan Ltd. (Chemicals)
---------- ----------
Pakistan State Oil Co. Ltd. (Oil-International Integrated)
---------- ----------
---------- ----------
PERU--0.07%
---------- ----------
Credicorp Limited (Financial-Diversified) (a)
---------- ----------
Credicorp Ltd. (Financial-Diversified)
---------- ----------
Telefonica del Peru S.A.-ADR (Telecommunications-Long Distance)
---------- ----------
Cerveceria Backus & Johnston S.A. (Beverages-Alcoholic)
---------- ----------
---------- ----------
PHILIPPINES--0.39%
---------- ----------
Manila Electric Co. (Electric Power) 253,774
---------- ----------
Philippine Long Distance Telephone Co. (Telephone) 273,290 429,935
---------- ----------
Philippine Long Distance Telephone Co.-ADR (Telephone) 300,875
---------- ----------
---------- ----------
POLAND--0.04%
---------- ----------
BIG Bank Gdanski S.A. - Reg S GDR (Banks - Regional) (c)
---------- ----------
Kredyt Bank PBI S.A. (Banks-Regional) (a)(c)
---------- ----------
Telekomunikacja Polsha S.A. (Telephone)
---------- ----------
Zaklady Piwowarskie w Zywcu S.A. (Beverages-Alcoholic)
---------- ----------
---------- ----------
PORTUGAL--2.20%
---------- ----------
Banco Comercial Portugues, S.A. (Banks-Major Regional) 2,037,072
---------- ----------
BPI-SGPS S.A. (Banks-Regional)
---------- ----------
Brisa Auto-Estradas de Portugal, S.A. (Engineering & Construction)
---------- ----------
Electricidade de Portugal, S.A.-ADR (Electric Companies) 614,963
---------- ----------
Electricidade de Portugal, S.A. (Water Utilities) 550,915
---------- ----------
Portugal Telecom S.A. (Telephone) 1,647,469
---------- ----------
Telecel-Comunicacaoes Pessoais, S.A. (Telecommunications-Cellular/Wireless) 1,022,980
---------- ----------
Pro Forma
Combining
---------
Tubos de Acero de Mexico S.A. (Oil & Gas-Drilling & Equipment) (a) 64,375
----------
8,908,602
----------
NETHERLANDS--5.87%
----------
Benckiser N.V. (Household Products/Non-durables) 82,581
----------
Core Laboratories N.V. (Oil & Gas-Drilling & Equipment) (a) 49,725
----------
Equant N.V. (Computers-Networking) (a) 127,488
----------
Getronics N.V. (Computers-Software & Services) 2,104,408
----------
Heineken N.V. (Beverages-Alcoholic) 2,815,675
----------
IHC Caland N.V. (Manufacturing-Specialized) 460,973
----------
ING Groep N.V. (Insurance Brokers) 622,611
----------
Koninklijke Ahold N.V. (Retail-Food Chains) 1,992,470
----------
Koninklijke KPN N.V. (Telecommunications-Long Distance) 64,562
----------
Koninklijke Numico N.V. (Foods) 1,238,952
----------
Laurus N.V. (Retail-General Merchandise) 590,039
----------
Randstad Holdings N.V. (Services-Commercial & Consumer) 699,074
----------
TNT Post Group N.V. (Air Freight) 967,575
----------
Vendex N.V. (Retail-General Merchandise) 810,904
----------
Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing) 3,396,380
----------
Wolters Kluwer N.V. (Specialty Printing) (a) 2,738,281
----------
18,761,697
----------
NEW ZEALAND--0.05%
----------
Telecom Corp. of New Zealand Ltd. (Telephone) 69,839
----------
Telecom Corporation of New Zealand Ltd. (Telephone) 75,674
----------
145,514
----------
NORWAY--0.23%
----------
Merkantildata A.S.A (Services-Commercial & Consumer) 434,371
----------
Petroleum Geo-Services ASA (Energy Equipment & Services) (a) 313,898
----------
748,269
----------
PAKISTAN--0.00%
----------
Engro Chemicals Pakistan Ltd. (Chemicals) 2,660
----------
Pakistan State Oil Co. Ltd. (Oil-International Integrated) 1,387
----------
4,047
----------
PERU--0.07%
----------
Credicorp Limited (Financial-Diversified) (a) 86,760
----------
Credicorp Ltd. (Financial-Diversified) 55,620
----------
Telefonica del Peru S.A.-ADR (Telecommunications-Long Distance) 65,975
----------
Cerveceria Backus & Johnston S.A. (Beverages-Alcoholic) 2,058
----------
210,413
----------
PHILIPPINES--0.39%
----------
Manila Electric Co. (Electric Power) 253,774
----------
Philippine Long Distance Telephone Co. (Telephone) 703,226
----------
Philippine Long Distance Telephone Co.-ADR (Telephone) 300,875
----------
1,257,875
----------
POLAND--0.04%
----------
BIG Bank Gdanski S.A. - Reg S GDR (Banks - Regional) (c) 40,650
----------
Kredyt Bank PBI S.A. (Banks-Regional) (a)(c) 26,512
----------
Telekomunikacja Polsha S.A. (Telephone) 58,854
----------
Zaklady Piwowarskie w Zywcu S.A. (Beverages-Alcoholic) 12,342
----------
138,358
----------
PORTUGAL--2.20%
----------
Banco Comercial Portugues, S.A. (Banks-Major Regional) 2,037,072
----------
BPI-SGPS S.A. (Banks-Regional) 332,260
----------
Brisa Auto-Estradas de Portugal, S.A. (Engineering & Construction) 94,137
----------
Electricidade de Portugal, S.A.-ADR (Electric Companies) 614,963
----------
Electricidade de Portugal, S.A. (Water Utilities) 601,599
----------
Portugal Telecom S.A. (Telephone) 1,647,469
----------
Telecel-Comunicacaoes Pessoais, S.A. (Telecommunications-Cellular/Wireless) 1,708,991
----------
478
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
---------- ----------
RUSSIA--0.01%
---------- ----------
Surgutneftegaz ADR (Oil-International Integrated) 46,946
---------- ----------
SINGAPORE--0.57%
---------- ----------
DBS Land Ltd. (Land Development)
---------- ----------
Development Bank of Singapore Ltd. (Banks-Major Regional)
---------- ----------
Keppel Corp. Ltd. (Engineering & Construction) (a)
---------- ----------
Oversea-Chinese Banking Corp. Ltd.(Banks - Major Regional)
---------- ----------
Singapore Press Holdings Ltd. (Publishing-Newspapers)
---------- ----------
Singapore Technologies Engineering Ltd. (Engineering & Construction)
---------- ----------
United Overseas Bank Ltd. (Banks-Major Regional)
---------- ----------
---------- ----------
SOUTH AFRICA--0.12%
---------- ----------
Anglo American Platinum Corp. Ltd. (Metals Mining) 61,702
---------- ----------
Liberty Life Association of Africa Ltd. (Insurance Brokers) 82,025
---------- ----------
Rembrandt Group Ltd. (Investment Management) 66,776
---------- ----------
Sanlam Ltd. (Insurance-Life/Health) 62,044
---------- ----------
South African Breweries Ltd. (Beverages - Alcoholic) 103,001
---------- ----------
Truworths International Ltd. (Textiles-Apparel) 2,171
---------- ----------
---------- ----------
SOUTH KOREA--0.57%
---------- ----------
Korea Electric Power Corp. (Electric Companies)
---------- ----------
Korea Electric Power Corp.-ADR (Electric Companies)
---------- ----------
LG Information & Communication (Communications Equipment)
---------- ----------
ML-Kospi200 Call Warrant
---------- ----------
Pohang Iron & Steel Co. Ltd. ADR (Iron & Steel) 131,625 70,503
---------- ----------
Samsung Display Devices Co. (Electronics-Component Distributors)
---------- ----------
Samsung Electronics (Electronics-Component Distributors)
---------- ----------
Samsung Fire & Marine Insurance (Insurance-Multi-line Property)
---------- ----------
Samsung Fire & Marine Insurance (Electronics Component Distributors) Rights, expire
01/13/99 (cost $0)
---------- ----------
---------- ----------
SPAIN--2.51%
---------- ----------
Corp. Financiera Reunida, S.A. (Investment Management) (a)
---------- ----------
Endesa S.A. (Electric Companies)
---------- ----------
Endesa S.A.-ADR (Electric Companies)
---------- ----------
Iberdrola S.A. (Electric Companies)
---------- ----------
Repsol S.A. (Oil & Gas-Refining & Marketing) 79,925
---------- ----------
Tabacalera S.A. (Tobacco) (a)
---------- ----------
Telefonica de Espana (Telephone)
---------- ----------
Telefonica de Espana Rights, expiring 01/30/99 (Telephone)
---------- ----------
Union Electrica Fenosa, S.A. (Electric Companies)
---------- ----------
---------- ----------
SWEDEN--1.54%
---------- ----------
Assa Abloy A.B.-Class B (Metal Fabricators)
---------- ----------
ForeningsSparbanken A.B.-Class A (Banks-Major Regional)
---------- ----------
Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel)
---------- ----------
Nordbanken Holding A.B. (Banks - Major Regional)
---------- ----------
Skandia Forsakrings A.B. (Insurance Brokers) (a)
---------- ----------
Telefonaktiebolaget LM Ericsson - Class B (Communications Equipment)
---------- ----------
WM-Data A.B. (Computers-Software & Services)
---------- ----------
---------- ----------
SWITZERLAND--4.70%
---------- ----------
Adecco S.A. (Services-Commercial & Consumer) (a)
---------- ----------
Julius Baer Holding A.G. (Banks-Major Regional) (a)
---------- ----------
Nestle S.A. (Foods)
---------- ----------
Novartis A.G. (Health Care-Diversified)
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
---------- ----------
RUSSIA--0.01%
---------- ----------
Surgutneftegaz ADR (Oil-International Integrated)
---------- ----------
SINGAPORE--0.57%
---------- ----------
DBS Land Ltd. (Land Development)
---------- ----------
Development Bank of Singapore Ltd. (Banks-Major Regional)
---------- ----------
Keppel Corp. Ltd. (Engineering & Construction) (a)
---------- ----------
Oversea-Chinese Banking Corp. Ltd.(Banks - Major Regional)
---------- ----------
Singapore Press Holdings Ltd. (Publishing-Newspapers)
---------- ----------
Singapore Technologies Engineering Ltd. (Engineering & Construction)
---------- ----------
United Overseas Bank Ltd. (Banks-Major Regional)
---------- ----------
---------- ----------
SOUTH AFRICA--0.12%
---------- ----------
Anglo American Platinum Corp. Ltd. (Metals Mining)
---------- ----------
Liberty Life Association of Africa Ltd. (Insurance Brokers)
---------- ----------
Rembrandt Group Ltd. (Investment Management)
---------- ----------
Sanlam Ltd. (Insurance-Life/Health)
---------- ----------
South African Breweries Ltd. (Beverages - Alcoholic)
---------- ----------
Truworths International Ltd. (Textiles-Apparel)
---------- ----------
---------- ----------
SOUTH KOREA--0.57%
---------- ----------
Korea Electric Power Corp. (Electric Companies)
---------- ----------
Korea Electric Power Corp.-ADR (Electric Companies) 31,375
---------- ----------
LG Information & Communication (Communications Equipment)
---------- ----------
ML-Kospi200 Call Warrant
---------- ----------
Pohang Iron & Steel Co. Ltd. ADR (Iron & Steel) 50,625
---------- ----------
Samsung Display Devices Co. (Electronics-Component Distributors)
---------- ----------
Samsung Electronics (Electronics-Component Distributors)
---------- ----------
Samsung Fire & Marine Insurance (Insurance-Multi-line Property)
---------- ----------
Samsung Fire & Marine Insurance (Electronics Component Distributors) Rights, expire
01/13/99 (cost $0)
---------- ----------
---------- ----------
SPAIN--2.51%
---------- ----------
Corp. Financiera Reunida, S.A. (Investment Management) (a)
---------- ----------
Endesa S.A. (Electric Companies)
---------- ----------
Endesa S.A.-ADR (Electric Companies) 180,900
---------- ----------
Iberdrola S.A. (Electric Companies) 74,752
---------- ----------
Repsol S.A. (Oil & Gas-Refining & Marketing)
---------- ----------
Tabacalera S.A. (Tobacco) (a) 425,860
---------- ----------
Telefonica de Espana (Telephone)
---------- ----------
Telefonica de Espana Rights, expiring 01/30/99 (Telephone)
---------- ----------
Union Electrica Fenosa, S.A. (Electric Companies) 51,841
---------- ----------
---------- ----------
SWEDEN--1.54%
---------- ----------
Assa Abloy A.B.-Class B (Metal Fabricators) 264,187
---------- ----------
ForeningsSparbanken A.B.-Class A (Banks-Major Regional) 391,138
---------- ----------
Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel)
---------- ----------
Nordbanken Holding A.B. (Banks - Major Regional) 389,622
---------- ----------
Skandia Forsakrings A.B. (Insurance Brokers) (a) 377,482
---------- ----------
Telefonaktiebolaget LM Ericsson - Class B (Communications Equipment) 738,249
---------- ----------
WM-Data A.B. (Computers-Software & Services)
---------- ----------
---------- ----------
SWITZERLAND--4.70%
---------- ----------
Adecco S.A. (Services-Commercial & Consumer) (a)
---------- ----------
Julius Baer Holding A.G. (Banks-Major Regional) (a)
---------- ----------
Nestle S.A. (Foods) 563,946
---------- ----------
Novartis A.G. (Health Care-Diversified) 853,335
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
---------- ----------
RUSSIA--0.01%
---------- ----------
Surgutneftegaz ADR (Oil-International Integrated)
---------- ----------
SINGAPORE--0.57%
---------- ----------
DBS Land Ltd. (Land Development)
---------- ----------
Development Bank of Singapore Ltd. (Banks-Major Regional)
---------- ----------
Keppel Corp. Ltd. (Engineering & Construction) (a)
---------- ----------
Oversea-Chinese Banking Corp. Ltd.(Banks - Major Regional)
---------- ----------
Singapore Press Holdings Ltd. (Publishing-Newspapers)
---------- ----------
Singapore Technologies Engineering Ltd. (Engineering & Construction)
---------- ----------
United Overseas Bank Ltd. (Banks-Major Regional) 32,774
---------- ----------
---------- ----------
SOUTH AFRICA--0.12%
---------- ----------
Anglo American Platinum Corp. Ltd. (Metals Mining)
---------- ----------
Liberty Life Association of Africa Ltd. (Insurance Brokers)
---------- ----------
Rembrandt Group Ltd. (Investment Management)
---------- ----------
Sanlam Ltd. (Insurance-Life/Health)
---------- ----------
South African Breweries Ltd. (Beverages - Alcoholic)
---------- ----------
Truworths International Ltd. (Textiles-Apparel)
---------- ----------
---------- ----------
SOUTH KOREA--0.57%
---------- ----------
Korea Electric Power Corp. (Electric Companies)
---------- ----------
Korea Electric Power Corp.-ADR (Electric Companies)
---------- ----------
LG Information & Communication (Communications Equipment)
---------- ----------
ML-Kospi200 Call Warrant
---------- ----------
Pohang Iron & Steel Co. Ltd. ADR (Iron & Steel)
---------- ----------
Samsung Display Devices Co. (Electronics-Component Distributors)
---------- ----------
Samsung Electronics (Electronics-Component Distributors)
---------- ----------
Samsung Fire & Marine Insurance (Insurance-Multi-line Property)
---------- ----------
Samsung Fire & Marine Insurance (Electronics Component Distributors) Rights, expire
01/13/99 (cost $0)
---------- ----------
---------- ----------
SPAIN--2.51%
---------- ----------
Corp. Financiera Reunida, S.A. (Investment Management) (a)
---------- ----------
Endesa S.A. (Electric Companies)
---------- ----------
Endesa S.A.-ADR (Electric Companies)
---------- ----------
Iberdrola S.A. (Electric Companies)
---------- ----------
Repsol S.A. (Oil & Gas-Refining & Marketing)
---------- ----------
Tabacalera S.A. (Tobacco) (a) 52,187
---------- ----------
Telefonica de Espana (Telephone) 50,810
---------- ----------
Telefonica de Espana Rights, expiring 01/30/99 (Telephone) 1,015
---------- ----------
Union Electrica Fenosa, S.A. (Electric Companies)
---------- ----------
---------- ----------
SWEDEN--1.54%
---------- ----------
Assa Abloy A.B.-Class B (Metal Fabricators)
---------- ----------
ForeningsSparbanken A.B.-Class A (Banks-Major Regional)
---------- ----------
Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel)
---------- ----------
Nordbanken Holding A.B. (Banks - Major Regional) 69,419
---------- ----------
Skandia Forsakrings A.B. (Insurance Brokers) (a) 56,182
---------- ----------
Telefonaktiebolaget LM Ericsson - Class B (Communications Equipment)
---------- ----------
WM-Data A.B. (Computers-Software & Services)
---------- ----------
---------- ----------
SWITZERLAND--4.70%
---------- ----------
Adecco S.A. (Services-Commercial & Consumer) (a) 82,188
---------- ----------
Julius Baer Holding A.G. (Banks-Major Regional) (a)
---------- ----------
Nestle S.A. (Foods) 104,515
---------- ----------
Novartis A.G. (Health Care-Diversified) 90,446
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
---------- ----------
RUSSIA--0.01%
---------- ----------
Surgutneftegaz ADR (Oil-International Integrated)
---------- ----------
SINGAPORE--0.57%
---------- ----------
DBS Land Ltd. (Land Development) 294,635
---------- ----------
Development Bank of Singapore Ltd. (Banks-Major Regional) 269,185
---------- ----------
Keppel Corp. Ltd. (Engineering & Construction) (a) 581,473
---------- ----------
Oversea-Chinese Banking Corp. Ltd.(Banks - Major Regional) 271,598
---------- ----------
Singapore Press Holdings Ltd. (Publishing-Newspapers) 224,381
---------- ----------
Singapore Technologies Engineering Ltd. (Engineering & Construction) 214,732
---------- ----------
United Overseas Bank Ltd. (Banks-Major Regional)
---------- ----------
---------- ----------
SOUTH AFRICA--0.12%
---------- ----------
Anglo American Platinum Corp. Ltd. (Metals Mining)
---------- ----------
Liberty Life Association of Africa Ltd. (Insurance Brokers)
---------- ----------
Rembrandt Group Ltd. (Investment Management)
---------- ----------
Sanlam Ltd. (Insurance-Life/Health)
---------- ----------
South African Breweries Ltd. (Beverages - Alcoholic)
---------- ----------
Truworths International Ltd. (Textiles-Apparel)
---------- ----------
---------- ----------
SOUTH KOREA--0.57%
---------- ----------
Korea Electric Power Corp. (Electric Companies) 124,167
---------- ----------
Korea Electric Power Corp.-ADR (Electric Companies)
---------- ----------
LG Information & Communication (Communications Equipment) 191,916
---------- ----------
ML-Kospi200 Call Warrant 206,838
---------- ----------
Pohang Iron & Steel Co. Ltd. ADR (Iron & Steel)
---------- ----------
Samsung Display Devices Co. (Electronics-Component Distributors) 247,083
---------- ----------
Samsung Electronics (Electronics-Component Distributors) 269,000
---------- ----------
Samsung Fire & Marine Insurance (Insurance-Multi-line Property) 499,500
---------- ----------
Samsung Fire & Marine Insurance (Electronics Component Distributors) Rights, expire
01/13/99 (cost $0) 58,763
---------- ----------
---------- ----------
SPAIN--2.51%
---------- ----------
Corp. Financiera Reunida, S.A. (Investment Management) (a) 742,373
---------- ----------
Endesa S.A. (Electric Companies) 1,302,119
---------- ----------
Endesa S.A.-ADR (Electric Companies)
---------- ----------
Iberdrola S.A. (Electric Companies) 2,765,820
---------- ----------
Repsol S.A. (Oil & Gas-Refining & Marketing)
---------- ----------
Tabacalera S.A. (Tobacco) (a)
---------- ----------
Telefonica de Espana (Telephone) 2,260,710
---------- ----------
Telefonica de Espana Rights, expiring 01/30/99 (Telephone) 45,143
---------- ----------
Union Electrica Fenosa, S.A. (Electric Companies)
---------- ----------
---------- ----------
SWEDEN--1.54%
---------- ----------
Assa Abloy A.B.-Class B (Metal Fabricators)
---------- ----------
ForeningsSparbanken A.B.-Class A (Banks-Major Regional)
---------- ----------
Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel) 1,752,343
---------- ----------
Nordbanken Holding A.B. (Banks - Major Regional)
---------- ----------
Skandia Forsakrings A.B. (Insurance Brokers) (a)
---------- ----------
Telefonaktiebolaget LM Ericsson - Class B (Communications Equipment)
---------- ----------
WM-Data A.B. (Computers-Software & Services) 873,522
---------- ----------
---------- ----------
SWITZERLAND--4.70%
---------- ----------
Adecco S.A. (Services-Commercial & Consumer) (a) 1,187,154
---------- ----------
Julius Baer Holding A.G. (Banks-Major Regional) (a) 764,601
---------- ----------
Nestle S.A. (Foods) 1,741,917
---------- ----------
Novartis A.G. (Health Care-Diversified) 2,713,370
---------- ----------
Pro Forma
Combining
---------
7,036,490
----------
RUSSIA--0.01%
----------
Surgutneftegaz ADR (Oil-International Integrated) 46,946
----------
SINGAPORE--0.57%
----------
DBS Land Ltd. (Land Development) 294,635
----------
Development Bank of Singapore Ltd. (Banks-Major Regional) 269,185
----------
Keppel Corp. Ltd. (Engineering & Construction) (a) 581,473
----------
Oversea-Chinese Banking Corp. Ltd.(Banks - Major Regional) 271,598
----------
Singapore Press Holdings Ltd. (Publishing-Newspapers) 224,381
----------
Singapore Technologies Engineering Ltd. (Engineering & Construction) 214,732
----------
United Overseas Bank Ltd. (Banks-Major Regional) 32,774
----------
1,888,777
----------
SOUTH AFRICA--0.12%
----------
Anglo American Platinum Corp. Ltd. (Metals Mining) 61,702
----------
Liberty Life Association of Africa Ltd. (Insurance Brokers) 82,025
----------
Rembrandt Group Ltd. (Investment Management) 66,776
----------
Sanlam Ltd. (Insurance-Life/Health) 62,044
----------
South African Breweries Ltd. (Beverages - Alcoholic) 103,001
----------
Truworths International Ltd. (Textiles-Apparel) 2,171
----------
377,720
----------
SOUTH KOREA--0.57%
----------
Korea Electric Power Corp. (Electric Companies) 124,167
----------
Korea Electric Power Corp.-ADR (Electric Companies) 31,375
----------
LG Information & Communication (Communications Equipment) 191,916
----------
ML-Kospi200 Call Warrant 206,838
----------
Pohang Iron & Steel Co. Ltd. ADR (Iron & Steel) 252,753
----------
Samsung Display Devices Co. (Electronics-Component Distributors) 247,083
----------
Samsung Electronics (Electronics-Component Distributors) 269,000
----------
Samsung Fire & Marine Insurance (Insurance-Multi-line Property) 499,500
----------
Samsung Fire & Marine Insurance (Electronics Component Distributors) Rights, expire
01/13/99 (cost $0) 58,763
----------
1,881,394
----------
SPAIN--2.51%
----------
Corp. Financiera Reunida, S.A. (Investment Management) (a) 742,373
----------
Endesa S.A. (Electric Companies) 1,302,119
----------
Endesa S.A.-ADR (Electric Companies) 180,900
----------
Iberdrola S.A. (Electric Companies) 2,840,572
----------
Repsol S.A. (Oil & Gas-Refining & Marketing) 79,925
----------
Tabacalera S.A. (Tobacco) (a) 478,047
----------
Telefonica de Espana (Telephone) 2,311,520
----------
Telefonica de Espana Rights, expiring 01/30/99 (Telephone) 46,157
----------
Union Electrica Fenosa, S.A. (Electric Companies) 51,841
----------
8,033,454
----------
SWEDEN--1.54%
----------
Assa Abloy A.B.-Class B (Metal Fabricators) 264,187
----------
ForeningsSparbanken A.B.-Class A (Banks-Major Regional) 391,138
----------
Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel) 1,752,343
----------
Nordbanken Holding A.B. (Banks - Major Regional) 459,041
----------
Skandia Forsakrings A.B. (Insurance Brokers) (a) 433,664
----------
Telefonaktiebolaget LM Ericsson - Class B (Communications Equipment) 738,249
----------
WM-Data A.B. (Computers-Software & Services) 873,522
----------
4,912,144
----------
SWITZERLAND--4.70%
----------
Adecco S.A. (Services-Commercial & Consumer) (a) 1,269,342
----------
Julius Baer Holding A.G. (Banks-Major Regional) (a) 764,601
----------
Nestle S.A. (Foods) 2,410,377
----------
Novartis A.G. (Health Care-Diversified) 3,657,151
----------
479
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
Roche Holding A.G. (Conglomerates)
---------- ----------
Swisscom A. G. (Telephone) (a)
---------- ----------
UBS A.G. (Banks-Major Regional)
---------- ----------
Zurich Allied A.G. (Insurance-Multi-Line) (a)
---------- ----------
---------- ----------
THAILAND--0.07%
---------- ----------
Electricity Generating Public Co. Ltd. (Electric Companies) (a)
---------- ----------
PTT Exploration and Production Public Co. Ltd. (Oil & Gas-Exploration & Production) (a)
---------- ----------
---------- ----------
TAIWAN--0.09%
---------- ----------
GT Taiwan Fund (Country Funds) (a)(g) 277,083
---------- ----------
---------- ----------
TURKEY--0.05%
---------- ----------
Haci Omer Sabanci Holding A.S. (Investment Management) 41,758
---------- ----------
Turkiye Is Bankasi (Isbank) (Banks-Money Center) 54,875
---------- ----------
Yapi ve Kredi Bankasi A.S. (Banks-Money Center)| 47,645
---------- ----------
---------- ----------
U.S.A.--2.32%
---------- ----------
AES Corp. (Power Producers-Independent) (a)
---------- ----------
AirTouch Communications, Inc. (Telecommunications-Cellualar & Wireless) (a)
---------- ----------
Aluminum Company of America (Aluminum) 82,019
---------- ----------
Amoco Corp. (Oil-International Integrated) 156,975
---------- ----------
AMR Corp. (Airlines) (a)
---------- ----------
Banco Latinoamericano de Exportaciones, S.A. (Banking)
---------- ----------
Bell Atlantic Corp. (Telephone)
---------- ----------
Centex Construction Products, Inc. (Construction-Cement & Aggregates) 125,938
---------- ----------
Centex Corp. (Homebuilding) 126,175
---------- ----------
Chevron Corp. (Oil-International Integrated) 116,113
---------- ----------
Chiquita Brands International (Foods) 15,300
---------- ----------
Cisco Systems, Inc. (Computers-Networking) (a)
---------- ----------
CMS Energy Corp. (Electric Companies)
---------- ----------
Coastal Corp. (The) (Natural Gas) 188,663
---------- ----------
COMAIR Holdings Inc. (Airlines)
---------- ----------
Crompton & Knowles Corp. (Chemicals-Specialty) 128,263
---------- ----------
Dole Food Co., Inc. (Foods) 36,000
---------- ----------
Dominion Resources, Inc. (Electric Companies)
---------- ----------
Du Pont (E.I.) de Nemours & Co. (Chemicals) 63,675
---------- ----------
El Paso Energy Corp. (Natural Gas) 128,806
---------- ----------
Enron Corp. (Natural Gas) 131,244
---------- ----------
FPL Group, Inc. (Electric Companies)
---------- ----------
Freeport-McMoRan Copper & Gold, Inc. (Metals Mining) 79,325
---------- ----------
General Dynamics Corp. (Aerospace/Defense)
---------- ----------
GPU, Inc. (Electric Companies)
---------- ----------
Gulfstream Aerospace Corp. (Aerospace/Defense) (a)
---------- ----------
Harken Energy Corp. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Houston Industries, Inc. (Electric Companies)
---------- ----------
Ingersoll-Rand Co. (Machinery-Diversified)
---------- ----------
Interstate Energy Corp. (Electric Companies)
---------- ----------
J. Ray McDermott, S.A. (Oil & Gas-Drilling & Equipment) (a) 48,875
---------- ----------
Kaufman and Broad Home Corporation (Home Building)
---------- ----------
L-3 Communications Holdings, Inc. (Communications Equipment) (a)
---------- ----------
Lafarge Corp. (Construciton-Cement & Aggregates) 72,900
---------- ----------
Martin Marietta Materials, Inc. (Construction-Cement & Aggregates) 273,625
---------- ----------
MCI WorldCom, Inc. (Telecommunications-Long Distance) (a)
---------- ----------
Merrill Lynch International & Co. KOSPI 200 - Wts. (Investment-Banking/Brockerage),
expiring 09/09/99 264,124
---------- ----------
Mobil Corp. (Oil-International Integrated) 487,900
---------- ----------
Montana Power Co. (Electric Companies) 181,000
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
Roche Holding A.G. (Conglomerates) 610,253
---------- ----------
Swisscom A. G. (Telephone) (a) 592,922 98,820
---------- ----------
UBS A.G. (Banks-Major Regional) 554,082
---------- ----------
Zurich Allied A.G. (Insurance-Multi-Line) (a) 596,928
---------- ----------
---------- ----------
THAILAND--0.07%
---------- ----------
Electricity Generating Public Co. Ltd. (Electric Companies) (a)
---------- ----------
PTT Exploration and Production Public Co. Ltd. (Oil & Gas-Exploration & Production) (a)
---------- ----------
---------- ----------
TAIWAN--0.09%
---------- ----------
GT Taiwan Fund (Country Funds) (a)(g)
---------- ----------
---------- ----------
TURKEY--0.05%
---------- ----------
Haci Omer Sabanci Holding A.S. (Investment Management)
---------- ----------
Turkiye Is Bankasi (Isbank) (Banks-Money Center)
---------- ----------
Yapi ve Kredi Bankasi A.S. (Banks-Money Center)|
---------- ----------
---------- ----------
U.S.A.--2.32%
---------- ----------
AES Corp. (Power Producers-Independent) (a) 131,939
---------- ----------
AirTouch Communications, Inc. (Telecommunications-Cellualar & Wireless) (a) 50,488
---------- ----------
Aluminum Company of America (Aluminum)
---------- ----------
Amoco Corp. (Oil-International Integrated)
---------- ----------
AMR Corp. (Airlines) (a) 29,688
---------- ----------
Banco Latinoamericano de Exportaciones, S.A. (Banking)
---------- ----------
Bell Atlantic Corp. (Telephone) 113,625
---------- ----------
Centex Construction Products, Inc. (Construction-Cement & Aggregates)
---------- ----------
Centex Corp. (Homebuilding) 72,100
---------- ----------
Chevron Corp. (Oil-International Integrated)
---------- ----------
Chiquita Brands International (Foods)
---------- ----------
Cisco Systems, Inc. (Computers-Networking) (a) 129,381
---------- ----------
CMS Energy Corp. (Electric Companies) 62,969
---------- ----------
Coastal Corp. (The) (Natural Gas)
---------- ----------
COMAIR Holdings Inc. (Airlines) 108,000
---------- ----------
Crompton & Knowles Corp. (Chemicals-Specialty)
---------- ----------
Dole Food Co., Inc. (Foods)
---------- ----------
Dominion Resources, Inc. (Electric Companies) 144,925
---------- ----------
Du Pont (E.I.) de Nemours & Co. (Chemicals)
---------- ----------
El Paso Energy Corp. (Natural Gas) 59,181
---------- ----------
Enron Corp. (Natural Gas) 133,070
---------- ----------
FPL Group, Inc. (Electric Companies) 73,950
---------- ----------
Freeport-McMoRan Copper & Gold, Inc. (Metals Mining)
---------- ----------
General Dynamics Corp. (Aerospace/Defense) 29,313
---------- ----------
GPU, Inc. (Electric Companies) 57,444
---------- ----------
Gulfstream Aerospace Corp. (Aerospace/Defense) (a) 71,462
---------- ----------
Harken Energy Corp. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Houston Industries, Inc. (Electric Companies) 147,775
---------- ----------
Ingersoll-Rand Co. (Machinery-Diversified) 75,100
---------- ----------
Interstate Energy Corp. (Electric Companies) 72,434
---------- ----------
J. Ray McDermott, S.A. (Oil & Gas-Drilling & Equipment) (a)
---------- ----------
Kaufman and Broad Home Corporation (Home Building) 115,000
---------- ----------
L-3 Communications Holdings, Inc. (Communications Equipment) (a) 4,656
---------- ----------
Lafarge Corp. (Construciton-Cement & Aggregates)
---------- ----------
Martin Marietta Materials, Inc. (Construction-Cement & Aggregates) 100,682
---------- ----------
MCI WorldCom, Inc. (Telecommunications-Long Distance) (a) 143,500
---------- ----------
Merrill Lynch International & Co. KOSPI 200 - Wts. (Investment-Banking/Brockerage),
expiring 09/09/99
---------- ----------
Mobil Corp. (Oil-International Integrated)
---------- ----------
Montana Power Co. (Electric Companies) 90,500
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
Roche Holding A.G. (Conglomerates) 134,256
---------- ----------
Swisscom A. G. (Telephone) (a) 87,515
---------- ----------
UBS A.G. (Banks-Major Regional) 98,647
---------- ----------
Zurich Allied A.G. (Insurance-Multi-Line) (a) 108,128
---------- ----------
---------- ----------
THAILAND--0.07%
---------- ----------
Electricity Generating Public Co. Ltd. (Electric Companies) (a)
---------- ----------
PTT Exploration and Production Public Co. Ltd. (Oil & Gas-Exploration & Production) (a)
---------- ----------
---------- ----------
TAIWAN--0.09%
---------- ----------
GT Taiwan Fund (Country Funds) (a)(g)
---------- ----------
---------- ----------
TURKEY--0.05%
---------- ----------
Haci Omer Sabanci Holding A.S. (Investment Management)
---------- ----------
Turkiye Is Bankasi (Isbank) (Banks-Money Center)
---------- ----------
Yapi ve Kredi Bankasi A.S. (Banks-Money Center)|
---------- ----------
---------- ----------
U.S.A.--2.32%
---------- ----------
AES Corp. (Power Producers-Independent) (a)
---------- ----------
AirTouch Communications, Inc. (Telecommunications-Cellualar & Wireless) (a)
---------- ----------
Aluminum Company of America (Aluminum)
---------- ----------
Amoco Corp. (Oil-International Integrated)
---------- ----------
AMR Corp. (Airlines) (a)
---------- ----------
Banco Latinoamericano de Exportaciones, S.A. (Banking) 45,104
---------- ----------
Bell Atlantic Corp. (Telephone)
---------- ----------
Centex Construction Products, Inc. (Construction-Cement & Aggregates)
---------- ----------
Centex Corp. (Homebuilding)
---------- ----------
Chevron Corp. (Oil-International Integrated)
---------- ----------
Chiquita Brands International (Foods)
---------- ----------
Cisco Systems, Inc. (Computers-Networking) (a)
---------- ----------
CMS Energy Corp. (Electric Companies)
---------- ----------
Coastal Corp. (The) (Natural Gas)
---------- ----------
COMAIR Holdings Inc. (Airlines)
---------- ----------
Crompton & Knowles Corp. (Chemicals-Specialty)
---------- ----------
Dole Food Co., Inc. (Foods)
---------- ----------
Dominion Resources, Inc. (Electric Companies)
---------- ----------
Du Pont (E.I.) de Nemours & Co. (Chemicals)
---------- ----------
El Paso Energy Corp. (Natural Gas)
---------- ----------
Enron Corp. (Natural Gas)
---------- ----------
FPL Group, Inc. (Electric Companies)
---------- ----------
Freeport-McMoRan Copper & Gold, Inc. (Metals Mining)
---------- ----------
General Dynamics Corp. (Aerospace/Defense)
---------- ----------
GPU, Inc. (Electric Companies)
---------- ----------
Gulfstream Aerospace Corp. (Aerospace/Defense) (a)
---------- ----------
Harken Energy Corp. (Oil & Gas-Exploration & Production) (a) 54,037
---------- ----------
Houston Industries, Inc. (Electric Companies)
---------- ----------
Ingersoll-Rand Co. (Machinery-Diversified)
---------- ----------
Interstate Energy Corp. (Electric Companies)
---------- ----------
J. Ray McDermott, S.A. (Oil & Gas-Drilling & Equipment) (a)
---------- ----------
Kaufman and Broad Home Corporation (Home Building)
---------- ----------
L-3 Communications Holdings, Inc. (Communications Equipment) (a)
---------- ----------
Lafarge Corp. (Construciton-Cement & Aggregates)
---------- ----------
Martin Marietta Materials, Inc. (Construction-Cement & Aggregates)
---------- ----------
MCI WorldCom, Inc. (Telecommunications-Long Distance) (a)
---------- ----------
Merrill Lynch International & Co. KOSPI 200 - Wts. (Investment-Banking/Brockerage),
expiring 09/09/99
---------- ----------
Mobil Corp. (Oil-International Integrated)
---------- ----------
Montana Power Co. (Electric Companies)
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ---------------------
Roche Holding A.G. (Conglomerates)
---------- ----------
Swisscom A. G. (Telephone) (a)
---------- ----------
UBS A.G. (Banks-Major Regional) 2,184,062
---------- ----------
Zurich Allied A.G. (Insurance-Multi-Line) (a) 1,851,515
---------- ----------
---------- ----------
THAILAND--0.07%
---------- ----------
Electricity Generating Public Co. Ltd. (Electric Companies) (a) 138,771
---------- ----------
PTT Exploration and Production Public Co. Ltd. (Oil & Gas-Exploration & Production) (a) 93,349
---------- ----------
---------- ----------
TAIWAN--0.09%
---------- ----------
GT Taiwan Fund (Country Funds) (a)(g)
---------- ----------
---------- ----------
TURKEY--0.05%
---------- ----------
Haci Omer Sabanci Holding A.S. (Investment Management)
---------- ----------
Turkiye Is Bankasi (Isbank) (Banks-Money Center)
---------- ----------
Yapi ve Kredi Bankasi A.S. (Banks-Money Center)|
---------- ----------
---------- ----------
U.S.A.--2.32%
---------- ----------
AES Corp. (Power Producers-Independent) (a)
---------- ----------
AirTouch Communications, Inc. (Telecommunications-Cellualar & Wireless) (a)
---------- ----------
Aluminum Company of America (Aluminum)
---------- ----------
Amoco Corp. (Oil-International Integrated)
---------- ----------
AMR Corp. (Airlines) (a)
---------- ----------
Banco Latinoamericano de Exportaciones, S.A. (Banking)
---------- ----------
Bell Atlantic Corp. (Telephone)
---------- ----------
Centex Construction Products, Inc. (Construction-Cement & Aggregates)
---------- ----------
Centex Corp. (Homebuilding)
---------- ----------
Chevron Corp. (Oil-International Integrated)
---------- ----------
Chiquita Brands International (Foods)
---------- ----------
Cisco Systems, Inc. (Computers-Networking) (a)
---------- ----------
CMS Energy Corp. (Electric Companies)
---------- ----------
Coastal Corp. (The) (Natural Gas)
---------- ----------
COMAIR Holdings Inc. (Airlines)
---------- ----------
Crompton & Knowles Corp. (Chemicals-Specialty)
---------- ----------
Dole Food Co., Inc. (Foods)
---------- ----------
Dominion Resources, Inc. (Electric Companies)
---------- ----------
Du Pont (E.I.) de Nemours & Co. (Chemicals)
---------- ----------
El Paso Energy Corp. (Natural Gas)
---------- ----------
Enron Corp. (Natural Gas)
---------- ----------
FPL Group, Inc. (Electric Companies)
---------- ----------
Freeport-McMoRan Copper & Gold, Inc. (Metals Mining)
---------- ----------
General Dynamics Corp. (Aerospace/Defense)
---------- ----------
GPU, Inc. (Electric Companies)
---------- ----------
Gulfstream Aerospace Corp. (Aerospace/Defense) (a)
---------- ----------
Harken Energy Corp. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Houston Industries, Inc. (Electric Companies)
---------- ----------
Ingersoll-Rand Co. (Machinery-Diversified)
---------- ----------
Interstate Energy Corp. (Electric Companies)
---------- ----------
J. Ray McDermott, S.A. (Oil & Gas-Drilling & Equipment) (a)
---------- ----------
Kaufman and Broad Home Corporation (Home Building)
---------- ----------
L-3 Communications Holdings, Inc. (Communications Equipment) (a)
---------- ----------
Lafarge Corp. (Construciton-Cement & Aggregates)
---------- ----------
Martin Marietta Materials, Inc. (Construction-Cement & Aggregates)
---------- ----------
MCI WorldCom, Inc. (Telecommunications-Long Distance) (a)
---------- ----------
Merrill Lynch International & Co. KOSPI 200 - Wts. (Investment-Banking/Brockerage),
expiring 09/09/99
---------- ----------
Mobil Corp. (Oil-International Integrated)
---------- ----------
Montana Power Co. (Electric Companies)
---------- ----------
Pro Forma
Combining
----------
Roche Holding A.G. (Conglomerates) 744,509
----------
Swisscom A. G. (Telephone) (a) 779,256
----------
UBS A.G. (Banks-Major Regional) 2,836,791
----------
Zurich Allied A.G. (Insurance-Multi-Line) (a) 2,556,572
----------
15,018,600
----------
THAILAND--0.07%
----------
Electricity Generating Public Co. Ltd. (Electric Companies) (a) 138,771
----------
PTT Exploration and Production Public Co. Ltd. (Oil & Gas-Exploration & Production) (a) 93,349
----------
232,119
----------
TAIWAN--0.09%
----------
GT Taiwan Fund (Country Funds) (a)(g) 277,083
----------
----------
TURKEY--0.05%
----------
Haci Omer Sabanci Holding A.S. (Investment Management) 41,758
----------
Turkiye Is Bankasi (Isbank) (Banks-Money Center) 54,875
----------
Yapi ve Kredi Bankasi A.S. (Banks-Money Center)| 47,645
----------
144,278
----------
U.S.A.--2.32%
----------
AES Corp. (Power Producers-Independent) (a) 131,939
----------
AirTouch Communications, Inc. (Telecommunications-Cellualar & Wireless) (a) 50,488
----------
Aluminum Company of America (Aluminum) 82,019
----------
Amoco Corp. (Oil-International Integrated) 156,975
----------
AMR Corp. (Airlines) (a) 29,688
----------
Banco Latinoamericano de Exportaciones, S.A. (Banking) 45,104
----------
Bell Atlantic Corp. (Telephone) 113,625
----------
Centex Construction Products, Inc. (Construction-Cement & Aggregates) 125,938
----------
Centex Corp. (Homebuilding) 198,275
----------
Chevron Corp. (Oil-International Integrated) 116,113
----------
Chiquita Brands International (Foods) 15,300
----------
Cisco Systems, Inc. (Computers-Networking) (a) 129,381
----------
CMS Energy Corp. (Electric Companies) 62,969
----------
Coastal Corp. (The) (Natural Gas) 188,663
----------
COMAIR Holdings Inc. (Airlines) 108,000
----------
Crompton & Knowles Corp. (Chemicals-Specialty) 128,263
----------
Dole Food Co., Inc. (Foods) 36,000
----------
Dominion Resources, Inc. (Electric Companies) 144,925
----------
Du Pont (E.I.) de Nemours & Co. (Chemicals) 63,675
----------
El Paso Energy Corp. (Natural Gas) 187,987
----------
Enron Corp. (Natural Gas) 264,314
----------
FPL Group, Inc. (Electric Companies) 73,950
----------
Freeport-McMoRan Copper & Gold, Inc. (Metals Mining) 79,325
----------
General Dynamics Corp. (Aerospace/Defense) 29,313
----------
GPU, Inc. (Electric Companies) 57,444
----------
Gulfstream Aerospace Corp. (Aerospace/Defense) (a) 71,462
----------
Harken Energy Corp. (Oil & Gas-Exploration & Production) (a) 54,037
----------
Houston Industries, Inc. (Electric Companies) 147,775
----------
Ingersoll-Rand Co. (Machinery-Diversified) 75,100
----------
Interstate Energy Corp. (Electric Companies) 72,434
----------
J. Ray McDermott, S.A. (Oil & Gas-Drilling & Equipment) (a) 48,875
----------
Kaufman and Broad Home Corporation (Home Building) 115,000
----------
L-3 Communications Holdings, Inc. (Communications Equipment) (a) 4,656
----------
Lafarge Corp. (Construciton-Cement & Aggregates) 72,900
----------
Martin Marietta Materials, Inc. (Construction-Cement & Aggregates) 374,307
----------
MCI WorldCom, Inc. (Telecommunications-Long Distance) (a) 143,500
----------
Merrill Lynch International & Co. KOSPI 200 - Wts. (Investment-Banking/Brockerage),
expiring 09/09/99 264,124
----------
Mobil Corp. (Oil-International Integrated) 487,900
----------
Montana Power Co. (Electric Companies) 271,500
----------
480
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
PacifiCorp (Electric Companies) 71,613
---------- ----------
Pinnacle West Capital Corp. (Electric Companies)
---------- ----------
PT Telekomunikasi Indonesia (Telephone) 78,000
---------- ----------
Public Service Enterprise Group Inc. (Electric Companies)
---------- ----------
Pulte Corp. (Homebuilding) 61,188
---------- ----------
Questar Corp. (Natural Gas) 131,750
---------- ----------
SBC Communications, Inc. (Telephone-Regional/Local)
---------- ----------
Scheid Vineyards Inc.-Class A (Beverages-Alcoholic) 50,213
---------- ----------
Solutia Inc. (Chemicals) 136,488
---------- ----------
Southdown, Inc. (Construction-Cement & Aggregates) 183,659
---------- ----------
Stillwater Mining Co. (Gold & Precious Metals Mining) (a) 180,400
---------- ----------
Tekelec (Communications Equipment) (a)
---------- ----------
Tele-Communications, Inc.-Class A (Broadcasting-Television, Radio & Cable) (a)
---------- ----------
Tellabs, Inc. (Communications Equipment) (a)
---------- ----------
Tesoro Petroleum Corp. (Oil & Gas-Refining & Marketing) 25,463
---------- ----------
Texas Utilities Co. (Electric Companies)
---------- ----------
Triton Energy Ltd. (Oil & Gas-Exploration & Production) (a) 45,244
---------- ----------
Union Camp Corp. (Containers & Packaging-Paper) 74,250
---------- ----------
United Technologies Corp. (Manufacturing-Diversified)
---------- ----------
USEC Inc. (Manufacturing-Specialized) (a) 126,956
---------- ----------
US Filter Corp. (Manufacturing -Specialized) (a) 121,238
---------- ----------
USG Corp. (Building Materials) 185,922
---------- ----------
Williams Companies, Inc. (The) (Natural Gas) 137,225
---------- ----------
W.R. Grace & Co. (Chemicals-Specialty) (a) 62,750
---------- ----------
---------- ----------
UNITED KINGDOM--16.93%
---------- ----------
Abbey National PLC (Savings & Loan Companies)
---------- ----------
Airtours PLC (Services-Commercial & Consumer)
---------- ----------
BG PLC (Oil & Gas-Exploration & Production)
---------- ----------
Bodycote International PLC (Chemicals-Specialty)
---------- ----------
British Aerospace PLC (Aerospace/Defense)
---------- ----------
British Energy PLC (Electric Companies)
---------- ----------
British Petroleum Co. PLC (Oil & Gas-Refining & Marketing)
---------- ----------
British Steel PLC-ADR (Iron & Steel) 49,725
---------- ----------
Cable & Wireless PLC (Telecommunications-Cellular\Wireless)
---------- ----------
Cadbury Schweppes PLC (Foods)
---------- ----------
CGU PLC (Insurance Brokers)
---------- ----------
Compass Group PLC (Services-Commercial & Consumer)
---------- ----------
Computacenter PLC (Computers & Peripherals (a)
---------- ----------
Corporate Services Group PLC (Business & Public Services)
---------- ----------
CRH PLC (Construction-Cement & Aggregates) 144,934
---------- ----------
Diageo PLC (Beverages-Alcoholic)
---------- ----------
EMAP PLC (Publishing)
---------- ----------
EMI Group PLC (Leisure Time-Products)
---------- ----------
Energis PLC (Telephone) (a)
---------- ----------
General Electric Co. PLC (Manufacturing-Diversified)
---------- ----------
GKN PLC (Manufacturing-Diversified)
---------- ----------
Glaxo Wellcome PLC (Health Care-Drugs-Generic & Other)
---------- ----------
Great Universal Stores PLC (Retail-General Merchandise)
---------- ----------
Hanson PLC - ADR (Manufacturing - Diversified)
---------- ----------
Hays PLC (Services-Commercial & Consumer)
---------- ----------
JBA Holdings PLC (Computer Software/Services)
---------- ----------
Kingfisher PLC (Retail-Department Stores)
---------- ----------
S|Ladbroke Group PLC (Leisure Time-Products)
---------- ----------
Lloyds TSB Group PLC (Banks-Major Regional)
---------- ----------
Logica PLC (Computer Software/Services)
---------- ----------
M & G Group PLC (Investment Management)
---------- ----------
S|Misys PLC (Services-Commercial & Consumer)
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
PacifiCorp (Electric Companies)
---------- ----------
Pinnacle West Capital Corp. (Electric Companies) 69,749
---------- ----------
PT Telekomunikasi Indonesia (Telephone)
---------- ----------
Public Service Enterprise Group Inc. (Electric Companies) 60,000
---------- ----------
Pulte Corp. (Homebuilding)
---------- ----------
Questar Corp. (Natural Gas)
---------- ----------
SBC Communications, Inc. (Telephone-Regional/Local) 160,875
---------- ----------
Scheid Vineyards Inc.-Class A (Beverages-Alcoholic)
---------- ----------
Solutia Inc. (Chemicals)
---------- ----------
Southdown, Inc. (Construction-Cement & Aggregates) 41,431
---------- ----------
Stillwater Mining Co. (Gold & Precious Metals Mining) (a)
---------- ----------
Tekelec (Communications Equipment) (a) 49,688
---------- ----------
Tele-Communications, Inc.-Class A (Broadcasting-Television, Radio & Cable) (a) 193,594
---------- ----------
Tellabs, Inc. (Communications Equipment) (a) 37,847
---------- ----------
Tesoro Petroleum Corp. (Oil & Gas-Refining & Marketing)
---------- ----------
Texas Utilities Co. (Electric Companies) 84,038
---------- ----------
Triton Energy Ltd. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Union Camp Corp. (Containers & Packaging-Paper)
---------- ----------
United Technologies Corp. (Manufacturing-Diversified) 152,250
---------- ----------
USEC Inc. (Manufacturing-Specialized) (a) 55,500
---------- ----------
US Filter Corp. (Manufacturing -Specialized) (a)
---------- ----------
USG Corp. (Building Materials)
---------- ----------
Williams Companies, Inc. (The) (Natural Gas)
---------- ----------
W.R. Grace & Co. (Chemicals-Specialty) (a)
---------- ----------
---------- ----------
UNITED KINGDOM--16.93%
---------- ----------
Abbey National PLC (Savings & Loan Companies) 540,513
---------- ----------
Airtours PLC (Services-Commercial & Consumer)
---------- ----------
BG PLC (Oil & Gas-Exploration & Production) 126,055
---------- ----------
Bodycote International PLC (Chemicals-Specialty)
---------- ----------
British Aerospace PLC (Aerospace/Defense) 55,038
---------- ----------
British Energy PLC (Electric Companies)
---------- ----------
British Petroleum Co. PLC (Oil & Gas-Refining & Marketing) 410,009
---------- ----------
British Steel PLC-ADR (Iron & Steel)
---------- ----------
Cable & Wireless PLC (Telecommunications-Cellular\Wireless)
---------- ----------
Cadbury Schweppes PLC (Foods) 568,907
---------- ----------
CGU PLC (Insurance Brokers) 298,890
---------- ----------
Compass Group PLC (Services-Commercial & Consumer)
---------- ----------
Computacenter PLC (Computers & Peripherals (a) 397,602
---------- ----------
Corporate Services Group PLC (Business & Public Services) 506,018
---------- ----------
CRH PLC (Construction-Cement & Aggregates) 67,806
---------- ----------
Diageo PLC (Beverages-Alcoholic) 285,829
---------- ----------
EMAP PLC (Publishing)
---------- ----------
EMI Group PLC (Leisure Time-Products)
---------- ----------
Energis PLC (Telephone) (a) 214,584
---------- ----------
General Electric Co. PLC (Manufacturing-Diversified) 114,861
---------- ----------
GKN PLC (Manufacturing-Diversified)
---------- ----------
Glaxo Wellcome PLC (Health Care-Drugs-Generic & Other) 588,475
---------- ----------
Great Universal Stores PLC (Retail-General Merchandise)
---------- ----------
Hanson PLC - ADR (Manufacturing - Diversified) 58,500
---------- ----------
Hays PLC (Services-Commercial & Consumer)
---------- ----------
JBA Holdings PLC (Computer Software/Services) 97,893
---------- ----------
Kingfisher PLC (Retail-Department Stores)
---------- ----------
S|Ladbroke Group PLC (Leisure Time-Products)
---------- ----------
Lloyds TSB Group PLC (Banks-Major Regional) 468,418
---------- ----------
Logica PLC (Computer Software/Services)
---------- ----------
M & G Group PLC (Investment Management)
---------- ----------
S|Misys PLC (Services-Commercial & Consumer) 464,746
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
PacifiCorp (Electric Companies)
---------- ----------
Pinnacle West Capital Corp. (Electric Companies)
---------- ----------
PT Telekomunikasi Indonesia (Telephone)
---------- ----------
Public Service Enterprise Group Inc. (Electric Companies)
---------- ----------
Pulte Corp. (Homebuilding)
---------- ----------
Questar Corp. (Natural Gas)
---------- ----------
SBC Communications, Inc. (Telephone-Regional/Local)
---------- ----------
Scheid Vineyards Inc.-Class A (Beverages-Alcoholic)
---------- ----------
Solutia Inc. (Chemicals)
---------- ----------
Southdown, Inc. (Construction-Cement & Aggregates)
---------- ----------
Stillwater Mining Co. (Gold & Precious Metals Mining) (a)
---------- ----------
Tekelec (Communications Equipment) (a)
---------- ----------
Tele-Communications, Inc.-Class A (Broadcasting-Television, Radio & Cable) (a)
---------- ----------
Tellabs, Inc. (Communications Equipment) (a)
---------- ----------
Tesoro Petroleum Corp. (Oil & Gas-Refining & Marketing)
---------- ----------
Texas Utilities Co. (Electric Companies)
---------- ----------
Triton Energy Ltd. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Union Camp Corp. (Containers & Packaging-Paper)
---------- ----------
United Technologies Corp. (Manufacturing-Diversified)
---------- ----------
USEC Inc. (Manufacturing-Specialized) (a)
---------- ----------
US Filter Corp. (Manufacturing -Specialized) (a)
---------- ----------
USG Corp. (Building Materials)
---------- ----------
Williams Companies, Inc. (The) (Natural Gas)
---------- ----------
W.R. Grace & Co. (Chemicals-Specialty) (a)
---------- ----------
---------- ----------
UNITED KINGDOM--16.93%
---------- ----------
Abbey National PLC (Savings & Loan Companies) 115,499
---------- ----------
Airtours PLC (Services-Commercial & Consumer)
---------- ----------
BG PLC (Oil & Gas-Exploration & Production)
---------- ----------
Bodycote International PLC (Chemicals-Specialty)
---------- ----------
British Aerospace PLC (Aerospace/Defense)
---------- ----------
British Energy PLC (Electric Companies)
---------- ----------
British Petroleum Co. PLC (Oil & Gas-Refining & Marketing)
---------- ----------
British Steel PLC-ADR (Iron & Steel)
---------- ----------
Cable & Wireless PLC (Telecommunications-Cellular\Wireless)
---------- ----------
Cadbury Schweppes PLC (Foods)
---------- ----------
CGU PLC (Insurance Brokers) 68,809
---------- ----------
Compass Group PLC (Services-Commercial & Consumer)
---------- ----------
Computacenter PLC (Computers & Peripherals (a)
---------- ----------
Corporate Services Group PLC (Business & Public Services)
---------- ----------
CRH PLC (Construction-Cement & Aggregates)
---------- ----------
Diageo PLC (Beverages-Alcoholic) 90,939
---------- ----------
EMAP PLC (Publishing) 91,737
---------- ----------
EMI Group PLC (Leisure Time-Products) 77,498
---------- ----------
Energis PLC (Telephone) (a)
---------- ----------
General Electric Co. PLC (Manufacturing-Diversified)
---------- ----------
GKN PLC (Manufacturing-Diversified)
---------- ----------
Glaxo Wellcome PLC (Health Care-Drugs-Generic & Other)
---------- ----------
Great Universal Stores PLC (Retail-General Merchandise) 71,591
---------- ----------
Hanson PLC - ADR (Manufacturing - Diversified)
---------- ----------
Hays PLC (Services-Commercial & Consumer)
---------- ----------
JBA Holdings PLC (Computer Software/Services)
---------- ----------
Kingfisher PLC (Retail-Department Stores)
---------- ----------
S|Ladbroke Group PLC (Leisure Time-Products)
---------- ----------
Lloyds TSB Group PLC (Banks-Major Regional) 125,041
---------- ----------
Logica PLC (Computer Software/Services)
---------- ----------
M & G Group PLC (Investment Management) 66,089
---------- ----------
S|Misys PLC (Services-Commercial & Consumer)
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
PacifiCorp (Electric Companies)
---------- ----------
Pinnacle West Capital Corp. (Electric Companies)
---------- ----------
PT Telekomunikasi Indonesia (Telephone)
---------- ----------
Public Service Enterprise Group Inc. (Electric Companies)
---------- ----------
Pulte Corp. (Homebuilding)
---------- ----------
Questar Corp. (Natural Gas)
---------- ----------
SBC Communications, Inc. (Telephone-Regional/Local)
---------- ----------
Scheid Vineyards Inc.-Class A (Beverages-Alcoholic)
---------- ----------
Solutia Inc. (Chemicals)
---------- ----------
Southdown, Inc. (Construction-Cement & Aggregates)
---------- ----------
Stillwater Mining Co. (Gold & Precious Metals Mining) (a)
---------- ----------
Tekelec (Communications Equipment) (a)
---------- ----------
Tele-Communications, Inc.-Class A (Broadcasting-Television, Radio & Cable) (a)
---------- ----------
Tellabs, Inc. (Communications Equipment) (a)
---------- ----------
Tesoro Petroleum Corp. (Oil & Gas-Refining & Marketing)
---------- ----------
Texas Utilities Co. (Electric Companies)
---------- ----------
Triton Energy Ltd. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Union Camp Corp. (Containers & Packaging-Paper)
---------- ----------
United Technologies Corp. (Manufacturing-Diversified)
---------- ----------
USEC Inc. (Manufacturing-Specialized) (a)
---------- ----------
US Filter Corp. (Manufacturing -Specialized) (a)
---------- ----------
USG Corp. (Building Materials)
---------- ----------
Williams Companies, Inc. (The) (Natural Gas)
---------- ----------
W.R. Grace & Co. (Chemicals-Specialty) (a)
---------- ----------
---------- ----------
UNITED KINGDOM--16.93%
---------- ----------
Abbey National PLC (Savings & Loan Companies)
---------- ----------
Airtours PLC (Services-Commercial & Consumer) 859,898
---------- ----------
BG PLC (Oil & Gas-Exploration & Production)
---------- ----------
Bodycote International PLC (Chemicals-Specialty) 553,600
---------- ----------
British Aerospace PLC (Aerospace/Defense) 1,915,321
---------- ----------
British Energy PLC (Electric Companies) 2,502,198
---------- ----------
British Petroleum Co. PLC (Oil & Gas-Refining & Marketing) 1,697,390
---------- ----------
British Steel PLC-ADR (Iron & Steel)
---------- ----------
Cable & Wireless PLC (Telecommunications-Cellular\Wireless) 1,324,062
---------- ----------
Cadbury Schweppes PLC (Foods)
---------- ----------
CGU PLC (Insurance Brokers)
---------- ----------
Compass Group PLC (Services-Commercial & Consumer) 1,784,980
---------- ----------
Computacenter PLC (Computers & Peripherals (a)
---------- ----------
Corporate Services Group PLC (Business & Public Services)
---------- ----------
CRH PLC (Construction-Cement & Aggregates)
---------- ----------
Diageo PLC (Beverages-Alcoholic)
---------- ----------
EMAP PLC (Publishing) 1,779,313
---------- ----------
EMI Group PLC (Leisure Time-Products)
---------- ----------
Energis PLC (Telephone) (a)
---------- ----------
General Electric Co. PLC (Manufacturing-Diversified) 2,367,551
---------- ----------
GKN PLC (Manufacturing-Diversified) 1,325,365
---------- ----------
Glaxo Wellcome PLC (Health Care-Drugs-Generic & Other)
---------- ----------
Great Universal Stores PLC (Retail-General Merchandise)
---------- ----------
Hanson PLC - ADR (Manufacturing - Diversified)
---------- ----------
Hays PLC (Services-Commercial & Consumer) 2,444,106
---------- ----------
JBA Holdings PLC (Computer Software/Services)
---------- ----------
Kingfisher PLC (Retail-Department Stores) 2,821,582
---------- ----------
S|Ladbroke Group PLC (Leisure Time-Products) 939,156
---------- ----------
Lloyds TSB Group PLC (Banks-Major Regional)
---------- ----------
Logica PLC (Computer Software/Services) 803,986
---------- ----------
M & G Group PLC (Investment Management)
---------- ----------
S|Misys PLC (Services-Commercial & Consumer) 927,558
---------- ----------
Pro Forma
Combining
---------
PacifiCorp (Electric Companies) 71,613
----------
Pinnacle West Capital Corp. (Electric Companies) 69,749
----------
PT Telekomunikasi Indonesia (Telephone) 78,000
----------
Public Service Enterprise Group Inc. (Electric Companies) 60,000
----------
Pulte Corp. (Homebuilding) 61,188
----------
Questar Corp. (Natural Gas) 131,750
----------
SBC Communications, Inc. (Telephone-Regional/Local) 160,875
----------
Scheid Vineyards Inc.-Class A (Beverages-Alcoholic) 50,213
----------
Solutia Inc. (Chemicals) 136,488
----------
Southdown, Inc. (Construction-Cement & Aggregates) 225,090
----------
Stillwater Mining Co. (Gold & Precious Metals Mining) (a) 180,400
----------
Tekelec (Communications Equipment) (a) 49,688
----------
Tele-Communications, Inc.-Class A (Broadcasting-Television, Radio & Cable) (a) 193,594
----------
Tellabs, Inc. (Communications Equipment) (a) 37,847
----------
Tesoro Petroleum Corp. (Oil & Gas-Refining & Marketing) 25,463
----------
Texas Utilities Co. (Electric Companies) 84,038
----------
Triton Energy Ltd. (Oil & Gas-Exploration & Production) (a) 45,244
----------
Union Camp Corp. (Containers & Packaging-Paper) 74,250
----------
United Technologies Corp. (Manufacturing-Diversified) 152,250
----------
USEC Inc. (Manufacturing-Specialized) (a) 182,456
----------
US Filter Corp. (Manufacturing -Specialized) (a) 121,238
----------
USG Corp. (Building Materials) 185,922
----------
Williams Companies, Inc. (The) (Natural Gas) 137,225
----------
W.R. Grace & Co. (Chemicals-Specialty) (a) 62,750
----------
7,400,564
----------
UNITED KINGDOM--16.93%
----------
Abbey National PLC (Savings & Loan Companies) 656,011
----------
Airtours PLC (Services-Commercial & Consumer) 859,898
----------
BG PLC (Oil & Gas-Exploration & Production) 126,055
----------
Bodycote International PLC (Chemicals-Specialty) 553,600
----------
British Aerospace PLC (Aerospace/Defense) 1,970,359
----------
British Energy PLC (Electric Companies) 2,502,198
----------
British Petroleum Co. PLC (Oil & Gas-Refining & Marketing) 2,107,398
----------
British Steel PLC-ADR (Iron & Steel) 49,725
----------
Cable & Wireless PLC (Telecommunications-Cellular\Wireless) 1,324,062
----------
Cadbury Schweppes PLC (Foods) 568,907
----------
CGU PLC (Insurance Brokers) 367,699
----------
Compass Group PLC (Services-Commercial & Consumer) 1,784,980
----------
Computacenter PLC (Computers & Peripherals (a) 397,602
----------
Corporate Services Group PLC (Business & Public Services) 506,018
----------
CRH PLC (Construction-Cement & Aggregates) 212,740
----------
Diageo PLC (Beverages-Alcoholic) 376,768
----------
EMAP PLC (Publishing) 1,871,050
----------
EMI Group PLC (Leisure Time-Products) 77,498
----------
Energis PLC (Telephone) (a) 214,584
----------
General Electric Co. PLC (Manufacturing-Diversified) 2,482,412
----------
GKN PLC (Manufacturing-Diversified) 1,325,365
----------
Glaxo Wellcome PLC (Health Care-Drugs-Generic & Other) 588,475
----------
Great Universal Stores PLC (Retail-General Merchandise) 71,591
----------
Hanson PLC - ADR (Manufacturing - Diversified) 58,500
----------
Hays PLC (Services-Commercial & Consumer) 2,444,106
----------
JBA Holdings PLC (Computer Software/Services) 97,893
----------
Kingfisher PLC (Retail-Department Stores) 2,821,582
----------
S|Ladbroke Group PLC (Leisure Time-Products) 939,156
----------
Lloyds TSB Group PLC (Banks-Major Regional) 593,459
----------
Logica PLC (Computer Software/Services) 803,986
----------
M & G Group PLC (Investment Management) 66,089
----------
S|Misys PLC (Services-Commercial & Consumer) 1,392,304
----------
481
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------- ------------------
National Grid Group PLC (Electric Companies)
---------- ----------
Nycomed Amersham PLC. (Healthcare-Drugs-Generic & Other)
---------- ----------
Orange PLC (Telecommunications) (a)
---------- ----------
Pearson PLC (Specialty Printing)
---------- ----------
Provident Financial PLC (Consumer Finance)
---------- ----------
Railtrack Group PLC (Shipping)
---------- ----------
Rentokil Initial PLC (Services-Commercial & Consumer)
---------- ----------
Reuters Group PLC. (Services-Commercial & Consumer)
---------- ----------
Rio Tinto PLC (Metals Mining) 74,347
---------- ----------
Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line)
---------- ----------
Safra Republic Holdings, S.A. (Banks-Major Regional)
---------- ----------
Schroders PLC (Banks-Regional)
---------- ----------
Scottish Power PLC (Electric Companies)
---------- ----------
Seton Scholl Healthcare PLC (Health Care-Diversified) (a)
---------- ----------
SmithKline Beecham PLC (Healthcare-Diversified)
---------- ----------
Somerfield PLC (Retail-Food Chains)
---------- ----------
Stagecoach Holdings PLC (Shipping)
---------- ----------
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration & Production) (a) 27,000
---------- ----------
Stolt Comex Seaway, S.A. (Oil & Gas-Exploration & Production) (a) 9,844
---------- ----------
Unilever PLC (Foods)
---------- ----------
United Biscuits Holdings PLC. (Foods)
---------- ----------
Vodafone Group PLC (Telecommunications-Cellular/Wireless)
---------- ----------
WPP Group PLC (Services-Advertising/Marketing)
---------- ----------
---------- ----------
VENEZUELA-0.07%
---------- ----------
C.A. La Electricidad de Caracas (Electric Companies)
---------- ----------
C.A. La Electricidad de Caracas (Electric Companies)
---------- ----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates)
---------- ----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates)
---------- ----------
---------- ----------
Fixed Income Securities--.62%
---------- ----------
---------- ----------
BRAZIL--0.00%
---------- ----------
Cvrd. Nonconv. 12/99
---------- ----------
Companhia Vale do Rio Doce - Non Convertible (Cost $0)
---------- ----------
---------- ----------
HONG KONG--0.05%
---------- ----------
Cosco Treasury Co. Ltd. (Financial Diversified), Conv. Gtd. Bonds, 1.00%, 03/13/03
---------- ----------
UNITED KINGDOM--0.27%
---------- ----------
---------- ----------
Airtours PLC, Conv. Sub. Notes, 5.75%, 01/05/04 (f)
---------- ----------
U.S.A.--0.30%
---------- ----------
Federal Home Loan Mortgage Corp., 4.50%, due 01/04/99
---------- ----------
---------- ----------
Repurchase Agreements--7.25% (g)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $525,000 U.S. Treasury Bills, 8.75% due 05/15/17
(market value of collateral is $734,767 including accrued interest). (cost $716,000) 716,000
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $490,000 U.S. Treasury Notes, 5.625% due 11/30/99
(market value of collateral is $496,635 including accrued interest). (cost $482,000) 482,000
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $410,000 U.S. Treasury Notes, 6.25% due 04/30/01
(market value of collateral is $428,450, including accrued interest). (cost $416,000)
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
National Grid Group PLC (Electric Companies) 159,460
---------- ----------
Nycomed Amersham PLC. (Healthcare-Drugs-Generic & Other) 480,871
---------- ----------
Orange PLC (Telecommunications) (a) 958,072
---------- ----------
Pearson PLC (Specialty Printing)
---------- ----------
Provident Financial PLC (Consumer Finance)
---------- ----------
Railtrack Group PLC (Shipping) 57,439
---------- ----------
Rentokil Initial PLC (Services-Commercial & Consumer)
---------- ----------
Reuters Group PLC. (Services-Commercial & Consumer)
---------- ----------
Rio Tinto PLC (Metals Mining)
---------- ----------
Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line)
---------- ----------
Safra Republic Holdings, S.A. (Banks-Major Regional) 547,834
---------- ----------
Schroders PLC (Banks-Regional)
---------- ----------
Scottish Power PLC (Electric Companies) 45,667
---------- ----------
Seton Scholl Healthcare PLC (Health Care-Diversified) (a)
---------- ----------
SmithKline Beecham PLC (Healthcare-Diversified) 622,363
---------- ----------
Somerfield PLC (Retail-Food Chains)
---------- ----------
Stagecoach Holdings PLC (Shipping) 54,870
---------- ----------
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration & Production) (a)
---------- ----------
Stolt Comex Seaway, S.A. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Unilever PLC (Foods)
---------- ----------
United Biscuits Holdings PLC. (Foods)
---------- ----------
Vodafone Group PLC (Telecommunications-Cellular/Wireless) 761,756 76,235
---------- ----------
WPP Group PLC (Services-Advertising/Marketing)
---------- ----------
---------- ----------
VENEZUELA-0.07%
---------- ----------
C.A. La Electricidad de Caracas (Electric Companies)
---------- ----------
C.A. La Electricidad de Caracas (Electric Companies)
---------- ----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates)
---------- ----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates)
---------- ----------
---------- ----------
Fixed Income Securities--.62%
---------- ----------
---------- ----------
BRAZIL--0.00%
---------- ----------
Cvrd. Nonconv. 12/99
---------- ----------
Companhia Vale do Rio Doce - Non Convertible (Cost $0)
---------- ----------
---------- ----------
HONG KONG--0.05%
---------- ----------
Cosco Treasury Co. Ltd. (Financial Diversified), Conv. Gtd. Bonds, 1.00%, 03/13/03
---------- ----------
UNITED KINGDOM--0.27%
---------- ----------
---------- ----------
Airtours PLC, Conv. Sub. Notes, 5.75%, 01/05/04 (f)
---------- ----------
U.S.A.--0.30%
---------- ----------
Federal Home Loan Mortgage Corp., 4.50%, due 01/04/99
---------- ----------
---------- ----------
Repurchase Agreements--7.25% (g)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $525,000 U.S. Treasury Bills, 8.75% due 05/15/17
(market value of collateral is $734,767 including accrued interest). (cost $716,000)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $490,000 U.S. Treasury Notes, 5.625% due 11/30/99
(market value of collateral is $496,635 including accrued interest). (cost $482,000)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $410,000 U.S. Treasury Notes, 6.25% due 04/30/01
(market value of collateral is $428,450, including accrued interest). (cost $416,000) 416,000
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
National Grid Group PLC (Electric Companies)
---------- ----------
Nycomed Amersham PLC. (Healthcare-Drugs-Generic & Other) 118,341
---------- ----------
Orange PLC (Telecommunications) (a) 83,580
---------- ----------
Pearson PLC (Specialty Printing)
---------- ----------
Provident Financial PLC (Consumer Finance)
---------- ----------
Railtrack Group PLC (Shipping)
---------- ----------
Rentokil Initial PLC (Services-Commercial & Consumer)
---------- ----------
Reuters Group PLC. (Services-Commercial & Consumer) 62,920
---------- ----------
Rio Tinto PLC (Metals Mining)
---------- ----------
Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line) 88,082
---------- ----------
Safra Republic Holdings, S.A. (Banks-Major Regional) 57,044
---------- ----------
Schroders PLC (Banks-Regional) 74,747
---------- ----------
Scottish Power PLC (Electric Companies)
---------- ----------
Seton Scholl Healthcare PLC (Health Care-Diversified) (a)
---------- ----------
SmithKline Beecham PLC (Healthcare-Diversified) 120,055
---------- ----------
Somerfield PLC (Retail-Food Chains)
---------- ----------
Stagecoach Holdings PLC (Shipping)
---------- ----------
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration & Production) (a)
---------- ----------
Stolt Comex Seaway, S.A. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Unilever PLC (Foods)
---------- ----------
United Biscuits Holdings PLC. (Foods) 53,846
---------- ----------
Vodafone Group PLC (Telecommunications-Cellular/Wireless) 128,204
---------- ----------
WPP Group PLC (Services-Advertising/Marketing)
---------- ----------
---------- ----------
VENEZUELA-0.07%
---------- ----------
C.A. La Electricidad de Caracas (Electric Companies) 152,001
---------- ----------
C.A. La Electricidad de Caracas (Electric Companies) 6,199
---------- ----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates) 29,860
---------- ----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates) 20,005
---------- ----------
---------- ----------
Fixed Income Securities--.62%
---------- ----------
---------- ----------
BRAZIL--0.00%
---------- ----------
Cvrd. Nonconv. 12/99 0
---------- ----------
Companhia Vale do Rio Doce - Non Convertible (Cost $0) 0
---------- ----------
---------- ----------
HONG KONG--0.05%
---------- ----------
Cosco Treasury Co. Ltd. (Financial Diversified), Conv. Gtd. Bonds, 1.00%, 03/13/03
---------- ----------
UNITED KINGDOM--0.27%
---------- ----------
---------- ----------
Airtours PLC, Conv. Sub. Notes, 5.75%, 01/05/04 (f)
---------- ----------
U.S.A.--0.30%
---------- ----------
Federal Home Loan Mortgage Corp., 4.50%, due 01/04/99 947,645
---------- ----------
---------- ----------
Repurchase Agreements--7.25% (g)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $525,000 U.S. Treasury Bills, 8.75% due 05/15/17
(market value of collateral is $734,767 including accrued interest). (cost $716,000)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $490,000 U.S. Treasury Notes, 5.625% due 11/30/99
(market value of collateral is $496,635 including accrued interest). (cost $482,000)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $410,000 U.S. Treasury Notes, 6.25% due 04/30/01
(market value of collateral is $428,450, including accrued interest). (cost $416,000)
---------- ----------
GT Global Variable AIM V.I. International
New Pacific Equity
------------------ ----------------------
National Grid Group PLC (Electric Companies)
---------- ----------
Nycomed Amersham PLC. (Healthcare-Drugs-Generic & Other)
---------- ----------
Orange PLC (Telecommunications) (a) 1,996,640
---------- ----------
Pearson PLC (Specialty Printing) 2,107,553
---------- ----------
Provident Financial PLC (Consumer Finance) 1,316,982
---------- ----------
Railtrack Group PLC (Shipping) 2,053,272
---------- ----------
Rentokil Initial PLC (Services-Commercial & Consumer) 2,823,152
---------- ----------
Reuters Group PLC. (Services-Commercial & Consumer)
---------- ----------
Rio Tinto PLC (Metals Mining)
---------- ----------
Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line)
---------- ----------
Safra Republic Holdings, S.A. (Banks-Major Regional)
---------- ----------
Schroders PLC (Banks-Regional)
---------- ----------
Scottish Power PLC (Electric Companies)
---------- ----------
Seton Scholl Healthcare PLC (Health Care-Diversified) (a) 586,318
---------- ----------
SmithKline Beecham PLC (Healthcare-Diversified)
---------- ----------
Somerfield PLC (Retail-Food Chains) 968,721
---------- ----------
Stagecoach Holdings PLC (Shipping) 576,534
---------- ----------
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration & Production) (a)
---------- ----------
Stolt Comex Seaway, S.A. (Oil & Gas-Exploration & Production) (a)
---------- ----------
Unilever PLC (Foods) 2,329,850
---------- ----------
United Biscuits Holdings PLC. (Foods)
---------- ----------
Vodafone Group PLC (Telecommunications-Cellular/Wireless) 3,000,726
---------- ----------
WPP Group PLC (Services-Advertising/Marketing) 1,458,816
---------- ----------
---------- ----------
VENEZUELA-0.07%
---------- ----------
C.A. La Electricidad de Caracas (Electric Companies)
---------- ----------
C.A. La Electricidad de Caracas (Electric Companies)
---------- ----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates)
---------- ----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates)
---------- ----------
---------- ----------
Fixed Income Securities--.62%
---------- ----------
---------- ----------
BRAZIL--0.00%
---------- ----------
Cvrd. Nonconv. 12/99
---------- ----------
Companhia Vale do Rio Doce - Non Convertible (Cost $0)
---------- ----------
---------- ----------
HONG KONG--0.05%
---------- ----------
Cosco Treasury Co. Ltd. (Financial Diversified), Conv. Gtd. Bonds, 1.00%, 03/13/03 178,965
---------- ----------
UNITED KINGDOM--0.27%
---------- ----------
---------- ----------
Airtours PLC, Conv. Sub. Notes, 5.75%, 01/05/04 (f) 850,386
---------- ----------
U.S.A.--0.30%
---------- ----------
Federal Home Loan Mortgage Corp., 4.50%, due 01/04/99
---------- ----------
---------- ----------
Repurchase Agreements--7.25% (g)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $525,000 U.S. Treasury Bills, 8.75% due 05/15/17
(market value of collateral is $734,767 including accrued interest). (cost $716,000)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $490,000 U.S. Treasury Notes, 5.625% due 11/30/99
(market value of collateral is $496,635 including accrued interest). (cost $482,000)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $410,000 U.S. Treasury Notes, 6.25% due 04/30/01
(market value of collateral is $428,450, including accrued interest). (cost $416,000)
---------- ----------
Pro Forma
Combining
---------
National Grid Group PLC (Electric Companies) 159,460
----------
Nycomed Amersham PLC. (Healthcare-Drugs-Generic & Other) 599,212
----------
Orange PLC (Telecommunications) (a) 3,038,292
----------
Pearson PLC (Specialty Printing) 2,107,553
----------
Provident Financial PLC (Consumer Finance) 1,316,982
----------
Railtrack Group PLC (Shipping) 2,110,711
----------
Rentokil Initial PLC (Services-Commercial & Consumer) 2,823,152
----------
Reuters Group PLC. (Services-Commercial & Consumer) 62,920
----------
Rio Tinto PLC (Metals Mining) 74,347
----------
Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line) 88,082
----------
Safra Republic Holdings, S.A. (Banks-Major Regional) 604,878
----------
Schroders PLC (Banks-Regional) 74,747
----------
Scottish Power PLC (Electric Companies) 45,667
----------
Seton Scholl Healthcare PLC (Health Care-Diversified) (a) 586,318
----------
SmithKline Beecham PLC (Healthcare-Diversified) 742,418
----------
Somerfield PLC (Retail-Food Chains) 968,721
----------
Stagecoach Holdings PLC (Shipping) 631,404
----------
Stolt Comex Seaway, S.A. (Oil & Gas - Exploration & Production) (a) 27,000
----------
Stolt Comex Seaway, S.A. (Oil & Gas-Exploration & Production) (a) 9,844
----------
Unilever PLC (Foods) 2,329,850
----------
United Biscuits Holdings PLC. (Foods) 53,846
----------
Vodafone Group PLC (Telecommunications-Cellular/Wireless) 3,966,920
----------
WPP Group PLC (Services-Advertising/Marketing) 1,458,816
----------
54,093,209
----------
VENEZUELA-0.07%
----------
C.A. La Electricidad de Caracas (Electric Companies) 152,001
----------
C.A. La Electricidad de Caracas (Electric Companies) 6,199
----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates) 29,860
----------
Corporacion Venezolana de Cementos S.A.C.A. (Constructions-Cement & Aggregates) 20,005
----------
208,066
----------
Fixed Income Securities--.62%
----------
----------
BRAZIL--0.00%
----------
Cvrd. Nonconv. 12/99 0
----------
Companhia Vale do Rio Doce - Non Convertible (Cost $0) 0
----------
----------
HONG KONG--0.05%
----------
Cosco Treasury Co. Ltd. (Financial Diversified), Conv. Gtd. Bonds, 1.00%, 03/13/03 178,965
----------
UNITED KINGDOM--0.27%
----------
----------
Airtours PLC, Conv. Sub. Notes, 5.75%, 01/05/04 (f) 850,386
----------
U.S.A.--0.30%
----------
Federal Home Loan Mortgage Corp., 4.50%, due 01/04/99 947,645
----------
1,976,996
----------
Repurchase Agreements--7.25% (g)
----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $525,000 U.S. Treasury Bills, 8.75% due 05/15/17
(market value of collateral is $734,767 including accrued interest). (cost $716,000) 716,000
----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collateralized by $490,000 U.S. Treasury Notes, 5.625% due 11/30/99
(market value of collateral is $496,635 including accrued interest). (cost $482,000) 482,000
----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $410,000 U.S. Treasury Notes, 6.25% due 04/30/01
(market value of collateral is $428,450, including accrued interest). (cost $416,000) 416,000
----------
482
Market Value
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,915,000 U.S. Treasury 2,136,000, 6.25% due 08/15/23
(market value of collateral is $2,183,697, including accrued interest). (cost $2,136,000)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,480,000 U.S. Treasury Notes, 7.125% due
09/30/99 (market value of col1ateral is $2,533,650, including accrued interest). (cost $1,500,000)
---------- ----------
Goldman, Sachs & Co., 4.40%, 01/04/99 (Cost $17,938,040)
---------- ----------
---------- ----------
TOTAL INVESTMENTS (Cost $263,468,100)--99.48% 6,707,559 5,630,417
---------- ----------
OTHER ASSETS LESS LIABILITIES--0.52% (311,959) 20,993
---------- ----------
NET ASSETS -- 100.00% 6,395,600 5,651,410
---------- ----------
GT Global Variable GT Global Variable
Europe Infrastructure
------------------ ------------------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,915,000 U.S. Treasury 2,136,000, 6.25% due 08/15/23
(market value of collateral is $2,183,697, including accrued interest). (cost $2,136,000) 2,136,000
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,480,000 U.S. Treasury Notes, 7.125% due
09/30/99 (market value of col1ateral is $2,533,650, including accrued interest). (cost $1,500,000)
---------- ----------
Goldman, Sachs & Co., 4.40%, 01/04/99 (Cost $17,938,040)
---------- ----------
---------- ----------
TOTAL INVESTMENTS (Cost $263,468,100)--99.48% 31,751,087 6,278,265
---------- ----------
OTHER ASSETS LESS LIABILITIES--0.52% 865,804 63,116
---------- ----------
NET ASSETS -- 100.00% 32,616,891 6,341,381
---------- ----------
GT Global Variable GT Global Variable
International Latin America
------------------ ------------------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,915,000 U.S. Treasury 2,136,000, 6.25% due 08/15/23
(market value of collateral is $2,183,697, including accrued interest). (cost $2,136,000)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,480,000 U.S. Treasury Notes, 7.125% due
09/30/99 (market value of col1ateral is $2,533,650, including accrued interest). (cost $1,500,000) 1,500,000
---------- ----------
Goldman, Sachs & Co., 4.40%, 01/04/99 (Cost $17,938,040)
---------- ----------
TOTAL INVESTMENTS (Cost $263,468,100)--99.48% 7,436,516 9,998,145
---------- ----------
OTHER ASSETS LESS LIABILITIES--0.52% (109,165) (62,888)
---------- ----------
NET ASSETS -- 100.00% 7,327,351 9,935,257
---------- ----------
GT Global Variable GT Global Variable
Natural Resources Emerging Markets
------------------ ------------------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,915,000 U.S. Treasury 2,136,000, 6.25% due 08/15/23
(market value of collateral is $2,183,697, including accrued interest). (cost $2,136,000)
---------- ----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,480,000 U.S. Treasury Notes, 7.125% due
09/30/99 (market value of col1ateral is $2,533,650, including accrued interest). (cost $1,500,000)
---------- ----------
Goldman, Sachs & Co., 4.40%, 01/04/99 (Cost $17,938,040) 17,938,040
---------- ----------
TOTAL INVESTMENTS (Cost $263,468,100)--99.48% 11,077,927 239,050,552
---------- -----------
(67,902) 1,263,760
OTHER ASSETS LESS LIABILITIES--0.52% ---------- -----------
11,010,025 240,314,312
NET ASSETS -- 100.00% ---------- -----------
Pro Forma
Combining
---------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,915,000 U.S. Treasury 2,136,000, 6.25% due 08/15/23
(market value of collateral is $2,183,697, including accrued interest). (cost $2,136,000) 2,136,000
-----------
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yield of 4.50%, collaterized by $1,480,000 U.S. Treasury Notes, 7.125% due
09/30/99 (market value of col1ateral is $2,533,650, including accrued interest). (cost $1,500,000) 1,500,000
-----------
Goldman, Sachs & Co., 4.40%, 01/04/99 (Cost $17,938,040) 17,938,040
-----------
23,188,040
-----------
TOTAL INVESTMENTS (Cost $263,468,100)--99.48% 317,930,468
-----------
OTHER ASSETS LESS LIABILITIES--0.52% 1,661,759
-----------
NET ASSETS -- 100.00% 319,592,227
-----------
483
AIM V.I. INTERNATIONAL EQUITY FUND
GT Global Variable International Fund
GT Global Variable Europe Fund
GT Global Variable Natural Resources Fund
GT Global Variable Infrastructure Fund
GT Global Variable New Pacific Fund
GT Global Variable Latin America Fund
GT Global Variable Emerging Markets Fund
PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1998
(Unaudited)
GT Global Variable GT Global Variable GT Global Variable
International Fund Europe Fund Natural Resources Fund
ASSETS:
Investments, at market value $ 5,936,516 $ 29,615,087 $ 5,991,559
(cost $182,932,292-AIM V.I. International Equity Fund)
(cost $ 5,545,889-GT Global Variable International Fund)
(cost $25,928,330-GT Global Variable Europe Fund)
(cost $ 6,474,678-GT Global Variable Natural Resources Fund)
(cost $ 4,736,767-GT Global Variable Infrastructure Fund)
(cost $10,711,330-GT Global Variable New Pacific Fund)
(cost $15,614,394-GT Global Variable Latin America Fund)
(cost $ 6,274,420-GT Global Variable Emerging Markets Fund)
Repurchase Agreement, at market value and cost 1,500,000 2,136,000 716,000
U.S. currency 826 96 221
Foreign currencies at value 3,089 -- 7,566
(cost $963,811-AIM V.I. International Equity Fund)
(cost $ 3,030-GT Global Variable International Fund)
(cost $ 0.00-GT Global Variable Europe Fund)
(cost $ 7,456-GT Global Variable Natural Resources Fund)
(cost $86,970-GT Global Variable Infrastructure Fund)
(cost $ 939-GT Global Variable New Pacific Fund)
(cost $54,678-GT Global Variable Latin America Fund)
(cost $38,246-GT Global Variable Emerging Markets Fund)
Receivables for:
Securities Sold -- -- 23,740
Capital Stock Sold -- -- --
Fund shares sold -- 912,029 330
Dividends and interest -- -- --
Dividends and dividend withholding tax reclaims receivable 7,467 37,738 73,510
Receivable form AIM Advisors, Inc. -- 11,804 --
Investment for deferred compensation plan -- -- --
Interest and interest withholding tax reclaims receivable 188 267 90
Interest and miscellaneous receivable -- 173 --
Other assets -- -- --
------------ ------------ ------------
Total assets 7,448,086 32,713,194 6,813,016
------------ ------------ ------------
LIABILITIES:
Payables for:
Securities purchased -- -- 371,131
Open forward foreign currency contacts 11,872 -- --
Capital Stock Reacquired -- -- --
Fund shares repurchased 64,334 56,493 10,714
Deferred compensation -- -- --
Payable for custodian fees 11,120 429 1,400
Payable for fund accounting fees 155 653 157
Payable for printing and postage expenses 10,454 162 6,000
Payable for professional fees 22,174 4,316 9,800
Payable for investment management and administration fees -- 28,023 2,192
Payable for loan outstanding -- -- --
Payable for registration and filing fees -- 2,385 --
Accrued advisory fees -- -- --
Accrued directors' fees -- -- --
Accrued trustees's fees -- 818 200
Accrued operating expenses -- -- --
Other accrued expenses 626 3,024 15,822
------------ ------------ ------------
Total liabilities 120,735 96,303 417,416
------------ ------------ ------------
------------ ------------ ------------
Net assets applicable to shares outstanding $ 7,327,351 $ 32,616,891 $ 6,395,600
------------ ------------ ------------
NET ASSETS:
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Authorized -- -- --
Outstanding 617,476 1,398,753 586,487
Net asset value and redemption price per share $ 11.87 $ 23.32 $ 10.90
GT Global Variable GT Global Variable GT Global Variable
Infrastructure Fund New Pacific Fund Latin America Fund
ASSETS:
Investments, at market value $ 5,862,265 $ 11,077,927 $ 9,998,145
(cost $182,932,292-AIM V.I. International Equity Fund)
(cost $ 5,545,889-GT Global Variable International Fund)
(cost $25,928,330-GT Global Variable Europe Fund)
(cost $ 6,474,678-GT Global Variable Natural Resources Fund)
(cost $ 4,736,767-GT Global Variable Infrastructure Fund)
(cost $10,711,330-GT Global Variable New Pacific Fund)
(cost $15,614,394-GT Global Variable Latin America Fund)
(cost $ 6,274,420-GT Global Variable Emerging Markets Fund)
Repurchase Agreement, at market value and cost 416,000 -- --
U.S. currency 983 1,994 1,008
Foreign currencies at value 86,088 939 54,617
(cost $963,811-AIM V.I. International Equity Fund)
(cost $ 3,030-GT Global Variable International Fund)
(cost $ 0.00-GT Global Variable Europe Fund)
(cost $ 7,456-GT Global Variable Natural Resources Fund)
(cost $86,970-GT Global Variable Infrastructure Fund)
(cost $ 939-GT Global Variable New Pacific Fund)
(cost $54,678-GT Global Variable Latin America Fund)
(cost $38,246-GT Global Variable Emerging Markets Fund)
Receivables for:
Securities Sold -- 9,597 --
Capital Stock Sold -- -- --
Fund shares sold 330 468 4,011
Dividends and interest -- -- --
Dividends and dividend withholding tax reclaims receivable 9,080 16,075 13,740
Receivable form AIM Advisors, Inc. -- -- 42,687
Investment for deferred compensation plan -- -- --
Interest and interest withholding tax reclaims receivable 52 -- --
Interest and miscellaneous receivable -- -- --
Other assets -- -- --
------------ ------------ ------------
Total assets 6,374,798 11,107,000 10,114,208
------------ ------------ ------------
LIABILITIES:
Payables for:
Securities purchased -- -- --
Open forward foreign currency contacts -- -- --
Capital Stock Reacquired -- -- --
Fund shares repurchased 15,295 18,382 79,375
Deferred compensation -- -- --
Payable for custodian fees 1,300 5,384 850
Payable for fund accounting fees 175 48 350
Payable for printing and postage expenses 5,070 11,244 --
Payable for professional fees 8,197 11,730 752
Payable for investment management and administration fees 3,163 2,563 49,024
Payable for loan outstanding -- 42,000 48,000
Payable for registration and filing fees -- 1,257 --
Accrued advisory fees -- -- --
Accrued directors' fees -- -- --
Accrued trustees's fees -- 1,202 600
Accrued operating expenses -- -- --
Other accrued expenses 217 3,165 --
------------ ------------ ------------
Total liabilities 33,417 96,975 178,951
------------ ------------ ------------
------------ ------------ ------------
Net assets applicable to shares outstanding $ 6,341,381 $ 11,010,025 $ 9,935,257
------------ ------------ ------------
NET ASSETS:
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Authorized -- -- --
Outstanding 367,346 1,262,519 1,034,282
Net asset value and redemption price per share $ 17.26 $ 8.72 $ 9.61
GT Global Variable AIM V.I. International Pro Forma
Emerging Markets Fund Equity Fund Combining
ASSETS:
Investments, at market value $ 5,148,417 $239,050,552 $312,680,468
(cost $182,932,292-AIM V.I. International Equity Fund)
(cost $ 5,545,889-GT Global Variable International Fund)
(cost $25,928,330-GT Global Variable Europe Fund)
(cost $ 6,474,678-GT Global Variable Natural Resources Fund)
(cost $ 4,736,767-GT Global Variable Infrastructure Fund)
(cost $10,711,330-GT Global Variable New Pacific Fund)
(cost $15,614,394-GT Global Variable Latin America Fund)
(cost $ 6,274,420-GT Global Variable Emerging Markets Fund)
Repurchase Agreement, at market value and cost 482,000 -- 5,250,000
U.S. currency 142 -- 5,270
Foreign currencies at value 37,492 982,733 1,172,524
(cost $963,811-AIM V.I. International Equity Fund)
(cost $ 3,030-GT Global Variable International Fund)
(cost $ 0.00-GT Global Variable Europe Fund)
(cost $ 7,456-GT Global Variable Natural Resources Fund)
(cost $86,970-GT Global Variable Infrastructure Fund)
(cost $ 939-GT Global Variable New Pacific Fund)
(cost $54,678-GT Global Variable Latin America Fund)
(cost $38,246-GT Global Variable Emerging Markets Fund)
Receivables for:
Securities Sold -- 119,244 152,581
Capital Stock Sold -- 50,764 50,764
Fund shares sold -- -- 917,168
Dividends and interest -- 450,298 450,298
Dividends and dividend withholding tax reclaims receivable 16,732 -- 174,342
Receivable form AIM Advisors, Inc. 84,518 -- 139,009
Investment for deferred compensation plan -- 23,005 23,005
Interest and interest withholding tax reclaims receivable 60 -- 657
Interest and miscellaneous receivable -- -- 173
Other assets -- 687 687
------------ ------------ ------------
Total assets 5,769,361 240,677,283 321,016,946
------------ ------------ ------------
LIABILITIES:
Payables for:
Securities purchased -- -- 371,131
Open forward foreign currency contacts -- -- 11,872
Capital Stock Reacquired -- 136,066 136,066
Fund shares repurchased 5,240 -- 249,833
Deferred compensation -- 23,005 23,005
Payable for custodian fees 9,214 -- 29,697
Payable for fund accounting fees -- -- 1,538
Payable for printing and postage expenses 6,764 -- 39,694
Payable for professional fees 18,994 -- 75,963
Payable for investment management and administration fees 70,117 -- 155,082
Payable for loan outstanding -- -- 90,000
Payable for registration and filing fees 796 -- 4,438
Accrued advisory fees -- 148,393 148,393
Accrued directors' fees -- 397 397
Accrued trustees's fees 2,157 -- 4,977
Accrued operating expenses -- 55,110 55,110
Other accrued expenses 4,669 -- 27,523
------------ ------------ ------------
Total liabilities 117,951 362,971 1,424,719
------------ ------------ ------------
------------ ------------ ------------
Net assets applicable to shares outstanding $ 5,651,410 $240,314,312 $319,592,227
------------ ------------ ------------
NET ASSETS:
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Authorized -- 250,000,000 250,000,000
Outstanding 844,749 12,249,573 16,290,422
Net asset value and redemption price per share $ 6.69 $ 19.62
See Accompanying notes to the Pro Forma Combining Financial Statements.
484
AIM V.I. INTERNATIONAL EQUITY FUND
GT Global Variable International Fund
GT Global Variable Europe Fund
GT Global Variable Natural Resources Fund
GT Global Variable Infrastructure Fund
GT Global Variable New Pacific Fund
GT Global Variable Latin America Fund
GT Global Variable Emerging Markets Fund
PRO FORMA COMBINING STATEMENT OF OPERATIONS
For the year ended December 31, 1998
(Unaudited)
GT Global Variable GT Global Variable GT Global Variable
International Fund Europe Fund Natural Resources Fund
INVESTMENT INCOME:
Dividends $ 138,329 $ 650,797 $ 248,806
Foreign withholding tax (11,991) (72,293) (17,802)
Interest 63,670 74,905 36,141
Securities lending income 5,867 38,173 1,057
----------- ------------ ------------
Total investment income 195,875 691,582 268,202
----------- ------------ ------------
EXPENSES:
Advisory fees -- -- --
Amortization of organization costs -- 720 --
Administrative services fees -- -- --
Custodian fees 19,100 42,370 13,346
Director's fees and expenses -- -- --
Fund accounting fees 1,897 9,969 2,994
Investment management and administration fees 67,875 362,517 109,635
Interest Expense 6,583 118,069 4,560
Trustees' fees 167 1,825 --
Professional Fees 18,682 30,345 23,960
Printing and postage expense 9,273 15,390 13,323
Registation and filing fees -- 730 --
Other 631 1,094 288
----------- ------------ ------------
Total expenses 124,208 583,029 168,106
Less: Expenses paid indirectly -- -- --
Expenses reimbursed (32,657) (11,804) (26,493)
Expense reductions (272) (1,171) (5,815)
----------- ------------ ------------
Net expenses 91,279 570,054 135,798
----------- ------------ ------------
Net investment income 104,596 121,528 132,404
----------- ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities 337,397 8,701,423 (4,340,007)
Foreign currencies 19,282 20,217 8,585
----------- ------------ ------------
356,679 8,721,640 (4,331,422)
----------- ------------ ------------
Net unrealized appreciation (depreciation) of:
Investment securities 137,293 (865,332) (369,811)
Foreign currencies (47,735) 3,427 (125)
----------- ------------ ------------
89,558 (861,905) (369,936)
----------- ------------ ------------
Net gain (loss) from investment securities and foreign currencies 446,237 7,859,735 (4,701,358)
----------- ------------ ------------
Net increase (decrease) in net assets resulting from operations 550,833 7,981,263 (4,568,954)
----------- ------------ ------------
GT Global Variable GT Global Variable GT Global Variable
Infrastructure Fund New Pacific Fund Latin America Fund
INVESTMENT INCOME:
Dividends $ 177,433 $ 355,731 $ 607,850
Foreign withholding tax (14,982) (9,235) (65,276)
Interest 32,901 100,665 7,808
Securities lending income 2,191 23,633 11,570
----------- ------------ ------------
Total investment income 197,543 470,794 561,952
----------- ------------ ------------
EXPENSES:
Advisory fees -- -- --
Amortization of organization costs -- 720 720
Administrative services fees -- -- --
Custodian fees 11,171 26,067 20,218
Director's fees and expenses -- -- --
Fund accounting fees 1,801 2,857 4,156
Investment management and administration fees 75,448 130,473 167,381
Interest Expense -- 2,315 22,294
Trustees' fees -- 2,015 931
Professional Fees 27,376 26,745 20,142
Printing and postage expense 10,293 39,857 38,378
Registation and filing fees -- 486 658
Other -- 584 2,719
----------- ------------ ------------
Total expenses 126,089 232,119 277,597
Less: Expenses paid indirectly -- -- --
Expenses reimbursed (31,784) (64,785) (45,215)
Expense reductions (526) (4,911) (828)
----------- ------------ ------------
Net expenses 93,779 162,423 232,382
----------- ------------ ------------
Net investment income 103,764 308,371 329,570
----------- ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities (15,219) (3,788,318) (3,213,894)
Foreign currencies (58,200) 181,208 (41,935)
----------- ------------ ------------
(73,419) (3,607,110) (3,255,829)
----------- ------------ ------------
Net unrealized appreciation (depreciation) of:
Investment securities 459,712 2,848,653 (5,882,978)
Foreign currencies 960 (105,425) (192)
----------- ------------ ------------
460,672 2,743,228 (5,883,170)
----------- ------------ ------------
Net gain (loss) from investment securities and foreign currencies 387,253 (863,882) (9,138,999)
----------- ------------ ------------
Net increase (decrease) in net assets resulting from operations 491,017 (555,511) (8,809,429)
----------- ------------ ------------
GT Global Variable AIM V.I. International
Emerging Markets Fund Equity Fund
INVESTMENT INCOME:
Dividends $ 277,377 $ 3,452,077
Foreign withholding tax (14,668) (426,044)
Interest 25,479 937,102
Securities lending income 5,764 --
------------ ------------
Total investment income 293,952 3,963,135
------------ ------------
EXPENSES:
Advisory fees -- 1,744,127
Amortization of organization costs -- --
Administrative services fees -- 68,587
Custodian fees 62,640 220,051
Director's fees and expenses -- 8,867
Fund accounting fees 2,661 --
Investment management and administration fees 95,192 --
Interest Expense 16,966 --
Trustees' fees 1,460 --
Professional Fees 28,470 --
Printing and postage expense 14,235 --
Registation and filing fees -- --
Other 1,828 70,591
------------ ------------
Total expenses 223,452 2,112,223
Less: Expenses paid indirectly -- (1,417)
Expenses reimbursed (84,518) --
Expense reductions (828) --
------------ ------------
Net expenses 138,106 2,110,806
------------ ------------
Net investment income 155,846 1,852,329
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities (4,658,345) 12,331,648
Foreign currencies (77,850) 929,906
------------ ------------
(4,736,195) 13,261,554
------------ ------------
Net unrealized appreciation (depreciation) of:
Investment securities 553,200 15,897,320
Foreign currencies 5,583 72,349
------------ ------------
558,783 15,969,669
------------ ------------
Net gain (loss) from investment securities and foreign currencies (4,177,412) 29,231,223
------------ ------------
Net increase (decrease) in net assets resulting from operations (4,021,566) 31,083,552
------------ -------------
Pro Forma
Adjustments Combining
INVESTMENT INCOME:
Dividends $ 5,908,400
Foreign withholding tax (632,291)
Interest 1,278,671
Securities lending income 88,255
------------ ------------
Total investment income $ 6,643,035
------------ ------------
EXPENSES:
Advisory fees 1,744,127
Amortization of organization costs 2,160
Administrative services fees 68,587
Custodian fees 414,963
Director's fees and expenses 8,867
Fund accounting fees 26,335
Investment management and administration fees 1,008,521
Interest Expense 170,787
Trustees' fees 6,398
Professional Fees 175,720
Printing and postage expense 140,749
Registation and filing fees 1,874
Other 77,735
------------ ------------
Total expenses 3,846,823
Less: Expenses paid indirectly (1,417)
Expenses reimbursed (297,256)
Expense reductions (13,523)
------------ ------------
Net expenses 3,534,627
------------ ------------
Net investment income 3,108,408
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCIES
Net realized gain (loss) from:
Investment securities 5,354,685
Foreign currencies 981,213
------------ ------------
6,335,898
------------ ------------
Net unrealized appreciation (depreciation) of:
Investment securities 12,778,057
Foreign currencies (71,158)
------------ ------------
12,706,899
------------ ------------
Net gain (loss) from investment securities and foreign currencies 19,042,797
------------ ------------
Net increase (decrease) in net assets resulting from operations 22,151,205
------------ ------------
485
AIM V.I. International Equity Fund
GT Global Variable International Fund GT
Global Variable Europe Fund
GT Global Variable Natural Resources Fund
GT Global Variable Infrastructure Fund
GT Global Variable New Pacific Fund
GT Global Variable Latin America Fund
GT Global Variable Emerging Markets Fund
Notes to Pro Forma Combining Financial Statements
December 31, 1998
(Unaudited)
Note 1 - Basis of Pro Forma Presentation
The pro forma financial statements and the accompanying pro forma schedule of
investments give effect to the proposed Agreement and Plan of Reorganization
between the AIM Variable Insurance Funds, Inc., GT Global Variable Investment
Series and the GT Global Variable Investment Trust and the consummation of the
transactions contemplated therein to be accounted for as a tax-free
reorganization of investment companies. The Agreement and Plan of
Reorganization would be accomplished by an exchange of shares of AIM V.I.
International Equity Fund for the net assets of GT Global Variable
International Fund, GT Global Variable Europe Fund, GT Global Variable Natural
Resources Fund, GT Global Variable Infrastructure Fund, GT Global Variable New
Pacific Fund, GT Global Variable Latin America Fund and GT Global Variable
Emerging Markets Fund and the distribution of AIM V.I. International Equity
Fund shares to GT Global Variable International Fund, GT Global Variable Europe
Fund, GT Global Variable Natural Resources Fund, GT Global Variable
Infrastructure Fund, GT Global Variable New Pacific Fund, GT Global Variable
Latin America Fund and GT Global Variable Emerging Markets Fund shareholders.
If the Agreement and Plan of Reorganization were to have taken place at
December 31, 1998, GT Global Variable International Fund shareholders would
have received 373,570 shares of AIM V.I. International Equity Fund, GT Global
Variable Europe Fund shareholders would have received 1,662,534 shares of AIM
V.I. International Equity Fund, GT Global Natural Resources Fund shareholders
would have received 325,826 shares of AIM V.I. International Equity Fund, GT
Global Variable Infrastructure Fund shareholders would have received 323,160
shares of AIM V.I. International Equity Fund, GT Global Variable New Pacific
Fund shareholders would have received 561,120 shares of AIM V.I. International
Equity Fund, GT Global Variable Latin America Fund shareholders would have
received 506,598 shares of AIM V.I. International Equity Fund and GT Global
Variable Emerging Markets Fund shareholders would have received 288,041 shares
of AIM V.I. International Equity Fund.
If shareholders of a fund of GT Global Variable Investment Series or GT Global
Variable Investment Trust vote to approve the Agreement and Plan of
Reorganization with AIM V.I. International Equity Fund, at a minimum the
combination will be that fund and AIM V.I. International Equity Fund or at the
maximum the combination of that fund and all other funds in the proposal with
AIM V.I. International Equity Fund or by any combination of that fund and any
other funds in the proposal with AIM V.I. International Equity Fund.
Note 2 - Pro Forma Adjustments
Pro Forma adjustments have been made to reflect the contractual expenses of the
combined entities and for replication of professional fees and shareholding
reporting among the entities.
486
AIM V.I. DIVERSIFIED INCOME FUND
GTG VARIABLE GLOBAL GOVERNMENT INCOME FUND
GTG VARIABLE STRATEGIC INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
(UNAUDITED)
PRINCIPAL AMOUNT (a)
- -----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
CORPORATE BONDS - 67.17%
ARGENTINA - 0.33%
53,000 53,000 Mastellone Hermanos S.A., 11.75% due 04/01/08 - 144A (b)
100,000 100,000 Supercanal Holdings S.A., 11.50% due 05/15/05 - Reg S (b)
245,000 245,000 Telefonica de Argentina, 9.125% due 05/07/08 - Reg S (b)
95,000 95,000 YPF S.A., 10.00% due 11/02/28
AUSTRALIA - 0.40%
- - 550,000 550,000 Centaur Mining & Exploration Ltd.(Metal Mining), Sr. Yankee Sec. Gtd. Notes-11.012
BRAZIL - 0.04%
53,000 53,000 Banco Hipotecario Espna, 10.00% due 04/17/03 - 144A (b)
CANADA -6.72%
- - 850,000 850,000 Bank of Montreal (Banks-Money Center), Sub. Deb., 7.92%, 07/31/12 (c)
- - 350,000 350,000 Bell Canada (Telecommunications-Long Distance), Deb., 9.50%, 10/15/10
- - 750,000 750,000 Bell Mobility Cellular, (Telecommunications-(Cellular/Wireless), Deb., 6.55-,
06/02/08 (c)
- - 450,000 450,000 Canadian Oil Debco Inc. (Oil & Gas-Exploration & Production), Deb., 11.00%,
10/31/00 (c)
- - 1,600,000 1,600,000 Clearnet Communications (Telecommunications-Cellular/Wireless), Sr. Disc. Notes,
10.40%, 5/15/08 (c)(d)
- - 1,500,000 1,500,000 Clearnet Communications Inc.(Telecommunications-Cellular/Wireless), Sr. Disc.Notes,
11.75%, 08/13/07 (c)(d)
- - 110,000 110,000 Clearnet Communications Inc., Sr. Yankee Unsec. Disc. Notes, 14.75%, 12/15/05
( elecommunications-Cellular/Wireless) (d)
- - 800,000 800,000 Gulf Canada Resources, Ltd.(Oil-International Integrated), Sr. Yankee Unsec.Notes,
8.35%, 08/01/06
1,000,000 1,000,000 Microcell Telecommunications, Inc. (Telecommunications-Cellular/Wireless), Sr. Disc.
11.125%, 10/15/07 (c)(d)
- - 1,000,000 1,000,000 NAV Canada (Services-Commercial & Consumer), Bonds, 7.40%, 06/01/27 (c)
- - 750,000 750,000 Poco Petroleums Ltd. (Oil & Gas-Exploration & Production), Unsec. Deb.,
6.6-%, 09/11/07 (c)
- - 800,000 800,000 Province of Quebec (Sovereign Debt), Notes, 6.29%, 03/06/26
- - 370,000 370,000 Rio Algom Ltd. (Metals Mining), Yankee Unsec. Deb., 7.05%, 11/01/05
- - 850,000 850,000 Teleglobe Canada, Inc. (Telephone), Unsec. Deb., 8.35%, 06/20/03 (c)
- - 500,000 500,000 Trans-Canada Pipelines (Natural Gas), Series Q Deb.,10.625%, 10/20/09 (c)
- - 280,000 280,000 Trans-Canada Pipelines (Natural Gas), Unsec. Notes, 8.55%, 02/01/06 (c)
- - 500,000 500,000 Westcoast Energy, Inc.(Natural Gas),Deb., 6.45%,12/18/06 (c)
CAYMAN ISLANDS - 0.51%
- - 500,000 500,000 Hutchison Delta Finance (Shipping), Conv. Unsec. Notes, 7.00%, 11/08/02
105,000 105,000 Nacional Financiera SNC, 8.649% due 12/01/00 - Euro 144A (b)(e)
CHINA -0.05%
- - 150,000 150,000 Panda Global Energy Co., Sr. Yankee Sec. Gtd. Notes, 12.50%, 04/15/04
COLOMBIA - 0.02%
30,000 30,000 Financiera Energia Nacional, 9.375% due 06/15/06 - Reg S (b)
GERMANY - 2.88%
100,000 140,000 - 240,000 Bayerische Landesbank NY, 5.875% due 12/01/08
- - 570,000 570,000 Daimler-Benz A.G. (Automobiles), Conv. Gtd. Unsub. Eurobonds, 4.125%, 07/05-03 (c)
- - 1,000,000 1,000,000 International Bank for Reconstruction & Development (Banks-Money Center), Unsec.
Global Bonds, 7.125%, 04/12/05 (c)(f)
100,000 - - 100,000 KFW International Finance (Sovereign Debt), Gtd. Unsec. Unsub., 7.25%, 07/16/07
- - 3,000,000 3,000,000 LKB Global (Financial-Diversified), Gtd. Notes, 6.00%, 01/25/06 (c)
JAMAICA - 0.02%
44,000 44,000 Mechala Group Jamaica, 12.75% due 12/30/99 - Reg S (b)
MEXICO - 0.70%
153,000 153,000 Banco Nacional Comercio Exte., 8.00% due 07/18/02 - Reg S (b)
40,000 40,000 Cemex Valenciana, 9.66% due 12/29/49
90,000 90,000 Dine, S.A. de C.V., 8.75% due 10/15/07 - 144A (b)
50,000 50,000 Grupo Azucarero Mexico, 11.50% due 01/15/05 - Reg S (b)
50,000 50,000 Grupo Industrial Durango, S.A., 12.625% due 08/01/03
193,000 193,000 Monterrey Power, S.A. de C.V., 9.625% due 11/15/09 - 144A (b)
180,000 180,000 Petroleos Mexicanos, 8.85% due 09/15/07 - 144A (b)
MARKET VALUE
-----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
CORPORATE BONDS - 67.17%
ARGENTINA - 0.33%
Mastellone Hermanos S.A., 11.75% due 04/01/08 - 144A (b) 42,798 42,798
Supercanal Holdings S.A., 11.50% due 05/15/05 - Reg S (b) 57,500 57,500
Telefonica de Argentina, 9.125% due 05/07/08 - Reg S (b) 226,652 226,652
YPF S.A., 10.00% due 11/02/28 97,969 97,969
---------
424,919
---------
AUSTRALIA - 0.40%
---------
Centaur Mining & Exploration Ltd.(Metal Mining), Sr. Yankee Sec. Gtd. Notes-11.012 - 503,250 503,250
---------
BRAZIL - 0.04%
---------
Banco Hipotecario Espna, 10.00% due 04/17/03 - 144A (b) 48,761 48,761
---------
CANADA -6.72%
Bank of Montreal (Banks-Money Center), Sub. Deb., 7.92%, 07/31/12 (c) - - 643,722 643,722
Bell Canada (Telecommunications-Long Distance), Deb., 9.50%, 10/15/10 - - 461,059 461,059
Bell Mobility Cellular, (Telecommunications-(Cellular/Wireless), Deb., 6.55-,
06/02/08 (c) - - 501,936 501,936
Canadian Oil Debco Inc. (Oil & Gas-Exploration & Production), Deb., 11.00%,
10/31/00 (c) - - 320,000 320,000
Clearnet Communications (Telecommunications-Cellular/Wireless), Sr. Disc. Notes,
10.40%, 5/15/08 (c)(d) - - 556,863 556,863
Clearnet Communications Inc.(Telecommunications-Cellular/Wireless), Sr. Disc.Notes,
11.75%, 08/13/07 (c)(d) - - 590,686 590,686
Clearnet Communications Inc., Sr. Yankee Unsec. Disc. Notes, 14.75%, 12/15/05
( elecommunications-Cellular/Wireless) (d) - - 95,150 95,150
Gulf Canada Resources, Ltd.(Oil-International Integrated), Sr. Yankee Unsec.Notes,
8.35%, 08/01/06 - - 805,736 805,736
Microcell Telecommunications, Inc. (Telecommunications-Cellular/Wireless), Sr. Disc.
11.125%, 10/15/07 (c)(d) 361,111 361,111
NAV Canada (Services-Commercial & Consumer), Bonds, 7.40%, 06/01/27 (c) - - 800,771 800,771
Poco Petroleums Ltd. (Oil & Gas-Exploration & Production), Unsec. Deb.,
6.6-%, 09/11/07 (c) - - 480,863 480,863
Province of Quebec (Sovereign Debt), Notes, 6.29%, 03/06/26 - - 897,184 897,184
Rio Algom Ltd. (Metals Mining), Yankee Unsec. Deb., 7.05%, 11/01/05 - - 402,220 402,220
Teleglobe Canada, Inc. (Telephone), Unsec. Deb., 8.35%, 06/20/03 (c) - - 621,039 621,039
Trans-Canada Pipelines (Natural Gas), Series Q Deb.,10.625%, 10/20/09 (c) - - 450,412 450,412
Trans-Canada Pipelines (Natural Gas), Unsec. Notes, 8.55%, 02/01/06 (c) - - 213,365 213,365
Westcoast Energy, Inc.(Natural Gas),Deb., 6.45%,12/18/06 (c) - - 346,085 346,085
---------
8,548,202
---------
CAYMAN ISLANDS - 0.51%
Hutchison Delta Finance (Shipping), Conv. Unsec. Notes, 7.00%, 11/08/02 - - 537,500 537,500
Nacional Financiera SNC, 8.649% due 12/01/00 - Euro 144A (b)(e) 106,050 106,050
---------
643,550
---------
CHINA -0.05%
---------
Panda Global Energy Co., Sr. Yankee Sec. Gtd. Notes, 12.50%, 04/15/04 - - 68,250 68,250
---------
COLOMBIA - 0.02%
---------
Financiera Energia Nacional, 9.375% due 06/15/06 - Reg S (b) - 25,200 - 25,200
---------
GERMANY - 2.88%
Bayerische Landesbank NY, 5.875% due 12/01/08 102,259 143,163 - 245,422
Daimler-Benz A.G. (Automobiles), Conv. Gtd. Unsub. Eurobonds, 4.125%, 07/05-03 (c) - - 619,119 619,119
International Bank for Reconstruction & Development (Banks-Money Center), Unsec.
Global Bonds, 7.125%, 04/12/05 (c)(f) - 711,988 711,988
KFW International Finance (Sovereign Debt), Gtd. Unsec. Unsub., 7.25%, 07/16/07 67,831 - - 67,831
LKB Global (Financial-Diversified), Gtd. Notes, 6.00%, 01/25/06 (c) - - 2,016,627 2,016,627
---------
3,660,986
---------
JAMAICA - 0.02%
---------
Mechala Group Jamaica, 12.75% due 12/30/99 - Reg S (b) 30,800 30,800
---------
MEXICO - 0.70%
Banco Nacional Comercio Exte., 8.00% due 07/18/02 - Reg S (b) 149,940 149,940
Cemex Valenciana, 9.66% due 12/29/49 36,200 36,200
Dine, S.A. de C.V., 8.75% due 10/15/07 - 144A (b) 72,450 72,450
Grupo Azucarero Mexico, 11.50% due 01/15/05 - Reg S (b) 19,000 19,000
Grupo Industrial Durango, S.A., 12.625% due 08/01/03 44,125 44,125
Monterrey Power, S.A. de C.V., 9.625% due 11/15/09 - 144A (b) 148,610 148,610
Petroleos Mexicanos, 8.85% due 09/15/07 - 144A (b) 162,000 162,000
487
AIM V.I. DIVERSIFIED INCOME FUND
GTG VARIABLE GLOBAL GOVERNMENT INCOME FUND
GTG VARIABLE STRATEGIC INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
(UNAUDITED)
PRINCIPAL AMOUNT (a)
- -----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
160,000 160,000 Petroleos Mexicanos, 9.25% due 03/30/18 - 144A (b)
130,000 130,000 Petroleos Mexicanos, 9.375% due 12/02/08 - 144A (b)
NETHERLANDS - 0.30%
- 126,000 - 126,000 TPSA Finance BV, 7.75% due 12/10/08 - 144A (b)
- - 250,000 250,000 Versatel Telecom B.V., Sr. Notes, 13.25%, 05/15/08 (Telecommunications-Long D stance)
NEW ZEALAND - 1.19%
- - 2,200,000 2,200,000 International Bank for Reconstruction & Development (Banks-Money Center), Sr. Unsub.
Notes, 7.25%, 05/27/03 (c)
- - 1,000,000 1,000,000 International Bank of Reconstruction & Development (Banks-Money Center), Sr. Unsec.
Notes, 0.00%, 08/20/07 (c)(f)
NORWAY - 0.56%
- - 750,000 750,000 Petro Geo-Services ASA, (Oil & Gas-Drilling & Equipment), Sr. Notes, 7.125%, 03/30/28
RUSSIA - 0.04%
94,000 94,000 Lukinter Finance BV Convertible, 3.50% due 05/06/02 - 144A (b)
67,000 67,000 Mosenergo Finance BV, 8.375% due 10/09/02 - 144A (b)
SWEDAN - 0.31%
- - 430,000 430,000 Stena Line A.B. (Lodging-Hotels), Sr. Yankee Notes, 10.625%, 06/01/08
TUNISIA - 0.16%
250,000 - - 250,000 Banque Centrais de Tunmisie, 8.25%, due 09/19/27
UNITED KINGDOM - 2.97%
- - 750,000 750,000 Cable & Wireless Communications PLC (U.K.)(Telephone), Yankee Notes, 6.75%, 03/06/08
- 150,000 - 150,000 COLT Telecom Group PLC (Telephone), 7.625% due 7/31/08
- - 700,000 700,000 COLT Telecom Group PLC (Telephone), Conv. Notes, 2.00%, 08/06/05 (c)
- - 350,000 350,000 Esprit Telecom Group PLC (Telecommunications-Long Distance), Sr. Yankee Notes,
11.50%, 12/15/07
- - 500,000 500,000 International Bank for Reconstruction & Development (Banks-Money Center), Sr.Unsec.
Notes, 6.875%, 07/14/00 (c)
200,000 200,000 SBC Jersey (Sovereign Debt), Sub., 8.75%, 06/20/05
- - 450,000 450,000 Sutton Bridge Financial Ltd. (Financial-Diversified), Gtd. Eurobonds (c)(b)
USA - 49.97%
- - 125,000 125,000 Abraxas Petroleum Corp., Series D Sr. Unsec. Gtd. Notes, 11.50%, 11/01/04
- 45,000 588,000 633,000 Acme Metal Inc., Sr. Unsec. Gtd. Deb., 10.875%, 12/15/07 (b)(g)(h)
- - 390,000 390,000 Advance Stores Co. Inc., Sr. Unsec. Gtd. Notes, 10.25%, 04/15/08
- - 750,000 750,000 AES Corp., Sr. Notes, 8.00%, 12/31/08
- - 750,000 750,000 Airgas Inc., Medium Term Notes, 7.14%, 03/08/04
- - 300,000 300,000 Airplanes Pass Through Trust, Sub. Bonds, 10.875%, 03/15/19
- - 300,000 300,000 Alaris Medical Systems, Sr. Unsec. Gtd. Sub. Deb., 9.75%, 01/01/06
- - 1,000,000 1,000,000 Alberto-Culver Corp., Notes, 6.375%, 06/15/28
- 55,000 - 55,000 Allbritton Communication, Sr. Sub. Notes, 8.875%, 02/01/08 (b)
- - 863,999 863,999 America West Airlines, Inc., Pass Through Ctfs., 6.86%, 07/02/04
- - 75,000 75,000 Americo Life Inc., Sr. Sub. Notes, 9.25%, 06/01/05
- - 320,000 320,000 AmeriServ Food Co., Gtd. Notes, 10.125%, 07/15/07
- - 350,000 350,000 Ascent Entertainment Group, Sr. Sec. Disc. Notes, 11.875%, 12/15/04 (d)
- - 750,000 750,000 Associates Corp. of North America, Series B Sr. Deb., 7.95%, 02/15/10
- - 450,000 450,000 ATC Group Services Inc., Unsec. Gtd. Sr. Sub. Notes, 12.00%, 01/15/08 (g)
- - 400,000 400,000 Atlas Air, Inc., Sr. Notes, 10.75%, 08/01/05
- - 500,000 500,000 Big 5 Corp., Sr. Unsec. Notes, 10.875%, 11/15/07
- - 110,000 110,000 Blue Bird Body Co., Series B Sr. Sub. Notes, 10.75%, 11/15/06
- - 390,000 390,000 Booth Creek Ski Holdings, Sr. Notes, 12.50%, 03/15/07
- 55,000 - 55,000 BTI Telecommunications Corp., 10.50% due 09/15/07 - 144A (b)
- 100,000 - 100,000 Cendant Corp., 7.75% due 12/01/03
- - 320,000 320,000 Centel Capital, Deb., 9.00%, 10/15/19
- - 370,000 370,000 CEX Holdings, Inc., Sr. Unsec. Gtd. Notes, 9.625%, 06/01/08
- 75,000 - 75,000 Chancellor Media Corp., Sr. Unsec. Sub. Notes, 8.125%, 12/15/07 (b)
- 152,000 - 152,000 Chase Manhattan Corp., Unsec. Sub. Notes, 6.25%, 01/15/06
- - 230,000 230,000 Chesapeake Energy Corp., Unsec. Sr. Notes, 9.625%, 05/01/05
- 75,000 - 75,000 Circus Circus Enterprise, Sr. Sub. Notes, 9.25%, 12/01/05
MARKET VALUE
-----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
Petroleos Mexicanos, 9.25% due 03/30/18 - 144A (b) 128,800 128,800
Petroleos Mexicanos, 9.375% due 12/02/08 - 144A (b) 129,675 129,675
---------
258,475
---------
NETHERLANDS - 0.30%
TPSA Finance BV, 7.75% due 12/10/08 - 144A (b) - 124,268 - 124,268
Versatel Telecom B.V., Sr. Notes, 13.25%, 05/15/08 (Telecommunications-Long D stance) - - 255,000 255,000
---------
379,268
---------
NEW ZEALAND - 1.19%
International Bank for Reconstruction & Development (Banks-Money Center), Sr. Unsub.
Notes, 7.25%, 05/27/03 (c) - - 1,211,399 1,211,399
International Bank of Reconstruction & Development (Banks-Money Center), Sr. Unsec.
Notes, 0.00%, 08/20/07 (c)(f) - - 303,547 303,547
---------
1,514,946
---------
NORWAY - 0.56%
---------
Petro Geo-Services ASA, (Oil & Gas-Drilling & Equipment), Sr. Notes, 7.125%, 03/30/28 - - 707,948 707,948
---------
RUSSIA - 0.04%
Lukinter Finance BV Convertible, 3.50% due 05/06/02 - 144A (b) - 34,310 - 34,310
Mosenergo Finance BV, 8.375% due 10/09/02 - 144A (b) - 11,725 - 11,725
---------
46,035
---------
SWEDAN - 0.31%
---------
Stena Line A.B. (Lodging-Hotels), Sr. Yankee Notes, 10.625%, 06/01/08 - - 389,150 389,150
---------
TUNISIA - 0.16%
---------
Banque Centrais de Tunmisie, 8.25%, due 09/19/27 207,049 - - 207,049
---------
UNITED KINGDOM - 2.97%
Cable & Wireless Communications PLC (U.K.)(Telephone), Yankee Notes, 6.75%, 03/06/08 - - 767,655 767,655
COLT Telecom Group PLC (Telephone), 7.625% due 7/31/08 - 89,059 - 89,059
COLT Telecom Group PLC (Telephone), Conv. Notes, 2.00%, 08/06/05 (c) - - 435,820 435,820
Esprit Telecom Group PLC (Telecommunications-Long Distance), Sr. Yankee Notes,
11.50%, 12/15/07 - - 364,000 364,000
International Bank for Reconstruction & Development (Banks-Money Center), Sr.Unsec.
Notes, 6.875%, 07/14/00 (c) - - 846,580 846,580
SBC Jersey (Sovereign Debt), Sub., 8.75%, 06/20/05 380,552 380,552
Sutton Bridge Financial Ltd. (Financial-Diversified), Gtd. Eurobonds (c)(b) - - 901,280 901,280
---------
3,784,945
---------
USA - 49.97%
Abraxas Petroleum Corp., Series D Sr. Unsec. Gtd. Notes, 11.50%, 11/01/04 - - 95,625 95,625
Acme Metal Inc., Sr. Unsec. Gtd. Deb., 10.875%, 12/15/07 (b)(g)(h) - 6,075 79,380 85,455
Advance Stores Co. Inc., Sr. Unsec. Gtd. Notes, 10.25%, 04/15/08 - - 397,800 397,800
AES Corp., Sr. Notes, 8.00%, 12/31/08 - - 747,533 747,533
Airgas Inc., Medium Term Notes, 7.14%, 03/08/04 - - 765,840 765,840
Airplanes Pass Through Trust, Sub. Bonds, 10.875%, 03/15/19 - - 315,189 315,189
Alaris Medical Systems, Sr. Unsec. Gtd. Sub. Deb., 9.75%, 01/01/06 - - 306,000 306,000
Alberto-Culver Corp., Notes, 6.375%, 06/15/28 - - 1,047,880 1,047,880
Allbritton Communication, Sr. Sub. Notes, 8.875%, 02/01/08 (b) - 55,000 - 55,000
America West Airlines, Inc., Pass Through Ctfs., 6.86%, 07/02/04 - - 862,012 862,012
Americo Life Inc., Sr. Sub. Notes, 9.25%, 06/01/05 - - 77,250 77,250
AmeriServ Food Co., Gtd. Notes, 10.125%, 07/15/07 - - 280,000 280,000
Ascent Entertainment Group, Sr. Sec. Disc. Notes, 11.875%, 12/15/04 (d) - - 211,750 211,750
Associates Corp. of North America, Series B Sr. Deb., 7.95%, 02/15/10 - - 867,908 867,908
ATC Group Services Inc., Unsec. Gtd. Sr. Sub. Notes, 12.00%, 01/15/08 (g) - - 42,750 42,750
Atlas Air, Inc., Sr. Notes, 10.75%, 08/01/05 - - 422,000 422,000
Big 5 Corp., Sr. Unsec. Notes, 10.875%, 11/15/07 - - 507,500 507,500
Blue Bird Body Co., Series B Sr. Sub. Notes, 10.75%, 11/15/06 - - 113,850 113,850
Booth Creek Ski Holdings, Sr. Notes, 12.50%, 03/15/07 - - 388,050 388,050
BTI Telecommunications Corp., 10.50% due 09/15/07 - 144A (b) - 40,975 - 40,975
Cendant Corp., 7.75% due 12/01/03 - 101,216 - 101,216
Centel Capital, Deb., 9.00%, 10/15/19 - - 411,693 411,693
CEX Holdings, Inc., Sr. Unsec. Gtd. Notes, 9.625%, 06/01/08 - - 334,850 334,850
Chancellor Media Corp., Sr. Unsec. Sub. Notes, 8.125%, 12/15/07 (b) - 74,813 - 74,813
Chase Manhattan Corp., Unsec. Sub. Notes, 6.25%, 01/15/06 - 157,318 - 157,318
Chesapeake Energy Corp., Unsec. Sr. Notes, 9.625%, 05/01/05 - - 180,550 180,550
Circus Circus Enterprise, Sr. Sub. Notes, 9.25%, 12/01/05 - 77,794 - 77,794
488
AIM V.I. DIVERSIFIED INCOME FUND
GTG VARIABLE GLOBAL GOVERNMENT INCOME FUND
GTG VARIABLE STRATEGIC INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
(UNAUDITED)
PRINCIPAL AMOUNT (a)
- -----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
- - 500,000 500,000 Cleveland Electric Illumination, Series D Sr. Notes, 7.88%, 11/01/17
- - 180,000 180,000 Coast Hotels & Casinos Inc., Series B Sec. First Mortgage Gtd. Notes, 13.01
- - 5,000,000 5,000,000 Coca-Cola Enterprises, Inc., Putable Notes, 7.24%, 06/20/20 (f)
- - 500,000 500,000 Comcast Cable Communications, Notes, 8.50%, 05/01/27
- 300,000 - 300,000 Comcast Cable Communications, Unsec. Unsub. Notes, 6.20%, 11/15/08
- - 1,300,000 1,300,000 ConAgra Inc., Sr. Unsec. Notes, 7.125%, 10/01/26
- - 500,000 500,000 CSC Holdings Inc., Sr. Unsec. Deb., 7.625%, 07/15/18
- - 500,000 500,000 CSC Holdings, Inc., Sr. Notes, 7.875%, 12/15/07
- - 260,000 260,000 CSK Auto Inc., Sr. Gtd. Sub. Deb., 11.00%, 11/01/06
- - 80,000 80,000 Dade International Inc., Series B Sr. Sub. Notes, 11.125%, 05/01/06
- - 500,000 500,000 Decora Industries, Inc., Series B Sr. Sec. Gtd. Notes, 11.00%, 05/01/05
- - 290,000 290,000 Del Monte Corp./Foods Co., Sr. Unsec. Sub. Notes, 12.25%, 04/15/07
- 40,000 - 40,000 Delco Remy International Inc., Sr. Notes, 8.625%, 12/15/07
- - 825,000 825,000 Delta Air Lines, Inc., Deb., 9.00%, 05/15/16
- - 750,000 750,000 Deutsche Bank Financial, Gtd. Unsec. Sub. Deb., 6.70%, 12/13/06
- - 350,000 350,000 Dialog Corp. PLC, (Communications Equipment) Series A Sr. Sub. Notes, 11.00%,11/1
- 90,000 - 90,000 Drypers Corp., Sr. Notes, 10.25%, 06/15/07
- 55,000 - 55,000 Duane Reade Inc., Sr. Unsec. Gtd. Sub. Notes, 9.25%, 02/15/08
- - 500,000 500,000 Dynegy Inc., Sr. Unsec. Deb., 7.125%, 05/15/18
- 60,000 - 60,000 Eagle Family Foods, Unsec. Gtd. Notes, 8.75%, 01/15/08 (b)
- - 430,000 430,000 EchoStar DBS Corp., Sr. Gtd. Notes, 12.50%, 07/01/02
- - 500,000 500,000 El Paso Electric Co., Series D Sec. First Mortgage Bonds, 8.90%, 02/01/06
- - 150,000 150,000 El Paso Electric Co., Series E Sec. First Mortgage Bonds, 9.40%, 05/01/11
- - 590,000 590,000 Electronic Retailing Systems International, Inc., Sr. Disc. Notes, 13.25%, 02/01/04 (d
- - 320,000 320,000 Elgin National Industies, Sr. Unsec. Gtd. Sub. Notes, 11.00%, 11/01/07
- 150,000 - 150,000 Engle Homes Inc., Sr. Unsec. Gtd. Sub. Notes, 9.25%, 02/01/08
- - 750,000 750,000 Enron Corp., Notes, 6.75%, 08/1/09
- - 450,000 450,000 Enron Corp., Sr. Sub. Deb., 6.75%, 07/01/05
- - 470,000 470,000 Esat Holdings Ltd.(Telephone), Sr. Yankee Notes, 12.50%, 02/01/07 (d)
- - 480,000 480,000 Exodus Communications, Sr. Unsec. Notes, 11.25%, 07/01/08
- - 525,000 525,000 Ferrellgas Partners, Series B Sr. Sec. Gtd. Notes, 9.375%, 06/15/06
- - 750,000 750,000 Finova Capital Corp., Unsec. Notes, 7.40%, 05/06/06
- - 800,000 800,000 First Union Bancorp, Sub. Deb., 7.50%, 04/15/35
- 75,000 - 75,000 Fisher Scientific International, Sr. Unsec. Sub. Note, 9.00%, 02/01/08
190,000 320,000 510,000 Ford Motor Credit Corp., 5.25% due 06/16/08
- - 750,000 750,000 Fruit of the Loom, Notes, 6.50%, 11/15/03
- 143,000 - 143,000 General Motors Accept Corp., Unsec. Notes, 6.625%, 10/15/05
- - 400,000 400,000 General Motors Corp., Deb., 8.80%, 03/01/21
- - 800,000 800,000 Glenborough Properties, Sr. Unsec. Notes, 7.625%, 03/15/05
- - 750,000 750,000 GMAC, Notes, 9.00%, 10/15/02
- 125,000 - 125,000 Graham Packaging, Sr. Unsec. Gtd. Sub., 8.75%, 01/15/08 (b)
- - 350,000 350,000 GS Industries, Inc., Sr. Gtd. Notes, 12.00%, 09/01/04
- 40,000 - 40,000 Hayes Lemmerz International, Inc., 8.25% due 12/15/05 - 144A (b)
- 50,000 - 50,000 Healthsouth Corp., 3.25% due 04/01/03
- 125,000 - 125,000 Hollywood Casino Corp., Sr. Sec. Gtd. Notes, 12.72%, 11/01/03
- - 1,000,000 1,000,000 Household Finance Corp., Notes, 7.125%, 09/01/05
- 50,000 - 50,000 International Home Foods, Inc., Sr. Gtd. Sub. Notes, 10.375%, 11/01/06
- - 750,000 750,000 ITT Corp., Unsec. Gtd. Deb., 7.375%, 11/15/15
- - 240,000 240,000 J Crew Operating Corp., Sr. Sub. Notes, 10.375%, 10/15/07
- - 550,000 550,000 John Q. Hammons Hotels Inc., Sec. First Mortgage Notes, 9.75%, 10/01/05
- - 500,000 500,000 K N Energy, Inc., Unsec. Deb., 7.35%, 08/01/26
- - 400,000 400,000 Kelley Oil & Gas Corp., Series B Sr. Gtd. Sub. Notes, 10.375%, 10/15/06
- - 1,000,000 1,000,000 Knology Holdings, Inc., Sr. Disc. Notes, 11.875% 10/15/07 (d)
- - 500,000 500,000 Laidlaw, Inc.(Services-Commercial & Consumer), Deb., 6.7%, 05/01/08
- 150,000 - 150,000 Lenfest Communications, Sr. Sub. Unsec. Notes, 8.25%, 02/15/08 (b)
- 150,000 - 150,000 Lin Television Corp., Sr. Unsec. Gtd. Notes, 8.375%, 03/01/08 (b)
- 75,000 - 75,000 Loews Cineplex Entertainment, Sr. Unsec. Sub Notes, 8.875%, 08/01/08 (b)
- - 500,000 500,000 Louis Dreyfus Natural Gas, Sr. Sub. Notes, 9.25%, 06/15/04
- - 270,000 270,000 Mariner Post-Acute Network, Inc., Series B Sr. Unsec. Sub. Notes, 9.50%, 11/01/07
- - 380,000 380,000 Mariner Post-Acute Network, Sr. Unsec. Disc. Sub. Notes, 10.5%, 11/01/07 (d)
- - 1,000,000 1,000,000 MCI Communications Corp., Putable Sr. Unsec. Deb., 7.125%, 06/15/27
MARKET VALUE
-----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
Cleveland Electric Illumination, Series D Sr. Notes, 7.88%, 11/01/17 - - 527,796 527,796
Coast Hotels & Casinos Inc., Series B Sec. First Mortgage Gtd. Notes, 13.01 - - 203,400 203,400
Coca-Cola Enterprises, Inc., Putable Notes, 7.24%, 06/20/20 (f) - - 1,282,200 1,282,200
Comcast Cable Communications, Notes, 8.50%, 05/01/27 - - 627,470 627,470
Comcast Cable Communications, Unsec. Unsub. Notes, 6.20%, 11/15/08 - 305,994 - 305,994
ConAgra Inc., Sr. Unsec. Notes, 7.125%, 10/01/26 - - 1,388,972 1,388,972
CSC Holdings Inc., Sr. Unsec. Deb., 7.625%, 07/15/18 - - 511,960 511,960
CSC Holdings, Inc., Sr. Notes, 7.875%, 12/15/07 - - 527,400 527,400
CSK Auto Inc., Sr. Gtd. Sub. Deb., 11.00%, 11/01/06 - - 274,300 274,300
Dade International Inc., Series B Sr. Sub. Notes, 11.125%, 05/01/06 - - 89,000 89,000
Decora Industries, Inc., Series B Sr. Sec. Gtd. Notes, 11.00%, 05/01/05 - - 472,500 472,500
Del Monte Corp./Foods Co., Sr. Unsec. Sub. Notes, 12.25%, 04/15/07 - - 330,600 330,600
Delco Remy International Inc., Sr. Notes, 8.625%, 12/15/07 - 41,200 - 41,200
Delta Air Lines, Inc., Deb., 9.00%, 05/15/16 - - 947,917 947,917
Deutsche Bank Financial, Gtd. Unsec. Sub. Deb., 6.70%, 12/13/06 - - 790,343 790,343
Dialog Corp. PLC, (Communications Equipment) Series A Sr. Sub. Notes, 11.00%,11/1 - - 350,000 350,000
Drypers Corp., Sr. Notes, 10.25%, 06/15/07 - 87,750 - 87,750
Duane Reade Inc., Sr. Unsec. Gtd. Sub. Notes, 9.25%, 02/15/08 - 56,925 - 56,925
Dynegy Inc., Sr. Unsec. Deb., 7.125%, 05/15/18 - - 493,355 493,355
Eagle Family Foods, Unsec. Gtd. Notes, 8.75%, 01/15/08 (b) - 56,850 - 56,850
EchoStar DBS Corp., Sr. Gtd. Notes, 12.50%, 07/01/02 - - 498,800 498,800
El Paso Electric Co., Series D Sec. First Mortgage Bonds, 8.90%, 02/01/06 - - 563,250 563,250
El Paso Electric Co., Series E Sec. First Mortgage Bonds, 9.40%, 05/01/11 - - 170,336 170,336
Electronic Retailing Systems International, Inc., Sr. Disc. Notes, 13.25%, 02/01/04 (d) - - 215,350 215,350
Elgin National Industies, Sr. Unsec. Gtd. Sub. Notes, 11.00%, 11/01/07 - - 323,200 323,200
Engle Homes Inc., Sr. Unsec. Gtd. Sub. Notes, 9.25%, 02/01/08 - 150,751 - 150,751
Enron Corp., Notes, 6.75%, 08/1/09 - - 779,828 779,828
Enron Corp., Sr. Sub. Deb., 6.75%, 07/01/05 - - 464,558 464,558
Esat Holdings Ltd.(Telephone), Sr. Yankee Notes, 12.50%, 02/01/07 (d) - - 312,550 312,550
Exodus Communications, Sr. Unsec. Notes, 11.25%, 07/01/08 - - 484,800 484,800
Ferrellgas Partners, Series B Sr. Sec. Gtd. Notes, 9.375%, 06/15/06 - - 527,625 527,625
Finova Capital Corp., Unsec. Notes, 7.40%, 05/06/06 - - 789,195 789,195
First Union Bancorp, Sub. Deb., 7.50%, 04/15/35 - - 877,888 877,888
Fisher Scientific International, Sr. Unsec. Sub. Note, 9.00%, 02/01/08 - 75,000 - 75,000
Ford Motor Credit Corp., 5.25% due 06/16/08 119,282 200,895 320,177
Fruit of the Loom, Notes, 6.50%, 11/15/03 - - 712,620 712,620
General Motors Accept Corp., Unsec. Notes, 6.625%, 10/15/05 - 150,998 - 150,998
General Motors Corp., Deb., 8.80%, 03/01/21 - - 505,972 505,972
Glenborough Properties, Sr. Unsec. Notes, 7.625%, 03/15/05 - - 766,798 766,798
GMAC, Notes, 9.00%, 10/15/02 - - 836,985 836,985
Graham Packaging, Sr. Unsec. Gtd. Sub., 8.75%, 01/15/08 (b) - 125,625 - 125,625
GS Industries, Inc., Sr. Gtd. Notes, 12.00%, 09/01/04 - - 239,750 239,750
Hayes Lemmerz International, Inc., 8.25% due 12/15/05 - 144A (b) - 40,000 - 40,000
Healthsouth Corp., 3.25% due 04/01/03 - 42,750 - 42,750
Hollywood Casino Corp., Sr. Sec. Gtd. Notes, 12.72%, 11/01/03 - 133,750 - 133,750
Household Finance Corp., Notes, 7.125%, 09/01/05 - - 1,064,040 1,064,040
International Home Foods, Inc., Sr. Gtd. Sub. Notes, 10.375%, 11/01/06 - 54,375 - 54,375
ITT Corp., Unsec. Gtd. Deb., 7.375%, 11/15/15 - - 638,100 638,100
J Crew Operating Corp., Sr. Sub. Notes, 10.375%, 10/15/07 - - 207,600 207,600
John Q. Hammons Hotels Inc., Sec. First Mortgage Notes, 9.75%, 10/01/05 - - 517,000 517,000
K N Energy, Inc., Unsec. Deb., 7.35%, 08/01/26 - - 527,575 527,575
Kelley Oil & Gas Corp., Series B Sr. Gtd. Sub. Notes, 10.375%, 10/15/06 - - 298,000 298,000
Knology Holdings, Inc., Sr. Disc. Notes, 11.875% 10/15/07 (d) - - 462,500 462,500
Laidlaw, Inc.(Services-Commercial & Consumer), Deb., 6.7%, 05/01/08 - - 488,985 488,985
Lenfest Communications, Sr. Sub. Unsec. Notes, 8.25%, 02/15/08 (b) - 157,126 - 157,126
Lin Television Corp., Sr. Unsec. Gtd. Notes, 8.375%, 03/01/08 (b) - 151,313 - 151,313
Loews Cineplex Entertainment, Sr. Unsec. Sub Notes, 8.875%, 08/01/08 (b) - 77,813 - 77,813
Louis Dreyfus Natural Gas, Sr. Sub. Notes, 9.25%, 06/15/04 - - 539,585 539,585
Mariner Post-Acute Network, Inc., Series B Sr. Unsec. Sub. Notes, 9.50%, 11/01/07 - - 209,250 209,250
Mariner Post-Acute Network, Sr. Unsec. Disc. Sub. Notes, 10.5%, 11/01/07 (d) - - 165,300 165,300
MCI Communications Corp., Putable Sr. Unsec. Deb., 7.125%, 06/15/27 - - 1,063,500 1,063,500
489
AIM V.I. DIVERSIFIED INCOME FUND
GTG VARIABLE GLOBAL GOVERNMENT INCOME FUND
GTG VARIABLE STRATEGIC INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
(UNAUDITED)
PRINCIPAL AMOUNT (a)
- -----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
- - 300,000 300,000 MDC Communications Corp.(Services-Advertising/Marketing), Sr. Yankee Unsec. Sub. Notes,
10.50%, 12/01/06
- - 380,000 380,000 Mediq Inc., Sr. Unsec. Gtd. Sub. Notes, 11.00%, 06/01/08
- - 300,000 300,000 Mercantile Bancorp Inc., Sub. Notes, 6.375%, 01/15/04
- - 1,000,000 1,000,000 Mercantile Bancorp Inc., Unsec. Sub. Notes, 7.30%, 06/15/07
- - 450,000 450,000 Metrocall Inc., Sr. Sub. Notes, 11.00%, 09/15/08 (b)
- - 380,000 380,000 MMI Products Inc., Sr. Unsec. Sub. Notes, 11.25%, 04/15/07
- - 380,000 380,000 MSX International Inc., Unsec. Sr. Sub. Notes, 11.375%, 01/15/08
- - 145,000 145,000 MVE Inc., Sr. Sec. Notes, 12.50%, 02/15/02
- - 330,000 330,000 Neff Corp., Sr. Sub. Notes, 10.25%, 06/01/08 (b)
- - 750,000 750,000 News America Holdings, Inc., Sr. Gtd. Deb., 9.25%, 02/01/13
- - 500,000 500,000 News America Holdings, Inc., Sr. Gtd. Putable Bonds, 7.43%, 10/01/26
- - 560,000 560,000 Nextel Communications, Inc., Sr. Notes, 12.00%, 11/01/08 (b)
- - 1,000,000 1,000,000 Niagara Mohawk Power Corp., First Mortgage Notes, 9.25%, 10/01/01
- - 1,000,000 1,000,000 Niagara Mohawk Power Corp., Series G Sr. Unsec. Notes, 7.75%, 10/01/08
65,000 65,000 Niagara Mohawk Power, 7.375% due 07/01/03
- 55,000 - 55,000 Norampac Inc., Sr. Notes, 9.50%, 02/01/08 (b)
- - 650,000 650,000 Norfolk Southern Corp., Putable Bonds, 7.05%, 05/01/37
- - 100,000 100,000 Northern Telecom, Notes, 6.00%, 09/01/03
- - 500,000 500,000 Nova Gas Transmission Ltd. (Chemicals), Yankee Deb., 8.50%, 12/15/12
- - 440,000 440,000 NTL Inc., Sr. Notes, 11.50%, 10/01/08 (b)
- - 500,000 500,000 Orion Capital Trust II, Gtd. Notes, 7.701%, 04/15/28
- - 530,000 530,000 Pacific & Atlantic Holding, Notes, 11.50%, 05/30/08
- - 450,000 450,000 Pacific Aerospace & Elec., Sr. Sub Notes, 11.25%, 08/01/05 (b)
- - 750,000 750,000 PageMart Wireless, Inc., Sr. Sub. Disc. Notes, 11.25%, 02/01/08 (d)
- 45,000 - 45,000 Park Place Entertainment, 7.875% due 12/15/05 - 144A (b)
500,000 Pegasus Shipping Hellas Co., Series A, Sr. Yankee Sec. Gtd. Mortgage Notes, 11.85%,
11/15/04
- 55,000 - 55,000 Penn National Gaming Inc., Sr. Unsec. Gtd. Notes, 10.625%, 12/15/04 (b)
- 25,000 - 25,000 Pillowtex Corp., 9.00% due 12/15/07 - 144A (b)
- - 330,000 330,000 Plainwell Inc., Series B Sr. Unsec. Sub. Notes, 11.00%, 03/01/08
- - 700,000 700,000 Province of Manitoba (Sovereign Debt), Yankee Bonds, 7.75%, 07/17/16
- - 750,000 750,000 Province of Quebec, Yankee Notes, 5.735%, 03/02/26
- 75,000 - 75,000 Psinet Inc., Sr. Unsec. Notes, 10.00%, 02/15/05
- - 400,000 400,000 Queen Sand Resources, Inc., Sr. Unsec. Gtd. Notes, 12.50%, 07/01/08
- - 250,000 250,000 R & B Falcon Corp., Sr. Notes, 9.50%, 12/15/08 (b)
- - 500,000 500,000 R & B Falcon Corp., Sr. Unsec. Notes, 6.95%, 04/15/08
- - 500,000 500,000 Regions Financial Corp., Sub. Notes, 7.75%, 09/15/24
- - 500,000 500,000 Renters Choice Inc., Sr. Sub. Notes, 11.00%, 08/15/08 (b)
- 55,000 - 55,000 Revlon Consumer Products, Sr. Unsec. Sub. Notes, 8.625%, 02/01/08 (b)
- 135,000 - 135,000 Riddell Sports Inc., Sr. Unsec. Gtd. Notes, 10.50%, 07/15/07
45,000 45,000 Salton/Maxim Housewares, 10.75% due 12/15/05 - 144A (b)
- - 750,000 750,000 SBC Communications Inc., Deb., 7.375%, 07/15/43
- 125,000 - 125,000 Smithfield Foods Inc., Sr. Unsec. Sub Notes, 7.625%, 02/15/08
- - 750,000 750,000 Solutia Inc., Bonds, 6.72%, 10/15/37
- - 800,000 800,000 Sovereign Bancorp, Inc., Sub. Notes, 8.00%, 03/15/03
- - 750,000 750,000 Spieker Properties LP, Unsec. Deb., 7.35%, 12/01/17
- - 220,000 220,000 Sterling Chemicals, Inc., Sr. Unsec. Sub. Notes, 11.75%, 08/15/06
- 60,000 - 60,000 Syratech Corp., Sr. Unsec. Gtd. Notes, 11.00%, 04/15/07 (b)
- - 500,000 500,000 Talisman Energy, Inc., (Canada) Yankee Deb., 7.125%, 06/01/07
- - 850,000 850,000 TCI Communications Inc., Sr. Notes, 8.00%, 08/01/05
- - 750,000 750,000 Tenet Healthcare Corp., Sr. Notes, 8.00%, 01/15/05
- - 330,000 330,000 Texas Petrochemical Corp., Sr. Unsec. Sub. Notes, 11.125%, 07/01/06
- - 500,000 500,000 Time Warner, Inc., Deb., 9.125%, 01/15/13
- - 500,000 500,000 Time Warner, Inc., Unsec. Deb., 6.85%, 01/15/26
- - 750,000 750,000 Torchmark Corp., Notes, 7.875%, 05/15/23
- - 400,000 400,000 Travelcenters of America Inc., Sr. Unsec. Gtd. Sub. Deb., 10.25%, 04/01/07
- 135,000 - 135,000 Trump Atlantic City Associates, Secured First Mortgage Gtd. Notes, 11.25%, 05/01/06
- 73,000 - 73,000 U.S. Filter Corp., Conv. Sub. Notes, 4.50%, 12/15/01
- 150,000 - 150,000 Unisys Corp., Sr. Notes, 7.875%, 04/01/08
- - 425,000 425,000 United Air Lines, Inc., Pass Thru Ctfs., 9.56%, 10/19/18
- - 275,000 275,000 United Stationer Supply, Sr. Sub. Notes, 12.75%, 05/01/05
- 100,000 - 100,000 United Stationers Supply, Sr. Gtd. Sub. Notes, 8.375%, 04/15/08 (b)
MARKET VALUE
-----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
MDC Communications Corp.(Services-Advertising/Marketing), Sr. Yankee Unsec. Sub. Notes,
10.50%, 12/01/06 - - 307,500 307,500
Mediq Inc., Sr. Unsec. Gtd. Sub. Notes, 11.00%, 06/01/08 - - 366,700 366,700
Mercantile Bancorp Inc., Sub. Notes, 6.375%, 01/15/04 - - 307,056 307,056
Mercantile Bancorp Inc., Unsec. Sub. Notes, 7.30%, 06/15/07 - - 1,095,900 1,095,900
Metrocall Inc., Sr. Sub. Notes, 11.00%, 09/15/08 (b) - - 454,500 454,500
MMI Products Inc., Sr. Unsec. Sub. Notes, 11.25%, 04/15/07 - - 412,300 412,300
MSX International Inc., Unsec. Sr. Sub. Notes, 11.375%, 01/15/08 - - 363,850 363,850
MVE Inc., Sr. Sec. Notes, 12.50%, 02/15/02 - - 142,825 142,825
Neff Corp., Sr. Sub. Notes, 10.25%, 06/01/08 (b) - - 320,100 320,100
News America Holdings, Inc., Sr. Gtd. Deb., 9.25%, 02/01/13 - - 936,128 936,128
News America Holdings, Inc., Sr. Gtd. Putable Bonds, 7.43%, 10/01/26 - - 543,560 543,560
Nextel Communications, Inc., Sr. Notes, 12.00%, 11/01/08 (b) - - 616,000 616,000
Niagara Mohawk Power Corp., First Mortgage Notes, 9.25%, 10/01/01 - - 1,083,450 1,083,450
Niagara Mohawk Power Corp., Series G Sr. Unsec. Notes, 7.75%, 10/01/08 - - 1,093,100 1,093,100
Niagara Mohawk Power, 7.375% due 07/01/03 - 66,632 - 66,632
Norampac Inc., Sr. Notes, 9.50%, 02/01/08 (b) - 56,100 - 56,100
Norfolk Southern Corp., Putable Bonds, 7.05%, 05/01/37 - - 733,993 733,993
Northern Telecom, Notes, 6.00%, 09/01/03 - - 101,482 101,482
Nova Gas Transmission Ltd. (Chemicals), Yankee Deb., 8.50%, 12/15/12 - - 606,900 606,900
NTL Inc., Sr. Notes, 11.50%, 10/01/08 (b) - - 481,800 481,800
Orion Capital Trust II, Gtd. Notes, 7.701%, 04/15/28 - - 459,410 459,410
Pacific & Atlantic Holding, Notes, 11.50%, 05/30/08 - - 410,750 410,750
Pacific Aerospace & Elec., Sr. Sub Notes, 11.25%, 08/01/05 (b) - - 339,750 339,750
PageMart Wireless, Inc., Sr. Sub. Disc. Notes, 11.25%, 02/01/08 (d) - - 363,750 363,750
Park Place Entertainment, 7.875% due 12/15/05 - 144A (b) - 45,281 45,281
Pegasus Shipping Hellas Co., Series A, Sr. Yankee Sec. Gtd. Mortgage Notes, 11.85%,
11/15/04 432,500 432,500
Penn National Gaming Inc., Sr. Unsec. Gtd. Notes, 10.625%, 12/15/04 (b) - 58,025 - 58,025
Pillowtex Corp., 9.00% due 12/15/07 - 144A (b) - 25,875 - 25,875
Plainwell Inc., Series B Sr. Unsec. Sub. Notes, 11.00%, 03/01/08 - - 259,050 259,050
Province of Manitoba (Sovereign Debt), Yankee Bonds, 7.75%, 07/17/16 - - 826,322 826,322
Province of Quebec, Yankee Notes, 5.735%, 03/02/26 - - 845,025 845,025
Psinet Inc., Sr. Unsec. Notes, 10.00%, 02/15/05 - 74,625 - 74,625
Queen Sand Resources, Inc., Sr. Unsec. Gtd. Notes, 12.50%, 07/01/08 - - 282,000 282,000
R & B Falcon Corp., Sr. Notes, 9.50%, 12/15/08 (b) - - 251,250 251,250
R & B Falcon Corp., Sr. Unsec. Notes, 6.95%, 04/15/08 - - 434,285 434,285
Regions Financial Corp., Sub. Notes, 7.75%, 09/15/24 - - 576,015 576,015
Renters Choice Inc., Sr. Sub. Notes, 11.00%, 08/15/08 (b) - - 510,000 510,000
Revlon Consumer Products, Sr. Unsec. Sub. Notes, 8.625%, 02/01/08 (b) - 50,875 - 50,875
Riddell Sports Inc., Sr. Unsec. Gtd. Notes, 10.50%, 07/15/07 - 128,242 - 128,242
Salton/Maxim Housewares, 10.75% due 12/15/05 - 144A (b) - 45,506 - 45,506
SBC Communications Inc., Deb., 7.375%, 07/15/43 - - 818,415 818,415
Smithfield Foods Inc., Sr. Unsec. Sub Notes, 7.625%, 02/15/08 - 126,250 - 126,250
Solutia Inc., Bonds, 6.72%, 10/15/37 - - 762,000 762,000
Sovereign Bancorp, Inc., Sub. Notes, 8.00%, 03/15/03 - - 841,608 841,608
Spieker Properties LP, Unsec. Deb., 7.35%, 12/01/17 - - 689,363 689,363
Sterling Chemicals, Inc., Sr. Unsec. Sub. Notes, 11.75%, 08/15/06 - - 190,300 190,300
Syratech Corp., Sr. Unsec. Gtd. Notes, 11.00%, 04/15/07 (b) - 48,900 - 48,900
Talisman Energy, Inc., (Canada) Yankee Deb., 7.125%, 06/01/07 - - 517,020 517,020
TCI Communications Inc., Sr. Notes, 8.00%, 08/01/05 - - 958,435 958,435
Tenet Healthcare Corp., Sr. Notes, 8.00%, 01/15/05 - - 769,943 769,943
Texas Petrochemical Corp., Sr. Unsec. Sub. Notes, 11.125%, 07/01/06 - - 326,700 326,700
Time Warner, Inc., Deb., 9.125%, 01/15/13 - - 628,805 628,805
Time Warner, Inc., Unsec. Deb., 6.85%, 01/15/26 - - 526,020 526,020
Torchmark Corp., Notes, 7.875%, 05/15/23 - - 779,640 779,640
Travelcenters of America Inc., Sr. Unsec. Gtd. Sub. Deb., 10.25%, 04/01/07 - - 400,000 400,000
Trump Atlantic City Associates, Secured First Mortgage Gtd. Notes, 11.25%, 05/01/06 - 118,800 - 118,800
U.S. Filter Corp., Conv. Sub. Notes, 4.50%, 12/15/01 - 69,168 - 69,168
Unisys Corp., Sr. Notes, 7.875%, 04/01/08 - 159,938 - 159,938
United Air Lines, Inc., Pass Thru Ctfs., 9.56%, 10/19/18 - - 521,603 521,603
United Stationer Supply, Sr. Sub. Notes, 12.75%, 05/01/05 - - 308,000 308,000
United Stationers Supply, Sr. Gtd. Sub. Notes, 8.375%, 04/15/08 (b) - 100,250 - 100,250
490
AIM V.I. DIVERSIFIED INCOME FUND
GTG VARIABLE GLOBAL GOVERNMENT INCOME FUND
GTG VARIABLE STRATEGIC INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
(UNAUDITED)
PRINCIPAL AMOUNT (a)
- ----------------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
- - 500,000 500,000 USA Networks, Inc., Sr. Notes, 6.75%, 11/15/05 (b)
- - 400,000 400,000 Venetian Casino Resort LLC, Gtd. Mortgage Notes, 12.25%, 11/15/04
- 75,000 - 75,000 Viasystems Inc., Sr. Sub Unsec. Notes, 9.75%, 06/01/07
- - 70,000 70,000 Wilson's-The Leather Experts, Inc., Sr. Notes, 11.25%, 08/15/04
- - 1,000,000 1,000,000 WMX Technologies, Inc., Unsec. Notes, 7.10%, 08/01/26
- 300,000 - 300,000 Xerox Corp., Notes, 5.50%, 11/15/03
TOTAL CORPORATE BONDS
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS - 25.08%
ALGERIA - 0.19%
- 500,000 - 500,000 Algeria Tranche 1 Loan Assignment (Sovereign Debt), Bonds, 6.00%, 09/04/06 (e)
ARGENTINA - 0.50%
180,000 - 180,000 Republic of Argentina, 11.00% due 12/04/05 - 144A (b)
134,000 - 134,000 Republic of Argentina, 11.00% due 10/09/06
150,000 - 150,000 Republic of Argentina, Discount Bond, 6.0625% due 03/31/23 (e)
115,000 - 115,000 Republic of Argentina, I.O. Strip, 12.11%, due 04/10/05
- 110,000 - 110,000 Republic of Argentina (Sovereign Debt), Unsec. Unsub., 11.375%, 01/30/17
BRAZIL - 0.15%
- 325,000 - 325,000 Brazil (Sovereign Debt), Floating Rate Disc. Note, 6.125%, 04/15/24 (e)
BRITISH POUND STERLING - 2.44%
- - 450,000 450,000 Fannie Mae, Unsec. Sr. Notes, 6.875%, 06/07/02 (c)
- - 400,000 400,000 United Kingdom Treasury (Sovereign Debt) Gtd. Notes, 7.00%, 11/06/01(c)
- - 450,000 450,000 United Kingdom Treasury Bonds (Sovereign Debt), 7.50%, 12/07/06 (c)
- - 400,000 400,000 United Kingdom Treasury Bonds (Sovereign Debt), 8.00%, 12/07/00 (c)
BULGARIA -0.32%
- 397,000 - 397,000 Bulgaria (Sovereign Debt), Sec. Disc. Bonds, 5.875%, 07/28/24 (e)
218,000 218,000 Republic of Bulgaria, Front Loaded Interest Reduction Bond Series A, 2.50%
(2.75% at 7/99), due 7/28/12 (i)
CANADIAN DOLLAR - 2.43%
- - 500,000 500,000 British Columbia Municipal Finance Authority, (Soveriegn Debt), Bonds,
7.75%, 12/01/05 (c)
230,000 300,000 - 530,000 Canadian Government (Sovereign Debt), Bonds, 6.00%, 06/01/08
- - 500,000 500,000 Canadian Government (Sovereign Debt), Bonds, 6.625%, 10/03/07 (c)
- - 750,000 750,000 Ontario Province (Sovereign Debt), Sr. Unsub. Notes, 8.00%, 03/11/03 (c)
- - 500,000 500,000 Province of Ontario (Sovereign Debt), Deb., 11.125%, 02/14/01 (c)
- - 1,000,000 1,000,000 Province of Ontario (Sovereign Debt), Unsec. Unsub. Notes, 6.25%, 12/03/08 (c)
- - 100,000 100,000 Quebec (Province of), Deb., 9.375%, 01/16/23 (Sovereign Debt) (c)
COLOMBIA - 0.16%
- 55,000 - 55,000 Republic of Colombia, 7.27% due 06/15/03 - 144A (b)
- 179,000 - 179,000 Republic of Colombia, 8.625% due 04/01/08
DENMARK - 1.14%
- 2,600,000 - 2,600,000 Kingdom of Denmark (Sovereign Debt), Bonds, 7.00%, 11/10/24
5,200,000 5,200,000 Kingdom of Denmark (Sovereign Debt), Bonds, 6.00%, 11/15/09
GERMAN DEUTSCHE MARKS - 3.77%
105,000 2,180,000 - 2,285,000 Bundesrepublic Deutschland (Sovereign Debt), Bonds, 6.00%, 01/05/06
- 920,000 - 920,000 Bundesrepublic Deutschland (Sovereign Debt), Bonds, 6.50%, 07/04/27
- - 1,000,000 1,000,000 Bundesrepublic Deutschland (Sovereign Debt), Bonds, 6.875%, 05/12/05 (c)
1,020,000 670,000 1,690,000 Deutschland Republic (Sovereign Debt) Bonds, 6.00%, 07/04/07
250,000 700,000 950,000 Deutschland Republic (Sovereign Debt) Bonds, 6.50%, 10/14/05
GREECE - 0.54%
50,000,000 50,000,000 - 100,000,000 Hellenic Republic (Sovereign Debt), Bonds, 8.14%, 06/19/07
30,000,000 50,000,000 - 80,000,000 Hellenic Republic (Sovereign Debt), Bonds, 8.51%, 03/21/02
MARKET VALUE
---------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
USA Networks, Inc., Sr. Notes, 6.75%, 11/15/05 (b) - - 501,330 501,330
Venetian Casino Resort LLC, Gtd. Mortgage Notes, 12.25%, 11/15/04 - - 376,000 376,000
Viasystems Inc., Sr. Sub Unsec. Notes, 9.75%, 06/01/07 - 70,125 - 70,125
Wilson's-The Leather Experts, Inc., Sr. Notes, 11.25%, 08/15/04 - - 68,950 68,950
WMX Technologies, Inc., Unsec. Notes, 7.10%, 08/01/26 - - 1,047,230 1,047,230
Xerox Corp., Notes, 5.50%, 11/15/03 - 300,834 - 300,834
----------
63,599,180
TOTAL CORPORATE BONDS 85,473,240
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS - 25.08%
ALGERIA - 0.19%
----------
Algeria Tranche 1 Loan Assignment (Sovereign Debt), Bonds, 6.00%, 09/04/06 (e) - 225,000 - 225,000
----------
ARGENTINA - 0.50%
Republic of Argentina, 11.00% due 12/04/05 - 144A (b) 179,550 179,550
Republic of Argentina, 11.00% due 10/09/06 132,828 132,828
Republic of Argentina, Discount Bond, 6.0625% due 03/31/23 (e) 111,188 111,188
Republic of Argentina, I.O. Strip, 12.11%, due 04/10/05 104,938 104,938
Republic of Argentina (Sovereign Debt), Unsec. Unsub., 11.375%, 01/30/17 - 110,275 - 110,275
----------
638,779
----------
BRAZIL - 0.15%
----------
Brazil (Sovereign Debt), Floating Rate Disc. Note, 6.125%, 04/15/24 (e) - 194,188 - 194,188
----------
BRITISH POUND STERLING - 2.44%
Fannie Mae, Unsec. Sr. Notes, 6.875%, 06/07/02 (c) - - 795,215 795,215
United Kingdom Treasury (Sovereign Debt) Gtd. Notes, 7.00%, 11/06/01(c) - - 705,209 705,209
United Kingdom Treasury Bonds (Sovereign Debt), 7.50%, 12/07/06 (c) - - 899,399 899,399
United Kingdom Treasury Bonds (Sovereign Debt), 8.00%, 12/07/00 (c) - - 702,549 702,549
----------
3,102,372
----------
BULGARIA -0.32%
Bulgaria (Sovereign Debt), Sec. Disc. Bonds, 5.875%, 07/28/24 (e) - 278,893 - 278,893
Republic of Bulgaria, Front Loaded Interest Reduction Bond Series A, 2.50%
(2.75% at 7/99), due 7/28/12 (i) 124,941 124,941
----------
403,834
----------
CANADIAN DOLLAR - 2.43%
British Columbia Municipal Finance Authority, (Soveriegn Debt), Bonds,
7.75%, 12/01/05 (c) - - 374,441 374,441
Canadian Government (Sovereign Debt), Bonds, 6.00%, 06/01/08 162,759 212,295 - 375,054
Canadian Government (Sovereign Debt), Bonds, 6.625%, 10/03/07 (c) - - 270,179 270,179
Ontario Province (Sovereign Debt), Sr. Unsub. Notes, 8.00%, 03/11/03 (c) - - 545,666 545,666
Province of Ontario (Sovereign Debt), Deb., 11.125%, 02/14/01 (c) - - 913,595 913,595
Province of Ontario (Sovereign Debt), Unsec. Unsub. Notes, 6.25%, 12/03/08 (c) - - 517,059 517,059
Quebec (Province of), Deb., 9.375%, 01/16/23 (Sovereign Debt) (c) - - 91,871 91,871
----------
3,087,864
----------
COLOMBIA - 0.16%
Republic of Colombia, 7.27% due 06/15/03 - 144A (b) - 47,025 - 47,025
Republic of Colombia, 8.625% due 04/01/08 - 153,045 - 153,045
----------
200,070
----------
DENMARK - 1.14%
Kingdom of Denmark (Sovereign Debt), Bonds, 7.00%, 11/10/24 - 523,432 - 523,432
Kingdom of Denmark (Sovereign Debt), Bonds, 6.00%, 11/15/09 933,025 933,025
----------
1,456,457
----------
GERMAN DEUTSCHE MARKS - 3.77%
Bundesrepublic Deutschland (Sovereign Debt), Bonds, 6.00%, 01/05/06 71,819 491,100 - 1,562,919
Bundesrepublic Deutschland (Sovereign Debt), Bonds, 6.50%, 07/04/27 - 690,147 - 690,147
Bundesrepublic Deutschland (Sovereign Debt), Bonds, 6.875%, 05/12/05 (c) - - 708,431 708,431
Deutschland Republic (Sovereign Debt) Bonds, 6.00%, 07/04/07 706,150 463,844 - 1,169,994
Deutschland Republic (Sovereign Debt) Bonds, 6.50%, 10/14/05 174,883 489,672 - 664,555
----------
4,796,046
----------
GREECE - 0.54%
Hellenic Republic (Sovereign Debt), Bonds, 8.14%, 06/19/07 198,849 198,849 - 397,698
Hellenic Republic (Sovereign Debt), Bonds, 8.51%, 03/21/02 110,769 184,616 - 295,385
491
AIM V.I. DIVERSIFIED INCOME FUND
GTG VARIABLE GLOBAL GOVERNMENT INCOME FUND
GTG VARIABLE STRATEGIC INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
(UNAUDITED)
PRINCIPAL AMOUNT (a)
- --------------------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
ITALY - 1.39%
610,000,000 780,000,000 - 1,390,000,000 Buoni Poliennali Del Tesoro (Sovereign Debt), Bonds, 7.25%, 11/01/26
440,000,000 420,000,000 - 860,000,000 Buoni Poliennali del Tesoro (Sovereign Debt), Deb., 8.50%, 01/01/04
IVORY COAST - 0.21%
- 3,851,250 - 3,851,250 Ivory Coast (Sovereign Debt), Past Due Interest Bonds, 1.90%, 03/29/18
- 296,250 - 296,250 Ivory Coast (Sovereign Debt) Past Due Interest Bonds, 2.00%, 03/29/18
KOREA - 0.19%
250,000 250,000 Korea Republic Restructured Debt, 8.281% due 04/08/00
MEXICO - 0.10%
131,000 131,000 United Mexican States, 9.875% due 01/15/07
NETHERLANDS -0.31%
275,000 400,000 - 675,000 Netherlands Government Bond, 5.5% due 01/15/28
NEW ZEALAND DOLLARS - 1.10%
- 550,000 1,250,000 1,800,000 Fannie Mae (Sovereign Debt), Notes, 7.25%, 06/20/02 (c)
- - 750,000 750,000 New Zealand Government (Sovereign Debt), Bonds, 8.00%, 02/15/01 (c)
PERU - 0.29%
- 584,000 - 584,000 Peru Past due Interest (Sovereign Debt), Bonds, 4.50%, 03/07/17 (i)
RUSSIA - 0.03%
667,458 667,458 Bank for Foreign Economic Affairs (Venesheconombank) Principal Loans,
6.625% due 12/15/20 (e)
9,000 9,000 Russian Ministry of Finance #6, due 05/14/06 GDR - 144A (b)
SWEDISH KORONAS - 2.09%
- - 6,000,000 6,000,000 Swedish Government (Sovereign Debt), Bonds, 6.00%, 02/09/05 (c)
- - 6,000,000 6,000,000 Swedish Government (Sovereign Debt), Bonds, 6.50%, 10/25/06 (c)
- - 7,500,000 7,500,000 Swedish Gov't, Bonds, 5.00%, 01/28/09 (c)
TURKEY - 0.08%
96,000 96,000 Republic of Turkey, 12.00% due 12/15/08
USA - 5.20%
U.S. TREASURY SECURITIES
- - 1,000,000 1,000,000 U.S. Treasury Bonds, 5.50%, 08/15/28
1,515,000 - 300,000 1,815,000 U.S. Treasury Notes, 5.625%, 05/15/08
740,000 1,660,000 - 2,400,000 U.S. Treasury Bonds, 6.375%, 08/15/27 (j)
- 300,000 - 300,000 U.S. Treasury Note, 4.25%, 11/15/03
280,000 170,000 - 450,000 U.S. Treasury Note, 4.75%, 11/15/08
200,000 - - 200,000 Fannie Mae, Sr. Unsub., 6.375%, 08/15/07
UNITED KINGDOM - 2.37%
360,000 970,000 - 1,330,000 Treasury (Sovereign Debt), Gtd. Bonds, 9.00%, 10/13/08
URUGUAY - .08%
100,000 100,000 Republic of Uruguay, 7.875% due 7/15/27 - 144a (b)
TOTAL GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
MORTGAGE BACKED -1.70%
DENMARK - 0.43%
1,596,000 1,904,000 - 3,500,000 Realkredit Danmark (Sovereign Debt), Conv., 6.00%, 10/01/26
UNITED STATES -1.27%
275,000 1,300,000 - 1,575,000 Government National Mortgage Association TBA Pass Thru Pool, due 01/15/29 (k)
48,446 - - 48,446 Federal Home Loan Mortgage Corp. ("FHLMC"), Pass through Certificates,
8.50%, 03/01/10
MARKET VALUE
------------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
---------
693,083
---------
ITALY - 1.39%
Buoni Poliennali Del Tesoro (Sovereign Debt), Bonds, 7.25%, 11/01/26 496,287 634,596 - 1,130,882
Buoni Poliennali del Tesoro (Sovereign Debt), Deb., 8.50%, 01/01/04 327,928 313,022 - 640,950
---------
1,771,832
---------
IVORY COAST - 0.21%
Ivory Coast (Sovereign Debt), Past Due Interest Bonds, 1.90%, 03/29/18 - 186,034 - 186,034
Ivory Coast (Sovereign Debt) Past Due Interest Bonds, 2.00%, 03/29/18 - 87,564 - 87,564
---------
273,598
---------
KOREA - 0.19%
---------
Korea Republic Restructured Debt, 8.281% due 04/08/00 - 239,375 - 239,375
---------
MEXICO - 0.10%
---------
United Mexican States, 9.875% due 01/15/07 129,526 129,526
---------
NETHERLANDS -0.31%
---------
Netherlands Government Bond, 5.5% due 01/15/28 162,376 236,184 - 398,560
---------
NEW ZEALAND DOLLARS - 1.10%
Fannie Mae (Sovereign Debt), Notes, 7.25%, 06/20/02 (c) - 298,589 682,650 981,239
New Zealand Government (Sovereign Debt), Bonds, 8.00%, 02/15/01 (c) - - 416,233 416,233
---------
1,397,471
---------
PERU - 0.29%
---------
Peru Past due Interest (Sovereign Debt), Bonds, 4.50%, 03/07/17 (i) - 369,380 - 369,380
---------
RUSSIA - 0.03%
Bank for Foreign Economic Affairs (Venesheconombank) Principal Loans,
6.625% due 12/15/20 (e) - 43,385 - 43,385
Russian Ministry of Finance #6, due 05/14/06 GDR - 144A (b) - 653 - 653
---------
44,038
---------
SWEDISH KORONAS - 2.09%
Swedish Government (Sovereign Debt), Bonds, 6.00%, 02/09/05 (c) - - 821,959 821,959
Swedish Government (Sovereign Debt), Bonds, 6.50%, 10/25/06 (c) - - 860,313 860,313
Swedish Gov't, Bonds, 5.00%, 01/28/09 (c) - - 983,492 983,492
---------
2,665,763
---------
TURKEY - 0.08%
---------
Republic of Turkey, 12.00% due 12/15/08 95,520 95,520
---------
USA - 5.20%
U.S. TREASURY SECURITIES
U.S. Treasury Bonds, 5.50%, 08/15/28 - - 1,046,970 1,046,970
U.S. Treasury Notes, 5.625%, 05/15/08 1,617,055 - 319,872 1,936,927
U.S. Treasury Bonds, 6.375%, 08/15/27 (j) 851,405 1,909,225 - 2,760,630
U.S. Treasury Note, 4.25%, 11/15/03 - 296,227 - 296,227
U.S. Treasury Note, 4.75%, 11/15/08 282,275 171,382 - 453,657
Fannie Mae, Sr. Unsub., 6.375%, 08/15/07 129,119 - - 129,119
---------
6,623,530
---------
UNITED KINGDOM - 2.37%
---------
Treasury (Sovereign Debt), Gtd. Bonds, 9.00%, 10/13/08 816,791 2,200,798 - 3,017,589
---------
URUGUAY - .08%
---------
Republic of Uruguay, 7.875% due 7/15/27 - 144a (b) 98,000 98,000
---------
TOTAL GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS 31,921,875
MORTGAGE BACKED -1.70%
DENMARK - 0.43%
---------
Realkredit Danmark (Sovereign Debt), Conv., 6.00%, 10/01/26 250,624 298,991 - 549,615
---------
UNITED STATES -1.27%
Government National Mortgage Association TBA Pass Thru Pool, due 01/15/29 (k) 272,594 1,288,625 - 1,561,219
Federal Home Loan Mortgage Corp. ("FHLMC"), Pass through Certificates,
8.50%, 03/01/10 50,217 - - 50,217
492
AIM V.I. DIVERSIFIED INCOME FUND
GTG VARIABLE GLOBAL GOVERNMENT INCOME FUND
GTG VARIABLE STRATEGIC INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
(UNAUDITED)
PRINCIPAL AMOUNT (a)
- -----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
TOTAL MORTGAGE BACKED
STRUCTURED NOTES - 0.08%
KOREA - 0.08%
130,000 130,000 Fixed Rate Trust Certificate 13.55% due 02/15/02 (Issued by a newly created Delaware
Business Trust, collateralized by triple A paper (l).
This trust certificate has a credit risk component linked to the value of a
referenced security:Korean Development
TOTAL STRUCTURED NOTES
DOMESTIC COMMON STOCK - 0.01%
- - 743 743 Nextel Communications, Inc.-Class A (m)
TOTAL DOMESTIC STOCK
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 1.06%
- - 16,000 16,000 Westpac Banking Corp. STRYPES Trust-$3.135 Conv. Pfd.
- - 8,000 8,000 Conseco Inc. - $4.278 Conv. PRIDES
TOTAL DOMESTIC CONVERTIBLE PREFERRED STOCKS
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 0.32%
ARGENTINA - 0.01%
- 180 - 180 Republic of Argentina (Sovereign Debt), expiring 12/03/99
CANADA - 0.00%
- - 891 891 Clearnet Communications Inc.(Telecommunications-Cellular/Wireless), expiring 09/15/05 (n)
FRANCE - 0.27%
- - 2,150 2,150 Societe Generale (Banks - Major Regional)
NETHERLANDS - 0.00%
- - 250 250 Versatel- WTS expiring 01/15/07 (n)
USA - 0.04%
- - 1,000 1,000 Knology Holdings, Inc., expiring 10/15/07 (d)(n)
- - 590 590 Electronic Retailing Systems International, expiring 02/01/04 (n)
- - 190 190 MVE Inc., expiring 02/15/02 (n)
- - 230 230 Gulf States Steel, Inc., expiring 04/15/03 (n)
- - 150 150 IHF Capital Inc., Series I, expiring 11/14/99 (n)
- - 580 580 Loral Space & Communications LTD, expiring 01/15/07 (n)
- - 470 470 ESAT Holdings Ltd., expiring 02/01/07 (n)
TOTAL FOREIGN STOCKS & OTHER EQUITY INTERESTS
SHORT-TERM INVESTMENTS - 1.23%
- 1,300,000 - 1,300,000 GE Capital, effective yield 5.25%, due 01/21/99
275,000 - 275,000 General Electric Capital Corp., effective yield 5.25%, due 01/21/99
TOTAL SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENTS (O) - 2.48%
2,305,989 2,305,989 Goldman Sachs & Co., 4.40%, 01/04/99 (p)
698,000 698,000 Dated December 31, 1998 with State Street Bank & Trust Co., due January 4, 1999, for an
effective yeild of 4.50%., collateralized by $695,000 U.S. Treasury Notes, 7.75%
due 12/31/99 (market value of collateral is $715,633, including accrued interest).
151,000 151,000 Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yeild of 4.50%, collateralized by
$130,000 U.S. Treasury Bonds, 6.75% due 08/15/26 (market value of collateral is $158,681,
including accrued interest).
MARKET VALUE
-----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
---------
1,611,436
---------
TOTAL MORTGAGE BACKED 2,161,051
STRUCTURED NOTES - 0.08%
KOREA - 0.08%
---------
Fixed Rate Trust Certificate 13.55% due 02/15/02 (Issued by a newly created Delaware
Business Trust, collateralized by triple A paper (l). - 102,700 - 102,700
---------
This trust certificate has a credit risk component linked to the value of a
referenced security:Korean Development
TOTAL STRUCTURED NOTES 102,700
DOMESTIC COMMON STOCK - 0.01%
---------
Nextel Communications, Inc.-Class A (m) - - 17,553 17,553
---------
TOTAL DOMESTIC STOCK 17,553
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 1.06%
Westpac Banking Corp. STRYPES Trust-$3.135 Conv. Pfd. - - 505,000 505,000
Conseco Inc. - $4.278 Conv. PRIDES - - 844,000 844,000
---------
1,349,000
---------
TOTAL DOMESTIC CONVERTIBLE PREFERRED STOCKS 1,349,000
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 0.32%
ARGENTINA - 0.01%
---------
Republic of Argentina (Sovereign Debt), expiring 12/03/99 - 8,640 - 8,640
---------
CANADA - 0.00%
---------
Clearnet Communications Inc.(Telecommunications-Cellular/Wireless), expiring 09/15/05 (n) - - 6,237 6,237
---------
FRANCE - 0.27%
---------
Societe Generale (Banks - Major Regional) - - 348,108 348,108
---------
NETHERLANDS - 0.00%
---------
Versatel- WTS expiring 01/15/07 (n) - - 2,531 2,531
---------
USA - 0.04%
Knology Holdings, Inc., expiring 10/15/07 (d)(n) - - 2,250 2,250
Electronic Retailing Systems International, expiring 02/01/04 (n) - - 2,950 2,950
MVE Inc., expiring 02/15/02 (n) - - 1,900 1,900
Gulf States Steel, Inc., expiring 04/15/03 (n) - - 2 2
IHF Capital Inc., Series I, expiring 11/14/99 (n) - - 75 75
Loral Space & Communications LTD, expiring 01/15/07 (n) - - 6,235 6,235
ESAT Holdings Ltd., expiring 02/01/07 (n) - - 33,018 33,018
---------
46,430
---------
TOTAL FOREIGN STOCKS & OTHER EQUITY INTERESTS 411,946
SHORT-TERM INVESTMENTS - 1.23%
GE Capital, effective yield 5.25%, due 01/21/99 1,296,136 1,296,136
General Electric Capital Corp., effective yield 5.25%, due 01/21/99 274,133 274,133
---------
1,570,269
---------
TOTAL SHORT-TERM INVESTMENTS 1,570,269
REPURCHASE AGREEMENTS (O) - 2.48%
Goldman Sachs & Co., 4.40%, 01/04/99 (p) 2,305,989 2,305,989
Dated December 31, 1998 with State Street Bank & Trust Co., due January 4, 1999, for an
effective yeild of 4.50%., collateralized by $695,000 U.S. Treasury Notes, 7.75%
due 12/31/99 (market value of collateral is $715,633, including accrued interest). 698,000 698,000
Dated December 31, 1998, with State Street Bank & Trust Co., due January 4, 1999, for an
effective yeild of 4.50%, collateralized by 151,000 151,000
---------
$130,000 U.S. Treasury Bonds, 6.75% due 08/15/26 (market value of collateral is $158,681,
including accrued interest). 3,154,989
---------
493
AIM V.I. DIVERSIFIED INCOME FUND
GTG VARIABLE GLOBAL GOVERNMENT INCOME FUND
GTG VARIABLE STRATEGIC INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
(UNAUDITED)
PRINCIPAL AMOUNT (a)
- -----------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
<
TOTAL REPURCHASE AGREEMENTS
TOTAL INVESTMENTS
OTHER ASSETS LESS LIABILITIES
NET ASSETS
MARKET VALUE
-----------------------------------------------
GTG GTG AIM V.I. PRO FORMA
VARIABLE VARIABLE DIVERSI- COMBINING
GLOBAL STRATEGIC FIED
GOVERN- INCOME INCOME
MENT FUND FUND
INCOME
FUND
TOTAL REPURCHASE AGREEMENTS 3,154,989
TOTAL INVESTMENTS 8,844,942 21,305,941 81,425,498 126,162,623
OTHER ASSETS LESS LIABILITIES (44,251) 715,904 2,014,920 1,105,266
NET ASSETS 8,800,691 22,021,845 96,445,353 127,267,889
(a) Principal amount is in U.S. Dollars, except as indicated by note (e).
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of 1933, as
amended. The valuation of these securities has been determined in accordance
with procedures established by the Board of Directors.
(c) Foreign denominated security. Par value and coupon rate are denominated in
currency of country indicated.
(d) Step bond issued at a discount. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(e) The coupon rate shown on floating rate note represents the rate at period
end.
(f) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(g) Defaulted security. Currently, the issuer is partially in default with
respect to interest payments.
(h) Valued in good faith at fair value using procedures approved by the Board of
Directors.
(i) The coupon rate shown on step-up coupon bond represents the rate at period
end.
(j) All or part of the Fund's holdings in this security is segregated as
collateral for when issued or derivative instruments.
(k) Purchased on a forward commitment basis.
(l) Certain events may cause the contract to terminate prior to date shown.
(m) Non-income producing security.
(n) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(o) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreements. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts, and certain non-registered investment companies m
(p) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$700,342,222. Collateralized by $646,494,000 U.S. Government obligations, 0% to
11.75% due 02/15/99 to 04/15/28 with an aggregate market value at 12/31/98 of
$714,694,897.
494
AIM V.I. DIVERSIFIED INCOME FUND
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
(UNAUDITED)
GT GLOBAL
GT GLOBAL VARIABLE
VARIABLE GLOBAL AIM V.I.
STRATEGIC GOVERNMENT DIVERSIFIED PRO FORMA
INCOME INCOME INCOME COMBINING
------------ ------------ ------------ ------------
ASSETS:
Investments, at market value $ 22,019,159 $ 8,864,031 $ 94,430,433 $125,313,623
- ----------------------------------------------------------------------------------------------------------------------------------
(cost $94,344,460 AIM VI Diversified Income Fund )
(cost $22,542,807 GT Global Variable Strategic Income Fund)
(cost $8,725,483 GT Global Variable Global Government Income Fund)
Repurchase Agreement, at value and cost 698,000 151,000 -- 849,000
- ----------------------------------------------------------------------------------------------------------------------------------
U.S. currency 385 401 -- 786
- ----------------------------------------------------------------------------------------------------------------------------------
Foreign currencies 149,625 67,106 144,120 360,851
- ----------------------------------------------------------------------------------------------------------------------------------
(cost $142,597 AIM V.I. Diversified Income Fund)
(cost $149,503 GT Global Variable Strategic Income Fund)
(cost $67,307 GT Global Variable Global Government Income Fund)
Receivables for:
Forward currency contracts 893 -- 206,490 207,383
- ----------------------------------------------------------------------------------------------------------------------------------
Securities Sold 1,729 1,572 -- 3,301
- ----------------------------------------------------------------------------------------------------------------------------------
AIM Advisors, Inc. 46,045 37,445 -- 83,490
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Stock Sold -- -- 53,293 53,293
- ----------------------------------------------------------------------------------------------------------------------------------
Fund shares sold 5,365 -- -- 5,365
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends and interest 493,346 149,640 1,847,543 2,490,529
- ----------------------------------------------------------------------------------------------------------------------------------
Investment for deferred compensation plan -- -- 22,013 22,013
- ----------------------------------------------------------------------------------------------------------------------------------
Other assets -- -- 452 452
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets 23,414,547 9,271,195 96,704,344 129,390,086
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Securities purchased 1,284,969 271,820 -- 1,556,789
- ----------------------------------------------------------------------------------------------------------------------------------
Capital stock reacquired -- -- 86,236 86,236
- ----------------------------------------------------------------------------------------------------------------------------------
Fund shares repurchased 24,085 125,193 -- 149,278
- ----------------------------------------------------------------------------------------------------------------------------------
Deferred compensation -- -- 22,013 22,013
- ----------------------------------------------------------------------------------------------------------------------------------
Custodian fees 3,454 1,690 -- 5,144
- ----------------------------------------------------------------------------------------------------------------------------------
Fund Accounting fees 298 151 -- 449
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Management and administration fees 57,310 48,083 -- 105,393
- ----------------------------------------------------------------------------------------------------------------------------------
Printing and postage expenses -- 5,803 -- 5,803
- ----------------------------------------------------------------------------------------------------------------------------------
Payable for professional fees 17,081 9,670 -- 26,751
- ----------------------------------------------------------------------------------------------------------------------------------
Payable for registration and filing fees 782 977 -- 1,759
- ----------------------------------------------------------------------------------------------------------------------------------
Forward currency contracts -- 1,842 70,412 72,254
- ----------------------------------------------------------------------------------------------------------------------------------
Accrued advisory fees -- -- 49,252 49,252
- ----------------------------------------------------------------------------------------------------------------------------------
Accrued directors' fees -- -- 183 183
- ----------------------------------------------------------------------------------------------------------------------------------
Accrued trustees' fees 2,278 3,018 -- 5,296
- ----------------------------------------------------------------------------------------------------------------------------------
Accrued operating expenses -- -- 30,895 30,895
- ----------------------------------------------------------------------------------------------------------------------------------
Other accrued expenses 2,445 2,257 -- 4,702
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,392,702 470,504 258,991 2,122,197
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding 22,021,845 8,800,691 96,445,353 127,267,889
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS: 22,021,845 8,800,691 96,445,353 127,267,889
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Authorized -- -- 250,000,000 250,000,000
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding 1,777,818 738,856 8,818,969 11,636,788
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption price per share $ 12.39 $ 11.91 $ 10.94 $ 10.94
- ----------------------------------------------------------------------------------------------------------------------------------
See Accompanying notes to Pro Forma Combining Financial Statements.
495
AIM V.I. Diversified Income Fund
GT Global Variable Strategic Income Fund
GT Global Variable Global Government Income Fund
Notes to Pro Forma Combining Financial Statements
December 31, 1998
(Unaudited)
Note 1 - Basis of Pro Forma Presentation
The pro forma financial statements and the accompanying pro forma schedule of
investments give effect to the proposed Agreement and Plan of Reorganization
between the AIM Variable Insurance Funds, Inc. and the GT Global Variable
Investment Trust and the consummation of the transactions contemplated therein
to be accounted for as a tax-free reorganization of investment companies. The
Agreement and Plan of Reorganization would be accomplished by an exchange of
shares of AIM V.I. Diversified Income Fund for the net assets of GT Global
Variable Strategic Income and GT Global Variable Global Government Income and
the distribution of AIM V.I. Diversified Income Fund shares to GT Global
Variable Strategic Income Fund shareholders and GT Global Variable Global
Government Income Fund shareholders. If the Agreement and Plan of
Reorganization were to have taken place at December 31, 1998, GT Global
Variable Strategic Income Fund shareholders would have received 2,013,452
shares of AIM V.I. Diversified Income Fund and GT Global Variable Global
Government Income Fund shareholders would have received 804,367 shares of AIM
V.I. Diversified Income Fund.
If shareholders of a fund of GT Global Variable Investment Series or GT Global
Variable Investment Trust vote to approve the Agreement and Plan of
Reorganization with AIM V.I. Diversified Income Fund, at a minimum the
combination will be that fund and AIM V.I. Diversified Income Fund or at the
maximum the combination of that fund and all other funds in the proposal with
AIM V.I. Diversified Income Fund or by any combination of that fund and any
other funds in the proposal with AIM V.I. Diversified Income Fund.
Note 2 - Pro Forma Adjustments
Pro Forma adjustments have been made to reflect the contractual expenses of the
combined entities and for replication of professional fees and shareholding
reporting among the entities.
496
AIM V. I. GOVERNMENT SECURITIES FUND
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
Principal Amount
----------------
GT AIM
Global Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining
Fund Fund
-------------------- --------------- --------- -------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES - 97.82%
Federal Farm Credit Bank - 3.44%
Medium term notes
-- 200,000 200,000 5.96%, 07/14/03
-- 1,000,000 1,000,000 5.80%, 06/17/05
-- 1,000,000 1,000,000 6.22%, 06/17/08
--------- --------- ---------
--------- --------- ---------
Federal Home Loan Bank - 3.69%
-- 150,000 150,000 Debentures
-- 250,000 250,000 8.375%, 10/25/99
-- 1,000,000 1,000,000 6.00%, 06/27/00
-- 500,000 500,000 5.97%, 12/11/00
-- 400,000 400,000 7.31%, 07/06/01
--------- --------- --------- 8.17%, 12/16/04
--------- --------- ---------
Federal Home Loan Mortgage Corp.
("FHLMC")- 21.66%
-- 150,000 150,000 Debenture
6.13%, 08/19/99
-- 692,788 692,788 Pass through certificates
-- 8,612,043 8,612,043 6.00% 11/01/08 to 08/01/10
-- 1,316,740 1,316,740 6.50% 12/01/08 to 01/14/29
-- 175,967 175,967 7.00% 11/01/10 to 01/01/26
-- 1,064,597 1,064,597 10.50%, 08/01/19
1,300,000 -- 1,300,000 8.50% 08/01/24 to 12/01/26
5.75% due 07/15/03
155,000 -- 155,000 Series 1462 PL
due 07/15/21
494,634 -- 494,634 Gold Pool #E72223
--------- --------- --------- 6.00% due 9/1/13
--------- --------- ---------
Federal National Mortgage Association
("FNMA")- 32.68%
Debenture
Market Value
------------
GT AIM
Global Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining
Fund Fund
- ----------------------------------------------- -------------------- --------------- ----------
U.S. GOVERNMENT AGENCY SECURITIES - 97.82%
Federal Farm Credit Bank - 3.44%
Medium term notes
5.96%, 07/14/03 $ -- $ 206,830 $ 206,830
5.80%, 06/17/05 -- 1,030,620 1,030,620
6.22%, 06/17/08 -- 1,020,460 1,020,460
------------ ------------ ------------
2,257,910
------------ ------------ ------------
Federal Home Loan Bank - 3.69%
Debentures
8.375%, 10/25/99 -- 154,281 154,281
6.00%, 06/27/00 -- 253,985 253,985
5.97%, 12/11/00 -- 1,019,900 1,019,900
7.31%, 07/06/01 -- 528,280 528,280
8.17%, 12/16/04 -- 459,712 459,712
------------ ------------ ------------
2,416,158
------------ ------------ ------------
Federal Home Loan Mortgage Corp.
("FHLMC")- 21.66%
Debenture
6.13%, 08/19/99 -- 151,287 151,287
Pass through certificates
6.00% 11/01/08 to 08/01/10 -- 699,280 699,280
6.50% 12/01/08 to 01/14/29 -- 8,695,795 8,695,795
7.00% 11/01/10 to 01/01/26 -- 1,350,198 1,350,198
10.50%, 08/01/19 -- 193,618 193,618
8.50% 08/01/24 to 12/01/26 -- 1,118,576 1,118,576
5.75% due 07/15/03 1,335,607 -- 1,335,607
Series 1462 PL
due 07/15/21 158,426 -- 158,426
Gold Pool #E72223
6.00% due 9/1/13 496,335 -- 496,335
------------ ------------ ------------
14,199,122
------------ ------------ ------------
Federal National Mortgage Association
("FNMA")- 32.68%
Debenture
497
AIM V. I. GOVERNMENT SECURITIES FUND
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
Principal Amount
----------------
GT AIM
Global Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining
Fund Fund
-------------------- --------------- --------- -------------------------------------------------
-- 500,000 500,000 4.696%, 06/02/99
-- 500,000 500,000 8.25%, 12/18/00
-- 1,350,000 1,350,000 7.50%, 02/01/02
-- 400,000 400,000 7.55%, 04/22/02
-- 500,000 500,000 8.50%, 02/01/05
-- 500,000 500,000 5.75%, 06/15/05
90,000 -- 90,000 6.80% due 01/10/03
Pool #398668
308,167 -- 308,167 6.50% due 09/01/27
Pool #363939
124,630 -- 124,630 7.00% due 3/1/04
Pool #356801
106,578 -- 106,578 6.00% due 12/01/08
Medium term note
-- 300,000 300,000 7.375%, 03/28/05
Pass through certificates
-- 2,444,502 2,444,502 7.50%, 11/01/09 to 07/01/27
-- 4,745,887 4,745,887 7.00%, 07/01/11 to 01/01/28
-- 1,446,854 1,446,854 6.50%, 10/01/10 to 06/01/23 (a)(b)
-- 2,981,962 2,981,962 6.00%, 10/01/13 to 12/01/13
-- 4,000,000 4,000,000 5.50%, 01/20/14 (a)(b)
-- 173,169 173,169 8.50%, 09/01/24
STRIPS(a)
-- 1,800,000 1,800,000 7.37%, 10/09/19
------- --------- ---------
------- --------- ---------
Financial Assistance Corp. - 0.13%
75,000 -- 75,000 9.375% due 07/21/03
Government National Mortgage Association
("GNMA")- 28.46%
Pass through certificates
-- 52,981 52,981 9.50%, 08/15/03 to 09/15/16
-- 121,713 121,713 9.00%, 09/15/08 to 10/15/16
-- 26,171 26,171 11.00%, 10/15/15
-- 29,476 29,476 10.50% 09/15/17 to 11/15/19
-- 939,580 939,580 10.00% 06/15/19
-- 417,615 417,615 6.50%, 12/15/23
-- 2,107,426 2,107,426 8.00%, 10/15/25 to 07/15/26
Market Value
------------
GT AIM
Global Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining
Fund Fund
- ----------------------------------------------- -------------------- --------------- ----------
4.696%, 06/02/99 -- $ 499,600 $ 499,600
8.25%, 12/18/00 -- 531,060 531,060
7.50%, 02/01/02 -- 1,445,756 1,445,756
7.55%, 04/22/02 -- 430,612 430,612
8.50%, 02/01/05 -- 516,845 516,845
5.75%, 06/15/05 -- 513,945 513,945
6.80% due 01/10/03 95,446 -- 95,446
Pool #398668
6.50% due 09/01/27 310,383 -- 310,383
Pool #363939
7.00% due 3/1/04 127,317 -- 127,317
Pool #356801
6.00% due 12/01/08 107,045 -- 107,045
Medium term note
7.375%, 03/28/05 -- 333,747 333,747
Pass through certificates
7.50%, 11/01/09 to 07/01/27 -- 2,519,349 2,519,349
7.00%, 07/01/11 to 01/01/28 -- 4,860,237 4,860,237
6.50%, 10/01/10 to 06/01/23 (a)(b) -- 1,470,115 1,470,115
6.00%, 10/01/13 to 12/01/13 -- 2,992,190 2,992,190
5.50%, 01/20/14 (a)(b) -- 3,954,261 3,954,261
8.50%, 09/01/24 -- 182,368 182,368
STRIPS(a)
7.37%, 10/09/19 -- 538,218 538,218
-------
------------ ----------
21,428,494
------- ------------ ----------
Financial Assistance Corp. - 0.13%
9.375% due 07/21/03 87,843 -- 87,843
Government National Mortgage Association
("GNMA")- 28.46%
Pass through certificates
9.50%, 08/15/03 to 09/15/16 -- 57,265 57,265
9.00%, 09/15/08 to 10/15/16 -- 130,650 130,650
11.00%, 10/15/15 -- 29,107 29,107
10.50% 09/15/17 to 11/15/19 -- 32,460 32,460
10.00% 06/15/19 -- 1,027,665 1,027,665
6.50%, 12/15/23 -- 424,790 424,790
8.00%, 10/15/25 to 07/15/26 -- 2,198,099 2,198,099
498
AIM V. I. GOVERNMENT SECURITIES FUND
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
Principal Amount
----------------
GT AIM
Global Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining
Fund Fund
-------------------- --------------- --------- -------------------------------------------------
-- 2,703,267 2,703,267 7.50%, 05/15/27 to 08/15/28
-- 3,707,135 3,707,135 7.00%, 04/15/28 to 06/15/28
-- 8,000,000 8,000,000 6.00%, 01/21/29(a)(b)
Pool #780523
219,072 -- 219,072 7.50% due 03/15/08
------- --------- ---------
------- --------- ---------
Mortgage Index Amortizing Trust - .76%
500,000 -- 500,000 6.682% due 08/25/04
Private Export Funding Company - .49%
Debenture
-- 300,000 300,000 7.30%, 01/31/02
Student Loan Marketing Association - 1.78%
Debentures
-- 500,000 500,000 4.838%, 02/22/99
-- 150,000 150,000 5.55%, 12/15/99
-- 150,000 150,000 6.50%, 08/01/02
350,000 -- 350,000 7.5% due 03/8/00
------- --------- ---------
------- --------- ---------
Supranational Bonds - .86%
International Bank of Reconstruction & Development
350,000 -- 350,000 5.25% due 09/16/03
Asian Development Bank
200,000 -- 200,000 8.00% due 04/30/01
------- --------- ---------
------- --------- ---------
Tennessee Valley Authority - 3.87%
Debenture
-- 2,000,000 2,000,000 6.375%, 06/15/05
Series A
400,000 -- 400,000 6.375% due 06/15/05
------- --------- ---------
------- --------- ---------
------- --------- ---------
======= ========= =========
Total U.S. Government Agencies
======= ========= =========
Market Value
------------
GT AIM
Global Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining
Fund Fund
- ----------------------------------------------- -------------------- --------------- ----------
7.50%, 05/15/27 to 08/15/28 -- $ 2,791,836 $ 2,791,836
7.00%, 04/15/28 to 06/15/28 -- 3,799,189 3,799,189
6.00%, 01/21/29(a)(b) -- 7,941,015 7,941,015
Pool #780523
7.50% due 03/15/08 227,013 -- 227,013
------------ ------------ ------------
18,659,089
------------ ------------ ------------
Mortgage Index Amortizing Trust - .76%
6.682% due 08/25/04 501,206 -- 501,206
Private Export Funding Company - .49%
Debenture
7.30%, 01/31/02 -- 318,633 318,633
Student Loan Marketing Association - 1.78%
Debentures
4.838%, 02/22/99 -- 499,900 499,900
5.55%, 12/15/99 -- 151,125 151,125
6.50%, 08/01/02 -- 157,262 157,262
7.5% due 03/8/00 360,406 -- 360,406
------------ ------------ ------------
1,168,693
------------ ------------ ------------
Supranational Bonds - .86%
International Bank of Reconstruction & Development
5.25% due 09/16/03 352,625 -- 352,625
Asian Development Bank
8.00% due 04/30/01 210,806 -- 210,806
------------ ------------ ------------
563,431
------------ ------------ ------------
Tennessee Valley Authority - 3.87%
Debenture
6.375%, 06/15/05 -- 2,114,460 2,114,460
Series A
6.375% due 06/15/05 423,250 -- 423,250
------------ ------------ ------------
2,537,710
------------ ------------ ------------
============ ============ ============
Total U.S. Government Agencies 4,793,708 59,344,581 64,138,289
============ ============ ============
499
AIM V. I. GOVERNMENT SECURITIES FUND
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
Principal Amount
----------------
GT AIM
Global Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining
Fund Fund
-------------------- --------------- ------------- -------------------------------------------------
U.S. TREASURY SECURITIES - 21.99%
U.S. Treasury Notes & Bonds - 20.55%
--- 500,000 500,000 6.125%, 12/31/01
--- 300,000 300,000 6.00%, 07/31/02
--- 3,500,000 3,500,000 5.25%, 08/15/03
--- 1,000,000 1,000,000 5.50%, 02/15/08
--- 500,000 500,000 6.875%, 08/15/25
--- 1,500,000 1,500,000 6.125%, 11/15/27
--- 3,000,000 3,000,000 5.50%, 08/15/28
1,050,000 --- 1,050,000 7.625%, due 02/15/25
600,000 --- 600,000 9.25%, due 02/15/16
300,000 --- 300,000 5.625%, due 05/15/08
--------- ---------- ----------
--------- ---------- ----------
U.S. Treasury STRIPS(c) - 1.44%
--- 750,000 750,000 5.378%, 05/15/06
--- 1,250,000 1,250,000 6.80%, 11/15/18
--------- ---------- ----------
--------- ---------- ----------
--------- ---------- ----------
========= ========== ==========
Total U.S. Treasury Securities
========= ========== =========-
REPURCHASE AGREEMENTS - 6.04%(d)
SBC Warburg Dillion Read, Inc., 4.75%, 01/04/99(e)
3,921,882 3,921,882 (Cost $3,921,882)
Dated December 31, 1998, with State Street Bank &
Trust Co., due January 4, 1999, for an effective yield of
4.50% collateralized by $30,000 U.S. Treasury Bonds,
8.88% due 08/15/17 (market value of collateral is
40,000 40,000 $43,177, including accrued interest) (Cost $40,000)
Total Repurchase Agreements
6,663,081 75,581,755 82,244,836 TOTAL INVESTMENTS - 125.85% (COSTS $81,136,765)
--------- ---------- ----------
LIABILITIES LESS OTHER ASSETS - (25.85%)
--------- ---------- ----------
NET ASSETS - 100.00%
========= ========== ==========
Market Value
------------
GT AIM
Global Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining
Fund Fund
- ----------------------------------------------- -------------------- --------------- ------------
U.S. TREASURY SECURITIES - 21.99%
U.S. Treasury Notes & Bonds - 20.55%
6.125%, 12/31/01 -- $ 520,840 $ 520,840
6.00%, 07/31/02 -- 313,026 313,026
5.25%, 08/15/03 -- 3,590,545 3,590,545
5.50%, 02/15/08 -- 1,059,290 1,059,290
6.875%, 08/15/25 -- 606,180 606,180
6.125%, 11/15/27 -- 1,679,850 1,679,850
5.50%, 08/15/28 -- 3,140,910 3,140,910
7.625%, due 02/15/25 1,381,511 -- 1,381,511
9.25%, due 02/15/16 861,680 -- 861,680
5.625%, due 05/15/08 320,209 -- 320,209
------------ ------------ ------------
13,474,041
------------ ------------ ------------
U.S. Treasury STRIPS(c) - 1.44%
5.378%, 05/15/06 -- 527,393 527,393
6.80%, 11/15/18 -- 414,837 414,837
------------ ------------ ------------
942,230
------------ ------------ ------------
============ ============ ============
Total U.S. Treasury Securities 2,563,400 11,852,871 14,416,271
============ ============ ============
REPURCHASE AGREEMENTS - 6.04%(d)
SBC Warburg Dillion Read, Inc., 4.75%, 01/04/99(e)
(Cost $3,921,882) 3,921,882 3,921,882
Dated December 31, 1998, with State Street Bank &
Trust Co., due January 4, 1999, for an effective yield of
4.50% collateralized by $30,000 U.S. Treasury Bonds,
8.88% due 08/15/17 (market value of collateral is
$43,177, including accrued interest) (Cost $40,000) 40,000 40,000
------------ ------------ ------------
Total Repurchase Agreements 3,961,882
============ ============ ============
TOTAL INVESTMENTS - 125.85% (COSTS $81,136,765) 7,397,108 75,119,334 82,516,442
LIABILITIES LESS OTHER ASSETS - (25.85%) (15,937) (16,934,653) (16,950,590)
NET ASSETS - 100.00% $ 7,381,171 $ 58,184,681 $ 65,565,852
============ ============ ============
500
AIM V. I. GOVERNMENT SECURITIES FUND
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
GT AIM GT AIM
Global Variable U.S. V.I. Government Pro Forma Global Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining Government Income Securities Combining
Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Abreviations:
STRIPS-Separately Traded Registered Interest and Principal Security
Notes to Schedule of Investments:
(a) At 12/31/98, cost of securities purchased on a when-issued basis totaled
$15,929,375.
(b) These securities are subject to dollar roll transactions. See Note 1 of
Notes to Financial Statements.
(c) STRIPS are traded on a discount basis. In such cases the interest rate
shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(d) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to ensure its market value is at least 102% of the sales
price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75%, due 06/30/99 to 11/15/21 with an aggregate
market value at 12/31/98 of $1,020,001,079.
See Accompanying Notes to Pro Forma Combining Financial Statements.
501
AIM V.I. GOVERNMENT SECURITIES FUND
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PRO FORMA COMBINING STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
(UNAUDITED)
GT AIM
Variable U.S. V.I. Government Pro Forma
Government Income Securities Combining
Fund Fund
ASSETS:
Investments, at market value $7,357,108 $75,119,334 $82,476,442
(cost $73,936,283-AIM V.I. Government Securities Fund)
(cost $7,160,482-GT Variable U.S. Government Income Fund)
Repurchase Agreement, at value and cost 40,000 --- 40,000
U.S. currency 554 --- 554
Receivables for:
Capital stock sold --- 37,061 37,061
Fund shares sold 2,500 --- 2,500
Interest 123,102 482,349 605,451
AIM Advisors, Inc. 23,670 --- 23,670
Investment for deferred compensation plan --- 21,587 21,587
Other assets 6,610 6,610
---------- ----------- -----------
Total assets 7,546,934 75,666,941 83,213,875
========== =========== ===========
LIABILITIES:
Payables for:
Investments purchased --- 15,929,375 15,929,375
Capital stock reaquired --- 1,479,184 1,479,184
Fund shares repurchased 108,713 --- 108,713
Custodian fees 1,768 --- 1,768
Deferred compensation --- 21,587 21,587
Investment management and administration fees 33,958 --- 33,958
Printing and postage expenses 9,583 --- 9,583
Professional fees 6,912 --- 6,912
Registration and filing fees 965 --- 965
Trustees's fees and expenses 1,932 --- 1,932
Accrued administrative services fees 75 2,655 2,730
Accrued advisory fees --- 24,918 24,918
Accrued operating expenses --- 24,541 24,541
Accrued other expenses 1,857 --- 1,857
---------- ----------- -----------
Total liabilities 165,763 17,482,260 17,648,023
========== =========== ===========
Net assets applicable to shares outstanding 7,381,171 58,184,681 65,565,852
========== =========== ===========
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Authorized --- 250,000,000 250,000,000
========== =========== ===========
Outstanding 609,681 5,205,570 5,865,967
========== =========== ===========
Net asset value, offering, and redemption price per share $ 12.11 $ 11.18 $ 11.18
========== =========== ===========
See Accompanying Notes to Proforma Combining Financial Statements.
502
AIM V.I. Government Securities Fund
GT Global Variable U.S. Government Income Fund
Notes to Pro Forma Combining Financial Statements
December 31, 1998
(Unaudited)
Note 1 - Basis of Pro Forma Presentation
The pro forma financial statements and the accompanying pro forma schedule of
investments give effect to the proposed Agreement and Plan of Reorganization
between the AIM Variable Insurance Funds, Inc. and GT Global Variable Investment
Trust and the consummation of the transactions contemplated therein to be
accounted for as a tax-free reorganization of investment companies. The
Agreement and Plan of Reorganization would be accomplished by an exchange of
shares of AIM V.I. Government Securities Fund for the net assets of GT Global
Variable U.S. Government Income Fund and the distribution of AIM V.I. Government
Securities Fund shares to GT Global Variable U.S. Government Income Fund
shareholders. If the Agreement and Plan of Reorganization were to have taken
place at December 31, 1998, GT Global Variable U.S. Government Income Fund
shareholders would have received 660,397 shares of AIM V.I. Government
Securities Fund.
Note 2 - Pro Forma Adjustments
Pro Forma adjustments have been made to reflect the contractual expenses of the
combined entities.
503
AIM VI MONEY MARKET
GT GLOBAL MONEY MARKET
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
Principal Amount Market Value
- ------------------------------------- -------------------------------------
(000) (000) (000)
GT Global AIM V.I. Pro forma GT Global AIM V.I. Pro forma
Money Market Money Market Combining Money Market Money Market Combining
- ------------ ------------ --------- ------------ ------------ ---------
COMMERCIAL PAPER - 45.70%(a)
Asset-Backed Securities - Multi-
Purpose - 30.14%
ABB Treasury Center USA
1,000 1,000 5.25%, 02/18/99 $ 993,067 $ 993,067
Bavaria TRR Corp.
2,000 2,000 5.2%, 03/02/99 $ 1,982,667 1,982,667
Bellsouth Capital Funding
1,500 1,500 5.5%, 01/22/99 1,495,291 1,495,291
Campbell Soup Co.
1,000 1,000 5.61%, 01/14/99 998,032 998,032
Caterpillar Financial Services
1,000 1,000 5.07%, 03/23/99 988,863 988,863
Clipper Receivables Corp.
3,000 3,000 5.75%, 01/08/99 2,996,646 2,996,646
Edison Asset Securitization, LLC
3,000 3,000 5.30%, 01/29/99 2,987,634 2,987,634
E.I. Dupont de Nemours & Co.
1,000 1,000 5.06%, 03/26/99 988,403 988,403
Falcon Asset Securitization Corp.
500 500 5.28%, 01/19/99 498,680 498,680
Ford Motor Credit Corp.
1,000 1,000 5.07%, 04/30/99 983,605 983,605
H.J. Heinz Co.
1,000 1,000 5.26%, 01/11/99 998,547 998,547
Harris Trust & Savings Bank
1,000 1,000 5.64%, 02/01/99 1,000,000 1,000,000
Hitachi America Ltd.
1,000 1,000 5.21%, 01/22/99 996,996 996,996
John Deere Capital Corp.
1,000 1,000 5.03%, 04/02/99 987,488 987,488
McGraw-Hill Cos.,Inc., The
1,000 1,000 5.24%, 02/22/99 992,547 992,547
Mont Blanc Capital Corp.
2,000 2,000 5.2%, 01/13/99 1,996,533 1,996,533
Monte Rosa Capital Corp.
1,000 1,000 5.32%, 01/21/99 997,045 997,045
Monte Rosa Capital Corp.
504
AIM VI MONEY MARKET
GT GLOBAL MONEY MARKET
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
Principal Amount Market Value
- ------------------------------------- -------------------------------------
(000) (000) (000)
GT Global AIM V.I. Pro forma GT Global AIM V.I. Pro forma
Money Market Money Market Combining Money Market Money Market Combining
- ------------ ------------ --------- ------------ ------------ ---------
1,000 1,000 5.55%, 01/28/99 $ 995,875 $ 995,875
PepsiCo, Inc.
1,000 1,000 5.33%, 01/27/99 996,172 996,172
Preferred Receivables Funding Corp.
1,000 1,000 5.25%, 03/11/99 984,539 984,539
2,000 2,000 5.06%, 04/21/99 1,979,875 1,979,875
Wachovia Bank N.A.
1,000 1,000 5.5%, 01/29/99 1,000,000 1,000,000
---------- ----------- -----------
14,414,886 14,423,619 28,838,505
---------- ----------- -----------
Asset-Backed Securities - Trade
Receivables - 4.16%
Corporate Asset Funding Co.
1,000 1,000 5.2%, 02/17/99 993,211 993,211
Delaware Funding Corp.
1,000 1,000 5.45%, 01/11/99 990,129 990,129
2,000 2,000 5.15%, 03/11/99 1,996,972 1,996,972
---------- ----------- -----------
3,980,312 3,980,312
---------- ----------- -----------
Banks - Domestic - 2.08%
First Chicago Financial Corp.
2,000 2,000 5.26%, 02/19/99 1,985,681 1,985,681
Finance - Multiple Industry - 2.06%
General Electric Capital Corp.
2,000 2,000 5.05%, 04/06/99 1,973,347 1,973,347
Household Products - 3.09%
Colgate - Palmolive Co.
3,000 3,000 4.85%, 04/22/99 2,955,138 2,955,138
Insurance (Life) - 1.04%
Hancock (John) Capital Corp.
1,000 1,000 5.35%, 01/22/99 996,879 996,879
Insurance (Other) - 3.13%
Marsh & McLennan Companies, Inc.
1,000 1,000 5.10%, 03/22/99 988,667 2,996,972
---------- ----------- -----------
Total Commercial Paper
(Cost $41,718,529) 14,414,886 27,303,643 43,726,834
---------- ----------- -----------
505
AIM VI MONEY MARKET
GT GLOBAL MONEY MARKET
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
Principal Amount Market Value
- ------------------------------------- -------------------------------------
(000) (000) (000)
GT Global AIM V.I. Pro forma GT Global AIM V.I. Pro forma
Money Market Money Market Combining Money Market Money Market Combining
- ------------ ------------ --------- ------------ ------------ ---------
CORPORATE NOTE - 1.05%
Automobile - 1.05%
Ford Motor Credit Co.
1,000 1,000 5.625%, 01/15/99 (Cost $1,000,070) $ 1,000,070 $ 1,000,070
MASTER NOTE AGREEMENTS - 8.36% (b)
Citicorp Securities, Inc.
2,000 2,000 5.75%, 01/25/99 (c) 2,000,000 2,000,000
Merrill Lynch Mortgage Capital, Inc.
3,000 3,000 5.78%, 08/16/99 (d) 3,000,000 3,000,000
Morgan Stanley, Dean Witter,
Discover & Co.
3,000 3,000 5.60%, 05/24/99 (e) 3,000,000 3,000,000
---------- ----------- -----------
Total Master Note Agreements
(Cost $8,000,000) 8,000,000 8,000,000
---------- ----------- -----------
TIME DEPOSIT - 3.14%
Banks - Foreign - 3.14%
Credit Communal de Belgique
3,000 3,000 5.125%, 01/04/99 (Cost $3,000,000) 3,000,000 3,000,000
U.S. GOVERNMENT AGENCY SECURITIES - 10.64%
Federal Home Loan Bank Discount Note
4,091 4,091 4.50%, 01/04/99 4,089,466 4,089,466
Federal Home Loan Mortgage Corporation
Discount Note
4,091 4,091 4.50%, 01/04/99 4,089,466 4,089,466
Federal National Mortgage Association
2,000 2,000 4.696%, 06/02/99 (f) 2,000,000 2,000,000
---------- ----------- -----------
Total U.S. Government Agency
Securities (Cost $10,178,932) 8,178,932 2,000,000 10,178,932
---------- ----------- -----------
Total Investments, excluding
Repurchase Agreements 37,008,704 41,303,713 65,905,836
---------- ----------- -----------
REPURCHASE AGREEMENTS - 36.24% (g)
3,000 3,000 Bear, Stearns & Co., Inc., 4.85% (h) 3,000,000 3,000,000
506
AIM VI MONEY MARKET
GT GLOBAL MONEY MARKET
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
Principal Amount Market Value
- ------------------------------------- -------------------------------------
(000) (000) (000)
GT Global AIM V.I. Pro forma GT Global AIM V.I. Pro forma
Money Market Money Market Combining Money Market Money Market Combining
- ------------ ------------ --------- ------------ ------------ ---------
15,000 15,000 J.P. Morgan Securities, Inc., 4.75%,
01/04/99 (i) $15,000,000 $15,000,000
4,677 4,677 SBC Warburg Dillon Read Securities, Inc.,
4.75%, 01/04/99 (j) 4,676,787 4,676,787
6,000 6,000 Dated December 31, 1998, with NationsBanc 6,000,000 6,000,000
Montgomery Securities, due January 4, 1999
for an effective yield of 4.25%,
collateralized by $3,600,000 U.S. Treasury
Bonds, 11.25%, due 02/15/15 (market value
of collateral is $6,118,777, accrued
interest)
6,000 6,000 Dated December 31, 1998, with State Street 6,000,000 6,000,000
Bank & Trust Co., due January 4, 1999 for
an effective yield of 4.50%, collateralized
by $5,370,000 U.S. Treasury Bonds, 6.25% due
8/15/23 (market value of collateral is
$6,123,475, inlcuding accrued interest)
---------- ----------- -----------
Total Repurchase Agreements
(Cost $34,676,787) 12,000,000 22,676,787 34,676,787
========== =========== ===========
TOTAL INVESTMENTS - 103.03% 34,593,818 63,980,500 98,574,318 (k)
========== =========== ===========
OTHER LIABILITIES LESS ASSETS - -(3.03)% (3,006,087) 109,823 (2,896,264)
========== =========== ===========
NET ASSETS - 100.00% 31,587,731 $64,090,323 95,678,054
========== =========== ===========
Notes to Schedule of Investments:
(a) Some commercial paper is traded on a discount basis. In such cases, the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(b) The investments in master note agreements are through participation in
joint accounts with other mutual funds, private accounts, and certain
nonregistered investment companies managed by the investment advisor or its
affiliates.
(c) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon 3 business days' notice to the issuer.
Interest rates on master notes are redetermined periodically. Rate shown is
the rate in effect on 12/31/98.
(d) The Portfolio may demand prepayment of notes purchased under the Master
Note Purchase Agreement upon 2 days' notice to the issuer. Interest rates
on master notes are redetermined periodically. Rate shown is the rate in
effect on 12/31/98.
(e) Master Note Purchase Agreement may be terminated by either party upon 3
business days'
507
AIM VI MONEY MARKET
GT GLOBAL MONEY MARKET
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
(UNAUDITED)
prior written notice. Interest rates on master notes are redetermined
periodically. Rate shown is the rate in effect on 12/31/98.
(f) Interest rates are redetermined weekly. Rate shown is the rate in effect on
12/31/98.
(g) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 % of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(h) Open joint repurchase agreement entered into 12/31/98. Either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $354,763,000 U.S. Government Obligations, 0% to 8.65% due
01/15/99 to 06/11/18 with an aggregate market value at 12/31/98 of
$360,262,932.
(i) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$500,263,889. Collateralized by $606,702,000 U.S. Government obligations,
0% to 7.55% due 01/04/99 to 10/03/22 with an aggregate market value at
12/31/98 of $510,001,764.
(j) Joint repurchase agreement entered into 12/31/98 with a maturing value of
$1,000,527,778. Collateralized by $2,207,068,000 U.S. Government
obligations, 0% to 6.75% due 06/30/99 to 11/15/21 with an aggregate market
value at 12/31/98 of $1,020,001,079.
(k) Also represents cost for federal income tax purposes.
See Accompanying notes to Pro Forma Combining Financial Statements.
508
AIM V.I MONEY MARKET FUND
GT GLOBAL MONEY MARKET FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
GT AIM Pro Forma
GLOBAL MONEY V.I. MONEY Adjustments Combining
MARKET FUND MARKET FUND
INVESTMENT INCOME:
Interest $ 1,739,586 $ 3,483,093 $ --- $ 5,222,679
=========== =========== ===== ===========
EXPENSES:
Advisory fees --- 252,407 0 252,407
Administrative services fees --- 36,480 0 36,480
Fund accounting fees 8,812 --- 8,812
Amortization of organization costs 720 --- 0 720
Custodian fees 10,585 26,470 0 37,055
Director's fees --- 8,885 0 8,885
Investment management and administration fees 160,063 160,063
Trustee's fees and expenses 1,460 --- 0 1,460
Printing and postage expenses 16,965 --- 0 16,965
Professional fees 32,970 --- 0 32,970
Other 1,826 43,075 0 44,901
----------- ----------- ----- -----------
Total expenses 233,401 367,317 0 600,718
=========== =========== ===== ===========
Net investment income 1,506,185 3,115,776 0 4,621,961
=========== =========== ===== ===========
Net increase in net assets resulting from operations $ 1,506,185 $ 3,115,776 $ 0 $ 4,621,961
=========== =========== ===== ===========
See Accompanying notes to Proforma Combining Financial Statements.
509
AIM V.I. Money Market Fund
GT Global Money Market Fund
Notes to Pro Forma Combining Financial Statements
December 31, 1998
(Unaudited)
Note 1 - Basis of Pro Forma Presentation
The pro forma financial statements and the accompanying pro forma schedule of
investments give effect to the proposed Agreement and Plan of Reorganization
between the AIM Variable Insurance Funds, Inc. and GT Global Variable
Investment Series and the consummation of the transactions contemplated therein
to be accounted for as a tax-free reorganization of investment companies. The
Agreement and Plan of Reorganization would be accomplished by an exchange of
shares of AIM V.I. Money Market Fund for the net assets of GT Global Money
Market Fund and the distribution of AIM V.I. Money Market Fund shares to GT
Global Money Market Fund shareholders. If the Agreement and Plan of
Reorganization were to have taken place at December 31, 1998, GT Global Money
Market Fund shareholders would have received 31,587,731 shares of AIM V.I.
Money Market Fund.
Note 2 - Pro Forma Adjustments
Pro Forma adjustments have been made to reflect the contractual expenses of the
combined entities.
510
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Under the terms of the Maryland General Corporation Law and the Registrant's
Charter and By-Laws, the Registrant may indemnify any person who was or is a
director, officer, employee or agent of the Registrant to the maximum extent
permitted by the Maryland General Corporation Law. The specific terms of such
indemnification are reflected in the Registrant's Charter and By-Laws, which are
incorporated herein as part of this Registration Statement. No indemnification
will be provided by the Registrant to any director or officer of the Registrant
for any liability to the Registrant or shareholders to which such director or
officer would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of duty.
In addition, under the terms of the agreements described in response to Item 16
of this Part C, various third parties have agreed to indemnify the registrant,
its directors and officers, and, in some cases, its investment advisor and/or
principal underwriter, against certain liabilities that may arise in connection
with the performance of the agreements. The specific terms of such
indemnification are set out in the agreements, and are incorporated herein by
reference.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereby, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in such Act and will be governed by the final
adjudication of such issue. Insurance coverage is provided under a joint Mutual
Fund & Investment Advisory Professional Directors & Officers Liability Policy,
issued by ICI Mutual Insurance Company, with a $35,000,000 limit of liability.
ITEM 16. EXHIBITS
References to "Initial Registration Statement" and any "Amendment" thereto
relate to Registrant's Registration Statement on Form N-1A (File No. 33-57340
and No. 811-7452), unless the context indicates that the reference is to this
Registration Statement on Form N-14.
1
511
Exhibit
Number Description
------ -----------
1(a) - Articles of Incorporation of Registrant, as filed with the
State of Maryland on January 22, 1993, were filed as an
Exhibit to Registrant's Initial Registration Statement on
January 25, 1993, and were filed electronically as an Exhibit
to Post-Effective Amendment No. 7 on April 29, 1996, and are
incorporated herein by reference.
(b) - Amendment to Articles of Incorporation of Registrant, as
filed with the State of Maryland on April 13, 1993, was filed
as an Exhibit to Registrant's Pre-Effective Amendment No. 1 on
April 19, 1993, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 7 on April 29, 1996, and is
incorporated herein by reference.
(c) - Amendment to Articles of Incorporation of Registrant, as
filed with the State of Maryland on April 15, 1993, was filed
as an Exhibit to Registrant's Pre-Effective Amendment No. 1 on
April 19, 1993, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 7 on April 29, 1996, and is
incorporated herein by reference.
(d) - Amendment to Articles of Incorporation of Registrant, as
filed with the State of Maryland on April 12, 1995, was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 6
on April 26, 1995, and was filed electronically as an Exhibit
to Post-Effective Amendment No. 7 on April 29, 1996, and is
incorporated herein by reference.
(e) - Articles Supplementary to Articles of Incorporation of
Registrant, as filed with the State of Maryland on April 12,
1994, were filed as an Exhibit to Registrant's Post-Effective
Amendment No. 3 on May 2, 1994, and were filed electronically
as an Exhibit to Post-Effective Amendment No. 7 on April 29,
1996, and are incorporated herein by reference.
(f) - Articles Supplementary to Articles of Incorporation of
Registrant, as filed with the State of Maryland on February 4,
1998 was filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 13, 1998, and is incorporated
herein by reference.
(g) - Articles Supplementary to Articles of Incorporation of
Registrant, as filed with the State of Maryland on September
30, 1998, was filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on October 2, 1998, and is
incorporated herein by reference.
2(a) - (i) By-Laws of Registrant were filed as an Exhibit to
Registrant's Initial Registration Statement on January 25,
1993 and were filed electronically as an Exhibit to
Post-Effective Amendment No. 7 on April 29, 1996.
2
512
- (ii) First Amendment, dated March 14, 1995, to By-Laws of
Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 7 on April 29, 1996.
(b) - Amended and Restated Bylaws, dated effective December 11,
1996, were filed as an Exhibit to Post-Effective Amendment No.
8 on April 23, 1997 and are incorporated herein by reference.
3. - Voting Trust Agreement - None.
4. - Agreement and Plan of Reorganization by and among GT Global
Variable Investment Series, GT Global Variable Investment
Trust, AIM Variable Insurance Funds, Inc. and A I M Advisors,
Inc. is incorporated herein by reference to Appendix I to the
Proxy Statement/Prospectus forming part of this Registration
Statement on Form N-14.
5. - Instruments Defining the Rights of Holders of the Securities
Being Registered - Incorporated herein by reference to
Exhibits 1 and 2, above.
6(a) - Investment Advisory Agreement, dated March 31, 1993, between
Registrant and A I M Advisors, Inc. was filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 1 on April 19, 1993.
(b) - (i) Master Investment Advisory Agreement, dated October 18,
1993, between Registrant and A I M Advisors, Inc. was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1 on
November 5, 1993, and was filed electronically as an Exhibit
to Post-Effective Amendment No. 7 on April 29, 1996.
(ii) Amendment, dated April 28, 1994, to Master Investment
Advisory Agreement, dated October 18, 1993, between Registrant
and A I M Advisors, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on May 2, 1994,
and was filed electronically as an Exhibit to Post-Effective
Amendment No. 7 on April 29, 1996.
(c) - (i) Master Investment Advisory Agreement, dated February 28,
1997, between Registrant and A I M Advisors, Inc. was filed as
an Exhibit to Post-Effective Amendment No. 8 on April 23, 1997
and is incorporated herein by reference.
- (ii) Amendment No. 1, dated April 15, 1998, to Master
Investment Advisory Agreement, between Registrant and A I M
Advisors, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on October 2, 1998 and is
incorporated herein by reference.
3
513
- (iii) Amendment No. 2, dated December 14, 1998, to Master
Investment Advisory Agreement, between Registrant and A I M
Advisors, Inc. was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 11 on February 18,
1999 and is incorporated herein by reference.
(d) - (i) Foreign Country Selection and Mandatory Securities
Depository Responsibilities Delegation Agreement, dated
September 9, 1998, between Registrant and A I M Advisors, Inc.
was filed electronically as an Exhibit to Post-Effective
Amendment No. 10 on October 2, 1998 and is incorporated herein
by reference.
- (ii) Amendment No. 1, dated September 28, 1998, to Foreign
County Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement between Registrant and A
I M Advisors, Inc. was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 11 on February 18,
1999 and is incorporated herein by reference.
- (iii) Amendment No. 2, dated December 14, 1998, to Foreign
Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement between Registrant and A
I M Advisors, Inc. was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 11 on February 18,
1999 and is hereby incorporated by reference.
7(a) - (i) Master Distribution Agreement, dated October 18, 1993,
between Registrant and A I M Distributors, Inc. was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1 on
November 5, 1993, and was filed electronically as an Exhibit
to Post-Effective Amendment No. 7 on April 29, 1996.
- (ii) Amendment, dated April 28, 1994, to Master Distribution
Agreement, dated October 18, 1993, between Registrant and A I
M Distributors, Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 3 on May 2, 1994, and was filed
electronically as an Exhibit to Post-Effective Amendment No. 7
on April 29, 1996.
(b) - (i) Master Distribution Agreement, dated February 28, 1997,
between Registrant and A I M Distributors, Inc. was filed as
an Exhibit to Post-Effective Amendment No. 8 on April 23, 1997
was filed electronically as an Exhibit to Post-Effective
Amendment No. 10 on October 2, 1998 and is incorporated herein
by reference.
- (ii) Amendment No. 1, dated April 15, 1998, to Master
Distribution Agreement, between Registrant and A I M
Distributors, Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on October 2, 1998 and is
incorporated herein by reference.
4
514
- (iii) Amendment No. 2, dated December 14, 1998, to Master
Distribution Agreement, between Registrant and A I M
Distributors, Inc. was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 11 on February 18,
1999 and is incorporated herein by reference.
(c) - Distribution Agreement, dated March 31, 1993, between
Registrant and A I M Distributors, Inc. was filed as an
Exhibit to Registrant's Pre-Effective Amendment No. 1 on April
19, 1993.
8(a) - Retirement Plan of Registrant's Non-Affiliated Directors,
effective March 8, 1994, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 4 on November 3,
1994.
(b) - Retirement Plan of Registrant's Non-Affiliated Directors,
effective March 8, 1994, as restated September 18, 1995, was
filed electronically as an Exhibit to Post-Effective Amendment
No. 7 on April 29, 1996, and is incorporated herein by
reference.
(c) - Form of Deferred Compensation Agreement of Registrant's
Non-Affiliated Directors was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 4 on November 3,
1994.
(d) - Form of Deferred Compensation Agreement of Registrant's
Non-Affiliated Directors, as approved on December 5, 1995, was
filed electronically as an Exhibit to Post-Effective Amendment
No. 7 on April 29, 1996, and is incorporated herein by
reference.
(e) - Form of Deferred Compensation Agreement was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 13, 1998, and is incorporated herein by reference.
9(a) - (i) Custodian Agreement, dated March 31, 1993, between
Registrant and State Street Bank and Trust Company was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 1
on November 5, 1993, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 7 on April 29, 1996,
and is incorporated herein by reference.
- (ii) Amendment No.1, dated April 25, 1994, to Custodian
Agreement, dated March 31, 1993, between Registrant and State
Street Bank and Trust Company was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on May 2, 1994,
and was filed electronically as an Exhibit to Post-Effective
Amendment No. 7 on April 29, 1996, and is incorporated herein
by reference.
- (iii) Amendment No. 2, dated September 19, 1995, to Custodian
Agreement, dated March 31, 1993, between Registrant and State
Street
5
515
Bank and Trust Company was filed electronically as an Exhibit
to Post-Effective Amendment No. 7 on April 29, 1996, and is
incorporated herein by reference.
- (iv) Amendment, dated September 9, 1998, to Custodian
Agreement, dated March 31, 1993, between Registrant and State
Street Bank and Trust Company was filed electronically as an
Exhibit to Post-Effective Amendment No. 10 on October 2, 1998
and is incorporated herein by reference.
10(a) - Registrant's Plan pursuant to Rule 12b-1 under the 1940 Act
- None.
(b) - Multiple Class Plan (Rule 18f-3) - None.
11(a) - (i) Opinion and Consent of Messrs. Freedman, Levy, Kroll &
Simonds regarding the AIM V.I. Capital Appreciation Fund, the
AIM V.I. Diversified Income Fund, the AIM V.I. Government
Securities Fund, the AIM V.I. Growth Fund, the AIM V.I.
International Equity Fund, the AIM V.I. Money Market Fund and
the AIM V.I. Value Fund was filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 1 on April 19, 1993
and is incorporated herein by reference.
- (ii) Opinion and Consent of Messrs. Freedman, Levy, Kroll &
Simonds regarding AIM V.I. Global Growth and Income Fund and
AIM V.I. Telecommunications Fund was filed electronically as
an Exhibit to Post-Effective Amendment No. 10 on October 2,
1998, and is incorporated herein by reference.
(b) - Opinion and Consent of Messrs. Freedman, Levy, Kroll &
Simonds regarding the legality of the shares being registered
under this Registration Statement on Form N-14 by AIM Variable
Insurance Funds, Inc. on behalf of the AIM V.I. Global Growth
and Income Fund, the AIM V.I. Capital Appreciation Fund, the
AIM V.I. International Equity Fund, the AIM V.I.
Telecommunications Fund, the AIM V.I. Diversified Income Fund,
the AIM V.I. Government Securities Fund, and the AIM V.I.
Money Market Fund is hereby filed electronically.
(c) - Consent of Messrs Freedman, Levy, Kroll & Simonds is hereby
filed electronically.
6
516
12 - Opinion and Consent of Messrs. Freedman, Levy, Kroll &
Simonds supporting the tax matters and consequences to
shareholders discussed in the Proxy Statement/Prospectus is
hereby filed electronically.
13(a) - Administrative Services Agreement, dated March 31, 1993,
between the Registrant and A I M Advisors, Inc. was filed as
an Exhibit to Registrant's Pre-Effective Amendment No. 1 on
April 19, 1993.
(b) - (i) Master Administrative Services Agreement, dated October
18, 1993, between the Registrant and A I M Advisors, Inc. was
filed as an Exhibit to Registrant's Post-Effective Amendment
No. 1 on November 5, 1993, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 7 on April 29, 1996.
- (ii) Amendment No.1, dated April 28, 1994, to Master
Administrative Services Agreement, dated October 18, 1993,
between Registrant and A I M Advisors, Inc. was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 3 on May
2, 1994, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 7 on April 29, 1996.
(c) - Master Administrative Services Agreement, dated February 28,
1997, between Registrant and A I M Advisors, Inc. was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 8 on
April 23, 1997.
(d) - (i) Master Administrative Services Agreement, as amended,
dated May 1, 1998, between Registrant and A I M Advisors, Inc.
was filed electronically as an Exhibit to Post-Effective
Amendment No. 10 on October 2, 1998 and is incorporated herein
by reference.
- (ii) Amendment No. 1, dated December 14, 1998, to Master
Administrative Services Agreement, as amended, dated May 1,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Registrant's Post-Effective
Amendment No. 11 on February 18, 1999 and is hereby
incorporated by reference.
(e) - (i) Transfer Agency Agreement, dated March 19, 1993, between
Registrant and State Street Bank and Trust Company was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 1
on November 5, 1993, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 7 on April 29, 1996,
and is incorporated herein by reference.
- (ii) Amendment No.1, dated April 25, 1994, to Transfer Agency
Agreement, dated March 19, 1993, between Registrant and State
Street Bank and Trust Company was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on May 2, 1994,
and was filed electronically
7
517
as an Exhibit to Post-Effective Amendment No. 7 on April 29,
1996, and is incorporated herein by reference.
(f) - Participation Agreement, dated February 25, 1993, between
Registrant, Connecticut General Life Insurance Company and A I
M Distributors, Inc. was filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1 on April 19, 1993, and was filed
electronically as an Exhibit to Post-Effective Amendment No. 7
on April 29, 1996, and is incorporated herein by reference.
(g) - (i) Participation Agreement, dated February 10, 1995,
between Registrant and Citicorp Life Insurance Company was
filed as an Exhibit to Registrant's Post-Effective Amendment
No. 5 on February 28, 1995, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 7 on April 29, 1996,
and is incorporated herein by reference.
- (ii) Amendment No. 1, dated February 3, 1997, to Participation
Agreement dated February 10, 1995, between Registrant and
Citicorp Life Insurance Company was filed electronically as an
Exhibit to Post-Effective Amendment No. 9 on February 13,
1998, and is incorporated herein by reference.
(h) - (i) Participation Agreement, dated February 10, 1995,
between Registrant and First Citicorp Life Insurance Company
was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 5 on February 28, 1995 and was filed
electronically as an Exhibit to Post-Effective Amendment No. 7
on April 29, 1996, and is incorporated herein by reference.
- (ii) Amendment No. 1, dated February 3, 1997, to Participation
Agreement, dated February 10, 1995, between Registrant and
First Citicorp Life Insurance Company was filed electronically
as an Exhibit to Post-Effective Amendment No. 9 on February
13, 1998, and is incorporated herein by reference.
(i) - (i) Participation Agreement, dated December 19, 1995,
between Registrant and Glenbrook Life and Annuity Company was
filed electronically as an Exhibit to Post-Effective Amendment
No. 7 on April 29, 1996, and is incorporated herein by
reference.
- (i)(1) Side Letter Agreement, dated December 1, 1995, among
Registrant and Glenbrook Life and Annuity Company was filed as
an Exhibit to Post-Effective Amendment No. 8 and is
incorporated herein by reference.
- (ii) Amendment No. 1, dated November 7, 1997, to Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity Company was filed electronically as
an Exhibit to
8
518
Post-Effective Amendment No. 10 on October 2, 1998, and is
incorporated herein by reference.
- (iii) Amendment No. 2, dated September 2, 1997, to
Participation Agreement, dated December 19, 1995, between
Registrant and Glenbrook Life and Annuity Company was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 13, 1998, and is incorporated herein by reference.
- (iv) Amendment No. 3, dated January 26, 1998, to Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity Company was filed electronically as
an Exhibit to Post-Effective Amendment No. 10 on October 2,
1998, and is incorporated herein by reference.
- (v) Amendment No. 4, dated May 1, 1998, to Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity Company was filed electronically as
an Exhibit to Post-Effective Amendment No. 10 on October 2,
1998, and is incorporated herein by reference.
- (vi) Amendment No. 5, dated January 12, 1999, to the
Participation Agreement, dated December 19, 1995, between
Registrant and Glenbrook Life and Annuity Insurance Company
was filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 11 on February 18, 1999 and is
hereby incorporated by reference.
(j) - Participation Agreement, dated March 4, 1996, between
Registrant and IDS Life Insurance Company was filed
electronically as an Exhibit to Post-Effective Amendment No. 7
on April 29, 1996.
(k) - (i) Participation Agreement, dated October 7, 1996, between
Registrant and IDS Life Insurance Company (supersedes and
replaces Participation Agreement dated March 4, 1996) was
filed as an Exhibit to Post-Effective Amendment No. 8 on April
23, 1997 and is incorporated herein by reference.
- (i)(1) Side Letter Agreement, dated September 27, 1996,
between Registrant, IDS Life Insurance Company and IDS Life
Insurance Company of New York was filed electronically as an
Exhibit to Post-Effective Amendment No. 9 on February 13,
1998, and is incorporated herein by reference.
- (ii) Amendment 1, dated November 11, 1997, the Participation
Agreement, dated October 7, 1996, between registrant and IDS
Life Insurance Company was filed electronically as an Exhibit
to Registrant's
9
519
Post-Effective Amendment No. 11 on February 18, 1999 and is
hereby incorporated by reference.
(l) - (i) Participation Agreement, dated October 7, 1996, between
Registrant and IDS Life Insurance Company of New York was
filed as an Exhibit to Post-Effective Amendment No. 8 on April
23, 1997 and is incorporated herein by reference.
- (ii) Amendment No. 1, dated November 11, 1997, to the
Participation Agreement, dated October 7, 1996 between
registrant and IDS Life Insurance Company of New York was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 11 on February 18, 1999 and is
hereby incorporated by reference.
(m) - Participation Agreement, dated April 8, 1996, between
Registrant and Connecticut General Life Insurance Company was
filed electronically as an Exhibit to Post-Effective Amendment
No. 7 on April 29, 1996, and is incorporated herein by
reference.
(n) - (i) Participation Agreement, dated September 21, 1996,
between Registrant and Pruco Life Insurance Company was filed
as an Exhibit to Post-Effective Amendment No. 8 on April 23,
1997 and is incorporated herein by reference.
- (ii) Amendment No. 1, dated July 1, 1997, to Participation
Agreement, dated September 21, 1996, between Registrant and
Pruco Life Insurance Company was filed electronically as an
Exhibit to Post-Effective Amendment No. 9 on February 13,
1998, and is incorporated herein by reference.
- (iii) Amendment No. 2, dated August 1, 1998, to Participation
Agreement, dated September 21, 1996, between Registrant and
Pruco Life Insurance Company was filed as an Exhibit
Post-Effective Amendment No. 10 on October 2, 1998 and is
incorporated herein by reference.
(o) - (i) Participation Agreement, dated October 1, 1996, between
Registrant and Allstate Life Insurance Company of New York was
filed as an Exhibit to Post-Effective Amendment No. 8 on April
23, 1997 and is incorporated herein by reference.
- (i)(1) Side Letter Agreement, dated October 1, 1996, between
Registrant and Allstate Life Insurance Company of New York was
filed as Exhibit to Post-Effective Amendment No. 10 on October
2, 1998 and is incorporated herein by reference.
10
520
- (ii) Amendment No. 1, dated November 7, 1997, to Participation
Agreement, dated October 1, 1996, between Registrant and
Allstate Life Insurance Company of New York was filed
electronically as an Exhibit to Post-Effective Amendment No.
12 on April 29, 1999 and is incorporated herein by reference.
(p) - (i) Participation Agreement, dated December 18, 1996,
between Registrant and Merrill Lynch Life Insurance Company
was filed as an Exhibit to Post-Effective Amendment No. 8 on
April 23, 1997 and is incorporated herein by reference.
- (i)(1)Side Letter Agreement, dated December 18, 1996, between
Registrant and Merrill, Lynch, Pierce, Fenner & Smith,
Incorporated was filed as an Exhibit to Post-Effective
Amendment No. 8 on April 23, 1997 and is incorporated herein
by reference.
- (ii) Amendment No. 1, dated May 1, 1997, to Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company was filed electronically
as an Exhibit to Post-Effective Amendment No. 9 on February
13, 1998, and is incorporated herein by reference.
(q) - (i) Participation Agreement, dated December 18, 1996,
between Registrant and ML Life Insurance Company of New York
was filed as an Exhibit to Post-Effective Amendment No. 8 on
April 23, 1997 and is incorporated herein by reference.
- (ii) Amendment No. 1, dated May 1, 1997, to Participation
Agreement, dated December 18, 1996, by and between Registrant
and ML Life Insurance Company of New York was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 13, 1998, and is incorporated herein by reference.
(r) - Participation Agreement, dated February 14, 1997, between
Registrant and Pruco Life Insurance Company of New Jersey was
filed as an Exhibit to Post-Effective Amendment No. 8 on April
23, 1997 and is incorporated herein by reference.
(s) - Participation Agreement, dated April 30, 1997, between
Registrant and Prudential Insurance Company of America was
filed electronically as an Exhibit to Post-Effective Amendment
No. 9 on February 13, 1998, and is incorporated herein by
reference.
(t) - Participation Agreement, dated October 30, 1997, between
Registrant and American Centurion Life Assurance Company was
filed electronically as
11
521
an Exhibit to Post-Effective Amendment No. 9 on February 13,
1998, and is incorporated herein by reference.
(u) - (i)Participation Agreement, dated October 30, 1997, between
Registrant and American Enterprise Life Insurance Company was
filed electronically as an Exhibit to Post-Effective Amendment
No. 9 on February 13, 1998, and is incorporated herein by
reference.
- (i)(1)Letter Agreement, dated October 30, 1997, between
American Enterprise Life Insurance Company and American
Centurion Life Assurance Company was filed electronically as
an Exhibit to Post-Effective Amendment No. 9 on February 13,
1998, and is incorporated herein by reference.
(v) - Participation Agreement, dated November 20, 1997, between
Registrant and AIG Life Insurance Company was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 13, 1998, and is incorporated herein by reference.
(w) - Participation Agreement, dated November 20, 1997, between
Registrant and American International Life Assurance Company
of New York was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 13, 1998, and is
incorporated herein by reference.
(x) - (i) Participation Agreement, dated November 4, 1997, between
Registrant and Nationwide Life Insurance Company was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 13, 1998, and is incorporated herein by reference.
- (ii) Amendment No. 1, dated June 15, 1998, to Participation
Agreement, dated November 4, 1997, between Registrant and
Nationwide Life Insurance Company was filed electronically as
an Exhibit to Post-Effective Amendment No. 10 on October 2,
1998 and is incorporated herein by reference.
(y) - (i) Participation Agreement, dated December 3, 1997, between
Registrant and Security Life of Denver was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 13, 1998, and is incorporated herein by reference.
- (ii) Amendment No. 1, dated June 23, 1998, to Participation
Agreement, dated December 3, 1997, between Registrant and
Security Life of Denver was filed electronically as an Exhibit
to Post-Effective Amendment No. 10 on October 2, 1998, and is
incorporated here in reference.
12
522
(z) - Participation Agreement, dated December 31, 1997, between
Registrant and Cova Financial Services Life Insurance Company
was filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 13, 1998, and is incorporated
herein by reference.
(aa) - Participation Agreement, dated December 31, 1997, between
Registrant and Cova Financial Life Insurance Company was filed
electronically as an Exhibit to Post-Effective Amendment No. 9
on February 13, 1998, and is incorporated herein by reference.
(bb) - Participation Agreement, dated February 2, 1998, between
Registrant and The Guardian Insurance & Annuity Company was
filed electronically as an Exhibit to Post-Effective Amendment
No. 10 on October 2, 1998, and is incorporated herein by
reference.
(cc) - (i) Participation Agreement, dated February 17, 1998,
between Registrant and Sun Life Assurance Company of Canada
(U.S.) was filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on October 2, 1998, and is
incorporated herein by reference.
- (ii) Amendment No. 1, dated December 11, 1998, to the
Participation Agreement, dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada (U.S.) was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 11 on February 18, 1999 and is
hereby incorporated by reference.
(dd) - Participation Agreement, dated April 1, 1998, between
Registrant and United Life & Annuity Insurance Company was
filed electronically as an Exhibit to Post-Effective Amendment
No. 10 on October 2, 1998, and is incorporated herein by
reference.
(ee) - (i)Participation Agreement, dated April 21, 1998, between
Registrant and Keyport Life Insurance Company was filed
electronically as an Exhibit to Post-Effective Amendment No.
10 on October 2, 1998, and is incorporated herein by
reference.
- (ii) Amendment No. 1, dated December 28, 1998, to the
Participation Agreement, dated April 21, 1998, between
Registrant and Keyport Life Insurance Company was filed
electronically as an Exhibit to Registrant's Post-Effective
Amendment No. 11 on February 18, 1999 and is hereby
incorporated by reference.
(ff) - (i) Participation Agreement, dated May 1, 1998, between
Registrant and PFL Life Insurance Company was filed
electronically as an Exhibit to Post-Effective Amendment No.
10 on October 2, 1998, and is incorporated herein by
reference.
13
523
- (ii) Amendment No. 1, dated June 30, 1998, to Participation
Agreement, dated May 1, 1998, between Registrant and PFL Life
Insurance Company was filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on October 2, 1998, and is
incorporated herein by reference.
- (iii) Amendment No. 2, dated November 27, 1998, to the
Participation Agreement, dated May 1, 1998, between Registrant
and PFL Life Insurance Company was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No. 11 on
February 18, 1999 and is hereby incorporated by reference.
(gg) - Participation Agreement, dated May 1, 1998, between
Registrant and Fortis Benefits Insurance Company was filed
electronically as an Exhibit to Post-Effective Amendment No.
10 on October 2, 1998, and is incorporated herein by
reference.
(hh) - (i) Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance Company was
filed electronically as an Exhibit to Post-Effective Amendment
No. 10 on October 2, 1998, and is incorporated herein by
reference.
(ii) Amendment No. 1, dated January 1, 1999, to the
Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance Company is
hereby filed electronically.
(ii) - (i) Participation Agreement, dated June 16, 1998, between
Registrant and Lincoln National Life Insurance Company was
filed electronically as an Exhibit to Post-Effective Amendment
No. 10 on October 2, 1998, and is incorporated herein by
reference.
- (ii) Amendment No. 1, dated November 20, 1998, to the
Participation Agreement, dated June 16, 1998, between
Registrant and Lincoln National Life Insurance Company was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 11 on February 18, 1999 and is
hereby incorporated by reference.
(jj) - Participation Agreement, dated June 30, 1998, between
Registrant and Aetna Life Insurance and Annuity Company was
filed electronically as an Exhibit to Post-Effective Amendment
No. 10 on October 2, 1998, and is incorporated herein by
reference.
(kk) - Participation Agreement, dated July 1, 1998, between
Registrant and The Union Central Life Insurance Company was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 11 on February 18, 1999 and is
hereby incorporated by reference.
14
524
(ll) - Participation Agreement, dated July 1, 1998, between
Registrant and United Investors Life Insurance Company was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 11 on February 18, 1999 and is
hereby incorporated by reference.
(mm) - Participation Agreement, dated July 2, 1998, between
Registrant and Hartford Life Insurance Company was filed
electronically as an Exhibit to Post-Effective Amendment No.
10 on October 2, 1998, and is incorporated herein by
reference.
(nn) - (i) Participation Agreement, dated July 13, 1998, between
Registrant and Keyport Benefit Life Insurance Company was
filed electronically as an Exhibit to Post-Effective Amendment
No. 10 on October 2, 1998, and is incorporated herein by
reference.
- (ii) Amendment No. 1, dated December 28, 1998 to the
Participation Agreement, dated July 13, 1998, between
Registrant and Keyport Benefit Life Insurance Company was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 11 on February 18, 1999 and is
hereby incorporated by reference.
(oo) - Participation Agreement, dated July 27, 1998, between
Registrant and Allmerica Financial Life Insurance and Annuity
Company was filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on October 2, 1998, and is
incorporated herein by reference.
(pp) - Participation Agreement, dated July 27, 1998, between
Registrant and First Allmerica Financial Life Insurance
Company was filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on October 2, 1998, and is
incorporated herein by reference.
(qq) - Participation Agreement, dated October 15, 1998, between
Registrant and Lincoln Life & Annuity Insurance Company of New
York was filed electronically as an Exhibit to Post-Effective
Amendment No. 12 on April 29, 1999 and is incorporated by
reference.
(rr) - Participation Agreement, dated November 23, 1998, between
Registrant and American General Annuity Insurance Company was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 11 on February 18, 1999 was filed
electronically as an Exhibit to Post-Effective Amendment No.
12 on April 29, 1999 and is incorporated by reference.
(ss) - Participation Agreement, dated December 1, 1998, between
Registrant and the Prudential Insurance Company of America was
filed electronically as
15
525
an Exhibit to Registrant's Post-Effective Amendment No. 11 on
February 18, 1999 and is hereby incorporated by reference.
(tt) - Participation Agreement, dated February 1, 1999, between
Registrant and Sage Life Assurance of America, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
12 on April 29, 1999 and is incorporated by reference.
(uu) - Participation Agreement, dated April 1, 1999, between
Registrant and Liberty Life Assurance Company of Boston was
filed electronically as an Exhibit to Post-Effective Amendment
No. 12 on April 29, 1999 and is incorporated by reference.
(vv) - Accounting Services Agreement, dated March 31, 1993, between
the Registrant and State Street Bank and Trust Company was
filed as an Exhibit to Registrant's Pre-Effective Amendment
No. 1 on April 19, 1993, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 7 on April 29, 1996.
14(a) - Consent of Messrs. Tait, Weller & Baker is hereby filed
electronically.
(b) - Consent of PricewaterhouseCoopers LLP will be filed as an
Exhibit in a Pre-Effective Amendment.
15 - Financial Statements Omitted from Item 22 - None.
16 - Manually signed Powers of Attorney pursuant to which the
name of any person has been signed to the registration
statement are hereby filed electronically.
17 - Forms of Proxy are hereby filed electronically.
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a
part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act of 1933, the reoffering prospectus will contain the
information called for by the applicable registration form for
reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering of them.
16
526
SIGNATURES
Pursuant to the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has duly caused this Registration Statement on Form
N-14 to be signed on its behalf by the undersigned thereto duly authorized, in
the City of Houston, State of Texas, on the 25th day of June, 1999.
AIM VARIABLE INSURANCE FUNDS, INC.
Registrant
By: /s/ ROBERT H. GRAHAM
------------------------------
Robert H. Graham
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form N-14 has been signed below by the following persons on the
25th day of June, 1999 in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/CHARLES T. BAUER Chairman & Director June 25, 1999
- -----------------------
Charles T. Bauer
/s/ROBERT H. GRAHAM Director & President June 25, 1999
- -----------------------
Robert H. Graham
* Director June 25, 1999
- -----------------------
Bruce L. Crockett
* Director June 25, 1999
- -----------------------
Owen Daly II
* Director June 25, 1999
- -----------------------
Prema Mathai-Davis
* Director June 25, 1999
- -----------------------
Edward K. Dunn, Jr.
* Director June 25, 1999
- -----------------------
Jack Fields
* Director June 25, 1999
- -----------------------
Carl Frischling
* Director June 25, 1999
- -----------------------
Lewis F. Pennock
* Director June 25, 1999
- -----------------------
Louis Sklar
/s/ DANA R. SUTTON Vice President & June 25, 1999
- ----------------------- Treasurer (Principal
Dana R. Sutton Financial Officer)
By: /s/ CAROL F. RELIHAN *
------------------------
Carol F. Relihan
Attorney-In-Fact
527
INDEX TO EXHIBITS
Exhibit
No. DESCRIPTION
- ------- -----------
11(b) - Opinion and Consent of Messrs. Freedman, Levy, Kroll & Simonds
regarding the legality of the shares being registered under
this Registration Statement on Form N-14 by AIM Variable
Insurance Funds, Inc. on behalf of the AIM V.I. Global Growth
and Income Fund, the AIM V.I. Capital Appreciation Fund, the
AIM V.I. International Equity Fund, the AIM V.I.
Telecommunications Fund, the AIM V.I. Diversified Income Fund,
the AIM V.I. Government Securities Fund, and the AIM V.I.
Money Market Fund.
11(c) - Consent of Messrs. Freedman, Levy, Kroll & Simonds.
12 - Opinion and consent of Messrs. Freedman, Levy, Kroll & Simonds
supporting the tax matters and consequences to shareholders
discussed in the Proxy Statement/Prospectus.
14(a) - Consent of Messrs. Tait, Weller & Baker.
16 - Powers of Attorney.
17 - Forms of Proxy.