<PAGE> 1
ANNUAL REPORT / DECEMBER 31 1999
AIM ADVISOR INTERNATIONAL VALUE FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
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[COVER IMAGE]
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TRADER GEORG (GISZE) BY HANS HOLBEIN THE YOUNGER
THIS PAINTING DEPICTS A GERMAN MERCHANT IN LONDON, PRESUMABLY
ON SOME KIND OF BUSINESS VENTURE. THE VARIOUS ITEMS SURROUNDING
HIM--LEDGERS AND LISTS, FOREIGN COINS, ORNAMENTAL AND EXOTIC-LOOKING
OBJECTS--CALL TO MIND HIS TRAVELS IN SUPPORT OF HIS PROFESSION.
TRADERS SUCH AS GEORG FORMED THE BASIS OF THE GLOBAL MARKETPLACE
AS WE KNOW IT, ALLOWING COMPANIES SUCH AS THOSE IN WHICH THIS FUND
INVESTS TO BE OPEN TO THE TRADERS OF TODAY.
-------------------------------------
AIM Advisor International Value Fund is for shareholders who seek a high total
return through growth of capital and current income through a diversified
portfolio of foreign equity securities.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Advisor International Value Fund's performance figures are historical,
and they reflect changes in net asset value and the reinvestment of
distributions.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of Class A shares due to different sales-charge structure and expenses.
o During the fiscal year ended 12/31/99, the fund paid distributions of
$0.3526 per share for Class A shares and $0.2262 per share for Class B and
Class C shares.
o International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to 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 holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper International Fund Index represents an average of the
performance of the 30 largest international mutual funds tracked by Lipper,
Inc., an independent mutual fund performance monitor.
o The unmanaged MSCI EAFE--Registered Trademark-- (Europe, Australasia and the
Far East) Index is a group of foreign securities tracked by Morgan Stanley
Capital International.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
is generally considered representative of the stock market in general.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends and do not reflect sales charges.
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 SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM ADVISOR INTERNATIONAL VALUE FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
The fiscal year discussed in this report has reconfirmed our
[PHOTO OF faith in two long-established principles of investing:
Charles T. portfolio diversification and long-term thinking. We could
Bauer, title this report "What a Difference a Year Makes."
Chairman of An investor surveying conditions when the fiscal year
the Board of opened on January 1, 1999, would have seen a market
THE FUND dominated by large-capitalization stocks and high-quality
APPEARS HERE] bonds, especially U.S. Treasuries. During 1998, two
well-known indexes of large-capitalization U.S. companies,
the S&P 500 and the Dow Jones Industrial Average, were up
28.60% and 18.15%, respectively. By contrast,
smaller-company stocks in the Russell 2000 had lost 2.55%.
Overseas, many markets were languishing, especially in Asia,
where so many financial difficulties had originated in 1997.
In bond markets as well, name-brand quality was the
place to be. The Lehman Government/Corporate Bond Index,
which follows sovereign issues and investment-grade debt, was up 9.47%, while
the Lehman High Yield Index, which tracks riskier "junk bonds," had risen only
1.60%.
It would be easy for an investor to conclude that blue-chip issues, whether
equity or fixed-income, were the place to be, that it was time to divest himself
of everything else and put all his eggs in the blue-chip basket. The investor,
of course, would be wrong.
MARKETS TURN
While large-capitalization stocks continued to do very well, during 1999 markets
broadened dramatically with many investment sectors performing a complete
turnaround. For example, the small-cap stocks in the Russell 2000 were up 21.26%
for calendar year 1999, and many Asian markets, particularly Japan, had staged a
comeback.
The same holds true of bonds. The higher-quality Lehman index was down 2.15%
during 1999 while the Lehman High Yield index was up 2.39%.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the markets'
overall trend has been upward. Selecting an asset class or a market sector on
the basis of a short-term snapshot of conditions is usually unwise, as is
concentrating your portfolio in one asset class. Staying fully invested in a
diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain. We also continue to remind you that the past few
years have seen extraordinary gains in some markets, and there is no assurance
that this trend will continue.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by multiple
signs of economic health in Europe and Asia, not to mention the prolonged U.S.
economic expansion. However, we are aware of how easily an investor could have
been misled by conditions just 12 months ago. For our shareholders, we therefore
reiterate our commitment to investing through a financial advisor. In addition
to helping you select investments appropriate to your time horizon and risk
tolerance, a financial advisor can keep you informed about how changing market
conditions affect you and your portfolio--and help ensure that when you do alter
your investments, there's a logical reason for doing so. AIM believes every
investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended December 31, how the markets behaved and
what they foresee for the near future. We trust you will find their discussion
informative. If you have any questions or comments, we invite you to contact us,
either at our Web site, aimfunds.com, or through our Client Services department
at 800-959-4246. Information about your account is also available through our
automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
- --Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED
PORTFOLIO REMAINS
A COMPELLING
STRATEGY AND ONE OF YOUR
BEST PROSPECTS FOR LONG-TERM GAIN.
-------------------------------------
AIM ADVISOR INTERNATIONAL VALUE FUND
<PAGE> 4
ANNUAL REPORT / MANAGER'S OVERVIEW
RESURGENT JAPAN BOOSTS
FUND PERFORMANCE
FOREIGN MARKETS EXPERIENCED A MAJOR TURNAROUND DURING THE REPORTING PERIOD. HOW
DID AIM ADVISOR INTERNATIONAL VALUE FUND PERFORM?
The fund finished the year strongly. For the fiscal year ended December 31,
1999, the fund posted total returns of 22.54% for Class A shares, 21.70% for
Class B shares and 21.64% for Class C shares. (These returns are at net asset
value, which does not include sales charges.) The fund finished close to the
EAFE Index, which had a return of 26.96% for the reporting period, but behind
the Lipper International Fund Index, which had a return of 37.83%. Net assets in
the fund grew to $145.9 million by the end of the fiscal year.
WHAT WERE THE MAJOR WORLDWIDE TRENDS OVER THE REPORTING PERIOD?
Global economic news was good on the whole during the fiscal year, thanks
largely to economic recoveries in Europe, Asia and Japan. Markets that were
devastated a year ago came along well during 1999; countries that focused on
cleaning up their banking systems and stabilizing their currencies enjoyed the
best performance. In fact, international stocks largely outperformed U.S. stocks
during 1999--the EAFE Index's 26.96% return topped the 21.03% return of the S&P
500 for the fiscal year. Overseas stocks benefited from improving investor
expectations of economic growth and more favorable valuations.
WHAT HAPPENED IN EUROPE?
European market fundamentals were good during the fiscal year: inflation was
low, employment and exports strengthened and consumer confidence improved. Many
countries saw increased growth expectations and strong earnings growth driven by
the economic recovery in Asia and the strong U.S. dollar, which helped exports.
European companies have been undergoing the same type of restructuring that
U.S. companies experienced in the 1980s--selling unproductive assets, cutting
workforces and buying back shares. Strong merger-and- acquisition (M&A) activity
also continued in Europe, stimulated by the launch of the euro at the beginning
of 1999. In fact, European M&A activity topped that of the United States for the
year.
HOW DID JAPAN FARE?
The Japanese stock market dominated the EAFE's performance during the year. Last
spring, investors--particularly foreign investors--began pouring money into
Japanese stocks amid prospects of a brighter economy. Market activity drove the
value of the yen to powerful heights. By the end of 1999, in a reversal of a
years-long state of affairs, foreigners owned more of corporate Japan than banks
owned.
However, not all Japanese stocks have enjoyed the favor of investors. As in
the United States, technology and Internet stocks have led the record-breaking
charge of Japan's markets. Japan's growth also still largely depends on
government spending. Near the end of 1999, Japan poured
See important fund and index disclosures inside front cover.
AIM ADVISOR INTERNATIONAL VALUE FUND
2
[ART WORK]
<PAGE> 5
ANNUAL REPORT / MANAGER'S OVERVIEW
-------------------------------------
WHY IS JAPAN YOUR LARGEST COUNTRY ALLOCATION?
Japan posted several consecutive quarters of economic growth, signaling an end
to its extended recession. Many investors feel that there has been a changing
of the economic guard in Japan. A "new economy" based on high-tech companies
could help the country rapidly make up the ground it lost during 1998's global
financial crisis, when the entire Japanese banking system was in danger of
collapse. The banks have since gone through some major restructuring that has
heightened investor confidence in the economy. Japan is also looking to the
United States as a model for how to integrate its emerging new economy. The main
caveat remains the strength of the yen, which could halt any sustained
turnaround in the economy because of its dependence on exports.
-------------------------------------
another $67 billion into its economy, the ninth stimulus package this decade.
HOW DID THE MARKET ENVIRONMENT AFFECT THE FUND?
As in the United States, technology and telecommunications dominated the
international markets for a good part of the year. While the fund had some
exposure to stocks in these areas, we had difficulty finding many stocks in this
primarily growth arena that would fit our valuation criteria. Areas in which we
continued to find relative value--such as pharmaceuticals, utilities and food
and beverages--remained in the doldrums to some extent because investors seemed
willing to pay any price to have exposure to technology stocks.
At 26.11% of the portfolio, Japan was our largest country allocation.
Although the fund remained underweight in Japan relative to the EAFE, we expect
our exposure to increase over time to reflect the potentially improved prospects
for leading companies. Our largest regional concentration is still Europe,
which makes up more than 60% of the fund's total net assets. European holdings
that issued disappointing earnings reports tended to be the laggards in the
fund during the fiscal year.
Top fund sectors at the end of the reporting period included financials,
22.96%; technology, 12.6%; communications services, 9.98%; and capital goods,
6.41%.
WHAT ARE SOME HOLDINGS THAT HAVE BENEFITED THE FUND?
Three of the fund's top-performing holdings--Kyocera, Murata Manufacturing and
Sony--are Japanese companies involved in electronics. Kyocera is a major
producer of semiconductor packaging and electronic components and products.
Murata Manufacturing, new to the fund during the year, is an integrated
electronic-components manufacturer of "functional ceramics" used in electronic
equipment. Sony, which is probably best known for its stereos, televisions and
PlayStation game system, also makes semiconductors, computer monitors and
batteries.
Other holdings that benefited the fund include Telecom Italia and Telecom
Italia Mobile. The difference in the two names reveals the difference between
the two companies: Telecom Italia is Italy's top fixed-line operator and
Internet-service provider, while Telecom Italia Mobile is a leading
wireless-telecommunications carrier in Europe. Both companies own stakes in
other like companies around the world, a testament to the continuing worldwide
consolidation within the telecommunications sector.
WHAT IS YOUR NEAR-TERM OUTLOOK?
While the threat of rising interest rates and potential profit-taking in those
stocks which have participated in the recent technology boom may dampen market
performance in the short term, we remain reasonably optimistic about
international markets. With a recovering global economy and lower valuations
overseas following the sharp gains in U.S. stocks in recent years, we envision
positive relative performance for international equities in 2000. We will
continue to offer diversified exposure to the core international markets through
well-valued stocks in many of the world's leading and most successful foreign
companies.
PORTFOLIO COMPOSITION
As of 12/31/99, based on total net assets
<TABLE>
<CAPTION>
================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 COUNTRIES
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Kyocera Corp. ADR (Japan) 5.03% 1. Japan 26.11%
2. Murata Manufacturing Co. Ltd. (Japan) 4.83 2. United Kingdom 19.16
3. HSBC Holdings PLC-ADR (United Kingdom) 3.60 3. Netherlands 9.94
4. Repsol S.A.-ADR (Spain) 3.11 4. Germany 8.29
5. Nintendo Co. Ltd. (Japan) 2.85 5. France 8.14
6. Societe Generale (France) 2.70 6. Italy 7.75
7. ING Groep N.V.-ADR (Netherlands) 2.51 7. Spain 5.80
8. Telecom Italia S.p.A.-ADR (Italy) 2.35 8. Australia 5.31
9. British Telecommunications PLC (United Kingdom) 2.28 9. Switzerland 4.80
10. Hitachi Ltd.-ADR (Japan) 2.22 10. Denmark 2.23
================================================================================================
<CAPTION>
=======================================================
TOP 10 INDUSTRIES
- -------------------------------------------------------
<S> <C>
1. Electronics (Component Distribution) 9.86%
2. Telephone 8.45
3. Oil (International Integrated) 8.00
4. Banks (Major Regional) 7.96
5. Health Care (Drugs-Major Pharmaceuticals) 7.80
6. Banks (Money Center) 6.80
7. Foods 5.81
8. Electrical Equipment 5.60
9. Electric Companies 5.15
10. Chemicals (Diversified) 3.56
=======================================================
</TABLE>
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
See important fund and index disclosures inside front cover.
AIM ADVISOR INTERNATIONAL VALUE FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM ADVISOR INTERNATIONAL VALUE FUND VS. BENCHMARK INDEXES
5/1/95-12/31/99
in thousands
MOUNTAIN CHART
<TABLE>
<CAPTION>
================================================================================
Lipper Int'l MSCI EAFE
AIM Fund Value Fund Index
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
5/95 $ 9,750 $10,000 $10,000
6/95 10,215 10,694 10,311
12/95 11,128 10,882 10,521
6/96 12,069 11,826 10,997
12/96 13,463 12,452 11,157
6/97 15,428 14,189 12,408
12/97 15,210 13,355 11,356
6/98 17,390 15,467 13,165
12/98 16,789 15,046 13,627
6/99 17,177 16,085 14,167
12/99 20,423 20,739 17,301
Past performance cannot guarantee comparable future results.
================================================================================
</TABLE>
ABOUT THIS CHART
The chart compares your fund's Class C shares to benchmark indexes. It is
intended to give you a general idea of how your fund performed compared to these
indexes over the period 5/1/95-12/31/99. (Data for the indexes are for the
period 4/30/95-12/31/99.) It is important to understand the differences between
your fund and an index. An index measures the performance of a hypothetical
portfolio. A market index such as the EAFE is not managed, incurring no sales
charges, expenses or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect your investment's
return. An index of funds such as the Lipper International Fund Index includes a
number of mutual funds grouped by investment objective. Each of those funds
interprets that objective differently, and each employs a different management
style and investment strategy.
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/99, including sales charges
================================================================================
CLASS A SHARES
Inception (12/31/96) 13.60%
1 year 15.83*
*22.54%, excluding sales charges
CLASS B SHARES
Inception (3/3/98) 10.34%
1 year 16.70*
*21.70%, excluding CDSC
CLASS C SHARES
Inception (5/1/95) 16.53%
1 year 20.64*
*21.64%, excluding CDSC
Source: Lipper, Inc.
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class B and Class C shares will differ from that
of its Class A shares due to differing fees and expenses. For fund performance
calculations and descriptions of the indexes cited on this page, please see the
inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
AIM ADVISOR INTERNATIONAL VALUE FUND
4
<PAGE> 7
CHOOSE YOUR INVESTMENT PALETTE
No two pieces of art are exactly alike. Just as an artist may use different
paints to create a piece, so does an investor use different kinds of investments
to create a portfolio. And as with art, tastes can change over time--most
investors have different goals at different stages in their lives, as well as
varying tolerance for risk. The biggest advantage mutual funds offer is the
potential for diversification. Providing funds with assorted objectives and
goals allows investors to shape their portfolios to their specific needs and
spread their risk over several different funds, rather than painting their
portfolios all one color.
GROWTH VS. INCOME
If you look at the list of AIM's retail mutual funds on the back of your fund
report, you'll notice that they are divided into different types. Two that
frequently appear are growth and income. Common stock is normally the growth
component of a mutual fund with growth as a primary or secondary objective.
Bonds are typically the income components of a mutual fund with income as a
primary or secondary objective.
Let's take a closer look at the categories into which AIM's retail mutual
funds are divided. Keep in mind that funds listed under the same category don't
necessarily have the same kind of investment strategy or portfolio, even if they
have the same objective.
DOMESTIC MUTUAL FUNDS
GROWTH FUNDS
Growth funds typically invest in common stocks of companies whose businesses are
growing. Growth companies tend to reinvest their profits toward expansion of
their potential to produce greater returns instead of paying dividends. So
growth mutual funds focus on generating capital gains--increasing the value of
the stocks they hold--rather than current income, which means they generally
don't pay regular income dividends. Growth funds usually do, however, make one
capital-gains distribution per year, when there are gains.
An increase over time in the value of a growth fund's portfolio means the
fund's value, or share price, increases over time also. Shareholders in a growth
fund, then, make money by selling their shares for more than they paid for them.
Of course, the opposite is also true--shareholders can lose money by selling
their shares for less than they paid for them. Growth funds usually range from
moderate to very aggressive, depending on the size and types of companies in
which they invest.
GROWTH AND INCOME FUNDS
A growth and income fund generally invests in common and preferred stocks and
bonds of older, more established companies that have a longer track record of
growth and paying dividends.
A typical growth and income mutual fund will pay quarterly or annual income
dividends to its shareholders. (Monthly dividends are not common.) In this way,
growth and income funds can potentially provide long-term growth of investments
and also current income. These funds tend to be more conservative than growth
funds.
INCOME FUNDS
Income funds are generally designed to provide high current income rather than
long-term growth. To that end, income funds usually invest chiefly in
interest-paying corporate and government bonds. They may also own stocks of
companies that pay regular dividends. Some income funds are more aggressive than
others. The aggressiveness of a particular fund depends not only on the kinds of
securities in which it invests, but also on the fund's sector allocation and
maturity structure.
[PHOTO]
AIM ADVISOR INTERNATIONAL VALUE FUND
5
<PAGE> 8
For example, Treasury securities are considered a relatively safe investment
because they are guaranteed by the U.S. government. However, lower risk also
means lower return potential. On the other hand, lower-rated corporate bonds,
often called junk bonds, involve more risk because they are not guaranteed--they
are only as good as the companies that issue them. But the added risk also means
higher return potential. Income funds are considered more conservative and are
suited for investors seeking income rather than growth.
TAX-FREE INCOME OR MUNICIPAL FUNDS
These funds provide shareholders with current income that is tax-exempt at some
level, depending on the securities in which they invest. So municipal mutual
funds appeal to investors who are looking to reduce income that would otherwise
be subject to tax. Municipal bonds or notes, which are issued by state or local
governments, are generally exempt from federal taxes. Federal securities, like
Treasury bonds, are usually exempt from state taxes. And then there are some
securities that are exempt from both federal and state taxes.1
MONEY MARKET FUNDS
A money market fund is one of the safest types of mutual funds available because
its main goal is preserving your investment while paying current income in the
form of interest. As a result, these funds tend to appeal to investors looking
for safety, liquidity and some income from their investment. Money market funds
invest in high-quality, short-term securities such as commercial paper and U.S.
government agency securities. Although money market funds are not guaranteed or
insured by the U.S. government, the securities they hold are less risky than
other types of fixed-income securities. The trade-off for safety of principal
investment is a lower rate of return.(2)
INTERNATIONAL AND GLOBAL
MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
An international growth fund has the same objective as a domestic growth fund,
except it invests in stocks of companies located outside the United States. Like
their domestic counterparts, international growth funds tend to pay
distributions in the form of capital gains rather than dividends. An
international growth mutual fund might invest in a particular country, region or
continent depending on the investment strategy shown in its prospectus.
International funds carry different risks than domestic funds because most
foreign markets are not as established as the markets in the United States.
Other risks include changes in the value of the U.S. dollar compared to foreign
currencies, accounting differences, political risks and foreign regulatory
differences.
GLOBAL GROWTH, GLOBAL GROWTH AND INCOME, AND GLOBAL INCOME FUNDS
These funds are similar to their domestic equivalents in terms of their goals
and the income distributions they pay. Global funds are comparable to
international funds in that they can invest in stocks of companies outside the
United States. But global funds can also invest substantially in U.S. stocks;
international funds generally do not. The amount of a global fund's portfolio
that can be invested in the United States varies greatly from fund to fund,
according to a fund's prospectus. Global funds carry the same risks as
international funds.
SPECIALIZED FUNDS
THEME FUNDS
Theme or sector funds invest primarily in a particular industry or sector of the
economy, either domestically or globally. Theme funds are required by prospectus
to invest a certain percentage of their assets in their industry or sector of
choice under normal market conditions. As a result, theme funds present greater
risk and potential reward than more diversified funds. The types of securities
held by a theme fund determine its goal of growth and/or income.
TYPES OF FUND DISTRIBUTIONS
INCOME DIVIDENDS are paid from dividends and/or interest from securities in a
fund's portfolio. For example, if a company in which a mutual fund owns stock
distributes some of its earnings to its shareholders as a dividend, the fund
passes on those earnings to its own shareholders. Income dividends are usually
taxed as ordinary income.
CAPITAL GAINS represent the net profit realized from the growth in value of the
holdings in a fund's portfolio. These distributions are usually made once per
year. There are two types of capital gains:
o Short-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for less than a year. Short-term capital
gains are taxed as ordinary income.
o Long-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for more than a year. Long-term capital
gains are usually taxed at the capital-gains rate, which is typically lower
than ordinary income-tax rates.
(1) Investors in tax-free income funds still have a risk of incurring taxes on
capital-gains distributions, for example, so it's wise to see your tax advisor
before investing in such funds.
(2) There is no guarantee that a money market fund will be able to maintain a
stable net asset value of $1.00 per share.
See the back cover for a complete list of AIM's retail mutual funds. For more
information about your fund's objective, read your fund prospectus. For more
complete information about any AIM fund(s), including sales charges and
expenses, ask your Financial advisor or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money.
AIM ADVISOR INTERNATIONAL VALUE FUND
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
December 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS-99.58%
AUSTRALIA-5.31%
National Australia Bank Ltd.-ADR
(Banks- Regional) 40,000 $ 3,050,000
- --------------------------------------------------------------
News Corp. Ltd. (The) (Publishing-
Newspapers) 325,000 3,158,035
- --------------------------------------------------------------
Rio Tinto Ltd.-ADR (Metals Mining) 18,000 1,541,565
- --------------------------------------------------------------
7,749,600
- --------------------------------------------------------------
DENMARK-2.23%
Den Danske Bank-ADR (Banks-Money
Center) 15,000 1,636,512
Novo-Nordisk A.S.-ADR (Health
Care-Drugs- Major
Pharmaceuticals) 25,000 1,615,625
- --------------------------------------------------------------
3,252,137
- --------------------------------------------------------------
FRANCE-8.14%
Credit Commercial de France
(Banks-Major Regional) 15,000 1,867,468
- --------------------------------------------------------------
Groupe Danone-ADR (Foods) 40,000 1,862,500
- --------------------------------------------------------------
Michelin-Class B (Automobile/Truck
Parts & Tires)(a) 30,000 1,177,546
- --------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 85,000 3,936,052
- --------------------------------------------------------------
Total Fina S.A.-ADR
(Oil-International Integrated) 43,833 3,035,435
- --------------------------------------------------------------
11,879,001
- --------------------------------------------------------------
GERMANY-8.29%
BASF A.G.-ADR
(Chemicals-Diversified) 60,000 3,067,056
- --------------------------------------------------------------
Bayer A.G.-ADR
(Chemicals-Diversified) 45,000 2,119,873
- --------------------------------------------------------------
DaimlerChrysler A.G. (Automobiles) 23,000 1,799,750
- --------------------------------------------------------------
Deutsche Bank A.G.-ADR (Banks-Money
Center) 36,000 3,025,559
- --------------------------------------------------------------
SAP A.G.-ADR (Computers-Software &
Services) 40,000 2,082,500
- --------------------------------------------------------------
12,094,738
- --------------------------------------------------------------
ITALY-7.75%
Enel S.p.A. (Electric Companies)(a) 300,000 1,256,050
- --------------------------------------------------------------
ENI S.p.A.-ADR (Oil-International
Integrated) 25,000 1,378,125
- --------------------------------------------------------------
San Paolo-IMI S.p.A.-ADR
(Banks-Major Regional) 109,725 3,003,722
- --------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular/Wireless) 200,000 2,232,306
- --------------------------------------------------------------
Telecom Italia S.p.A.-ADR
(Telephone) 24,500 3,430,000
- --------------------------------------------------------------
11,300,203
- --------------------------------------------------------------
JAPAN-26.11%
Bank of Tokyo-Mitsubishi Ltd.
(Banks- Regional)(a) 75,000 1,045,777
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Canon, Inc.-ADR (Office Equipment &
Supplies) 75,000 $ 3,042,187
- --------------------------------------------------------------
Fuji Photo Film-ADR
(Photography/Imaging) 50,000 1,912,500
- --------------------------------------------------------------
Hitachi Ltd.-ADR
(Manufacturing-Diversified) 20,000 3,237,500
- --------------------------------------------------------------
Honda Motor Co., Ltd. (Automobiles) 18,000 1,377,000
- --------------------------------------------------------------
Kyocera Corp.-ADR
(Electronics-Component
Distributors) 28,000 7,336,000
- --------------------------------------------------------------
Mitsubishi Heavy Industries, Ltd.
(Manufacturing-Diversified)(a) 300,000 1,001,714
- --------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics- Component
Distributors) 30,000 7,050,184
- --------------------------------------------------------------
Nintendo Co. Ltd. (Leisure
Time-Products) 25,000 4,156,671
- --------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telephone) 150 2,570,379
- --------------------------------------------------------------
Sony Corp-ADR (Electrical
Equipment) 10,000 2,847,500
- --------------------------------------------------------------
Takefuji Corp.
(Financial-Diversified) 20,000 2,504,774
- --------------------------------------------------------------
38,082,186
- --------------------------------------------------------------
NETHERLANDS-9.94%
ABN AMRO Holding N.V. (Banks-Major
Regional) 60,000 1,497,598
- --------------------------------------------------------------
Akzo Nobel N.V.-ADR (Chemicals) 30,000 1,492,500
- --------------------------------------------------------------
ING Groep N.V.-ADR
(Insurance-Life/Health) 60,000 3,660,000
- --------------------------------------------------------------
Koninklijke (Royal) Philips
Electronics N.V.-ADR (Electrical
Equipment) 20,000 2,700,000
- --------------------------------------------------------------
Royal Dutch Petroleum Co.-New York
Shares- ADR (Oil-International
Integrated) 45,000 2,719,687
- --------------------------------------------------------------
Unilever N.V.-ADR (Foods) 44,642 2,430,199
- --------------------------------------------------------------
14,499,984
- --------------------------------------------------------------
PORTUGAL-2.05%
Portugal Telecom S.A.-ADR
(Telephone) 275,000 2,990,625
- --------------------------------------------------------------
SPAIN-5.80%
Banco Popular Espanol S.A.
(Banks-Major Regional) 20,000 1,303,353
- --------------------------------------------------------------
Endesa S.A.-ADR (Electric
Companies) 130,000 2,624,375
- --------------------------------------------------------------
Repsol S.A.-ADR (Oil-International
Integrated) 195,000 4,533,750
- --------------------------------------------------------------
8,461,478
- --------------------------------------------------------------
SWITZERLAND-4.80%
Nestle S.A.-ADR (Foods) 30,000 2,733,441
- --------------------------------------------------------------
Novartis A.G.-ADR (Health
Care/Drugs-Major Pharmaceuticals) 35,000 2,556,022
- --------------------------------------------------------------
Zurich Allied A.G.
(Insurance-Multi-Line) 3,000 1,710,733
- --------------------------------------------------------------
7,000,196
- --------------------------------------------------------------
UNITED KINGDOM-19.16%
Associated British Foods PLC-ADR
(Foods) 264,000 1,449,862
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
AstraZeneca Group PLC-ADR (Health
Care- Drugs-Major
Pharmaceuticals) 65,000 $ 2,713,750
- --------------------------------------------------------------
British Airways PLC-ADR (Airlines) 25,000 1,609,375
- --------------------------------------------------------------
British Telecommunications PLC
(Telephone) 14,000 3,332,000
- --------------------------------------------------------------
Carlton Communications PLC-ADR
(Electrical Equipment) 55,000 2,619,375
- --------------------------------------------------------------
Corus Group PLC-ADR (Iron & Steel) 55,000 1,423,125
- --------------------------------------------------------------
Glaxo Wellcome PLC-ADR (Health
Care-Drugs- Major
Pharmaceuticals) 40,000 2,235,000
- --------------------------------------------------------------
HSBC Holdings PLC-ADR (Banks-Money
Center) 75,000 5,258,227
- --------------------------------------------------------------
Marks & Spencer PLC (Retail-Stores) 300,000 1,427,798
- --------------------------------------------------------------
PowerGen PLC-ADR (Electric
Companies) 55,000 1,739,375
- --------------------------------------------------------------
Scottish Power PLC (Electric
Companies) 250,000 1,893,236
- --------------------------------------------------------------
SmithKline Beecham PLC-ADR (Health
Care- Drugs-Major
Pharmaceuticals) 35,000 2,255,313
- --------------------------------------------------------------
27,956,436
- --------------------------------------------------------------
Total Foreign Stocks (Cost
$96,020,162) 145,266,584
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. GOVERNMENT AGENCY
SECURITIES-0.88%
FEDERAL HOME LOAN BANK-0.88%
Disc. Notes,(b)
1.50%, 01/03/00 (Cost $1,279,893) $1,280,000 $ 1,279,893
- --------------------------------------------------------------
TOTAL INVESTMENTS-100.46% (Cost
$97,300,055) 146,546,477
- --------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.46%) (670,743)
- --------------------------------------------------------------
NET ASSETS-100.00% $145,875,734
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$97,300,055) $146,546,477
- ---------------------------------------------------------
Foreign currencies, at value (cost $20,378) 20,600
- ---------------------------------------------------------
Receivables for:
Capital stock sold 146,305
- ---------------------------------------------------------
Interest and dividends 351,799
- ---------------------------------------------------------
Investment for deferred compensation plan 12,194
- ---------------------------------------------------------
Other assets 6,445
- ---------------------------------------------------------
Total assets 147,083,820
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 749,388
- ---------------------------------------------------------
Deferred compensation plan 12,194
- ---------------------------------------------------------
Accrued advisory fees 117,574
- ---------------------------------------------------------
Accrued distribution fees 253,604
- ---------------------------------------------------------
Accrued transfer agent fees 21,004
- ---------------------------------------------------------
Accrued administrative services fees 4,247
- ---------------------------------------------------------
Accrued operating expenses 50,075
- ---------------------------------------------------------
Total liabilities 1,208,086
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $145,875,734
=========================================================
NET ASSETS:
Class A $ 31,412,114
=========================================================
Class B $ 5,642,468
=========================================================
Class C $108,821,152
=========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 1,576,677
=========================================================
Class B:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 284,889
=========================================================
Class C:
Authorized 100,000,000
- ---------------------------------------------------------
Outstanding 5,496,171
=========================================================
Class A:
Net asset value and redemption price per
share $ 19.92
- ---------------------------------------------------------
Offering price per share:
(Net asset value of $19.92 divided
by 94.50%) $ 21.08
=========================================================
Class B:
Net asset value and offering price per
share $ 19.81
=========================================================
Class C:
Net asset value and offering price per
share $ 19.80
=========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
For the year ended December 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $350,255 foreign
withholding tax) $ 2,789,892
- --------------------------------------------------------
Interest 110,773
- --------------------------------------------------------
Total investment income 2,900,665
- --------------------------------------------------------
EXPENSES:
Advisory fees 1,307,027
- --------------------------------------------------------
Administrative services fees 25,721
- --------------------------------------------------------
Custodian fees 29,499
- --------------------------------------------------------
Operating services fees 290,546
- --------------------------------------------------------
Distribution fees-Class A 94,674
- --------------------------------------------------------
Distribution fees-Class B 42,551
- --------------------------------------------------------
Distribution fees-Class C 993,935
- --------------------------------------------------------
Directors' fees and expenses 3,847
- --------------------------------------------------------
Transfer Agent fees-Class A 17,199
- --------------------------------------------------------
Transfer Agent fees-Class B 7,228
- --------------------------------------------------------
Transfer Agent fees-Class C 65,930
- --------------------------------------------------------
Other 45,538
- --------------------------------------------------------
Total expenses 2,923,695
- --------------------------------------------------------
Less: Fees waived (166,253)
- --------------------------------------------------------
Expenses paid indirectly (759)
- --------------------------------------------------------
Net expenses 2,756,683
- --------------------------------------------------------
Net investment income 143,982
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 7,711,836
- --------------------------------------------------------
Foreign currencies (100,916)
- --------------------------------------------------------
7,610,920
- --------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 18,910,641
- --------------------------------------------------------
Foreign currencies 1,968
- --------------------------------------------------------
18,912,609
- --------------------------------------------------------
Net gain from investment securities and
foreign currencies 26,523,529
- --------------------------------------------------------
Net increase in net assets resulting from
operations $26,667,511
=========================================================
</TABLE>
9
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 143,982 $ 226,806
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies 7,610,920 (5,494,200)
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies 18,912,609 15,275,348
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 26,667,511 10,007,954
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (432,681) (160,712)
- -----------------------------------------------------------------------------------------
Class B (42,668) --
- -----------------------------------------------------------------------------------------
Class C (838,386) --
- -----------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS ON
INVESTMENT SECURITIES:
Class A (115,532) (237)
- -----------------------------------------------------------------------------------------
Class B (20,873) (51)
- -----------------------------------------------------------------------------------------
Class C (410,586) (1,274)
- -----------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (2,103,894) 18,784,781
- -----------------------------------------------------------------------------------------
Class B 446,063 4,303,232
- -----------------------------------------------------------------------------------------
Class C (14,925,148) 3,112,106
- -----------------------------------------------------------------------------------------
Net increase in net assets 8,223,806 36,045,799
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 137,651,928 101,606,129
- -----------------------------------------------------------------------------------------
End of period $145,875,734 $137,651,928
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 96,576,058 $113,159,037
- -----------------------------------------------------------------------------------------
Undistributed net investment income (1,208,005) 58,330
- -----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies 1,261,120 (5,899,391)
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 49,246,561 30,333,952
- -----------------------------------------------------------------------------------------
$145,875,734 $137,651,928
=========================================================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Advisor International Value Fund (the "Fund") is a series portfolio of AIM
Advisor Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of four
separate portfolios. The Fund currently offers three different classes of
shares: Class A shares, Class B shares and Class C shares. Class A shares are
sold with a front-end sales charge. Class B shares and Class C shares are sold
with a contingent deferred sales charge. Matters affecting each portfolio or
class will be voted on exclusively by the shareholders of such portfolio or
class. The assets, liabilities and operations of each portfolio are accounted
for separately. Information presented in these financial statements pertains
only to the Fund. The Fund's investment objective is to achieve a high total
return on investment through growth of capital and current income, without
regard to federal income tax considerations.
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 preparation 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 closing bid price on that day. 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. Debt obligations (including convertible bonds) are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
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. For
purposes of determining net asset value per share, futures and option
contracts generally will be valued 15 minutes after the close of trading of
the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
which would not be reflected in the computation of the Fund's net asset
value. If events materially affecting the value of such securities occur
during such period, then these securities will be valued at their fair
value as determined in good faith by or under the supervision of the Board
of Directors.
B. Securities Transactions and Investment Income -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date. On December 31, 1999, undistributed net investment income
was decreased by $96,582 and undistributed net realized gains increased by
$96,582 as a result of differing book/tax treatment of foreign currency
transactions and foreign tax credits. Net assets of the Fund were
unaffected by the reclassifications.
C. Distributions -- Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to use a portion of the proceeds of capital stock
redemptions as distributions for federal income tax purposes.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions. The Fund does not separately account for 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
11
<PAGE> 14
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. Expenses -- Distribution expenses directly attributable to a class of
shares are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated among the classes.
NOTE 2-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 the annual rate of 1.00% of
the Fund's average daily net assets. AIM has entered into a sub-advisory
agreement with INVESCO Global Asset Management Limited ("IGAM") whereby AIM pays
IGAM an annual rate of 0.35% of the first $50 million of the Fund's average
daily net assets, plus 0.30% of the Fund's average daily net assets in excess of
$50 million to and including $100 million, plus 0.25% of the Fund's average
daily net assets in excess of $100 million.
The Company, pursuant to an operating services agreement with AIM, agreed to
pay AIM an annual rate of 0.45% of the Fund's average daily net assets for
providing or arranging to provide accounting, legal (except litigation),
dividend disbursing, transfer agency, registrar, custodial, shareholder
reporting, sub-accounting and recordkeeping services and functions. The
agreement provided that AIM pay all fees and expenses associated with these and
other functions, including, but not limited to, registration fees, shareholder
meeting fees, and proxy statement and shareholder report expenses. During the
year ended December 31, 1999, AIM was paid $151,347 under the agreement. As of
June 1, 1998, AIM voluntarily agreed to limit the operating services fees to an
annual rate of 0.45% of the first $50 million of the Fund's average daily net
assets and 0.10% of the Fund's average daily net assets in excess of $50
million. During the year ended December 31, 1999, AIM voluntarily waived
operating services fees in the amount of $139,199.
Pursuant to an amended operating services agreement effective July 1, 1999,
the Fund shall pay costs incurred for providing operating services, such as
accounting, legal (except litigation), dividend disbursing, transfer agency,
registrar, custodial, shareholder reporting, sub-accounting and recordkeeping
services and functions, including, but not limited to, registration fees,
shareholder meeting fees, and proxy statement and shareholder report expenses.
Further, the Fund's operating expenses are limited to 0.45% of the Fund's
average daily net assets.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a master administrative services agreement with AIM.
Pursuant to a master administrative services agreement, the Fund has agreed to
pay AIM for certain administrative costs incurred in providing accounting
services to the Fund. For the period July 1, 1999 though December 31, 1999, AIM
was paid $25,721 for such services.
Following the amendment to the operating services agreement effective July 1,
1999, the Fund entered into a transfer agency and service agreement with A I M
Fund Services, Inc. ("AFS"). Pursuant to a transfer agency and service
agreement, the Fund agreed to pay AFS a fee for providing transfer agency and
shareholder services to the Fund. For the period July 1, 1999 through December
31, 1999, AFS was paid $34,877 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
shares of the Fund. The Company has adopted plans pursuant to Rule 12b-1 under
the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class
C shares (collectively, the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C shares. AIM Distributors has contractually agreed to limit the
Class A shares plan payments to 0.25% for three years beginning August 4, 1997.
Of these amounts, the Fund may pay a service fee of 0.25% of the average daily
net assets of the Class A, Class B or Class C shares to selected dealers and
financial institutions who furnish continuing personal shareholder services to
their customers who purchase and own the appropriate class of shares of the
Fund. Any amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. During the year ended December 31, 1999, the Class A, Class B and Class
C shares paid AIM Distributors $67,620, $42,551 and $993,935, respectively, as
compensation under the Plans. During the year ended December 31, 1999, AIM
Distributors waived fees of $27,054 for Class A shares.
AIM Distributors received commissions of $9,075 from sales of the Class A
shares of the Fund during the year ended December 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1999,
AIM Distributors received $63,088 in contingent deferred sales charges imposed
on redemptions of Fund shares.
Certain officers and directors of the Company are officers and directors of
AIM, AFS and AIM Distributors.
During the period July 1, 1999 through December 31, 1999, the Fund paid legal
fees of $1,087 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as
counsel to the Company's directors. A member of that firm is a director of the
Company.
12
<PAGE> 15
NOTE 3-INDIRECT EXPENSES
During the year ended December 31, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $46 and $713, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $759 during the year ended December 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, in mutual fund shares in accordance with a deferred compensation
plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the year
ended December 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1999 was
$30,504,918 and $43,581,993, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of December 31, 1999 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $52,043,747
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (3,905,912)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $48,137,835
=========================================================
</TABLE>
Cost of investments for tax purposes is $98,408,642.
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended December 31, 1999
and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 1,038,717 $ 17,709,368 1,753,054 $ 28,241,964
- -------------------------------------------------------------------------------------------------------------------
Class B 154,805 2,600,272 309,463 5,088,103
- -------------------------------------------------------------------------------------------------------------------
Class C 914,757 15,303,016 1,767,625 28,826,767
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 28,852 526,848 9,847 156,574
- -------------------------------------------------------------------------------------------------------------------
Class B 3,257 59,148 3 46
- -------------------------------------------------------------------------------------------------------------------
Class C 59,722 1,083,956 71 1,122
- -------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,198,053) (20,340,110) (619,207) (9,613,757)
- -------------------------------------------------------------------------------------------------------------------
Class B (133,374) (2,213,357) (49,265) (784,917)
- -------------------------------------------------------------------------------------------------------------------
Class C (1,855,582) (31,312,120) (1,630,166) (25,715,783)
- -------------------------------------------------------------------------------------------------------------------
(986,899) $(16,582,979) 1,541,425 $ 26,200,119
===================================================================================================================
</TABLE>
13
<PAGE> 16
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the three-year period ended December 31,
1999, for a share of Class B capital stock outstanding during the year ended
December 31, 1999 and the period March 3, 1998 (date sales commenced) through
December 31, 1998 and for a share of Class C capital stock outstanding during
each of the years in the four-year period ended December 31, 1999 and the period
May 1, 1995 (date operations commenced) through December 31, 1995.
<TABLE>
<CAPTION>
CLASS A(a) CLASS B
----------------------------------- ------------------------
1999 1998 1997(b) 1999 1998
-------- ------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.57 $ 14.99 $13.42 $16.48 $16.21
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Income from investment operations:
Net investment income 0.13 0.09 0.17 (0.01) --
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Net gains on securities (both realized and unrealized) 3.57 1.59 1.69 3.56 0.27
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Total from investment operations 3.70 1.68 1.86 3.55 0.27
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Less distributions:
Dividends from net investment income (0.28) (0.10) (0.07) (0.15) --
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Distributions from net realized gains (0.07) -- (0.22) (0.07) --
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Total distributions (0.35) (0.10) (0.29) (0.22) --
- ------------------------------------------------------------ ------- ------- ------ ------ ------
Net asset value, end of period $ 19.92 $ 16.57 $14.99 $19.81 $16.48
============================================================ ======= ======= ====== ====== ======
Total return(c) 22.54% 11.20% 13.84% 21.70% 1.67%
============================================================ ======= ======= ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $31.412 $28,281 $8,444 $5,642 $4,289
============================================================ ======= ======= ====== ====== ======
Ratio of expenses to average net assets(d) 1.51%(e) 1.57% 1.71% 2.27%(e) 2.32%(f)
============================================================ ======= ======= ====== ====== ======
Ratio of net investment income (loss) to average net
assets(g) 0.71%(e) 0.84% 0.83% (0.05)%(e) 0.09%(f)
============================================================ ======= ======= ====== ====== ======
Portfolio turnover rate 24% 9% 9% 24% 9%
============================================================ ======= ======= ====== ====== ======
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and is not annualized for periods less than
one year.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.72%, 1.81% and 1.81% for 1999-1997 for Class A and 2.38% and 2.46%
(annualized) for 1999-1998 for Class B.
(e) Ratios are based on average net assets of $27,054,104 and $4,255,071 for
Class A and Class B, respectively.
(f) Annualized.
(g) 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 0.50%, 0.60% and 0.73% for 1999-1997 for Class A and
(0.16)% and (0.05)% (annualized) for 1999-1998 for Class B.
<TABLE>
<CAPTION>
CLASS C(a)
------------------------------------------------------------
1999(b) 1998 1997(b) 1996 1995
-------- -------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.48 $ 14.93 $ 13.42 $ 11.13 $10.00
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Income from investment operations:
Net investment income (loss) (0.01) -- 0.01 (0.01) --
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Net gains on securities (both realized and unrealized) 3.55 1.55 1.73 2.34 1.13
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Total from investment operations 3.54 1.55 1.74 2.33 1.13
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.15) -- (0.01) -- --
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Distributions from net realized gains (0.07) -- (0.22) (0.04) --
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Total distributions (0.22) -- (0.23) (0.04) --
- ------------------------------------------------------------ -------- -------- ------- ------- ------
Net asset value, end of period $ 19.80 $ 16.48 $ 14.93 $ 13.42 $11.13
============================================================ ======== ======== ======= ======= ======
Total return(c) 21.64% 10.38% 12.98% 20.99% 11.28%
============================================================ ======== ======== ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $108,821 $105,083 $93,162 $51,916 $9,467
============================================================ ======== ======== ======= ======= ======
Ratio of expenses to average net assets(d) 2.27%(e) 2.32% 2.46% 2.50% 2.50%(f)
============================================================ ======== ======== ======= ======= ======
Ratio of net investment income (loss) to average net
assets(g) (0.05)%(e) 0.09% 0.08% (0.16)% 0.03%(f)
============================================================ ======== ======== ======= ======= ======
Portfolio turnover rate 24% 9% 9% 5% 2%
============================================================ ======== ======== ======= ======= ======
</TABLE>
(a) Per share information and shares have been restated to reflect a 4 for 1
stock split, effected in the form of a 300% stock dividend, on November 7,
1997.
(b) Calculated using average shares outstanding.
(c) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(d) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
2.38% and 2.46% for 1999-1998.
(e) Ratios are based on average net assets of $99,393,505.
(f) Annualized.
(g) 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 (0.16)% and (0.05)% for 1999-1998.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM Advisor International Value Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Advisor International Value Fund (a
portfolio of AIM Advisor Funds, Inc.), including the
schedule of investments, as of December 31, 1999, and the
related statement of operations for the year then ended,
the statement of changes in net assets and the financial
highlights for each of the years in the two-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and the 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, 1999, 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 Advisor
International Value Fund as of December 31, 1999, the
results of its operations for the year then ended, the
changes in its net assets and the financial highlights
for each of the years in the two-year period then ended,
in conformity with generally accepted accounting
principles.
KPMG LLP
February 4, 2000
Houston, Texas
15
<PAGE> 18
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II SUB-ADVISOR
Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer INVESCO Global Asset Management Limited
12 Bermudian Rd., 3rd Floor
Edward K. Dunn Jr. Robert G. Alley P.O. Box HM66
Chairman, Mercantile Mortgage Corp.; Vice President Hamilton, HM AX, Bermuda
Formerly Vice Chairman, President
and Chief Operating Officer, Stuart W. Coco TRANSFER AGENT
Mercantile-Safe Deposit & Trust Co.; and Vice President
President, Mercantile Bankshares A I M Fund Services, Inc.
Melville B. Cox P.O. Box 4739
Jack Fields Vice President Houston, TX 77210-4739
Chief Executive Officer
Texana Global, Inc.; Karen Dunn Kelley CUSTODIAN
Formerly Member Vice President
of the U.S. House of Representatives State Street Bank and Trust Company
Edgar M. Larsen 225 Franklin Street
Carl Frischling Vice President Boston, MA 02110
Partner
Kramer, Levin, Naftalis & Frankel LLP Mary J. Benson COUNSEL TO THE FUND
Assistant Vice President and
Robert H. Graham Assistant Treasurer Ballard Spahr
President and Chief Executive Officer Andrews & Ingersoll, LLP
A I M Management Group Inc. Sheri Morris 1735 Market Street
Assistant Vice President and Philadelphia, PA 19103
Prema Mathai-Davis Assistant Treasurer
Chief Executive Officer, YWCA of the U.S.A., COUNSEL TO THE DIRECTORS
Commissioner, New York City Dept. for Renee A. Friedli
the Aging; and member of the Board of Directors, Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
Metropolitan Transportation Authority of 919 Third Avenue
New York State P. Michelle Grace New York, NY 10022
Assistant Secretary
Lewis F. Pennock DISTRIBUTOR
Attorney Nancy L. Martin
Assistant Secretary A I M Distributors, Inc.
Louis S. Sklar 11 Greenway Plaza
Executive Vice President Ofelia M. Mayo Suite 100
Hines Interests Assistant Secretary Houston, TX 77046
Limited Partnership
Lisa A. Moss AUDITORS
Assistant Secretary
KPMG LLP
Kathleen J. Pflueger 700 Louisiana
Assistant Secretary Houston, TX 77002
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
16
<PAGE> 19
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
AIM Advisor International Value Fund Class A, Class B and Class C shares paid
ordinary dividends in the amount of $0.2783, $0.1519, and $0.1519 per share,
respectively, to shareholders during its tax year ended December 31, 1999. Of
these amounts 1.77% is eligible for the dividends received deduction for
corporations. The Fund also distributed long-term capital gains of $546, 991 for
the Fund's tax year ended December 31, 1999. Of long-term capital gains
distributed, 100% is 20% rate gain.
For the fiscal year ended December 31, 1999, the amount of income received by
the Fund from sources within foreign countries and possessions of the United
States was $0.7332 per share (representing a total of $3,021,612). The amount of
taxes paid by the Fund to such countries for the fiscal year ended December 31,
1999 was $0.0849 per share (representing a total of $349,988). The following
table provides a breakdown by country of ordinary income dividends and foreign
taxes paid by the Fund during the fiscal year ended December 31, 1999:
<TABLE>
<CAPTION>
GROSS FOREIGN
INCOME TAX PAID
COUNTRY % %
- ------------------------------------------------------------ ------- --------
<S> <C> <C>
Australia................................................... 7.13% 3.48%
Denmark..................................................... 2.88% 3.82%
France...................................................... 5.18% 6.95%
Germany..................................................... 9.42% 7.18%
Italy....................................................... 6.80% 9.17%
Japan....................................................... 3.03% 5.05%
Netherlands................................................. 20.79% 27.05%
Portugal.................................................... 1.86% 1.67%
Spain....................................................... 5.53% 7.40%
Switzerland................................................. 2.38% 3.23%
United Kingdom.............................................. 29.70% 23.89%
Various..................................................... 0.65% 1.11%
- ------------------------------------------------------------ ------- --------
Subtotal.................................................... 95.35% 100.00%
- ------------------------------------------------------------ ------- --------
United States............................................... 4.65% 0.00%
- ------------------------------------------------------------ ------- --------
Total....................................................... 100.00% 100.00%
============================================================ ======= ========
</TABLE>
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund AIM Money Market Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately
AIM Capital Development Fund $160 billion in assets for more than 6.6 million
AIM Constellation Fund(1) INTERNATIONAL GROWTH FUNDS shareholders, including individual investors,
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund corporate clients and financial institutions,
AIM Large Cap Growth Fund AIM Asian Growth Fund as of December 31, 1999.
AIM Mid Cap Equity Fund AIM Developing Markets Fund The AIM Family of Funds--Registered Trademark--
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) is distributed nationwide, and AIM today is the
AIM Mid Cap Opportunities Fund AIM European Development Fund eighth-largest mutual fund complex in the United
AIM Select Growth Fund AIM International Equity Fund States in assets under management, according to
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund Strategic Insight, an independent mutual fund
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund monitor.
AIM Value Fund AIM New Pacific Growth Fund
AIM Weingarten Fund
GLOBAL GROWTH FUNDS
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund
AIM Advisor Flex Fund AIM Global Growth Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS
AIM Balanced Fund AIM Global Growth & Income Fund
AIM Basic Value Fund AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund
AIM Floating Rate Fund AIM Global Government Income Fund
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund
AIM Income Fund
AIM Intermediate Government Fund THEME FUNDS
AIM Limited Maturity Treasury Fund AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
TAX-FREE INCOME FUNDS AIM Global Health Care Fund
AIM High Income Municipal Fund AIM Global Infrastructure Fund
AIM Municipal Bond Fund AIM Global Resources Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(5)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(6)
</TABLE>
(1) Effective December 1, 1999, AIM Constellation Fund's investment strategy
broadened to allow investments across all market capitalizations. (2) AIM Small
Cap Growth Fund closed to new investors on November 8, 1999. (3) AIM Small Cap
Opportunities Fund closed to new investors on November 4, 1999. (4) On September
1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth Fund. Previously
the fund invested in all size companies in most areas of Europe. The fund now
seeks to invest at least 65% of its assets in large-cap companies within
countries using the euro as their currency (EMU-member countries). (5) On June
1, 1999, AIM Global Telecommunications Fund was renamed AIM Global
Telecommunications and Technology Fund. (6) Effective August 27, 1999, AIM
Global Trends Fund was restructured to operate as a traditional mutual fund.
Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your Financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
sales material after April 20, 2000, this report must be accompanied by a
current Quarterly Review of Performance for AIM Funds.
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc. IVAL-AR-1
