<PAGE> 1
[PHOTO APPEARS HERE]
AIM GLOBAL INCOME FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT OCTOBER 31, 1996
<PAGE> 2
[PHOTO APPEARS HERE]
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Income Fund's performance figures are historical and
reflect reinvestment of all distributions and changes in net asset
value. Unless otherwise indicated, the Fund's performance is computed
without a sales charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B 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 performance of the Fund's Class B shares will
differ from that of Class A shares.
o The Fund's distribution rate is equal to the actual distributions from
investment income declared for the prior 30-day period, expressed as
an annual percentage. Distribution rates may include daily dividends
and short-term capital gains.
o The 30-day yield is calculated on the basis of a formula defined by the
SEC. The formula is based on the portfolio's potential earnings from
dividends, interest, yield-to-maturity, or yield-to-call of the bonds
in the portfolio, net of all expenses and expressed on an annualized
basis.
o One-year performance includes reinvested distributions for Class A and
Class B shares of $0.9275 and $0.8715 per share, respectively.
o The Fund's investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less
than their original cost.
o The Fund's portfolio composition may change and there is no assurance
the Fund will continue to hold any specific security in any particular
country.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN
THIS REPORT:
o The Lehman Brothers Government Bond Index is an unmanaged composite
generally representative of intermediate- and long-term U.S. Treasury
and U.S. government agency securities. Index performance is for the
period 9/30/94-10/31/96.
o The Salomon Brothers World Government Bond Index is an unmanaged
composite of long-term foreign government debt securities. Index
performance is for the period 9/30/94-10/31/96.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not
reflect sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY
THE FDIC OR ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR
OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE;
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS
OF PRINCIPAL AMOUNT INVESTED.
AIM GLOBAL INCOME FUND
For shareholders who seek
a high level of current income.
The Fund invests in a portfolio
of debt securities
issued by U.S. and foreign
governments and corporations.
This report may be distributed only to current shareholders or to persons who
have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
[PHOTO OF Dear Shareholder:
Charles T.
Bauer, As you may have heard in the financial news, AIM Management
Chairman of Group Inc. recently announced a significant event in our
the Board of company's history--an agreement to merge with INVESCO PLC, one
the Fund, of the world's largest independent investment management groups.
APPEARS HERE] AIM has long been known for its strategic planning and forward
thinking. In seeking this merger, AIM had specific goals in
choosing a partner: to better AIM's position to succeed in an
increasingly competitive financial services environment, both
in the U.S. and globally; to ensure the continuation of AIM's
independent culture, investment philosophy, and dedication to
our shareholders; and to offer the broadest range of products
and services to our shareholders.
A "MERGER OF EQUALS" THAT PRESERVES INDEPENDENCE
When the merger is completed, AIM and INVESCO will be combined under a new
holding company to be named AMVESCO, to reflect the strongly complementary
strengths of our two companies which together create a "merger of equals."
AMVESCO will have combined assets under management in excess of $150 billion.
Most importantly, the agreement enables AIM to preserve its independent
culture--which has been so essential to our company's success. The locations,
management, structure, and brand names of AIM and INVESCO will not change.
With INVESCO, AIM achieves a strategic combination with a partner that offers
complementary rather than overlapping strengths. AIM has delivered impressive
performance over the years as a domestic retail fund manager. INVESCO brings to
AIM its primary strengths as an institutional money manager, and as a
successful international investment manager with significant operations in
North America, Europe, and the Pacific region.
NO CHANGES IN YOUR AIM FUND OR ITS MANAGEMENT
While AIM certainly will be enriched through these added strengths, it will
retain those qualities that have produced two decades of successful
performance. The reputation of AIM funds has been built by its seasoned team of
portfolio managers who adhere to AIM's disciplined and successful investment
management process. AIM's central goal is to keep the current investment team
in place and our time-tested investment philosophy intact. Also, the names of
AIM funds will not change.
Moreover, because the merger will not result in any changes in the way AIM
does business, this transaction will be seamless--without any disruption of
service to you.
YOUR VOTE IS IMPORTANT
The merger is expected to be completed on or about February 28. As a result of
the merger, it is necessary for shareholders of AIM funds to approve a new
investment advisory agreement.
Recently, we mailed an announcement for the shareholder meeting planned on
February 7, along with a proxy card that describes proposals that relate to the
management and policies of your Fund. We encourage you to review and return
your proxy as soon as possible. Your Fund's Board of Directors carefully
considered and unanimously approved the proposals and recommends that you vote
in favor of each one. Your vote is important to us. If you haven't yet mailed
your proxy card, please send it today.
The AIM/INVESCO merger marks a new and promising era for AIM, and we believe
it will yield exciting opportunities for AIM shareholders. We appreciate the
trust you have placed in us.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
-------------------------------
With INVESCO, AIM
achieves a strategic
combination with a
partner that offers comple-
mentary rather than
overlapping strengths.
-------------------------------
<PAGE> 4
The Managers' Overview
GLOBAL BOND PERFORMANCE STRONG
A roundtable discussion with the Fund management team for AIM Global Income
Fund for the year ended October 31, 1996.
- --------------------------------------------------------------------------------
Q. HOW DID AIM GLOBAL INCOME FUND PERFORM DURING THE REPORTING PERIOD?
A. It was a good year for AIM Global Income Fund--total return was 10.22% and
9.66% for Class A and Class B shares,
respectively. The Fund bested the 5.12% return for the Lehman Brothers
Government Bond Index and the 5.36% return for the Salomon Brothers World
Government Bond Index.
As of October 31, 1996, the Fund's 30-day yield was 6.09% and 5.90% for
Class A and Class B shares, respectively, when calculated on maximum
offering price. During the year ended October 31, 1996, net assets in the
Fund grew from $14 million to more than $38 million.
Q. HOW DID YOU MANAGE THE FUND DURING THE PERIOD?
A We continued our disciplined approach of remaining invested in three
bond-market segments: foreign bonds, investment-grade domestic bonds, and
high-yield bonds. These three asset classes tend to behave differently
because the factors that influence them vary. Toward the end of the
reporting period, the Fund modestly increased the investment-grade segment
of the portfolio to take advantage of declining interest rates.
Q. HOW WAS THE FUND POSITIONED AT THE END OF THE REPORTING PERIOD?
A. There were 157 holdings in the Fund as of October 31, 1996. Weighted
average maturity for the Fund was 7.9 years and duration was 5.5 years.
The Fund had an average portfolio quality rating of A as measured by
Standard & Poor's Corporation (S&P) and Moody's Investor Service
(Moody's), two widely known credit rating agencies, and other nationally
recognized securities rating organizations (NRSROs). These ratings are
historical and are based on analysis of the credit quality of the
individual securities in the Fund's portfolio.
================================================================================
AIM GLOBAL INCOME FUND HAS STRONG YEAR
1-year total returns as of 10/31/96
- --------------------------------------------------------------------------------
AIM FUND CLASS A 10.22%
AIM FUND CLASS B 9.66%
LEHMAN BROTHERS GOVERNMENT BOND INDEX 5.12%
SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX 5.36%
================================================================================
================================================================================
AIM GLOBAL INCOME FUND DISTRIBUTION RATES VS. KEY CURRENT YIELDS
As of 10/31/96
- --------------------------------------------------------------------------------
AIM FUND CLASS A 6.91%
AIM FUND CLASS B 6.42%
U.S. 10-YEAR TREASURY NOTE 6.34%
GERMANY 10-YEAR NOTE 6.00%
JAPAN 10-YEAR NOTE 2.61%
================================================================================
The Fund's distribution rate is equal to the actual distributions from
investment income declared for the prior 30-day period, expressed as an annual
percentage. Distribution rates may include daily dividends and short-term
capital gains.
Government securities, such as U.S. Treasury bills, notes, and bonds offer a
high degree of safety and are guaranteed as to timely payment of principal and
interest if held to maturity. Fund shares are not insured and their value and
yield will vary with market conditions.
Q. HOW DID FOREIGN BONDS PERFORM DURING THE PERIOD?
A. Most foreign bond markets performed well during the year covered by
this report. In Europe, much of that good performance stemmed from
government efforts to reduce budget deficits and outstanding
indebtedness to comply with requirements for the European Monetary
Union.
The Fund took advantage of those efforts by holding Swedish, French,
German, and Italian securities.
Q. WHAT WERE CONDITIONS LIKE IN THE INVESTMENT-GRADE DOMESTIC BOND MARKET
DURING THE PAST YEAR?
A. The bond market rallied during the final months of the reporting
period amid mounting evidence that the economy was
------------------------
The Fund also benefited from
exposure to such markets as
Australia, Canada, and the
United Kingdom where
interest rates declined and
currencies appreciated in value.
------------------------
See important Fund & index disclosures inside front cover.
2
<PAGE> 5
growing at a reasonable rate and that inflation was mild. Earlier in the
period, there had been concerns the Federal Reserve Board would raise interest
rates to slow rapid economic growth and forestall inflation, and that created
uncertainty in the bond market. However, the rate of growth of the economy
slowed from 4.7% in the second quarter to 2.0% in the third quarter. Moreover,
inflation remained modest. Satisfied with the pace of the economy, the Fed
left interest rates unchanged at its summer and fall meetings. With investor
concerns calmed, bond prices, down for much of the period, began to rise.
================================================================================
COUNTRIES REPRESENTED IN THE PORTFOLIO
As of 10/31/96
- --------------------------------------------------------------------------------
Canada Germany
United States Denmark
France Sweden
Switzerland Japan
Italy New Zealand
United Kingdom Australia
================================================================================
================================================================================
PORTFOLIO COMPOSITION
As of 10/31/96
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP 5 HOLDINGS COUPON MATURITY TOP 10 COUNTRIES
<S> <C> <C> <C> <C>
1. U.S. Treasury Note 6.50% 05/2001 1. United States 6. Australia
2. U.K. Treasury 7.00% 11/2001 2. Canada 7. France
3. U.S. Treasury Note 6.50% 08/2005 3. United Kingdom 8. Italy
4. U.S. Treasury Note 6.75% 08/2026 4. Germany 9. Japan
5. Swedish Government 10.25% 05/2003 5. Sweden 10. Denmark
================================================================================
</TABLE>
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
Q. HOW DID HIGH-YIELD BONDS PERFORM IN THIS ENVIRONMENT?
A. Unlike investment-grade bonds, high-yield bonds usually benefit from a
burgeoning economy. Improving business conditions and cash flows can
have a positive impact on the credit situation of many corporate
borrowers. The high-yield element of the portfolio performed well
because of healthy economic expansion during the period.
Q. WHAT IS YOUR MARKET OUTLOOK?
A. The Fund remains committed to maintaining exposure in the three key
bond-market sectors--foreign bonds, investment-grade bonds, and
high-yield bonds--to reduce volatility and enhance opportunities for
attractive returns over time.
As 1996 draws to a close, conditions appear to be improving for the
domestic bond market. The economy is growing at a reasonable rate
without rising inflation. That tends to favor both investment-grade
bonds and high-yield bonds.
In other developed countries, the prevailing trend has been toward
fiscal restraint and modest economic expansion, which has created a
favorable climate for the global bond market. Improving foreign
markets will continue to provide opportunities for Fund
diversification.
---------------------------
Improving
foreign markets
will continue to provide
opportunities for
Fund diversification.
---------------------------
3
<PAGE> 6
Long-Term Performance
AIM GLOBAL INCOME FUND VS. BENCHMARK INDEXES
The chart below compares your Fund to benchmark indexes. It is intended to give
you a general idea of how your Fund performed compared to the bond market over
the period 9/15/94-10/31/96. It is important to understand the difference
between your Fund and an index. Your Fund's total return is shown with a sales
charge and includes Fund expenses and management fees. An index measures the
performance of a hypothetical portfolio, in this case the Lehman Brothers
Government Bond Index and the Salomon Brothers World Government Bond Index.
Unlike your Fund, an index is not managed; therefore there are no sales
charges, expenses or fees. You cannot invest in an index. But if you could buy
all the securities that make up a particular index, you would incur expenses
that would affect the return on your investment.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/96 Including sales charges.
- --------------------------------------------------------------------------------
CLASS A SHARES
Inception (9/15/94) 10.22%
1 Year 4.99*
CLASS B SHARES
Inception (9/15/94) 10.93%
1 Year 4.66**
*10.22% excluding sales charges.
**9.66 excluding sales charges.
================================================================================
================================================================================
GROWTH OF A $10,000 INVESTMENT
Past performance is no guarantee of comparable future results.
<TABLE>
<CAPTION>
SALOMON BROTHERS LEHMAN BROTHERS
AIM GLOBAL INCOME AIM GLOBAL INCOME WORLD GOVERNMENT GOVERNMENT
FUND, CLASS A FUND, CLASS B BOND INDEX BOND INDEX
(In thousands)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9/15/94 $ 9,530 $10,000 $10,000 $10,000
11/30/94 9,510 9,967 9,974 10,021
2/28/95 9,929 10,395 10,441 10,523
5/31/95 10,559 11,031 11,074 11,673
8/31/95 10,798 11,268 11,249 11,365
11/30/95 11,236 11,713 11,709 11,838
2/28/96 11,394 11,871 11,704 11,754
5/31/96 11,480 11,947 11,512 11,393
8/31/96 11,798 12,262 11,664 12,058
10/31/96 12,298 12,472 12,119 12,333
=================================================================================================================
</TABLE>
(Data are for the month-ends shown)
Your Fund's total return includes sales charges, expenses, and management fees.
For Fund performance calculations and descriptions of indexes cited on this
page, please refer to the inside front cover.
<PAGE> 7
For Consideration
MARKETS LOOK TO INDICATORS TO SEE
WHICH WAY THE ECONOMIC WIND BLOWS
Every month, the government releases reports of key economic indicators--the
harbingers of the business cycle considered so vital to financial markets. Have
you ever wondered why economic indicators are so important? We asked Gary
Beauchamp, AIM's Economic Strategist, to discuss a few widely followed
indicators that may be of interest to investors.
GROSS DOMESTIC PRODUCT (GDP)
GDP measures the final output of goods and services
produced in the United States in one year, which makes it the broadest measure
of economic performance. Initial estimates are released about a month after the
close of each quarter.
Financial markets react strongly to the GDP number because it indicates the
pace of economic activity. For instance, if the GDP is growing at a faster rate
than in previous periods, it's an indication that the economy may be heating
up. Rapid growth strains the economy, and that drives up prices and interest
rates. The resulting inflation erodes corporate profits and the value of
financial securities. Conversely, growth that is too slow causes prices and
profits to fall, and that drives up unemployment and dries up demand.
EMPLOYMENT DATA
When the various economic indicators are mixed, many analysts consider
employment data to be the most important. An increase in employment, a decrease
in initial jobless claims, or a decrease in unemployment can bode well for the
economy. However, an unexpectedly large surge in employment, such as the
non-farm payroll figures reported last February and March, can signal the
potential for inflation.
INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
Monthly industrial production and capacity utilization indicators report the
efficiency of economic productivity. The index of industrial production
measures changes in the output of the mining, manufacturing, and gas and
electric utilities sectors of the economy. Capacity utilization is the rate at
which industrial production sectors operate--it is an indicator of industry's
current physical limits.
Together, these indicators can reveal expansion or contraction in the economy
before the GDP. High levels are positive; but maximum levels of industrial
production and capacity utilization can indicate inordinate strain on the
economy, which can lead to inflation. Conversely, low levels of capacity
utilization often generate increased productivity efficiency, and that can
signal an upturn in the economy from recession.
HOUSING STARTS
Released monthly by the U.S. Department of Commerce, the housing starts figure
is an estimate of the number of new homes and apartments under construction
within a stated period. The housing starts figure is sensitive to changes in
interest rates and reported levels of new home sales--another indicator of
consumer confidence. When consumers feel secure about the direction of the
economy, they are more likely to make long-term financial commitments like home
mortgages. Conversely, housing starts tend to fall well before the onset of
recession. One of the most volatile indicators, housing start figures often
vary widely from month to month and are sometimes substantially revised.
INDEX OF LEADING ECONOMIC INDICATORS
The U.S. Commerce Department tracks the performance of the economy by measuring
changes in the business cycle--the alternating progression of the economy from
periods of expansion when business is growing to periods of contraction when
business activity slows and unemployment increases.
Every month, the Commerce Department compiles its composite index of leading
economic indicators. Leading indicators are those factors that have shown the
tendency to signal change before the economy makes a major turn. The index
measures changes in such factors as stock prices, new orders for durable goods,
contracts and orders for plant and equipment, and average weekly claims for
state unemployment compensation. Positive changes in the index signal
improvement in the economy. Negative changes are understood to be warnings that
the economy might contract.
"The composite index of leading economic indicators is not the square root of
the universe. There is no single index or formula that provides all the answers
to the problems of business forecasting."
Michael B. Lehman, The Business One Irwin Guide to Using The Wall Street
Journal
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS & NOTES-37.45%
ADVERTISING/BROADCASTING-1.63%
SFX Broadcasting, Inc.
Sr. Sub. Notes, 10.75%
05/15/06 $ 200,000 $ 205,000
- ----------------------------------------------------------------
Sinclair Broadcast Group,
Sr. Sub. Notes, 10.00%
09/30/05 100,000 97,000
- ----------------------------------------------------------------
Time Warner Inc.,
Deb., 6.85% 01/15/26 125,000 122,333
- ----------------------------------------------------------------
Notes, 8.18% 08/15/07 200,000 205,810
- ----------------------------------------------------------------
630,143
- ----------------------------------------------------------------
AIRLINES-0.76%
Airplanes Pass Through Trust,
Sub. Bonds, 10.875% 03/15/19 230,000 250,987
- ----------------------------------------------------------------
Greenwich Air Services Inc.,
Sr. Notes, 10.50% 06/01/06 40,000 41,800
- ----------------------------------------------------------------
292,787
- ----------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.16%
CSK Auto Inc.,
Sr. Sub. Notes, 11.00%
11/01/06
(acquired 10/23/96; cost
$60,000)(b) 60,000 61,050
- ----------------------------------------------------------------
BANKING-1.74%
First Union Bancorp,
Sub. Deb., 7.50% 04/15/35 200,000 209,990
- ----------------------------------------------------------------
Royal Bank of Scotland,
Yankee Bond, 6.375% 02/01/11 500,000 463,710
- ----------------------------------------------------------------
673,700
- ----------------------------------------------------------------
BEVERAGES-1.55%
Coca Cola Enterprises,
Notes, 7.24% 06/20/20(c) 3,113,000 598,878
- ----------------------------------------------------------------
CABLE TELEVISION-2.45%
CAI Wireless Systems Inc.,
Sr. Notes, 12.25% 09/15/02 40,000 38,800
- ----------------------------------------------------------------
Comcast UK Cable,
Yankee Unsec. Sr. Disc. Deb.,
11.20% 11/15/07(d) 400,000 258,000
- ----------------------------------------------------------------
Fundy Cable Ltd.,
Yankee Bonds, 11.00% 11/15/05 30,000 31,350
- ----------------------------------------------------------------
Kabelmedia Holdings GMBH,
Yankee Unsec. Sr. Disc. Notes,
13.625% 08/01/06(d) 200,000 109,500
- ----------------------------------------------------------------
Rifkin Acquisition Partners
L.P.,
Sr. Sub. Notes, 11.125%
01/15/06 40,000 40,800
- ----------------------------------------------------------------
Telewest PLC,
Yankee Sr. Disc. Deb.,
11.00% 10/01/07(d) 50,000 31,876
- ----------------------------------------------------------------
United International Holdings
Inc.,
Sec. Sr. Disc. Notes, 11/15/99
12.99%(d) 200,000 138,000
- ----------------------------------------------------------------
Viacom Inc.,
Sr. Notes, 7.75% 06/01/05 100,000 97,053
- ----------------------------------------------------------------
Wireless One Inc.,
Units, 13.00% 10/15/03(e) 200,000 203,000
- ----------------------------------------------------------------
948,379
- ----------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CHEMICALS-1.38%
BPC Holding Corp.,
Sr. Notes, 12.50% 06/15/06 $ 100,000 $ 105,250
- ----------------------------------------------------------------
Crain Industries,
Sr. Sub. Notes, 13.50%
08/15/05 40,000 44,600
- ----------------------------------------------------------------
Laroche Industries,
Sr. Sub Notes, 13.00% 08/15/04 100,000 108,000
- ----------------------------------------------------------------
Polymer Group Inc.,
Sr. Notes, 12.25% 07/15/02 200,000 218,000
- ----------------------------------------------------------------
Sterling Chemicals Inc.,
Unsec. Sr. Sub. Notes, 11.75%
08/15/06 60,000 60,600
- ----------------------------------------------------------------
536,450
- ----------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.27%
Printpack Inc.,
Sr. Sub. Notes, 10.625%
08/15/06(b)
(acquired 08/15/96-09/04/96;
cost $100,500) 100,000 103,250
- ----------------------------------------------------------------
CONSUMER NON-DURABLES-0.27%
Hines Horticulture Inc.,
Sr. Sub Notes, 11.75% 10/15/05 100,000 105,500
- ----------------------------------------------------------------
CONTAINERS-0.35%
Ivex Packaging,
Sr. Sub. Notes, 12.50%
12/15/02 10,000 10,750
- ----------------------------------------------------------------
Owens-Illinois Inc.,
Sr. Sub. Notes, 10.50%
06/15/02 50,000 52,126
- ----------------------------------------------------------------
Riverwood International,
Unsec. Sr. Sub. Notes,
10.875% 04/01/08 80,000 73,200
- ----------------------------------------------------------------
136,076
- ----------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-2.12%
Associates Corp.,
Deb., 7.95% 02/15/10 100,000 110,246
- ----------------------------------------------------------------
Household Finance Co.,
Notes, 7.125% 09/01/05 700,000 709,521
- ----------------------------------------------------------------
819,767
- ----------------------------------------------------------------
FOOD PROCESSING-0.60%
Chiquita Brands International
Inc.,
Unsec. Sr. Notes, 10.25%
11/01/06 80,000 82,400
- ----------------------------------------------------------------
International Home Foods,
Sr. Sub. Notes, 10.375%
11/01/06(b)
(acquired 10/29/96; cost
$50,000) 50,000 50,500
- ----------------------------------------------------------------
Pilgrim's Pride Corp.,
Sr. Sub. Notes, 10.875%
08/01/03 100,000 99,250
- ----------------------------------------------------------------
232,150
- ----------------------------------------------------------------
FOREIGN GOVERNMENT-0.81%
Province of Manitoba,
Yankee Bonds, 7.75% 07/17/16 300,000 314,703
- ----------------------------------------------------------------
GAMING-1.57%
Aztar Corp.,
Sr. Sub. Notes, 11.00%
10/01/02 30,000 28,200
- ----------------------------------------------------------------
Casino America Inc.,
Gtd. Sr. Notes, 12.50%
08/01/03 200,000 205,500
- ----------------------------------------------------------------
Coast Hotel & Casino,
First Mortgage Notes, 13.00%
12/15/02 70,000 75,250
- ----------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
GAMING-(CONTINUED)
Harvey Casinos Resorts,
Unsec. Sr. Sub. Notes,
10.625% 06/01/06 $ 100,000 $ 104,750
- ----------------------------------------------------------------
Showboat Marina,
First Mortgage Notes, 13.50%
03/15/03 100,000 107,500
- ----------------------------------------------------------------
Trump Atlantic City,
First Mortgage Notes, 11.25%
05/01/06 90,000 85,050
- ----------------------------------------------------------------
606,250
- ----------------------------------------------------------------
HOMEBUILDING-0.14%
Continental Homes Holdings,
Sr. Notes, 10.00% 04/15/06 55,000 55,550
- ----------------------------------------------------------------
HOTELS/MOTELS-0.63%
ITT Corp. (New),
Deb., 7.375% 11/15/15 150,000 144,893
- ----------------------------------------------------------------
John Q. Hammons Hotels,
Gtd. First Mortgage Notes,
9.75% 10/01/05 100,000 100,000
- ----------------------------------------------------------------
244,893
- ----------------------------------------------------------------
LEISURE & RECREATION-0.47%
Cobblestone Golf Group,
Sr. Notes, 11.50% 06/01/03(b)
(acquired 05/29/96; cost
$100,000) 100,000 103,250
- ----------------------------------------------------------------
Icon Health & Fitness Inc.,
Sr. Sub. Notes, 13.00%
07/15/02 70,000 78,574
- ----------------------------------------------------------------
181,824
- ----------------------------------------------------------------
MACHINERY (HEAVY)-0.48%
Fairfield Manufacturing,
Sr. Sub. Notes, 11.375%
07/01/01 50,000 51,750
- ----------------------------------------------------------------
Primeco Inc.,
Sr. Sub. Notes, 12.75%
03/01/05 120,000 132,600
- ----------------------------------------------------------------
184,350
- ----------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.38%
Interlake Corp.,
Sr. Notes, 12.00% 11/15/01 40,000 42,400
- ----------------------------------------------------------------
MVE Inc.,
Sr. Sec. Notes, 12.50%
02/15/02 100,000 105,250
- ----------------------------------------------------------------
147,650
- ----------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-0.21%
Dynacare Inc.,
Yankee Sr. Notes, 10.75%
01/15/06 80,000 81,300
- ----------------------------------------------------------------
MEDICAL
INSTRUMENTS/PRODUCTS-0.47%
Dade International Inc.,
Sr. Sub. Notes, 11.125%
05/01/06(b)
(acquired 04/30/96-07/16/96;
cost $102,700) 100,000 107,000
- ----------------------------------------------------------------
Graphic Controls Corp.,
Sr. Sub. Notes, 12.00%
09/15/05 70,000 75,950
- ----------------------------------------------------------------
182,950
- ----------------------------------------------------------------
METALS (MISCELLANEOUS)-0.33%
Rio Algom Ltd.,
Yankee Deb., 7.05% 11/01/05 130,000 127,374
- ----------------------------------------------------------------
NATURAL GAS PIPELINE-1.56%
Ferrellgas Partners L.P.,
Sr. Notes, 9.375% 06/15/06 300,000 300,750
- ----------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
NATURAL GAS PIPELINE-(CONTINUED)
Plains Resources Inc.,
Sr. Sub. Notes, 10.25%
03/15/06 $ 50,000 $ 52,000
- ----------------------------------------------------------------
Talisman Energy Inc.,
Yankee Deb., 7.125% 06/01/07 250,000 249,260
- ----------------------------------------------------------------
602,010
- ----------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-1.27%
Benton Oil & Gas,
Sr. Notes, 11.625% 05/01/03 50,000 55,000
- ----------------------------------------------------------------
Forest Oil Corp.,
Sr. Sub. Notes, 11.25%
09/01/03 100,000 106,500
- ----------------------------------------------------------------
Mariner Energy Corp.,
Sr. Sub. Notes, 10.50%
08/01/06(b)
(acquired 08/12/96-09/04/96;
cost $110,350) 110,000 113,987
- ----------------------------------------------------------------
Maxus Energy,
Deb., 11.50% 11/15/15 170,000 178,713
- ----------------------------------------------------------------
Petroleum Heat & Power Inc.,
Sub. Deb., 12.25% 02/01/05 33,000 36,960
- ----------------------------------------------------------------
491,160
- ----------------------------------------------------------------
OIL & GAS (INTEGRATED)-0.53%
Wainoco Oil Corp.,
Sr. Sub. Notes, 12.00%
08/01/02 200,000 207,000
- ----------------------------------------------------------------
OIL & GAS (SERVICES)-0.05%
Falcon Drilling Co. Inc.,
Sr. Notes, 9.75% 01/15/01 20,000 20,500
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.59%
National Fiberstock Corp.,
Sr. Notes, 11.625% 06/15/02(b)
(acquired 06/21/96; cost
$100,000) 100,000 104,500
- ----------------------------------------------------------------
Rapp International Finance,
Gtd. Yankee Sec. Notes,
11.50% 12/15/00 50,000 52,000
- ----------------------------------------------------------------
Repap New Brunswick,
Yankee Bonds, 10.625% 04/15/05 70,000 70,700
- ----------------------------------------------------------------
227,200
- ----------------------------------------------------------------
POLLUTION CONTROL-2.16%
Norcal Waste Systems,
Sr. Notes, 12.75% 11/15/05 150,000 165,000
- ----------------------------------------------------------------
WMX Technologies Inc.,
Unsec. Notes, 7.10% 08/01/26 650,000 672,777
- ----------------------------------------------------------------
837,777
- ----------------------------------------------------------------
PUBLISHING-0.73%
News America Holdings,
Gtd. Sr. Deb., 9.25% 02/01/13 250,000 280,797
- ----------------------------------------------------------------
RAILROADS-0.19%
Johnstown America Industries
Inc.,
Sr. Sub. Notes, 11.75%
08/15/05 80,000 73,600
- ----------------------------------------------------------------
REAL ESTATE-1.32%
Finova Capital Corp.,
Notes, 7.40% 05/06/06 500,000 511,820
- ----------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.54%
Carr-Gottstein Foods Co.,
Sr. Sub. Notes, 12.00%
11/15/05 100,000 105,000
- ----------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
RETAIL (FOOD & DRUG)-(CONTINUED)
Great Atlantic & Pacific,
Yankee Bonds, 7.78%
11/01/00(b)
(acquired 10/18/95; cost
$100,000) $ 100,000 $ 102,221
- ----------------------------------------------------------------
207,221
- ----------------------------------------------------------------
RETAIL (STORES)-0.93%
Loehmann's Holdings, Inc.,
Unsec. Sr. Notes, 11.875%
05/15/03 100,000 106,750
- ----------------------------------------------------------------
Samsonite Corp.,
Sr. Sub. Notes, 11.125%
07/15/05 40,000 42,400
- ----------------------------------------------------------------
Specialty Retailers Inc.,
Sr. Sub. Notes, 11.00%
08/15/03 75,000 77,062
- ----------------------------------------------------------------
United Stationer Supply Inc.,
Sr. Sub. Notes, 12.75%
05/01/05 120,000 132,000
- ----------------------------------------------------------------
358,212
- ----------------------------------------------------------------
SCHOOLS-0.28%
Herff Jones Inc.,
Sr. Sub. Notes, 11.00%
08/15/05 100,000 106,750
- ----------------------------------------------------------------
SEMICONDUCTORS-0.29%
Advanced Micro Devices,
Sec. Sr. Notes, 11.00%
08/01/03 110,000 113,850
- ----------------------------------------------------------------
STEEL-0.96%
Bayou Steel Corp.,
First Mortgage Notes, 10.25%
03/01/01 135,000 129,600
- ----------------------------------------------------------------
GS Technologies Inc.,
Sr. Notes, 12.00% 09/01/04 75,000 78,187
- ----------------------------------------------------------------
Gulf States Steel Corp.,
First Mortgage Notes, 13.50%
04/15/03 60,000 57,000
- ----------------------------------------------------------------
Oregon Steel Mills,
First Mortgage Notes, 11.00%
06/15/03 100,000 105,000
- ----------------------------------------------------------------
369,787
- ----------------------------------------------------------------
TELECOMMUNICATIONS-5.10%
Arch Communications Group,
Sr. Disc. Notes, 10.875%
03/15/08(d) 250,000 137,500
- ----------------------------------------------------------------
Celcaribe SA,
Sr. Notes, 13.50% 03/15/04(d) 500,000 419,376
- ----------------------------------------------------------------
Clearnet Communications,
Yankee Units, 14.75%
12/15/05(d)(f) 100,000 59,125
- ----------------------------------------------------------------
Omnipoint Corp.,
Sr. Notes, 11.625% 08/15/06(b)
(acquired 08/22/96; cost
$200,000) 200,000 202,000
- ----------------------------------------------------------------
PriCellular Wire,
Sr. Notes, 10.75% 11/01/04(b)
(acquired 10/30/96; cost
$40,000) 40,000 40,400
- ----------------------------------------------------------------
Pronet Inc.,
Sr. Sub. Notes, 11.875%
06/15/05 30,000 27,600
- ----------------------------------------------------------------
Sprint Spectrum L.P.,
Unsec. Sr. Notes, 11.00%
08/15/06 200,000 201,501
- ----------------------------------------------------------------
Sygnet Wireless Inc.,
Unsec. Sr. Notes, 11.50%
10/01/06 60,000 60,600
- ----------------------------------------------------------------
TCI Communications Inc.,
Notes, 8.00% 08/01/05 150,000 142,630
- ----------------------------------------------------------------
Teleport Communications,
Sr. Disc. Notes, 11.125%
07/01/07(d) 300,000 192,000
- ----------------------------------------------------------------
360 Communications Co.,
Sr. Notes, 7.50% 03/01/06 500,000 497,355
- ----------------------------------------------------------------
1,980,087
- ----------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TRANSPORTATION
(MISCELLANEOUS)-0.22%
Stena AB,
Yankee Sr. Notes, 10.50%
12/15/05 $ 80,000 $ 83,700
- ----------------------------------------------------------------
TRUCKING-0.76%
Ameritruck Distribution,
Sr. Sub. Notes, 12.25%
11/15/05 300,000 294,750
- ----------------------------------------------------------------
UTILITIES-0.67%
El Paso Electric Co.,
First Mortgage Notes, 8.90%
02/01/06 250,000 258,407
- ----------------------------------------------------------------
WATER SUPPLY-0.53%
Panda Funding Corp.,
Pooled Project Bonds, 11.625%
08/20/12(b)
(acquired 07/26/96; cost
$200,000) 200,000 206,250
- ----------------------------------------------------------------
Total U.S. Dollar
Denominated
Non-Convertible Bonds &
Notes 14,495,852
- ----------------------------------------------------------------
U.S. DOLLAR DENOMINATED CONVERTIBLE
BONDS & NOTES-1.99%
AIRLINES-1.32%
Continental Airlines Inc.,
Conv. Sr. Sub. Notes, 6.75%
04/15/06(b)
(acquired 02/27/96; cost
$499,825) 500,000 511,250
- ----------------------------------------------------------------
TRANSPORTATION
(MISCELLANEOUS)-0.67%
Laidlaw Inc.,
Unsec. Unsub. Conv. Deb.,
6.00% 01/15/99 200,000 260,000
- ----------------------------------------------------------------
Total U.S. Dollar
Denominated Convertible
Bonds & Notes 771,250
- ----------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED NON-
CONVERTIBLE BONDS &
NOTES(G)-12.97%
CANADA-5.63%
Bank of Montreal
(Finance-Asset Management),
Sub. Deb., 7.92% 07/31/12 CAD 300,000 244,441
- ----------------------------------------------------------------
Bell Canada
(Telecommunications), Deb,
10.875% 10/11/04 150,000 140,880
- ----------------------------------------------------------------
Canadian Oil Debco Inc. (Oil &
Gas),
Deb., 11.00% 10/31/00 250,000 219,650
- ----------------------------------------------------------------
Teleglobe Canada Inc.
(Telecommunications),
Deb., 8.35% 06/20/03 650,000 535,442
- ----------------------------------------------------------------
Trans-Canada Pipelines (Oil &
Gas),
Notes, 8.55% 02/01/06 500,000 418,221
- ----------------------------------------------------------------
Notes, 10.625% 10/20/09 375,000 359,694
- ----------------------------------------------------------------
Viridian Inc.
(Chemicals-Specialty), Notes,
11.00% 03/31/04 300,000 261,565
- ----------------------------------------------------------------
2,179,893
- ----------------------------------------------------------------
FRANCE-0.40%
Credit Local de France
(Finance-Consumer Credit),
Sr. Unsub. Deb., 6.00%
11/15/01 FRF 250,000 50,748
- ----------------------------------------------------------------
IBM International Finance N.V.
(Computer Mainframes),
Sr. Unsub. Deb., 10.00%
08/29/97 500,000 104,020
- ----------------------------------------------------------------
154,768
- ----------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
GERMANY-3.22%
Ford Credit Europe PLC
(Finance-Consumer Credit),
Deb., 6.00% 03/30/99 DEM 200,000 $ 137,936
- ----------------------------------------------------------------
International Bank for
Reconstruction & Development
(Supranational
Organization), Unsub. Global
Bonds, 7.125% 04/12/05 475,000 329,574
- ----------------------------------------------------------------
LKB Global (Banking),
Gtd Notes, 6.00% 01/25/06 1,200,000 780,666
- ----------------------------------------------------------------
1,248,176
- ----------------------------------------------------------------
ITALY-2.33%
KFW International Finance
(Finance-Consumer Credit),
Gtd. Notes, 11.625% 11/27/98 ITL 570,000,000 402,059
- ----------------------------------------------------------------
Swedish Export Credit
(Finance-Consumer Credit)
Unsec. Unsub. Deb., 11.70%
12/04/98 700,000,000 500,867
- ----------------------------------------------------------------
902,926
- ----------------------------------------------------------------
JAPAN-0.65%
Sony Corp. (Electronic
Components/Miscellaneous),
Bonds, 1.40% 09/30/03 JPY 6,000,000 67,033
- ----------------------------------------------------------------
Toyota Motor Corp.
(Automobile-Manufacturers),
Deb., 1.20% 01/28/98 15,000,000 182,930
- ----------------------------------------------------------------
249,963
- ----------------------------------------------------------------
SWEDEN-0.29%
Credit Foncier de France
(Finance-Consumer Credit)
Sr. Unsub. Deb., 6.50%
02/22/99 SEK 750,000 113,980
- ----------------------------------------------------------------
UNITED KINGDOM-0.45%
KFW International Finance
(Finance-Consumer Credit),
Gtd. Notes, 10.625% 09/03/01 BPS 100,000 173,120
- ----------------------------------------------------------------
Total Non-U.S. Dollar
Denominated
Non-Convertible Bonds &
Notes 5,022,826
- ----------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED CONVERTIBLE
BONDS & NOTES(g)-2.74%
Societe Generale (Banking),
Conv. Deb., 3.50% 01/01/00 FRF 231,000 49,292
- ----------------------------------------------------------------
JAPAN-1.51%
Glaxo Holdings PLC
(Medical-Drugs), Conv. Deb.,
4.30% 09/28/98 JPY 4,000,000 40,824
- ----------------------------------------------------------------
Jusco Co. Ltd. (Consumer
Non-Durables), Conv. Deb.,
1.20% 02/20/01 40,000,000 544,728
- ----------------------------------------------------------------
585,552
- ----------------------------------------------------------------
SWITZERLAND-1.10%
Aderans Co. Ltd. (Cosmetics &
Toiletries), Conv. Deb.,
0.875% 08/31/98 CHF 200,000 159,810
- ----------------------------------------------------------------
Yamada Denki Co. Ltd.
(Retail-Stores), Conv. Notes,
0.25% 03/31/00 300,000 265,822
- ----------------------------------------------------------------
425,632
- ----------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Convertible
Bonds & Notes 1,060,476
- ----------------------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED GOVERNMENT
BONDS & NOTES(g)-25.00%
AUSTRALIA-4.02%
Australian Government,
Gtd. Deb., 10.00% 02/15/06 AUD 500,000 $ 465,762
- ----------------------------------------------------------------
Gtd. Deb., 10.00% 10/15/07 500,000 472,388
- ----------------------------------------------------------------
Queensland Treasury Corp.,
Gtd. Notes, 8.875% 11/08/96 180,000 142,854
- ----------------------------------------------------------------
Treasury Corp. of Victoria,
Local Government Gtd. Deb.,
12.00% 09/22/01 500,000 474,984
- ----------------------------------------------------------------
1,555,988
- ----------------------------------------------------------------
CANADA-3.30%
British Columbia (Province of),
Deb., 9.00% 06/21/04(c) CAD 150,000 68,721
- ----------------------------------------------------------------
British Columbia Municipal
Finance Authority, Deb., 7.75%
12/01/05 500,000 404,678
- ----------------------------------------------------------------
Ontario Province,
Sr. Unsub. Deb., 8.35%
03/11/03 600,000 493,583
- ----------------------------------------------------------------
Ontario Province, STRIP, 8.18%
01/10/45(c) 15,000,000 310,588
- ----------------------------------------------------------------
1,277,570
- ----------------------------------------------------------------
DENMARK-1.82%
Kingdom of Denmark,
Deb., 8.00% 11/15/01 DKK 3,750,000 706,218
- ----------------------------------------------------------------
FRANCE-1.83%
French Treasury Bill,
Notes, 5.75% 11/12/98 FRF 3,500,000 709,413
- ----------------------------------------------------------------
GERMANY-2.03%
Bundesrepublik Deutschland,
Deb., 6.75% 07/15/04 DEM 750,000 512,554
- ----------------------------------------------------------------
Deb., 6.875% 05/12/05 400,000 273,257
- ----------------------------------------------------------------
785,811
- ----------------------------------------------------------------
NEW ZEALAND-1.35%
New Zealand Government,
Gtd. Deb., 9.00% 11/15/96 NZD 305,000 215,669
- ----------------------------------------------------------------
Gtd. Deb., 10.00% 07/15/97 425,000 304,612
- ----------------------------------------------------------------
520,281
- ----------------------------------------------------------------
SWEDEN-3.78%
Swedish Government
Bonds, 13.00% 06/15/01 SEK 3,000,000 573,270
- ----------------------------------------------------------------
Bonds, 10.25% 05/05/03 5,000,000 890,019
- ----------------------------------------------------------------
1,463,289
- ----------------------------------------------------------------
UNITED KINGDOM-6.87%
Ontario Province,
Sr. Unsub. Notes, 6.875%
09/15/00 BPS 35,000 55,101
- ----------------------------------------------------------------
United Kingdom Treasury Notes
8.00% 12/07/00 350,000 587,549
- ----------------------------------------------------------------
7.00% 11/06/01 800,000 1,290,233
- ----------------------------------------------------------------
7.50% 12/07/06 450,000 726,357
- ----------------------------------------------------------------
2,659,240
- ----------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Government
Bonds & Notes 9,677,810
- ----------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS-1.63%
ADVERTISING/BROADCASTING-0.00%
Time Warner Inc., Series K Conv.
Pfd.(b)
(acquired 06/06/96; cost $775) 1 $ 832
- ----------------------------------------------------------------
ELECTRIC POWER-0.62%
Citizens Utilities Trust, $2.50
Conv. Pfd. 5,000 240,000
- ----------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-1.01%
Conseco Inc., $4.28, Conv. Pfd. 4,000 390,000
- ----------------------------------------------------------------
Total Convertible Preferred
Stocks 630,832
- ----------------------------------------------------------------
WARRANTS-0.04%
CABLE TELEVISION-0.00%
Wireless One-Wt., expiring
10/19/00(h) 150 450
- ----------------------------------------------------------------
CONTAINERS-0.01%
MVE Inc.,-Wt., expiring
02/15/02(h) 100 3,000
- ----------------------------------------------------------------
LEISURE & RECREATION-0.01%
IHF Holdings-Wt., expiring
11/14/99(h) 70 2,800
- ----------------------------------------------------------------
STEEL-0.00%
Gulf States Steel-Wt., expiring
04/15/03(h) 60 300
- ----------------------------------------------------------------
TELECOMMUNICATIONS-0.02%
Clearnet Communications-Wt.,
expiring 09/15/05(h) 330 2,640
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS-(CONTINUED)
Intermedia-Wt., expiring
06/01/00(b)(h)
(acquired 05/25/95; cost $150) 150 $ 7,500
- ----------------------------------------------------------------
10,140
- ----------------------------------------------------------------
Total Warrants 16,690
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-11.01%
U.S. Treasury Notes
6.50% 05/31/01 $ 1,500,000 $ 1,525,230
- ----------------------------------------------------------------
6.625% 06/30/01 500,000 510,825
- ----------------------------------------------------------------
6.50% 08/15/05 1,200,000 1,213,488
- ----------------------------------------------------------------
6.75% 08/15/26 1,000,000 1,012,160
- ----------------------------------------------------------------
Total U.S. Treasury securities 4,261,703
- ----------------------------------------------------------------
REPURCHASE AGREEMENTS(i)-3.62%
Daiwa Securities America Inc.,
5.53% 11/01/96(j) 400,640 400,640
- ----------------------------------------------------------------
Dresdner Securities Inc.,
5.54% 11/01/96(k) 1,000,000 1,000,000
- ----------------------------------------------------------------
Total Repurchase Agreements 1,400,640
- ----------------------------------------------------------------
TOTAL INVESTMENTS-96.45% 37,338,079
- ----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-3.55% 1,375,691
- ----------------------------------------------------------------
NET ASSETS-100.00% $ 38,713,770
================================================================
</TABLE>
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as indicated by note (g).
(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 October 31, 1996 was
$1,713,990 which represented 4.43% 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) Discounted bond at purchase. Interest rate represents coupon rate at which
the bond will accrue at a specified future date.
(e) Issued as a unit. This unit also includes 150 warrants to purchase one share
of common stock each at $11.55 per share.
(f) Issued as a unit. This unit also includes 330 warrants to purchase shares of
common stock.
(g) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(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 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.
(j) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$750,115,208. Collateralized by $733,115,000 U.S. Treasury obligations, 0%
to 10.375% due 11/15/96 to 8/15/23.
(k) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$200,030,778. Collateralized by $198,651,000 U.S. Treasury obligations,
4.75% to 9.25% due 11/30/97 to 6/30/99.
Abbreviations:
<TABLE>
<S> <C> <C> <C> <C>
AUD Australian Dollar ITL Italian Lire
BPS British Pound Sterling JPY Japanese Yen
CAD Canadian Dollar NZD New Zealand Dollar
CHF Swiss Franc Pfd. Preferred
Conv. Convertible Sec. Secured
Deb. Debentures SEK Swedish Krona
DEM German Deutschemark Sr. Senior
Disc. Discounted Sub. Subordinated
DKK Danish Krone Unsec. Unsecured
FRF French Franc Unsub. Unsubordinated
Gtd. Guaranteed Wt. Warrant
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$36,405,538) $ 37,338,079
- --------------------------------------------------------
Foreign currencies, at market value (cost
$48,394) 48,572
- --------------------------------------------------------
Receivables for:
Investments sold 519,266
- --------------------------------------------------------
Capital stock sold 271,999
- --------------------------------------------------------
Forward contracts 40,843
- --------------------------------------------------------
Dividends and interest 937,904
- --------------------------------------------------------
Other assets 18,424
- --------------------------------------------------------
Total assets 39,175,087
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 330,330
- --------------------------------------------------------
Capital stock reacquired 38,094
- --------------------------------------------------------
Dividends 44,563
- --------------------------------------------------------
Accrued administrative service fees 6,429
- --------------------------------------------------------
Accrued distribution fees 24,964
- --------------------------------------------------------
Accrued transfer agent fees 7,162
- --------------------------------------------------------
Accrued operating expenses 9,775
- --------------------------------------------------------
Total liabilities 461,317
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 38,713,770
========================================================
NET ASSETS:
Class A $ 21,926,360
- --------------------------------------------------------
Class B $ 16,787,410
========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 2,020,149
========================================================
Class B:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 1,548,110
========================================================
Class A:
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE $ 10.85
========================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.85 divided
by 95.25%) $ 11.39
========================================================
Class B:
NET ASSET VALUE AND OFFERING PRICE PER
SHARE $ 10.84
========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $2,196,445
- --------------------------------------------------------
Dividends 25,703
- --------------------------------------------------------
2,222,148
- --------------------------------------------------------
EXPENSES:
Advisory fees 182,596
- --------------------------------------------------------
Administrative service fees 74,433
- --------------------------------------------------------
Directors' fees 5,763
- --------------------------------------------------------
Distribution fees-Class A 78,792
- --------------------------------------------------------
Distribution fees-Class B 103,129
- --------------------------------------------------------
Custodian fees 12,220
- --------------------------------------------------------
Transfer agent fees-Class A 31,849
- --------------------------------------------------------
Transfer agent fees-Class B 30,603
- --------------------------------------------------------
Other 59,764
- --------------------------------------------------------
Total expenses 579,149
- --------------------------------------------------------
Less: Expenses assumed by advisor (200,896)
- --------------------------------------------------------
Expenses paid indirectly (410)
- --------------------------------------------------------
Net expenses 377,843
- --------------------------------------------------------
Net investment income 1,844,305
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain on sales of:
Investment securities 243,673
- --------------------------------------------------------
Foreign currencies 174,698
- --------------------------------------------------------
418,371
- --------------------------------------------------------
UNREALIZED APPRECIATION OF:
Investment securities 496,691
- --------------------------------------------------------
Foreign currencies 46,609
- --------------------------------------------------------
543,300
- --------------------------------------------------------
Net gain on investment securities and
foreign currencies 961,671
- --------------------------------------------------------
Net increase in net assets resulting from
operations $2,805,976
========================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,844,305 $ 570,694
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities and foreign currencies 418,371 263,982
- ------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and foreign currencies 543,300 430,541
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,805,976 1,265,217
- ------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (1,175,361) (461,318)
- ------------------------------------------------------------------------------------------------------------------------------
Class B (705,239) (139,421)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on investment securities:
Class A (122,866) --
- ------------------------------------------------------------------------------------------------------------------------------
Class B (57,565) --
- ------------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 11,543,105 6,847,734
- ------------------------------------------------------------------------------------------------------------------------------
Class B 12,214,514 3,676,004
- ------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 24,502,564 11,188,216
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 14,211,206 3,022,990
- ------------------------------------------------------------------------------------------------------------------------------
End of period $38,713,770 $14,211,206
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $37,281,153 $13,511,536
- ------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 123,655 85,635
- ------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment securities and foreign currencies 330,414 178,787
- ------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 978,548 435,248
- ------------------------------------------------------------------------------------------------------------------------------
$38,713,770 $14,211,206
==============================================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Income Fund (the "Fund") is an investment portfolio of AIM
International 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 management investment company consisting of four separate
series portfolios: AIM Global Income Fund, AIM Global Aggressive Growth Fund,
AIM Global Growth Fund and AIM International Equity Fund. The Fund currently
offers two different classes of shares: Class A shares and Class B shares. Class
A shares are sold with a front-end sales charge. Class B shares are sold with a
contingent deferred sales charge. Matters affecting each portfolio or class are
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 the financial statements pertains only to the Fund. The
Fund's investment objective is to provide high current income.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. 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.
A. Security Valuations-Non-convertible bonds and notes 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 price,
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,
12
<PAGE> 15
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 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 price. 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 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 a 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 would not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities and exchange rates occur during such period, then
these securities and exchange rates 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.
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 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 contracts at October 31, 1996 were as follows:
<TABLE>
<CAPTION>
SETTLEMENT CONTRACT TO UNREALIZED
DATE DELIVER VALUE RECEIVE APPRECIATION
---------- ------------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
11/05/96 JPY 30,000,000 $ 263,495 $ 283,554 $ 20,059
12/17/96 JPY 18,000,000 158,106 165,594 7,488
12/19/96 DEM 1,400,000 927,426 929,245 1,819
01/27/97 DEM 700,000 464,874 465,735 861
01/30/97 CHF 525,000 419,153 419,161 8
02/03/97 JPY 32,000,000 281,097 291,705 10,608
---------- ---------- ----------
$2,514,151 $2,554,994 $ 40,843
========== ========== ==========
</TABLE>
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. On October 31, 1996,
undistributed net investment income was increased by $74,315, undistributed
net realized gains decreased by $86,313, and paid-in capital increased by
$11,998 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-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.
F. Expenses-Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
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 0.70% of
the first $1 billion of the Fund's average daily net assets, plus 0.65% of the
Fund's average daily net assets in excess of $1 billion. During the year ended
October 31, 1996, AIM waived fees of $182,596 and assumed expenses of $18,300.
The Fund, pursuant to a master administrative services agreement, has agreed
to pay AIM for administrative costs incurred in providing accounting services to
the Fund. During the year ended October 31, 1996, AIM was reimbursed $74,433 for
such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
reimburse A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the year ended October 31, 1996, the Fund paid AFS
$40,282 for such services.
13
<PAGE> 16
The Fund received reductions in transfer agency fees of $368 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $42 for pricing services which are paid through directed
brokerage commissions. The effect of the above arrangements resulted in a
reduction in the Fund's total expenses of $410 during the year ended October 31,
1996.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and the Class B shares of the Fund. The Company has adopted
Distribution Plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares (the "Class A Plan") and with respect to the Fund's Class
B shares (the "Class B Plan") (collectively, the "Plans"). The Fund, pursuant to
the Class A Plan, will pay AIM Distributors an annual rate of 0.50% of the
average daily net assets attributable to the Class A shares. The Class A Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs, of the total compensation payable, the Fund pays a service fee of
0.25% of the average daily net assets attributable to the Class A shares to
selected dealers or financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own Class A shares of
the Fund. The Fund, pursuant to the Class B Plan, will pay AIM Distributors at
an annual rate of 1.00% of the average daily net assets attributable to the
Class B shares. Of this amount, the Fund may pay a service fee of 0.25% of the
average daily net assets of the Class B shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own Class B shares of the Fund. Any amounts not paid
as a service fee under such 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. AIM Distributors may,
from time to time, assign, transfer or pledge to one or more designees, its
rights to all or a designated portion of (a) compensation received by AIM
Distributors from the Fund pursuant to the Class B Plan (but not AIM
Distributors' duties and obligations pursuant to the Class B Plan) and (b) any
contingent deferred sales charges received by AIM Distributors related to the
Class B shares. During the year ended October 31, 1996, the Class A shares and
the Class B shares paid AIM Distributors $78,792 and $103,129, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $57,096 from the sales of the Class A
shares of the Fund during the year ended October 31, 1996. 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 October 31, 1996,
AIM Distributors received commissions of $4,924 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 year ended October 31, 1996, the Fund incurred legal fees of $3,047
for services rendered by the law firm of Kramer, Levin, Naftalis, & Frankel as
counsel to the Company's 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-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) $325,000,000 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. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 19, 1996, the Fund was
limited to borrowing $100,000. During the year ended October 31, 1996, 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 0.08% on the unused balance
of the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1996 was
$40,174,480 and $19,868,348 respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1996, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,293,370
- ------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (360,829)
- ------------------------------------------------------
Net unrealized appreciation of investment
securities $ 932,541
======================================================
Investments have the same cost for tax and financial statement purposes.
</TABLE>
NOTE 6-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold:
- ----------------------------------------------------------------------
Class A 1,609,644 $17,019,341 760,598 $ 7,840,532
- ----------------------------------------------------------------------
Class B 1,313,279 13,876,204 388,091 4,010,514
- ----------------------------------------------------------------------
Issued as
reinvestment
of dividends:
Class A 92,969 985,383 23,999 250,917
- ----------------------------------------------------------------------
Class B 58,431 618,362 11,879 124,099
- ----------------------------------------------------------------------
Reacquired:
Class A (613,922) (6,461,619) (118,603) (1,243,715)
- ----------------------------------------------------------------------
Class B (215,814) (2,280,052) (43,933) (458,609)
- ----------------------------------------------------------------------
2,244,587 $23,757,619 1,022,031 $10,523,738
======================================================================
</TABLE>
14
<PAGE> 17
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share and Class B share
outstanding during each of the years in the two-year period ended October 31,
1996 and the period September 15, 1994 (dates operations commenced) through
October 31, 1994.
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------- ---------------------------------
1996 1995 1994 1996 1995 1994
---------- ------- ------ ---------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.74 $10.02 $10.00 $10.73 $10.01 $10.00
- --------------------------------------------------------------------------------------- ---------------------------------
Income from investment operations:
Net investment income 0.79(a) 0.79 0.08 0.74(a) 0.74 0.07
- --------------------------------------------------------------------------------------- ---------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.25 0.75 0.01 0.24 0.75 0.01
- --------------------------------------------------------------------------------------- ---------------------------------
Total from investment operations 1.04 1.54 0.09 0.98 1.49 0.08
- --------------------------------------------------------------------------------------- ---------------------------------
Less distributions:
Dividends from investment income (0.81) (0.82) (0.07) (0.75) (0.77) (0.07)
- --------------------------------------------------------------------------------------- ---------------------------------
Distributions from net realized capital gains (0.12) -- -- (0.12) -- --
- --------------------------------------------------------------------------------------- ---------------------------------
Total distributions (0.93) (0.82) (0.07) (0.87) (0.77) (0.07)
- --------------------------------------------------------------------------------------- ---------------------------------
Net asset value, end of period $10.85 $10.74 $10.02 $10.84 $10.73 $10.01
======================================================================================= =================================
Total return(b) 10.22% 16.07% 0.93% 9.66% 15.56% 0.79%
======================================================================================= =================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $21,926 $10,004 $2,661 $16,787 $4,207 $362
======================================================================================= =================================
Ratio of expenses to average net assets(c) 1.25%(d)(e) 1.25% 1.25%(f) 1.75%(d)(e) 1.74% 1.73%(f)
======================================================================================= =================================
Ratio of net investment income to average net
assets(c) 7.27%(d) 7.38% 6.01%(f) 6.77%(d) 6.88% 3.59%(f)
======================================================================================= =================================
Portfolio turnover rate 83% 128% 6% 83% 128% 6%
======================================================================================= =================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and expense reimbursements. The ratios of expenses and net
investment income to average net assets before fee waivers and expense
reimbursements were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------- --------------------------
NET INVESTMENT NET INVESTMENT
EXPENSES INCOME EXPENSES INCOME
-------- -------------- -------- --------------
<S> <C> <C> <C> <C>
1996 2.02% 6.51% 2.53% 6.00%
--------------------------------------------------------------------------------------------------
1995 3.03% 5.59% 3.57% 5.05%
--------------------------------------------------------------------------------------------------
1994 5.61% 1.65% 22.09% (16.77)%
--------------------------------------------------------------------------------------------------
</TABLE>
(d) Ratios are based on average net assets of $15,758,345 for Class A shares and
$10,312,948 for Class B shares.
(e) Ratios include indirectly paid expenses. Excluding indirectly paid expenses,
the ratios of expenses to average net assets would have remained the same
for both Class A shares and Class B shares.
(f) Annualized.
NOTE 8-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and INVESCO
PLC announced the execution of an Agreement and Plan of Merger pursuant to which
AIM Management will be merged with and into a direct wholly-owned subsidiary of
INVESCO PLC. AIM Management is the parent company of the Fund's advisor. The
merger is conditional on, among other things, approval by the shareholders of
INVESCO PLC and AIM Management and the shareholders of the AIM Funds and the
mutual funds managed by INVESCO PLC, and is expected to take place during the
first quarter of 1997.
15
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM Global Income Fund (a portfolio of AIM
International Funds, Inc.), including the schedule of
investments, as of October 31, 1996, and the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years in
the two-year period then ended and the financial highlights
for each of the years in the two-year period then ended,
and for the period September 15, 1994 (date operations
commenced) through October 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 October 31, 1996, 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 Global
Income Fund as of October 31, 1996, the results of its
operations for the year then ended, the changes in its net
assets for each of the years in the two-year period then
ended and the financial highlights for each of the years in
the two-year period then ended and for the period September
15, 1994 (date operations commenced) through October 31,
1994, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Houston, Texas
December 6, 1996
16
<PAGE> 19
DIRECTORS & OFFICERS
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Officer Chairman Suite 1919
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Formerly Director, President, and
Chief Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President and Treasurer 11 Greenway Plaza
Suite 1919
Owen Daly II Carol F. Relihan Houston, TX 77046
Director Senior Vice President and Secretary
Cortland Trust Inc. TRANSFER AGENT
Gary T. Crum
Carl Frischling Senior Vice President A I M Fund Services, Inc.
Partner P.O. Box 4739
Kramer, Levin, Naftalis & Frankel Scott G. Lucas Houston, TX 77210-4739
Senior Vice President
Robert H. Graham CUSTODIAN
President and Chief Operating Officer Dana R. Sutton
A I M Management Group Inc. Vice President and Assistant Treasurer State Street Bank & Trust
225 Franklin Street
John F. Kroeger Robert G. Alley Boston, MA 02110
Formerly Consultant Vice President
Wendell & Stockel Associates, Inc. COUNSEL TO THE FUND
Melville B. Cox
Lewis F. Pennock Vice President Ballard Spahr
Attorney Andrews & Ingersoll
Jonathan C. Schoolar 1735 Market Street
Ian W. Robinson Vice President Philadelphia, PA 19103
Consultant; Formerly Executive Vice President and
Chief Financial Officer P. Michelle Grace COUNSEL TO THE DIRECTORS
Bell Atlantic Management Assistant Secretary
Services, Inc. Kramer, Levin, Naftalis & Frankel
David L. Kite 919 Third Avenue
Louis S. Sklar Assistant Secretary New York, NY 10022
Executive Vice President
Hines Interests Nancy L. Martin DISTRIBUTOR
Limited Partnership Assistant Secretary
A I M Distributors, Inc.
Ofelia M. Mayo 11 Greenway Plaza
Assistant Secretary Suite 1919
Houston, TX 77046
Kathleen J. Pflueger
Assistant Secretary AUDITORS
Samuel D. Sirko KPMG Peat Marwick LLP
Assistant Secretary 700 Louisiana
NationsBank Bldg.
Stephen I. Winer Houston, TX 77002
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Global Income Fund Class A and Class B shares paid ordinary dividends in the
amount of $0.9275 and $0.8715 per share, respectively, to shareholders during
the Fund's tax year ended October 31, 1996. Of this amount 1% is eligible for
the dividends received deduction for corporations.
STATE INCOME TAX INFORMATION
Of the total income dividends paid, 7% was derived from U.S. Treasury
obligations.
<PAGE> 20
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--REGISTERED TRADEMARK--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
[PHOTO OF GROWTH
11 Greenway Plaza AIM Blue Chip Fund
APPEARS HERE] AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
HIGH DEGREE OF SAFETY AND CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND CURRENT INCOME
AIM Money Market Fund
A I M Management Group Inc. has provided leadership in STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
the mutual fund industry since 1976 and currently AIM Tax-Exempt Cash Fund
manages approximately $60 billion in assets for more
than 3.5 million shareholders, including individual
investors, corporate clients, and financial *AIM Aggressive Growth Fund was closed to new investors
institutions. The AIM Family of Funds--Registered on July 18, 1995. For more complete information about
Trademark-- is distributed nationwide, and AIM today any AIM Fund(s), including sales charges and expenses,
ranks among the nation's top 15 mutual fund companies ask your financial consultant or securities dealer for
in assets under management, according to Lipper a free prospectus(es). Please read the prospectus(es)
Analytical Services, Inc. carefully before you invest or send money.
[AIM LOGO APPEARS HERE] ---------------
BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza, Suite 1919 PAID
Houston, TX 77046 HOUSTON, TX
Permit No. 1919
---------------
</TABLE>
