<PAGE> 1
[PHOTO APPEARS HERE]
AIM INTERNATIONAL
EQUITY 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 International Equity 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 5.50% 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 due to differences in sales charge structure and Fund
expenses.
o During the year ended October 31, 1996, the Fund paid distributions on Class
A and Class B shares of $0.381 and $0.375 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 is subject to change and there is no
assurance the Fund will continue to hold any particular security.
o Past performance cannot guarantee comparable future results.
o International investing presents certain risks not associated with investing
solely in the U.S. These include risks relating to fluctuations in the value
of the U.S. dollar relative to the value 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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Lipper Analytical Services, Inc. is an independent mutual fund performance
monitor. The unmanaged Lipper International Fund Index represents an average
of the performance of the 30 largest international mutual funds.
o The Europe, Australia, and Far East Index (EAFE) is a group of unmanaged
foreign securities tracked by Morgan Stanley Capital International.
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 INTERNATIONAL EQUITY FUND
For shareholders who seek
long-term growth of capital.
The Fund invests in
a diversified portfolio
of international equity securities
of companies with strong
earnings momentum.
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
Dear Shareholder:
As you may have heard in the financial news, A I M Management
Group, Inc. recently announced a significant event in our
company's history--an agreement to merge with INVESCO PLC,
one of the world's largest independent investment management
[PHOTO OF groups.
Charles T. Bauer, AIM has long been known for its strategic planning and
Chairman of forward thinking. In seeking this merger, AIM had specific
the Board of goals in choosing a partner: to better AIM's position to
the Fund succeed in an increasingly competitive financial services
APPEARS HERE] 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
FOREIGN STOCK INVESTORS ARE
TREATED TO A STRONG 1996
A roundtable discussion with the Fund management team for AIM International
Equity Fund for the fiscal year ended October 31, 1996.
- --------------------------------------------------------------------------------
Q. WORLD EQUITY MARKETS HAVE CERTAINLY STRENGTHENED IN 1996. HOW DID AIM
INTERNATIONAL EQUITY FUND PERFORM DURING THE REPORTING PERIOD?
A. It has been a good year for foreign stocks, particularly in Europe. The
Morgan Stanley Capital International (MSCI) Europe, Australia, and Far East
Index (EAFE) of foreign stocks gained 10.47% for the year ended October 31,
1996. AIM International Equity Fund had a better year--total return as of
October 31, 1996, was 15.79% for Class A shares and 14.88% for Class B
shares.
That performance also bested the 12.65% average total return for similar
funds over the same period, according to the Lipper International Fund Index.
Q. WHAT IGNITED THE PERFORMANCE OF FOREIGN STOCKS?
A. Signs of improving economic performance, lower interest rates, and a strong
U.S. dollar encouraged investors to propel foreign stocks to enthusiastic
levels during 1996, especially in Europe. Cost savings from privatization and
major restructuring efforts have begun to bear fruit, and the momentum seems
to be building.
On October 15, stock markets in the United Kingdom, Denmark, Germany,
Hungary, the Netherlands, Norway, Spain, Sweden, and Switzerland set new
highs. Many of these countries were among the Fund's largest weightings.
Q. WHAT'S BEHIND THE ECONOMIC PROGRESS IN EUROPE?
A. Clearly, the drive to comply with European Monetary Unit standards has been
a significant influence behind the economic revival. Earlier in the year, the
club of countries likely to adopt a single currency in January 1999 seemed to
include a select few. Now, many countries are cutting interest rates and
attacking budget deficits in a scramble to qualify for EMU standards, and
financial markets have roared their approval.
Many of the biggest gains have been made at the fringes of the continent.
Both Italian and Spanish government bond yields have fallen by about one
percentage point in October, a sign of investor confidence in economic
progress there. Stocks in Spain gained 32% for the year ended October 31,
1996, based on U.S. dollars.
Q. HOW ABOUT THE PACIFIC RIM?
A. Stock markets in Asia were thriving. Hong Kong and Malaysia, countries in
which the Fund invests, were among the top-performing countries in the
Pacific basin, based on U.S. dollars. Improved investor confidence has
triggered a surge of funds into the region. In China, companies on Hong
Kong's Hang Seng stock market index raised HK$22 billion ($2.8 billion) in
the first eight months of 1996.
Japan's stock market continued to languish as that economy struggled to
emerge from recession. The Bank of Japan has lowered interest rates to near
zero in an effort to stimulate growth, and recent economic data has suggested
some gathering strength. Japanese exporters were strong beneficiaries of the
continued strength in the U.S. dollar. However, consumer spending--the engine
of domestic economic growth--continues to lag.
<TABLE>
<CAPTION>
==================================================
AIM INTERNATIONAL EQUITY FUND
HAS STRONG YEAR
==================================================
10/31/95-10/31/96
<S> <C>
AIM Fund Class A 15.79%
AIM Fund Class B 14.88%
MSCI EAFE Index 10.47%
Lipper Index 12.65%
==================================================
</TABLE>
<TABLE>
<CAPTION>
==================================================
LIPPER RANKINGS (CLASS A SHARES) As of 10/31/96
==================================================
AIM International
Period Fund Funds Top %
- --------------------------------------------------
<S> <C> <C> <C>
3 Years 20 147 14%
1 Year 42 324 13
</TABLE>
The Fund's Class B shares ranked 56 of 324 funds,
or 18% for the year ended 10/31/96.
Fund percentage rankings are vs. all international
funds tracked by Lipper, excluding all sales
charges, and including fees and expenses.
==================================================
---------------------------------
Clearly, the drive
to comply with
European Monetary Unit standards
has been a
significant influence
behind Europe's economic revival.
---------------------------------
2
<PAGE> 5
<TABLE>
<CAPTION>
================================================================================
PORTFOLIO COMPOSITION
As of October 31, 1996
TOP 10 EQUITY HOLDINGS TOP 10 COUNTRIES
<S> <C>
1. HSBC Holdings PLC 1. Japan
2. Autoliv AB 2. United Kingdom
3. Honda Motor Co. 3. France
4. Cheung Kong-Holdings 4. Hong Kong
5. Cosco Pacific Ltd. 5. Netherlands
6. Hang Seng Bank 6. Germany
7. NTT Data Comm. Sys. Co. 7. Italy
8. Telecomunicacoes Brasileiras S.A.-Telebras-ADR 8. Canada
9. Pinault-Printemps-Redoute S.A. 9. Australia
10. Canon, Inc. 10. Sweden
</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 THE FUND TAKE ADVANTAGE OF THE INVESTMENT CLIMATE OVERSEAS?
A. The Fund had a strong presence in Europe--more than 40% of the portfolio as
of October 31, 1996--including many of the top-performing markets like the
United Kingdom, Spain, Sweden, and the Netherlands.
Many of the strongest European performers in the Fund were long-term
favorites, including retailers Pinault-Printemps-Redoute S.A. and Carrefour
Supermarch in France, and British retailer Dixons Group PLC and oil & gas
giant British Petroleum.
Q. HOW WAS THE FUND INVESTED OUTSIDE OF EUROPE?
A. Hong Kong stocks again claimed many of the Fund's top 10 equity positions,
including the Fund's largest single holding, real estate company Cheung
Kong-Holdings Ltd. The Fund also maintained significant positions in major
banks HSBC Holdings plc and Hang Seng Bank Ltd., and Cosco Pacific Ltd., a
leading conglomerate.
In Japan, the Fund reduced its investment exposure to 17%, and continued
to emphasize those companies that benefited from the strong U.S. dollar and
exhibited growing earnings. For example, auto-makers Honda Motor Co. and
Toyota Motor Corp. profited by the comparative advantage in currency exchange
with the U.S. and by cutting production costs on their cars by one-third.
Q. CANADA APPEARED AMONG THE FUND'S TOP COUNTRY WEIGHTINGS. WHAT IS BEHIND THE
STRONG PERFORMANCE IN THAT MARKET?
A. Stocks in Canada gained almost 30% for the year ended October 31, 1996. The
country is a direct beneficiary of healthy economic conditions in the U.S.
and the continued strength in the U.S. dollar. A surge in Canadian exports to
the U.S. and lower interest rates have boosted economic growth and helped to
lower its stifling unemployment rate. Holdings in Canada were increased to
3% of the Fund.
Q. HOW WAS THE FUND POSITIONED AT THE END OF THE FISCAL YEAR?
A. The Fund held 180 stocks as of October 31, 1996, spread over 26 countries and
54 industry categories. The largest position weighting in the Fund was 1.04%.
More than 40% of the Fund's holdings was invested in Europe, followed by 16%
in Japan, 8% in Hong Kong, and 3% in Canada. The Fund's net assets at the end
of the reporting period stood at $1.48 billion.
Q. WHAT IS YOUR OUTLOOK FOR THE MARKET IN 1997?
A. Conditions appear favorable for foreign stocks in general, and even better
for European stocks. Recent reports suggest that the United Kingdom's labor
market has become the envy of European growth enthusiasts. The 7.2%
unemployment rate for October was a nudge lower than the 7.4% of September
and well below the 8.1% of October 1995.
Analysts also are eyeing strong economic progress in Hong Kong and
Malaysia. Even Japan's recovery has begun to show signs of life.
It also is good news for foreign markets that the U.S. economy is growing
at a reasonable rate without rising inflation, which keeps the U.S. dollar
strong and reduces the likelihood that interest rates may increase over the
near term. A strong U.S. dollar helps foreign exporters remain competitive.
Lower interest rates help stimulate the hard-won progress in economic
recovery, particularly in Europe and Canada.
It is good news for foreign markets that the U.S. economy is growing at a
reasonable rate without rising inflation.
<TABLE>
<CAPTION>
============================================
A GLOBAL VIEW
TOP 10
WORLD
MARKETS
AVERAGE
ANNUALIZED RETURN
IN U.S. DOLLARS
10-31-95-10/31/96
- --------------------------------------------
<S> <C>
1. Taiwan 38.32%
2. Argentina 33.21
3. Brazil 33.03
4. Spain 32.11
5. Venezuela 30.93
6. Canada 29.94
7. Sweden 28.92
8. Portugal 28.06
9. Hong Kong 28.04
10. Ireland 27.05
</TABLE>
Source: Morgan Stanley Capital International
============================================
See important Fund & index disclosures inside front cover.
3
<PAGE> 6
LONG-TERM PERFORMANCE
AIM INTERNATIONAL EQUITY 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 stock market over
the period 4/7/92 to 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 hypothetical portfolios, in this case the Europe, Australia, and
Far East Index and the Lipper International Fund Index. Unlike your Fund, these
indexes are 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.
<TABLE>
<CAPTION>
==========================================
AVERAGE ANNUAL TOTAL RETURN
As of 10/31/96. Including sales charges.
<S> <C>
CLASS A SHARES
Inception (4/7/92) 13.51%
1 Year 9.42*
*15.79% excluding sales charge.
CLASS B SHARES
Inception (9/15/94) 7.88%
1 Year 9.88*
*14.88% excluding sales charge.
==========================================
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================
GROWTH OF A $10,000 INVESTMENT
(In thousands)
- ---------------------------------------------------------------------------------------------------
AIM International Europe, Australia, and Lipper International
Equity Fund Far East Index Fund Index
<S> <C> <C> <C>
4/7/92 $9,454 $10,000 $10,000
10/31/92 9,610 9,822 9,600
10/31/93 13,182 13,501 12,870
10/31/94 14,611 14,863 14,351
10/31/95 15,326 14,808 14,284
10/31/96 17,740 16,359 16,090
(Data are for month-ends shown)
Past performance is no guarantee of comparable future results.
===================================================================================================
</TABLE>
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.
4
<PAGE> 7
For Consideration
INVESTMENT STRATEGIES FOR 1997 TO
KEEP YOU IN THE MARKET COME RAIN OR COME SHINE
DIVERSIFICATION: WEATHER-PROOFING
YOUR PORTFOLIO
As another investment year comes to a close, it's a good time to return to the
basics of investing: risk and reward. Focus on what you are trying to
accomplish--your reward--and ask yourself how much risk you are willing to
take.
You've probably often heard that the higher the risk, the higher the reward,
but that maxim doesn't always hold true. There are different types of risks,
and different types of investments may help buffer those risks.
DIVERSIFICATION AS A STRATEGY
With a diversified investment strategy, return depends on the overall
performance of the portfolio, rather than of one particular investment. The
gains of one sector may offset the losses of another.
Let's look at a core diversification strategy. Investments are classified
into several categories: cash or cash equivalents, income and growth. These
categories are made up of different securities and each meets basic needs:
o MONEY MARKET SECURITIES: ready cash for emergencies or other immediate needs;
o BONDS: current income to cover ongoing expenses;
o STOCKS: funds for the future.
All of these investment categories belong in a balanced,
diversified portfolio. The blend depends on your age, time horizon, objectives
and tolerance for risk. Money market securities are the most conservative,
bonds range from conservative to aggressive, and stocks generally are the most
aggressive investment. Each category reacts differently to the economy and
other factors affecting the financial markets.
Mutual funds fit well within a diversification strategy. A mutual fund
usually has one or two objectives, such as growth or income or both. It spreads
its professionally managed assets among a variety of investments. When you
invest in more than one fund, you decrease your level of exposure to investment
risks.
HOW SAFE IS SAFE? STOCKS HEDGE INFLATION
One such risk is inflation: a rise in cost without a rise in value received,
a decrease in the value of money over time. Inflation means that your
investment may lose purchasing power as the cost of living rises.
Overly risk-averse investors who prefer to keep their money in "safe"
investments
<TABLE>
<CAPTION>
================================================================================
INFLATION'S SHRINKING EFFECT
At 4% inflation, $1,000 would shrink to:
<S> <C>
5 Years $822
10 Years $676
15 Years $555
20 Years $456
25 Years $375
================================================================================
</TABLE>
<TABLE>
<CAPTION>
================================================================================
Stocks Historically Beat Other Investments
Average Annual Total Returns, Year End: 1925-1996*
*1996 is through 9/30/96
<S> <C>
Large-Company Stocks 10.7%
Long-Term Government Bonds 5.1%
U.S. Treasury Bills 3.8%
Inflation 3.1%
================================================================================
</TABLE>
Source: Ibbotson Associates, Inc. The Standard & Poor's Composite Index of 500
Stocks (S&P 500) is a group of unmanaged securities widely regarded by investors
to be representative of large-company stocks in general; results shown assume
the reinvestment of dividends. Inflation is determined by the Consumer Price
Index, a measure of change in consumer prices, as determined by the U.S. Bureau
of Labor Statistics.
Government securities, such as U.S. Treasury bills and long-term government
bonds, offer a high degree of safety and are guaranteed as to the timely
payment of principal and interest if held to maturity. U.S. Treasury bills are
short-term securities with maturities of one year or less. Long-term government
bonds used in this illustration have a maturity of approximately 20 years. Fund
shares are not insured and their value and yield will vary with market
conditions.
(continued on page 6)
5
<PAGE> 8
(continued from page 5)
such as savings accounts may not have enough growth in their portfolio to
offset inflation. The charts on the previous page show inflation's shrinking
effect and how stocks historically have outperformed all other asset
categories.
BONDS AND MONEY MARKET SECURITIES OFFER BALLAST
Despite their long-term performance, stocks are subject to dramatic swings.
Investing in bonds and conservative money market securities may help offset
stocks' volatility. High-quality bonds usually are considered lower-risk
investments compared to stocks. They pay higher income than short-term
investments such as certificates of deposits, money market funds or savings
accounts. Bank certificates of deposit, which are insured by the FDIC for up to
$100,000, are short-term investments that pay fixed principal and interest, but
are subject to fluctuating rollover rates and early withdrawal penalties. Fund
shares are not insured and their value and yield will vary with market
conditions.
The "money market" is the marketplace for all debt securities of less
than one-year maturity. These securities are considered excellent short-term
parking places for cash that you may need quickly. Money market securities are
among the most conservative investments and, consequently, their level of return
is much lower than that of stocks or bonds.
Your financial consultant can help you create a diversification strategy to
meet your risk tolerance and long-term objectives. AIM offers a free brochure on
asset allocation which also can help you evaluate your investments. To order,
please call 800-347-4246.
DOLLAR-COST AVERAGING
The motto says buy low and sell high, but it's easy for an investor to buy high
and sell low instead. When markets are rising, the temptation to get in on the
action can be irresistible. When markets are dropping, people naturally want to
cut their losses and get out while the getting is good.
Is there a way to enjoy the advantages of having investments without
second-guessing your own decisions?
DOLLAR-COST AVERAGING EMPLOYS DISCIPLINE, NOT EMOTION
With dollar-cost averaging, you invest a set amount of money at regular
intervals regardless of market swings or pundits' forecasts. You decide how much
and how often to invest. And you decide when to change the amount or the
schedule if doing so suits you.
This technique has emotional advantages:
o You will be less tempted to make investment decisions on the basis of
short-term phenomena and your feelings of the moment.
o Whichever way the market is moving, you will be part of it. Your fortunes as
an investor won't depend entirely on your making a right call about future
trends.
Dollar-cost averaging also has financial advantages:
o You automatically purchase more shares of a mutual fund when its cost per
share is low and fewer shares when its cost per share is high. As the
illustration below shows, dollar-cost averaging may lower your average cost
per share.
Of course, you don't have to dollar-cost average all the money you invest.
The technique is especially appropriate to investments where your goals are
long-term, since over time market volatility tends to even itself out.
Dollar-cost averaging involves investing continuously regardless of
fluctuating securities prices, so you need to be confident that you can keep
making purchases for an extended period.
No investment technique can assure a profit in a declining market. What
dollar-cost averaging will do is apply discipline to your investing behavior,
discipline that can be especially important when market watchers issue
conflicting forecasts.
<TABLE>
<CAPTION>
==========================================================
DOLLAR-COST AVERAGING: $200 INVESTMENT PER MONTH*
MONTH NET ASSET VALUE # OF SHARES PURCHASED
- ----------------------------------------------------------
<S> <C> <C>
January $24.00 8.333
February $20.00 10.000
March $14.00 14.286
April $18.00 11.111
May $22.00 9.090
June $24.00 8.333
Average Net Asset Value: $20.33
Total Shares Bought: 61.153
Average Purchase Price per Share: $19.62
*Results are hypothetical.
==========================================================
</TABLE>
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
FOREIGN STOCKS &
OTHER EQUITY INTERESTS-90.94%
ARGENTINA-1.50%
Banco de Galicia y Buenos Aires
S.A. de C.V.- ADR (Banking) 278,280 $ 5,043,825
- -----------------------------------------------------------------
Perez Companc S.A.-Class B
(Oil & Gas-Services) 878,000 5,575,858
- -----------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil & Gas-Services) 508,200 11,561,550
- -----------------------------------------------------------------
22,181,233
- -----------------------------------------------------------------
AUSTRALIA-2.91%
National Mutual Holdings Ltd.(a)
(Insurance-Multi-Line Property) 3,770,000 5,378,884
- -----------------------------------------------------------------
News Corp. Ltd. (The)-ADR
(Publishing) 508,000 9,017,000
- -----------------------------------------------------------------
QBE Insurance Group, Ltd.
(Insurance-Broker) 1,540,276 8,155,553
- -----------------------------------------------------------------
QNI Ltd.
(Metals-Miscellaneous) 5,230,400 10,530,450
- -----------------------------------------------------------------
Western Mining Corp. Holding Ltd.
(Metals-Miscellaneous) 1,571,100 9,875,414
- -----------------------------------------------------------------
42,957,301
- -----------------------------------------------------------------
AUSTRIA-0.69%
OMV A.G.
(Oil & Gas-Exploration & Production) 66,000 6,460,932
- -----------------------------------------------------------------
VA Technologie A.G.
(Engineering & Construction) 27,000 3,775,869
- -----------------------------------------------------------------
10,236,801
- -----------------------------------------------------------------
BELGIUM-1.82%
Barco Industries(a)
(Electronic Components/Miscellaneous) 41,000 6,743,508
- -----------------------------------------------------------------
Colruyt S.A.
(Retail-Food & Drug) 14,600 6,295,928
- -----------------------------------------------------------------
Delhaize-Le Lion S.A.
(Retail-Food & Drug) 124,000 6,937,480
- -----------------------------------------------------------------
UCB S.A.
(Medical-Drugs) 3,100 6,833,119
- -----------------------------------------------------------------
26,810,035
- -----------------------------------------------------------------
BRAZIL-0.89%
Telecomunicacoes Brasileiras
S/A-Telebras-ADR
(Telecommunications) 177,000 13,186,500
- -----------------------------------------------------------------
CANADA-3.25%
Canadian National Railway Co.
(Railroads) 128,000 3,520,000
- -----------------------------------------------------------------
Canadian Natural Resources Ltd.(a)
(Oil & Gas-Exploration &
Production) 335,000 8,323,758
- -----------------------------------------------------------------
Canadian Pacific Ltd.
(Transportation-Miscellaneous) 307,000 7,751,750
- -----------------------------------------------------------------
Newbridge Networks Corp.(a)
(Computer Networking) 188,000 5,945,500
- -----------------------------------------------------------------
Northern Telecom Ltd.
(Telecommunications) 124,700 8,121,087
- -----------------------------------------------------------------
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Suncor, Inc.
(Oil & Gas-Exploration &
Production) 190,000 $ 7,336,596
- -----------------------------------------------------------------
TELUS Corp.
(Telecommunications) 445,000 6,989,442
- -----------------------------------------------------------------
47,988,133
- -----------------------------------------------------------------
CHILE-0.41%
Cia. de Telecomunicaciones de Chile
S.A.-ADR (Telephone) 62,100 6,124,612
- -----------------------------------------------------------------
DENMARK-0.77%
Danisco A/S
(Food/Processing) 79,300 4,543,279
- -----------------------------------------------------------------
Novo Nordisk A/S-Class B
(Medical-Drugs) 41,200 6,861,587
- -----------------------------------------------------------------
11,404,866
- -----------------------------------------------------------------
FRANCE-8.56%
AXA S.A.
(Insurance-Life & Health) 121,000 7,557,027
- -----------------------------------------------------------------
Carrefour Supermarche
(Retail-Stores) 18,700 10,376,900
- -----------------------------------------------------------------
Cetelem
(Finance-Consumer Credit) 22,400 4,780,127
- -----------------------------------------------------------------
Compagnie Francaise d'Etudes
et de Construction Technip
(Engineering & Construction) 59,000 5,157,379
- -----------------------------------------------------------------
Compagnie Generale des Eaux
(Water Supply) 62,000 7,409,682
- -----------------------------------------------------------------
Elf Aquitaine S.A.
(Oil & Gas-Services) 90,000 7,196,479
- -----------------------------------------------------------------
Essilor International-Compagnie
Generale d'Optique
(Medical Instruments/Products) 24,940 6,561,232
- -----------------------------------------------------------------
Michelin-Class B
(Automobile/Truck Parts & Tires) 134,000 6,460,831
- -----------------------------------------------------------------
Pathe S.A.(a)
(Advertising/Broadcasting) 25,500 6,878,142
- -----------------------------------------------------------------
Pinault-Printemps-Redoute, S.A.
(Retail-Food & Drug) 34,800 13,123,599
- -----------------------------------------------------------------
Rexel S.A.
(Transportation-Miscellaneous) 23,200 6,874,914
- -----------------------------------------------------------------
Rhone-Poulenc-Class A
(Chemicals) 130,000 3,852,323
- -----------------------------------------------------------------
Roussel-Uclaf
(Medical-Drugs) 24,000 6,351,491
- -----------------------------------------------------------------
Societe BIC S.A.
(Office Products) 51,500 7,726,259
- -----------------------------------------------------------------
Sodexho S.A.
(Business Services) 20,000 9,666,504
- -----------------------------------------------------------------
Total S.A.-Class B
(Oil & Gas-Exploration &
Production) 111,000 8,682,425
- -----------------------------------------------------------------
Valeo S.A.
(Automobile/Truck Parts & Tires) 128,500 7,711,257
- -----------------------------------------------------------------
126,366,571
- -----------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
GERMANY-4.58%
Adidas A.G.
(Shoes & Related Apparel) 130,000 $ 11,142,367
- -----------------------------------------------------------------
Altana A.G.
(Chemicals) 13,350 10,666,601
- -----------------------------------------------------------------
Commerzbank A.G.
(Banking) 295,000 6,603,605
- -----------------------------------------------------------------
Continental A.G.
(Automobile/Truck Parts & Tires) 285,000 4,987,124
- -----------------------------------------------------------------
Dresdner Bank A.G.
(Banking) 240,000 6,418,383
- -----------------------------------------------------------------
Hoechst A.G.
(Chemicals) 280,500 10,548,385
- -----------------------------------------------------------------
SGL Carbon A.G.
(Metals-Miscellaneous) 50,500 5,685,585
- -----------------------------------------------------------------
SKW Trostberg A.G.
(Chemicals) 116,000 3,385,631
- -----------------------------------------------------------------
Veba A.G.
(Electric Services) 155,000 8,266,871
- -----------------------------------------------------------------
67,704,552
- -----------------------------------------------------------------
HONG KONG-7.90%
Asia Satellite Telecommunications
Holdings Ltd.-ADR(a)
(Telecommunications) 174,500 4,667,875
- -----------------------------------------------------------------
Cheung Kong Holdings Ltd.
(Real Estate) 1,795,000 14,393,058
- -----------------------------------------------------------------
Citic Pacific Ltd.
(Banking) 1,212,000 5,893,691
- -----------------------------------------------------------------
Cosco Pacific Ltd.
(Transportation-Miscellaneous) 14,908,000 14,267,505
- -----------------------------------------------------------------
First Pacific Co. Ltd.
(Conglomerates) 7,017,908 9,666,165
- -----------------------------------------------------------------
Hang Seng Bank Ltd.
(Banking) 1,151,100 13,658,910
- -----------------------------------------------------------------
Hong Kong & China Gas Company Ltd.
(Electric Power) 6,028,000 10,602,519
- -----------------------------------------------------------------
Hong Kong & China Gas Company Ltd.,
Expiring 1997-Warrants(a)
(Electric Power) 369,000 136,009
- -----------------------------------------------------------------
HSBC Holdings PLC
(Banking) 864,000 17,599,131
- -----------------------------------------------------------------
New World Infrastructure Ltd.(a)
(Building Materials) 4,126,000 10,272,044
- -----------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Real Estate) 1,118,100 12,725,072
- -----------------------------------------------------------------
Varitronix International Ltd.
(Electronic Components/
Miscellaneous) 1,529,000 2,788,197
- -----------------------------------------------------------------
116,670,176
- -----------------------------------------------------------------
INDONESIA-1.87%
PT Bank International Indonesia
(Banking) 6,284,267 10,117,203
- -----------------------------------------------------------------
PT Hanjaya Mandala Sampoerna
(Tobacco) 1,380,000 12,826,600
- -----------------------------------------------------------------
PT Indosat
(Telecommunications) 933,000 2,823,874
- -----------------------------------------------------------------
PT Indosat-ADR
(Telecommunications) 63,500 1,912,937
- -----------------------------------------------------------------
27,680,614
- -----------------------------------------------------------------
IRELAND-0.30%
Elan Corp. PLC-ADR(a)
(Medical-Drugs) 158,800 4,406,700
- -----------------------------------------------------------------
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ISRAEL-0.53%
Teva Pharmaceutical Industries
Ltd.-ADR
(Medical-Drugs) 186,800 $ 7,822,250
- -----------------------------------------------------------------
ITALY-3.17%
Edison S.p.A.
(Electric Power) 1,210,000 7,208,952
- -----------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Exploration &
Production) 2,050,000 9,805,405
- -----------------------------------------------------------------
Istituto Mobiliare Italiano S.p.A.
(Banking) 533,450 4,225,402
- -----------------------------------------------------------------
Parmalat Finanziaria S.p.A.
(Food/Processing) 4,550,000 6,505,570
- -----------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications) 3,800,000 7,835,465
- -----------------------------------------------------------------
Telecom Italia S.p.A.
(Telecommunications) 5,000,000 11,179,960
- -----------------------------------------------------------------
46,760,754
- -----------------------------------------------------------------
JAPAN-16.20%
Alpine Electronics Inc.
(Electronic Components/
Miscellaneous) 472,000 7,462,123
- -----------------------------------------------------------------
Amada Co., Ltd.
(Building Materials-Tools) 876,000 7,540,117
- -----------------------------------------------------------------
Bridgestone Corp.
(Automobile/Truck Parts & Tires) 685,000 11,551,535
- -----------------------------------------------------------------
Canon, Inc.
(Office Automation) 680,000 13,020,069
- -----------------------------------------------------------------
Daiichi Corp.
(Electronic Components/
Miscellaneous) 286,900 6,778,455
- -----------------------------------------------------------------
DDI Corp.
(Telecommunications) 1,700 12,766,238
- -----------------------------------------------------------------
Honda Motor Co.
(Automobile Manufacturers) 610,000 14,572,922
- -----------------------------------------------------------------
Ibiden Co., Ltd.
(Building Materials) 710,000 6,610,162
- -----------------------------------------------------------------
Jusco Co.
(Retail-Stores) 358,000 10,627,904
- -----------------------------------------------------------------
Komatsu Ltd.
(Machinery-Heavy) 1,298,000 10,625,234
- -----------------------------------------------------------------
Matsushita Electric Industrial Co. Ltd.
(Electronic Components/
Miscellaneous) 569,000 9,095,604
- -----------------------------------------------------------------
Nippon Television Network
(Advertising/Broadcasting) 26,530 7,689,517
- -----------------------------------------------------------------
Nomura Securities Co., Ltd.
(Finance-Asset Management) 642,000 10,600,852
- -----------------------------------------------------------------
NSK Ltd.
(Metals-Miscellaneous) 1,015,000 6,721,795
- -----------------------------------------------------------------
NTT Data Communications Systems Co.
(Computer Software/Services) 4,500 13,319,573
- -----------------------------------------------------------------
Okuma Corp.(a)
(Machine Tools) 871,000 8,338,589
- -----------------------------------------------------------------
Ricoh Co., Ltd.
(Office Automation) 1,095,000 10,867,770
- -----------------------------------------------------------------
Shizuoka Bank
(Banking) 430,000 4,909,754
- -----------------------------------------------------------------
SMC
(Machinery-Miscellaneous) 100,000 6,481,929
- -----------------------------------------------------------------
Sony Corp.
(Electronic Components/
Miscellaneous) 190,100 11,403,829
- -----------------------------------------------------------------
Sumitomo Heavy Industries, Ltd.(a)
(Machinery-Heavy) 2,355,000 8,294,366
- -----------------------------------------------------------------
TDK Corp.
(Electronic Components/
Miscellaneous) 211,000 12,379,606
- -----------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Toyota Motor Corp.
(Automobile-Manufacturers) 459,000 $ 10,844,583
- -----------------------------------------------------------------
Yamaha Corp.
(Electronic Components/
Miscellaneous) 566,000 8,600,237
- -----------------------------------------------------------------
Yamatake-Honeywell
(Airlines) 481,000 8,069,123
- -----------------------------------------------------------------
239,171,886
- -----------------------------------------------------------------
MALAYSIA-1.92%
Commerce Asset Holdings Berhad
(Finance-Asset Management) 1,129,000 7,373,244
- -----------------------------------------------------------------
Edaran Otomobil Nasional Berhad
(Automobile Manufacturers) 618,000 5,772,729
- -----------------------------------------------------------------
Malayan Banking Berhad
(Banking) 1,032,000 10,211,755
- -----------------------------------------------------------------
YTL Corp. Berhad
(Engineering & Construction) 581,000 3,127,489
- -----------------------------------------------------------------
YTL Corp. Berhad, Warrants-expiring
1997(a)
(Engineering & Construction) 405,000 1,859,489
- -----------------------------------------------------------------
28,344,706
- -----------------------------------------------------------------
MEXICO-1.61%
Grupo Industrial Maseca S.A. de
CV-Class B
(Food/Processing) 9,461,000 11,512,109
- -----------------------------------------------------------------
Grupo Televisa S.A.-GDR(a)
(Advertising/Broadcasting) 138,000 3,622,500
- -----------------------------------------------------------------
Panamerican Beverages, Inc.
(Beverages-Soft Drinks) 199,100 8,685,737
- -----------------------------------------------------------------
23,820,346
- -----------------------------------------------------------------
NETHERLANDS-4.99%
Akzo Nobel
(Conglomerates) 49,500 6,237,461
- -----------------------------------------------------------------
Elsevier N.V.
(Publishing) 383,000 6,365,651
- -----------------------------------------------------------------
Getronics N.V.
(Computer Software/Services) 292,000 7,176,519
- -----------------------------------------------------------------
Gucci Group N.V.-New York Shares-ADR
(Textiles) 90,000 6,210,000
- -----------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food & Drug) 142,000 8,285,495
- -----------------------------------------------------------------
Nutricia Verenigde Bedrijven N.V.
(Food/Processing) 87,000 12,203,690
- -----------------------------------------------------------------
Oce-Van Der Grinten N.V.-V
(Office Automation) 60,000 6,400,660
- -----------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil & Gas-Services) 44,500 7,348,913
- -----------------------------------------------------------------
Ver Ned Uitgevuer Bezit N.V.
(Publishing) 332,000 6,026,758
- -----------------------------------------------------------------
Wolters Kluwer N.V.
(Publishing) 58,000 7,455,531
- -----------------------------------------------------------------
73,710,678
- -----------------------------------------------------------------
NORWAY-0.30%
UNI Storebrand A.S.(a)
(Insurance-Multi-line Property) 750,000 4,396,001
- -----------------------------------------------------------------
PHILIPPINES-2.19%
C & P Homes, Inc.
(Homebuilding) 14,560,500 6,648,630
- -----------------------------------------------------------------
Filinvest Land Inc.(a)
(Real Estate) 21,584,500 7,309,819
- -----------------------------------------------------------------
Metro Pacific Corp.
(Conglomerates) 33,845,000 8,242,314
- -----------------------------------------------------------------
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
PHILIPPINES-(CONTINUED)
Metropolitan Bank & Trust Co.
(Banking) 342,800 $ 7,565,601
- -----------------------------------------------------------------
Southeast Asia Cement Holdings,
Inc.(a)
(Building Materials) 26,967,460 2,565,398
- -----------------------------------------------------------------
32,331,762
- -----------------------------------------------------------------
PORTUGAL-0.39%
Portugal Telecom S.A.(a)
(Telecommunications) 220,000 5,721,006
- -----------------------------------------------------------------
SINGAPORE-2.20%
Cerebos Pacific Ltd.
(Food/Processing) 528,000 4,086,049
- -----------------------------------------------------------------
City Developments Ltd.
(Real Estate) 1,155,000 9,102,236
- -----------------------------------------------------------------
DBS Land Ltd.
(Real Estate) 2,810,000 8,857,934
- -----------------------------------------------------------------
Overseas Union Bank Ltd.
(Banking) 1,539,000 10,489,457
- -----------------------------------------------------------------
32,535,676
- -----------------------------------------------------------------
SOUTH AFRICA-0.88%
De Beers Centenary A.G.
(Gold & Silver Mining) 195,000 5,755,461
- -----------------------------------------------------------------
Sasol Ltd.
(Oil & Gas-Exploration & Production) 590,700 7,206,729
- -----------------------------------------------------------------
12,962,190
- -----------------------------------------------------------------
SPAIN-1.86%
Empresa Nacional de Electricidad,
S.A. (Electric Power) 163,000 9,977,115
- -----------------------------------------------------------------
Iberdrola S.A.
(Electric Power) 745,000 7,911,556
- -----------------------------------------------------------------
Repsol S.A.
(Oil & Gas-Services) 59,250 1,934,059
- -----------------------------------------------------------------
Telefonica de Espana
(Telecommunications) 380,000 7,624,123
- -----------------------------------------------------------------
27,446,853
- -----------------------------------------------------------------
SWEDEN-2.78%
Astra AB-Class A
(Medical-Drugs) 73,300 3,344,131
- -----------------------------------------------------------------
Autoliv AB
(Automobile/Truck Parts & Tires) 400,000 16,971,577
- -----------------------------------------------------------------
Hennes & Mauritz AB-B shares
(Retail-Stores) 74,000 9,801,846
- -----------------------------------------------------------------
Securitas AB
(Security & Safety Services) 267,000 6,902,687
- -----------------------------------------------------------------
Telefonaktiebolaget L.M.
Ericsson-ADR (Telecommunications) 144,280 3,985,735
- -----------------------------------------------------------------
41,005,976
- -----------------------------------------------------------------
SWITZERLAND-1.13%
Ciba-Geigy Ltd.
(Chemicals) 5,200 6,405,380
- -----------------------------------------------------------------
Sandoz A.G.
(Chemicals) 5,500 6,357,199
- -----------------------------------------------------------------
Swissair A.G.(a)
(Airlines) 5,000 3,896,361
- -----------------------------------------------------------------
16,658,940
- -----------------------------------------------------------------
THAILAND-1.26%
Bank of Ayudhya Ltd.
(Banking) 120,150 344,026
- -----------------------------------------------------------------
Krung Thai Bank PLC
(Banking) 1,502,920 4,067,522
- -----------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
THAILAND-(CONTINUED)
Siam Commercial Bank Public Co. Ltd.
(Banking) 375,500 $ 3,416,984
- -----------------------------------------------------------------
Thai Farmers Bank PLC
(Banking) 573,600 4,387,213
- -----------------------------------------------------------------
Thai Farmers Bank PLC-Rights(a)
(Banking) 72,450 37,818
- -----------------------------------------------------------------
Total Access Communication Public
Co. Ltd.
(Telecommunications) 931,000 6,423,900
- -----------------------------------------------------------------
18,677,463
- -----------------------------------------------------------------
UNITED KINGDOM-14.08%
Airtours PLC
(Leisure & Recreation) 390,000 4,138,672
- -----------------------------------------------------------------
Argos PLC
(Retail-Stores) 653,333 8,203,880
- -----------------------------------------------------------------
Barclays PLC
(Finance-Consumer Credit) 500,000 7,840,983
- -----------------------------------------------------------------
Bass PLC
(Beverages-Alcoholic) 650,000 8,336,589
- -----------------------------------------------------------------
B.A.T. Industries PLC
(Conglomerates) 1,285,000 8,951,497
- -----------------------------------------------------------------
British Aerospace PLC
(Aerospace/Defense) 425,000 8,058,675
- -----------------------------------------------------------------
British Petroleum Co. PLC
(Oil & Gas-Services) 840,000 9,037,109
- -----------------------------------------------------------------
Burton Group PLC
(Retail-Stores) 3,140,000 7,627,686
- -----------------------------------------------------------------
Caradon PLC
(Building Materials) 1,800,000 7,075,195
- -----------------------------------------------------------------
Compass Group PLC
(Food/Processing) 970,000 9,614,746
- -----------------------------------------------------------------
Dixons Group PLC
(Retail-Stores) 1,370,000 12,275,147
- -----------------------------------------------------------------
FKI PLC
(Conglomerates) 1,110,000 3,793,945
- -----------------------------------------------------------------
General Electric Co. PLC
(Electronic
Components/Miscellaneous) 1,140,000 7,041,504
- -----------------------------------------------------------------
GKN PLC
(Automobile/Truck Parts & Tires) 530,000 9,963,379
- -----------------------------------------------------------------
Granada Group PLC
(Leisure & Recreation) 590,000 8,484,131
- -----------------------------------------------------------------
Kingfisher PLC
(Retail-Stores) 326,000 3,464,811
- -----------------------------------------------------------------
Marks & Spencer PLC
(Retail-Stores) 850,000 7,138,672
- -----------------------------------------------------------------
Medeva PLC
(Medical-Drugs) 1,490,000 6,402,344
- -----------------------------------------------------------------
MFI Furniture Group PLC
(Retail-Stores) 2,300,000 7,486,979
- -----------------------------------------------------------------
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Next PLC
(Retail-Stores) 1,010,000 9,205,729
- -----------------------------------------------------------------
NFC PLC
(Transportation-Miscellaneous) 2,350,000 $ 7,343,750
- -----------------------------------------------------------------
Peninsular & Oriental Steam
Navigation Co. (The)
(Transportation-Miscellaneous) 725,000 7,121,379
- -----------------------------------------------------------------
Provident Financial PLC
(Finance-Consumer Credit) 942,400 7,063,398
- -----------------------------------------------------------------
Rentokil Group PLC
(Business Services) 975,000 6,546,021
- -----------------------------------------------------------------
Siebe PLC
(Electronic Components/
Miscellaneous) 370,000 5,805,339
- -----------------------------------------------------------------
Smiths Industries PLC
(Electronics/Defense) 256,000 3,416,667
- -----------------------------------------------------------------
Standard Chartered PLC
(Finance-Asset Management) 645,000 6,960,205
- -----------------------------------------------------------------
WPP Group PLC
(Advertising/Broadcasting) 2,575,000 9,555,664
- -----------------------------------------------------------------
207,954,096
- -----------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 1,343,038,677
=================================================================
PRINCIPAL
AMOUNT(b)
FOREIGN CONVERTIBLE BONDS-1.26%
ITALY-0.48%
Pirelli S.p.A., Conv. Bonds,
5.00%, 12/31/98
(Automobile/Truck Parts & Tires) ITL 10,062,964,600 7,048,055
- ------------------------------------------------------------------
JAPAN-0.78%
MBL International Finance
Bermuda, Conv. Yankee Bonds,
3.00%, 11/30/02
(Financial Services) 4,780,000 5,341,650
- ------------------------------------------------------------------
Sumitomo Bank, Conv. American
Depository Notes,
0.75%, 05/31/01
(Banking) 6,500,000 6,207,500
- ------------------------------------------------------------------
11,549,150
- ------------------------------------------------------------------
Total Foreign Convertible
Bonds 18,597,205
- ------------------------------------------------------------------
REPURCHASE AGREEMENTS-6.38%(c)
Daiwa Securities America Inc.,
5.53%, 11/01/96(d) 121,642 121,642
- ------------------------------------------------------------------
SBC Capital Markets, Inc.,
5.55%, 11/01/96(e) 94,000,000 94,000,000
- ------------------------------------------------------------------
Total Repurchase Agreements 94,121,642
- ------------------------------------------------------------------
TOTAL INVESTMENTS-98.58% 1,455,757,524
- ------------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.42% 20,991,944
- ------------------------------------------------------------------
NET ASSETS-100.00% $ 1,476,749,468
==================================================================
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
Conv. -- Convertible
GDR -- Global Depository Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Principal in U.S. Dollars unless otherwise indicated.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value 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.
(d) 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 08/15/23.
(e) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$700,107,917. Collateralized by $691,506,000 U.S. Treasury obligations, 0%
to 9.125% due 11/30/96 to 10/31/01.
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 $1,260,825,376) $1,455,757,524
- ---------------------------------------------------------
Foreign currencies, at market value
(cost $36,976,366) 36,821,259
- ---------------------------------------------------------
Receivables for:
Investments sold 11,444,676
- ---------------------------------------------------------
Capital stock sold 9,947,233
- ---------------------------------------------------------
Dividends and interest 2,711,321
- ---------------------------------------------------------
Investment for deferred compensation plan 17,703
- ---------------------------------------------------------
Other assets 81,081
- ---------------------------------------------------------
Total assets 1,516,780,797
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 35,604,954
- ---------------------------------------------------------
Capital stock reacquired 1,649,363
- ---------------------------------------------------------
Deferred compensation 17,703
- ---------------------------------------------------------
Accrued advisory fees 1,117,595
- ---------------------------------------------------------
Accrued administrative services fees 8,031
- ---------------------------------------------------------
Accrued directors' fees 946
- ---------------------------------------------------------
Accrued distribution fees 580,743
- ---------------------------------------------------------
Accrued transfer agent fees 322,318
- ---------------------------------------------------------
Accrued operating expenses 729,676
- ---------------------------------------------------------
Total liabilities 40,031,329
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $1,476,749,468
=========================================================
NET ASSETS:
Class A $1,108,394,906
=========================================================
Class B $ 368,354,562
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER
SHARE:
Class A:
Authorized 200,000,000
- ---------------------------------------------------------
Outstanding 72,108,763
=========================================================
Class B:
Authorized 200,000,000
- ---------------------------------------------------------
Outstanding 24,337,966
=========================================================
Class A:
Net asset value and redemption price
per share $ 15.37
=========================================================
Offering price per share:
(Net asset value divided by 94.50%) $ 16.26
=========================================================
Class B:
Net asset value and offering price per
share $ 15.13
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $2,703,027 foreign
withholding tax) $ 16,488,363
- --------------------------------------------------------
Interest 3,504,142
- --------------------------------------------------------
Total investment income 19,992,505
- --------------------------------------------------------
EXPENSES:
Advisory fees 10,384,642
- --------------------------------------------------------
Administrative services fees 94,250
- --------------------------------------------------------
Directors' fees 11,727
- --------------------------------------------------------
Distribution fees-Class A 2,684,486
- --------------------------------------------------------
Distribution fees-Class B 2,034,652
- --------------------------------------------------------
Custodian fees 929,674
- --------------------------------------------------------
Transfer agent fees-Class A 1,810,548
- --------------------------------------------------------
Transfer agent fees-Class B 590,277
- --------------------------------------------------------
Other 638,489
- --------------------------------------------------------
Total expenses 19,178,745
- --------------------------------------------------------
Less: Advisory fees waived (299,147)
- --------------------------------------------------------
Expenses paid indirectly (17,187)
- --------------------------------------------------------
Net expenses 18,862,411
- --------------------------------------------------------
Net investment income 1,130,094
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain on sales of:
Investment securities 43,787,593
- --------------------------------------------------------
Foreign currencies 41,811
- --------------------------------------------------------
43,829,404
- --------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 98,797,523
- --------------------------------------------------------
Foreign currencies (335,775)
- --------------------------------------------------------
98,461,748
- --------------------------------------------------------
Net gain on investment securities and
foreign currencies 142,291,151
- --------------------------------------------------------
Net increase in net assets resulting from
operations $143,421,246
========================================================
</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 $ 1,130,094 $ 468,936
- -------------------------------------------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities and foreign currencies 43,829,404 19,301,818
- -------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and foreign currencies 98,461,748 8,812,756
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 143,421,246 28,583,510
- -------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (295,965) (2,166,421)
- -------------------------------------------------------------------------------------------------------------------------------
Class B -- (19,050)
- -------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized capital gains:
Class A (18,468,041) (23,092,160)
- -------------------------------------------------------------------------------------------------------------------------------
Class B (1,875,276) (287,957)
- -------------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 350,398,961 (54,671,896)
- -------------------------------------------------------------------------------------------------------------------------------
Class B 296,841,074 45,389,211
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 770,021,999 (6,264,763)
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 706,727,469 712,992,232
- -------------------------------------------------------------------------------------------------------------------------------
End of period $1,476,749,468 $706,727,469
===============================================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,238,126,321 $590,886,286
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,113,111 237,171
- -------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment securities
and foreign currencies 42,949,270 19,504,994
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and foreign currencies 194,560,766 96,099,018
- -------------------------------------------------------------------------------------------------------------------------------
$1,476,749,468 $706,727,469
===============================================================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM International Equity Fund (the "Fund") is a series 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 International Equity Fund, AIM Global Aggressive Growth
Fund, AIM Global Growth Fund and AIM Global Income 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 these financial statements pertains only to the Fund.
The Fund's investment objective is to provide long-term growth of capital. The
Fund seeks to achieve its objective by investing in a diversified portfolio of
international equity securities, the issuers of which are considered by AIM to
have strong earnings momentum.
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--Except as provided in the next sentence, a security
listed or traded on an exchange is valued at the last sales price on the
exchange where the security is principally traded or, lacking any sales, at
the mean between the closing bid and asked prices on the day of valuation.
Exchange listed convertible bonds are valued at the mean between the closing
bid and asked prices obtained from a broker-dealer. If a mean is not
available, as is the case in some foreign markets, the
12
<PAGE> 15
closing bid will be used absent a last sales price. Securities traded in the
over-the-counter market (but not including securities reported on the NASDAQ
National Market System) are valued at the mean between the closing bid and
asked prices on valuation date. Securities reported on the NASDAQ National
Market System are valued at the last sales price on the valuation date or
absent a last sales price, at the mean of the closing bid and asked prices.
Securities for which market quotations are either not readily available or
are questionable are valued at fair value as determined in good faith by or
under the supervision of the Company's officers in a manner specifically
authorized by the Board of Directors. Investments with maturities of 60 days
or less are valued on the basis of amortized cost which approximates market
value. Generally, trading in foreign securities is substantially completed
each day at various times prior to the close of the New York Stock Exchange.
The values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York Stock
Exchange. Occasionally, events affecting the values of such securities and
such exchange rates may occur between the times at which they are determined
and the close of the New York Stock Exchange which 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. 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 forward 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 forward 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 forward 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.
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 $41,811 and
undistributed net realized gains reduced by $41,811 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. Organizational Costs--Organizational costs of $23,098 were borne by the Fund.
Such costs are amortized to operations over sixty months. Prior to full
amortization of the organizational costs, the proceeds of any redemption of
the shares related to the Fund's initial formation (10,000 Class A shares)
will be reduced by a pro rata share of such unamortized organizational
expenses. The pro rata share of organizational expenses will be calculated by
dividing the number of initial shares redeemed by the remaining number of
initial shares outstanding at the time of the redemption and multiplying the
result by the unamortized organizational expenses.
G. 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 0.95% of
the first $1 billion of the Fund's average daily net assets, plus 0.90% of the
Fund's average daily net assets in excess of $1 billion. AIM is currently
voluntarily waiving a portion of its advisory fees paid by the Fund to AIM to
the extent necessary to reduce the fees paid by the Fund at net asset levels
higher than those currently incorporated in the present advisory fee schedule.
Under the voluntary waiver, AIM will receive a fee calculated at the annual rate
of 0.95% of the first $500 million of the Fund's average daily net assets, plus
0.90% of the Fund's average daily net assets in excess of $500 million to and
including $1 billion, plus 0.85% of the Fund's average daily net assets in
excess of $1 billion. The waiver of fees is voluntary and the Board of Directors
of the Company would be advised of any decision by AIM to discontinue the
waiver. During the year ended October 31, 1996, AIM waived fees of $299,147.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1996, AIM was
reimbursed $94,250 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Fund. During the year ended October 31, 1996,
the Fund paid AFS $1,170,699 for such services.
13
<PAGE> 16
The Fund received reductions in transfer agency fees of $15,590 from dividends
received on balances in cash management bank accounts. In addition, the Fund
incurred expenses of $1,597 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 $17,187 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, pays AIM Distributors at an annual rate of 0.30% 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 compensation payable, the Fund pays a service fee of 0.25%
to selected dealers and 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, pays AIM Distributors 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 $2,684,486 and $2,034,652,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,489,975 from 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 $39,753 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 $5,247
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 $10,800,000. 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
$1,253,564,886 and $666,195,047, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of October 31, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $227,690,078
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (33,057,825)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $194,632,253
==========================================================
Costs of investments for tax purposes is $1,261,125,271.
</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 41,055,911 $ 601,559,902 19,941,452 $ 256,345,253
- --------------- ----------- ------------- ----------- -------------
Class B 21,641,528 313,690,762 3,764,258 49,112,660
- --------------- ----------- ------------- ----------- -------------
Issued as
reinvestment
of dividends:
Class A 1,305,811 17,576,215 1,330,022 15,787,364
- --------------- ----------- ------------- ----------- -------------
Class B 130,593 1,741,975 24,816 294,807
- --------------- ----------- ------------- ----------- -------------
Reacquired:
Class A (18,205,834) (268,737,156) (25,762,596) (326,804,513)
- --------------- ----------- ------------- ----------- -------------
Class B (1,270,776) (18,591,663) (310,613) (4,018,256)
- --------------- ----------- ------------- ----------- -------------
44,657,233 $ 647,240,035 (1,012,661) $ (9,282,685)
=========== ============= =========== =============
</TABLE>
14
<PAGE> 17
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share outstanding during
each of the years in the four-year period ended October 31, 1996 and the period
November 5, 1991 (date operations commenced) through October 31, 1992 and for a
Class B share outstanding during each of the years in the two-year period ended
October 31, 1996 and the period September 15, 1994 (date sales commenced)
through October 31, 1994.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
----------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 13.65 $ 13.50 $ 12.18 $ 8.88 $ 8.61(a)
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Income from investment operations:
Net investment income 0.04(b) 0.01 0.02 0.02 0.03
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Net gains on securities (both realized and
unrealized) 2.07 0.62 1.31 3.29 0.26
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Total from investment operations 2.11 0.63 1.33 3.31 0.29
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Less distributions:
Dividends from net investment income (0.01) (0.04) (0.01) (0.01) (0.02)
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Distributions from capital gains (0.38) (0.44) -- -- --
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Total distributions (0.39) (0.48) (0.01) (0.01) (0.02)
- ---------------------------------------------- ----------- ---------- ---------- --------- ---------
Net asset value, end of period $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88
============================================== =========== ========== ========== ========= =========
Total return(c) 15.79% 5.24% 10.94% 37.36% 3.36%
============================================== =========== ========== ========== ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,108,395 $ 654,764 $ 708,159 $ 372,282 $ 122,663
============================================== =========== ========== ========== ========= =========
Ratio of expenses to average net assets(d) 1.58%(e)(f) 1.67% 1.64% 1.78% 1.80%(g)
============================================== =========== ========== ========== ========= =========
Ratio of net investment income to average net
assets(h) 0.25%(e) 0.10% 0.22% 0.28% 0.30%(g)
============================================== =========== ========== ========== ========= =========
Portfolio turnover rate 66% 68% 67% 62% 41%
============================================== =========== ========== ========== ========= =========
Average brokerage commission rate(i) $ 0.0192 N/A N/A N/A N/A
============================================== =========== ========== ========== ========= =========
</TABLE>
(a) Net asset value at the beginning of the period has been restated to reflect
a 1.1619 for 1 stock split, effected in the form of a dividend, on May 21,
1992.
(b) Calculated using average shares outstanding.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers and expense reimbursements are 1.60%, 1.68%
and 1.89% (annualized), respectively for 1996, 1995 and 1992.
(e) Ratios are based on average net assets of $894,828,456.
(f) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have been
1.57%.
(g) Annualized.
(h) After fee waivers and expense reimbursements. Ratios of net investment
income to average net assets before fee waivers and expense reimbursements
are 0.22%, 0.09% and 0.22% (annualized), respectively for 1996, 1995 and
1992.
(i) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
<TABLE>
<CAPTION>
1996 1995 1994
---------- --------- ---------
<S> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 13.54 $ 13.49 $ 13.42
- ----------------------------------------------------------------------------------- ---------- --------- ---------
Income from investment operations:
Net investment income (loss) (0.07) (a) (0.09) (0.01)
- ----------------------------------------------------------------------------------- ---------- --------- ---------
Net gains on securities (both realized and unrealized) 2.04 0.61 0.08
- ----------------------------------------------------------------------------------- ---------- --------- ---------
Total from investment operations 1.97 0.52 0.07
- ----------------------------------------------------------------------------------- ---------- --------- ---------
Less distributions:
Dividends from net investment income -- (0.03) --
- ----------------------------------------------------------------------------------- --------- --------- ---------
Distributions from capital gains (0.38) (0.44) --
- ----------------------------------------------------------------------------------- --------- --------- ---------
Total distributions (0.38) (0.47) --
- ----------------------------------------------------------------------------------- --------- --------- ---------
Net asset value, end of period $ 15.13 $ 13.54 $ 13.49
=================================================================================== ========= ========= =========
Total return(b) 14.88% 4.35% 0.52%
=================================================================================== ========= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 368,355 $ 51,964 $ 4,833
=================================================================================== ========= ========= =========
Ratio of expenses to average net assets(c) 2.35% (d)(e) 2.55% 2.53%(f)
=================================================================================== ========= ========= =========
Ratio of net investment income (loss) to average net assets(g) (0.53)% (d) (0.78)% (0.67)%(f)
=================================================================================== ========= ========= =========
Portfolio turnover rate 66% 68% 67%
=================================================================================== ========= ========= =========
Average brokerage commission rate(h) $ 0.0192 N/A N/A
=================================================================================== ========= ========= =========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and for periods less than
one year, total returns are not annualized.
(c) After fee waivers and expense reimbursements. Ratios of expenses to average
net assets before fee waivers are 2.37% and 2.56%, respectively for 1996 and
1995.
(d) Ratios are based on average net assets of $203,465,249.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratios of net investment
income (loss) to average net assets before fee waivers are (0.55%) and
(0.79)%, respectively for 1996 and 1995.
(h) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
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
The Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM International Equity Fund (a portfolio
of AIM International Funds, Inc.), including the schedule
of investments, as of October 31, 1996, 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 financial highlights
for each of the years in the four-year period then ended
and the period November 5, 1991 (date operations
commenced) through October 31, 1992. 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
International Equity 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 four-year period then ended
and the period November 5, 1991 (date operations
commenced) through October 31, 1992, 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 E. 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 P. Michelle Grace COUNSEL TO THE DIRECTORS
Chief Financial Officer Assistant Secretary
Bell Atlantic Management Kramer, Levin, Naftalis & Frankel
Services, Inc. David L. Kite 919 Third Avenue
Assistant Secretary New York, NY 10022
Louis S. Sklar
Executive Vice President Nancy L. Martin DISTRIBUTOR
Hines Interests Assistant Secretary
Limited Partnership 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 International Equity Fund paid ordinary dividends in the amount of $0.006
per share to shareholders of Class A shares during its tax year ended October
31, 1996. Of this amount 0% is eligible for the dividends received deduction for
corporations. The Fund also distributed long-term capital gains of $0.375 per
share for Class A and Class B shares during its tax year ended October 31, 1996.
<PAGE> 20
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--REGISTERED TRADEMARK--
[PHOTO OF 11 GREENWAY PLAZA
APPEARS HERE] AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Blue Chip Fund
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 STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
leadership in the mutual fund industry AIM Tax-Exempt Cash Fund
since 1976 and currently manages
approximately $60 billion in assets for
more than 3.5 million shareholders, *AIM Aggressive Growth Fund was closed
including individual investors, corporate to new investors on July 18, 1995. For
clients, and financial institutions. The more complete information about any AIM
AIM Family of Funds--Registered Fund(s), including sales charges and
Trademark--is distributed nationwide, and expenses, ask your financial consultant
AIM today ranks among the nation's top 15 or securities dealer for a free
mutual fund companies in assets under prospectus(es). Please read the
management, according to Lipper prospectus(es) carefully before you
Analytical Services, Inc. invest or send money.
---------------
[AIM LOGO APPEARS HERE] BULK RATE
U.S. POSTAGE
A I M Distributors, Inc. PAID
11 Greenway Plaza, Suite 1919 HOUSTON, TX
Houston, TX 77046 Permit No. 1919
---------------
</TABLE>
