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AIM INTERNATIONAL FUNDS, INC.
AIM European Development Fund
Supplement dated July 1, 1998
to the Prospectus dated November 12, 1997
as revised January 2, 1998
The third sentence in the second paragraph under the caption "HEDGING STRATEGIES
AND OTHER INVESTMENT POLICIES--Options" on page 7 is deleted and replaced in its
entirety by the following:
"A put option is 'covered' if the Fund segregates liquid assets with a
value equal to the exercise price of the put option."
The following paragraphs are inserted as a new item under "HEDGING STRATEGIES
AND OTHER INVESTMENT POLICIES," before "Portfolio Turnover" on page 9 of the
prospectus:
"REAL ESTATE INVESTMENT TRUSTS ("REITS"). The Fund may invest in equity
and/or debt securities issued by REITs. Such investments will not
exceed 5% of the total assets of the Fund.
REITs are trusts which sell equity or debt securities to investors and
use the proceeds to invest in real estate or interests therein. A REIT
may focus on particular projects, such as apartment complexes, or
geographic regions, such as the Southeastern United States, or both.
To the extent that the Fund has the ability to invest in REITs, the Fund
could conceivably own real estate directly as a result of a default on
the securities it owns. The Fund, therefore, may be subject to certain
risks associated with the direct ownership of real estate including
difficulties in valuing and trading real estate, declines in the value
of real estate, risks related to general and local economic condition,
adverse change in the climate for real estate, increases in property
taxes and operating expense, changes in zoning laws, casualty or
condemnation losses, limitations on rents, changes in neighborhood
values, the appeal of properties to tenants, and increases in interest
rates.
In addition to the risks described above, equity REITs may be affected
by any changes in the value of the underlying property owned by the
trusts, while mortgage REITs may be affected by the quality of any
credit extended. Equity and mortgage REITs are dependent upon management
skill, are not diversified, and are therefore subject to the risk of
financing single or a limited number of projects. Such trusts are also
subject to heavy cash flow dependency, defaults by borrowers,
self-liquidation, and the possibility of failing to maintain exemption
from the 1940 Act. Changes in interest rates may also affect the value
of debt securities held by a Fund. By investing in REITs indirectly
through the Fund, a shareholder will bear not only his/her proportionate
share of the expenses of the Fund, but also, indirectly, similar
expenses of the REITs."
The following paragraphs should be inserted under the heading of "Foreign
Securities--Currency Risk" on page 9:
"Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
the Netherlands, Portugal, and Spain are members of the European
Economic and Monetary Union (the "EEMU"). The EEMU intends to establish
a common European currency for participating countries which will be
known as the "euro." It is anticipated that each participating country
will supplement its existing currency with the euro on January 1, 1999,
and will replace its existing currency with the euro on July 1, 2002.
Any other European country which is a
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member of the EEMU may elect to participate in the EEMU and may
supplement its existing currency with the euro after January 1, 1999.
The expected introduction of the euro presents unique risks and
uncertainties, including whether the payment and operational systems of
banks and other financial institutions will be ready by January 1, 1999;
how outstanding financial contracts will be treated after January 1,
1999; the establishment of exchange rates for existing currencies and
the euro; and the creation of suitable clearing and settlement systems
for the euro. These and other factors could cause market disruptions
before or after the introduction of the euro and could adversely affect
the value of securities held by the Fund."
