<PAGE> 1
As filed with the Securities and Exchange Commission on November 16, 1998.
Securities Act Registration No. 33-44611
Investment Company Act Registration No. 811-6463
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-effective Amendment No. ____ Post-effective Amendment No. ____
(Check appropriate box or boxes)
AIM INTERNATIONAL FUNDS, INC.
-----------------------------------------
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza
Suite 100
Houston, TX 77046
------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number: (713)626-1919
Name and Address of Agent for Service: Copy to:
CAROL F. RELIHAN, ESQUIRE THOMAS H. DUNCAN, ESQUIRE
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza 1225 17th Street
Suite 100 Suite 2300
Houston, TX 77046 Denver, CO 80202
Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective under the Securities Act of
1933.
It is proposed that this filing will become effective on December 16,
1998 pursuant to Rule 488.
The title of the securities being registered is AIM INTERNATIONAL
EQUITY FUND Class A shares and Class B shares and AIM GLOBAL GROWTH FUND Class A
shares and Class B shares. No filing fee is due in reliance on Section 24(f) of
the Securities Act of 1933.
<PAGE> 2
AIM INTERNATIONAL FUNDS, INC.
Cross Reference Sheet
Pursuant to Rule 481(a) under the Securities Act of 1933
<TABLE>
<CAPTION>
LOCATION IN COMBINED PROXY
FORM N-14 ITEM NO. STATEMENT AND PROSPECTUS
------------------ --------------------------
PART A
<S> <C> <C>
Item 1. Beginning of Registration Statement and Cover Page of Registration
Outside Front Cover Page of Prospectus Statement; Front Cover Page of
Prospectus
Item 2. Beginning and Outside Back Cover Page of Table of Contents
Prospectus
Item 3. Fee Table, Synopsis and Risk Factors Synopsis; Risk Factors
Item 4. Information About the Transaction Reasons for the Transaction;
Synopsis; Additional
Information About the
Agreement; Rights of
Shareholders; Capitalization
Item 5. Information About the Registrant Front Cover Page of Prospectus;
Synopsis; Risk Factors;
Comparison of Investment
Objectives and Policies;
Financial Highlights; Additional
Information About the Acquiring
Funds and the Acquired Funds;
Information Filed with the
Securities and Exchange
Commission
Item 6. Information About the Company Being Front Cover Page of Prospectus;
Acquired Comparison of Investment
Objectives and Policies;
Additional Information About
the Acquiring Funds and the
Acquired Funds; Information
Filed with the Securities and
Exchange Commission
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
Item 7. Voting Information Prospectus Cover Page; Notice
of Special Meeting of
Shareholders; Introduction;
Ownership of the Acquiring
Fund and Acquired Fund Shares
Item 8. Interest of Certain Persons and Experts Not Applicable
Item 9. Additional Information Required for Not Applicable
Reoffering by Persons Deemed to be
Underwriters
PART B
Item 10. Cover Page Cover Page of Statement of
Additional Information
Item 11. Table of Contents Not Applicable
Item 12. Additional Information about the Registrant Description of Permitted
Investments; Directors and
Officers of the Company;
Advisory and Management
Related Services Agreements
and Plans of Distribution;
Portfolio Transactions;
Description of Shares;
Determination of Net Asset
Value; Taxes; Performance Data
Item 13. Additional Information about the Company Not Applicable
Being Acquired
Item 14. Financial Statements Financial Information
</TABLE>
PART C OTHER INFORMATION
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of this document.
2
<PAGE> 4
AIM INTERNATIONAL GROWTH FUND
AIM WORLDWIDE GROWTH FUND
Portfolios of
AIM GROWTH SERIES
Fifty California Street, 27th Floor
San Francisco, California 94111
December __, 1998
Dear Shareholder:
Enclosed is a combined proxy statement and prospectus seeking your
approval of a proposed combination of AIM International Growth Fund with AIM
International Equity Fund and a proposed combination of AIM Worldwide Growth
Fund with AIM Global Growth Fund. AIM International Growth Fund and AIM
Worldwide Growth Fund (the "Acquired Funds") are investment portfolios of AIM
Growth Series, a Delaware business trust. AIM International Equity Fund and AIM
Global Growth Fund (the "Acquiring Funds") are investment portfolios of AIM
International Funds, Inc., a Maryland corporation.
The investment objective and policies of each Acquired Fund are similar
to the investment objective and policies of the Acquiring Fund with which it
will combine. A I M Advisors, Inc. serves as the investment adviser to the
Acquired Funds and the Acquiring Funds. As discussed in the accompanying
document, the Acquiring Funds have better performance histories and generally
lower operating expense ratios than the Acquired Funds. The Acquiring Funds are
substantially larger than the Acquired Funds and have a more stable base of
assets. The accompanying document describes the proposed transactions and
compares the investment policies, operating expenses and performance histories
of the Acquired Funds and Acquiring Funds.
Shareholders of AIM International Growth Fund and AIM Worldwide Growth
Fund are being asked to approve an Agreement and Plan of Reorganization by and
among AIM Growth Series, AIM International Funds, Inc. and A I M Advisors, Inc.,
that will govern the reorganization of the Acquired Funds into the Acquiring
Funds. After careful consideration, the Board of Trustees of AIM Growth Series
has unanimously approved the proposals and recommends that you read the enclosed
materials carefully and then vote FOR the proposals.
Your vote is important. Please take a moment now to sign and return
your proxy cards in the enclosed postage paid return envelope. If we do not hear
from you after a reasonable amount of time you may receive a telephone call from
our proxy solicitor, Shareholder Communications Corporation, reminding you to
vote your shares. You may also vote your shares through a web site established
by Shareholder Communications Corporation by following the instructions that
appear on the enclosed proxy insert.
Sincerely,
Robert Graham
Chairman
<PAGE> 5
AIM INTERNATIONAL GROWTH
AIM WORLDWIDE GROWTH FUND
Portfolios OF
AIM GROWTH SERIES
FIFTY CALIFORNIA STREET, 27TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 10, 1999
TO THE SHAREHOLDERS OF AIM INTERNATIONAL GROWTH FUND AND AIM WORLDWIDE
GROWTH FUND:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of AIM
International Growth Fund and AIM Worldwide Growth Fund (the "Acquired Funds"),
investment portfolios of AIM Growth Series ("AGS"), will be held at 11 Greenway
Plaza, Suite 100, Houston, TX 77046 on February 10, 1999, at 3:00 p.m., local
time, for the following purposes:
1. To approve an Agreement and Plan of Reorganization (the
"Agreement") between AGS, acting on behalf of the Acquired
Funds, and AIM International Funds, Inc., ("AIF"), acting on
behalf of AIM International Equity Fund and AIM Global Growth
Fund (the "Acquiring Funds"). The Agreement provides for the
combination of AIM International Growth Fund with AIM
International Equity Fund and the combination of AIM Worldwide
Growth Fund with AIM Global Growth Fund (the
"Reorganizations"). Pursuant to the Agreement, all of the
assets of an Acquired Fund will be transferred to the
Acquiring Fund with which it will combine, the Acquiring Fund
will assume all of the liabilities of the Acquired Fund, and
AIF will issue Class A shares of the Acquiring Fund to the
Acquired Fund's Class A and Advisor Class shareholders, and
Class B shares of the Acquiring Fund to the Acquired Fund's
Class B shareholders. The value of each Acquired Fund
shareholder's account with the Acquiring Fund immediately
after the Reorganization will be the same as the value of such
shareholder's account with the Acquired Fund immediately prior
to the Reorganization. The Reorganizations have been
structured as tax- free transactions. No initial sales charge
will be imposed in connection with the Reorganizations.
2. To transact any other business, not currently contemplated,
that may properly come before the Special Meeting, in the
discretion of the proxies or their substitutes.
Shareholders of record as of the close of business on December
8, 1998, are entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY, WHICH IS BEING SOLICITED BY THE
MANAGEMENT OF AGS. YOU MAY ALSO VOTE YOUR SHARES THROUGH A WEB SITE ESTABLISHED
FOR THAT PURPOSE BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY INSERT.
YOUR VOTE IS IMPORTANT FOR THE PURPOSE OF ENSURING A QUORUM AT THE SPECIAL
MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY THE
SUBSEQUENT EXECUTION AND SUBMISSION OF A REVISED PROXY, BY GIVING WRITTEN NOTICE
OF REVOCATION TO AGS AT ANY TIME BEFORE THE PROXY IS EXERCISED OR BY VOTING IN
PERSON AT THE SPECIAL MEETING.
HELGE K. LEE
VICE PRESIDENT AND SECRETARY
December __, 1998
<PAGE> 6
AIM INTERNATIONAL GROWTH FUND
AIM WORLDWIDE GROWTH FUND
Portfolios OF
AIM GROWTH SERIES
FIFTY CALIFORNIA STREET, 27TH FLOOR
SAN FRANCISCO, CA 94120-7345
TOLL FREE: (800) 347-4246
AIM INTERNATIONAL EQUITY FUND
AIM GLOBAL GROWTH FUND
Portfolios OF
AIM INTERNATIONAL FUNDS, INC.
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
TOLL FREE: (800) 347-4246
COMBINED PROXY STATEMENT AND PROSPECTUS
Dated: December __, 1998
This document is being furnished in connection with a special meeting
of Shareholders of AIM INTERNATIONAL GROWTH FUND and AIM WORLDWIDE GROWTH FUND
(the "Acquired Funds"), investment portfolios of AIM Growth Series ("AGS"), a
Delaware business trust, to be held on February 10, 1999 (the "Special
Meeting"). At the Special Meeting, the shareholders of the Acquired Funds are
being asked to consider and approve an Agreement and Plan of Reorganization (the
"Agreement") by and among AGS, acting on behalf of the Acquired Funds, AIM
International Funds, Inc. ("AIF"), a Maryland corporation, acting on behalf of
AIM INTERNATIONAL EQUITY FUND and AIM GLOBAL GROWTH FUND (the "Acquiring
Funds"), and A I M Advisors, Inc. ("AIM Advisors"). The Agreement provides for
the combination of AIM INTERNATIONAL GROWTH FUND with AIM INTERNATIONAL EQUITY
FUND, and the combination of AIM WORLDWIDE GROWTH FUND with AIM GLOBAL GROWTH
FUND (the "Reorganizations"). THE BOARD OF TRUSTEES OF AGS HAS UNANIMOUSLY
APPROVED THE AGREEMENT AND REORGANIZATIONS AS BEING IN THE BEST INTEREST OF THE
SHAREHOLDERS OF EACH OF THE ACQUIRED FUNDS.
Pursuant to the Agreement, all of the assets of an Acquired Fund will
be transferred to the Acquiring Fund with which it will combine, the Acquiring
Fund will assume all of the liabilities of the Acquired Fund, and AIF will issue
Class A shares of the Acquiring Fund to the Acquired Fund's Class A and Advisor
Class shareholders, and Class B shares of the Acquiring Fund to the Acquired
Fund's Class B shareholders. The value of each Acquired Fund shareholder's
account with the Acquiring Fund immediately after the Reorganization will be the
same as the value of such shareholder's account with the Acquired Fund
immediately prior to the Reorganization. The Reorganizations have been
structured as tax-free transactions. No initial sales charge will be imposed in
connection with the Reorganizations.
<PAGE> 7
The Acquiring Funds are series portfolios of AIF, an open-end, series
management investment company. The investment objective and policies of each
Acquiring Fund are similar to those of the Acquired Fund with which it will
combine.
AIM INTERNATIONAL EQUITY FUND seeks to provide long-term growth of
capital by investing in a diversified portfolio of international equity
securities, the issuers of which are considered by AIM Advisors, its investment
adviser, to have strong earnings momentum. AIM INTERNATIONAL GROWTH FUND seeks
long-term growth of capital by investing in equity securities of issuers
domiciled in certain countries other than the United States.
AIM GLOBAL GROWTH FUND seeks to provide long-term growth of capital by
investing in a portfolio of global (i.e., U.S. and foreign) equity securities of
selected companies that are considered by AIM Advisors to have strong earnings
momentum. AIM WORLDWIDE GROWTH FUND seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled anywhere in the
world. See "Comparison of Investment Objectives and Policies."
This Combined Proxy Statement and Prospectus ("Proxy
Statement/Prospectus") sets forth the information that a shareholder of the
Acquired Funds should know before voting on the Agreement. It should be read and
retained for future reference.
The current Prospectuses of the Acquired Funds, each dated September 8,
1998, along with the Supplement to the Prospectus of AIM INTERNATIONAL GROWTH
FUND dated September 28, 1998, and the Supplement to the Prospectus of AIM
WORLDWIDE GROWTH FUND dated September 28, 1998 (the "Acquired Funds
Prospectuses"), together with the related Statement of Additional Information
also dated September 8, 1998, are on file with the Securities and Exchange
Commission (the "SEC") and are incorporated by reference herein. The
Prospectuses of the Acquiring Funds dated February 20, 1998, along with the
Supplement to the Prospectus of AIM INTERNATIONAL EQUITY FUND dated July 1, 1998
and the Supplements to the Prospectus of AIM GLOBAL GROWTH FUND dated June 30,
1998 and October 1, 1998 (the "Acquiring Funds Prospectuses"), and the related
Statement of Additional Information also dated February 20, 1998, have been
filed with the SEC and are incorporated by reference herein. A copy of the
Prospectus of AIM INTERNATIONAL EQUITY FUND is attached as Appendix II, and the
Prospectus of AIM GLOBAL GROWTH FUND is attached as Appendix III, to this Proxy
Statement/Prospectus. Such documents are available without charge by writing to
A I M Distributors, Inc., P.O. Box 4739, Houston, Texas 77210-4739 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the prospectuses and statements of additional information described above,
material incorporated by reference, and other information about AGS and AIF.
Additional information about the Acquired Funds and the Acquiring Funds may also
be obtained on the Web at http://www.aimfunds.com.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION......................................................................................................1
REASONS FOR THE REORGANIZATIONS...................................................................................3
Background and Reasons for the Reorganizations...........................................................3
Board Considerations.....................................................................................3
SYNOPSIS .........................................................................................................7
The Reorganizations......................................................................................7
Comparison of the Acquiring Funds and the Acquired Funds.................................................7
RISK FACTORS.....................................................................................................11
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES.................................................................13
Investment Objectives of AIM International Equity Fund and AIM
International Growth Fund...............................................................................13
Investment Policies of AIM International Equity Fund and AIM
International Growth Fund...............................................................................13
Investment Objectives of AIM Global Growth Fund and
AIM Worldwide Growth Fund...............................................................................16
Investment Policies of AIM Global Growth Fund and
AIM Worldwide Growth Fund...............................................................................16
Portfolio Management....................................................................................18
Management Discussion and Analysis of Performance.......................................................19
FINANCIAL HIGHLIGHTS.............................................................................................19
AIM International Equity Fund...........................................................................19
AIM Global Growth Fund..................................................................................22
ADDITIONAL INFORMATION ABOUT THE AGREEMENT.......................................................................25
Terms of the Reorganizations............................................................................25
The Reorganizations.....................................................................................25
Other Terms.............................................................................................26
Federal Tax Consequences................................................................................26
Accounting Treatment....................................................................................28
RIGHTS OF SHAREHOLDERS...........................................................................................28
Liability of Shareholders...............................................................................28
Election of Directors/Trustees; Terms...................................................................29
Removal of Trustees.....................................................................................29
Meetings of Shareholders................................................................................30
</TABLE>
i
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C>
Liability of Directors/Trustees and Officers............................................................30
Termination.............................................................................................31
Voting Rights of Shareholders...........................................................................31
Dissenters' Rights......................................................................................31
Amendments to Organization Documents....................................................................31
OWNERSHIP OF THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS SHARES...................................................32
Significant Holders.....................................................................................32
Ownership of Officers and Directors/Trustees............................................................33
CAPITALIZATION...................................................................................................33
LEGAL MATTERS....................................................................................................35
INFORMATION FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION......................................................................35
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUNDS AND
THE ACQUIRED FUNDS......................................................................................36
APPENDIX I ....................................................................Agreement and Plan of Reorganization
APPENDIX II.............................................................Prospectus of AIM International Equity Fund
APPENDIX III...................................................................Prospectus of AIM Global Growth Fund
APPENDIX IV ....................................................AIM International Equity Fund Discussion & Analysis
APPENDIX V.............................................................AIM Global Growth Fund Discussion & Analysis
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the
AIM logo), AIM and Design, AIM, AIM Link, AIM Institutional Funds, aimfunds.com,
Invest With Discipline, La Familia AIM de Fondos and La Familia AIM de Fondos
and Design are registered service marks, and AIM Bank Connection is a service
mark, of A I M Management Group Inc.
ii
<PAGE> 10
INTRODUCTION
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees of AGS from the shareholders of
the Acquired Funds for use at the Special Meeting of Shareholders to be held at
11 Greenway Plaza, Suite 100, Houston, TX 77046 on February 10, 1999, at 3:00
p.m., local time (such meetings and any adjournments thereof are referred to as
the "Special Meeting").
All properly executed and unrevoked proxies received in time for the
Special Meeting will be voted in accordance with the instructions contained
therein. If no instructions are given, shares represented by proxies will be
voted FOR the proposal to approve the Agreement and in accordance with
management's recommendation on other matters. The presence in person or by proxy
of one-third of the outstanding shares of beneficial interest of a class of
shares of an Acquired Fund at the Special Meeting will constitute a quorum
("Quorum") with respect to that class of shares. Approval of the Agreement by an
Acquired Fund requires the affirmative vote of a majority of the shares cast by
shareholders of each class of shares of that Acquired Fund. The Agreement may be
approved by one of the Acquired Funds and the Reorganization of that Acquired
Fund may be completed even though the Agreement is not approved by shareholders
of the other Acquired Fund. Abstentions and broker non-votes will be counted as
shares present at the Special Meeting for quorum purposes, but will not be
considered votes cast at the Special Meeting. Broker non-votes arise from a
proxy returned by a broker holding shares for a customer which indicates that
the broker has not been authorized by the customer to vote on a proposal. Any
person giving a proxy has the power to revoke it at any time prior to its
exercise by executing a superseding proxy or by submitting a notice of
revocation to the Secretary of AGS. In addition, although mere attendance at the
Special Meeting will not revoke a proxy, a shareholder present at the Special
Meeting may withdraw his proxy and vote in person. Shareholders may also
transact any other business not currently contemplated that may properly come
before the Special Meeting in the discretion of the proxies or their
substitutes.
Shareholders of record as of the close of business on December 8, 1998
(the "Record Date"), are entitled to vote at the Special Meeting. On the Record
Date, there were __________ Class A shares, _____ Class B shares and _____
Advisor Class shares of AIM INTERNATIONAL GROWTH FUND outstanding, and
__________ Class A shares, _____ Class B shares and _____ Advisor Class shares
of AIM WORLDWIDE GROWTH FUND outstanding. Each share is entitled to one vote for
each full share held, and a fractional vote for a fractional share held.
<PAGE> 11
AGS has engaged the services of Shareholder Communications Corporation
("SCC") to assist it in the solicitation of proxies for the Special Meeting. AGS
expects to solicit proxies principally by mail, but AGS or SCC may also solicit
proxies by telephone, facsimile, telegraph or personal interview. AGS's officers
will not receive any additional or special compensation for any such
solicitation. The cost of shareholder solicitation is anticipated to be
approximately $______. Each of the Acquired Funds will bear its costs and
expenses incurred in connection with the Reorganizations.
AGS intends to mail this Proxy Statement/Prospectus and the
accompanying proxy on or about December __, 1998.
2
<PAGE> 12
REASONS FOR THE REORGANIZATIONS
BACKGROUND AND REASONS FOR THE REORGANIZATIONS
AGS was organized as a Massachusetts business trust in 1985, and was
reorganized into a Delaware business trust on May 29, 1998. Prior to May 29,
1998, AGS operated under the name GT Global Growth Series. Chancellor LGT Asset
Management, Inc., an indirect subsidiary of Liechtenstein Global Trust AG
("LGT"), initially provided investment advisory services to GT Global Growth
Series.
On May 29, 1998, LGT consummated a purchase agreement with AMVESCAP PLC
pursuant to which AMVESCAP PLC acquired LGT's Asset Management Division,
including Chancellor LGT Asset Management, Inc., which then changed its name to
INVESCO (NY), Inc. In connection with that transaction, the Board of Trustees
determined that it would be advisable to engage AIM Advisors to provide
investment advisory and other services to GT Global Growth Series with INVESCO
(NY), Inc. continuing to provide sub-advisory services. AIM Advisors and its
affiliates are indirect subsidiaries of AMVESCAP PLC that provide investment
advisory, marketing, administration, fund accounting and distribution services
to The AIM Family of Funds(R). The shareholders of GT Global Growth Series
approved the change in service providers, which took effect on May 29, 1998. GT
Global Growth Series changed its name to AIM Growth Series at that same time.
AIM Advisors now serves as investment adviser to the investment portfolios of
AIM Growth Series and INVESCO (NY), Inc. serves as sub-adviser to several of the
investment portfolios of AIM Growth Series.
AIM Advisors evaluated AIM INTERNATIONAL GROWTH FUND and AIM WORLDWIDE
GROWTH FUND and recommended that AIM INTERNATIONAL GROWTH FUND be reorganized
into AIM INTERNATIONAL EQUITY FUND and that AIM WORLDWIDE GROWTH FUND be
reorganized into AIM GLOBAL GROWTH FUND. AIM INTERNATIONAL GROWTH FUND and AIM
INTERNATIONAL EQUITY FUND have similar investment objectives and policies, as do
AIM WORLDWIDE GROWTH FUND and AIM GLOBAL GROWTH FUND. AIM Advisors serves as
investment adviser for the Acquired Funds and the Acquiring Funds.
Reorganization of the Acquiring Funds into the Acquired Funds was recommended by
AIM Advisors because the Acquiring Funds have similar investment objectives and
policies, and have better performance records and generally lower operating
expense ratios than the Acquired Funds. The Acquiring Funds are also
substantially larger than the Acquired Funds and have a more stable base of
assets.
BOARD CONSIDERATIONS
The Board of Trustees of AGS has determined that the Reorganizations of
the Acquired Funds are in the best interests of the shareholders of each of the
Acquired Funds, and recommended approval of the Agreement by the shareholders of
the Acquired Funds at the Special Meeting. A summary of the information that was
presented to, and considered by, the Board of Trustees in making their
determination is provided below.
3
<PAGE> 13
At a meeting of the Board of Trustees held on August 11 and 12, 1998,
AIM Advisors proposed that the Board of Trustees approve the Reorganizations of
the Acquired Funds into the Acquiring Funds. The Trustees received from AIM
Advisors written materials that described the structure and tax consequences of
the Reorganizations and contained information concerning the Acquired Funds and
the Acquiring Funds, including comparative total return and fee and expense
information, a comparison of the investment objectives of the Acquired Funds and
the Acquiring Funds, pro forma expense ratios and biographical information on
the portfolio managers of the Acquiring Funds.
In considering the Reorganizations, the Board of Trustees noted that
AIM INTERNATIONAL GROWTH FUND and AIM INTERNATIONAL EQUITY FUND have similar
investment objectives and policies, as do AIM WORLDWIDE GROWTH FUND and AIM
GLOBAL GROWTH FUND. The Board of Trustees also noted that the expense ratios of
the Acquired Funds are generally higher than the expense ratios of the Acquiring
Funds, as shown below.
COMPARATIVE OPERATING EXPENSES AT JUNE 30, 1998
<TABLE>
<CAPTION>
AIM International Equity
------------------------
Fund AIM International Growth Fund
---- -----------------------------
Advisor
Class A Class B Class A Class B Class
Shares Shares Shares Shares Shares
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total Expense Ratio 1.43% 2.20% 1.91% 2.56% 1.56%
<CAPTION>
AIM Global Growth Fund AIM Worldwide Growth Fund
---------------------- -------------------------
Advisor
Class A Class B Class A Class B Class
Shares Shares Shares Shares Shares
------ ------ ------ ------ ------
Total Expense Ratio 1.69% 2.23% 1.87% 2.52% 1.52%
</TABLE>
The Board of Trustees also considered the performance of the Acquired
Funds in relation to the performance of the Acquiring Funds. As of May 31, 1998,
the Morningstar ratings and Lipper Analytical Services rankings for AIM
INTERNATIONAL EQUITY FUND and AIM INTERNATIONAL GROWTH FUND were as follows:
4
<PAGE> 14
<TABLE>
<CAPTION>
MORNINGSTAR RATING 1
Overall 3 Year 5 Year 10 Year
------- ------ ------ -------
<S> <C> <C> <C> <C>
AIM International Equity Fund 4 4 4 n/a
AIM International Growth Fund 3 3 2 3
</TABLE>
<TABLE>
<CAPTION>
LIPPER RANK (Percentile)
YTD 1 Year 3 Year 5 Year 10 Year
--- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
AIM International Equity Fund 29% 27% 18% 15% n/a
AIM International Growth Fund 90% 49% 39% 85% 64%
</TABLE>
As of May 31, 1998, the Morningstar ratings and Lipper Analytical
Services rankings for AIM GLOBAL GROWTH FUND and AIM WORLDWIDE GROWTH FUND were
as follows:
<TABLE>
<CAPTION>
MORNINGSTAR RATING 1
Overall 3 Year 5 Year 10 Year
------- ------ ------ -------
<S> <C> <C> <C> <C>
AIM Global Growth Fund 5 5 n/a n/a
AIM Worldwide Growth Fund 4 3 3 4
</TABLE>
<TABLE>
<CAPTION>
LIPPER RANK (Percentile)
YTD 1 Year 3 Year 5 Year 10 Year
--- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
AIM Global Growth Fund 32% 28% 11% n/a n/a
AIM Worldwide Growth Fund 75% 65% 76% 92% 58%
</TABLE>
The Trustees noted that if the better performance of AIM GLOBAL GROWTH FUND
continues it should offset the slightly higher expenses that would be incurred
by AIM WORLDWIDE GROWTH FUND Advisor Class shareholders who receive AIM GLOBAL
GROWTH FUND Class A shares in the Reorganization.
- --------
1 Under the Morningstar rating system, the top 10% of funds in a category
receive 5 stars, the next 22.5% receive 4 stars, the middle 35% receive 3
stars, the next 22.5% receive 2 stars and the bottom 10% receive a single
star.
5
<PAGE> 15
In addition, the Board of Trustees noted that no initial sales or other
charges would be imposed on any of the shares of the Acquiring Funds issued to
the shareholders of the Acquired Funds in connection with the Reorganizations.
Finally, the Board of Trustees reviewed the principal terms of the Agreement.
The Board of Trustees noted that the Acquired Funds would be provided with an
opinion of counsel that the Reorganizations would be tax-free as to each
Acquired Fund and its shareholders.
At a meeting held on August 31, 1998, the Board of Trustees again
considered the Reorganizations. At that meeting, AIM Advisors noted that AIM
INTERNATIONAL GROWTH FUND had about $170 million in assets, compared with $2.3
billion in assets for AIM INTERNATIONAL EQUITY FUND. AIM Advisors further
indicated that AIM INTERNATIONAL EQUITY FUND'S superior historic performance and
lower expense ratios make AIM INTERNATIONAL EQUITY FUND a potentially better
investment for shareholders than AIM INTERNATIONAL EQUITY GROWTH FUND. The
Reorganization of AIM INTERNATIONAL GROWTH FUND into AIM INTERNATIONAL EQUITY
FUND would benefit shareholders by lowering the expense ratios for shareholders
of AIM INTERNATIONAL GROWTH FUND without imposing any tax consequences. The
Reorganization would result in reduced revenues for AIM Advisors, since AIM
Advisors would receive lower management fees on the assets presently held by AIM
INTERNATIONAL GROWTH FUND. AIM Advisors noted that the expenses incurred by AIM
INTERNATIONAL GROWTH FUND in connection with Reorganization would be offset by
lower management fees and total expenses after the Reorganization. AIM Advisors
indicated that Advisor Class Shareholders of AIM INTERNATIONAL GROWTH FUND would
receive to Class A shares of AIM INTERNATIONAL EQUITY FUND, which is the most
appropriate class available for such shares.
AIM Advisors reported that AIM WORLDWIDE GROWTH FUND'S assets totaled
about $114 million, compared with $500 million for AIM GLOBAL GROWTH FUND. AIM
Advisors indicated that AIM GLOBAL GROWTH FUND had performed significantly
better than AIM WORLDWIDE GROWTH FUND and had a generally lower expense ratios.
AIM Advisors explained that the Reorganization would result in lost revenues for
AIM Advisors, since it would move shareholders on a tax-free basis to a fund
with lower advisory fees. AIM Advisors indicated that Advisor Class shareholders
of AIM WORLDWIDE GROWTH FUND would receive Class A shares of AIM GLOBAL GROWTH
FUND, which is the most appropriate class available for such shares. AIM
Advisors noted that Advisor Class shares are estimated to have an expense
increase of 0.11% as a result of the Reorganization. The Board discussed these
matters further and agreed that the impact of the Reorganizations on
shareholders was favorable in general.
At a subsequent meeting of the Board of Trustees held on September 23,
1998, based upon their evaluation of the information presented to them, the
Board of Trustees determined that the proposed Reorganizations will not dilute
the interests of the shareholders of either of the Acquired Funds and are in the
best interest of the shareholders of each of the Acquired Funds in view of the
better performance and generally lower operating expenses of the Acquiring Funds
with which they will be combined. Therefore, the Board of Trustees recommended
the approval of the Agreement by the shareholders of each Acquired Fund at a
special meeting.
6
<PAGE> 16
SYNOPSIS
THE REORGANIZATIONS
The Reorganizations will result in the combination of AIM INTERNATIONAL
GROWTH FUND with AIM INTERNATIONAL EQUITY FUND and the combination of AIM
WORLDWIDE GROWTH FUND with AIM GLOBAL GROWTH FUND. The Acquired Funds are
portfolios of AGS, a Delaware business trust. The Acquiring Funds are portfolios
of AIF, a Maryland corporation.
If shareholders of an Acquired Fund approve the Agreement and other
closing conditions are satisfied, all of the assets of that Acquired Fund will
be transferred to the Acquiring Fund with which it will combine, the Acquiring
Fund will assume all of the liabilities of the Acquired Fund, and AIF will issue
Class A shares of the Acquiring Fund to the Acquired Fund's Class A and Advisor
Class shareholders, and Class B shares of the Acquiring Fund to the Acquired
Fund's Class B shareholders. The shares of an Acquiring Fund issued in a
Reorganization will have an aggregate net asset value equal to the value of the
Acquired Fund's net assets transferred to the Acquiring Fund. Shareholders will
not pay any initial sales charge for shares of the Acquiring Funds received in
connection with the Reorganizations. The value of each shareholder's account
with an Acquiring Fund immediately after a Reorganization will be the same as
the value of such shareholder's account with the Acquired Fund immediately prior
to the Reorganization. A copy of the Agreement is attached as Appendix I to this
Proxy Statement/ Prospectus. See "Additional Information About the Agreement"
below.
The Acquired Funds will receive an opinion of Ballard Spahr Andrews &
Ingersoll, LLP, to the effect that the Reorganizations will constitute tax-free
reorganizations for Federal income tax purposes. Thus, shareholders will not
have to pay Federal income taxes as a result of the Reorganizations. See
"Additional Information About the Agreement - Federal Tax Consequences" below.
COMPARISON OF THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
Investment Objective and Policies
The investment objective and policies of each Acquiring Fund are
similar to the investment objective and policies of the Acquired Fund with which
it will combine.
AIM INTERNATIONAL EQUITY FUND seeks to provide long-term growth of
capital by investing in a diversified portfolio of international equity
securities, the issuers of which are considered by AIM Advisors to have strong
earnings momentum. AIM INTERNATIONAL GROWTH FUND seeks long-term growth of
capital by investing in equity securities of issuers domiciled in certain
countries other than the United States.
AIM GLOBAL GROWTH FUND seeks to provide long-term growth of capital by
investing in a portfolio of global (i.e., U.S. and foreign) equity securities of
selected companies that are considered by AIM Advisors to have strong earnings
momentum. AIM WORLDWIDE GROWTH FUND seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled anywhere in the
world. See "Comparison of Investment Objectives and Policies" below.
7
<PAGE> 17
Investment Advisory Services
AIM Advisors serves as investment adviser, and INVESCO (NY), Inc.
serves as subadviser, to the Acquired Funds. AIM Advisors also serves as
investment adviser to the Acquiring Funds. INVESCO (NY), Inc. does not act as
sub-adviser for the Acquiring Funds, however, and the Reorganizations will end
INVESCO (NY), Inc.'s role in management of the Acquired Funds' assets.
Performance
Set forth below are average annual total returns for the periods
indicated for each of the Acquiring Funds and the Acquired Funds. Average annual
total return figures do not take into account sales charges applicable to
purchases of Class A shares or redemptions of Class B shares of the Acquiring
Funds or the Acquired Funds. Past performance cannot guarantee comparable future
results.
<TABLE>
<CAPTION>
AIM International AIM International Growth
Equity Fund Fund
Advisor
Class A Class B Class A Class B Class
Shares Shares Shares Shares Shares
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
1 Year Ended April 30, 1998 23.27% 22.27% 21.75% 20.82% 21.56%
5 Years Ended April 30, 1998 16.12% N/A 9.46% 8.74% N/A
</TABLE>
<TABLE>
<CAPTION>
AIM Global Growth AIM Worldwide Growth
Fund Fund
Advisor
Class A Class B Class A Class B Class
Shares Shares Shares Shares Shares
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
1 Year Ended April 30, 1998 31.09% 30.43% 25.74% 24.83% 26.33%
3 Years Ended April 30, 1998 23.87% 23.27% 16.78% 16.00% N/A
</TABLE>
8
<PAGE> 18
Expenses
Set forth below is a comparison of annual operating expenses as a
percentage of net assets ("Expense Ratio") for the Class A and Class B shares of
the Acquiring Funds for their fiscal year ended October 31, 1997 and for the
Class A, Class B and Advisor Class shares of the Acquired Funds for their fiscal
year ended December 31, 1997. Pro forma estimated Expense Ratios of the
Acquiring Funds giving effect to the Reorganizations are also provided. Expense
Ratios are shown net of any voluntary fee waivers and expense reimbursements.
AIM INTERNATIONAL EQUITY FUND AND AIM INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
AIM INTERNATIONAL
AIM INTERNATIONAL EQUITY FUND
EQUITY FUND AIM INTERNATIONAL GROWTH FUND PRO FORMA ESTIMATED
Class A Class B Class A Class B Advisor Class A Class B
Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION EXPENSES
Maximum sales load
imposed on purchase of
shares (as a percentage of
offering price) 5.50% none 5.50% none none 5.50% none
Deferred Sales Load (as a
percentage of original
purchase price or
redemption proceeds, as
applicable) none 5.00% none 5.00% none none 5.00%
ANNUAL OPERATING
EXPENSES (AS A % OF NET
ASSETS) (AFTER FEE
WAIVERS OR EXPENSE
REIMBURSEMENTS, IF ANY)
Management fees.............. 0.89% 0.89% 0.98% 0.98% 0.98% 0.89% 0.89%
Rule 12b-1 distribution
plan payments................ 0.30% 1.00% 0.35% 1.00% 0.00% 0.30% 1.00%
All other expenses........... 0.28% 0.36% 0.49% 0.49% 0.49% 0.28% 0.36%
---- ---- ---- ---- ---- ---- ----
Total fund operating
expenses (net of
waivers) (1)................. 1.47% 2.25% 1.82% 2.47% 1.47% 1.47% 2.25%
==== ==== ==== ==== ==== ==== ====
</TABLE>
(1) If management fees had not been waived for AIM INTERNATIONAL EQUITY
FUND, the management fees would have been 0.93% and total fund
operating expenses would have been 1.51% and 2.29% for the Class A
shares and Class B shares, respectively.
9
<PAGE> 19
<TABLE>
<CAPTION>
AIM GLOBAL GROWTH FUND AND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL GROWTH
AIM FUND
GLOBAL GROWTH AIM WORLDWIDE GROWTH FUND PRO FORMA ESTIMATED
FUND
Class A Class B Class A Class B Advisor Class A Class B
Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION EXPENSES
Maximum sales load
imposed on purchase of
shares (as a percentage of
offering price) ............... 4.75% none 5.50% none none 4.75% none
Deferred Sales Load (as a
percentage of original
purchase price or
redemption proceeds, as
applicable) ................... none 5.00% none 5.00% none none 5.00%
ANNUAL OPERATING
EXPENSES (AS A % OF NET
ASSETS) (AFTER FEE
WAIVERS OR EXPENSE
REIMBURSEMENTS, IF ANY)
Management fees.............. 0.85% 0.85% 0.98% 0.98% 0.98% 0.85% 0.85%
Rule 12b-1 distribution
plan payments................ 0.50% 1.00% 0.35% 1.00% 0.00% 0.50% 1.00%
All other expenses........... 0.41% 0.44% 0.49% 0.49% 0.49% 0.30% 0.35%
---- ---- ---- ---- ---- ---- -----
Total fund operating
expenses..................... 1.76% 2.29% 1.82% 2.47% 1.47% 1.65% 2.20%
==== ==== ==== ==== ==== ==== =====
</TABLE>
Sales Charges
No sales charges are applicable to shares of the Acquiring Funds
received in connection with the Reorganizations.
The Acquiring Funds Class A shares, which will be issued to the
Acquired Funds Class A and Advisor Class shareholders pursuant to the Agreement,
are sold at net asset value plus an initial sales charge of 5.50% for AIM
INTERNATIONAL EQUITY FUND and 4.75% for AIM GLOBAL GROWTH FUND. After the
Reorganizations, current holders of Advisor Class shares of an Acquired Fund
will be able to purchase additional Class A shares of the resulting Acquiring
Fund at net asset value without imposition of an initial sales charge. The
Acquiring Funds Class B Shares are offered at net asset value, without an
initial sales charge, and are subject to a maximum contingent deferred sales
charge of 5% on certain redemptions made within six years from the date such
shares were purchased.
10
<PAGE> 20
The AIM INTERNATIONAL EQUITY FUND Class A shares pay a fee in the
amount of 0.30% of average daily net assets and the AIM GLOBAL GROWTH FUND Class
A shares pay a fee in the amount of 0.50% of average daily net assets to A I M
Distributors, Inc. ("AIM Distributors") for distribution services. Class B
shares of the Acquiring Funds pay AIM Distributors fees at an annual rate of
1.00% of the average daily net assets attributable to the Class B shares for
distribution services. For more information, see the Investors Guide to The AIM
Family of Funds in the The Acquiring Funds Prospectuses attached as Appendix II
and Appendix III to this Proxy Statement/Prospectus.
The Class A shares of the Acquired Funds are sold at net asset value
plus an initial sales charge of 5.50%. Advisor Class shares of the Acquired
Funds are sold at net asset value without the imposition of an initial sales
charge or a contingent deferred sales charge, but are available for purchase
only by qualified purchasers. The Acquired Funds Class B shares are offered at
net asset value without an initial sales charge and are subject to a maximum
contingent deferred sales charge of 5% on certain redemptions made within six
years from the date such shares were purchased.
The Acquired Funds Class A shares pay a fee in the amount of 0.35% of
average daily net assets of the Class A shares to AIM Distributors for
distribution services. The Acquired Funds Advisor Class shares are currently not
subject to such distribution fees. The Acquired Funds Class B shares pay
distribution expenses at an annual rate of 1.00% of the average daily net assets
attributable to the Class B shares to AIM Distributors.
Distribution; Purchase, Exchange and Redemption
Shares of the Acquiring Funds and the Acquired Funds are both
distributed by AIM Distributors. Purchase and redemption procedures are the same
for the Acquiring Funds and the Acquired Funds. Shares of the Acquiring Funds
and the Acquired Funds may be exchanged for shares of other funds of The AIM
Family of Funds of the same class.
RISK FACTORS
The Acquiring Funds and the Acquired Funds are subject to substantially
similar investment risks. The Acquiring Funds and the Acquired Funds invest in
securities of foreign companies, which generally involves greater risks than
investing in securities of domestic companies. The principal risks to AIM
INTERNATIONAL EQUITY FUND and AIM GLOBAL GROWTH FUND from investing in foreign
securities are described below.
CURRENCY RISK. The value of an Acquiring Fund's foreign investments may
be affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security generally decreases when the value of the U.S. dollar rises
against the foreign currency in which the security is denominated, and tends to
increase when the value of the U.S. dollar falls against such currency.
11
<PAGE> 21
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg,
the Netherlands, Portugal and Spain are members of the European Union designated
for participation in the European Economic and Monetary Union (the "EMU"). The
EMU intends to establish a common European currency for participating countries
which will be known as the "euro." On January 1, 1999, the euro will be
substituted for national currencies of the participating countries. During a
transition period from January 1, 1999 through December 31, 2001, national
currencies will be defined as denominations of the euro. Any other European
country which is a member of the European Union and satisfies the criteria for
participation in the EMU may elect to participate in the EMU and may supplement
its existing currency with the euro 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
Portfolio.
POLITICAL AND ECONOMIC RISK. The economies of many of the countries in
which an Acquiring Fund may invest are not as developed as the United States
economy and may be subject to significantly different forces. Political and
social instability, expropriation or confiscatory taxation, and limitations on
the removal of funds or other assets could also adversely affect the value of a
Fund's investments.
REGULATORY RISK. Foreign companies are generally not subject to the
regulatory controls imposed on United States issuers and, as a consequence,
there is generally less publicly available information about foreign securities
than is available about domestic securities. Foreign companies are not subject
to uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies. Income from
foreign securities owned by an Acquiring Fund may be reduced by withholding tax
at the source which would reduce dividend income payable to the Fund's
shareholders.
MARKET RISK. The securities markets in many of the countries in which
an Acquiring Fund invests will have substantially less trading volume than the
major United States markets. As a result, the securities of some foreign
companies may be less liquid and experience more price volatility than
comparable domestic securities. There is generally less government regulation
and supervision of foreign stock exchanges, brokers and issuers which may make
it difficult to enforce contractual obligations. In addition, transaction costs
in foreign securities markets are likely to be higher, since brokerage
commission rates in foreign countries are likely to be higher than in the United
States. Further, the settlement period of securities transactions in foreign
markets may be longer than in domestic markets. These considerations generally
are more of a concern in developing countries. For example, the possibility of
revolution and the
12
<PAGE> 22
dependence on foreign economic assistance may be greater in these countries than
in developed countries. The management of the Acquiring Funds seeks to mitigate
the risks associated with these considerations through diversification and
active professional management.
EMERGING MARKETS AND DEVELOPING COUNTRIES. Investors should also be
aware that the Acquiring Funds may invest in companies located within emerging
or developing countries. Investments in emerging markets or developing countries
involve exposure to economic structures that are generally less diverse and
mature and to political systems which can be expected to have less stability
than those of more developed countries. Such countries may have relatively
unstable governments, economies based on only a few industries, and securities
markets which trade only a small number of securities. Historical experience
indicates that emerging markets have been more volatile than the markets of more
mature economies; such markets have also from time to time provided higher rates
of return and greater risks to investors. AIM Advisors believes that these
characteristics of emerging markets can be expected to continue in the future.
In addition, throughout the countries formerly referred to as the Eastern Bloc,
the lack of a capital market structure or market-oriented economy and the
possible reversal of recent favorable economic, political and social events in
some of these countries present greater risks than those associated with more
developed market-oriented Western European countries and markets.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES OF AIM INTERNATIONAL EQUITY FUND AND AIM INTERNATIONAL
GROWTH FUND
The investment objective of AIM INTERNATIONAL EQUITY FUND is to provide
long-term growth of capital by investing in a diversified portfolio of
international equity securities, the issuers of which are considered by AIM
Advisors to have strong earnings momentum.
AIM INTERNATIONAL GROWTH FUND seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in certain foreign
countries.
INVESTMENT POLICIES OF AIM INTERNATIONAL EQUITY FUND AND AIM INTERNATIONAL
GROWTH FUND
Under normal market conditions, AIM INTERNATIONAL EQUITY FUND will
invest at least 70% of its total assets in marketable equity securities,
including common stock, preferred stock, depositary receipts for stock and other
securities having the characteristics of stock (such as an equity or ownership
interest in a company) of foreign companies which are listed on a recognized
foreign securities exchange or traded in a foreign over-the-counter-market. The
Fund may satisfy the foregoing requirement in part by investing in the
securities of foreign issuers which are in the form of American Depositary
Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities
representing underlying securities of foreign issuers. The Fund may also invest
up to 20% of its total assets in securities exchangeable for or convertible into
equity securities of foreign companies which are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market.
13
<PAGE> 23
In managing AIM INTERNATIONAL EQUITY FUND, AIM Advisors seeks to apply
to a diversified portfolio of international equity securities substantially the
same investment strategy which it applies to several of its other managed
portfolios which have similar investment objectives but which invest primarily
in United States equities markets. The Fund will utilize to the extent
practicable a fully managed investment policy providing for the selection of
securities which meet certain quantitative standards determined by AIM Advisors.
AIM Advisors reviews carefully the earnings history and prospects for growth of
each company considered for investment by the Fund. It is expected that the
Fund's portfolio, when fully invested, will generally be comprised of two basic
categories of foreign companies: (1) "core" companies, which AIM Advisors
considers to have experienced consistent long-term growth in earnings and to
have strong prospects for outstanding future growth, and (2) companies that AIM
Advisors believes are currently experiencing a greater than anticipated increase
in earnings.
If a particular foreign company meets the quantitative standards
determined by AIM Advisors, its securities may be acquired by AIM INTERNATIONAL
EQUITY FUND regardless of the location of the company or the percentage of the
Fund's investments in the company's country or region. However, AIM Advisors
will also consider other factors in making investment decisions for the Fund,
including such factors as the prospects for relative economic growth among
countries or regions, economic and political conditions, currency exchange
fluctuations, tax considerations and the liquidity of a particular security.
AIM Advisors may invest a portion of AIM INTERNATIONAL EQUITY FUND'S
assets in (i) cash or high-grade short-term securities, including repurchase
agreements, commercial paper, time deposits and master notes, denominated either
in U.S. dollars or foreign currencies, (ii) U.S. government obligations or
investment grade (high quality) corporate bonds or other debt securities, and
(iii) taxable municipal securities, when such positions are deemed advisable in
light of economic or market conditions or for daily cash management purposes. In
addition, AIM Advisors may invest, for temporary defensive purposes, all or
substantially all of the Fund's assets in the securities described above. To the
extent that the Fund is invested to a significant degree in cash, high-grade
short-term securities, U.S. government obligations, investment grade (high
quality) corporate bonds or other debt securities, or taxable municipal
securities, its ability to achieve its investment objective of growth of capital
may be adversely affected. Under normal circumstances, the Fund will invest no
more than 20% of the value of its total assets in high-grade short-term
securities.
Under normal market conditions, AIM INTERNATIONAL EQUITY FUND invests
in the securities of foreign companies located in at least four countries
outside the United States. The Fund will emphasize investment in foreign
companies in the developed countries of Western Europe (such as Germany, France,
Switzerland, the Netherlands and the United Kingdom) and the Pacific Basin (such
as Japan, Hong Kong and Australia), and the Fund may also invest in the
securities of companies located in developing countries (such as Turkey,
Malaysia and Mexico) in various regions of the world. A "developing country" is
a country in the initial stages of its industrial cycle.
14
<PAGE> 24
Investment in the equity markets of developing countries involves
exposure to securities exchanges that may have substantially less trading volume
and greater price volatility, economic structures that are less diverse and
mature, and political systems that may be less stable than the equity markets of
developed countries. At the present time, AIM does not intend to invest more
than 20% of AIM INTERNATIONAL EQUITY FUND'S total assets in foreign companies
located in developing countries.
AIM INTERNATIONAL GROWTH FUND is intended for investors seeking to
complement their U.S. equity investments with a professionally managed non-U.S.
portfolio. AIM INTERNATIONAL GROWTH FUND seeks its objective by investing, under
normal circumstances, at least 65% of its total assets in equity securities of
issuers domiciled in its Primary Investment Area, as described below. Equity
securities in which the Fund may invest include common stocks, preferred stocks,
convertible debt securities and warrants to acquire such securities. The Fund's
Primary Investment Area includes the following countries: Argentina, Australia,
Austria, Belgium, Brazil, Canada, Chile, Colombia, Denmark, Finland, France,
Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy,
Japan, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Norway,
Pakistan, Peru, the Philippines, Portugal, Singapore, South Africa, South Korea,
Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom and
Venezuela but not the United States.
AIM INTERNATIONAL GROWTH FUND may also invest up to 35% of its total
assets in the equity securities of issuers domiciled outside of its Primary
Investment Area. Such investments may include: (a) securities of issuers in
countries that are not located in the Primary Investment Area but are linked by
tradition, economic markets, cultural similarities or geography to the countries
in such Primary Investment Area; and (b) securities of issuers located elsewhere
in the world that have operations in the Primary Investment Area or that stand
to benefit from political and economic events in the Primary Investment Area.
Under normal circumstances, the assets of AIM INTERNATIONAL GROWTH FUND
are invested in the equity securities of issuers domiciled in at least three
different countries.
AIM INTERNATIONAL GROWTH FUND may invest up to 35% of its total assets
in debt securities, including U.S. and foreign government securities and
corporate debt securities, Samurai and Yankee bonds, Eurobonds and Depository
Receipts. The issuers of such debt securities may or may not be domiciled in the
Primary Investment Area of the Fund. The Fund will limit its purchases of debt
securities to investment grade obligations. "Investment grade" debt refers to
those securities rated within one of the four highest ratings categories by
Moody's Investors Service, Inc. ("Moody's") or by Standard & Poor's, a division
of The McGraw-Hill Companies, Inc. ("S&P"), or, if not similarly rated by any
other nationally recognized statistical rating organization ("NRSRO"), deemed by
the Fund's Sub-advisor to be of equivalent quality. Debt rated Baa by Moody's,
which is the lowest category of investment grade debt, is considered by Moody's
to have speculative characteristics.
15
<PAGE> 25
In managing AIM INTERNATIONAL GROWTH FUND, the Sub-adviser seeks to
identify those countries and industries where economic and political factors,
including currency movements, are likely to produce above average growth rates.
The Sub-adviser further attempts to identify those companies in such countries
and industries that are best positioned and managed to take advantage of these
economic and political factors. Investments are made in such markets only after
balancing the potential for growth of selected companies in each market relative
to the risks of investing in each such country.
INVESTMENT OBJECTIVES OF AIM GLOBAL GROWTH FUND AND AIM WORLDWIDE GROWTH FUND
The investment objective of AIM GLOBAL GROWTH FUND is to provide
long-term growth of capital.
AIM WORLDWIDE GROWTH FUND seeks long-term growth of capital.
INVESTMENT POLICIES OF AIM GLOBAL GROWTH FUND AND AIM WORLDWIDE GROWTH FUND
AIM GLOBAL GROWTH FUND seeks to achieve its objective by investing in a
portfolio of global equity securities of selected companies that are considered
by AIM Advisors to have strong earnings momentum. Current income is not an
important criterion of investment selection, and any such income should be
considered incidental.
In managing AIM GLOBAL GROWTH FUND, AIM Advisors seeks to apply to the
diversified portfolio of equity securities the same investment strategy which it
applies to several of its other managed portfolios which have similar investment
objectives but which invest primarily in United States equities markets. The
Fund will utilize to the extent practicable a fully managed investment policy
providing for the selection of securities which meet certain quantitative
standards determined by AIM Advisors. AIM Advisors reviews carefully the
earnings history and prospects for growth of each company considered for
investment by the Fund. It is anticipated that common stocks will be the
principal form of investment of the Fund. The portfolio of the Fund is primarily
comprised of securities of two basic categories of companies: (a) "core"
companies, which AIM Advisors considers to have experienced above-average and
consistent long-term growth in earnings and to have excellent prospects for
outstanding future growth, and (b) "earnings acceleration" companies which AIM
Advisors believes are currently enjoying a dramatic increase in earnings.
Under normal market conditions, AIM GLOBAL GROWTH FUND will invest
primarily in marketable equity securities (including common and preferred stock
and other securities having the characteristics of stock (such as an equity or
ownership interest in a company)) of companies which are listed on a recognized
securities exchange or traded in an over-the-counter market. The Fund may
satisfy the foregoing requirement in part by investing in the securities of
issuers which are in the form of ADRs, European Depositary Receipts ("EDRs"),
or other securities representing underlying securities of foreign issuers. The
Fund may invest up to 20% of its total assets in securities convertible into or
exchangeable for equity securities of foreign and domestic issuers which (except
in the case of ADRs, EDRs and other securities representing underlying
securities of foreign issuers) are listed on a recognized securities exchange or
traded in an over-the-counter market.
16
<PAGE> 26
If a particular foreign company meets the quantitative standards
determined by AIM Advisors, its securities may be acquired by AIM GLOBAL GROWTH
FUND regardless of the location of the company or the percentage of the Fund's
investments in the company's country or region. However, AIM Advisors will also
consider other factors in making investment decisions for the Fund, including
such factors as the prospects for relative economic growth among countries or
regions, economic and political conditions, currency exchange fluctuations, tax
considerations and the liquidity of a particular security. Under normal market
conditions, the Fund will maintain at least 20% of its total assets in U.S.
dollar denominated securities.
AIM WORLDWIDE GROWTH FUND seeks to achieve its objective by investing,
under normal circumstances, at least 65% of its total assets in equity
securities of issuers domiciled in its Primary Investment Area, as described
below. Equity securities in which the Fund may invest include common stocks,
preferred stocks, convertible debt securities and warrants to acquire such
securities. The Fund's Primary Investment Area includes the following countries:
Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Colombia,
Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia,
Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands,
New Zealand, Norway, Pakistan, Peru, the Philippines, Portugal, Singapore,
Spain, South Africa, South Korea, Sweden, Switzerland, Taiwan, Thailand, Turkey,
United Kingdom, United States and Venezuela.
AIM WORLDWIDE GROWTH FUND will emphasize investment in companies in
developed countries such as the United States, the countries of Western Europe
and certain countries in the Pacific Basin (such as Japan, Hong Kong and
Australia). The Fund may also invest in the securities of companies located in
developing countries (such as Turkey, Poland and Mexico) in various regions of
the world. A "developing country" is a country in the initial stages of its
industrial cycle. Under normal market conditions, the assets of the Fund will be
invested in the securities of companies located in at least four different
countries, including the United States.
Under normal circumstances, the assets of AIM WORLDWIDE GROWTH FUND are
invested in the equity securities of issuers domiciled in at least three
different countries, and 20% to 60% of the Fund's assets normally are invested
in the equity securities of U.S. issuers.
AIM WORLDWIDE GROWTH FUND may invest up to 35% of its total assets in
debt securities, including U.S. and foreign government securities and corporate
debt securities, Samurai and Yankee bonds, Eurobonds and Depository Receipts.
The Fund will not limit its purchases of debt securities to investment grade
obligations. "Investment grade" debt refers to those securities rated within one
of the four highest ratings categories by Moody's or by S&P, or, if not
similarly rated by any other NRSRO, deemed by the Sub-adviser to be of
equivalent quality. Debt rated Baa by Moody's, which is the lowest category of
investment grade debt, is considered by Moody's to have speculative
characteristics.
17
<PAGE> 27
In managing AIM WORLDWIDE GROWTH FUND, the Sub-adviser seeks to
identify those countries and industries where economic and political factors,
including currency movements, are likely to produce above average growth rates.
The Sub-adviser further attempts to identify those companies in such countries
and industries that are best positioned and managed to take advantage of these
economic and political factors. Investments are made in such markets only after
balancing the potential for growth of selected companies in each market relative
to the risks of investing in each such country.
PORTFOLIO MANAGEMENT
A. Dale Griffin, III, Clas G. Olsson, Paul A. Rogge and Barrett K.
Sides are primarily responsible for the day-to-day management of AIM
INTERNATIONAL EQUITY FUND. Mr. Griffin is Vice President of A I M Capital
Management, Inc. ("AIM Capital"), a wholly owned subsidiary of A I M Management
Group Inc. ("AIM") and has been responsible for AIM INTERNATIONAL EQUITY FUND
since its inception in 1992. He has been associated with AIM and/or its
subsidiaries since 1989 and began working as an investment professional in 1987.
Mr. Olsson is an Investment Officer of AIM Capital and has been responsible for
AIM INTERNATIONAL EQUITY FUND since 1997. He has been associated with AIM and/or
its subsidiaries since 1994 and began working as an investment professional in
1994. Prior to 1994, Mr. Olsson was a broker assistant trainee with Merrill
Lynch, Pierce, Fenner & Smith Incorporated. Mr. Rogge is Vice President of AIM
Capital and also has been responsible for AIM INTERNATIONAL EQUITY FUND since
its inception in 1992. He has been associated with AIM and/or its subsidiaries
since he began working as an investment professional in 1991. Mr. Sides is
Assistant Vice President of AIM Capital and has been responsible for AIM
INTERNATIONAL EQUITY FUND since 1995. He has been associated with AIM and/or its
subsidiaries since he began working as an investment professional in 1990.
A. Dale Griffin, III, Paul A. Rogge and Jonathan G. Schoolar are
primarily responsible for day-to-day management of AIM GLOBAL GROWTH FUND.
Background information on Mr. Griffin and Mr. Rogge is provided above. Mr.
Griffin and Mr. Rogge have been responsible for AIM GLOBAL GROWTH FUND since its
inception in 1994. Mr. Schoolar is Senior Vice President of AIM Capital, Vice
President of AIM, Vice President of AIF and has been responsible for AIM GLOBAL
GROWTH FUND since its inception in 1994. He has been associated with AIM or its
subsidiaries since 1986 and began working as an investment professional in 1984.
MANAGEMENT DISCUSSION AND ANALYSIS OF PERFORMANCE
A discussion of the performance of AIM INTERNATIONAL EQUITY FUND for
the six-month period ended April 30, 1998, is set forth in Appendix IV to this
Proxy Statement/Prospectus and a discussion of the performance of AIM GLOBAL
GROWTH FUND for the six-month period ended April 30, 1998, is set forth in
Appendix V to this Proxy Statement/Prospectus.
18
<PAGE> 28
FINANCIAL HIGHLIGHTS
AIM INTERNATIONAL EQUITY FUND
Shown below are financial highlights for a Class A Share of AIM
INTERNATIONAL EQUITY FUND outstanding during the six months ended April 30,
1998, and during each of the years in the five-year period ended October 31,
1997 and the period April 7, 1992 (effective date of registration statement)
through October 31, 1992, and for a Class B Share of AIM INTERNATIONAL EQUITY
FUND outstanding during the six months ended April 30, 1998, and during each of
the years in the three-year period ended October 31, 1997 and the period
September 15, 1994 (date sales commenced) through October 31, 1994. This
information (other than the information for the six months ended April 30, 1998)
has been audited by AIF's independent accountants whose unqualified reports on
the financial statements of AIM INTERNATIONAL EQUITY FUND are included in its
annual report to shareholders for the fiscal year ended October 31, 1997. AIM
INTERNATIONAL EQUITY FUND's semi-annual report to shareholders dated April 30,
1998, and its annual report to shareholders dated October 31, 1997, are
available without charge upon request made to AIF at the address or telephone
number appearing on the cover page of this Proxy Statement/Prospectus.
19
<PAGE> 29
AIM INTERNATIONAL EQUITY FUND CLASS A SHARES
<TABLE>
<CAPTION>
April 30,
1998 Year Ended October 31
---- --------------------------------------------------
(unaudited) 1997 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value beginning
of period ................ $ 16.64 $ 15.37 $ 13.65 $ 13.50
Income from operations:
Net investment income . (0.01)(a) 0.04(a) 0.04(a) 0.01
Net gains on securities
(both realized and
unrealized) ........... 2.87 1.68 2.07 0.62
------------ ------------ ------------ ------------
Total from investment
operations ............ 2.86 1.72 2.11 0.63
------------ ------------ ------------ ------------
Less distributions:
Dividends from net
investment income ..... (0.06) (0.02) (0.01) (0.04)
Distributions from net
realized gains ........ -- (0.43) (0.38) (0.44)
Total distributions ... (0.06) (0.45) (0.39) (0.48)
Net asset value, end of
period ................ $ 19.44 $ 16.64 $ 15.37 $ 13.65
============ ============ ============ ============
Total return ............. 17.27% 11.43% 15.79% 5.24%
Ratios/Supplemental Data:
Net assets, end of yea
(000's omitted) ....... $ 1,795,411 $ 1,577,390 $ 1,108,395 $ 654,764
Ratio of expenses to
average net assets .... 1.46%(d)(e) 1.47% 1.58% 1.67%
Ratio of net investment
income to average net
assets ................ (0.13)%(d) 0.24% 0.25% 0.10%
Portfolio turnover rate 30% 50% 66% 68%
Average brokerage
commission rate ....... $ 0.0229 $ 0.0168 $ 0.0192 N/A
<CAPTION>
Year Ended October 31 Period April 7,
------------------------------ 1992 through
1994 1993 October 31, 1992
------------ ------------ ------------
<S> <C> <C> <C>
Net asset value beginning
of period ................ $ 12.18 $ 8.88 $ 8.74(h)
Income from operations:
Net investment income . 0.02 0.02 0.01
Net gains on securities
(both realized and
unrealized) ........... 1.31 3.29 0.13
------------ ------------ ------------
Total from investment
operations ............ 1.33 3.31 0.14
------------ ------------ ------------
Less distributions:
Dividends from net
investment income ..... (0.01) (0.01) --
Distributions from net
realized gains ........ -- -- --
------------ ------------ ------------
Total distributions ... (0.01) (0.01) --
------------ ------------ ------------
Net asset value, end of
period ................ $ 13.50 $ 12.18 $ 8.88
============ ============ ============
Total return ............. 10.94% 37.36% 1.65%
Ratios/Supplemental Data:
Net assets, end of yea
(000's omitted) ....... $ 708,159 $ 372,282 $ 122,663
Ratio of expenses to
average net assets .... 1.64% 1.78% 1.85%(i)
Ratio of net investment
income to average net
assets ................ 0.22% 0.28% 0.27%(i)
Portfolio turnover rate 67% 62% 23%
Average brokerage
commission rate ....... N/A N/A N/A
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than 1 year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
are 1.50% (annualized), 1.51%, 1.60%, 1.68% and 1.89% (annualized),
respectively for 1998-1995 and 1992.
(d) Ratios are annualized and based on average net assets of
$1,607,899,814.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have been
the same.
(f) After fee waivers and/or expense reimbursements. Ratios of net
investment income to average net assets prior to fee waivers and/or
expense reimbursements are (0.17)% (annualized), 0.20%, 0.22%, 0.09%
and 0.22% (annualized), respectively for 1998-1995 and 1992.
(g) The average commission rate paid is the total brokerage commissions
paid on applicable purchases and sales of securities for the period
divided by the total number of related shares purchased and sold, which
is required to be disclosed for fiscal years beginning September 1,
1995 and thereafter.
(h) Net asset value at 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
(i) Annualized.
20
<PAGE> 30
AIM INTERNATIONAL EQUITY FUND CLASS B SHARES
<TABLE>
<CAPTION>
April 30,
1998 Year Ended October 31 Period September 15
---- -------------------------------------------- through
(unaudited) 1997 1996 1995 October 31, 1994
---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of period ............. $ 16.27 $ 15.13 $ 13.54 $ 13.49 $ 13.42
Income from operations:
Net investment income ........ (0.08)(a) (0.09)(a) (0.07)(a) (0.09) (0.01)
Net gains on securities
(both realized and
unrealized) .................. 2.81 1.66 2.04 0.61 0.08
---------- ---------- ---------- ---------- ----------
Total from investment
operations ................... 2.73 1.57 1.97 0.52 0.07
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income ............ -- -- -- (0.03) --
Distributions from net
realized gains ............... -- (0.43) (0.38) (0.47) --
---------- ---------- ---------- ---------- ----------
Total distributions .......... -- (0.43) (0.38) (0.47) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period .. $ 19.00 $ 16.27 $ 15.13 $ 13.54 $ 13.49
========== ========== ========== ========== ==========
Total return .................... 16.78% 10.61% 14.88% 4.35% 0.52%
Ratios/Supplemental Data:
Net assets, end of year
(000's omitted) .............. $ 810,320 $ 678,809 $ 368,355 $ 51,964 $ 4,833
Ratio of expenses to
average net assets ........... 2.23%(d)(e) 2.25% 2.35% 2.55% 2.53%(f)
Ratio of net investment
income to average net
assets ....................... (0.90)%(d) (0.53)% (0.53)% (0.78)% (0.67%)(f)
Portfolio turnover rate ...... 30% 50% 66% 68% 67%
Average brokerage
commission rate .............. $ 0.0229 $ 0.0168 $ 0.0192 N/A N/A
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
are 2.27% (annualized), 2.28%, 2.37% and 2.56%, respectively for
1998-1995.
(d) Ratios are annualized and based on average net assets of $720,585,336.
(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/or expense reimbursements. Ratios of net
investment income (loss) to average net assets prior to fee waivers
and/or expense reimbursements are (0.94)% (annualized), (0.57)%,
(0.55)% and (0.79)%, respectively for 1998-1995.
(h) The average commission rate paid is the total brokerage commissions
paid on applicable purchases and sales of securities for the period
divided by the total number of related shares purchased and sold, which
is required to be disclosed for fiscal years beginning September 1,
1995 and thereafter.
21
<PAGE> 31
AIM GLOBAL GROWTH FUND
Shown below are financial highlights for a Class A share and a Class B
share of AIM GLOBAL GROWTH FUND outstanding during the six months ended April
30, 1998, and during each of the years in the three-year period ended October
31, 1997, and the period September 15, 1994 (date operations commenced) through
October 31, 1994. This information (other than the information for the six
months ended April 30, 1998) has been audited by AIF's independent accountants
whose unqualified reports on the financial statements of AIM GLOBAL GROWTH FUND
are included in its annual report to shareholders for the fiscal year ended
October 31, 1997. AIM GLOBAL GROWTH FUND'S semi-annual report to shareholders
dated April 30, 1998, and the annual report to shareholders dated October 31,
1997, are available without charge upon request made to AIF at the address or
telephone number appearing on the cover page of this Proxy Statement/Prospectus.
22
<PAGE> 32
AIM GLOBAL GROWTH FUND CLASS A SHARES
<TABLE>
<CAPTION>
April 30,
1998 Year Ended October 31 Period September 15
---- ------------------------------------ through
(unaudited) 1997 1996 1995 October 31, 1994
------------- ------------- ----------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of period $ 16.65 $ 14.20 $ 12.32 $ 10.23 $ 10.00
Income from operations:
Net investment income .......... (0.04) (0.04) (0.01) (0.02) --
Net gains on securities (both
realized and unrealized) ....... 3.09 2.49 2.11 2.11 0.23
------------- ------------- ----------- ------------- -------------
Total from investment
operations ..................... 3.05 2.45 2.10 2.09 0.23
------------- ------------- ----------- ------------- -------------
Less distributions:
Dividends from net investment
income ......................... -- -- -- (0.004) --
Distributions from net
realized gains ................. (0.42) -- (0.22) -- --
------------- ------------- ----------- ------------- -------------
Total distributions ............ (0.42) -- (0.22) (0.004) --
------------- ------------- ----------- ------------- -------------
Net asset value, end of period .... $ 19.28 $ 16.65 $ 14.20 $ 12.32 $ 10.23
============= ============= =========== ============= =============
Total return ...................... 18.81% 17.25% 17.26% 20.48% 2.30%
Ratios/Supplemental Data:
Net assets, end of year (000's
omitted) ....................... $ 217,916 $ 178,917 $ 114,971 $ 23,754 $ 3,093
Ratio of expenses to average
net assets ..................... 1.74%(c)(d) 1.76(c)(d) 1.93% 2.12% 1.95%(e)
Ratio of net investment income
to average net assets .......... (0.49)%(c) (0.30)(c) (0.13)% (0.28)% 0.10%(e)
Portfolio turnover rate ........ 36% 96% 82% 79% .6%
Average brokerage
commission rate ................ $ 0.0277 $ 0.0239 $ 0.0234 N/A N/A
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
were 1.94%, 2.98% and 5.67% (annualized) for the periods 1996- 1994,
respectively.
(c) Ratios are annualized and based on average net assets of $190,554,477.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have been
the same (annualized).
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net
investment income (loss) to average net assets prior to fee waivers
and/or expense reimbursements were (0.14)%, (1.14)% and (3.63)%
(annualized) for the periods 1996-1994, respectively.
(g) The average commission rate paid is the total brokerage commissions
paid on applicable purchases and sales of securities for the period
divided by the total number of related shares purchased and sold, which
is required to be disclosed for fiscal years beginning September 1,
1995 and thereafter.
23
<PAGE> 33
AIM GLOBAL GROWTH FUND CLASS B SHARES
<TABLE>
<CAPTION>
April 30,
1998 Year Ended October 31 Period September 15
---- ------------------------------------------------ through
(unaudited) 1997 1996 1995 October 31, 1994
------------- ------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value beginning of
period .......................... $ 16.39 $ 14.05 $ 12.26 $ 10.22 $ 10.00
Income from operations:
Net investment income ........ (0.09)(a) (0.11) (0.05) (0.04) --
Net gains on securities (both
realized and unrealized) ..... 3.04 2.45 2.06 2.08 0.22
------------- ------------- ------------- ------------- ----------
Total from investment
operations ................... 2.95 2.34 2.01 2.04 0.22
------------- ------------- ------------- ------------- ----------
Less distributions:
Distributions from net
realized gains ............... (0.42) -- (0.22) -- --
------------- ------------- ------------- ------------- ----------
Total distributions .......... (0.42) -- (0.22) -- --
------------- ------------- ------------- ------------- ----------
Net asset value, end of period .. $ 18.92 $ 16.39 $ 14.05 $ 12.26 $ 10.22
============= ============= ============= ============= ==========
Total return (b) ................ 18.49% 16.65% 16.60% 19.96% 2.20%
Ratios/Supplemental Data:
Net assets, end of year (000's
omitted) ..................... $ 281,432 $ 224,225 $ 121,848 $ 17,157 $ 1,277
Ratio of expenses to average
net assets (c) ............... 2.28%(d)(e) 2.29% 2.48% 2.64% 2.51%(f)
Ratio of net investment income
(loss) to average net
assets (g) ................... (1.02)%(d) (0.83)% (0.69)% (0.79)% (0.47)%(f)
Portfolio turnover rate ...... 36% 96% 82% 79% 6%
Average brokerage
commission rate (h) .......... $ 0.0277 $ 0.0239 $ 0.0234 N/A N/A
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Rations of expenses to
average net assets prior to fee waivers and/or expense reimbursements
were 2.49%, 3.38% and 6.20% (annualized) for the periods 1996- 1994,
respectively.
(d) Ratios are annualized and based on average net assets of $244,693,916.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have been
2.27% (annualized).
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net
investment income (loss) to average net assets prior to fee waivers
and/or expense reimbursements were (0.69)%, (1.54)% and (4.16)%
(annualized) for the periods 1996-1994, respectively.
(h) The average commission rate is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by
the total number of related shares purchased and sold, which is
required to be disclosed for fiscal years beginning September 1, 1995
and thereafter.
24
<PAGE> 34
ADDITIONAL INFORMATION ABOUT THE AGREEMENT
TERMS OF THE REORGANIZATIONS
The terms and conditions under which the Reorganizations may be
consummated are set forth in the Agreement. Significant provisions of the
Agreement are summarized below; however, this summary is qualified in its
entirety by reference to the Agreement, a copy of which is attached as Appendix
I to this Proxy Statement/Prospectus.
THE REORGANIZATIONS
Each Acquiring Fund will acquire all of the assets of the Acquired Fund
with which it will combine in exchange for shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the liabilities of the Acquired Fund.
Consummation of each Reorganization (the "Closing") is expected to occur on
February 12, 1999, at 5:00 p.m. Central Time (the "Effective Time") on the basis
of values calculated as of the close of regular trading on the NYSE on that
business day.
At the Effective Time, all of the assets of AIM INTERNATIONAL GROWTH
FUND shall be delivered to the Custodian for the account of AIM INTERNATIONAL
EQUITY FUND in exchange for the assumption by AIM INTERNATIONAL EQUITY FUND of
all of the liabilities of any kind of AIM INTERNATIONAL GROWTH FUND and delivery
by AIF directly to (i) the AIM INTERNATIONAL GROWTH FUND Advisor class
shareholders and Class A shareholders of a number of AIM INTERNATIONAL EQUITY
FUND Class A shares (including, if applicable, fractional shares rounded to the
nearest thousandth) and to (ii) the AIM INTERNATIONAL GROWTH FUND Class B
shareholders of a number of AIM INTERNATIONAL EQUITY FUND Class B shares
(including, if applicable, fractional shares rounded to the nearest thousandth),
having an aggregate net asset value equal to the net value of the assets of AIM
INTERNATIONAL GROWTH FUND so transferred, assigned and delivered.
At the Effective Time, all of the assets of AIM WORLDWIDE GROWTH FUND
shall be delivered to the Custodian for the account of AIM GLOBAL GROWTH FUND in
exchange for the assumption by AIM GLOBAL GROWTH FUND of all of the liabilities
of any kind of AIM WORLDWIDE GROWTH FUND and delivery by AIF directly to (i) the
AIM WORLDWIDE GROWTH FUND Advisor class shareholders and Class A shareholders of
a number of AIM GLOBAL GROWTH FUND Class A shares (including, if applicable,
fractional shares rounded to the nearest thousandth) and to (ii) the AIM
WORLDWIDE GROWTH FUNDS Class B shareholders of a number of AIM GLOBAL GROWTH
FUND Class B shares (including, if applicable, fractional shares rounded to the
nearest thousandth), having an aggregate net asset value equal to the net value
of the assets of AIM WORLDWIDE GROWTH FUND so transferred, assigned and
delivered.
Consummation of the Reorganization of AIM INTERNATIONAL GROWTH FUND is
not conditioned upon consummation of the Reorganization of AIM WORLDWIDE GROWTH
FUND, and consummation of the Reorganization of AIM WORLDWIDE GROWTH FUND is not
conditioned upon consummation of the Reorganization of AIM INTERNATIONAL GROWTH
FUND.
25
<PAGE> 35
OTHER TERMS
The Agreement may be amended without shareholder approval by mutual
agreement of AGS and AIF. If any amendment is made to the Agreement which
effects a material change to the Agreement and the Reorganizations, such change
will be submitted to the affected shareholders for their approval.
Each of AGS and AIF has made representations and warranties in the
Agreement that are customary in matters such as the Reorganizations. The
obligations of AGS and AIF pursuant to the Agreement with respect to a
particular Acquired Fund or Acquiring Fund are subject to various conditions,
including the following: (a) the assets of the Acquired Fund to be acquired by
the Acquiring Fund with which it will be combined shall constitute at least 90%
of the fair market value of the net assets and at least 70% of the fair market
value of the gross assets held by each of the Acquired Funds immediately prior
to the Reorganizations; (b) AIF's Registration Statement on Form N-14 under the
Securities Act of 1933 (the "1933 Act") shall have been filed with the SEC and
such Registration Statement shall have become effective, and no stop-order
suspending the effectiveness of the Registration Statement shall have been
issued, and no proceeding for that purpose shall have been initiated or
threatened by the SEC (and not withdrawn or terminated); (c) the shareholders of
the Acquired Fund shall have approved the Agreement; and (d) AGS and AIF shall
have received an opinion from Ballard Spahr Andrews & Ingersoll, LLP, that the
Reorganizations will not result in the recognition of gain or loss for Federal
income tax purposes for the Acquired Fund, the Acquiring Fund or their
shareholders.
The Acquired Fund and the Acquiring Funds have each agreed to bear
their own expenses in connection with the Reorganizations.
The Board of Trustees of AGS may waive without shareholder approval any
default by AIF or any failure by AIF to satisfy any of the conditions to AGS's
obligations as long as such a waiver will not have a material adverse effect on
the benefits intended under the Agreement for the shareholders of the Acquired
Funds. The Agreement may be terminated and the Reorganizations may be abandoned
by either AGS or AIF at any time by mutual agreement of AGS and AIF, or by
either party in the event that the Acquired Funds shareholders do not approve
the Agreement or if the Closing does not occur on or before April 30, 1999.
FEDERAL TAX CONSEQUENCES
The following is a general summary of the material Federal income tax
consequences of the Reorganizations and is based upon the current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the existing
Treasury regulations thereunder, current administrative rulings of the Internal
Revenue Service ("IRS") and judicial decisions, all of which are subject to
change. The principal Federal income tax consequences that are expected to
result from the Reorganizations, under currently applicable law, are as follows:
(i) the Reorganizations will each qualify as a "reorganization" within the
meaning of Section 368(a) of the Code; (ii) no gain or loss will be recognized
by each Acquired Fund upon the transfer of its assets to an Acquiring Fund;
(iii) no gain or loss will be recognized by any shareholder of an Acquired Fund
upon the
26
<PAGE> 36
exchange of shares of an Acquired Fund solely for shares of an Acquiring Fund;
(iv) the tax basis of the shares of an Acquiring Fund to be received by a
shareholder of an Acquired Fund will be the same as the tax basis of the shares
of the Acquired Fund surrendered in exchange therefor; (v) the holding period of
the shares of an Acquiring Fund to be received by a shareholder of an Acquired
Fund will include the holding period for which such shareholder held the shares
of the Acquired Fund exchanged therefor, provided that such shares of the
Acquired Fund are capital assets in the hands of such shareholder as of the
Closing; (vi) no gain or loss will be recognized by an Acquiring Fund on the
receipt of assets of an Acquired Fund in exchange for shares of the Acquiring
Fund and the Acquiring Fund's assumption of the Acquired Fund's liabilities;
(vii) the tax basis of the assets of each Acquired Fund in the hands of an
Acquiring Fund will be the same as the tax basis of such assets in the hands of
the Acquired Fund immediately prior to the Reorganization; and (viii) the
holding period of the assets of an Acquired Fund to be received by each
Acquiring Fund will include the holding period of such assets in the hands of
the Acquired Fund immediately prior to the Reorganization.
As a condition to Closing, Ballard Spahr Andrews & Ingersoll, LLP will
render a favorable opinion to AGS and AIF as to the foregoing Federal income tax
consequences of the Reorganizations, which opinion will be conditioned upon the
accuracy, as of the date of Closing, of certain representations of AGS and AIF
upon which Ballard Spahr Andrews & Ingersoll, LLP will rely in rendering its
opinion, which representations include, but are not limited to, the following
(taking into account for purposes thereof any events that are part of the plan
of reorganization): (A) there is no plan or intention by the shareholders of the
Acquired Funds to redeem a number of shares of the Acquiring Funds received in
the Reorganizations that would reduce an Acquired Fund shareholders' ownership
of Acquiring Fund shares to a number of shares having a value, as of the Closing
Date, of less than 50% of the value of all of the formerly outstanding shares of
the respective Acquired Fund as of the Closing Date; (B) following the
Reorganizations, each Acquiring Fund will continue the historic business of the
respective Acquired Fund (for this purpose "historic business" shall mean the
business most recently conducted by each Acquired Fund which was not entered
into in connection with the Reorganizations) or use a significant portion of
such Acquired Fund's historic business assets in its business; (C) at the
direction of the Acquired Funds, the Acquiring Funds will issue directly to each
Acquired Fund's shareholders pro rata the shares of the Acquiring Fund that each
respective Acquired Fund constructively receives in the Reorganization and each
Acquired Fund will distribute its other properties (if any) to its shareholders
on, or as promptly as practicable after, the Closing; (D) the Acquiring Funds
have no plan or intention to reacquire any of their shares issued in the
Reorganizations, except to the extent that the Acquiring Funds are required by
the Investment Company Act of 1940 (the "1940 Act") to redeem any of their
shares presented for redemption; (E) the Acquiring Funds do not plan or intend
to sell or otherwise dispose of any of the assets of the Acquired Funds acquired
in the Reorganizations, except for dispositions made in the ordinary course of
their business or dispositions necessary to maintain their status as a
"regulated investment company" ("RIC") under the Code; (F) the Acquiring Funds,
the Acquired Funds and the shareholders of the Acquired Funds will pay their
respective expenses, if any, incurred in connection with the Reorganizations;
(G) each Acquiring Fund will acquire at least 90 percent of the fair market
value of the net assets, and at least 70% of the fair market value of the gross
assets, held by each respective Acquired Fund immediately before the
Reorganizations,
27
<PAGE> 37
including for this purpose any amounts used by each Acquired Fund to pay its
reorganization expenses and all redemptions and distributions made by the
Acquired Fund immediately before the Reorganizations (other than redemptions
pursuant to a demand of a shareholder in the ordinary course of the Acquired
Fund's business as an open-end diversified management investment company under
the 1940 Act and regular, normal dividends not in excess of the requirements of
Section 852 of the Code); and (H) the Acquiring Funds and the Acquired Funds
have each elected to be taxed as a RIC under Section 851 of the Code and will
each have qualified for the special Federal tax treatment afforded RICs under
the Code for all taxable periods (including the last short taxable period of the
Acquired Funds ending on the Closing and the taxable year of the Acquiring Funds
that includes the Closing).
THE FOREGOING DESCRIPTION OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
REORGANIZATIONS IS MADE WITHOUT REGARD TO THE PARTICULAR FACTS AND CIRCUMSTANCES
OF ANY SHAREHOLDER OF THE ACQUIRED FUNDS. THE ACQUIRED FUNDS SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM
OF THE REORGANIZATIONS, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.
ACCOUNTING TREATMENT
The Reorganizations will be accounted for on a tax-free combined basis.
Accordingly, the book cost basis to the Acquiring Funds of the assets of the
Acquired Funds will be the same as the book cost basis of such assets to the
Acquired Funds.
RIGHTS OF SHAREHOLDERS
AIF is a Maryland corporation and AGS is a Delaware business trust.
There is much that is similar between the two forms of organization. For
example, the responsibilities, powers and fiduciary duties of the trustees of
the AGS are substantially the same as those of the directors of AIF.
There are, however, certain differences between the two forms of
organization. The operations of AIF, as a Maryland corporation, are governed by
its Articles of Incorporation, and amendments and supplements thereto, and
applicable Maryland law. The operations of AGS, as a Delaware business trust,
are governed by its Agreement and Declaration of Trust, as amended (the
"Declaration of Trust") and Delaware law.
LIABILITY OF SHAREHOLDERS
The Delaware Business Trust Act provides that shareholders of a
Delaware business trust shall be entitled to the same limitations of liability
extended to shareholders of private for-profit corporations. There is, however,
a remote possibility that, under certain circumstances, shareholders of a
Delaware business trust might be held personally liable for the trust's
obligations to the extent the courts of another state that does not recognize
such limited liability
28
<PAGE> 38
were to apply the laws of such state to a controversy involving such
obligations. The AGS Declaration of Trust provides that shareholders of the
Acquired Funds shall not be subject to any personal liability for acts or
obligations of the Acquired Funds and that every written agreement, obligation
or other undertaking made or issued by the Acquired Funds shall contain a
provision to the effect that shareholders are not personally liable thereunder.
In addition, the Declaration of Trust provides for indemnification out of the
Acquired Funds' property for any shareholder held personally liable solely by
reason of his or her being or having been a shareholder. Therefore, the risk of
any shareholder incurring financial loss beyond his investment due to
shareholder liability is limited to circumstances in which the Acquired Funds
themselves are unable to meet their obligations and the express disclaimer of
shareholder liabilities is determined not to be effective. Given the nature of
the assets and operations of the Acquired Funds, the possibility of the Acquired
Funds being unable to meet their obligations is considered remote, and even if a
claim were brought against the Funds and a court determined that shareholders
were personally liable, it would likely not impose a material obligation on a
shareholder.
Shareholders of a Maryland corporation generally do not have personal
liability for the corporation's obligations, except that a shareholder may be
liable to the extent that he receives any distribution which exceeds the amount
which he could properly receive under Maryland law or where such liability is
necessary to prevent fraud.
ELECTION OF DIRECTORS/TRUSTEES; TERMS
The shareholders of AGS have elected the trustees of AGS. Such trustees
serve for the life of AGS, subject to the earlier death, incapacitation,
resignation, retirement or removal (see below). Shareholders may elect
successors to such Trustees only at annual or special meetings of shareholders.
The shareholders of AIF have elected the directors of AIF. Each
director serves until a successor is elected, subject to earlier death,
incapacitation, resignation, retirement or removal (see below). Shareholders may
elect successors to such directors only at annual or special meetings of
shareholders.
REMOVAL OF TRUSTEES/DIRECTORS
A trustee of AGS may be removed at any time by vote of at least
two-thirds of the trustees or by vote of two-thirds of the outstanding shares of
AGS. The Declaration of Trust provides that vacancies may be filled by
appointment by the remaining trustees.
A director of AIF may be removed by the affirmative vote of a majority
of the Board of Directors, a committee of the Board of Directors appointed for
such purpose, or the holders of a majority of the outstanding shares of AIF.
29
<PAGE> 39
MEETINGS OF SHAREHOLDERS
AGS is not required to hold annual meetings of shareholders unless
required by the 1940 Act and does not intend to do so. The By-Laws of AGS
provide that a majority of the Trustees may call special meetings of
shareholders and the Trustees shall call a special meeting of the shareholders
upon written request of the holders of not less than 10% of the Acquired Funds'
shares. Special meetings may be called for the purpose of electing trustees or
for any other action requiring shareholder approval, or for any matter deemed by
the trustees to be necessary or desirable.
AIF is not required to hold annual meetings of shareholders and does
not intend to do so unless required by the 1940 Act. AIF's Bylaws provide that a
special meeting of shareholders may be called by the President, Secretary, a
majority of the Board of Directors or holders of shares entitled to cast at
least 10% of the votes entitled to be cast at the special meeting. Requests for
special meetings must, among other things, state the purpose of such meeting and
the matters to be voted upon. No special meeting may be called to consider any
matter previously voted upon at a special meeting called by the shareholders
during the preceding twelve months, unless requested by a majority of all shares
entitled to vote at such meeting.
LIABILITY OF DIRECTORS/TRUSTEES AND OFFICERS; INDEMNIFICATION
Delaware law provides that trustees of a business trust shall not be
liable to the business trust or its shareholders for acting in good faith
reliance on the provisions of its governing instrument and that the trustee's
liabilities may be expanded or restricted by such instrument. Under the AGS
Declaration of Trust, the trustees and officers of AGS are not liable for any
act or omission or any conduct whatsoever in their capacity as trustees, except
for liability to the trust or shareholders due to willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of trustee. Delaware law allows a business trust to
indemnify and hold harmless any trustee or other person against any and all
claims and demands. The AGS Declaration of Trust require the indemnification of
its trustees and officers to the fullest extent permitted by Delaware law,
except with respect to any matter in which it has been determined that such
director or officer acted with willful misfeasance, bad faith, gross negligence
or reckless disregard of his or her duties.
Maryland law permits a corporation to eliminate liability of its
directors and officers to the corporation or its stockholders, except for
liability arising from receipt of an improper benefit or profit and from active
and deliberate dishonesty. AIF's Articles of Incorporation eliminate director
and officer liability to the fullest extent permitted under Maryland law. Under
Maryland law, indemnification of a corporation's directors and officers is
mandatory if a director or officer has been successful on the merits or
otherwise in the defense of certain proceedings. Maryland law permits
indemnification for other matters unless it is established that the act or
omission giving rise to the proceeding was committed in bad faith, a result of
active and deliberate dishonesty, or one in which a director or officer actually
received an improper benefit.
30
<PAGE> 40
TERMINATION
AGS or any series or class of shares of beneficial interest in AGS may
be terminated by a majority shareholder vote of AGS or the affected series or
class, respectively, or if there are fewer than 100 shareholders of record of
AGS or of such terminating series or class, the trustees pursuant to written
notice to the shares of AGS or the affected series or class.
Maryland law provides that AIF may be dissolved by the vote of a
majority of the Board of Directors and two-thirds of the shares entitled to vote
on the dissolution.
VOTING RIGHTS OF SHAREHOLDERS
The AGS Declaration of Trust grants shareholders power to vote only
with respect to the following: (i) election of trustees; (ii) removal of
trustees, (iii) approval of investment advisory contracts, as required by the
1940 Act; (iv) termination of AGS or a series of class of its shares of
beneficial interest, (v) amendment of the Declaration of Trust, (vi) sale of all
or substantially all of the assets of AGS or one of its investment portfolios,
(vii) merger or consolidation of AGS or any of its investment portfolios, with
certain exceptions, and (viii) approval of such additional matters as may be
required by law or as the trustees, in their sole discretion, shall determine.
Shareholders of a Maryland corporation such as AIF are entitled to vote
on, among other things, those matters which effect fundamental changes in the
corporate structure (such as a merger, consolidation or sale of substantially
all of the assets of the corporation) as provided by Maryland corporation law.
DISSENTERS' RIGHTS
Neither Delaware law nor the Declaration of Trust confers upon AGS
shareholders appraisal or dissenters' rights.
Under Maryland law, AIF's shareholders may not demand the fair value of
their shares from the successor company in a transaction involving the transfer
of the Acquiring Funds' assets, and are bound by the terms of the transaction.
AMENDMENTS TO ORGANIZATION DOCUMENTS
Consistent with Delaware law, the Board of Trustees of AGS may, without
shareholder approval, amend the Declaration of Trust at any time, except that no
amendment may be made which repeals the limitations of personal liability of any
shareholder, which reduces the amount payable in respect of the shares of AGS
upon liquidation of AGS or which diminishes or eliminates any voting rights
pertaining to the shares of AGS, without approval of the majority of the shares
of AGS. The trustees shall have the power to alter, amend or repeal the Bylaws
of AGS or adopt new Bylaws at any time.
31
<PAGE> 41
Consistent with Maryland law, AIF reserves the right to amend, alter,
change or repeal any provision contained in their Articles of Incorporation in
the manner now or hereafter prescribed by statute, including any amendment that
alters the contract rights, as expressly set forth in the Articles of
Incorporation, of any outstanding stock, and all rights conferred on
shareholders are granted subject to this reservation. The Board of Directors of
AIF may approve amendments to the Articles of Incorporation to classify or
reclassify unissued shares of a class of stock without shareholder approval.
Other amendments to the AIF Articles of Incorporation may be adopted if approved
by a vote of a majority of the shares at any meeting at which a quorum is
present. The AIF Bylaws provide that the Bylaws may be amended at any regular
meeting or special meeting of the stockholders provided that notice of such
amendment is contained in the notice of the special meeting. Except as to any
particular Bylaw which is specified as not subject to amendment by the Board of
Directors, the Bylaws may be also amended by the affirmative vote of a majority
of the Board of Directors at any regular or special meetings of the Board.
OWNERSHIP OF THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS SHARES
SIGNIFICANT HOLDERS
Listed below is the name, address and percent ownership of each person
who as of December 8, 1998, to the knowledge of AGS, owned beneficially 5% or
more of any class of the outstanding shares of the Acquired Funds:
AIM INTERNATIONAL GROWTH FUND
NUMBER PERCENT
CLASS OF OF SHARES BENEFICIAL
NAME AND ADDRESS SHARES OWNED OWNERSHIP
- ---------------- ------ ----- ----------
AIM WORLDWIDE GROWTH FUND
NUMBER OF PERCENT
CLASS OF SHARES BENEFICIAL
NAME AND ADDRESS SHARES OWNED OWNERSHIP
- ---------------- ------ ----- ---------
32
<PAGE> 42
Listed below is the name, address and percent ownership of each person
who as of December 8, 1998 to the knowledge of AIF, owned beneficially 5% or
more of the outstanding shares of the Acquiring Funds:
AIM INTERNATIONAL EQUITY FUND
NUMBER PERCENT
CLASS OF OF SHARES BENEFICIAL
NAME AND ADDRESS SHARES OWNED OWNERSHIP
- ---------------- ------ ----- ---------
AIM GLOBAL GROWTH FUND
NUMBER PERCENT
CLASS OF OF SHARES BENEFICIAL
NAME AND ADDRESS SHARES OWNED OWNERSHIP
- ---------------- ------ ----- ---------
OWNERSHIP OF OFFICERS AND DIRECTORS/TRUSTEES
To the best of the knowledge of AIF, the beneficial ownership of shares
of the Acquiring Funds by officers and directors of AIF as a group constituted
less than 1% of the outstanding shares of each such fund as of December 8, 1998.
To the best of the knowledge of AGS, the beneficial ownership of shares of the
Acquired Funds by officers or trustees of AGS as a group constituted less than
1% of the outstanding shares of such fund as of December 8, 1998.
CAPITALIZATION
The following table sets forth as of June 30, 1998, (i) the
capitalization of the Acquiring Funds Class A Shares and the Acquiring Funds
Class B Shares, (ii) the capitalization of the Acquired Funds Class A, Class B
and Advisor Class shares, and (iii) the pro forma capitalization of the
Acquiring Funds Class A and Class B shares as adjusted to give effect to the
transactions contemplated by the Agreement.
33
<PAGE> 43
AIM INTERNATIONAL EQUITY FUND AND AIM INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
AIM AIM PRO FORMA AIM
AIM INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL EQUITY
EQUITY FUND GROWTH FUND GROWTH FUND FUND CLASS A
CLASS A SHARES CLASS A SHARES ADVISOR SHARES SHARES AS ADJUSTED
-------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C>
Net Assets $1,833,589,859 $143,957,678 $252,159 $1,977,799,696
Shares
Outstanding 92,577,015 16,887,447 29,471 99,856,664
Net Asset Value
Per Shares $19.81 $8.52 $8.56 $19.81
</TABLE>
<TABLE>
<CAPTION>
AIM AIM PRO FORMA AIM
INTERNATIONAL INTERNATIONAL INTERNATIONAL EQUITY
EQUITY FUND GROWTH FUND FUND CLASS B
CLASS B SHARES CLASS B SHARES SHARES AS ADJUSTED
-------------- -------------- ------------------
<S> <C> <C> <C>
Net Assets $844,051,101 $49,567,348 $893,618,449
Shares Outstanding 43,647,712 6,072,995 46,210,657
Net Asset Value Per Shares $19.34 $8.16 $19.34
</TABLE>
AIM GLOBAL GROWTH FUND AND AIM WORLDWIDE GROWTH FUND
<TABLE>
<CAPTION>
AIM AIM PRO FORMA AIM
AIM GLOBAL GROWTH WORLDWIDE WORLDWIDE GLOBAL GROWTH FUND
FUND GROWTH FUND GROWTH FUND CLASS A
CLASS A SHARES CLASS A SHARES ADVISOR SHARES SHARES AS ADJUSTED
-------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C>
Net Assets $230,046,171 $95,789,457 $1,173,623 $327,009,251
Shares
Outstanding 11,774,553 6,010,096 72,854 16,736,840
Net Asset Value
Per Shares $19.54 $15.94 $16.11 $19.54
</TABLE>
34
<PAGE> 44
<TABLE>
<CAPTION>
AIM AIM PRO FORMA AIM
GLOBAL WORLDWIDE GLOBAL GROWTH FUND
GROWTH FUND GROWTH FUND CLASS B
CLASS B SHARES CLASS B SHARES SHARES AS ADJUSTED
-------------- -------------- ------------------
<S> <C> <C> <C>
Net Assets $294,453,584 $41,963,181 $336,416,765
Shares Outstanding 15,375,353 2,762,324 17,566,642
Net Asset Value Per Shares $19.15 $15.19 $19.15
</TABLE>
LEGAL MATTERS
Certain legal matters concerning AIF and its participation in the
Reorganizations, the issuance of shares of the Acquiring Funds in connection
with the Reorganizations and the tax consequences of the Reorganizations will be
passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, 51st
Floor, Philadelphia, PA 19103-7599. Certain legal matters concerning AGS and its
participation in the Reorganizations will be passed upon by Kirkpatrick &
Lockhart LLP 1800 Massachusetts Avenue, N.W., Washington, D.C. 20036-1800.
INFORMATION FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
This Proxy Statement/Prospectus and the related Statement of Additional
Information do not contain all the information set forth in the registration
statements and the exhibits relating thereto and annual reports which AGS and
AIF have filed with the SEC pursuant to the requirements of the 1933 Act and the
1940 Act, to which reference is hereby made. The SEC file number for AGS's
registration statement containing the Prospectus and Statement of Additional
Information relating to the Acquired Funds is Registration No. 2-57526. Such
Prospectus and Statement of Additional Information are incorporated herein by
reference. The SEC file number for AIF's registration statement containing the
Prospectus and Statement of Additional Information relating to the Acquiring
Funds is Registration No. 811-6463. Such Prospectus and Statement of Additional
Information are incorporated herein by reference.
AIF and AGS are subject to the informational requirements of the 1940
Act and in accordance therewith file reports and other information with the SEC.
Reports, proxy statements, registration statements and other information filed
by AGS and AIF (including the Registration Statement of AIF relating to the
Acquiring Funds on Form N-14 of which this Proxy Statement/Prospectus is a part
and which is hereby incorporated by reference) may be inspected without charge
and copied at the public reference facilities maintained by the SEC at Room
1014, Judiciary Plaza, 450 Fifth Street, NW, Washington, DC 20549, and at the
following regional offices of the SEC: 7 World Trade Center, New York, New York
10048; and 500 West Madison Street, 14th Floor, Chicago, Illinois 60661. Copies
of such material may also be
35
<PAGE> 45
obtained from the Public Reference Section of the SEC at 450 Fifth Street, NW,
Washington, DC 20549, at the prescribed rates. The SEC maintains a Web site at
http://www.sec.gov that contains information regarding AIF, AGS and other
registrants that file electronically with the SEC.
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUNDS AND
THE ACQUIRED FUNDS
For more information with respect to AIF and the Acquiring Funds
concerning the following topics, please refer to the Acquiring Funds
Prospectuses as indicated: (i) see"Summary," "The Fund," "Investment Objectives
and Policies," "Management" and "General Information" for further information
regarding AIF and the Acquiring Funds; (ii) see "Summary," "Investment
Objectives and Policies," "Management" and "General Information" for further
information regarding management of the Acquiring Funds; (iii) see "Summary,"
"Management," "Organization of the Company," "Dividends, Distributions and Tax
Matters" and "General Information" for further information regarding the capital
stock of the Acquiring Funds; (iv) see "Management," "How to Purchase Shares,"
"Terms and Conditions of Purchase of the AIM Funds," "Special Plans," "Exchange
Privilege," "Determination of Net Asset Value" and "How to Redeem Shares" for
further information regarding the purchase, redemption and repurchase of the
Acquiring Funds.
For more information with respect to AGS and the Acquired Funds
concerning the following topics, please refer to the Acquired Funds Prospectuses
as indicated: (i) see "Summary," "The Fund," "Investment Program," "Management"
and "General Information" for further information regarding AGS and the Acquired
Funds; (ii) see "Summary," "Investment Program," "Management" and "General
Information" for further information regarding management of the Acquired Funds;
(iii) see "Summary," "Management," "Organization of the Trust," "Dividends,
Distributions and Tax Matters" and "General Information" for further information
regarding the shares of the Acquired Funds; (iv) see "Management," "How to
Purchase Shares," "Terms and Conditions of Purchase of the AIM Funds," "Special
Plans," "Exchange Privilege," "Determination of Net Asset Value" and "How to
Redeem Shares" for further information regarding the purchase, redemption and
repurchase of the Acquired Funds.
36
<PAGE> 46
APPENDIX I
AGREEMENT
and
PLAN OF REORGANIZATION
for
AIM INTERNATIONAL GROWTH FUND
and
AIM WORLDWIDE GROWTH FUND,
separate portfolios of
AIM GROWTH SERIES
November 4, 1998
<PAGE> 47
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 TRANSFER OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Computation of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.6 Issuance of Acquiring Funds' Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.7 Investment Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.8 Liabilities and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF AIM GROWTH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.1 Organization; Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.2 Registration and Regulation of AIM Growth. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 No Material Adverse Changes; Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . 8
Section 3.5 Acquired Funds Shares; Liabilities; Business Operations . . . . . . . . . . . . . . . . . . . 8
Section 3.6 Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.7 Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.8 No Breaches or Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.9 Authorizations or Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.10 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.11 No Actions, Suits or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.13 Properties and Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.15 Benefit and Employment Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.16 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.17 Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.18 State Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.19 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.20 Prospectus and Statement of Additional Information . . . . . . . . . . . . . . . . . . . . 11
Section 3.21 No Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.22 Liabilities of the Acquired Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.23 Value of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.24 Shareholder Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.25 Intercompany Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AIM INTERNATIONAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.1 Organization; Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2 Registration and Regulation of AIM International . . . . . . . . . . . . . . . . . . . . . 12
Section 4.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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<TABLE>
<S> <C>
Section 4.4 No Material Adverse Changes; Contingent Liabilities . . . . . . . . . . . . . . . . . . . . 13
Section 4.5 Registration of Acquiring Funds Class A Shares and Acquiring Funds Class B Shares . . . . . 13
Section 4.6 Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.7 Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.8 No Breaches or Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.9 Authorizations or Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.10 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.11 No Actions, Suits or Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.13 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.14 Representations Concerning the Reorganization . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.15 Prospectus and Statement of Additional Information . . . . . . . . . . . . . . . . . . . . 16
Section 4.16 Value of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.17 Intercompany Indebtedness; Consideration . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 5 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.2 Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.5 Notice of Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.6 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.7 Consents, Approvals and Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.8 Submission of Agreement to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 6 CONDITIONS PRECEDENT TO THE REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.1 Conditions Precedent of AIM International. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.2 Mutual Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.3 Conditions Precedent of AIM Growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.4 Transactions Independent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 7 TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.2 Survival After Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.2 Law Governing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.3 Binding Effect, Persons Benefitting, No Assignment . . . . . . . . . . . . . . . . . . . . 23
Section 8.4 Obligations of AIM International and AIM Growth. . . . . . . . . . . . . . . . . . . . . . 23
Section 8.5 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.6 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.7 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.9 Entire Agreement; Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
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<TABLE>
<S> <C> <C>
Section 8.11 Representations by AIM Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Schedule 6.1(d) Opinion of Counsel to AIM International
Schedule 6.2(g) Tax Opinions
Schedule 6.3(d) Opinion of Counsel to AIM Growth
</TABLE>
iii
<PAGE> 50
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of November 4, 1998
(this "Agreement"), by and among AIM Growth Series, a Delaware business trust
("AIM Growth") acting on behalf of AIM International Growth Fund and AIM
Worldwide Growth Fund, each a separate series of AIM Growth (the "Acquired
Funds"), AIM International Funds, Inc., a Maryland corporation ("AIM
International"), acting on behalf of AIM International Equity Fund and AIM
Global Growth Fund, each a separate series of AIM International (the "Acquiring
Funds") and A I M Advisors, Inc. ("AIM Advisors"), a Delaware corporation.
(The Acquiring Funds and the Acquired Funds are sometimes referred to
collectively as the "Funds" and individually as a "Fund").
WITNESSETH
WHEREAS, AIM Growth is an investment company registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
(as defined below) that offers separate classes of its shares representing
interests in its investment portfolios, AIM International Growth Fund and AIM
Worldwide Growth Fund, for sale to the public; and
WHEREAS, AIM International is an investment company registered with
the SEC under the Investment Company Act that offers separate classes of its
shares representing interests in separate investment portfolios for sale to the
public; and
WHEREAS, AIM Advisors provides investment advisory services to both
AIM Growth and AIM International.
WHEREAS, the Acquired Funds own securities in which the Acquiring
Funds are permitted to invest; and
WHEREAS, the Acquired Funds desire to provide for their reorganization
through the transfer of all of their assets to the Acquiring Funds in exchange
for the assumption by the Acquiring Funds of all of the liabilities of the
Acquired Funds and the issuance by AIM International of shares of the Acquiring
Funds in the manner set forth in this Agreement; and
WHEREAS, this Agreement is intended to be and is adopted by the
parties hereto as a Plan of Reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings contained in this Agreement, AIM Growth and AIM
International agree as follows:
<PAGE> 51
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. For all purposes in this Agreement,
the following terms shall have the respective meanings
set forth in this Section 1.1 (such definitions to be
equally applicable to both the singular and plural forms
of the terms herein defined):
"Acquired Funds" means AIM International Growth Fund and AIM Worldwide
Growth Fund, each a separate series of AIM Growth.
"Acquired Funds Financial Statements" shall have the meaning set forth
in Section 3.3 of this Agreement.
"Acquired Funds Shareholders" means the holders of record as of the
Effective Time on the Closing Date of the issued and outstanding shares of
beneficial interest in the Acquired Funds.
"Acquired Funds Shareholders Meeting" means a meeting of the
shareholders of the Acquired Funds convened in accordance with applicable law
and the Agreement and Declaration of Trust of AIM Growth to consider and vote
upon the approval of this Agreement and the transactions contemplated by this
Agreement.
"Acquired Funds Shares" means the issued and outstanding shares of
beneficial interest of the Acquired Funds.
"Acquiring Funds" means AIM International Equity Fund and AIM Global
Growth Fund, each a separate series of AIM International.
"Acquiring Funds Class A Shares" means Class A Shares of the capital
stock of the Acquiring Funds issued by AIM International.
"Acquiring Funds Class B Shares" means Class B Shares of the capital
stock of the Acquiring Funds issued by AIM International.
"Acquiring Funds Financial Statements" shall have the meaning set
forth in Section 4.3 of this Agreement.
"Acquiring Funds Shares" means shares of common stock of AIM
International issued pursuant to Section 2.6 of this Agreement.
"Advisers Act" means the Investment Advisers Act of 1940, as amended,
and all rules and regulations of the SEC adopted pursuant thereto.
"Affiliated Person" means an affiliated person as defined in Section
2(a)(3) of the Investment Company Act.
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<PAGE> 52
"Agreement" means this Agreement and Plan of Reorganization, together
with all schedules and exhibits attached hereto and all amendments hereto and
thereof.
"AIM Growth" means AIM Growth Series, a Delaware business trust.
"AIM Growth Registration Statement" means the registration statement
on Form N-1A of AIM Growth, as amended, Registration No. 2-57526, that is
applicable to the Acquired Funds.
"AIM International" means AIM International Funds, Inc., a Maryland
corporation.
"AIM International Registration Statement" means the registration
statement on Form N-1A of AIM International, as amended, Registration
No. 811-6463.
"Benefit Plan" means any material "employee benefit plan" (as defined
in Section 3(3) of ERISA) and any material bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, vacation, retirement, profit sharing, welfare plans or other plan,
arrangement or understanding maintained or contributed to by AIM International
on behalf of the Acquired Funds, or otherwise providing benefits to any current
or former employee, officer or trustee of AIM International.
"Closing" means the transfer of the assets of the Acquired Funds to
the Acquiring Funds, the assumption of all of the Acquired Funds' liabilities
by the Acquiring Funds and the issuance of the Acquiring Funds Shares directly
to the shareholders of the Acquired Funds as described in Section 2.1 of this
Agreement.
"Closing Date" means February 12, 1999, or such other date as the
parties may mutually determine.
"Code" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations adopted pursuant thereto.
"Custodian" means State Street Bank and Trust Company acting in its
capacity as custodian for the assets of the Acquiring Funds and the Acquired
Funds.
"Effective Time" shall mean 5:00 p.m. Central Time on the Closing
Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules or regulations adopted pursuant thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations adopted by the SEC pursuant thereto.
"Governmental Authority" means any foreign, United States or state
government, government agency, department, board, commission (including the
SEC) or instrumentality, and any court, tribunal or arbitrator of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including the National Association of
Securities Dealers, Inc., the Commodity Futures Trading Commission, the
National Futures Association, the Investment Management Regulatory Organization
Limited and the Office of Fair Trading).
3
<PAGE> 53
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and all rules and regulations adopted by the SEC pursuant thereto.
"Lien" means any pledge, lien, security interest, charge, claim or
encumbrance of any kind.
"Material Adverse Effect" means an effect that would cause a change in
the condition (financial or otherwise), properties, assets or prospects of an
entity having an adverse monetary effect in an amount equal to or greater than
$50,000.
"Person" means an individual or a corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
"Reorganizations" means the acquisition of the assets of the Acquired
Funds by the Acquiring Funds in consideration of the assumption by the
Acquiring Funds of all of the liabilities of the Acquired Funds and the
issuance by AIM International of the Acquiring Funds Shares directly to
Acquired Funds Shareholders as described in this Agreement and the termination
of the Acquired Funds' status as designated series of shares of AIM Growth.
"Required Acquired Funds Shareholder Vote" shall have the meaning set
forth in Section 3.17 of this Agreement.
"Return" means any return, report or form or any attachment thereto
required to be filed with any taxing authority.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted by the SEC pursuant thereto.
"Tax" means any tax or similar governmental charge, impost or levy
(including income taxes (including alternative minimum tax and estimated tax),
franchise taxes, transfer taxes or fees, sales taxes, use taxes, gross receipts
taxes, value added taxes, employment taxes, excise taxes, ad valorem taxes,
property taxes, withholding taxes, payroll taxes, minimum taxes, or windfall
profit taxes), together with any related penalties, fines, additions to tax or
interest, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof.
ARTICLE 2
TRANSFER OF ASSETS
Section 2.1 Organization.
(a) Reorganization of AIM International Growth Fund. At the
Effective Time, all of the assets of AIM International Growth Fund shall be
delivered to the Custodian for the account of AIM International Equity Fund in
exchange for the assumption by AIM International Equity Fund of all of the
liabilities of any kind of AIM International Growth Fund and delivery by AIM
International directly to (i) the AIM International Growth Fund Advisor class
shareholders and Class A shareholders of a number of AIM International Equity
Fund Class A shares (including, if applicable, fractional shares rounded to the
nearest
4
<PAGE> 54
thousandth) and to (ii) the AIM International Growth Fund Class B shareholders
of a number of AIM International Equity Fund Class B shares (including, if
applicable, fractional shares rounded to the nearest thousandth), having an
aggregate net asset value equal to the net value of the assets of AIM
International Growth Fund so transferred, assigned and delivered, all
determined and adjusted as provided in Section 2.2 below. Upon delivery of
such assets, the AIM International Equity Fund will receive good and marketable
title to such assets free and clear of all Liens
(b) Reorganization of AIM Worldwide Growth Fund. At the Effective
Time, all of the assets of AIM Worldwide Growth Fund shall be delivered to the
Custodian for the account of AIM Global Growth Fund in exchange for the
assumption by AIM Global Growth Fund of all of the liabilities of any kind of
AIM Worldwide Growth Fund and delivery by AIM International directly to (i) the
AIM Worldwide Growth Fund Advisor class shareholders and Class A shareholders
of a number of AIM Global Growth Fund Class A shares (including, if applicable,
fractional shares rounded to the nearest thousandth) and to (ii) the AIM
Worldwide Growth Funds Class B shareholders of a number of AIM Global Growth
Fund Class B shares (including, if applicable, fractional shares rounded to the
nearest thousandth), having an aggregate net asset value equal to the net value
of the assets of AIM Worldwide Growth Fund so transferred, assigned and
delivered, all determined and adjusted as provided in Section 2.2 below. Upon
delivery of such assets, the AIM Global Growth Fund will receive good and
marketable title to such assets free and clear of all liens.
Section 2.2 Computation of Net Asset Value.
(a) The net asset value of the Acquiring Funds Class A shares and
the Acquiring Funds Class B Shares, and the net value of the assets of the
Acquired Funds subject to this Agreement, shall, in each case, be determined as
of the close of regular trading on the NYSE on the Closing Date.
(b) The net asset value of the Acquiring Funds Class A Shares and
the Acquiring Funds Class B Shares shall be computed in accordance with the
policies and procedures of the Acquiring Funds as described in the AIM
International Registration Statement.
(c) The net value of the assets of the Acquired Funds to be
transferred to the Acquiring Funds pursuant to this Agreement shall be computed
in accordance with the policies and procedures of the Acquired Funds as
described in the AIM Growth Registration Statement.
(d) All computations of value regarding the net assets of the
Acquired Funds and the net asset value of the Acquiring Funds Class A Shares
and the Acquiring Funds Class B Shares to be issued pursuant to this Agreement
shall be made by agreement of AIM Growth and AIM International. The parties
agree to use commercially reasonable efforts to resolve any material pricing
differences between the prices of portfolio securities determined in accordance
with their respective pricing policies and procedures.
Section 2.3 Valuation. The assets of the Acquired Funds and
the net asset value per share of the Acquiring Funds
Class A Shares and the Acquiring Funds Class B Shares
shall be valued as of the close of regular trading on
the NYSE on the Closing Date. The share transfer books
of the Acquired Funds will be permanently closed as of
the close of business on the Closing Date and only
requests for the redemption of shares of the Acquired
Funds received in proper form prior to the close of
regular trading on the NYSE on the Closing Date shall be
accepted by the
5
<PAGE> 55
Acquired Funds. Redemption requests thereafter received
by the Acquired Funds shall be deemed to be redemption
requests for Acquiring Funds Class A Shares or Acquiring
Funds Class B Shares, as applicable (assuming that the
transactions contemplated by this Agreement have been
consummated), to be distributed to Acquired Funds
Shareholders under this Agreement.
Section 2.4 Delivery.
(a) Assets held by the Acquired Funds shall be delivered by AIM
Growth to the Custodian on the Closing Date. No later than three (3) business
days preceding the Closing Date, AIM Growth shall instruct the Custodian to
transfer such assets to the account of the Acquiring Funds. The assets so
delivered shall be duly endorsed in proper form for transfer in such condition
as to constitute a good delivery thereof, in accordance with the custom of
brokers, and shall be accompanied by all necessary state stock transfer stamps,
if any, or a check for the appropriate purchase price thereof. Cash held by
the Acquired Funds shall be delivered on the Closing Date and shall be in the
form of currency or wire transfer in Federal funds, payable to the order of the
account of the Acquiring Funds at the Custodian.
(b) If, on the Closing Date, an Acquired Fund is unable to make
delivery in the manner contemplated by Section 2.4(a) of securities held by the
Acquired Fund for the reason that any of such securities purchased prior to the
Closing Date have not yet been delivered to the Acquired Fund, its broker or
brokers, then, AIM International shall waive the delivery requirements of
Section 2.4(a) with respect to said undelivered securities, if the Acquired
Fund has delivered to the Custodian by or on the Closing Date and with respect
to said undelivered securities, executed copies of an agreement of assignment
and escrow agreement and due bills executed on behalf of said broker or
brokers, together with such other documents as may be required by AIM
International or the Custodian, including brokers' confirmation slips.
Section 2.5 Dissolution. As soon as reasonably practicable
after the Closing Date, the Acquired Funds' status as
designated series of shares of AIM Growth shall be
terminated.
Section 2.6 Issuance of Acquiring Funds' Shares. At the
Effective Time, each Acquired Funds Shareholder of
record as of the close of regular trading on the NYSE on
the Closing Date holding the Acquired Funds Class A
shares or Advisor Class shares shall be issued that
number of full and fractional shares of the Acquiring
Funds Class A Shares having a net asset value equal to
the net asset value of the Acquired Funds Class A shares
or Advisor Class shares held by such Acquired Funds
Shareholders on the Closing Date, and each Acquired
Funds Shareholder of record as of the Closing Date
holding the Acquired Funds Class B shares shall be
issued that number of full and fractional shares of the
Acquiring Funds Class B Shares having a net asset value
equal to the net asset value of the Acquired Funds Class
B Shares held by such Acquired Funds Shareholder on the
Closing Date. All issued and outstanding shares of
beneficial interest of the Acquired Funds shall
thereupon be canceled on the books of AIM Growth. AIM
Growth shall provide instructions to the transfer agent
of AIM International with respect to the Acquiring
6
<PAGE> 56
Funds Class A Shares and Acquiring Funds Class B Shares
to be issued to Acquired Funds Shareholders. AIM
International shall have no obligation to inquire as to
the validity, propriety or correctness of any such
instruction, but shall, in each case, assume that such
instruction is valid, proper and correct. AIM
International shall record on its books the ownership of
the Acquiring Funds Class A and the Acquiring Funds
Class B Shares by Acquired Funds Shareholders and shall
forward a confirmation of such ownership to the Acquired
Funds Shareholders. No redemption or repurchase of such
shares credited to former Acquired Funds Shareholders in
respect of the Acquired Funds shares represented by
unsurrendered shares certificates shall be permitted
until such certificates have been surrendered to AIM
International for cancellation, or if such certificates
are lost or misplaced, until lost certificate affidavits
have been executed and delivered to AIM International.
Section 2.7 Investment Securities. On or prior to the
Closing Date, AIM Growth shall deliver a list setting
forth the securities the Acquired Funds then owns
together with the respective Federal income tax bases
thereof. AIM Growth shall provide to AIM International
on or before the Closing Date, detailed tax basis
accounting records for each security to be transferred
to it pursuant to this Agreement. Such records shall be
prepared in accordance with the requirements for
specific identification tax lot accounting and clearly
reflect the bases used for determination of gain and
loss realized on the sale of any security transferred to
the Acquiring Funds hereunder. Such records shall be
made available by AIM Growth prior to the Closing Date
for inspection by the Treasurer (or his designee) or the
auditors of AIM International upon reasonable request.
Section 2.8 Liabilities and Expenses. The Acquired Funds
shall use reasonable best efforts to discharge all of
their known liabilities, so far as may be possible,
prior to the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF AIM GROWTH
AIM Growth, on behalf of the Acquired Funds, represents and warrants
to AIM International that:
Section 3.1 Organization; Authority. AIM Growth is duly
organized, validly existing and in good standing under
the Delaware Business Trust Act, with all requisite
trust power and authority to enter into this Agreement
and perform its obligations hereunder.
Section 3.2 Registration and Regulation of AIM Growth. AIM
Growth is duly registered with the SEC as an investment
company under the Investment Company Act and all
Acquired Funds Shares which have been
7
<PAGE> 57
or are being offered for sale have been duly registered
under the Securities Act and have been duly registered,
qualified or are exempt from registration or
qualification under the securities laws of each state or
other jurisdiction in which such shares have been or are
being offered for sale, and no action has been taken by
AIM Growth to revoke or rescind any such registration or
qualification. The Acquired Funds are in compliance in
all material respects with all applicable laws, rules
and regulations, including, without limitation, the
Investment Company Act, the Securities Act, the Exchange
Act and all applicable state securities laws. The
Acquired Funds are in compliance in all material
respects with the applicable investment policies and
restrictions set forth in the AIM Growth Registration
Statement currently in effect. The value of the net
assets of the Acquired Funds are determined using
portfolio valuation methods that comply in all material
respects with the requirements of the Investment Company
Act and the policies of the Acquired Funds and all
purchases and redemptions of Acquired Funds Shares have
been effected at the net asset value per share
calculated in such manner.
Section 3.3 Financial Statements. The books of account and
related records of the Acquired Funds fairly reflect in
reasonable detail its assets, liabilities and
transactions in accordance with generally accepted
accounting principles applied on a consistent basis.
The audited financial statements dated December 31,
1997, and the unaudited financial statements dated June
30, 1998, of the Acquired Funds previously delivered to
AIM International (the "Acquired Funds Financial
Statements") present fairly in all material respects the
financial position of the Acquired Funds as at the dates
indicated and the results of operations and changes in
net assets for the periods then ended in accordance with
generally accepted accounting principles applied on a
consistent basis for the periods then ended.
Section 3.4 No Material Adverse Changes; Contingent
Liabilities. Since June 30, 1998, no material adverse
change has occurred in the financial condition, results
of operations, business, assets or liabilities of the
Acquired Funds or the status of the Acquired Funds as
regulated investment companies under the Code, other
than changes resulting from any change in general
conditions in the financial or securities markets or the
performance of any investments made by the Acquired
Funds or occurring in the ordinary course of business of
the Acquired Funds or AIM Growth. There are no
contingent liabilities of the Acquired Funds not
disclosed in the Acquired Funds Financial Statements
which are required to be disclosed in accordance with
generally accepted accounting principles.
8
<PAGE> 58
Section 3.5 Acquired Funds Shares; Liabilities; Business
Operations.
(a) The Acquired Funds Shares have been duly authorized and
validly issued and are fully paid and non- assessable.
(b) There is no plan or intention by the shareholders of the
Acquired Funds who own five percent (5%) or more of the Acquired Funds Shares,
and to the knowledge of AIM Growth's management the remaining Acquired Funds
Shareholders have no present plan or intention, of selling, exchanging,
redeeming or otherwise disposing of a number of the Acquiring Funds' Class A
Shares or the Acquiring Funds Class B Shares received by them in connection
with the Reorganization that would reduce the Acquired Funds Shareholders'
ownership of Acquiring Funds Class A Shares and Acquiring Funds Class B Shares
to a number of shares having a value, as of the Closing Date, of less than
fifty percent (50%) of the value of all of the formerly outstanding Acquired
Funds Shares as of the same date. For purposes of this representation,
Acquired Funds Shares exchanged for cash or other property or exchanged for
cash in lieu of fractional shares of the Acquiring Funds will be treated as
outstanding Acquired Funds Shares on the date of the Reorganization. Moreover,
Acquired Funds Shares and Acquiring Funds Class A Shares and Acquiring Funds
Class B Shares held by Acquired Funds Shareholders and otherwise sold, redeemed
or disposed of prior or subsequent to the Reorganization will be considered in
making this representation, except for Acquired Funds Shares or Acquiring Funds
Class A Shares and Acquiring Funds Class B Shares which have been, or will be,
redeemed by an Acquired Fund or an Acquiring Fund in the ordinary course of its
business as an open-end, diversified management investment company (or a series
thereof) under the Investment Company Act.
(c) At the time of the Reorganization, the Acquired Funds shall
not have outstanding any warrants, options, convertible securities or any other
type of right pursuant to which any Person could acquire Acquired Funds Shares,
except for the right of investors to acquire Acquired Funds Shares at net asset
value in the ordinary course of its business as an open-end diversified
management investment company operating under the Investment Company Act.
(d) From the date it commenced operations and ending on the
Closing Date, each of the Acquired Funds will have conducted its historic
business within the meaning of Section 1.368-1(d) of the Income Tax Regulations
under the Code in a substantially unchanged manner. In anticipation of the
Reorganization, each of the Acquired Funds will not dispose of assets that, in
the aggregate, will result in less than fifty percent (50%) of its historic
business assets being transferred to the Acquiring Funds.
(e) AIM Growth does not have, and has not had during the six (6)
months prior to the date of this Agreement, any employees, and shall not hire
any employees from and after the date of this Agreement through the Closing
Date.
Section 3.6 Accountants. PricewaterhouseCoopers, LLP, which
has reported upon Acquired Funds Financial Statements
for the period ended December 31, 1997, are independent
public accountants as required by the Securities Act and
the Exchange Act.
Section 3.7 Binding Obligation. This Agreement has been duly
authorized, executed and delivered by AIM Growth on
behalf of the Acquired Funds and, assuming this
Agreement has been duly executed and delivered by AIM
International and approved by the Acquired Funds
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Shareholders, constitutes the legal, valid and binding
obligation of AIM Growth enforceable against AIM Growth
in accordance with its terms from and with respect to
the revenues and assets of the Acquired Funds, except as
the enforceability hereof may be limited by bankruptcy,
insolvency, reorganization or similar laws relating to
or affecting creditors' rights generally, or by general
equity principles (whether applied in a court of law or
a court of equity and including limitations on the
availability of specific performance or other equitable
remedies).
Section 3.8 No Breaches or Defaults. The execution and
delivery of this Agreement by AIM Growth on behalf of
the Acquired Funds and performance by AIM Growth of its
obligations hereunder has been duly authorized by all
necessary trust action on the part of AIM Growth, other
than Acquired Funds Shareholder approval, and (i) do
not, and on the Closing Date will not, result in any
violation of the Agreement and Declaration of Trust or
by-laws of AIM Growth and (ii) do not, and on the
Closing Date will not, result in a breach of any of the
terms or provisions of, or constitute (with or without
the giving of notice or the lapse of time or both) a
default under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the
loss of a material benefit under, or result in the
creation or imposition of any Lien upon any property or
assets of the Acquired Funds (except for such breaches
or defaults or Liens that would not reasonably be
expected, individually or in the aggregate, to have a
Material Adverse Effect) under (A) any indenture,
mortgage or loan agreement or any other material
agreement or instrument to which AIM Growth is a party
or by which it may be bound and which relates to the
assets of the Acquired Funds or to which any of the
Acquired Funds' properties may be subject; (B) any
Permit (as defined below); or (C) any existing
applicable law, rule, regulation, judgment, order or
decree of any Governmental Authority having jurisdiction
over AIM Growth or any of the Acquired Funds'
properties. AIM Growth is not under the jurisdiction of
a court in a Title 11 of the United States Code or
similar case within the meaning of Section 368(a)(3)(A)
of the Code.
Section 3.9 Authorizations or Consents. Other than those
which shall have been obtained or made on or prior to
the Closing Date and those that must be made after the
Closing Date to comply with Section 2.5 of this
Agreement, no authorization or approval or other action
by, and no notice to or filing with, any Governmental
Authority will be required to be obtained or made by AIM
Growth in connection with the due execution and delivery
by AIM Growth of this Agreement and the consummation by
AIM Growth of the transactions contemplated hereby.
Section 3.10 Permits. AIM Growth has in full force and effect
all Federal, state, local and foreign governmental
approvals, consents, authorizations, certificates,
filings, franchises, licenses, notices, permits and
rights (collectively, "Permits") necessary for it to
conduct its business
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as presently conducted as it relates to the Acquired
Funds, and there has occurred no default under any
Permit, except for the absence of Permits and for
defaults under Permits the absence or default of which
would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. To the
knowledge of AIM Growth there are no proceedings
relating to the suspension, revocation or modification
of any Permit, except for such that would not reasonably
be expected, individually or in the aggregate, to have a
Material Adverse Effect.
Section 3.11 No Actions, Suits or Proceedings.
(a) There is no pending action, litigation or proceeding, nor, to
the knowledge of AIM Growth, has any litigation been overtly threatened in
writing or, if probable of assertion, orally, against AIM Growth before any
Governmental Authority which questions the validity or legality of this
Agreement or of the actions contemplated hereby or which seeks to prevent the
consummation of the transactions contemplated hereby, including the
Reorganization.
(b) There are no judicial, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the knowledge of AIM Growth,
threatened in writing or, if probable of assertion, orally, against AIM Growth
affecting any property, asset, interest, or right of the Acquired Funds, that
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect with respect to the Acquired Funds. There are not in
existence on the date hereof any plea agreements, judgments, injunctions,
consents, decrees, exceptions or orders that were entered by, filed with or
issued by Governmental Authority relating to AIM Growth's conduct of the
business of the Acquired Funds affecting in any significant respect the conduct
of such business. AIM Growth is not, and has not been, to the knowledge of AIM
Growth the target of any investigation by the SEC or any state securities
administrator with respect to its conduct of the business of the Acquired
Funds.
Section 3.12 Contracts. AIM Growth is not in default under any
contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a
party and which involves or affects the assets of the
Acquired Funds, by which the assets, business, or
operations of the Acquired Funds may be bound or
affected, or under which it or the assets, business or
operations of the Acquired Funds receives benefits, and
which default could reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect,
and, to the knowledge of AIM Growth there has not
occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a
default.
Section 3.13 Properties and Assets. The Acquired Funds have
good and marketable title to all properties and assets
reflected in the Acquired Funds Financial Statements as
owned by them, free and clear of all Liens, except as
described in the Acquired Funds Financial Statements.
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Section 3.14 Taxes.
(a) Each of the Acquired Funds has elected to be treated as a
regulated investment company under Subchapter M of the Code. Each Acquired
Fund has qualified as such for each taxable year since inception and that has
ended prior to the Closing Date and will have satisfied the requirements of
Part I of Subchapter M of the Code to maintain such qualification for the
period beginning on the first day of its current taxable year and ending on the
Closing Date. Each Acquired Fund has no earnings and profits accumulated in
any taxable year in which the provisions of Subchapter M of the Code did not
apply to it. In order to (i) insure continued qualification of each Acquired
Fund as a "regulated investment company" for tax purposes and (ii) eliminate
any tax liability of an Acquired Fund arising by reason of undistributed
investment company taxable income or net capital gain, AIM Growth will declare
to the Acquired Funds Shareholders of record on or prior to the Closing Date, a
dividend or dividends that, together with all previous such dividends shall
have the effect of distributing (A) all of each Acquired Fund's investment
company taxable income (determined without regard to any deductions for
dividends paid) for the taxable year ended December 31, 1998 and for the short
taxable year beginning on January 1, 1999 and ending on the Closing Date and
(B) all of each Acquired Fund's net capital gains realized in its taxable year
ended December 31, 1998 and in such short taxable year (after reduction for
any capital loss carryover).
(b) Each Acquired Fund has timely filed all Returns required to be
filed by it and all Taxes with respect thereto have been paid, except where the
failure so to file or so to pay, would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. Adequate provision has
been made in the financial statements of each Acquired Fund for all Taxes in
respect of all periods ending on or before the date of such financial
statements, except where the failure to make such provisions would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. No deficiencies for any Taxes have been proposed, assessed or
asserted in writing by any taxing authority against either Acquired Fund, and
no deficiency has been proposed, assessed or asserted, in writing, where such
deficiency would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. No waivers of the time to assess any such
Taxes are outstanding nor are any written requests for such waivers pending and
no Returns of either Acquired Fund are currently being or have been audited
with respect to income taxes or other Taxes by any Federal, state, local, or
foreign Tax authority.
(c) To the best of our knowledge, the fiscal year of each Acquired
Fund has not been changed for tax purposes since the date on which it commenced
operations.
Section 3.15 Benefit and Employment Obligations. On or prior
to the Closing Date, the Acquired Funds have no
obligation to provide any post-retirement or post-
employment benefit to any Person, including but not
limited to under any Benefit Plan, and have no
obligation to provide unfunded deferred compensation or
other unfunded or self-funded benefits to any Person.
Section 3.16 Brokers. No broker, finder or similar
intermediary has acted for or on behalf of AIM Growth or
the Acquired Funds in connection with this Agreement or
the transactions contemplated hereby, and no broker,
finder, agent or similar intermediary is entitled to any
broker's, finder's or similar fee or other commission in
connection therewith based on any agreement, arrangement
or understanding with AIM Growth or any action taken by
it.
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Section 3.17 Voting Requirements. The vote of a majority of
the Acquired Funds Shares cast at a meeting at which a
quorum is present (the "Required Acquired Funds
Shareholder Vote") are the only votes of the holders of
any class or series of shares of beneficial interest of
the Acquired Funds necessary to approve this Agreement
and the transactions contemplated by this Agreement.
Section 3.18 State Takeover Statutes. No state takeover
statute or similar statute or regulation applies or
purports to apply to the Reorganizations, this Agreement
or any of the transactions contemplated by this
Agreement.
Section 3.19 Books and Records. The books and records of AIM
Growth relating to the Acquired Funds, reflecting, among
other things, the purchase and sale of Acquired Funds
Shares by Acquired Funds Shareholders, the number of
issued and outstanding shares owned by each Acquired
Funds Shareholder and the state or other jurisdiction in
which such shares were offered and sold, are complete
and accurate in all material respects.
Section 3.20 Prospectus and Statement of Additional
Information. The current prospectus and statement of
additional information for the Acquired Funds as of the
date on which they were issued did not contain, and as
supplemented by any supplement thereto dated prior to or
on the Closing Date, do not contain any untrue statement
of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading.
Section 3.21 No Distribution. The Acquiring Funds Class A
Shares and the Acquiring Funds Class B Shares are not
being acquired for the purpose of any distribution
thereof, other than in accordance with the terms of this
Agreement.
Section 3.22 Liabilities of the Acquired Funds. The
liabilities of each Acquired Fund that are to be assumed
by the Acquiring Funds in connection with the
Reorganizations, or which the assets of the Acquired
Funds to be transferred in the Reorganizations are
subject, were incurred by such Acquired Fund in the
ordinary course of its business. The fair market value
of the assets of each Acquired Fund to be transferred
to an Acquiring Fund in the Reorganizations will equal
or exceed the sum of the liabilities to be assumed by
such Acquiring Fund plus the amount of liabilities, if
any, to which such transferred assets will be subject.
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Section 3.23 Value of Shares. The fair market value of the
Acquiring Funds Class A Shares received by the Acquired
Funds Shareholders in each Reorganization will be
approximately equal to the fair market value of the
Acquired Funds Class A shares and the Acquired Funds
Advisor Class shares constructively surrendered in
exchange therefor, and the fair market value of the
Acquiring Funds Class B Shares received by the Acquired
Funds Shareholders in each Reorganization will be
approximately equal to the fair market value of the
Acquired Funds Class B shares constructively surrendered
therefor.
Section 3.24 Shareholder Expenses. The Acquired Funds
Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganizations.
Section 3.25 Intercompany Indebtedness. There is no
intercompany indebtedness between AIM Growth and AIM
International that was issued, acquired, or will be
settled, at a discount.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AIM INTERNATIONAL
AIM International, on behalf of the Acquiring Funds, represents and
warrants to AIM Growth as follows:
Section 4.1 Organization; Authority. AIM International is
duly organized, validly existing and in good standing
under the Maryland General Corporation Law, with all
requisite corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
Section 4.2 Registration and Regulation of AIM International.
AIM International is registered with the SEC under the
Investment Company Act as an open-end, management,
series, investment company. The Acquiring Funds are in
compliance in all material respects with all applicable
laws, rules and regulations, including without
limitation the Investment Company Act, the Securities
Act, the Exchange Act and all applicable state
securities laws. The Acquiring Funds are in compliance
in all material respects with the applicable investment
policies and restrictions set forth in the AIM
International Registration Statement currently in
effect. The value of the net assets of the Acquiring
Funds are determined using portfolio valuation methods
that comply in all material respects with the
requirements of the Investment Company Act.
Section 4.3 Financial Statements. The books of account and
related records of the Acquiring Funds fairly reflect in
reasonable detail its assets, liabilities and
transactions in accordance with generally accepted
accounting principles applied on a consistent basis.
The audited financial statements dated December 31,
1997, and the unaudited financial statements dated June
30, 1998, of the Acquiring Funds previously
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delivered to AIM Growth (the "Acquiring Funds Financial
Statements") present fairly in all material respects the
financial position of the Acquiring Funds as at the
dates indicated and the results of operations and
changes in net assets for the periods then ended in
accordance with generally accepted accounting principles
applied on a consistent basis for the periods then
ended.
Section 4.4 No Material Adverse Changes; Contingent
Liabilities. Since June 30, 1998, no material adverse
change has occurred in the financial condition, results
of operations, business, assets or liabilities of the
Acquiring Funds or the status of the Acquiring Funds as
investment companies under the Code, other than changes
resulting from any change in general conditions in the
financial or securities markets or the performance of
any investments made by the Acquiring Funds or occurring
in the ordinary course of business of the Acquiring
Funds or AIM International. There are no contingent
liabilities of the Acquiring Funds not disclosed in the
Acquiring Funds Financial Statements which are required
to be disclosed in accordance with generally accepted
accounting principles.
Section 4.5 Registration of Acquiring Funds Class A Shares and
Acquiring Funds Class B Shares.
(a) The capital stock of AIM International is divided into six
portfolios, including the Acquiring Funds. The Acquiring Funds currently have
three classes of shares, Class A shares, Class B shares and Class C shares.
Under its Charter, AIM International is authorized to issue 200,000,000 Class A
shares and 200,000,000 Class B shares of the Acquiring Funds.
(b) The Acquiring Funds Class A Shares and the Acquiring Funds
Class B Shares to be issued pursuant to Section 2.6 shall on the Closing Date
be duly registered under the Securities Act by a Registration Statement on Form
N-14 of AIM International then in effect.
(c) The Acquiring Funds Class A Shares and the Acquiring Funds
Class B Shares to be issued pursuant to Section 2.6 are duly authorized and on
the Closing Date will be validly issued and fully paid and non-assessable and
will conform to the description thereof contained in the Registration Statement
on Form N-14 then in effect. At the time of the Reorganizations, the Acquiring
Funds shall not have outstanding any warrants, options, convertible securities
or any other type of right pursuant to which any Person could acquire Acquiring
Funds Class A or Acquiring Funds Class B shares, except for the right of
investors to acquire Acquiring Funds Class A Shares or Acquiring Funds Class B
Shares at net asset value in the normal course of its business as an open-ended
diversified management investment company operating under the Investment
Company Act.
(d) The combined proxy statement/prospectus (the "Combined Proxy
Statement/Prospectus") which forms a part of AIM International's Registration
Statement on Form N-14 shall be furnished to AIM Growth and Acquired Funds
Shareholders entitled to vote at the Acquired Funds Shareholders Meeting. The
Combined Proxy Statement/Prospectus and related Statement of Additional
Information of the Acquiring Funds, when they become effective, shall conform
to the applicable requirements
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of the Securities Act and the Investment Company Act and shall not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not materially misleading,
provided, however, that no representation or warranty is made with respect to
written information provided by AIM Growth for inclusion in the Combined/Proxy
Statement/Prospectus.
(e) The shares of the Acquiring Funds which have been or are being
offered for sale (other than Acquiring Funds Class A Shares and Acquiring Funds
Class B Shares to be issued in connection with the Reorganization) have been
duly registered under the Securities Act by the AIM International Registration
Statement then in effect and have been duly registered, qualified or are exempt
from registration or qualification under the securities laws of each state or
other jurisdiction in which such shares have been or are being offered for
sale, and no action has been taken by AIM International to revoke or rescind
any such registration or qualification.
Section 4.6 Accountants. KPMG Peat Marwick LLP, which has
reported upon the Acquiring Funds Financial Statements
for the period ended December 31, 1997, are independent
public accountants as required by the Securities Act and
the Exchange Act.
Section 4.7 Binding Obligation. This Agreement has been duly
authorized, executed and delivered by AIM International
on behalf of the Acquiring Funds and, assuming this
Agreement has been duly executed and delivered by AIM
Growth, constitutes the legal, valid and binding
obligation of AIM International, enforceable against AIM
International in accordance with its terms from and with
respect to the revenues and assets of the Acquiring
Funds, except as the enforceability hereof may be
limited by bankruptcy, insolvency, reorganization or
similar laws relating to or affecting creditors' rights
generally, or by general equity principles (whether
applied in a court or law or a court of equity and
including limitations on the availability of specific
performance or other equitable remedies).
Section 4.8 No Breaches or Defaults. The execution and
delivery of this Agreement by AIM International on
behalf of the Acquiring Funds and performance by AIM
International of its obligations hereunder have been
duly authorized by all necessary corporate action on the
part of AIM International and (i) do not, and on the
Closing Date will not, result in any violation of the
Charter or by-laws, of AIM International and (ii) do
not, and on the Closing Date will not, result in a
breach of any of the terms or provisions of, or
constitute (with or without the giving of notice or the
lapse of time or both) a default under, or give rise to
a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit
under, or result in the creation or imposition of any
Lien upon any property or assets of the Acquiring Funds
(except for such breaches or defaults or Liens that
would not reasonably be expected, individually or in the
aggregate, to adversely affect the consummation of the
Reorganization) under (A) any indenture, mortgage or
loan or any other
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material agreement or instrument to which AIM
International is a party or by which it may be bound
which relates to the assets of Acquiring Funds or to
which any properties of the Acquiring Funds may be
subject; (B) any Permit; or (C) any existing applicable
law, rule, regulation, judgment, order or decree of any
Governmental Authority having jurisdiction over AIM
International or any of the Acquiring Funds's
properties.
Section 4.9 Authorizations or Consents. Other than those
which shall have been obtained or made on or prior to
the Closing Date, no authorization or approval or other
action by, and no notice to or filing with, any
Governmental Authority will be required to be obtained
or made by AIM International in connection with the due
execution and delivery by AIM International of this
Agreement and the consummation by AIM International of
the transactions contemplated hereby.
Section 4.10 Permits. AIM International has in full force and
effect all Permits necessary for it to conduct its
business as presently conducted as it relates to the
Acquiring Funds, and there has occurred no default under
any Permit, except for the absence of Permits and for
defaults under Permits the absence or default of which
would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect. To the
knowledge of AIM International there are no proceedings
relating to the suspension, revocation or modification
of any Permit, except for such that would not reasonably
be expected, individually or in the aggregate, to have a
Material Adverse Effect.
Section 4.11 No Actions, Suits or Proceedings.
(a) There is no pending action, suit or proceeding, nor, to the
knowledge of AIM International, has any litigation been overtly threatened in
writing or, if probable of assertion, orally, against AIM International before
any Governmental Authority which questions the validity or legality of this
Agreement or of the transactions contemplated hereby, or which seeks to prevent
the consummation of the transactions contemplated hereby, including the
Reorganization.
(b) There are no judicial, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the knowledge of AIM
International, threatened in writing or, if probable of assertion, orally,
against AIM International, affecting any property, asset, interest, or right of
the Acquiring Funds, that could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect with respect to the Acquiring
Funds. There are not in existence on the date hereof any plea agreements,
judgments, injunctions, consents, decrees, exceptions or orders that were
entered by, filed with or issued by Governmental Authority relating to AIM
International's conduct of the business of the Acquiring Funds affecting in any
significant respect the conduct of such business. AIM International is not,
and has not been, to the knowledge of AIM International, the target of any
investigation by the SEC or any state securities administrator with respect to
its conduct of the business of the Acquiring Funds.
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Section 4.12 Taxes.
(a) Each Acquiring Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code. Each Acquiring Fund has
qualified as such for each taxable year since inception that has ended prior to
the Closing Date and will satisfy the requirements of Part I of Subchapter M of
the Code to maintain such qualification for its current taxable year.
(b) Each Acquiring Fund has timely filed all Returns required to
be filed by it and all Taxes with respect thereto have been paid, except where
the failure so to file or so to pay, would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. Adequate
provision has been made in the financial statements of each Acquiring Fund for
all Taxes in respect of all periods ending on or before the date of such
financial statements, except where the failure to make such provisions would
not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. No deficiencies for any Taxes have been proposed,
assessed or asserted in writing by any taxing authority against either
Acquiring Fund, and no deficiency has been proposed, assessed or asserted, in
writing, where such deficiency would reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect. No waivers of the time to
assess any such Taxes are outstanding nor are any written requests for such
waivers pending and no Return of either Acquiring Fund is currently being or
has been audited with respect to income taxes or other Taxes by any Federal,
state, local, or foreign Tax authority.
(c) The fiscal year of each Acquiring Fund has not been changed
for tax purposes since the date on which it commenced operations.
Section 4.13 Brokers. No broker, finder or similar
intermediary has acted for or on behalf of AIM
International or the Acquiring Funds in connection with
this Agreement or the transactions contemplated hereby,
and no broker, finder, agent or similar intermediary is
entitled to any broker's, finder's or similar fee or
other commission in connection therewith based on any
agreement, arrangement or understanding with AIM
International or any action taken by it.
Section 4.14 Representations Concerning the Reorganization.
(a) The Acquiring Funds do not own directly or indirectly, nor
will they have owned at any time during the five-year period ending on the
Closing Date, any shares of the Acquired Funds.
(b) AIM International has no plan or intention to reacquire any of
the Acquiring Funds Class A Shares or the Acquiring Funds Class B Shares issued
in the Reorganization, except to the extent that each Acquiring Fund is
required by the Investment Company Act to redeem any of its shares presented
for redemption at net asset value in the ordinary course of its business as an
open-end, management investment company.
(c) Each Acquiring Fund has no plan or intention to sell or
otherwise dispose of any of the assets of the Acquired Funds acquired in the
Reorganization, other than in the ordinary course of its business and to the
extent necessary to maintain its status as a "regulated investment company"
under the Code.
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(d) Following the Reorganizations, each Acquiring Fund will
continue the "historic business" (within the meaning of Section 1.368-1(d) of
the Income Tax Regulations under the Code) of the Acquired Fund from which such
Acquiring Fund acquired assets in the Reorganization or use a significant
portion of such Acquired Fund's historic business assets in a business.
Section 4.15 Prospectus and Statement of Additional
Information. The current prospectuses and statements of
additional information for the Acquiring Funds as of the
date on which they were issued did not contain, and as
supplemented by any supplement thereto dated prior to or
on the Closing Date do not contain, any untrue statement
of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading.
Section 4.16 Value of Shares. The fair market value of the
Acquiring Funds' Class A Shares received by the Acquired
Funds Shareholders will be approximately equal to the
fair market value of the Acquired Funds' Class A shares
and Advisor Class shares constructively surrendered in
exchange therefor, and the fair market value of the
Acquiring Funds Class B Shares received by the Acquired
Funds Shareholders will be approximately equal to the
fair market value of the Acquired Funds Class B shares
constructively surrendered therefor.
Section 4.17 Intercompany Indebtedness; Consideration. There
is no intercompany indebtedness between AIM Growth and
AIM International that was issued or acquired, or will
be settled, at a discount. No consideration other than
the Acquiring Funds Class A Shares and Acquiring Funds
Class B Shares (and each Acquiring Fund's assumption of
an Acquired Fund's liabilities, including for this
purpose all liabilities to which the assets of each
respective Acquired Fund are subject) will be issued in
exchange for the assets of the Acquired Funds
respectively acquired by the Acquiring Funds in
connection with the Reorganizations. The fair market
value of the assets of each Acquired Fund transferred to
an Acquiring Fund in the Reorganizations will equal or
exceed the sum of the liabilities assumed by such
Acquiring Fund, plus the amount of liabilities, if any,
to which such transferred assets are subject.
ARTICLE 5
COVENANTS
Section 5.1 Conduct of Business.
(a) From the date of this Agreement up to and including the
Closing Date (or, if earlier, the date upon which this Agreement is terminated
pursuant to Article 7), AIM Growth shall conduct the business of the Acquired
Funds only in the ordinary course and substantially in accordance with past
practices, and shall use its reasonable best efforts to preserve intact its
business organization and material assets and maintain the rights, franchises
and business and customer relations necessary to conduct the business of the
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Acquired Funds in the ordinary course in all material respects. Without
limiting the generality of the foregoing, AIM Growth shall not do any of the
following with respect to the Acquired Funds without the prior written consent
of AIM International, which consent shall not be unreasonably withheld:
(i) split, combine or reclassify any of its shares of
beneficial interest or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for its shares
of beneficial interest;
(ii) amend its Agreement and Declaration of Trust or by-laws;
(iii) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division
thereof or any assets that are material, individually or in the
aggregate, to the Acquired Funds taken as a whole, except purchases of
assets in the ordinary course of business consistent with past
practice;
(iv) sell, lease or otherwise dispose of any of its material
properties or assets, or mortgage or otherwise encumber or subject to
any Lien any of its material properties or assets, other than in the
ordinary course of business;
(v) incur any indebtedness for borrowed money or guarantee any
indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the
Acquired Funds, guarantee any debt securities of another Person, enter
into any "keep well" or other agreement to maintain any financial
statement condition of another Person, or enter into any arrangement
having the economic effect of any of the foregoing;
(vi) settle or compromise any material income tax liability or
make any material tax election;
(vii) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course of
business;
(viii) change its methods of accounting, except as required by
changes in generally accepted accounting principles as concurred in by
its independent auditors, or change its fiscal year;
(ix) make or agree to make any material severance,
termination, indemnification or similar payments except pursuant to
existing agreements; or
(x) adopt any Benefit Plan.
(b) From the date of this Agreement up to and including the
Closing Date (or, if earlier, the date upon which this Agreement is terminated
pursuant to Article 7), AIM International shall conduct the business of the
Acquiring Funds only in the ordinary course and substantially in accordance
with past practices, and shall use its reasonable best efforts to preserve
intact its business organization and material assets and maintain the rights,
franchises and business relations necessary to conduct the business operations
of the Acquiring Funds in the ordinary course in all material respects.
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Section 5.2 Announcements. AIM Growth and AIM International
shall consult with each other before issuing any press
release or otherwise making any public statements with
respect to this Agreement and the transactions
contemplated by this Agreement, and neither AIM Growth
nor AIM International shall issue any such press release
or make any public statement without the prior written
approval of the other party to this Agreement, such
approval not to be unreasonably withheld, except as may
be required by law.
Section 5.3 Expenses. The Acquired Funds and the Acquiring
Funds shall each bear the expenses they incur in
connection with this Agreement and the Reorganizations
and other transactions contemplated hereby.
Section 5.4 Further Assurances. Each of the parties hereto
shall execute such documents and other papers and
perform such further acts as may be reasonably required
to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior
to the Closing Date, use its reasonable best efforts to
fulfill or obtain the fulfillment of the conditions
precedent to the consummation of the Reorganizations,
including the execution and delivery of any documents,
certificates, instruments or other papers that are
reasonably required for the consummation of the
Reorganizations.
Section 5.5 Notice of Events. AIM International shall give
prompt notice to AIM Growth, and AIM Growth shall give
prompt notice to AIM International, of (a) the
occurrence or nonoccurrence of any event which to the
knowledge of AIM International or to the knowledge of
AIM Growth, the occurrence or non-occurrence of which
would be likely to result in any of the conditions
specified in (i) in the case of AIM Growth, Sections 6.1
and 6.2 or (ii) in the case of AIM International,
Sections 6.2 and 6.3, not being satisfied so as to
permit the consummation of the Reorganizations and (b)
any material failure on its part, or on the part of the
other party hereto of which it has knowledge, to comply
with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to
this Section 5.5 shall not limit or otherwise affect the
remedies available hereunder to any party.
Section 5.6 Access to Information.
(a) AIM Growth will, during regular business hours and on reasonable
prior notice, allow AIM International and its authorized representatives
reasonable access to the books and records of AIM Growth pertaining to the
assets of the Acquired Funds and to officers of AIM Growth knowledgeable
thereof; provided, however, that any such access shall not significantly
interfere with the business or operations of AIM Growth.
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(b) AIM International will, during regular business hours and on
reasonable prior notice, allow AIM Growth and its authorized representatives
reasonable access to the books and records of AIM International pertaining to
the assets of the Acquiring Funds and to officers of AIM International
knowledgeable thereof; provided, however, that any such access shall not
significantly interfere with the business or operations of AIM International.
Section 5.7 Consents, Approvals and Filings. Each of AIM
Growth and AIM International shall make all necessary
filings, as soon as reasonably practicable, including,
without limitation, those required under the Securities
Act, the Exchange Act, the Investment Company Act and
the Advisers Act, in order to facilitate prompt
consummation of the Reorganizations and the other
transactions contemplated by this Agreement. In
addition, each of AIM Growth and AIM International shall
use its reasonable best efforts, and shall cooperate
fully with each other (i) to comply as promptly as
reasonably practicable with all requirements of
Governmental Authorities applicable to the
Reorganizations and the other transactions contemplated
herein and (ii) to obtain as promptly as reasonably
practicable all necessary permits, orders or other
consents of Governmental Authorities and consents of all
third parties necessary for the consummation of the
Reorganizations and the other transactions contemplated
herein. Each of AIM Growth and AIM International shall
use reasonable efforts to provide such information and
communications to Governmental Authorities as such
Governmental Authorities may request.
Section 5.8 Submission of Agreement to Shareholders. AIM
Growth shall take all action necessary in accordance
with applicable law and its Agreement and Declaration of
Trust and by-laws to convene the Acquired Funds
Shareholders Meeting. AIM Growth shall, through its
Board of Trustees, recommend to the Acquired Funds
Shareholders approval of this Agreement and the
transactions contemplated by this Agreement. AIM Growth
shall use its reasonable best efforts to hold the
Acquired Funds Shareholders Meeting as soon as
practicable after the date hereof.
ARTICLE 6
CONDITIONS PRECEDENT TO THE REORGANIZATION
Section 6.1 Conditions Precedent of AIM International. The
obligation of AIM International to consummate the
Reorganizations is subject to the satisfaction, at or
prior to the Closing Date, of all of the following
conditions, any one or more of which may be waived in
writing by AIM International.
(a) The representations and warranties of AIM Growth on behalf of
the Acquired Funds set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date
with the same effect as though all such representations and warranties had been
made as of the Closing Date.
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(b) AIM Growth shall have complied with and satisfied in all
material respects all agreements and conditions set forth herein on its part to
be performed or satisfied at or prior to the Closing Date.
(c) AIM International shall have received at the Closing Date (i)
a certificate, dated as of the Closing Date, from an officer of AIM Growth on
behalf of AIM Growth, in such individual's capacity as an officer of AIM Growth
and not as an individual, to the effect that the conditions specified in
Section 6.1(a) and (b) have been satisfied and (ii) a certificate, dated as of
the Closing Date, from the Secretary or Assistant Secretary of AIM Growth
certifying as to the accuracy and completeness of the attached Agreement and
Declaration of Trust and by-laws of AIM Growth, and resolutions, consents and
authorizations of or regarding AIM Growth, with respect to the execution and
delivery of this Agreement and the transactions contemplated hereby.
(d) AIM International shall have received the signed opinion of
Kirkpatrick & Lockhart LLP, counsel to AIM Growth, or other counsel reasonably
acceptable to AIM International, in form and substance reasonably acceptable to
counsel for AIM International, as to the matters set forth in Schedule 6.1(d).
(e) The dividend or dividends described in the last sentence of
Section 3.14(a) shall have been declared.
Section 6.2 Mutual Conditions. The obligations of AIM Growth
and AIM International to consummate the Reorganizations
are subject to the satisfaction, at or prior to the
Closing Date, of all of the following further
conditions, any one or more may be waived in writing by
AIM Growth, and AIM International, but only if and to
the extent that such waiver is mutual.
(a) All filings required to be made prior to the Closing Date
with, and all consents, approvals, permits and authorizations required to be
obtained on or prior to the Closing Date from Governmental Authorities, in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein by AIM Growth and AIM
International shall have been made or obtained, as the case may be; provided,
however, that such consents, approvals, permits and authorizations may be
subject to conditions that would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(b) This Agreement, the Reorganization of AIM International Growth
Fund and related matters shall have been approved and adopted at the Acquired
Funds Shareholders Meeting by the shareholders of AIM International Growth Fund
on the record date by the Required Acquired Funds Shareholder Vote, and this
Agreement, the Reorganization of AIM Worldwide Growth Fund and related matters
shall have been approved and adopted at the Acquired Funds Shareholders Meeting
by the shareholders of AIM Worldwide Growth Fund on the record date by the
Required Acquired Funds Shareholder Vote.
(c) The assets of each of the Acquired Funds to be acquired by the
respective Acquiring Funds shall constitute at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the gross
assets held by such Acquired Fund immediately prior to the Reorganization. For
purposes
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of this Section 6.2(c), assets used by an Acquired Fund to pay the expenses it
incurs in connection with this Agreement and the Reorganization and to effect
all shareholder redemptions and distributions (other than regular, normal
dividends and regular, normal redemptions pursuant to the Investment Company
Act, and not in excess of the requirements of Section 852 of the Code,
occurring in the ordinary course of such Acquired Fund's business as an
open-end diversified management investment company) after the date of this
Agreement shall be included as assets of such Acquired Fund held immediately
prior to the Reorganization.
(d) No temporary restraining order, preliminary or permanent
injunction or other order issued by any Governmental Authority preventing the
consummation of the Reorganizations on the Closing Date shall be in effect;
provided, however, that the party or parties invoking this condition shall use
reasonable efforts to have any such order or injunction vacated.
(e) The Registration Statement on Form N-14 filed by AIM
International with respect to the Acquiring Funds Class A Shares and the
Acquiring Funds Class B Shares to be issued to Acquired Funds Shareholders in
connection with the Reorganizations shall have become effective under the
Securities Act and no stop order suspending the effectiveness thereof shall
have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the Securities Act.
(f) AIM Growth and AIM International shall have received on or
before the Closing Date an opinion of Ballard Spahr Andrews & Ingersoll, LLP in
form, scope and substance satisfactory to AIM Growth and AIM International, set
forth on Schedule 6.2(f).
(g) The dividend or dividends described in the last sentence of
Section 3.14(a) shall have been declared.
Section 6.3 Conditions Precedent of AIM Growth. The
obligation of AIM Growth to consummate the
Reorganization is subject to the satisfaction, at or
prior to the Closing Date, of all of the following
conditions, any one or more of which may be waived in
writing by AIM Growth.
(a) The representations and warranties of AIM International on
behalf of the Acquiring Funds set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date with the same effect as though all such representations and
warranties had been made as of the Closing Date.
(b) AIM International shall have complied with and satisfied in
all material respects all agreements and conditions set forth herein on its
part to be performed or satisfied at or prior to the Closing Date.
(c) AIM Growth shall have received on the Closing Date (i) a
certificate, dated as of the Closing Date, from an officer of AIM International
on behalf of AIM International, in such individual's capacity as an officer of
AIM International and not as an individual, to the effect that the conditions
specified in Sections 6.3(a) and (b) have been satisfied and (ii) a
certificate, dated as of the Closing Date, from the Secretary or Assistant
Secretary of AIM International certifying as to the accuracy and completeness
of the attached Charter and by-laws, as amended, of AIM International and
resolutions, consents and authorizations of or regarding AIM International with
respect to the execution and delivery of this Agreement and the transactions
contemplated hereby.
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(d) AIM Growth shall have received the signed opinion of Ballard
Spahr Andrews & Ingersoll, LLP, counsel to AIM International, or other counsel
reasonably acceptable to AIM Growth, in form and substance reasonably
acceptable to counsel for AIM International, as to the matters set forth on
Schedule 6.3(d).
Section 6.4 Transactions Independent. AIM International and
AIM Growth agree that consummation of the Reorganization
of AIM International Growth Fund is not conditioned upon
consummation of the Reorganization of AIM Worldwide
Growth Fund, and that consummation of the Reorganization
of AIM Worldwide Growth is not conditioned upon
consummation of the Reorganization of AIM International
Growth Fund. Accordingly, the occurrence or
non-occurrence of an event that would result in any of
the conditions precedent to the Reorganization of AIM
International Fund not being satisfied will not absolve
the parties of their obligation under this Agreement to
consummate the Reorganization of AIM Worldwide Growth
Fund (assuming that all of the conditions precedent to
the Reorganization of AIM Worldwide Growth Fund had been
satisfied), and the occurrence or non-occurrence of an
event that would result in any of the conditions
precedent to the Reorganization of AIM Worldwide Growth
Fund not being satisfied will not absolve the parties of
their obligation under this Agreement to consummate the
Reorganization of AIM International Growth Fund
(assuming that all of the conditions precedent to the
Reorganization of AIM International Growth Fund have
been satisfied).
ARTICLE 7
TERMINATION OF AGREEMENT
Section 7.1 Termination.
(a) This Agreement may be terminated in whole or with respect to
one of the Reorganizations described herein on or prior to the Closing Date as
follows:
(i) by mutual written consent of AIM Growth and AIM
International; or
(ii) at the election of AIM Growth or AIM International:
(A) if the Closing Date shall not be on or before
April 30, 1999, or such later date as the parties hereto may
agree upon, unless the failure to consummate the
Reorganizations is the result of a willful and material breach
of this Agreement by the party seeking to terminate this
Agreement;
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(B) if, upon a vote at Acquired Funds
Shareholders Meeting or any adjournment thereof, the Required
Acquired Funds Shareholder Vote shall not have been obtained
as contemplated by Section 5.8; or
(C) if any Governmental Authority shall have
issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting
the Reorganizations and such order, decree, ruling or other
action shall have become final and nonappealable.
(b) The termination of this Agreement shall be effectuated by the
delivery by the terminating party to the other party of a written notice of
such termination.
Section 7.2 Survival After Termination. If this Agreement is
terminated in accordance with Section 7.1 hereof and the
transactions contemplated hereby are not consummated,
this Agreement shall become void and of no further force
and effect, except for the provisions of Section 5.3.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Survival of Representations and Warranties. The
representations, warranties and covenants in this
Agreement or in any certificate or instrument delivered
pursuant to this Agreement shall survive the
consummation of the transactions contemplated hereunder
for a period of three (3) years following the Closing
Date.
Section 8.2 Law Governing. This Agreement shall be construed
and interpreted according to the laws of the State of
Delaware applicable to contracts made and to be
performed wholly within such state.
Section 8.3 Binding Effect, Persons Benefitting, No
Assignment. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and the
respective successors and assigns of the parties and
such Persons. Nothing in this Agreement is intended or
shall be construed to confer upon any entity or Person
other than the parties hereto and their respective
successors and permitted assigns any right, remedy or
claim under or by reason of this Agreement or any part
hereof. Without the prior written consent of the
parties hereto, this Agreement may not be assigned by
any of the parties hereto.
Section 8.4 Obligations of AIM International and AIM Growth.
(a) AIM Growth and AIM International hereby acknowledge and agree
that the Acquiring Funds are separate investment portfolios of AIM
International, that AIM International is executing this Agreement on behalf of
the Acquiring Funds, and that any amounts payable by AIM International under or
in connection with this Agreement shall be payable solely from the revenues and
assets of the Acquiring
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<PAGE> 76
Funds. AIM Growth further acknowledges and agrees that this Agreement has been
executed by a duly authorized officer of AIM International in his or her
capacity as an officer of AIM International intending to bind AIM International
as provided herein, and that no officer, director or shareholder of AIM
International shall be personally liable for the liabilities or obligations of
AIM International incurred hereunder.
(b) AIM Growth and AIM International hereby acknowledge and agree
that the Acquired Funds are separate investment portfolios of AIM Growth, that
AIM Growth is executing this Agreement on behalf of the Acquired Funds and that
any amounts payable by AIM Growth under or in connection with this Agreement
shall be payable solely from the revenues and assets of the Acquired Funds.
AIM International further acknowledges and agrees that this Agreement has been
executed by a duly authorized officer of AIM Growth in his or her capacity as
an officer of AIM Growth intending to bind AIM Growth as provided herein, and
that no officer, trustee or shareholder of AIM Growth shall be personally
liable for the liabilities of AIM Growth incurred hereunder.
Section 8.5 Amendments. This Agreement may not be amended,
altered or modified except by a written instrument
executed by AIM Growth and AIM International.
Section 8.6 Enforcement. The parties agree irreparable
damage would occur in the event that any of the
provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement
in any court of the United States or any state having
jurisdiction, in addition to any other remedy to which
they are entitled at law or in equity.
Section 8.7 Interpretation. When a reference is made in this
Agreement to a Section or Schedule, such reference shall
be to a Section of, or a Schedule to, this Agreement
unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference
purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed
by the words "without limitation". Each representation
and warranty contained in Article 3 or 4 that relates to
a general category of a subject matter shall be deemed
superseded by a specific representation and warranty
relating to a subcategory thereof to the extent of such
specific representation or warranty.
Section 8.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original
and each of which shall constitute one and the same
instrument.
Section 8.9 Entire Agreement; Schedules. This Agreement,
including the Schedules, certificates and lists referred
to herein, and any documents executed by the parties
simultaneously herewith or pursuant thereto,
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<PAGE> 77
constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and
understandings, written or oral, between the parties
with respect to such subject matter.
Section 8.10 Notices. All notices, requests, demands and
other communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered
by hand or by overnight courier, two days after being
sent by registered mail, return receipt requested, or
when sent by telecopier (with receipt confirmed),
provided, in the case of a telecopied notice, a copy is
also sent by registered mail, return receipt requested,
or by courier, addressed as follows (or to such other
address as a party may designate by notice to the
other):
(a) If to AIM Growth:
AIM Growth Series
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attn: Carol F. Relihan, Esq.
Fax: (713) 993-9185
with a copy to:
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Attn: William H. Rheiner, Esq.
Fax: (215) 864-8999
(b) If to AIM International:
AIM International Funds, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attn: Carol F. Relihan, Esq.
Fax: (713) 993-9185
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with a copy to:
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Attn: William H. Rheiner, Esq.
Fax: (215) 864-8999
Section 8.11 Representations by AIM Advisors. In its capacity
as investment adviser to AIM Growth, AIM Advisors
represents to AIM International that to the best of its
knowledge the representations and warranties of AIM
Growth and the Acquired Funds contained in this
Agreement are true and correct as of the date of this
Agreement. In its capacity as investment adviser to AIM
International, AIM Advisors represents to AIM Growth
that to the best of its knowledge the representations
and warranties of AIM International and the Acquiring
Funds contained in this Agreement are true and correct
as of the date of this Agreement. For purposes of this
Section 8.11, the best knowledge standard shall be
deemed to mean that the officers of AIM Advisors who
have substantive responsibility for the provision of
investment advisory services to AIM Growth and AIM
International do not have actual knowledge to the
contrary.
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<PAGE> 79
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
AIM GROWTH SERIES, acting
on behalf of AIM International Growth
Fund and AIM World Wide Growth Fund
By:
-------------------------------------
AIM INTERNATIONAL FUNDS, INC., acting
on behalf of AIM International Equity
Fund and AIM Global Growth Fund
By:
-------------------------------------
A I M Advisors, Inc.
By:
-------------------------------------
<PAGE> 80
Schedule 6.1(d)
Opinion of Counsel to AIM International
1. AIM International is a corporation validly existing and in
good standing under the Maryland General Corporation Law.
2. AIM International is an open-end, management investment
company registered under the Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by
AIM International have been duly authorized and approved by
all requisite corporate action on the part of AIM
International. The Agreement has been duly executed and
delivered by AIM International and constitutes the valid and
binding obligation of the Acquired Funds.
4. The Acquired Funds Shares outstanding on the date hereof have
been duly authorized and validly issued, are fully paid and
are non-assessable.
5. AIM International is not required to submit any notice, report
or other filing with or obtain any authorization, consent or
approval from any governmental authority or self regulatory
organization prior to the consummation of the transactions
contemplated by the Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer
who is the current primary contact for AIM International or who has devoted
substantive attention on behalf of AIM International during the preceding
twelve months and who is still currently employed by or is currently a member
of this firm, no litigation or governmental proceeding is pending or threatened
in writing against the Acquired Funds (i) with respect to the Agreement or (ii)
which involves in excess of $500,000 in damages.
<PAGE> 81
Schedule 6.2(f)
Tax Opinions
(i) The transfer of the assets of each of the Acquired Funds to
each respective Acquiring Fund in exchange for the Acquiring Funds Shares
distributed directly to the Acquired Funds Shareholders, as provided in the
Agreement, will constitute a "reorganization" within the meaning of Section
368(a) of the Code and that each of the Acquired Funds and each of the
Acquiring Funds will be a "party to a reorganization" within the meaning of
368(b) of the Code.
(ii) In accordance with Section 361(a) and Section 361(c)(1) of the
Code, no gain or loss will be recognized by each of the Acquired Funds on the
transfer of its assets to each respective Acquiring Fund solely in exchange for
Acquiring Funds Class A Shares and Acquiring Funds Class B Shares or on the
distribution of Acquiring Funds Class A Shares and Class B Shares to the
Acquired Funds Shareholders.
(iii) In accordance with Section 1032 of the Code, no gain or loss
will be recognized by each Acquiring Fund upon the receipt of assets of each
respective the Acquired Fund in exchange for Acquiring Funds Class A Shares and
Money Market Class B Shares issued directly to the Acquired Funds Shareholders.
(iv) In accordance with Section 354(a)(1) of the Code, no gain or
loss will be recognized by Acquired Funds Shareholders on the receipt of
Acquiring Funds Class A Shares and Acquiring Funds Class B Shares in exchange
for Acquired Funds Shares of each respective Acquired Fund.
(v) In accordance with Section 362(b) of the Code, the basis to
each Acquiring Fund of the assets of each respective Acquired Fund transferred
to it will be the same as the basis of such assets in the hands of such
Acquired Funds immediately prior to the Reorganizations.
(vi) In accordance with Section 358(a) of the Code, an Acquired
Funds Shareholder's basis for Acquiring Funds Class A Shares and Acquiring
Funds Class B Shares received by such Acquired Funds Shareholder will be the
same as his basis for Acquired Funds Shares of each respective Acquired Fund
exchanged therefor.
(vii) In accordance with Section 1223(1) of the Code, an Acquired
Funds Shareholder's holding period for Acquiring Funds Class A Shares and
Acquired Funds Class B Shares will be determined by including such Acquired
Funds Shareholder's holding period for the Acquired Funds Shares of each
respective Acquired Fund exchanged therefor, provided that Acquired Funds
Shareholder held such Acquired Funds Shares as a capital asset.
(viii) In accordance with Section 1223(2) of the Code, the holding
period with respect to the assets of each Acquired Fund transferred to each
respective Acquiring Fund in the Reorganizations will include the holding
period for such assets in the hands of such Acquired Fund.
<PAGE> 82
Schedule 6.3(d)
Opinion of Counsel to AIM Growth
1. AIM Growth is duly organized and validly existing as a
business trust under the Delaware Business Trust Act.
2. AIM Growth is an open-end, management investment company
registered under the Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by
AIM Growth have been duly authorized and approved by all
requisite trust action on the part of AIM Growth. The
Agreement has been duly executed and delivered by AIM Growth
and constitutes the valid and binding obligation of the
Acquiring Funds.
4. The Acquired Funds Shares outstanding on the date hereof have
been duly authorized and validly issued, are fully paid and
are non-assessable.
5. AIM Growth is not required to submit any notice, report or
other filing with or obtain any authorization, consent or
approval from any governmental authority or self regulatory
organization prior to the consummation of the transactions
contemplated by the Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer
who is the current primary contact for AIM Growth or who has devoted
substantive attention on behalf of AIM Growth during the preceding twelve
months and who is still currently employed by or is currently a member of this
firm, no litigation or governmental proceeding is pending or threatened in
writing against the Acquiring Funds (i) with respect to the Agreement or (ii)
which involves in excess of $500,000 in damages.
<PAGE> 83
APPENDIX II
AIM INTERNATIONAL FUNDS, INC.
AIM International Equity Fund
Supplement dated July 1, 1998
to the Prospectus dated February 20, 1998
The third sentence in the second paragraph under the caption "HEDGING STRATEGIES
AND OTHER INVESTMENT TECHNIQUES--Options" on page 10 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 TECHNIQUES," after "Investment in Other Investment
Companies" on page 12 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 "RISK
FACTORS--Currency Risk" on page 12:
"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
<PAGE> 84
existing currency with the euro on July 1, 2002. Any other European
country which is a 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."
<PAGE> 85
[AIM LOGO THE AIM FAMILY OF FUNDS--Registered Trademark--
APPEARS HERE]
AIM INTERNATIONAL EQUITY FUND
(A SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.)
PROSPECTUS
FEBRUARY 20, 1998
AIM INTERNATIONAL EQUITY FUND (the "Fund") is a diversified, series
investment portfolio of AIM International Funds, Inc. (the
"Company"), an open-end, series, management investment company. The
Fund seeks to provide long-term growth of capital by investing in a
diversified portfolio of international equity securities, the issuers
of which are considered by the Fund's investment advisor to have
strong earnings momentum. There is no assurance that the Fund will
attain its investment objective.
This Prospectus sets forth basic information about the Fund that
prospective investors should know before investing. It should be read
and retained for future reference. A Statement of Additional
Information, dated February 20, 1998, has been filed with the United
States Securities and Exchange Commission (the "SEC") and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the
Company at P.O. Box 4739, Houston, Texas 77210-4739 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material
incorporated by reference, and other information regarding the Fund.
Additional information about the Fund may also be obtained on the Web
at http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 86
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.................................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF
THE FUND................................. 4 FUNDS--Registered Trademark--.......... A-1
Table of Fees and Expenses............. 4 Introduction to The AIM Family of
Financial Highlights................... 6 Funds............................... A-1
Performance............................ 8 How to Purchase Shares................. A-1
Investment Objective and Policies...... 9 Terms and Conditions of Purchase of the
Hedging Strategies and Other Investment AIM Funds........................... A-2
Techniques.......................... 10 Special Plans.......................... A-9
Risk Factors........................... 12 Exchange Privilege..................... A-11
Investment Restrictions................ 13 How to Redeem Shares................... A-13
Management............................. 13 Determination of Net Asset Value....... A-17
Organization of the Company............ 16 Dividends, Distributions and Tax
Matters............................. A-18
General Information.................... A-20
APPLICATION INSTRUCTIONS................. B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND. AIM International Funds, Inc. (the "Company") is a Maryland
corporation organized as an open-end, series, management investment company.
Currently the Company offers six separate series portfolios. This Prospectus
relates to AIM INTERNATIONAL EQUITY FUND (the "Fund"). The Company also offers
other classes of shares in five other investment portfolios, AIM ASIAN GROWTH
FUND ("ASIAN FUND"), AIM EUROPEAN DEVELOPMENT FUND ("EUROPEAN FUND"), AIM GLOBAL
AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"), AIM GLOBAL GROWTH FUND
("GROWTH FUND") and AIM GLOBAL INCOME FUND ("INCOME FUND"), (collectively, with
AIM INTERNATIONAL EQUITY FUND, the "Funds") each of which pursues unique
investment objectives. All such other Funds offer multiple classes of shares to
different types of investors. The shares of the other Funds of the Company have
different sales charges and expenses, which may affect performance. To obtain
information about ASIAN FUND, EUROPEAN FUND, AGGRESSIVE GROWTH FUND, GROWTH
FUND, or INCOME FUND, call (800) 347-4246. See "General Information."
The investment objective of the Fund is to provide long-term growth of capital
by investing in a diversified portfolio of international equity securities the
issuers of which are considered by the Fund's investment advisor to have strong
earnings momentum. Any income realized by the Fund will be incidental and will
not be an important criterion in the selection of portfolio securities. Under
normal market conditions, the Fund will invest at least 70% of its total assets
in marketable equity securities (including common and preferred stock,
depositary receipts for stock and other securities having the characteristics of
stock) of companies located outside the United States ("foreign companies")
which are listed on a recognized foreign securities exchange or traded in a
foreign over-the-counter market. The Fund may also invest up to 20% of its total
assets in securities exchangeable for or convertible into equity securities of
foreign companies which are listed on a recognized foreign securities exchange
or traded on a foreign over-the-counter market. Under normal market conditions,
the Fund's assets will be invested in the securities of foreign companies
located in at least four countries outside the United States. The Fund will
emphasize investment in foreign companies in the developed countries of Western
Europe and the Pacific Basin and may also invest to a limited extent in the
securities of companies located in developing countries in various regions of
the world.
Over the past 30 years, securities of foreign companies ("foreign securities")
have offered generally higher levels of capital growth than similar investments
in the United States. The Fund's investment advisor believes that investment in
foreign securities offers significant potential for long-term capital
appreciation. Also, foreign equity markets often do not move in step with each
other or with domestic equity markets. The Fund's investment advisor believes
that a portfolio invested in a number of markets worldwide should thus achieve
better long-term results for investors than one which is subject to the
movements of a single market.
The Fund intends to achieve its investment objective by using a fully managed
investment policy providing for the selection of securities. The Fund will also
seek to spread its investments among countries or regions in accordance with the
investment advisor's assessment of prospects for relative economic growth,
political conditions, currency exchange fluctuations and other relevant factors.
For more complete information on the Fund's investment objective, policies and
strategies, see "Investment Objective and Policies" and "Hedging Strategies and
Other Investment Techniques."
RISK FACTORS. THE FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING
INTERNATIONAL DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH
INVESTMENT IN FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND
ECONOMIC RISK, REGULATORY RISK AND MARKET RISK. IT IS NOT DESIGNED AS A COMPLETE
INVESTMENT PROGRAM. FOR A DISCUSSION OF THESE RISKS, SEE "RISK FACTORS."
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Fund's investment
advisor pursuant to an investment advisory agreement (the "Advisory Agreement").
AIM, together with its subsidiaries, manages or advises over 50 investment
company portfolios encompassing a broad range of investment objectives. Under
the terms of the Advisory Agreement, AIM supervises all aspects of the
2
<PAGE> 87
Fund's operations and provides investment advisory services to the Fund. As
compensation for these services, AIM receives a fee based on the Fund's average
daily net assets. Under an administrative services agreement (the
"Administrative Services Agreement"), AIM is reimbursed by the Fund for its
costs of performing, or arranging for the performance of, certain accounting and
other administrative services for the Fund. Under a transfer agency and service
agreement ("the Transfer Agency and Service Agreement"), A I M Fund Services,
Inc. ("AFS"), AIM's wholly owned subsidiary and a registered transfer agent,
receives a fee for its provision of transfer agency, dividend distribution and
disbursement and shareholder services for the Fund.
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A, Class B or Class C
shares of the Fund which are offered by this Prospectus at an offering price
that reflects differing sales charges and expense levels. See "Terms and
Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer
Concessions."
Class A Shares -- Shares are offered at net asset value plus any
applicable initial sales charge.
Class B Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a maximum contingent deferred
sales charge of 5% on certain redemptions made within six years of the date
on which a purchase was made. Class B shares automatically convert to Class
A shares of the Fund eight years following the end of the calendar month in
which a purchase was made. Class B shares are subject to higher expenses
than Class A shares.
Class C Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a contingent deferred sales charge
of 1% on certain redemptions made within one year of the date such shares
were purchased. Class C shares are subject to higher expenses than Class A
shares.
SUITABILITY FOR INVESTORS. The Multiple Distribution System permits an
investor to choose the method of purchasing shares that is most beneficial given
the amount of the purchase, the length of time the shares are expected to be
held, whether dividends will be paid in cash or reinvested in additional shares
of the Fund and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the Fund, the accumulated
distribution fees and any applicable contingent deferred sales charges on Class
B shares prior to conversion or Class C shares would be less than the initial
sales charge and accumulated distribution fees on Class A shares purchased at
the same time, and to what extent such differential would be offset by the
higher return on Class A shares. To assist investors in making this
determination, the table under the caption "Table of Fees and Expenses" sets
forth examples of the charges applicable to each class of shares. Class A shares
will normally be more beneficial than Class B shares or Class C shares to the
investor who qualifies for reduced initial sales charges, as described below.
Therefore, A I M Distributors, Inc. ("AIM Distributors") intends to reject any
order for purchase of more than $250,000 for Class B shares.
PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Fund's shares is A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. See "How to Purchase Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Fund is one of several mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of the Fund may be exchanged for shares of other funds in The AIM
Family of Funds in the manner and subject to the policies and charges set forth
herein. See "Exchange Privilege."
REDEEMING SHARES. Holders of Class A shares may redeem all or a portion of
their shares at net asset value on any business day, generally without charge. A
contingent deferred sales charge of 1% may apply to certain redemptions of Class
A shares, where purchases of $1 million or more are made at net asset value. See
"How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
Holders of Class B shares may redeem all or a portion of their shares at net
asset value on any business day, less a contingent deferred sales charge for
redemptions made within six years following the date on which a purchase was
made. Class B shares redeemed after six years following the date of purchase
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Holders of Class C shares of the Fund may redeem all or a portion of their
shares at net asset value on any business day, less a 1% contingent deferred
sales charge for redemptions made within one year from the date such shares were
purchased. Class C shares redeemed after one year from the date such shares were
purchased will not be subject to any contingent deferred sales charge. See "How
to Redeem Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund declares and pays dividends from net investment
income, if any, and makes distributions of realized capital gains, if any, on an
annual basis. Dividends and distributions of the Fund may be reinvested at net
asset value without payment of a sales charge in the Fund's shares or may be
invested in shares of the other funds in The AIM Family of Funds. See
"Dividends, Distributions and Tax Matters" and "Special Plans."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 88
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Fund understand the
various costs that an investor will bear, both directly and indirectly. The fees
and expenses for Class A and Class B shares set forth in the table are based on
the average net assets of the respective classes of the Fund for the year ended
October 31, 1997. The fees and expenses for Class C shares set forth in the
table are based on the estimated average net assets of Class C shares of the
Fund for the period August 4 (date sales commenced) to October 31, 1997. The
rules of the SEC require that the maximum sales charge be reflected in the
table, even though certain investors may qualify for reduced sales charges. See
"How to Purchase Shares."
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchase of shares (as a %
of offering price)...................................... 5.50% None None
Maximum sales load on reinvested dividends and
distributions........................................... None None None
Deferred sales load (as a % of original purchase price or
redemption proceeds, whichever is lower)................ None* 5.00% 1.00%
Redemption fee............................................ None None None
Exchange fee.............................................. None None None
Annual Fund Operating Expenses (as a % of average net
assets)
Management fees** (after fee waivers)..................... 0.89% 0.89% 0.89%
Rule 12b-1 distribution plan payments..................... 0.30% 1.00% 1.00%
Other expenses............................................ 0.28% 0.36% 0.36%
----- ----- -----
Total fund operating expenses**....................... 1.47% 2.25% 2.25%
===== ===== =====
</TABLE>
- ------------
* Purchases of $1 million or more are not subject to an initial sales charge.
HOWEVER, A CONTINGENT DEFERRED SALES CHARGE OF 1% APPLIES TO CERTAIN
REDEMPTIONS MADE WITHIN 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED.
See the Investor's Guide, under the caption "How to Redeem Shares --
Contingent Deferred Sales Charge Program for Large Purchases."
** If management fees had not been waived, the management fees would have been
0.93% and total fund operating expenses would have been 1.51%, 2.28% and
2.28% for the Class A shares, Class B shares and Class C shares,
respectively.
EXAMPLES. An investor in the Fund would pay the following expenses on a $1,000
investment in Class A shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<S> <C>
1 year.................................................... $ 69
3 years................................................... $ 99
5 years................................................... $131
10 years.................................................. $221
</TABLE>
THE EXAMPLES ABOVE ASSUME PAYMENT OF A SALES CHARGE AT THE TIME OF PURCHASE;
ACTUAL EXPENSES MAY VARY FOR PURCHASES OF $1 MILLION OR MORE, WHICH ARE MADE AT
NET ASSET VALUE AND ARE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE FOR 18
MONTHS FOLLOWING THE DATE SUCH SHARES WERE PURCHASED.
An investor in the Fund would pay the following expenses on a $1,000
investment in Class B shares of the Fund, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<S> <C>
1 year................................................... $ 73
3 years.................................................. $100
5 years.................................................. $140
10 years.................................................. $239*
</TABLE>
An investor in the Fund would pay the following expenses on the same $1,000
investment in Class B shares, assuming no redemption at the end of each time
period.
<TABLE>
<S> <C>
1 year................................................... $ 23
3 years.................................................. $ 70
5 years.................................................. $120
10 years.................................................. $239*
</TABLE>
- ------------
* Reflects the conversion to Class A shares eight years following the end of the
calendar month in which a purchase was made; therefore years nine and ten
reflect Class A expenses.
4
<PAGE> 89
An investor would pay the following expenses on a $1,000 investment in Class C
shares of the Fund, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<S> <C>
1 year.................................................... $33
3 years................................................... $70
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Fund, assuming no redemption at the end of each time
period.
<TABLE>
<S> <C>
1 year.................................................... $23
3 years................................................... $70
</TABLE>
As a result of 12b-1 fees, a long-term shareholder in the Fund may pay more
than the economic equivalent of the maximum front-end sales charges permitted by
rules of the National Association of Securities Dealers, Inc. Given the maximum
front-end sales charge applicable to Class A shares and the Rule 12b-1 fees
applicable to Class A shares, Class B shares and Class C shares, it is estimated
that it would require a substantial number of years to exceed the maximum
permissible front-end sales charges.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF THE FUND'S
ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN. In
addition, while the examples assume a 5% annual return, the Fund's actual
performance will vary and may result in an actual return that is greater or less
than 5%. The examples assume reinvestment of all dividends and distributions and
that the percentage amounts for total fund operating expenses remain the same
for each year.
5
<PAGE> 90
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below are per share income and capital changes for a Class A share of
the Fund outstanding during each of the years in the five-year period ended
October 31, 1997, and the period April 7, 1992 (effective date of registration
statement) through October 31, 1992, and for a Class B share of the Fund
outstanding during each of the years in the three-year period ended October 31,
1997 and the period September 15, 1994 (date sales commenced) through October
31, 1994 and for a Class C share of the Fund outstanding during the period
August 4, 1997 (date sales commenced) through October 31, 1997. The information
has been audited by KPMG Peat Marwick LLP, independent auditors, whose
unqualified report on the Fund's financial statements and the related notes
appears in the Statement of Additional Information.
<TABLE>
<CAPTION>
PERIOD
APRIL 7, 1992
YEAR ENDED OCTOBER 31, THROUGH
----------------------------------------------------------- OCTOBER 31,
1997 1996 1995 1994 1993 1992
---------- ---------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARE
Net asset value, beginning of period....... $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88 $ 8.74(h)
Income from investment operations:
Net investment income.................... 0.04(a) 0.04(a) 0.01 0.02 0.02 0.01
Net gains on securities (both realized
and unrealized)........................ 1.68 2.07 0.62 1.31 3.29 0.13
---------- ---------- -------- -------- -------- --------
Total from investment operations......... 1.72 2.11 0.63 1.33 3.31 0.14
---------- ---------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income..... (0.02) (0.01) (0.04) (0.01) (0.01) --
Distributions from net realized gains.... (0.43) (0.38) (0.44) -- -- --
---------- ---------- -------- -------- -------- --------
Total distributions...................... (0.45) (0.39) (0.48) (0.01) (0.01) --
---------- ---------- -------- -------- -------- --------
Net asset value, end of period............. $ 16.64 $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88
========== ========== ======== ======== ======== ========
Total return(b)............................ 11.43% 15.79% 5.24% 10.94% 37.36% 1.65%
========== ========== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................... $1,577,390 $1,108,395 $654,764 $708,159 $372,282 $122,663
========== ========== ======== ======== ======== ========
Ratio of expenses to average net
assets(c).............................. 1.47%(d)(e) 1.58% 1.67% 1.64% 1.78% 1.85%(i)
========== ========== ======== ======== ======== ========
Ratio of net investment income to average
net assets(f).......................... 0.24%(d) 0.25% 0.10% 0.22% 0.28% 0.27%(i)
========== ========== ======== ======== ======== ========
Portfolio turnover rate.................. 50% 66% 68% 67% 62% 23%
========== ========== ======== ======== ======== ========
Average brokerage commission rate(g)..... $ 0.0168 $ 0.0192 N/A N/A N/A N/A
========== ========== ======== ======== ======== ========
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than 1 year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements are
1.51%, 1.60%, 1.68 and 1.89% (annualized), respectively for 1997-1995 and
1992.
(d) Ratios are based on average net assets of $1,416,524,861.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(f)After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements are 0.20%, 0.22%, 0.09% and 0.22% (annualized), respectively
for 1997-1995 and 1992.
(g)The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(h)Net asset value at 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.
(i)Annualized.
6
<PAGE> 91
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
----------------------------------- OCTOBER 31,
1997 1996 1995 1994
-------- -------- ------- -------------
<S> <C> <C> <C> <C>
CLASS B SHARE
Net asset value, beginning of period..................... $ 15.13 $ 13.54 $ 13.49 $ 13.42
Income from investment operations:
Net investment income (loss)........................... (0.09)(a) (0.07)(a) (0.09) (0.01)
Net gains on securities (both realized and
unrealized).......................................... 1.66 2.04 0.61 0.08
-------- -------- ------- -------
Total from investment operations....................... 1.57 1.97 0.52 0.07
-------- -------- ------- -------
Less distributions:
Dividends from net investment income................... -- -- (0.03) --
Distributions from net realized gains.................. (0.43) (0.38) (0.44) --
-------- -------- ------- -------
Total distributions.................................... (0.43) (0.38) (0.47) --
-------- -------- ------- -------
Net asset value, end of period........................... $ 16.27 $ 15.13 $ 13.54 $ 13.49
======== ======== ======= =======
Total return(b).......................................... 10.61% 14.88% 4.35% 0.52%
======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)................. $678,809 $368,355 $51,964 $ 4,833
======== ======== ======= =======
Ratio of expenses to average net assets(c)............. 2.25%(d)(e) 2.35% 2.55% 2.53%(f)
======== ======== ======= =======
Ratio of net investment income (loss) to average net
assets(g)............................................ (0.53)%(d) (0.53)% (0.78)% (0.67)%(f)
======== ======== ======= =======
Portfolio turnover rate................................ 50% 66% 68% 67%
======== ======== ======= =======
Average brokerage commission rate(h)................... $ 0.0168 $ 0.0192 N/A N/A
======== ======== ======= =======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements are
2.28%, 2.37% and 2.56%, respectively for 1997-1995.
(d) Ratios are based on average net assets of $558,130,289.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been 2.24%.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements are (0.57)%, (0.55)% and (0.79)%, respectively for 1997-1995.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
7
<PAGE> 92
<TABLE>
<CAPTION>
PERIOD
AUGUST 4,
THROUGH
OCTOBER 31,
1997
-----------
<S> <C>
CLASS C SHARES
Net asset value, beginning of period........................ $ 17.64
Income from investment operations:
Net investment income (loss).............................. (0.02)(a)
Net gains (losses) on securities (both realized and
unrealized)............................................. (1.35)
-------
Total from investment operations.......................... (1.37)
-------
Less distributions:
Dividends from net investment income...................... --
Distributions from net realized gains..................... --
-------
Total distributions....................................... --
-------
Net asset value, end of period.............................. $ 16.27
=======
Total return(b)............................................. (7.77)%
=======
Ratios/supplemental data:
Net assets, end of period (000s omitted).................. $12,829
=======
Ratio of expenses to average net assets(c)................ 2.27%(d)(e)
=======
Ratio of net investment income (loss) to average net
assets(f)............................................... (0.55)%(d)
=======
Portfolio turnover rate................................... 50%
=======
Average brokerage commission rate(g)...................... $0.0168
=======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements is
2.30% (annualized).
(d) Ratio is annualized and based on average net assets of $5,564,501.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been 2.26%.
(f) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements is (0.59)% (annualized).
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
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PERFORMANCE
The Fund's performance may be quoted in advertising in terms of total return.
All advertisements of the Fund will disclose the maximum sales charge (including
deferred sales charge) to which investments in the Fund's shares may be subject.
If any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
Standardized total return for Class A shares reflects the deduction of the
maximum initial sales charge at the time of purchase. Standardized total return
for Class B shares reflects the deduction of the maximum applicable contingent
deferred sales charge on a redemption of shares held for the period.
Standardized total return for Class C shares reflects the deduction of a 1%
contingent deferred sales charge, if applicable, on a redemption of shares held
for the period.
The Fund's total return shows its overall change in value, including changes
in share price assuming that all the Fund's dividends and capital gain
distributions are reinvested and that all charges and expenses are deducted. A
cumulative total return reflects the Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical compounded annual
rate of return that would have produced the same cumulative total return if the
Fund's performance had been constant over the entire period. BECAUSE AVERAGE
ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN, INVESTORS
SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR
RESULTS. To illustrate the components of overall performance, the Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses. The stated period for quotations of
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<PAGE> 93
average annual total return will be for periods of one year and the life of the
Fund (commencing as of the effective date of its registration statement).
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such a practice will
have the effect of increasing the Fund's total return.
The performance of the Fund will vary from time to time, and past results are
not necessarily representative of future results. The Fund's performance is a
function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund as well
as by general market conditions. A shareholder's investment in the Fund is not
insured or guaranteed. These factors should be carefully considered by the
investor before making an investment in the Fund.
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INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund, which is a fundamental policy that may
be changed only with the approval of the Fund's shareholders, is to provide
long-term growth of capital by investing in a diversified portfolio of
international equity securities, the issuers of which are considered by AIM to
have strong earnings momentum. Any income realized by the Fund will be
incidental and will not be an important criterion in the selection of portfolio
securities. There can be no assurance that the Fund will achieve its objective.
The Board of Directors of the Company reserves the right to change any of the
investment policies, strategies or practices of the Fund, as described below and
elsewhere in this Prospectus and in the Statement of Additional Information,
without approval of the Fund's shareholders, except in those instances in which
shareholder approval is expressly required.
Under normal market conditions the Fund will invest at least 70% of its total
assets in marketable equity securities, including common stock, preferred stock,
depositary receipts for stock and other securities having the characteristics of
stock (such as an equity or ownership interest in a company) of foreign
companies which are listed on a recognized foreign securities exchange or traded
in a foreign over-the-counter-market. The Fund may satisfy the foregoing
requirement in part by investing in the securities of foreign issuers which are
in the form of American Depositary Receipts ("ADRs"), European Depositary
Receipts ("EDRs"), or other securities representing underlying securities of
foreign issuers. The Fund may also invest up to 20% of its total assets in
securities exchangeable for or convertible into equity securities of foreign
companies which are listed on a recognized foreign securities exchange or traded
in a foreign over-the-counter market.
In managing the Fund, AIM seeks to apply to a diversified portfolio of
international equity securities substantially the same investment strategy which
it applies to several of its other managed portfolios which have similar
investment objectives but which invest primarily in United States equities
markets. The Fund will utilize to the extent practicable a fully managed
investment policy providing for the selection of securities which meet certain
quantitative standards determined by AIM. AIM reviews carefully the earnings
history and prospects for growth of each company considered for investment by
the Fund. It is expected that the Fund's portfolio, when fully invested, will
generally be comprised of two basic categories of foreign companies: (1) "core"
companies, which AIM considers to have experienced consistent long-term growth
in earnings and to have strong prospects for outstanding future growth, and (2)
companies that AIM believes are currently experiencing a greater than
anticipated increase in earnings.
If a particular foreign company meets the quantitative standards determined by
AIM, its securities may be acquired by the Fund regardless of the location of
the company or the percentage of the Fund's investments in the company's country
or region. However, AIM will also consider other factors in making investment
decisions for the Fund, including such factors as the prospects for relative
economic growth among countries or regions, economic and political conditions,
currency exchange fluctuations, tax considerations and the liquidity of a
particular security.
AIM recognizes that often there is less public information about foreign
companies than is available in reports supplied by domestic companies, that
foreign companies are not subject to uniform accounting and financial reporting
standards, and that there may be greater delays experienced by the Fund in
receiving financial information supplied by foreign companies than comparable
information supplied by domestic companies. For these and other reasons, AIM
from time to time may encounter greater difficulty applying its disciplined
stock selection strategy to an international equity investment portfolio than to
a portfolio of domestic equity securities.
AIM may invest a portion of the Fund's assets in (i) cash or high-grade
short-term securities, including repurchase agreements, commercial paper, time
deposits and master notes, denominated either in U.S. dollars or foreign
currencies, (ii) U.S. government obligations or investment grade (high quality)
corporate bonds or other debt securities, and (iii) taxable municipal
securities, when such positions are deemed advisable in light of economic or
market conditions or for daily cash management purposes. In addition, AIM may
invest, for temporary defensive purposes, all or substantially all of the Fund's
assets in the securities described above. To the extent that the Fund is
invested to a significant degree in cash, high-grade short-term securities, U.S.
government obligations, investment grade (high quality) corporate bonds or other
debt securities, or taxable municipal securities, its ability to achieve its
investment objective of growth of capital may be adversely affected. Under
normal circumstances, the Fund will invest no more than 20% of the value of its
total assets in high-grade short-term securities. A repurchase agreement is an
instrument under which the Fund acquires ownership of a debt security and the
seller agrees, at the time of the sale, to repurchase the obligation at a
mutually agreed upon time and price, thereby determining the yield during the
Fund's holding period. In the event of a bankruptcy or other default of a seller
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<PAGE> 94
of a repurchase agreement, the Fund could experience both delays in liquidating
the underlying securities and losses, including (a) a possible decline in the
value of the underlying security during the period while the Fund seeks to
enforce its rights thereto, (b) possible reduced levels of income and lack of
access to income during this period and (c) expenses of enforcing its rights.
The Fund intends to enter into repurchase agreements with sellers believed by
AIM to present minimal credit risk. See "Investment Restrictions."
Under normal market conditions, the Fund intends to invest in the securities
of foreign companies located in at least four countries outside the United
States. The Fund will emphasize investment in foreign companies in the developed
countries of Western Europe (such as Germany, France, Switzerland, the
Netherlands and the United Kingdom) and the Pacific Basin (such as Japan, Hong
Kong and Australia), and the Fund may also invest in the securities of companies
located in developing countries (such as Turkey, Malaysia and Mexico) in various
regions of the world. A "developing country" is a country in the initial stages
of its industrial cycle.
Investment in the equity markets of developing countries involves exposure to
securities exchanges that may have substantially less trading volume and greater
price volatility, economic structures that are less diverse and mature, and
political systems that may be less stable than the equity markets of developed
countries. At the present time, AIM does not intend to invest more than 20% of
the Fund's total assets in foreign companies located in developing countries.
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HEDGING STRATEGIES AND OTHER INVESTMENT TECHNIQUES
The Fund may, at such times as AIM deems appropriate and consistent with the
investment objective of the Fund, write (sell) covered put or call options and
may purchase put or call options on its portfolio securities. The Fund may also
purchase and sell (i) options on domestic and foreign securities and currencies,
(ii) stock index options, (iii) stock, currency and interest rate futures, (iv)
options on stock, currency, stock index and interest rate futures and (v)
foreign forward currency exchange contracts. The purpose of such transactions is
to hedge against changes in the market value of the Fund's portfolio securities
caused by fluctuating interest rates, fluctuating currency exchange rates and
changing market conditions, and to close out or offset existing positions in
such options or futures contracts as described below. The Fund will not engage
in such transactions for speculative purposes. The Fund does not intend to hedge
against currency, investment and interest rate risks during the coming year. Any
change to such policy must be submitted by AIM to the Company's Board of
Directors prior to the effectiveness of such change.
To a limited extent the Fund may employ certain investment techniques intended
to provide liquidity for temporary or emergency purposes, provide flexibility in
the purchase of new issues of securities, protect the Fund from a decline in the
market value of its securities and permit the Fund to invest all of its assets.
Those techniques include entering into reverse repurchase agreements, lending
portfolio securities, purchasing securities on a "when-issued" basis, short
sales "against the box" and investing in closed-end investment companies.
OPTIONS. The Fund may purchase put or call options. Such options give the Fund
the right for a fixed period of time to sell (in the case of purchase of a put
option) or to buy (in the case of purchase of a call option) the number of units
of the underlying security or obligation covered by the option at a fixed or
determinable exercise price. Buying a put option hedges against the risk of a
market decline. Buying a call option hedges against a market advance. Prior to
its expiration, a put or call option may be sold in a closing sale transaction.
Gain or loss from such a sale will depend on whether the amount received is more
or less than the premium paid for the option plus the related transaction costs.
The Fund also may write (sell) put or call options, but only if such options
are covered and remain covered as long as the Fund is obligated as a writer of
the option (seller). A call option is "covered" if the Fund owns the underlying
security covered by the call. A put option is "covered" if the Fund's custodian
segregates liquid assets with a value equal to the exercise price of the put
option. If a "covered" call or put option expires unexercised, the writer
realizes a gain in the amount of the premium received. If the covered call
option is exercised, the writer realizes either a gain or loss from the sale or
purchase of the underlying security with the proceeds to the writer being
increased by the amount of the premium. If the covered put option is exercised,
the writer's cost of purchasing the underlying security is reduced by the amount
of the premium received from the initial sale of the put option. Prior to its
expiration, a put or call option may be closed out by means of a purchase of an
identical option. Any gain or loss from such transaction will depend on whether
the amount paid is more or less than the premium received for the option plus
related transaction costs.
The Fund may also purchase and write options in combination with each other to
adjust the risk and return characteristics of certain portfolio security
positions. This technique is commonly referred to as a "collar."
Options are subject to certain risks, including the risk of imperfect
correlation between the option and the Fund's portfolio securities and the risk
that there might not be a liquid secondary market for the option when the Fund
seeks to hedge against adverse market movements. In general, options whose
strike prices are close to their underlying securities' current values will have
the highest trading value, while options whose strike prices are further away
may be less liquid. The liquidity of options may also be affected if options
exchanges impose trading halts, particularly when markets are volatile.
The Fund will not write options if, immediately after such sale, the aggregate
value of the securities or obligations underlying the outstanding options
exceeds 25% of the Fund's total assets. The Fund will not purchase put options
(including options on securities
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<PAGE> 95
indices and futures contracts) if, at the time of investment, the aggregate
premiums paid for such options will exceed 5% of its total assets.
FUTURES AND FORWARD CONTRACTS. Since substantially all of the securities held
by the Fund may be denominated in foreign currencies, the value of the Fund's
portfolio will be affected by changes in exchange rates between currencies
(including the U.S. dollar), as well as by changes in the market value of the
securities themselves. The Fund may enter into interest rate, exchange rate and
currency futures contracts and related options, or it may purchase or sell stock
index futures contracts and related options in order to hedge the value of its
portfolio against changes in market conditions or in exchange rates between
currencies (including the U.S. dollar). Futures contracts obligate the seller to
deliver a specific type of security called for in the contract, at a specified
future time and for a specified price. Futures contracts are traded on U.S. and
foreign exchanges and generally contain standardized strike prices and
expiration dates. Certain futures contracts may be satisfied by actual delivery
of the securities or, more typically, by entering into an offsetting
transaction. An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract. In
addition to purchasing or selling futures contracts on currencies and specific
securities, interest rates and exchange rates, the Fund may purchase or sell
stock index futures contracts. A stock index futures contract is an agreement to
take or make delivery of an amount of cash based on the difference between the
value of a stock index at the beginning and at the end of the contract period.
No more than 5% of the Fund's total assets will be committed to initial margin
deposits required pursuant to futures contracts. Percentage investment
limitations on the Fund's investment in options on futures contracts and asset
coverage requirements are set forth above under "Options." Although the Fund is
authorized to invest in futures contracts and related options with respect to
foreign securities, stock indices, interest rates and currencies, it will limit
such investments to those which have been approved by the Commodity Futures
Trading Commission for investment by United States investors.
In attempting to manage its currency exposure, the Fund may buy and sell
currencies, either in the spot (cash) market or in the forward market (through
forward contracts generally expiring within one year). The Fund may also enter
into forward contracts with respect to a specific purchase or sale of a
security, or with respect to its portfolio positions generally. When the Fund
purchases a security for settlement in the near future, it may immediately
purchase in the forward market the currency needed to pay for and settle the
purchase. By entering into a forward contract with respect to the specific
purchase or sale of a security denominated in a foreign currency, the Fund can
secure an exchange rate between the trade and settlement dates for that purchase
or sale transaction. This practice is sometimes referred to as "transaction
hedging." Unlike futures contracts, forward contracts are generally individually
negotiated and privately traded. A forward contract obligates the seller to sell
a specific security or currency at a specified price on a future date, which may
be any fixed number of days from the date of the contract. The Fund may enter
into transaction hedging forward contracts with respect to all or a substantial
portion of its trades. The Fund will not enter into a position hedging
commitment if, as a result thereof, the Fund would have more than 10% of the
value of its total assets committed to such contracts. The Fund will not enter
into a forward contract with a term of more than one year.
There are risks associated with the use of futures and forward contracts and
options thereon for hedging purposes. During certain market conditions, sales of
futures contracts may not completely offset a decline or rise in the value of
the Fund's portfolio securities or currency against which the futures or forward
contract or options thereon are being sold. In the futures and options on
futures markets, it may not always be possible to execute a buy or sell order at
the desired price, or to close out an open position due to market conditions,
limits on open positions and/or daily price fluctuations. Risks in the use of
futures contracts and options thereon also result from the possibility that
changes in the market value of securities or currency may differ substantially
from the changes anticipated by the Fund when hedged positions were established.
Successful use of futures and forward contracts and options thereon is dependent
upon AIM's ability to predict correctly movements in the direction of the
applicable markets. No assurance can be given that AIM's judgment in this
respect will be correct. Accordingly, the Fund may lose the expected benefit of
futures and forward transactions and options thereon if markets move in an
unanticipated manner.
OTHER HEDGING TECHNIQUES. For hedging purposes, the Fund may also purchase
foreign currencies in the form of bank deposits as well as other foreign money
market instruments, including, but not limited to, bankers' acceptances,
certificates of deposit, commercial paper, short-term government and corporate
obligations and repurchase agreements.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
institutions believed by the Company's Board of Directors to present minimal
credit risk. A repurchase agreement is an instrument under which the Fund
acquires ownership of a debt security and the seller agrees, at the time of the
sale, to repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the Fund's holding period. In the event of
a bankruptcy or other default of a seller of a repurchase agreement (such as the
sellers' failure to repurchase the obligation in accordance with the terms of
the agreement), a Fund could experience both delays in liquidating the
underlying securities and losses, including: (a) a possible decline in the value
of the underlying security during the period while the Fund seeks to enforce its
rights thereto; (b) possible reduced levels of income and lack of access to
income during this period; and (d) expenses of enforcing its rights. Repurchase
agreements are considered to be loans by the Fund under the Investment Company
Act of 1940, as amended (the "1940 Act"). Repurchase agreements will be secured
by U.S. Treasury securities, U.S. Government agency securities (including, but
not limited to, those which have been stripped of their interest payments and
mortgage-backed securities) and commercial paper. For additional information on
the use of repurchase agreements, see the Statement of Additional Information.
REVERSE REPURCHASE AGREEMENTS. The Fund may invest in reverse repurchase
agreements, which involve the sale of securities held by the Fund, with an
agreement that the Fund will repurchase the securities at an agreed upon price
and date. The Fund may em-
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<PAGE> 96
ploy reverse repurchase agreements (i) for temporary emergency purposes, such as
to meet unanticipated net redemptions so as to avoid liquidating other portfolio
securities during unfavorable market conditions; (ii) to cover short-term cash
requirements resulting from the timing of trade settlements; or (iii) to take
advantage of market situations where the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of the transaction. At the time it enters into a reverse repurchase
agreement, the Fund will segregate liquid assets having a dollar value equal to
the repurchase price. Reverse repurchase agreements are considered borrowings by
the Fund under the 1940 Act. The Fund may enter into reverse repurchase
agreements in amounts not exceeding 33 1/3% of the value of its total assets.
Reverse repurchase agreements involve the risk that the market value of
securities retained by the Fund in lieu of liquidation may decline below the
repurchase price of the securities sold by the Fund which it is obligated to
repurchase. This risk, if encountered, could cause a reduction in the net asset
value of the Fund's shares.
LENDING OF PORTFOLIO SECURITIES. The Fund may from time to time lend
securities from its portfolio, with a value not exceeding 33 1/3% of its total
assets, to banks, brokers and other financial institutions, and receive in
return collateral in the form of cash or securities issued or guaranteed by the
U.S. Government which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. During the
period of the loan, the Fund receives the income on both the loaned securities
and the collateral and thereby increases its yield. In the event that the
borrower defaults on its obligation to return loaned securities because of
insolvency or otherwise, the Fund could experience delays and costs in gaining
access to the collateral and could suffer a loss to the extent that the value of
the collateral falls below the market value of the loaned securities.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
of the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the
transaction). The Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. The Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. If the Fund purchases a when-issued
security or enters into a delayed delivery agreement, the Fund's custodian bank
will segregate liquid assets in an amount at least equal to the when-issued
commitment or delayed delivery agreement commitment.
SHORT SALES. The Fund may make short sales "against the box." A short sale is
a transaction in which a party sells a security it does not own in anticipation
of a decline in the market value of that security. A short sale is "against the
box" to the extent that the Fund contemporaneously owns or has the right to
obtain securities identical to those sold short without payment of any further
consideration. The Fund will enter into such transactions only to the extent the
aggregate value of all securities sold short does not represent more than 10% of
the Fund's assets at any given time.
ILLIQUID SECURITIES AND RULE 144A SECURITIES. The Fund may invest up to 15% of
its net assets in securities that are illiquid. Illiquid securities include
securities that have no readily available market quotations and cannot be
disposed of promptly (within seven days) in the normal course of business at a
price at which they are valued. Illiquid securities may include securities that
are subject to restrictions on resale because they have not been registered
under the Securities Act of 1933. Unregistered securities may, in certain
circumstances, be resold pursuant to Rule 144A, and thus may or may not
constitute illiquid securities. Limitations on the resale of unregistered
securities may have an adverse effect on their marketability, which may prevent
the Fund from disposing of them promptly at reasonable prices. The Fund may have
to bear the expense of registering such securities for resale, and the risk of
substantial delays in effecting such registrations. The Company's Board of
Directors is responsible for developing and establishing guidelines and
procedures for determining the liquidity of Rule 144A securities on behalf of
the Fund and monitoring AIM's implementation of the guidelines and procedures.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Fund may invest in other
investment companies to the extent permitted by the 1940 Act, and rules and
regulations thereunder, and, if applicable, exemptive orders granted by the SEC.
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RISK FACTORS
There can be no assurance that the Fund's investment objective will be
attained. The Fund is designed for investors seeking international
diversification, and is not intended as a complete investment program. In
addition, investing in securities of foreign companies generally involves
greater risks than investing in securities of domestic companies. Investors
should consider carefully the following special factors before investing in the
Fund.
CURRENCY RISK. The value of the Fund's foreign investments may be affected by
changes in currency exchange rates. The U.S. dollar value of a foreign security
generally decreases when the value of the U.S. dollar rises against the foreign
currency in which the security is denominated, and tends to increase when the
value of the U.S. dollar falls against such currency.
POLITICAL AND ECONOMIC RISK. The economies of many of the countries in which
the Fund may invest are not as developed as the United States economy and may be
subject to significantly different forces. Political or social instability,
expropriation or confiscatory taxation, and limitations on the removal of funds
or other assets could also adversely affect the value of the Fund's investments.
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<PAGE> 97
REGULATORY RISK. Foreign companies are generally not subject to the regulatory
controls imposed on United States issuers and, as a consequence, there is
generally less publicly available information about foreign securities than is
available about domestic securities. Foreign companies are not subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies. Income from
foreign securities owned by the Fund may be reduced by withholding tax at the
source which would reduce dividend income payable to the Fund's shareholders.
MARKET RISK. The securities markets in many of the countries in which the Fund
invests will have substantially less trading volume than the major United States
markets. As a result, the securities of some foreign companies may be less
liquid and experience more price volatility than comparable domestic securities.
There is generally less government regulation and supervision of foreign stock
exchanges, brokers and issuers which may make it difficult to enforce
contractual obligations. In addition, transaction costs in foreign securities
markets are likely to be higher, since brokerage commission rates in foreign
countries are likely to be higher than in the United States. Further, the
settlement period of securities transactions in foreign markets may be longer
than in domestic markets. These considerations generally are more of a concern
in developing countries. For example, the possibility of revolution and the
dependence on foreign economic assistance may be greater in these countries than
in developed countries. The management of the Funds seeks to mitigate the risks
associated with these considerations through diversification and active
professional management.
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INVESTMENT RESTRICTIONS
The following restrictions may not be changed without approval of the Fund's
shareholders. The Fund may not:
1. Purchase a security if, as a result, with respect to 75% of the
value of the Fund's total assets, taken at market value, more than 5% of
the value of the Fund's total assets, taken at market value, would be
invested in securities of any one issuer (including repurchase agreements
with any one entity), except securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities and except that the
Fund may purchase securities of other investment companies to the extent
permitted by applicable law or exemptive order.
2. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by the Fund,
except that the Fund may purchase securities of other investment companies
to the extent permitted by applicable law or exemptive order.
3. Purchase a security if, as a result, 25% or more of the value of
the Fund's total assets, taken at market value, would be invested in the
securities of issuers having their principal business activities in the
same industry. This restriction does not apply to obligations issued or
guaranteed by the U.S. Government or by any of its agencies or
instrumentalities but will apply to foreign government obligations unless
the SEC permits their exclusion.
4. Borrow money, except that the Fund may borrow from banks (including
the Fund's custodian bank) and enter into reverse repurchase agreements as
a temporary defensive measure for extraordinary or emergency purposes, and
then only in amounts not exceeding 10% of its total assets, taken at market
value, and may pledge amounts of up to 20% of its total assets, taken at
market value, to secure such borrowings. For purposes of this restriction,
collateral arrangements with respect to the writing of options, futures
contracts, options on futures contracts, and collateral arrangements with
respect to initial and variation margin are not deemed to be a pledge of
assets and neither such arrangements nor the purchase and sale of options,
futures or related options shall be deemed to be the issuance of a senior
security. Whenever bank borrowings and the value of the Fund's reverse
repurchase agreements exceed 5% of the value of the Fund's total assets,
the Fund will not make any additional purchases of securities for
investment purposes.
A complete listing of investment restrictions applicable to the Fund, some of
which may be changed by the Board of Directors without shareholder approval, is
contained in the Statement of Additional Information.
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MANAGEMENT
The overall management of the business and affairs of the Fund is vested with
the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Fund and persons or companies furnishing
services to the Fund, including the investment advisory agreement with AIM, the
administrative services agreement with AIM, the agreement with AIM Distributors
regarding distribution of the Fund's shares, the agreement with State Street
Bank and Trust Company as custodian, and the agreement with A I M Fund Services,
Inc. as transfer agent. The day-to-day operations of the Fund are delegated to
the officers of the Company and to AIM, subject always to the objective and
policies of the Fund and to the general supervision of the Board of Directors.
Information concerning the Board of Directors may be found in the Statement of
Additional Information. Certain directors and officers of the Company are
affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM. AIM Management is a holding company engaged in the
financial services business. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. For a discussion of AIM Management and its subsidiaries'
Year 2000 Compliance Project, see "General Information -- Year 2000 Compliance
Project."
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INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046, serves as the investment advisor to the Fund pursuant to a
Master Investment Advisory Agreement dated as of February 28, 1997. AIM was
organized in 1976 and, together with its subsidiaries, manages or advises over
50 investment company portfolios encompassing a broad range of investment
objectives.
Under the terms of the Advisory Agreement, AIM supervises all aspects of the
Fund's operations and provides investment advisory services to the Fund. AIM
obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Fund.
ADMINISTRATOR. AIM and the Company have entered into a Master Administrative
Services Agreement, dated as of February 28, 1997, pursuant to which AIM has
agreed to provide or arrange for the provision of certain accounting and other
administrative services to the Fund. AIM is entitled to receive from the Fund
reimbursement of its costs or such reasonable compensation as may be approved by
the Board of Directors. Currently, AIM is reimbursed for the services of the
Fund's principal financial officer and his staff, and any expenses related to
such services.
For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information. In accordance with policies established by the Board of Directors,
AIM may take into account sales of shares of the Fund and other funds advised by
AIM in selecting broker-dealers to effect portfolio transactions on behalf of
the Fund.
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Fund. AIM's investment staff consists of approximately 135
individuals. While individual members of AIM's investment staff are assigned
primary responsibility for the day-to-day management of each of AIM's accounts,
all accounts are reviewed on a regular basis by AIM's Investment Policy
Committee to ensure that they are being invested in accordance with the
accounts' and AIM's investment policies. A. Dale Griffin, III, Clas G. Olsson,
Paul A. Rogge and Barrett K. Sides are primarily responsible for the day-to-day
management of the Fund. Mr. Griffin is Vice President of A I M Capital
Management, Inc. ("AIM Capital"), a wholly owned subsidiary of AIM, and has been
responsible for the Fund since its inception in 1992. He has been associated
with AIM and/or its subsidiaries since 1989 and began working as an investment
professional in 1987. Mr. Olsson is an Investment Officer of AIM Capital and has
been responsible for the Fund since 1997. He has been associated with AIM and/or
its subsidiaries since 1994 and began working as an investment professional in
1994. Prior to 1994, Mr. Olsson was a broker assistant trainee with Merrill
Lynch, Pierce, Fenner & Smith Incorporated. Mr. Rogge is Vice President of AIM
Capital and also has been responsible for the Fund since its inception in 1992.
He has been associated with AIM and/or its subsidiaries since he began working
as an investment professional in 1991. Mr. Sides is Assistant Vice President of
AIM Capital and has been responsible for the Fund since 1995. He has been
associated with AIM and/or its subsidiaries since he began working as an
investment professional in 1990.
FEES AND EXPENSES. For the year ended October 31, 1997, the Fund paid AIM an
amount for its advisory services which represented 0.89% of the Fund's average
daily net assets. Although the fee payable to AIM under the Advisory Agreement
is higher than that paid by most mutual funds which invest in domestic
securities, it is competitive with such fees paid by mutual funds which invest
primarily in foreign securities. The Company believes such fee is justified due
to the higher costs and additional expenses associated with managing and
operating a fund holding primarily foreign equity securities. For the year ended
October 31, 1997, the Fund reimbursed AIM for administrative services costs
pursuant to the Administrative Services Agreement an amount which represented
0.01% of the Fund's average daily net assets. The Class A shares' total expenses
for such year were 1.47% of the Class A shares' average daily net assets. The
Class B shares' total expenses for such year were 2.25% of the Class B shares'
average daily net assets. The Class C shares' total expenses for the period
August 4, 1997 (date sales commenced) through October 31, 1997 were 2.25% of the
Class C shares' average daily net assets.
In addition, the Company and A I M Fund Services, Inc. P.O. Box 4739, Houston,
TX 77210-4739, a wholly owned subsidiary of AIM and registered transfer agent,
have entered into a Transfer Agency and Service Agreement, pursuant to which AFS
provides transfer agency, dividend distribution and disbursement, and
shareholder services to the Fund.
FEE WAIVERS. AIM may from time to time voluntarily waive or reduce its fees,
while retaining its ability to be reimbursed for such fees prior to the end of
each fiscal year. Fee waivers or reductions, other than those contained in the
Advisory Agreement, may be modified or terminated at any time and without notice
to investors. AIM has voluntarily agreed to waive its advisory fees under the
Advisory Agreement in order to achieve the following annual fee structure for
the Fund: 0.95% of the first $500 million of the Fund's average daily net
assets; 0.90% of the next $500 million of the Fund's average daily net assets;
and 0.85% of the Fund's average daily net assets exceeding $1 billion. For the
fiscal year ended October 31, 1997, AIM waived advisory fees for the Fund which
represented 0.04% of the Fund's average daily net assets.
DISTRIBUTOR. The Company has entered into Master Distribution Agreements on
behalf of the Fund (the "Distribution Agreements") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A, Class B and Class C shares of the Fund. The address of
A I M Distributors, Inc. is P.O. Box 4739, Houston, Texas 77021-4739. Certain
directors and officers of the Company are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute shares of the Fund directly and through institutions with whom AIM
Distributors has entered into selected dealer agreements. Under the Distribution
Agreement for the Class B shares, AIM Distributors sells Class B shares at net
asset value subject to a contingent deferred sales charge established by AIM
14
<PAGE> 99
Distributors. AIM Distributors is authorized to advance to institutions through
whom Class B shares are sold a sales commission under schedules established by
AIM Distributors. The Distribution Agreement for the Class B shares provides
that AIM Distributors (or its assignee or transferee) will receive 0.75% (of the
total 1.00% payable under the distribution plan applicable to Class B shares) of
the Fund's average daily net assets attributable to Class B shares attributable
to the sales efforts of AIM Distributors. In the event the Class B shares
Distribution Agreement is terminated, AIM Distributors would continue to receive
payments of asset based sales charges in respect of the outstanding Class B
shares attributable to AIM Distributors; provided, however, that a complete
termination of the Class B shares master distribution plan (as defined in the
plan) would terminate all payments to AIM Distributors. Termination of the Class
B shares distribution plan or Distribution Agreement does not affect the
obligation of Class B shareholders to pay Contingent Deferred Sales Charges.
DISTRIBUTION PLANS. Class A and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of the Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of the Fund.
Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.30% of the average daily net assets of Class A shares of
the Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of the Fund on an annualized basis.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of the Fund. Payments
can also be directed by AIM Distributors to selected institutions who have
entered into service agreements with respect to Class A and Class C shares of
the Fund and who provide continuing personal services to their customers who own
Class A and Class C shares of the Fund. The service fees payable to selected
institutions are calculated at the annual rate of 0.25% of the average daily net
asset value of those Fund shares that are held in such institution's customers'
accounts which were purchased on or after a prescribed date set forth in the
Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to the
Fund. The Class A and C Plan does not obligate the Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Class A and C Plan on behalf of the Fund. Thus, under
the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc.
Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of the Fund (the "Class B Plan"). Under the Class B
Plan, the Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of such amount, the
Fund pays a service fee of 0.25% of the average daily net assets attributable to
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 would
constitute an asset based sales charge. Amounts paid in accordance with the
Class B Plan may be used to finance any activity primarily intended to result in
the sale of Class B shares.
Activities that may be financed under the Class A and C Plan and the Class B
Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, supplemental payments to dealers and other
institutions such as asset-based sales charges or as payments of service fees
under shareholder service arrangements and the cost of administering the Plans.
These amounts payable by the Fund under the Plans need not be directly related
to the expenses actually incurred by AIM Distributors on behalf of the Fund.
Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Company will not be obligated to
pay more than that fee, and, if AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee. Payments
pursuant to the Plans are subject to any applicable limitations imposed by the
rules of the National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those directors who are not "interested persons" of the Company or by a vote of
the holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its fee that has not been
assigned or transferred, while retaining its ability to be reimbursed for such
fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but
15
<PAGE> 100
rather as agent, for the Fund in making such payments. Financial intermediaries
and any other person entitled to receive compensation for selling Fund shares
may receive different compensation for selling shares of one particular class
over another.
For additional information concerning the operation of the Plans, see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE COMPANY
The Company was organized in 1991 as a Maryland corporation, and is registered
with the SEC as an open-end series management investment company. The Company
currently consists of six investment portfolios: the Fund, AIM ASIAN GROWTH
FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM
GLOBAL GROWTH FUND and AIM GLOBAL INCOME FUND. The Board of Directors may
authorize additional portfolios in the future. Shares of the Fund are offered to
investors pursuant to this Prospectus, while shares of the Company's other
portfolios are offered to investors pursuant to separate prospectuses. The
authorized capital stock of the Company consists of 4,000,000,000 shares of
common stock with a par value of $0.001 per share, of which 200,000,000 shares
are designated Class A shares, 200,000,000 shares are designated Class B shares
and 200,000,000 shares are designated Class C shares of each investment
portfolio of the Company, and the balance of which are unclassified.
Class A shares, Class B shares and Class C shares of the Fund represent
interests in the Fund's assets and have identical voting, dividend, liquidation
and other rights on the same terms and conditions, except that each class of
shares bears differing class-specific ex-penses (such as those associated with
the shareholder servicing of their shares) and is subject to differing sales
loads (which may affect performance), conversion features and exchange
privileges, and has exclusive voting rights on matters pertaining to that class'
distribution plan.
Except as specifically noted above, shareholders of the Fund are entitled to
one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the Class A shares, Class B
shares and Class C shares of the Fund. However, on matters affecting one
portfolio of the Company or one class of shares, a separate vote of shareholders
of that portfolio or class is required. Shareholders of a portfolio or class are
not entitled to vote on any matter which does not affect that portfolio or class
but which requires a separate vote of another portfolio or class. An example of
a matter which would be voted on separately by shareholders of a portfolio is
the approval of an advisory agreement, and an example of a matter which would be
voted on separately by shareholders of a class of shares is approval of a
distribution plan. When issued, shares of the Fund are fully paid and
nonassessable, have no preemptive or subscription rights, and are fully
transferable. Other than the automatic conversion of Class B shares to Class A
shares, there are no conversion rights. Shares do not have cumulative voting
rights, which means that in situations in which shareholders elect directors,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors of the Company, and the holders of less than 50% of
the shares voting for the election of directors will not be able to elect any
directors.
Under Maryland law and the Company's By-Laws, the Company need not hold an
annual meeting of shareholders unless a meeting is otherwise required under the
1940 Act to elect directors. As of February 2, 1998, Merrill Lynch, Pierce,
Fenner & Smith Incorporated was the owner of record of 33.13%, 36.84% and 47.42%
of the outstanding Class A, Class B and Class C shares, respectively, of the
Fund. As long as Merrill Lynch, Pierce, Fenner & Smith Incorporated owns over
25% of such shares, it may be presumed to be in "control" of the Class A, Class
B and Class C shares of the Fund, as defined in the 1940 Act.
16
<PAGE> 101
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND(*) AIM GLOBAL UTILITIES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND(*) AIM GROWTH FUND
AIM ADVISOR LARGE CAP VALUE FUND(*) AIM HIGH INCOME MUNICIPAL FUND
AIM ADVISOR MULTIFLEX FUND(*) AIM HIGH YIELD FUND
AIM ADVISOR REAL ESTATE FUND(*) AIM INCOME FUND
AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND
AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND
AIM BLUE CHIP FUND AIM MONEY MARKET FUND(**)
AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND
AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(**)
AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND
</TABLE>
(*) Class B Shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM
REAL ESTATE FUND will not be available until on or about March 3, 1998.
(**) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Salary Reduction ("SARSEP") accounts, Savings Incentive Match
Plans for Employee IRA ("SIMPLE IRA") accounts, 403(b) plans or 457 (state
deferred compensation) plans (except that the minimum initial investment for
salary deferrals for such plans is $25), or for investment of dividends and
distributions of any of the AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-02/98
A-1
<PAGE> 102
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION--SM--: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for detail.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-02/98
A-2
<PAGE> 103
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-02/98
A-3
<PAGE> 104
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record on April 30, 1995 who purchase additional shares in any of the Funds
on or after May 1, 1995, and in circumstances where AIM Distributors grants an
exemption on particular transactions.
MCF-02/98
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<PAGE> 105
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class C shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class C shares redeemed
within one year from the date such shares were purchased are subject to a
1.00% contingent deferred sales charge. No contingent deferred sales charge
will be imposed if Class C shares are redeemed after one year from the date
such shares were purchased. Redemptions of Class C shares and associated
charges are further described under the caption "How to Redeem
Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
MCF-02/98
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<PAGE> 106
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that each Money Market Fund can maintain a $1.00
net asset value per share. In order to earn dividends with respect to AIM MONEY
MARKET FUND on the same day that a purchase is made, purchase payments in the
form of federal funds must be received by the Transfer Agent before 12:00 noon
Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by vir-
MCF-02/98
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<PAGE> 107
tue of the foregoing definition, to the reduced sales charge. No person or
entity may distribute shares of the AIM Funds without payment of the applicable
sales charge other than to persons or entities who qualify for a reduction in
the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) within the following 13 consecutive months. By marking the LOI section on
the account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND
and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve
Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the
Multiple Class Funds) owned by such purchaser, calculated at their then current
public offering price. If a purchaser so qualifies for a reduced sales charge,
the reduced sales charge applies to the total amount of money then being
invested by such purchaser and not just to the portion that exceeds the
breakpoint above which a reduced sales charge applies. For example, if a
purchaser already owns qualifying shares of any AIM Fund with a value of $20,000
and wishes to invest an additional $20,000 in a fund with a maximum initial
sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to
the full $20,000 purchase and not just to the $15,000 in excess of the $25,000
breakpoint. To qualify for obtaining the discount applicable to a particular
purchase, the purchaser or his dealer must furnish AFS with a list of the
account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends,
MCF-02/98
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<PAGE> 108
Distributions and Tax Matters"); (b) exchanges of shares of certain other funds
(see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to
Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a
fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; and (i) employees of
Triformis Inc.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of
AIM LIMITED MATURITY TREASURY FUND sold at net asset value to an employee
benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
MCF-02/98
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<PAGE> 109
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan each
withdrawal is made from the shareholder's bank account in the amount specified
by the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and
MCF-02/98
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Tax Matters -- Dividends and Distributions" for a description of payment dates
for these options. In order to qualify to have dividends and distributions of
one AIM Fund invested in shares of another AIM Fund, the following conditions
must be satisfied: (a) the shareholder must have an account balance in the
dividend paying fund of at least $5,000; (b) the account must be held in the
name of the shareholder (i.e., the account may not be held in nominee name); and
(c) the shareholder must have requested and completed an authorization relating
to the reinvestment of dividends into another AIM Fund. An authorization may be
given on the account application or on an authorization form available from AIM
Distributors. An AIM Fund will waive the $5,000 minimum account value
requirement if the shareholder has an account in the fund selected to receive
the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
MCF-02/98
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
---------- -----------------
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A --------------
AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A AIM MONEY MARKET FUND
FUND -- CLASS A AIM HIGH INCOME MUNICIPAL -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH
FUND; (ii) LOWER LOAD FUND SHARE PURCHASES OF $1,000,000 OR MORE AND AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES
MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH
WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR
PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND
SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH
EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B
shares may be exchanged only for Class B shares; (v) Class C shares may only be
exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY
MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or
for Class B or Class C shares.
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DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds..........
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds.......... acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C shares of
another Multiple Class Fund; (b) the dollar amount of the exchange must be at
least equal to the minimum investment applicable to the shares of the fund
acquired through such exchange; (c) the shares of the fund acquired through
exchange must be qualified for sale in the state in which the shareholder
resides; (d) the exchange must be made between accounts having identical
registrations and addresses; (e) the full amount of the purchase price for the
shares being exchanged must have already been received by the fund; (f) the
account from which shares have been exchanged must be coded as having a
certified taxpayer identification number on file or, in the alternative, an
appropriate Internal Revenue Service ("IRS") Form W-8 (certificate of foreign
status) or Form W-9 (certifying exempt status) must have been received by the
fund; (g) newly acquired shares (through either an initial or subsequent
investment) are held in an account for at least ten business days, and all other
shares are held in an account for at least one day, prior to the exchange; and
(h) certificates representing shares must be returned before shares can be
exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received
MCF-02/98
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<PAGE> 113
after NYSE Close will result in the redemption of shares at their net asset
value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-02/98
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<PAGE> 114
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from individual retirement accounts,
custodial accounts maintained pursuant to Code Section 403(b), deferred
compensation plans qualified under Code Section 457 and plans qualified under
Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class B or Class C shares at the time the shareholder elects to participate
in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a
Multiple Class Fund to liquidate a shareholder's account if the aggregate net
asset value of shares held in the account is less than the designated minimum
account size described in the prospectus of such Multiple Class Fund, (5)
effected by AIM of its investment in Class B or Class C shares and (6) of Class
C shares where such investor's dealer of record, due to the nature of the
investor's account, notifies AIM Distributors prior to the time of investment
that the dealer waives the payment otherwise payable to the dealer described in
the fifth paragraph under the caption "Terms and Conditions of Purchase of the
AIM Funds -- All Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70-1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
MCF-02/98
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<PAGE> 115
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired
through an exchange of shares which previously were subject to the 1% contingent
deferred sales charge will be credited with the period of time such exchanged
shares were held, and (ii) shares of any Load Fund which are subject to the 1%
contingent deferred sales charge and which were acquired through an exchange of
shares of a Lower Load Fund or a No Load Fund which previously were not subject
to the 1% contingent deferred sales charge will not be credited with the period
of time such exchanged shares were held. The charge will be waived in the
following circumstances: (1) redemptions of shares by employee benefit plans
("Plans") qualified under Sections 401 or 457 of the Code, or Plans created
under Section 403(b) of the Code and sponsored by nonprofit organizations as
defined under Section 501(c)(3) of the Code, where shares are being redeemed in
connection with employee terminations or withdrawals, and (a) the total amount
invested in a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a
letter of intent to invest at least $1,000,000 in one or more of the AIM Funds,
or (c) the shares being redeemed were purchased by an employer-sponsored Plan
with at least 100 eligible employees; provided, however, that Plans created
under Section 403(b) of the Code which are sponsored by public educational
institutions shall qualify under (a), (b) or (c) above on the basis of the value
of each Plan participant's aggregate investment in the AIM Funds, and not on the
aggregate investment made by the Plan or on the number of eligible employees;
(2) redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59-1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information; and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be gen-
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uine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND). After completing the appropriate authorization form,
shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND
and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does
not apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner; (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions; and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed
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the surety coverage amount indicated on the medallion. For information regarding
whether a particular institution or organization qualifies as an "eligible
guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund at the net asset value next computed after receipt by the
Transfer Agent of the funds to be reinvested; provided, however, if the
redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY
FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject
to the difference in sales charge between the shares redeemed and the shares the
proceeds are reinvested in. The shareholder must ask the Transfer Agent for such
privilege at the time of reinvestment. A realized gain on the redemption is
taxable, and reinvestment may alter any capital gains payable. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in (or exchanged for) shares of another AIM Fund
at a reduced sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE. The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 or Trustees of the
applicable AIM Fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares are expected to be lower than those
for Class A shares or AIM Cash Reserve Shares because of higher distribution
fees paid by Class B and Class C shares. Dividends on all shares may also be
affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such
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payment. Any dividend and distribution election remains in effect until the
Transfer Agent receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are
exempt from federal tax. Dividends paid by a fund (other than capital gain
distributions) may qualify for the federal 70% dividends received deduction for
corporate shareholders to the extent of the qualifying dividends received by the
fund on domestic common or preferred stock. It is not likely that dividends
received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE
FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will
qualify for this dividends received deduction. Shortly after the end of each
year, shareholders will receive information regarding the amount and federal
income tax treatment of all distributions paid during the year. Certain
dividends declared in October, November or December of a calendar year are
taxable to shareholders as though received on December 31 of that year if paid
to shareholders during January of the following calendar year. No gain or loss
will be recognized by shareholders upon the automatic conversion of Class B
shares of a Multiple Class Fund into Class A shares of such Fund. With respect
to tax-exempt shareholders, distributions from the Funds will not be subject to
federal income taxation to the extent permitted under the applicable tax-
exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
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other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as
Sub-Custodian for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish between the year 2000 from the year 1900.
This defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers provide the AIM Funds
and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
MCF-02/98
A-20
<PAGE> 121
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
MCF-02/98
A-21
<PAGE> 122
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-02/98
B-1
<PAGE> 123
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-02/98
B-2
<PAGE> 124
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
Houston, TX 77002
For more complete information about any other Fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please
call (800) 347-4246 or write to A I M Distributors, Inc. and request a
free prospectus. Please read the prospectus carefully before you invest
or send money.
INT-PRO-1
<PAGE> 125
APPENDIX III
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
(SERIES PORTFOLIO OF AIM INTERNATIONAL FUNDS, INC.)
Supplement dated October 1, 1998 to the
Prospectus dated February 20, 1998, as supplemented June 30, 1998
The following paragraph should be inserted under the heading of "Foreign
Securities--Currency Risk" on page 21:
"Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, and Spain are members of the
European Economic and Monetary Union (the "EMU"). The EMU 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 that is a member of the European
Union and satisfies the criteria for participation in the EMU may elect
to participate in the EMU and may supplement its existing currency with
the euro 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 Portfolio."
The following paragraph replaces in its entirety the third paragraph under the
heading "MANAGEMENT--Portfolio Management" on page 24 of the prospectus :
"A. Dale Griffin, III, Paul A. Rogge and Jonathan C. Schoolar are
primarily responsible for the day-to-day management of Growth Fund.
Background information for Mr. Griffin and Mr. Rogge is discussed above
with respect to the management of Aggressive Growth Fund. Mr. Griffin
and Mr. Rogge have been responsible for the Fund since its inception in
1994. Mr. Schoolar is a Senior Vice President of AIM Capital, Vice
President of AIM, Vice President of the Company and has been
responsible for the Fund since its inception in 1994. He has been
associated with AIM and/or its subsidiaries since 1986 and began
working as an investment professional in 1984."
<PAGE> 126
AIM INTERNATIONAL FUNDS, INC.
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Global Income Fund
Supplement dated June 30, 1998
to the Prospectus dated February 20, 1998
The third sentence in the second paragraph under the caption "HEDGING
STRATEGIES--Options" on page 18 is deleted and replaced in its entirety by the
following:
"A put option is 'covered' if a 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 "OTHER INVESTMENT
TECHNIQUES," after "Investment in Other Investment Companies" on page 21 of
the prospectus:
"REAL ESTATE INVESTMENT TRUSTS ("REITS"). To the extent consistent with
the Funds' investment objectives and policies, the Funds may invest
in equity and/or debt securities issued by REITs. Such investments
will not exceed 5% of the total assets of any of the Funds.
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 a Fund has the ability to invest in REITs, such Fund
could conceivably own real estate directly as a result of a default on
the securities it owns. A 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 a Fund, a shareholder will bear not only his/her proportionate
share of the expenses of the Fund, but also, indirectly, similar
expenses of the REITs."
The following paragraphs should be inserted under the heading of "Foreign
Securities--Currency Risk" on page 21:
"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
<PAGE> 127
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 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 Portfolio."
The third paragraph under the heading "MANAGEMENT--Portfolio Management" on page
24 of the prospectus is revised as follows:
The first sentence is revised to read in its entirety as follows:
"Stephen L. Boyd, Monika H. Degan, A. Dale Griffin, III, Clas G.
Olsson, Paul A. Rogge, Jonathan C. Schoolar and Barrett K. Sides
are primarily responsible for the day-to-day management of
Growth Fund."
The following sentence should be inserted as the 6th sentence in the
same paragraph and should read in its entirety as follows:
"Mr. Boyd has been responsible for the Fund since 1998. He has
been associated with AIM and/or its subsidiaries since 1998 and
has been an investment professional since 1967. Prior to joining
AIM, he was a portfolio manager for Van Kampen American Capital
from 1989 to 1998."
<PAGE> 128
[AIM LOGO THE AIM FAMILY OF FUNDS--Registered Trademark--
APPEARS HERE]
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
PROSPECTUS
FEBRUARY 20, 1998
AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND and AIM
GLOBAL INCOME FUND (collectively, the "Funds") are series investment
portfolios of AIM International Funds, Inc. (the "Company"), an
open-end, series, management investment company.
AIM GLOBAL AGGRESSIVE GROWTH FUND ("AGGRESSIVE GROWTH FUND"). The
investment objective of the AGGRESSIVE GROWTH FUND is to provide
above-average long-term growth of capital appreciation. The Fund
seeks to achieve its objective by investing in a portfolio of global
(i.e., U.S. and foreign) equity securities including securities of
selected companies with relatively small market capitalization.
AIM GLOBAL GROWTH FUND ("GROWTH FUND"). The investment objective of
GROWTH FUND is to provide long-term growth of capital. The Fund seeks
to achieve its objective by investing in a portfolio of global (i.e.,
U.S. and foreign) equity securities of selected companies that are
considered by the Fund's investment advisor to have strong earnings
momentum.
AIM GLOBAL INCOME FUND ("INCOME FUND"). The investment objective of
INCOME FUND is to provide high current income. The Fund seeks to
achieve its objective by investing in a portfolio of U.S. and foreign
government and corporate debt securities. As a secondary objective,
the Fund seeks preservation of principal and capital appreciation.
This Prospectus sets forth basic information about the Funds that
prospective investors should know before investing. It should be read
and retained for future reference. A Statement of Additional
Information, dated February 20, 1998, has been filed with the United
States Securities and Exchange Commission (the "SEC") and is
incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the
Company at P.O. Box 4739, Houston, Texas 77210-4739 or by calling
(800) 347-4246. The SEC maintains a Web site at http://www.sec.gov
that contains the Statement of Additional Information, material
incorporated by reference, and other information regarding the Funds.
Additional information about the Funds may also be obtained on the
Web at http://www.aimfunds.com.
THE FUNDS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND THE FUNDS' SHARES ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
SHARES OF THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 129
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.................................. 2 INVESTOR'S GUIDE TO THE AIM FAMILY OF
THE FUNDS................................ 4 FUNDS--Registered Trademark--.......... A-1
Table of Fees and Expenses............. 4 Introduction to The AIM Family of
Financial Highlights................... 6 Funds............................... A-1
Performance............................ 15 How to Purchase Shares................. A-1
Investment Objectives and Policies..... 15 Terms and Conditions of Purchase of the
Hedging Strategies..................... 18 AIM
Other Investment Techniques............ 19 Funds............................... A-2
Risk Factors........................... 21 Special Plans.......................... A-9
Investment Restrictions................ 23 Exchange Privilege..................... A-11
Portfolio Turnover..................... 23 How to Redeem Shares................... A-13
Management............................. 23 Determination of Net Asset Value....... A-17
Organization of the Company............ 27 Dividends, Distributions and Tax
Matters............................. A-18
General Information.................... A-20
APPENDIX A............................... A-21
APPENDIX B............................... A-23
APPLICATION INSTRUCTIONS................. B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUNDS. AIM International Funds, Inc. (the "Company") is a Maryland
corporation organized as an open-end, series, management investment company.
Currently, the Company offers six separate series portfolios. Three of these
series are offered pursuant to this Prospectus: AIM GLOBAL AGGRESSIVE GROWTH
FUND ("AGGRESSIVE GROWTH FUND"), AIM GLOBAL GROWTH FUND ("GROWTH FUND") and AIM
GLOBAL INCOME FUND ("INCOME FUND")(individually, a "Fund" and collectively, the
"Funds"), each of which pursues unique investment objectives. The AGGRESSIVE
GROWTH FUND and the GROWTH FUND are diversified investment portfolios; the
INCOME FUND is a non-diversified investment portfolio. For more complete
information on the Funds' investment objectives and policies, see "Investment
Objectives and Policies."
The Company also offers other classes of shares in three other investment
portfolios, AIM ASIAN GROWTH FUND ("ASIAN FUND"), AIM EUROPEAN DEVELOPMENT FUND
("EUROPEAN FUND") and AIM INTERNATIONAL EQUITY FUND ("EQUITY FUND")
(collectively, with AGGRESSIVE GROWTH FUND, GROWTH FUND and INCOME FUND, the
"Funds") each of which pursues unique investment objectives. All such other
Funds offer multiple classes of shares to different types of investors. The
shares of the other Funds of the Company have different sales charges and
expenses, which may affect performance. To obtain information about ASIAN FUND,
EUROPEAN FUND or EQUITY FUND, call (800) 347-4246. See "General Information."
RISK FACTORS. EACH FUND IS DESIGNED FOR LONG-TERM INVESTORS SEEKING GLOBAL
DIVERSIFICATION AND WILLING TO BEAR THE RISKS ASSOCIATED WITH INVESTMENTS IN
FOREIGN SECURITIES, INCLUDING CURRENCY RISK, POLITICAL AND ECONOMIC RISK,
REGULATORY RISK AND MARKET RISK. THE INCOME FUND IS A NON-DIVERSIFIED PORTFOLIO,
AND MAY ALSO INVEST IN HIGH YIELD SECURITIES (I.E., "JUNK BONDS") THAT ENTAIL
CERTAIN RISKS. NONE OF THE FUNDS IS DESIGNED AS A COMPLETE INVESTMENT PROGRAM.
FOR A DISCUSSION OF THESE RISKS, SEE "RISK FACTORS." THE INCOME FUND MAY ENGAGE
IN LEVERAGING WHICH MAY INVOLVE AN INCREASE IN RISK. SEE "OTHER INVESTMENT
TECHNIQUES -- BORROWING."
MANAGEMENT. A I M Advisors, Inc. ("AIM") serves as the Funds' investment
advisor pursuant to an investment advisory agreement (the "Advisory Agreement").
AIM, together with its subsidiaries, manages or advises over 50 investment
company portfolios encompassing a broad range of investment objectives. Under
the terms of the Advisory Agreement, AIM supervises all aspects of the Funds'
operations and provides investment advisory services to the Funds. As
compensation for these services, AIM receives a fee based on each Fund's average
daily net assets. Under an administrative services agreement (the
"Administrative Services Agreement"), AIM is reimbursed by each Fund for its
costs of performing, or arranging for the performance of, certain accounting and
other administrative services for each Fund. Under a transfer agency and service
agreement (the "Transfer Agency and Service Agreement"), A I M Fund Services,
Inc. ("AFS"), AIM's wholly owned subsidiary and a registered transfer agent,
receives a fee for its provision of transfer agency, dividend distribution and
disbursement, and shareholder services for each Fund.
MULTIPLE DISTRIBUTION SYSTEM. Investors may select Class A, Class B or Class C
shares of the Funds which are offered by this Prospectus at an offering price
that reflects differing sales charges and expense levels. See "Terms and
Conditions of Purchase of the AIM Funds -- Sales Charges and Dealer
Concessions."
Class A Shares -- Shares are offered at net asset value plus any
applicable initial sales charge.
Class B Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a maximum contingent deferred
sales charge of 5% on certain redemptions made within six years of the date
on which a purchase was made.
2
<PAGE> 130
Class B shares automatically convert to Class A shares of the same Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Class C Shares -- Shares are offered at net asset value, without an
initial sales charge, and are subject to a contingent deferred sales charge
of 1% on certain redemptions made within one year of the date such shares
were purchased.
SUITABILITY FOR INVESTORS. The Multiple Distribution System permits an
investor to choose the method of purchasing shares that is most beneficial given
the amount of the purchase, the length of time the shares are expected to be
held, whether dividends will be paid in cash or reinvested in additional shares
of a Fund and other circumstances. Investors should consider whether, during the
anticipated life of their investment in a Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion or Class C shares would be less than the initial sales
charge and accumulated distribution fees on Class A shares purchased at the same
time, and to what extent such differential would be offset by the higher return
on Class A shares. To assist investors in making this determination, the table
under the caption "Table of Fees and Expenses" sets forth examples of the
charges applicable to each class of shares. Class A shares will normally be more
beneficial than Class B shares to the investor who qualifies for reduced initial
sales charges, as described below. Therefore, A I M Distributors, Inc. ("AIM
Distributors") will reject any order for purchase of more than $250,000 for
Class B shares.
PURCHASING SHARES. Initial investments in any class of shares must be at least
$500 and additional investments must be at least $50. The minimum initial
investment is modified for investments through tax-qualified retirement plans
and accounts initially established with an Automatic Investment Plan. The
distributor of the Funds' shares is A I M Distributors, Inc., P.O. Box 4739,
Houston, Texas 77210-4739. See "How to Purchase Shares" and "Special Plans."
EXCHANGE PRIVILEGE. The Funds are several of the mutual funds distributed by
AIM Distributors (collectively, "The AIM Family of Funds"). Class A, Class B and
Class C shares of each Fund may be exchanged for shares of other funds in The
AIM Family of Funds in the manner and subject to the policies and charges set
forth herein. See "Exchange Privilege."
REDEEMING SHARES. Holders of Class A shares may redeem all or a portion of
their shares at net asset value on any business day, generally without charge. A
contingent deferred sales charge of 1% may apply to certain redemptions of Class
A shares, where purchases of shares in an amount of $1 million or more are made
at net asset value. See "How to Redeem Shares -- Contingent Deferred Sales
Charge Program for Large Purchases."
Holders of Class B shares may redeem all or a portion of their shares at net
asset value on any business day, less a contingent deferred sales charge for
redemptions made within six years following the date on which a purchase was
made. Class B shares redeemed after six years following the date of purchase
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
Holders of Class C shares may redeem all or a portion of their shares at net
asset value on any business day, less a 1% contingent deferred sales charge for
redemptions made within one year from the date such shares were purchased. See
"How to Redeem Shares -- Multiple Distribution System."
DISTRIBUTIONS. AGGRESSIVE GROWTH FUND and GROWTH FUND declare and pay
dividends from net investment income, if any, and make distributions of realized
capital gains, if any, on an annual basis. INCOME FUND declares dividends from
net investment income on a daily basis and pays such dividends monthly. INCOME
FUND declares and makes distributions of realized short-term capital gains, if
any, annually, and of realized long-term capital gains, if any, annually.
Dividends and distributions of the Funds may be reinvested at net asset value
without payment of a sales charge in the Funds' shares or may be invested in
shares of the other funds in The AIM Family of Funds. See "Dividends,
Distributions and Tax Matters" and "Special Plans."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 131
THE FUNDS
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The following table is designed to help an investor in the Funds understand
the various costs that an investor will bear, both directly and indirectly. The
fees and expenses for Class A and Class B shares set forth in the table are
based on the average net assets of the respective classes of the Funds for the
year ended October 31, 1997. The fees and expenses for Class C shares set forth
in the table are based on the estimated average net assets of Class C shares of
the Funds for the period August 4, 1997 (date sales commenced) to October 31,
1997. The rules of the SEC require that the maximum sales charge be reflected in
the table, even though certain investors may qualify for reduced sales charges.
See "How to Purchase Shares."
<TABLE>
<CAPTION>
AGGRESSIVE INCOME
GROWTH FUND GROWTH FUND FUND
-------------------------------- -------------------------------- --------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum sales load
imposed on purchase
of shares
(as a % of offering
price)............... 4.75% None None 4.75% None None 4.75%
Maximum sales load on
reinvested dividends
and distributions.... None None None None None None None
Deferred sales load (as
a % of original
purchase price or
redemption proceeds,
whichever is
lower)............... None* 5.00% 1.00% None* 5.00% 1.00% None*
Redemption fee......... None None None None None None None
Exchange fee........... None None None None None None None
Annual Fund Operating
Expenses (as a % of
average net assets)
Management fees........ 0.87% 0.87% 0.87% 0.85% 0.85% 0.85% 0.09%**
Rule 12b-1 distribution
plan payments........ 0.50% 1.00% 1.00% 0.50% 1.00% 1.00% 0.50%
Other expenses......... 0.38% 0.43% 0.43% 0.41% 0.44% 0.44% 0.66%
----- ----- ----- ----- ----- ----- -----
Total fund
operating
expenses...... 1.75% 2.30% 2.30% 1.76% 2.29% 2.29% 1.25%**
===== ===== ===== ===== ===== ===== =====
<CAPTION>
INCOME FUND
---------------------
CLASS B CLASS C
-------- --------
<S> <C> <C>
Shareholder Transaction
Expenses
Maximum sales load
imposed on purchase
of shares
(as a % of offering
price)............... None None
Maximum sales load on
reinvested dividends
and distributions.... None None
Deferred sales load (as
a % of original
purchase price or
redemption proceeds,
whichever is
lower)............... 5.00% 1.00%
Redemption fee......... None None
Exchange fee........... None None
Annual Fund Operating
Expenses (as a % of
average net assets)
Management fees........ 0.09%** 0.09%**
Rule 12b-1 distribution
plan payments........ 1.00% 1.00%
Other expenses......... 0.67% 0.67%
----- -----
Total fund
operating
expenses...... 1.76%** 1.76%**
===== =====
</TABLE>
- ---------------
* Purchases of shares in an amount of $1 million or more are not subject to
an initial sales charge. HOWEVER, A CONTINGENT DEFERRED SALES CHARGE OF 1%
APPLIES TO CERTAIN REDEMPTIONS MADE WITHIN 18 MONTHS FROM THE DATE SUCH
SHARES WERE PURCHASED. See the Investor's Guide, under the caption "How to
Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
** After fee waivers. If management fees had not been waived for INCOME FUND,
management fees would have been 0.70%, and total fund operating expenses
would have been 1.86%, 2.37% and 2.37% (annualized) for the Class A shares,
Class B shares and Class C shares, respectively.
EXAMPLES. An investor in each of the Funds would pay the following expenses on
a $1,000 investment in Class A shares of the Funds, assuming (1) a 5% annual
return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH GROWTH INCOME
FUND FUND FUND
---------- ------ ------
<S> <C> <C> <C>
1 year........................................ $ 64 $ 65 $ 60
3 years....................................... $100 $100 $ 85
5 years....................................... $138 $138 $113
10 years...................................... $244 $245 $191
</TABLE>
THE EXAMPLES ABOVE ASSUME PAYMENT OF A SALES CHARGE AT THE TIME OF PURCHASE;
ACTUAL EXPENSES MAY VARY FOR PURCHASES OF $1 MILLION OR MORE WHICH ARE MADE AT
NET ASSET VALUE AND SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE FOR 18 MONTHS
FOLLOWING THE DATE SUCH SHARES WERE PURCHASED.
4
<PAGE> 132
An investor in each of the Funds would pay the following expenses on a $1,000
investment in Class B shares of the Funds, assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH GROWTH INCOME
FUND FUND FUND
---------- ------ ------
<S> <C> <C> <C>
1 year................................................. $ 73 $ 73 $ 68
3 years................................................ $102 $102 $ 85
5 years................................................ $143 $143 $115
10 years............................................... $250* $249* $194*
</TABLE>
An investor in each of the Funds would pay the following expenses on the same
$1,000 investment in Class B shares, assuming no redemption at the end of each
time period:
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH GROWTH INCOME
FUND FUND FUND
---------- ------ ------
<S> <C> <C> <C>
1 year................................................. $ 23 $ 23 $ 18
3 years................................................ $ 72 $ 72 $ 55
5 years................................................ $123 $123 $ 95
10 years............................................... $250* $249* $194*
</TABLE>
- ---------------
* Reflects the conversion to Class A shares eight years following the end of the
calendar month in which a purchase was made; therefore years nine and ten
reflect Class A expenses.
An investor would pay the following expenses on a $1,000 investment in Class C
shares of the Funds, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH GROWTH INCOME
FUND FUND FUND
---------- ------ ------
<S> <C> <C> <C>
1 year.................................................... $33 $33 $28
3 years................................................... $72 $72 $55
</TABLE>
An investor would pay the following expenses on the same $1,000 investment in
Class C shares of the Funds, assuming no redemption at the end of each time
period:
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH GROWTH INCOME
FUND FUND FUND
---------- ------ ------
<S> <C> <C> <C>
1 year.................................................... $23 $23 $18
3 years................................................... $72 $72 $55
</TABLE>
As a result of 12b-1 fees, a long-term shareholder may pay more than the
economic equivalent of the maximum front-end sales charges permitted by rules of
the National Association of Securities Dealers, Inc. Given the maximum front-end
sales charge applicable to Class A shares and the Rule 12b-1 fees applicable to
Class A shares, Class B shares and Class C shares, it is estimated that it would
require a substantial number of years to exceed the maximum permissible
front-end sales charges.
THE ABOVE EXAMPLES SHOULD NOT BE CONSIDERED REPRESENTATIVE OF A PARTICULAR
FUND'S ACTUAL OR FUTURE EXPENSES, WHICH MAY BE GREATER OR LESS THAN THOSE SHOWN.
In addition, while the examples assume a 5% annual return, a Fund's actual
performance will vary and may result in an actual return that is greater or less
than 5%. The examples assume reinvestment of all dividends and distributions and
that the percentage amounts for total fund operating expenses remain the same
for each year.
5
<PAGE> 133
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Shown below are per share income and capital changes for a Class A share and
Class B share of each of the Funds outstanding during each of the years in the
three-year period ended October 31, 1997 and the period September 15, 1994 (date
operations commenced) through October 31, 1994 and for a Class C share of each
of the Funds outstanding during the period August 4, 1997 (date sales commenced)
through October 31, 1997. The information has been audited by KPMG Peat Marwick
LLP, independent auditors, whose unqualified reports on the Funds' financial
statements and the related notes appear in the Statement of Additional
Information.
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
------------------------------------ OCTOBER 31,
1997 1996 1995 1994
---------- -------- -------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARE
Net asset value, beginning of period................ $ 15.76 $ 13.09 $ 10.22 $ 10.00
Income from investment operations:
Net investment income (loss)...................... (0.15)(a) (0.09)(a) (0.09)(a) --
Net gains (losses) on securities (both realized
and unrealized)................................. 1.67 2.81 2.96 0.22
---------- -------- -------- --------
Total from investment operations.................. 1.52 2.72 2.87 0.22
---------- -------- -------- --------
Less distributions:
Distributions from net realized gains............. -- (0.05) -- --
---------- -------- -------- --------
Net asset value, end of period...................... $ 17.28 $ 15.76 $ 13.09 $ 10.22
========== ======== ======== ========
Total return(b)..................................... 9.65% 20.83% 28.08% 2.20%
========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted).......... $1,242,505 $919,319 $186,029 $ 18,410
========== ======== ======== ========
Ratio of expenses to average net assets........... 1.75%(c)(d) 1.83% 2.11% 2.02%(e)(f)
========== ======== ======== ========
Ratio of net investment income (loss) to average
net assets...................................... (0.88)%(c) (0.62)% (0.68)% 0.27%(f)(g)
========== ======== ======== ========
Portfolio turnover rate........................... 57% 44% 64% 2%
========== ======== ======== ========
Average brokerage commission rate paid(h)......... $ 0.0131 $ 0.0155 N/A N/A
========== ======== ======== ========
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are based on average net assets of $1,175,400,376.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements is
4.03% (annualized).
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements is (1.74)% (annualized).
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
6
<PAGE> 134
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
------------------------------------ OCTOBER 31,
1997 1996 1995 1994
---------- -------- -------- -------------
<S> <C> <C> <C> <C>
CLASS B SHARE
Net asset value, beginning of period................ $ 15.58 $ 13.02 $ 10.21 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.24)(a) (0.17)(a) (0.14)(a) --
---------- -------- -------- ------
Net gains (losses) on securities (both realized
and unrealized)................................. 1.66 2.78 2.95 0.21
---------- -------- -------- ------
Total from investment operations.................. 1.42 2.61 2.81 0.21
---------- -------- -------- ------
Less distributions:
Distributions from net realized gains............. -- (0.05) -- --
---------- -------- -------- ------
Net asset value, end of period...................... $ 17.00 $ 15.58 $ 13.02 $10.21
========== ======== ======== ======
Total return(b)..................................... 9.11% 20.09% 27.52% 2.10%
========== ======== ======== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted).......... $1,241,999 $807,215 $118,199 $6,201
========== ======== ======== ======
Ratio of expenses to average net assets........... 2.30%(c)(d) 2.37% 2.62% 2.54%(e)(f)
========== ======== ======== ======
Ratio of net investment income (loss) to average
net assets...................................... (1.44)%(c) (1.16)% (1.19)% (0.25)%(f)(g)
========== ======== ======== ======
Portfolio turnover rate........................... 57% 44% 64% 2%
========== ======== ======== ======
Average brokerage commission rate paid(h)......... $ 0.0131 $ 0.0155 N/A N/A
========== ======== ======== ======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are based on average net assets of $1,117,630,574.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average assets would have been the same.
(e) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements is
4.43% (annualized).
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements is (2.14)% (annualized).
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
7
<PAGE> 135
<TABLE>
<CAPTION>
PERIOD
AUGUST 4,
THROUGH
OCTOBER 31,
1997
-----------
<S> <C>
CLASS C SHARE
Net asset value, beginning of period........................ $ 18.39
Income from investment operations:
Net investment income (loss).............................. (0.04)(a)
Net gains (losses) on securities (both realized and
unrealized)............................................. (1.35)
-------
Total from investment operations.......................... (1.39)
-------
Less distributions:
Distributions from net realized gains..................... --
-------
Net asset value, end of period.............................. $ 17.00
=======
Total return(b)............................................. (7.56)%
=======
Ratios/supplemental data:
Net assets, end of period (000s omitted).................. $ 4,676
=======
Ratio of expenses to average net assets................... 2.36%(c)(d)
=======
Ratio of net investment income (loss) to average net
assets.................................................. (1.50)%(c)
=======
Portfolio turnover rate................................... 57%
=======
Average brokerage commission rate paid(e)................. $0.0131
=======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are annualized and based on average net assets of $2,556,355.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average assets would have been the same.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
8
<PAGE> 136
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
---------------------------------- OCTOBER 31,
1997 1996 1995 1994
--------- -------- -------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARE
Net asset value, beginning of period................ $ 14.20 $ 12.32 $ 10.23 $10.00
Income from investment operations:
Net investment income (loss)...................... (0.04) (0.01) (0.02) --
Net gains (losses) on securities (both realized
and unrealized)................................ 2.49 2.11 2.11 0.23
-------- -------- -------- ------
Total from investment operations.................. 2.45 2.10 2.09 0.23
-------- -------- -------- ------
Less distributions:
Dividends from net investment income.............. -- -- (0.004) --
Distributions from net realized gains............. -- (0.22) -- --
-------- -------- -------- ------
Total distributions............................... -- (0.22) (0.004) --
-------- -------- -------- ------
Net asset value, end of period...................... $ 16.65 $ 14.20 $ 12.32 $10.23
======== ======== ======== ======
Total return(a)..................................... 17.25% 17.26% 20.48% 2.30%
======== ======== ======== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted).......... $178,917 $114,971 $ 23,754 $3,093
======== ======== ======== ======
Ratio of expenses to average net assets(b)........ 1.76%(c)(d) 1.93% 2.12% 1.95%(e)
======== ======== ======== ======
Ratio of net investment income (loss) to average
net assets(f).................................. (0.30)%(c) (0.13)% (0.28)% 0.10%(e)
======== ======== ======== ======
Portfolio turnover rate........................... 96% 82% 79% 6%
======== ======== ======== ======
Average brokerage commission rate(g).............. $ 0.0239 $ 0.0234 N/A N/A
======== ======== ======== ======
</TABLE>
- ---------------
(a)Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b)After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.94%, 2.98% and 5.67% (annualized) for the periods 1996-1994, respectively.
(c)Ratios are based on average net assets of $155,717,515.
(d)Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been the same.
(e)Annualized.
(f)After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.14)%, (1.14)% and (3.63)% (annualized) for the periods
1996-1994, respectively.
(g)The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
9
<PAGE> 137
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
-------------------------------------- OCTOBER 31,
1997 1996 1995 1994
------------- -------- -------- -------------
<S> <C> <C> <C> <C>
CLASS B SHARE
Net asset value, beginning of period............ $ 14.05 $ 12.26 $ 10.22 $10.00
Income from investment operations:
Net investment income (loss).................. (0.11) (0.05) (0.04) --
Net gains (losses) on securities (both
realized and unrealized)................... 2.45 2.06 2.08 0.22
-------- -------- -------- ------
Total from investment operations.............. 2.34 2.01 2.04 0.22
-------- -------- -------- ------
Less distributions:
Distributions from net realized capital
gains......................................... -- (0.22) -- --
-------- -------- -------- ------
Total distributions........................... -- (0.22) -- --
-------- -------- -------- ------
Net asset value, end of period.................. $ 16.39 $ 14.05 $ 12.26 $10.22
======== ======== ======== ======
Total return(a)................................. 16.65% 16.60% 19.96% 2.20%
======== ======== ======== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted)...... $224,225 $121,848 $ 17,157 $1,277
======== ======== ======== ======
Ratio of expenses to average net assets(b).... 2.29%(c)(d) 2.48% 2.64% 2.51%(e)
======== ======== ======== ======
Ratio of net investment income (loss) to
average net assets(f)...................... (0.83)%(c) (0.69)% (0.79)% (0.47)%(e)
======== ======== ======== ======
Portfolio turnover rate....................... 96% 82% 79% 6%
======== ======== ======== ======
Average brokerage commission rate(g).......... $ 0.0239 $ 0.0234 N/A N/A
======== ======== ======== ======
</TABLE>
- ---------------
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.49%, 3.38% and 6.20% (annualized) for the periods 1996-1994, respectively.
(c) Ratios are based on average net assets of $184,750,715.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.69)%, (1.54)% and (4.16)% (annualized) for the
periods 1996-1994, respectively.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
10
<PAGE> 138
<TABLE>
<CAPTION>
PERIOD
AUGUST 4,
THROUGH
OCTOBER 31, 1997
----------------
<S> <C>
CLASS C SHARE
Net asset value, beginning of period........................ $ 17.39
Income from investment operations:
Net investment income (loss).............................. (0.03)
Net gains (losses) on securities (both realized and
unrealized)............................................ (0.97)
-------
Total from investment operations.......................... (1.00)
-------
Net asset value, end of period.............................. $ 16.39
=======
Total return(a)............................................. (5.75)%
=======
Ratios/supplement data:
Net assets, end of period (000s omitted).................. $ 1,100
=======
Ratio of expenses to average net assets(b)................ 2.29%(c)
=======
Ratio of net investment income (loss) to average net
assets(b).............................................. (0.83)%
=======
Portfolio turnover rate................................... 96%
=======
Average brokerage commission rate(d)...................... $0.0239
=======
</TABLE>
- ---------------
(a) Does not deduct sales charges and periods for less than one year, total
returns are not annualized.
(b) Ratios are annualized and based on average net assets of $628,292.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been the same.
(d) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
11
<PAGE> 139
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
-------------------------------- OCTOBER 31,
1997 1996 1995 1994
--------- ------- ------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARE
Net asset value, beginning of period..................... $ 10.85 $ 10.74 $ 10.02 $10.00
Income from investment operations:
Net investment income.................................. 0.72 0.79(a) 0.79 0.08
Net gains (losses) on securities (both realized and
unrealized)......................................... 0.21 0.25 0.75 0.01
------- ------- ------- ------
Total from investment operations....................... 0.93 1.04 1.54 0.09
------- ------- ------- ------
Less distributions:
Dividends from investment income....................... (0.72) (0.81) (0.82) (0.07)
Distributions from net realized capital gains.......... (0.13) (0.12) -- --
------- ------- ------- ------
Total distributions.................................... (0.85) (0.93) (0.82) (0.07)
------- ------- ------- ------
Net asset value, end of period........................... $ 10.93 $ 10.85 $ 10.74 $10.02
======= ======= ======= ======
Total return(b).......................................... 9.05% 10.22% 16.07% 0.93%
======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)...................................... $30,924 $21,926 $10,004 $2,661
======= ======= ======= ======
Ratio of expenses to average net assets(g)............. 1.25%(d)(e) 1.25% 1.25% 1.25%(f)
======= ======= ======= ======
Ratio of net investment income to average net
assets(d)........................................... 6.54%(d) 7.27% 7.38% 6.01%(f)
======= ======= ======= ======
Portfolio turnover rate................................ 61% 83% 128% 6%
======= ======= ======= ======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.86%, 2.02%, 3.03% and 5.61% (annualized) for the periods 1997-1994,
respectively.
(d) Ratios are based on average net assets of $27,582,444.
(e) Ratios include expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been 1.24%.
(f) Annualized.
(g) After fee waivers and/or expenses reimbursements. The ratios of net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 5.93%, 6.51%, 5.59% and 1.65% (annualized) for the
periods 1997-1994, respectively.
12
<PAGE> 140
<TABLE>
<CAPTION>
PERIOD
SEPTEMBER 15,
YEAR ENDED OCTOBER 31, THROUGH
-------------------------------------- OCTOBER 31,
1997 1996 1995 1994
------------- -------- -------- -------------
<S> <C> <C> <C> <C>
CLASS B SHARE
Net asset value, beginning of period............ $ 10.84 $ 10.73 $ 10.01 $10.00
Income from investment operations:
Net investment income......................... 0.67 0.74(a) 0.74 0.07
Net gains (losses) on securities (both
realized and unrealized)................... 0.21 0.24 0.75 0.01
-------- -------- -------- ------
Total from investment operations.............. 0.88 0.98 1.49 0.08
-------- -------- -------- ------
Less distributions:
Dividends from investment income.............. (0.67) (0.75) (0.77) (0.07)
-------- -------- -------- ------
Distributions from net realized gains......... (0.13) (0.12) -- --
-------- -------- -------- ------
Total distributions........................... (0.80) (0.87) (0.77) (0.07)
-------- -------- -------- ------
Net asset value, end of period.................. $ 10.92 $ 10.84 $ 10.73 $10.01
======== ======== ======== ======
Total return(b)................................. 8.48% 9.66% 15.56% 0.79%
======== ======== ======== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted)...... $ 25,121 $ 16,787 $ 4,207 $ 362
======== ======== ======== ======
Ratio of expenses to average net assets(c).... 1.76%(d)(e) 1.75% 1.74% 1.73%(f)
======== ======== ======== ======
Ratio of net investment income to
average net assets(g)...................... 6.03%(d) 6.77% 6.88% 3.59%(f)
======== ======== ======== ======
Portfolio turnover rate....................... 61% 83% 128% 6%
======== ======== ======== ======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.37%, 2.53%, 3.57% and 22.09% (annualized) for the periods 1997-1994,
respectively.
(d) Ratios are based on average net assets of $21,915,481.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. The ratios of net
investment income (loss) to average net assets prior to fee waivers and/or
expense reimbursements were 5.42%, 6.00% and 5.05% and (16.77)% (annualized)
for the periods 1997-1994, respectively.
13
<PAGE> 141
<TABLE>
<CAPTION>
PERIOD
AUGUST 4,
THROUGH
OCTOBER 31,
1997
-----------
<S> <C>
CLASS C SHARE
Net asset value, beginning of period........................ $ 10.76
Income from investment operations:
Net investment income..................................... 0.15(a)
Net gains (losses) on securities (both realized and
unrealized)............................................ 0.17
-------
Total from investment operations.......................... 0.32
-------
Less distributions:
Dividends from net investment income...................... (0.13)
Distributions from net realized gains..................... (0.03)
Total distributions....................................... (0.16)
Net asset value, end of period.............................. $ 10.92
=======
Total return(b)............................................. 2.99%
=======
Ratios/supplemental data:
Net assets, end of period (000s omitted).................. $ 242
=======
Ratio of expenses to average net assets(c)................ 1.76%(d)(e)
=======
Ratio of net investment income to average net
assets(f).............................................. 6.03%(c)(d)
=======
Portfolio turnover rate................................... 61%
=======
</TABLE>
- ---------------
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and periods for less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.37% (annualized).
(d) Ratios are annualized and based on average net assets of $98,262.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(f) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 5.42% (annualized).
14
<PAGE> 142
- --------------------------------------------------------------------------------
PERFORMANCE
The performance of each Fund may be quoted in advertising in terms of total
return, and the performance of INCOME FUND may also be quoted in terms of yield.
All advertisements of a Fund will disclose the maximum sales charge (including
deferred sales charge) to which investments in shares of the Funds may be
subject. If any advertised performance data does not reflect the maximum sales
charge (if any), such advertisement will disclose that the sales charge has not
been deducted in computing the performance data, and that, if reflected, the
maximum sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Funds. Further information regarding the Funds'
performance is contained in the Funds' annual reports to shareholders, which are
available upon request and without charge.
Standardized total return for Class A shares of a Fund reflects the deduction
of the maximum initial sales charge at the time of purchase. Standardized total
return for Class B shares of a Fund reflects the deduction of the maximum
applicable contingent deferred sales charge on a redemption of shares held for
the period. Standardized total return for Class C shares of a Fund reflects the
deduction of a 1% contingent deferred sales charge, if applicable, on a
redemption of shares held for the period.
Each Fund's total return shows its overall change in value, including changes
in share price assuming that all the Fund's dividends and capital gain
distributions are reinvested and that all charges and expenses are deducted. A
cumulative total return reflects a Fund's performance over a stated period of
time. An average annual total return reflects the hypothetical compounded annual
rate of return that would have produced the same cumulative total return if the
Fund's performance had been constant over the entire period. BECAUSE AVERAGE
ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN A FUND'S RETURN, INVESTORS SHOULD
RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR RESULTS. To
illustrate the components of overall performance, a Fund may separate its
cumulative and average annual returns into income results and capital gains or
losses.
Yield is computed in accordance with a standardized formula described in the
Statement of Additional Information and can be expected to fluctuate from time
to time and is not necessarily indicative of future results. Accordingly, the
yield information may not provide a basis for comparison with investments which
pay a fixed rate of interest for a stated period of time. Yield reflects
investment income net of expenses over the relevant period attributable to a
share of the Fund, expressed as an annualized percentage of the maximum offering
price per share of the Fund. It is a function of the type and quality of a
Fund's investments, its maturity and its operating expense ratio.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of any Fund. Such a practice will
have the effect of increasing the Fund's yield and total return.
The performance of each Fund will vary from time to time, and past results are
not necessarily representative of future results. Each Fund's performance is a
function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund as well
as by general market conditions. A shareholder's investment in any of the Funds
is not insured or guaranteed. These factors should be carefully considered by
the investor before making an investment in a Fund.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Each of the Funds has its own investment objective and investment program as
discussed herein. The Funds' investment objective(s) are fundamental policies
that cannot be changed without shareholder approval. There can, of course, be no
assurance that any Fund will in fact achieve its objective(s). The Board of
Directors of the Company reserves the right to change any of the investment
policies, strategies or practices of any of the Funds, as described in this
Prospectus and in the Statement of Additional Information, without shareholder
approval, except in those instances where shareholder approval is expressly
required.
AIM GLOBAL AGGRESSIVE GROWTH FUND. The investment objective of AGGRESSIVE
GROWTH FUND is to provide above-average long-term growth of capital
appreciation. The Fund seeks to achieve its objective by investing in a
portfolio of global equity securities including securities of selected companies
with relatively small market capitalization.
The AGGRESSIVE GROWTH FUND will invest in companies throughout the world which
AIM believes possess exceptional growth potential that should enhance such
companies' prospects for future growth in earnings. As a result of this policy,
the market prices of many of the securities purchased and held by AGGRESSIVE
GROWTH FUND may fluctuate widely. Any income received from securities held by
the Fund will be incidental, and an investor should not consider a purchase of
shares of AGGRESSIVE GROWTH FUND as equivalent to a complete investment program.
AGGRESSIVE GROWTH FUND will emphasize investment in small to medium-sized
companies, but its strategy does not preclude investment in large, seasoned
companies which in AIM's judgment possess superior potential returns similar to
companies with formative growth profiles. The Fund will also invest in
established smaller companies (under $1 billion in market capitalization) which
in AIM's judgment offer exceptional value based upon substantially above average
earnings growth potential relative to market value. Investors should realize
that equity securities of small to medium-sized companies may involve greater
risk than is associated with investing in more established companies. Small to
medium-sized companies often have limited product and market diversification,
fewer financial and managerial resources or may be dependent on a few key
managers. Also, because smaller companies normally have fewer shares outstanding
than larger companies and trade less frequently, it may be more difficult for
the Fund to buy and sell shares without an unfavorable impact on prevailing
market prices. Some of the companies in
15
<PAGE> 143
which the Fund may invest may distribute, sell or produce products which have
recently been brought to market. Any of the foregoing may change suddenly and
have an immediate impact on the value of the Fund's investments. Furthermore,
whenever the securities markets have experienced rapid price changes due to
national economic trends, secondary growth securities have historically been
subject to exaggerated price changes.
AIM GLOBAL GROWTH FUND. The investment objective of GROWTH FUND is to provide
long-term growth of capital. The Fund seeks to achieve its objective by
investing in a portfolio of global equity securities of selected companies that
are considered by AIM to have strong earnings momentum. Current income will not
be an important criterion of investment selection, and any such income should be
considered incidental.
In managing both AGGRESSIVE GROWTH FUND and GROWTH FUND, AIM seeks to apply to
each of the diversified portfolios of equity securities the same investment
strategy which it applies to several of its other managed portfolios which have
similar investment objectives but which invest primarily in United States
equities markets. Each of AGGRESSIVE GROWTH FUND and GROWTH FUND will utilize to
the extent practicable a fully managed investment policy providing for the
selection of securities which meet certain quantitative standards determined by
AIM. AIM reviews carefully the earnings history and prospects for growth of each
company considered for investment by each of the two Funds. It is anticipated
that common stocks will be the principal form of investment of AGGRESSIVE GROWTH
FUND and GROWTH FUND. The portfolio of each of the two Funds is primarily
comprised of securities of two basic categories of companies: (a) "core"
companies, which AIM considers to have experienced above-average and consistent
long-term growth in earnings and to have excellent prospects for outstanding
future growth, and (b) "earnings acceleration" companies which AIM believes are
currently enjoying a dramatic increase in earnings.
Under normal market conditions, AGGRESSIVE GROWTH FUND and GROWTH FUND will
invest primarily in marketable equity securities (including common and preferred
stock and other securities having the characteristics of stock (such as an
equity or ownership interest in a company)) of companies which are listed on a
recognized securities exchange or traded in an over-the-counter market. Each of
these Funds may satisfy the foregoing requirement in part by investing in the
securities of issuers which are in the form of American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs"), or other securities
representing underlying securities of foreign issuers. Each of AGGRESSIVE GROWTH
FUND and GROWTH FUND may invest up to 20% of its total assets in securities
convertible into or exchangeable for equity securities of foreign and domestic
issuers which (except in the case of ADRs, EDRs and other securities
representing underlying securities of foreign issuers) are listed on a
recognized securities exchange or traded in an over-the-counter market.
If a particular foreign company meets the quantitative standards determined by
AIM, its securities may be acquired by a Fund regardless of the location of the
company or the percentage of the Fund's investments in the company's country or
region. However, AIM will also consider other factors in making investment
decisions for these Funds, including such factors as the prospects for relative
economic growth among countries or regions, economic and political conditions,
currency exchange fluctuations, tax considerations and the liquidity of a
particular security. Under normal market conditions, AGGRESSIVE GROWTH FUND and
GROWTH FUND will maintain at least 20% of their respective total assets in U.S.
dollar denominated securities.
AIM recognizes that often there is less public information about foreign
companies than is available in reports supplied by domestic companies, that
foreign companies are not subject to uniform accounting and financial reporting
standards, and that there may be greater delays experienced by a Fund in
receiving financial information supplied by foreign companies than comparable
information supplied by domestic companies. In addition, the value of a Fund's
investments that are denominated in a foreign currency may be affected by
changes in currency exchange rates. For these and other reasons, AIM from time
to time may encounter greater difficulty applying its disciplined stock
selection strategy to an international equity investment portfolio than to a
portfolio of domestic equity securities. See "Risk Factors -- Foreign
Securities."
AGGRESSIVE GROWTH FUND and GROWTH FUND each will normally invest at least 65%
of their respective total assets in marketable equity securities of foreign and
domestic issuers, including common and preferred stock.
AGGRESSIVE GROWTH FUND and GROWTH FUND will each emphasize investment in
companies in developed countries such as the United States, the countries of
Western Europe and certain countries in the Pacific Basin (such as Japan, Hong
Kong and Australia). The Funds may also invest in the securities of companies
located in developing countries (such as Turkey, Poland and Mexico) in various
regions of the world. A "developing country" is a country in the initial stages
of its industrial cycle. Under normal market conditions, the assets of each Fund
will be invested in the securities of companies located in at least four
different countries, including the United States.
Investment in the equity markets of developing countries involves exposure to
securities exchanges that may have substantially less trading volume and greater
price volatility, economic structures that are less diverse and mature, and
political systems that may be less stable than the equity markets of developed
countries. See "Risk Factors -- Emerging Markets and Developing Countries."
AIM GLOBAL INCOME FUND. INCOME FUND'S primary investment objective is to
provide a high level of current income. As a secondary objective the Fund seeks
preservation of principal and capital appreciation. The Fund seeks to achieve
its objectives by investing in a portfolio of U.S. and foreign government and
corporate debt securities. INCOME FUND intends to invest in (i) foreign
government securities, (ii) securities issued by supranational organizations
(such as the World Bank), (iii) foreign and domestic
16
<PAGE> 144
corporate debt securities, including lower-rated or unrated U.S.
dollar-denominated high yield corporate debt securities, commonly known as
"junk bonds" and (iv) U.S. Government securities, including U.S. Government
Agency mortgage-backed securities.
INCOME FUND is a non-diversified portfolio, which means that with respect to
50% of its assets, it is permitted to invest more than 5% of its assets in the
securities of any one issuer. INCOME FUND will, however, invest no more than 5%
of its total assets in the securities of any one corporate issuer, and will
invest no more than 25% of its total assets in securities of any one foreign
government or supranational issuer. INCOME FUND will generally invest in the
securities of issuers located in at least four countries, including the United
States.
INCOME FUND may invest in securities issued by governments and companies
throughout the world, but expects that it will invest primarily in securities of
issuers in industrialized countries with established securities markets, such as
Western European countries, Canada, Japan, Australia, New Zealand and the United
States. INCOME FUND may, however, invest up to 20% of its total assets in
securities of issuers in developing countries such as Turkey, Poland and Mexico.
Although INCOME FUND will invest at least 65% of its total assets in
non-convertible debt securities of foreign and domestic issuers, it may invest
up to 10% of its total assets in common stocks, preferred stocks and similar
equity securities of foreign and domestic issuers. INCOME FUND may also invest
up to 10% of its total assets in convertible debt securities of foreign and
domestic issuers.
INCOME FUND may invest less than 35% of its total assets in high yield debt
securities (i.e., "junk bonds"). Such securities, at the time of purchase, are
rated below investment grade or are determined by AIM to be of non-investment
grade quality. (For a description of the various rating categories of corporate
debt securities in which INCOME FUND may invest, see Appendix A to this
Prospectus.)
During the fiscal year ended October 31, 1997, the percentage of INCOME FUND'S
average annual assets, calculated on a dollar weighted basis, which was invested
in securities within each rating category of Moody's (as described in Appendix
A), and in unrated securities determined by AIM to be of comparable quality, was
as follows:
<TABLE>
<CAPTION>
INCOME FUND
-----------
<S> <C>
Aaa......................................................... 31.94%
Aa.......................................................... 12.86%
A........................................................... 14.12%
Baa......................................................... 10.91%
Ba.......................................................... 6.75%
B........................................................... 18.28%
Caa......................................................... 0.54%
Ca.......................................................... 0.00%
C........................................................... 0.00%
D........................................................... 0.00%
Unrated..................................................... 4.60%
-------
Total Average Annual Assets....................... 100.0%
</TABLE>
Securities issued by the U.S. Treasury (notes, bonds and bills) are supported
by the full faith and credit of the United States government, while certain
securities issued or guaranteed by agencies or instrumentalities of the U.S.
Government may not be supported by the full faith and credit of the United
States. These agency securities include both obligations supported by the right
of the issuer to borrow from the U.S. Treasury (such as obligations of the
Federal Home Loan Bank) and obligations supported by the credit of the agency or
instrumentality (such as Federal National Mortgage Association bonds.)
Similarly, obligations of foreign governments include obligations issued by
national, provincial, state or other governments that have taxing authority over
their local populations, or by agencies of such governments that may be
supported by the full faith and credit of the governmental entity, or solely by
the credit of such agency.
Supranational organizations include organizations formed and supported by
governmental entities to promote economic growth and development, or
international banking institutions, such as the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the Inter-American Development Bank.
Supranational organizations are generally formed and supported by the capital
contributions of governmental entities and, in their lending and other
activities, carry out the particular purposes designated by their member
governmental entities.
17
<PAGE> 145
The value of the debt securities in which INCOME FUND invests will change in
response to interest rate changes and other factors. During periods of rising
interest rates, the values of outstanding long-term debt securities will
generally decline, and during periods of falling interest rates, the values of
such securities will generally rise. Such changes will affect the net asset
value per share of INCOME FUND. Longer-term fixed income securities tend to be
subject to greater fluctuations in price than shorter-term securities.
For a discussion of certain risks associated with investments in high yield
securities (i.e., "junk bonds"), foreign securities and non-diversified funds,
see "Risk Factors" in this Prospectus. For a further discussion of the intended
investment strategies of AGGRESSIVE GROWTH FUND, GROWTH FUND and INCOME FUND,
see "Hedging Strategies" and "Other Investment Techniques" in this Prospectus.
- --------------------------------------------------------------------------------
HEDGING STRATEGIES
Each of the Funds may, at such times as AIM deems appropriate and consistent
with the investment objective of the Fund, write (sell) covered put or call
options on its portfolio securities. Each of the Funds may also purchase and
sell (i) options on domestic and foreign securities and currencies, (ii) stock
index options, (iii) stock, currency and interest rate futures, (iv) options on
stock, currency, stock index and interest rate futures and (v) foreign forward
currency exchange contracts. The purpose of such transactions is to hedge
against changes in the market value of a Fund's portfolio securities caused by
fluctuating interest rates, fluctuating currency exchange rates and changing
market conditions, and to close out or offset existing positions in such options
or futures contracts as described below. None of the Funds will engage in such
transactions for speculative purposes.
OPTIONS. Each Fund may purchase options issued by the Options Clearing
Corporation. Such options give a Fund the right for a fixed period of time to
sell (in the case of purchase of a put option) or to buy (in the case of
purchase of a call option) the number of units of the underlying security or
obligation covered by the option at a fixed or determinable exercise price.
Buying a put option hedges against the risk of a market decline. Buying a call
option hedges against a market advance. Prior to its expiration, a put or call
option may be sold in a closing sale transaction. Gain or loss from such a sale
will depend on whether the amount received is more or less than the premium paid
for the option plus the related transaction costs.
Each Fund also may write (sell) put or call options, but only if such options
are covered and remain covered as long as the Fund is obligated as a writer of
the option (seller). A call option is "covered" if a Fund owns the underlying
security covered by the call. A put option is "covered" if a Fund segregates
with its custodian liquid assets with a value equal to the exercise price of the
put option. If a "covered" call or put option expires unexercised, the writer
realizes a gain in the amount of the premium received. If the covered call
option is exercised, the writer realizes either a gain or loss from the sale or
purchase of the underlying security with the proceeds to the writer being
increased by the amount of the premium. If the covered put option is exercised,
the writer's cost of purchasing the underlying security is reduced by the amount
of the premium received from the initial sale of the put option. Prior to its
expiration, a put or call option may be closed out by means of a purchase of an
identical option. Any gain or loss from such transaction will depend on whether
the amount paid is more or less than the premium received for the option plus
related transaction costs.
Each Fund may also purchase and write options in combination with each other
to adjust the risk and return characteristics of certain portfolio security
positions. This technique is commonly referred to as a "collar."
Options are subject to certain risks, including the risk of imperfect
correlation between the option and a Fund's other investments and the risk that
there might not be a liquid secondary market for the option when the Fund seeks
to hedge against adverse market movements. In general, options whose strike
prices are close to their underlying securities' current values will have the
highest trading value, while options whose strike prices are further away may be
less liquid. The liquidity of options may also be affected if options exchanges
impose trading halts, particularly when markets are volatile.
None of the Funds will write options if, immediately after such sale, the
aggregate value of the securities or obligations underlying the outstanding
options exceeds 25% of the Fund's total assets. None of the Funds will purchase
put options (including options on securities indices and futures contracts) if,
at the time of investment, the aggregate premiums paid for such options will
exceed 5% of the Fund's total assets.
FUTURES AND FORWARD CONTRACTS. Since substantially all of the securities held
by each Fund may be denominated in foreign currencies, the value of their
respective portfolios will be affected by changes in exchange rates between
currencies (including the U.S. dollar), as well as by changes in the market
value of the securities themselves. Each Fund may enter into interest rate,
exchange rate and currency futures contracts and related options, or it may
purchase or sell stock index futures contracts and related options in order to
hedge the value of its portfolio against changes in market conditions or in
exchange rates between currencies (including the U.S. dollar). Futures contracts
obligate the seller to deliver a specific type of security called for in the
contract, at a specified future time and for a specified price. Futures
contracts are traded on U.S. and foreign exchanges and generally contain
standardized strike prices and expiration dates. Certain futures contracts may
be satisfied by actual delivery of the securities or, more typically, by
entering into an offsetting transaction. An option on a futures contract gives
the purchaser the right, in return for the premium paid, to assume a position in
a futures contract. In addition to purchasing or selling futures contracts on
currencies and specific securities, interest rates and exchange rates, each Fund
may purchase or sell stock index futures contracts. A stock index futures
contract is an agreement to take or make delivery of an amount of cash based on
the difference between the value of a stock index at the beginning
18
<PAGE> 146
and at the end of the contract period. No more than 5% of each Fund's total
assets will be committed to initial margin deposits required pursuant to futures
contracts. Percentage investment limitations on each Fund's investment in
options on futures contracts are set forth above under "Options." Although each
Fund is authorized to invest in futures contracts and related options with
respect to foreign securities, stock indices, interest rates and currencies, it
will limit such investments to those which have been approved by the Commodity
Futures Trading Commission for investment by United States investors.
In attempting to manage its currency exposure, each Fund may buy and sell
currencies, either in the spot (cash) market or in the forward market (through
forward contracts generally expiring within one year). Each Fund may also enter
into forward contracts with respect to a specific purchase or sale of a
security, or with respect to its portfolio positions generally. When a Fund
purchases a security for settlement in the near future, it may immediately
purchase in the forward market the currency needed to pay for and settle the
purchase. By entering into a forward contract with respect to the specific
purchase or sale of a security denominated in a foreign currency, a Fund can
secure an exchange rate between the trade and settlement dates for that purchase
or sale transaction. This practice is sometimes referred to as "transaction
hedging." In addition to hedging specific securities transactions, the Funds may
also generally hedge their respective holdings denominated in a particular
currency. This practice is sometimes referred to as "position hedging." The
Funds may not position hedge with respect to the currency of a particular
country to an extent greater than the aggregate market value (at the time of
making such sale) of the securities held in any such Fund's portfolio
denominated or quoted in that particular foreign currency. None of the Funds
will enter into a position hedging commitment if, as a result thereof, (1)
AGGRESSIVE GROWTH FUND or GROWTH FUND would have more than 10% of the value of
their respective total assets committed to such contracts, or (2) INCOME FUND
would have more than 40% of the value of its total assets committed to such
contracts. None of the Funds will enter into a forward contract with a term of
more than one year.
Unlike futures contracts, forward contracts are generally individually
negotiated and privately traded. A forward contract obligates the seller to sell
a specific security or currency at a specified price on a future date, which may
be any fixed number of days from the date of the contract. Each Fund may enter
into transaction hedging forward contracts with respect to all or a substantial
portion of its trades.
There are risks associated with the use of futures and forward contracts and
options thereon for hedging purposes. During certain market conditions, sales of
futures contracts may not completely offset a decline or rise in the value of a
Fund's portfolio securities or currency against which the futures or forward
contract or options thereon are being sold. In the futures and options on
futures markets, it may not always be possible to execute a buy or sell order at
the desired price, or to close out an open position due to market conditions,
limits on open positions and/or daily price fluctuations. Risks in the use of
futures contracts and options thereon also result from the possibility that
changes in the market value of securities or currency may differ substantially
from the changes anticipated by a Fund when hedged positions were established.
Successful use of futures and forward contracts and options thereon is dependent
upon AIM's ability to predict correctly movements in the direction of the
applicable markets. No assurance can be given that AIM's judgment in this
respect will be correct. Accordingly, the Funds may lose the expected benefit of
futures and forward transactions and options thereon if markets move in a manner
unanticipated by AIM.
- --------------------------------------------------------------------------------
OTHER INVESTMENT TECHNIQUES
Each of the Funds has the flexibility to invest, to the extent described
below, in a variety of instruments designed to enhance its investment
capabilities. Each of the Funds may invest in money market obligations, foreign
securities, repurchase agreements, reverse repurchase agreements, illiquid
securities, Rule 144A securities, ADRs and EDRs; INCOME FUND may invest in U.S.
Government Agency Mortgage-Backed Securities; and each of the Funds may purchase
or sell securities on a delayed delivery or when-issued basis, may borrow money,
may lend portfolio securities and make short sales "against the box." A short
sale is "against the box" to the extent that the Fund contemporaneously owns or
has the right to obtain securities identical to those sold short without payment
of any further consideration.
CASH MANAGEMENT AND TEMPORARY DEFENSIVE MEASURES. AIM may invest a portion of
the assets of the Funds in (i) cash or short-term Money Market Obligations, (ii)
U.S. government obligations or investment grade (high quality) corporate bonds
or other debt securities, and (iii) taxable municipal securities, when such
positions are deemed advisable in light of economic or market conditions or for
daily cash management purposes. In addition, AIM may invest, for temporary
defensive purposes, all or substantially all of the assets of the Funds in the
securities described above. The term "Money Market Obligations" includes a broad
range of U.S. Government and foreign government obligations, and bank and
commercial instruments that may be available in the money markets. Examples of
such obligations include U.S. Treasury obligations and repurchase agreements
secured by such obligations, bankers' acceptances, certificates of deposit,
repurchase agreements, time deposits and commercial paper, and U.S. Government
agencies' securities. Money Market Obligations such as bankers' acceptances,
certificates of deposit and time deposits may be purchased from U.S. or foreign
banks. See the Statement of Additional Information for more information on Money
Market Obligations.
To the extent that any of the Funds is invested to a significant degree in
cash or cash equivalent Money Market Obligations, U.S. government obligations or
investment grade (high quality) corporate bonds or other debt securities, or
taxable municipal securities, its ability to achieve its investment objective or
objectives may be adversely affected. Under normal circumstances, neither
AGGRESSIVE GROWTH FUND nor GROWTH FUND will invest more than 35% of the value of
its total assets in high-grade short-term securities,
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<PAGE> 147
including repurchase agreements. Under normal circumstances, INCOME FUND will
maintain at least 20% of its total assets in securities of U.S. issuers.
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES. INCOME FUND may invest in
U.S. Government Agency Mortgage-Backed Securities. These securities are
obligations issued or guaranteed by the United States Government or by one of
its agencies or instrumentalities, including but not limited to the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), or the Federal Home Loan Mortgage Corporation ("FHLMC").
U.S. Government Agency Mortgage-Backed Certificates provide for the pass-through
to investors of their pro-rata share of monthly payments (including any
principal prepayments) made by the individual borrowers on the pooled mortgage
loans, net of any fees paid to the guarantor of such securities and the
servicers of the underlying mortgage loans. GNMA, FNMA, and FHLMC each guarantee
timely distributions of interest to certificate holders. GNMA and FNMA guarantee
timely distributions of scheduled principal. FHLMC has in the past guaranteed
only the ultimate collection of principal of the underlying mortgage loan;
however, FHLMC Gold Participation Certificates now guarantee timely payment of
monthly principal reductions. Although their close relationship with the U.S.
Government is believed to make them high-quality securities with minimal credit
risks, the U.S. Government is not obligated by law to support either FNMA or
FHLMC. However, historically there have not been any defaults of FNMA or FHLMC
issues. See Appendix B for a more complete description of these securities.
Mortgage-backed securities consist of interests in underlying mortgages
generally with maturities of up to thirty years. However, due to early
unscheduled payments of principal on the underlying mortgages, the securities
have a shorter average life and, therefore, less volatility than a comparable
thirty-year bond. The value of U. S. Government Agency Mortgage-Backed
Securities, like other traditional debt instruments, will tend to decline as
interest rates rise and increase as interest rates decline.
REPURCHASE AGREEMENTS. Each of the Funds may enter into repurchase agreements
with institutions believed by the Company's Board of Directors to present
minimal credit risk. A repurchase agreement is an instrument under which the
Fund acquires ownership of a debt security and the seller agrees, at the time of
the sale, to repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the Fund's holding period. In the event of
a bankruptcy or other default of a seller of a repurchase agreement (such as the
sellers' failure to repurchase the obligation in accordance with the terms of
the agreement), a Fund could experience both delays in liquidating the
underlying securities and losses, including: (a) a possible decline in the value
of the underlying security during the period while the Fund seeks to enforce its
rights thereto; (b) possible reduced levels of income and lack of access to
income during this period; and (d) expenses of enforcing its rights. Repurchase
agreements are considered to be loans by the Fund under the Investment Company
Act of 1940, as amended (the "1940 Act"). Repurchase agreements will be secured
by U.S. Treasury securities, U.S. Government agency securities (including, but
not limited to, those which have been stripped of their interest payments and
mortgage-backed securities) and commercial paper. For additional information on
the use of repurchase agreements, see the Statement of Additional Information.
REVERSE REPURCHASE AGREEMENTS. Each Fund may invest in reverse repurchase
agreements, which involve the sale of securities held by the Fund, with an
agreement that the Fund will repurchase the securities at an agreed upon price
and date. Each Fund may employ reverse repurchase agreements (i) for temporary
emergency purposes, such as to meet unanticipated net redemptions so as to avoid
liquidating other portfolio securities during unfavorable market conditions;
(ii) to cover short-term cash requirements resulting from the timing of trade
settlements; or (iii) to take advantage of market situations where the interest
income to be earned from the investment of the proceeds of the transaction is
greater than the interest expense of the transaction. At the time it enters into
a reverse repurchase agreement, the Fund will segregate liquid assets having a
dollar value equal to the repurchase price. Reverse repurchase agreements are
considered borrowings by the Fund under the 1940 Act. Reverse repurchase
agreements involve the risk that the market value of securities retained by a
Fund in lieu of liquidation may decline below the repurchase price of the
securities sold by a Fund which it is obligated to repurchase. This risk, if
encountered, could cause a reduction on the net asset value of a Fund's shares.
AGGRESSIVE GROWTH FUND and GROWTH FUND currently intend to enter into reverse
repurchase agreements only for temporary or emergency purposes and not as a
means of increasing income. INCOME FUND may enter into reverse repurchase
agreements to enhance portfolio returns. See "Borrowing."
LENDING OF PORTFOLIO SECURITIES. Each Fund may from time to time lend
securities from their respective portfolios, with a value not exceeding 33 1/3%
of its total assets, to banks, brokers and other financial institutions, and
receive in return collateral in the form of cash or securities issued or
guaranteed by the U.S. Government which will be maintained at all times in an
amount equal to at least 100% of the current market value of the loaned
securities. During the period of the loan, a Fund receives the income on both
the loaned securities and the collateral and thereby increases its yield. In the
event that the borrower defaults on its obligation to return loaned securities
because of insolvency or otherwise, a Fund could experience delays and costs in
gaining access to the collateral and could suffer a loss to the extent that the
value of the collateral falls below the market value of the loaned securities.
SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. Each Fund may
purchase securities on a "when-issued" basis, that is, delivery of and payment
of the securities is not fixed at the date of purchase, but is set after the
securities are issued (normally within forty-five days after the date of the
transaction). Each Fund also may purchase or sell securities on a delayed
delivery basis. The payment obligation and the interest rate that will be
received on the delayed delivery securities are fixed at the time the buyer
enters into the commitment. Each Fund will only make commitments to purchase
when-issued or delayed delivery securities with the intention of actually
acquiring such securities, but each Fund may sell these securities before the
settlement date if it is
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<PAGE> 148
deemed advisable. If a Fund purchases a when-issued security or enters into a
delayed delivery agreement, the Fund's custodian bank will segregate liquid
assets in an amount at least equal to the when-issued commitment or delayed
delivery agreement commitment.
DOLLAR ROLL TRANSACTIONS. In order to enhance portfolio returns and manage
prepayment risks, INCOME FUND may engage in dollar roll transactions with
respect to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar roll
transaction, a Fund sells a mortgage security held in the portfolio to a
financial institution such as a bank or broker-dealer, and simultaneously agrees
to repurchase a substantially similar security (same type, coupon and maturity)
from the institution at a later date at an agreed upon price. The mortgage
securities that are repurchased will bear the same interest rate as those sold,
but generally will be collateralized by different pools of mortgages with
different prepayment histories. During the period between the sale and
repurchase, the Fund will not be entitled to receive interest and principal
payments on the securities sold. Proceeds of the sale will be invested in
short-term instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for the Fund
exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the
securities retained by a Fund may decline below the price of the securities that
the Fund has sold but is obligated to repurchase under the agreement. In the
event the buyer of securities under a dollar roll transaction files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of
the securities may be restricted pending a determination by the other party, or
its trustee or receiver, whether to enforce the Fund's obligation to repurchase
the securities. See "Borrowing," below for the applicable limitation on dollar
roll transactions.
BORROWING. Each of the Funds may borrow money to a limited extent from banks
(including the Funds' custodian bank) for temporary or emergency purposes
subject to the limitations under the 1940 Act. The Funds will restrict
borrowings, reverse repurchase agreements and dollar roll transactions to an
aggregate of 33-1/3% of each Fund's respective total assets at the time of the
transaction. Neither AGGRESSIVE GROWTH FUND nor GROWTH FUND will purchase
additional securities when any borrowings from banks exceed 5% of each Fund's
respective total assets.
Reverse repurchase agreement transactions and dollar roll transactions are
considered borrowings under the 1940 Act. Any investment gains made by INCOME
FUND with the borrowed monies in excess of interest paid by the Fund will cause
the net asset value of the Fund's shares to rise faster than would otherwise be
the case. On the other hand, if the investment performance of the additional
securities purchased with the proceeds of such borrowings fails to cover the
interest paid by the money borrowed by the Fund, the net asset value of the Fund
will decrease faster than would otherwise be the case. This speculative factor
is known as "leveraging."
SHORT SALES. Each Fund may make short sales "against the box." A short sale is
a transaction in which a party sells a security it does not own in anticipation
of a decline in the market value of that security. A short sale is "against the
box" to the extent that a Fund contemporaneously owns or has the right to obtain
securities identical to those sold short without payment of any further
consideration. The Funds will enter into such transactions only to the extent
the aggregate value of all securities sold short does not represent more than
10% of each Fund's respective assets at any given time.
ILLIQUID SECURITIES AND RULE 144A SECURITIES. Each Fund may invest up to 15%
of its net assets in securities that are illiquid. Illiquid securities include
securities that have no readily available market quotations and cannot be
disposed of promptly (within seven days) in the normal course of business at a
price at which they are valued. Illiquid securities may include securities that
are subject to restrictions on resale because they have not been registered
under the Securities Act of 1933. Unregistered securities may, in certain
circumstances, be resold pursuant to Rule 144A, and thus may or may not
constitute illiquid securities. Limitations on the resale of unregistered
securities may have an adverse effect on their marketability, which may prevent
the Fund from disposing of them promptly at reasonable prices. The Fund may have
to bear the expense of registering such securities for resale, and the risk of
substantial delays in effecting such registrations. The Company's Board of
Directors is responsible for developing and establishing guidelines and
procedures for determining the liquidity of Rule 144A securities on behalf of
the Funds and monitoring AIM's implementation of the guidelines and procedures.
INVESTMENT IN OTHER INVESTMENT COMPANIES. Each of the Funds may invest in
other investment companies to the extent permitted by the 1940 Act, and rules
and regulations thereunder, and, if applicable, exemptive orders granted by the
SEC.
- --------------------------------------------------------------------------------
RISK FACTORS
There can be no assurance that each Fund's investment objective will be
attained. Each Fund is designed for investors seeking international
diversification, and is not intended as a complete investment program. In
addition, investing in securities of foreign companies generally involves
greater risks than investing in securities of domestic companies. INCOME FUND
may also invest in high yield securities (i.e., "junk bonds"), which entail
certain risks. Investors should consider carefully the following special factors
before investing in a Fund.
FOREIGN SECURITIES. The following considerations are risk factors associated
with the Funds' investments in foreign securities:
CURRENCY RISK. The value of a Fund's foreign investments may be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security generally decreases when the value of the U.S. dollar
rises against the foreign currency in which the security is denominated,
and tends to increase when the value of the U.S. dollar falls against such
currency.
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<PAGE> 149
POLITICAL AND ECONOMIC RISK. The economies of many of the countries in
which a Fund may invest are not as developed as the United States economy
and may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could also adversely affect the value of a
Fund's investments.
REGULATORY RISK. Foreign companies are generally not subject to the
regulatory controls imposed on United States issuers and, as a consequence,
there is generally less public information available about foreign
securities than is available about domestic securities. Foreign companies
are not subject to accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic
companies. Income from foreign securities owned by a Fund may be reduced by
withholding tax at the source which would reduce dividend income payable to
the Fund's shareholders.
MARKET RISK. The securities markets in many of the countries in which
a Fund invests will have substantially less trading volume than the major
United States markets. As a result, the securities of some foreign
companies may be less liquid and experience more price volatility than
comparable domestic securities. There is generally less government
regulation and supervision of foreign stock exchanges, brokers and issuers
which may make it difficult to enforce contractual obligations. Transaction
costs in foreign securities markets are likely to be higher, since
brokerage commission rates in foreign countries are likely to be higher
than in the United States. Further, the settlement period of securities
transactions in foreign markets may be longer than in domestic markets.
These considerations generally are more of a concern in developing
countries. For example, the possibility of revolution and the dependence on
foreign economic assistance may be greater in these countries than in
developed countries. The management of the Funds seeks to mitigate the
risks associated with these considerations through diversification and
active professional management.
NON-INVESTMENT GRADE DEBT SECURITIES (INCOME FUND ONLY). INCOME FUND may
invest in non-investment grade debt securities, commonly known as "junk bonds."
While generally providing greater income and opportunity for gain,
non-investment grade debt securities may be subject to greater risks than
higher-rated securities. Economic downturns tend to disrupt the market for junk
bonds and adversely affect their values. Such economic downturns may be expected
to result in increased price volatility for junk bonds and of the value of
shares of the Fund, and increased issuer defaults on junk bonds.
In addition, many issuers of junk bonds are substantially leveraged, which may
impair their ability to meet their obligations. In some cases, junk bonds are
subordinated to the prior payment of senior indebtedness, which potentially
limits a Fund's ability to fully recover principal or to receive payments when
senior securities are subject to a default.
The credit rating of a debt security does not necessarily address its market
value risk, and ratings may from time to time change to reflect developments
regarding the issuer's financial condition. Junk bonds have speculative
characteristics which are likely to increase in number and significance with
each successive lower rating category. Credit ratings evaluate the safety of
principal and interest payments, not market value risk of high yield bonds.
Also, since credit rating agencies may fail to timely change the credit ratings
to reflect subsequent events, AIM continuously monitors the issuers of high
yield bonds in INCOME FUND'S portfolio to determine if the issuers will have
sufficient cash flow and profits to meet required principal and interest
payments, and to attempt to assure the bonds' liquidity so that INCOME FUND can
meet redemption requests. The achievement of INCOME FUND'S investment objective
may be more dependent on AIM's own credit analysis than might be the case for a
fund which invests in higher quality bonds. INCOME FUND may retain a portfolio
security whose rating has been changed. See Appendix A to this
Prospectus -- "Description of Corporate Bond Ratings."
When the secondary market for junk bonds becomes more illiquid, or in the
absence of readily available market quotations for such securities, the relative
lack of reliable objective data makes it more difficult for the directors to
value a Fund's securities, and judgment plays a more important role in
determining such valuations. Increased illiquidity in the junk bond market also
may affect a Fund's ability to dispose of such securities at desirable prices.
In the event a Fund experiences an unexpected level of net redemptions, the
Fund could be forced to sell its junk bonds without regard to their investment
merits, thereby decreasing the asset base upon which the Fund's expenses can be
spread and possibly reducing the Fund's rate of return. Prices of junk bonds
have been found to be less sensitive to fluctuations in interest rates, and more
sensitive to adverse economic changes and individual corporate developments,
than those of higher-rated debt securities.
NON-DIVERSIFIED PORTFOLIO (INCOME FUND ONLY). INCOME FUND is a non-diversified
portfolio, which means that, with respect to 50% of its total assets, it may
invest more than 5% of its assets in obligations of one issuer. (A diversified
portfolio may not invest more than 5% of its assets in obligations of one
issuer, with respect to 75% of its total assets.) Since INCOME FUND may invest a
greater percentage of its assets in securities of fewer issuers than a
diversified portfolio, it may be subject to greater investment and credit risks
than a diversified portfolio.
EMERGING MARKETS AND DEVELOPING COUNTRIES. Investors should also be aware that
the Funds may invest in companies located within emerging or developing
countries. Investments in emerging markets or developing countries involve
exposure to economic structures that are generally less diverse and mature and
to political systems which can be expected to have less stability than those of
more developed countries. Such countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
which trade only a small number of securities. Historical experience indicates
that emerging markets have been more volatile than the markets of more mature
economies; such markets have also from time to time provided higher rates
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<PAGE> 150
of return and greater risks to investors. AIM believes that these
characteristics of emerging markets can be expected to continue in the future.
In addition, throughout the countries commonly referred to as the Eastern Bloc,
the lack of a capital market structure or market-oriented economy and the
possible reversal of recent favorable economic, political and social events in
some of those countries present greater risks than those associated with more
developed, market-oriented Western European countries and markets.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
The following restrictions are matters of fundamental policy and may not be
changed without approval of a Fund's shareholders.
No Fund may:
1. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by the Fund,
except that the Fund may purchase securities of other investment companies
to the extent permitted by applicable law or exemptive order.
2. Purchase a security if, as a result, 25% or more of the value of
the Fund's total assets, taken at market value, would be invested in the
securities of issuers having their principal business activities in the
same industry. This restriction does not apply to obligations issued or
guaranteed by the U.S. Government or by any of its agencies or
instrumentalities but will apply to foreign government obligations unless
the SEC permits their exclusion.
3. Borrow money, except that the Fund may borrow from banks (including
the Fund's custodian bank) and enter into reverse repurchase agreements and
dollar roll transactions (INCOME FUND only). With respect to AGGRESSIVE
GROWTH FUND and GROWTH FUND, such permitted borrowings shall be used as a
temporary defensive measure for extraordinary or emergency purposes.
Permitted borrowings shall be in amounts not exceeding 33- 1/3% of a Fund's
total assets, taken at market value, and each Fund may pledge amounts of up
to 20% of its total assets, taken at market value, to secure such
borrowings. Whenever bank borrowings exceed 5% of the value of the total
assets of AGGRESSIVE GROWTH FUND or GROWTH FUND, such Fund will not make
any additional purchases of securities for investment purposes.
Neither AGGRESSIVE GROWTH FUND nor GROWTH FUND will purchase a security if, as
a result, with respect to 75% of the value of the Fund's respective total
assets, taken at market value, more than 5% of the value of the Fund's total
assets, taken at market value, would be invested in securities of any one
issuer, except securities issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities and except that the Fund may purchase
securities of other investment companies to the extent permitted by applicable
law or exemptive order.
INCOME FUND will not purchase a security if, as a result, with respect to 50%
of the value of the Fund's total assets taken at market value, more than 5% of
the value of the Fund's total assets, taken at market value, would be invested
in securities of any one issuer, except securities issued or guaranteed by the
U.S. Government or any of its agencies or instrumentalities.
A complete listing of investment restrictions applicable to the Funds, some of
which may be changed by the Board of Directors without shareholder approval, is
contained in the Statement of Additional Information.
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER
Any particular security will be sold, and the proceeds reinvested, whenever
such action is deemed prudent from the viewpoint of a Fund's investment
objectives, regardless of the holding period of that security. A higher rate of
portfolio turnover may result in higher transaction costs, including brokerage
commissions. Also, to the extent that higher portfolio turnover results in a
higher rate of net realized capital gains to a Fund, the portion of the Fund's
distributions constituting taxable capital gains may increase. For additional
information regarding income taxes and brokerage practices, see the Fund's
Statement of Additional Information.
- --------------------------------------------------------------------------------
MANAGEMENT
The overall management of the business and affairs of the Funds are vested
with the Company's Board of Directors. The Board of Directors approves all
significant agreements between the Funds and persons or companies furnishing
services to the Funds, including the investment advisory agreement with AIM, the
administrative services agreement with AIM, the agreement with AIM Distributors
regarding distribution of the Funds' shares, the agreement with State Street
Bank and Trust Company as custodian, and the agreement with A I M Fund Services,
Inc. as transfer agent. The day-to-day operations of the Funds are delegated to
the officers of the Company and to AIM, subject always to the objective and
policies of each Fund and to the general supervision of the Board of Directors.
Information concerning the Board of Directors may be found in the Statement of
Additional Information. Certain directors and officers of the Company are
affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM. AIM Management is a holding company engaged in the
financial services business. AIM Management is an indirect wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. For a discussion of AIM Management and its subsidiaries'
Year 2000 Compliance Project, see "General Information -- Year 2000 Compliance
Project."
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<PAGE> 151
INVESTMENT ADVISOR. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100,
Houston, Texas 77046, serves as the investment advisor to each Fund pursuant to
a Master Investment Advisory Agreement, dated as of February 28, 1997. A I M was
organized in 1976 and, together with its subsidiaries, manages or advises over
50 investment company portfolios encompassing a broad range of investment
objectives. AIM is a wholly owned subsidiary of AIM Management.
Under the terms of the Advisory Agreement, AIM supervises all aspects of each
Fund's operations and provides investment advisory services to the Fund. AIM
obtains and evaluates economic, statistical and financial information to
formulate and implement investment programs for the Funds.
ADMINISTRATOR. AIM and the Company have entered into an Administrative
Services Agreement dated as of February 28, 1997, pursuant to which AIM has
agreed to provide or arrange for the provision of certain accounting and other
administrative services to the Funds. AIM is entitled to receive from each Fund
reimbursement of its costs or such reasonable compensation as may be approved by
the Company's Board of Directors for providing specified administrative
services. Currently, AIM is reimbursed for the services of the Company's
principal financial officer and his staff, and any expenses related to such
services.
For a discussion of AIM's brokerage allocation policies and practices, see
"Portfolio Transactions and Brokerage" in the Statement of Additional
Information. In accordance with policies established by the directors, AIM may
take into account sales of shares of the Funds and other funds advised by AIM in
selecting broker-dealers to effect portfolio transactions on behalf of the
Funds.
PORTFOLIO MANAGEMENT. AIM uses a team approach and disciplined investment
strategy in providing investment advisory services to all its accounts,
including the Funds. AIM's investment staff consists of approximately 135
individuals. While individual members of AIM's investment staff are assigned
primary responsibility for the day-to-day management of each of AIM's accounts,
all accounts are reviewed on a regular basis by AIM's Investment Policy
Committee to ensure that they are being invested in accordance with the
accounts' and AIM's investment policies. The individuals on the investment team
who are primarily responsible for the day-to-day management of each of the Funds
and their titles, if any, with AIM or its affiliates and the Company, the length
of time they have been responsible for the management of the Funds, their years
of experience and prior experience are shown below:
A. Dale Griffin, III, Robert M. Kippes, Clas G. Olsson, Paul A. Rogge, Barrett
K. Sides and Kenneth A. Zschappel are primarily responsible for the day-to-day
management of AGGRESSIVE GROWTH FUND. Mr. Griffin is Vice President of A I M
Capital Management, Inc. ("AIM Capital"), a wholly owned subsidiary of AIM, and
has been responsible for the Fund since its inception in 1994. He has been
associated with AIM and/or its subsidiaries since 1989 and began working as an
investment professional in 1987. Mr. Kippes is Vice President of AIM Capital and
also has been responsible for the Fund since its inception in 1994. He has been
associated with AIM and/or its subsidiaries since he began working as an
investment professional in 1989. Mr. Rogge is Vice President of AIM Capital and
also has been responsible for the Fund since its inception in 1994. He has been
associated with AIM and/or its subsidiaries since he began working as an
investment professional in 1991. Mr. Sides is Assistant Vice President of AIM
Capital and has been responsible for the Fund since 1995. He has been associated
with AIM and/or its subsidiaries since he began working as an investment
professional in 1990. Mr. Olsson is an Investment Officer of AIM Capital and has
been responsible for the Fund since 1997. He has been associated with AIM and/or
its subsidiaries since 1994 and began working as an investment professional in
1994. Prior to 1994, Mr. Olsson was a broker assistant with Merrill Lynch,
Pierce, Fenner & Smith Incorporated. Mr. Zschappel is Assistant Vice President
of AIM Capital and has been responsible for the Fund since January 1998. He has
been associated with AIM and/or its subsidiaries since he began working as an
investment professional in 1990.
Monika H. Degan, A. Dale Griffin, III, Clas G. Olsson, Paul A. Rogge, Jonathan
C. Schoolar and Barrett K. Sides are primarily responsible for the day-to-day
management of GROWTH FUND. Background information for Mr. Griffin, Mr. Olsson,
Mr. Rogge and Mr. Sides is discussed above with respect to the management of
AGGRESSIVE GROWTH FUND. Mr. Griffin and Mr. Rogge have been responsible for the
Fund since its inception in 1994. Mr. Olsson has been responsible for the Fund
since 1997. Mr. Sides has been responsible for the Fund since 1995. Ms. Degan is
an Investment Officer of AIM Capital and has been responsible for the Fund since
1997. She has been associated with AIM and/or its subsidiaries since 1995 and
began working as an investment professional in 1990. Prior to 1995, Ms. Degan
was a Senior Financial Analyst for Shell Oil Co. Pension Trust. Mr. Schoolar is
Senior Vice President of AIM Capital, Vice President of AIM, Vice President of
the Company and has been responsible for the Fund since its inception in 1994.
He has been associated with AIM and/or its subsidiaries since 1986 and began
working as an investment professional in 1984.
Robert G. Alley, John L. Pessarra and Carolyn L. Gibbs are primarily
responsible for the day-to-day management of INCOME FUND. Mr. Alley is Senior
Vice President of AIM Capital, Vice President of AIM, Vice President of the
Company and has been responsible for the Fund since its inception in 1994. He
has been associated with AIM and/or its subsidiaries since 1992 and began
working as an investment professional in 1973. Mr. Pessarra is Vice President of
AIM Capital and also has been responsible for the Fund since its inception in
1994. He has been associated with AIM and/or its subsidiaries since 1990 and
began working as an investment professional in 1985. Ms. Gibbs is Vice President
of AIM Capital and has been responsible for the Fund since 1995. She has been
associated with AIM and/or its subsidiaries since 1992 and began working as an
investment professional in 1983.
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<PAGE> 152
FEES AND EXPENSES. AIM is entitled to be paid by each Fund an advisory fee at
the annual rates of:
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $1 billion............................................ 0.90%
Over $1 billion............................................. 0.85%
</TABLE>
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $1 billion............................................ 0.85%
Over $1 billion............................................. 0.80%
</TABLE>
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
---------- -----------
<S> <C>
First $1 billion............................................ 0.70%
Over $1 billion............................................. 0.65%
</TABLE>
Although these fees are higher than those paid by most mutual funds which
invest in domestic securities, they are competitive with such fees paid by
mutual funds which invest primarily in foreign securities. The Company believes
such fees are justified due to the higher costs and additional expenses
associated with managing and operating funds holding primarily foreign
securities.
For the year ended October 31, 1997, each Fund paid the following compensation
to AIM for its advisory services, and the total expenses of each class of such
Fund were, stated as a percentage of that class' average daily net assets, as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
COMPENSATION EXPENSE EXPENSE EXPENSE*
TO AIM RATIO RATIO RATIO
------------ ------- ------- --------
<S> <C> <C> <C> <C>
Aggressive Growth Fund....................... 0.87% 1.75% 2.30% 2.30%
Growth Fund.................................. 0.85% 1.76% 2.29% 2.29%
Income Fund.................................. 0.09% 1.25% 1.76% 1.76%
</TABLE>
- ---------------
* For the period August 4, 1997 (date sales commenced) to October 31, 1997.
For the fiscal year ended October 31, 1997, AIM waived advisory fees for
INCOME FUND which represented 0.61% of such Fund's average daily net assets.
For the year ended October 31, 1997, each Fund reimbursed AIM for
administrative services in the following amounts, stated as a percentage of the
Funds' average daily net assets:
<TABLE>
<CAPTION>
REIMBURSEMENT
PAYMENTS
-------------
<S> <C>
Aggressive Growth Fund...................................... 0.00%
Growth Fund................................................. 0.03%
Income Fund................................................. 0.15%
</TABLE>
In addition, the Company and A I M Fund Services, Inc., P.O. Box 4739,
Houston, TX 77210-4739, a wholly owned subsidiary of AIM and registered transfer
agent, have entered into a Transfer Agency and Service Agreement, pursuant to
which AFS provides transfer agency, dividend distribution and disbursement, and
shareholder services to the Funds.
FEE WAIVERS. AIM may from time to time voluntarily waive or reduce its fees,
while retaining its ability to be reimbursed prior to the end of each fiscal
year. Fee waivers or reductions, other than those contained in the Advisory
Agreement, may be modified or terminated at any time and without notice to
investors. AIM has agreed to waive advisory fees under the Advisory Agreement
for INCOME FUND until such time as in AIM's judgment, the Fund has achieved a
size in assets under management to bear such costs.
DISTRIBUTOR. The Company has entered into Master Distribution Agreements on
behalf of the Funds (the "Distribution Agreements") with AIM Distributors, a
registered broker-dealer and a wholly owned subsidiary of AIM, to act as the
distributor of Class A, Class B and Class C shares of the Funds. The address of
A I M Distributors, Inc. is P.O. Box 4739, Houston, Texas 77210-4739. Certain
directors and officers of the Company are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute shares of the Funds directly and through institutions with whom
AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
institutions through whom Class B shares are sold a sales commission under
schedules established by AIM Distributors. The Distribution Agreement for the
Class B shares provides that AIM Distributors (or its
25
<PAGE> 153
assignee or transferee) will receive 0.75% (of the total 1.00% payable under the
distribution plan applicable to Class B shares) of each Fund's average daily net
assets attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges in respect of the outstanding Class B shares attributable to AIM
Distributors; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments to AIM Distributors. Termination of the Class B shares distribution
plan or Distribution Agreement does not affect the obligation of Class B
shareholders to pay Contingent Deferred Sales Charges.
DISTRIBUTION PLANS. Class A and C Plan. The Company has adopted a Master
Distribution Plan applicable to Class A and Class C shares of each Fund (the
"Class A and C Plan") pursuant to Rule 12b-1 under the 1940 Act, to compensate
AIM Distributors for the purpose of financing any activity that is intended to
result in the sale of Class A and Class C shares of each Fund.
Under the Class A and C Plan, the Company may compensate AIM Distributors an
aggregate amount of 0.50% of the average daily net assets of Class A shares of
each Fund on an annualized basis and an aggregate amount of 1.00% of the average
daily net assets of Class C shares of each Fund on an annualized basis.
The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of a Fund. Payments can
also be directed by AIM Distributors to selected institutions who have entered
into service agreements with respect to Class A and Class C shares of each Fund
and who provide continuing personal services to their customers who own Class A
and Class C shares of a Fund. The service fees payable to selected institutions
are calculated at the annual rate of 0.25% of the average daily net asset value
of those Fund shares that are held in such institution's customers' accounts
which were purchased on or after a prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A and C Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of a Fund,
in amounts of up to 0.25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to a
Fund. The Class A and C Plan does not obligate a Fund to reimburse AIM
Distributors for the actual expenses AIM Distributors may incur in fulfilling
its obligations under the Class A and C Plan on behalf of a Fund. Thus, under
the Class A and C Plan, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, a Fund will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Payments pursuant to the Plans are subject to any applicable limitations imposed
by rules of the National Association of Securities Dealers, Inc.
Class B Plan. The Company has also adopted a master distribution plan
applicable to Class B shares of each Fund (the "Class B Plan"). Under the Class
B Plan, each Fund pays distribution expenses at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of such amount,
each Fund pays a service fee of 0.25% of the average daily net assets
attributable to its 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 such Fund. Any amounts not paid
as a service fee would constitute an asset based sales charge. Amounts paid in
accordance with the Class B Plan may be used to finance any activity primarily
intended to result in the sale of Class B shares.
Activities that may be financed under the Class A and C Plan and the Class B
Plan (collectively, the "Plans") include, but are not limited to: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders, overhead, preparation and distribution of advertising
material and sales literature, supplemental payments to dealers and other
institutions such as asset-based sales charges or as payments of service fees
under shareholder service arrangements and the cost of administering the Plans.
These amounts payable by a Fund under the Plans need not be directly related to
the expenses actually incurred by AIM Distributors on behalf of the Fund. Thus,
even if AIM Distributors' actual expenses exceed the fee payable to AIM
Distributors thereunder at any given time, the Company will not be obligated to
pay more than that fee, and, if AIM Distributors' expenses are less than the fee
it receives, AIM Distributors will retain the full amount of the fee. Payments
pursuant to the Plans are subject to any applicable limitations imposed by the
rules of the National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those directors who are not "interested persons" of the Company or by a vote of
the holders of the majority of the outstanding shares of the applicable class.
Under the Plans, AIM Distributors may in its discretion from time to time
agree to waive voluntarily all or any portion of its fee that has not been
assigned or transferred, while retaining its ability to be reimbursed for such
fee prior to the end of each fiscal year.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of a Fund on an agency basis, may
receive payments from the Fund pursuant to the Fund's Plans. AIM Distributors
does not act as principal, but rather as agent, for the Funds in making such
payments. Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
For additional information concerning the operation of the Plans, see the
Statement of Additional Information.
26
<PAGE> 154
- --------------------------------------------------------------------------------
ORGANIZATION OF THE COMPANY
The Company was organized in 1991 as a Maryland corporation, and is registered
with the SEC as a diversified open-end series management investment company. The
Company currently consists of six investment portfolios: the Funds, AIM ASIAN
GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, and AIM INTERNATIONAL EQUITY FUND.
The Board of Directors may authorize additional portfolios in the future. Shares
of the Funds are offered to investors pursuant to this Prospectus, while shares
of the Company's other portfolios are offered to investors pursuant to separate
prospectuses. The authorized capital stock of the Company consists of
4,000,000,000 shares of common stock with a par value of $0.001 per share, of
which 200,000,000 shares are designated Class A shares, 200,000,000 shares are
designated Class B shares and 200,000,000 shares are designated Class C shares
of each investment portfolio of the Company, and the balance of which are
unclassified.
Class A shares, Class B shares and Class C shares of the same Fund represent
interests in that Fund's assets and have identical voting, dividend, liquidation
and other rights on the same terms and conditions, except that each class of
shares bears differing class-specific expenses (such as those associated with
the shareholder servicing of their shares) and is subject to differing sales
loads (which may affect performance), conversion features and exchange
privileges, and has exclusive voting rights on matters pertaining to that class'
distribution plan.
Except as specifically noted above, shareholders of each Fund are entitled to
one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the Class A shares, Class B
shares and Class C shares of a Fund. However, on matters affecting one portfolio
of the Company or one class of shares, a separate vote of shareholders of that
portfolio or class is required. Shareholders of a portfolio or class are not
entitled to vote on any matter which does not affect that portfolio or class but
which requires a separate vote of another portfolio or class. An example of a
matter which would be voted on separately by shareholders of a portfolio is the
approval of an advisory agreement, and an example of a matter which would be
voted on separately by shareholders of a class of shares is approval of a
distribution plan. When issued, shares of each Fund are fully paid and
nonassessable, have no preemptive or subscription rights, and are fully
transferable. Other than the automatic conversion of Class B shares to Class A
shares, there are no conversion rights. Shares do not have cumulative voting
rights, which means that in situations in which shareholders elect directors,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors of the Company, and the holders of less than 50% of
the shares voting for the election of directors will not be able to elect
any directors.
Under Maryland law and the Company's By-Laws, the Company need not hold an
annual meeting of shareholders unless a meeting is otherwise required under the
1940 Act to elect directors. As of February 2, 1998, Merrill Lynch, Pierce,
Fenner & Smith Incorporated was the owner of record of 26.14% and 46.94% of the
outstanding Class B shares and Class C shares, respectively, of AGGRESSIVE
GROWTH FUND. As of February 2, 1998, Merrill Lynch, Pierce, Fenner & Smith
Incorporated was the owner of record of 36.29% of the outstanding Class C shares
of GROWTH FUND. As long as Merrill Lynch, Pierce, Fenner & Smith Incorporated
owns over 25% of such shares, it may be presumed to be in "control" of the Class
B shares and Class C shares of AGGRESSIVE GROWTH FUND and the Class C shares of
GROWTH FUND, as defined in the 1940 Act.
27
<PAGE> 155
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND SHAREHOLDER
ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND(*) AIM GLOBAL UTILITIES FUND
AIM ADVISOR INTERNATIONAL VALUE FUND(*) AIM GROWTH FUND
AIM ADVISOR LARGE CAP VALUE FUND(*) AIM HIGH INCOME MUNICIPAL FUND
AIM ADVISOR MULTIFLEX FUND(*) AIM HIGH YIELD FUND
AIM ADVISOR REAL ESTATE FUND(*) AIM INCOME FUND
AIM AGGRESSIVE GROWTH FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM ASIAN GROWTH FUND AIM INTERNATIONAL EQUITY FUND
AIM BALANCED FUND AIM LIMITED MATURITY TREASURY FUND
AIM BLUE CHIP FUND AIM MONEY MARKET FUND(**)
AIM CAPITAL DEVELOPMENT FUND AIM MUNICIPAL BOND FUND
AIM CHARTER FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM CONSTELLATION FUND AIM TAX-EXEMPT CASH FUND(**)
AIM EUROPEAN DEVELOPMENT FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM VALUE FUND
AIM GLOBAL GROWTH FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND
</TABLE>
(*) Class B Shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND and AIM
REAL ESTATE FUND will not be available until on or about March 3, 1998.
(**) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND are offered to investors at net asset value, without
payment of a sales charge, as described below. Other funds, including the
Class A, Class B and Class C shares of AIM MONEY MARKET FUND, are sold with
an initial sales charge or subject to a contingent deferred sales charge
upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed IRS Form W-8 (for non-resident aliens) or Form
W-9 (certifying exempt status) accompanying the registration information will be
subject to backup withholding. See the Account Application for applicable
Internal Revenue Service penalties. The minimum initial investment is $500,
except for accounts initially established through an Automatic Investment Plan,
which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Salary Reduction ("SARSEP") accounts, Savings Incentive Match
Plans for Employee IRA ("SIMPLE IRA") accounts, 403(b) plans or 457 (state
deferred compensation) plans (except that the minimum initial investment for
salary deferrals for such plans is $25), or for investment of dividends and
distributions of any of the AIM Funds into any existing AIM Funds account.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
MCF-02/98
A-1
<PAGE> 156
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus are offered
pursuant to separate prospectuses. Copies of other prospectuses may be obtained
by calling (800) 347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. There are no such minimum investment requirements for investment of
dividends and distributions of any of the AIM Funds into any other existing AIM
Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION--SM--: To purchase additional shares by electronic
funds transfer, please contact the Client Services Department of AFS for detail.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND,
AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED
MATURITY TREASURY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-FREE INTERMEDIATE FUND, AIM VALUE
FUND and AIM WEINGARTEN FUND, collectively (other than AIM AGGRESSIVE GROWTH
FUND, AIM LIMITED MATURITY TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may
be purchased at their respective net asset value plus a sales charge as
indicated below, except that Class A shares of AIM TAX-EXEMPT CASH FUND and AIM
Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a sales charge and
Class B shares (the "Class B shares") and Class C shares ("Class C shares") of
the Multiple Class Funds are sold at net asset value subject to a contingent
deferred sales charge payable upon certain redemptions. These contingent
deferred sales charges are described under the caption "How to Redeem
Shares -- Multiple Distribution System." Securities dealers and other persons
entitled to receive compensation for selling or servicing shares of a Multiple
Class Fund may receive different compensation for selling or servicing one
particular class of shares over another class in the same Multiple Class Fund.
Factors an investor should consider prior to purchasing Class A, Class B or
Class C shares (or, if applicable, AIM Cash Reserve Shares) of a Multiple Class
Fund are described below under "Special Information Relating to Multiple Class
Funds." For information on purchasing any of the AIM Funds and to receive a
prospectus, please call (800) 347-4246. As described below, the sales charge
otherwise applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value." The following tables show the sales charge and dealer concession
at various investment levels for the AIM Funds.
MCF-02/98
A-2
<PAGE> 157
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BLUE CHIP
FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND, AIM CONSTELLATION FUND,
AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL UTILITIES FUND, AIM GROWTH FUND, AIM
INTERNATIONAL EQUITY FUND, AIM MONEY MARKET FUND, AIM VALUE FUND and AIM
WEINGARTEN FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND,
AIM GLOBAL INCOME FUND, AIM HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM
INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM MUNICIPAL BOND FUND and AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/ or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
MCF-02/98
A-3
<PAGE> 158
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million or more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to a contingent deferred sales charge, for all AIM Funds
other than Class A shares of each of AIM LIMITED MATURITY TREASURY FUND and AIM
TAX-FREE INTERMEDIATE FUND as follows: 1% of the first $2 million of such
purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of
the next $17 million of such purchases, plus 0.25% of amounts in excess of $20
million of such purchases. See "Contingent Deferred Sales Charge Program for
Large Purchases." AIM Distributors may make payments to dealers and institutions
who are dealers of record for purchases of $1 million or more of Class A shares
(or shares which normally involve payment of initial sales charges), and which
are sold at net asset value and are not subject to a contingent deferred sales
charge, in an amount up to 0.10% of such purchases of Class A shares of AIM
LIMITED MATURITY TREASURY FUND, and in an amount up to 0.25% of such purchases
of Class A shares of AIM TAX-FREE INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
are not paid on sales to investors exempt from the CDSC, including shareholders
of record on April 30, 1995 who purchase additional shares in any of the Funds
on or after May 1, 1995, and in circumstances where AIM Distributors grants an
exemption on particular transactions.
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TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of the New York Stock Exchange ("NYSE"), which is generally 4:00 p.m.
Eastern Time (and which is hereinafter referred to as "NYSE Close") on any
business day of an AIM Fund will be confirmed at the price next determined.
Orders received after NYSE Close will be confirmed at the price determined on
the next business day of the AIM Fund. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. Please see "How to Purchase
Shares -- Purchases by Wire" for information on obtaining a reference number for
wire orders, which will facilitate the handling of such orders and ensure prompt
credit to an investor's account. A "business day" of an AIM Fund is any day on
which the NYSE is open for business. It is expected that the NYSE will be closed
during the next twelve months on Saturdays and Sundays and on the days on which
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES are sold subject to the initial sales charges described
above and are subject to the other fees and expenses described herein.
Class A shares of AIM MONEY MARKET FUND are designed to meet the needs of
an investor who wishes to establish a dollar cost averaging program,
pursuant to which Class A shares an investor owns may be exchanged at net
asset value for Class A shares of another Multiple Class Fund or shares of
another AIM Fund which is not a Multiple Class Fund, subject to the terms
and conditions described under the caption "Exchange Privilege -- Terms and
Conditions of Exchanges."
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and distributions) eight
years from the end of the calendar month in which the purchase of Class B
shares was made. Following such conversion of their Class B shares,
investors will be relieved of the higher Rule 12b-1 Plan payments
associated with Class B shares. See "Management -- Distribution Plans."
CLASS C SHARES are sold without an initial sales charge. Thus the entire
purchase price of Class C shares is immediately invested in Class C shares.
Class C shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class C shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class C shares redeemed
within one year from the date such shares were purchased are subject to a
1.00% contingent deferred sales charge. No contingent deferred sales charge
will be imposed if Class C shares are redeemed after one year from the date
such shares were purchased. Redemptions of Class C shares and associated
charges are further described under the caption "How to Redeem
Shares -- Multiple Distribution System."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
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SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND AND AIM TAX-EXEMPT CASH
FUND (THE "MONEY MARKET FUNDS"). Because each Money Market Fund uses the
amortized cost method of valuing the securities it holds and rounds its per
share net asset value to the nearest whole cent, it is anticipated that the net
asset value of the shares of such funds will remain constant at $1.00 per share.
However, there is no assurance that each Money Market Fund can maintain a $1.00
net asset value per share. In order to earn dividends with respect to AIM MONEY
MARKET FUND on the same day that a purchase is made, purchase payments in the
form of federal funds must be received by the Transfer Agent before 12:00 noon
Eastern Time on that day. Purchases made by payments in any other form, or
payments in the form of federal funds received after such time but prior to NYSE
Close, will begin to earn dividends on the next business day following the date
of purchase. The Money Market Funds generally will not issue share certificates
but will record investor holdings in noncertificate form and regularly advise
the shareholder of his ownership position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY MARKET FUND and Class
B and Class C shares of the Multiple Class Funds will not be taken into account
in determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
Plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), a Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by vir-
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tue of the foregoing definition, to the reduced sales charge. No person or
entity may distribute shares of the AIM Funds without payment of the applicable
sales charge other than to persons or entities who qualify for a reduction in
the sales charge as provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for
(i) Class A shares of AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) within the following 13 consecutive months. By marking the LOI section on
the account application and by signing the account application, the purchaser
indicates that he understands and agrees to the terms of the LOI and is bound by
the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gains
distributions will not be applied to the LOI. At any time during the 13-month
period after meeting the original obligation, a purchaser may revise his
intended investment amount upward by submitting a written and signed request.
Such a revision will not change the original expiration date. By signing an LOI,
a purchaser is not making a binding commitment to purchase additional shares,
but if purchases made within the 13-month period do not total the amount
specified, the investor will pay the increased amount of sales charge as
described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND
and (ii) Class B and Class C shares of the Multiple Class Funds) at the time of
the proposed purchase. Rights of Accumulation are also available to holders of
the Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992. To determine
whether or not a reduced initial sales charge applies to a proposed purchase,
AIM Distributors takes into account not only the money which is invested upon
such proposed purchase, but also the value of all shares of the AIM Funds
(except for (i) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve
Shares of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the
Multiple Class Funds) owned by such purchaser, calculated at their then current
public offering price. If a purchaser so qualifies for a reduced sales charge,
the reduced sales charge applies to the total amount of money then being
invested by such purchaser and not just to the portion that exceeds the
breakpoint above which a reduced sales charge applies. For example, if a
purchaser already owns qualifying shares of any AIM Fund with a value of $20,000
and wishes to invest an additional $20,000 in a fund with a maximum initial
sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to
the full $20,000 purchase and not just to the $15,000 in excess of the $25,000
breakpoint. To qualify for obtaining the discount applicable to a particular
purchase, the purchaser or his dealer must furnish AFS with a list of the
account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and distributions from a fund
(see "Dividends,
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Distributions and Tax Matters"); (b) exchanges of shares of certain other funds
(see "Exchange Privilege"); (c) use of the reinstatement privilege (see "How to
Redeem Shares"); or (d) a merger, consolidation or acquisition of assets of a
fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM, or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholders Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; and (i) employees of
Triformis Inc.
In addition, shares of any AIM Fund may be purchased at net asset value,
without payment of a sales charge, by pension, profit-sharing or other employee
benefit plans created pursuant to a plan qualified under Section 401 of the Code
or plans under Section 457 of the Code, or employee benefit plans created
pursuant to Section 403(b) of the Code and sponsored by nonprofit organizations
defined under Section 501(c)(3) of the Code. Such plans will qualify for
purchases at net asset value provided that (1) the total amount invested in the
plan is at least $1,000,000, (2) the sponsor signs a $1,000,000 LOI, (3) such
shares are purchased by an employer-sponsored plan with at least 100 eligible
employees, or (4) all of the plan's transactions are executed through a single
financial institution or service organization who has entered into an agreement
with AIM Distributors with respect to their use of the AIM Funds in connection
with such accounts. Section 403(b) plans sponsored by public educational
institutions will not be eligible for net asset value purchases based on the
aggregate investment made by the plan or the number of eligible employees.
Participants in such plans will be eligible for reduced sales charges based
solely on the aggregate value of their individual investments in the applicable
AIM Fund. PLEASE NOTE THAT TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR
SUCH PLANS. AIM Distributors may pay investment dealers or other financial
service firms for share purchases of the Load Funds (as defined on page A-10
herein) sold at net asset value to an employee benefit plan in accordance with
this paragraph as follows: 1% of the first $2 million of such purchases, plus
0.80% of the next $1 million of such purchases, plus 0.50% of the next $17
million of such purchases, plus 0.25% of amounts in excess of $20 million of
such purchases and up to 0.10% of the net asset value of any Class A shares of
AIM LIMITED MATURITY TREASURY FUND sold at net asset value to an employee
benefit plan in accordance with this paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sale of Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such trusts;
and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
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FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that exceed on an annual
basis 12% of such account will be subject to a contingent deferred sales charge
on the amounts exceeding 12% of the account value at the time the shareholder
elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested in shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the Multiple Class Funds and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan each
withdrawal is made from the shareholder's bank account in the amount specified
by the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and
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Tax Matters -- Dividends and Distributions" for a description of payment dates
for these options. In order to qualify to have dividends and distributions of
one AIM Fund invested in shares of another AIM Fund, the following conditions
must be satisfied: (a) the shareholder must have an account balance in the
dividend paying fund of at least $5,000; (b) the account must be held in the
name of the shareholder (i.e., the account may not be held in nominee name); and
(c) the shareholder must have requested and completed an authorization relating
to the reinvestment of dividends into another AIM Fund. An authorization may be
given on the account application or on an authorization form available from AIM
Distributors. An AIM Fund will waive the $5,000 minimum account value
requirement if the shareholder has an account in the fund selected to receive
the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sales charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
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- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds,
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
---------- -----------------
AIM ADVISOR FLEX FUND -- AIM GLOBAL GROWTH AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INCOME AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL UTILITIES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A --------------
AIM ADVISOR MULTIFLEX AIM GROWTH FUND -- CLASS A AIM MONEY MARKET FUND
FUND -- CLASS A AIM HIGH INCOME MUNICIPAL -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE FUND -- CLASS A AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM ASIAN GROWTH FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM INTERNATIONAL EQUITY
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM MUNICIPAL BOND
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM EUROPEAN DEVELOPMENT OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM WEINGARTEN FUND -- CLASS A
FUND -- CLASS A
</TABLE>
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH
FUND; (ii) LOWER LOAD FUND SHARE PURCHASES OF $1,000,000 OR MORE AND AIM Cash
Reserve Shares of AIM MONEY MARKET FUND and AIM TAX-EXEMPT CASH FUND PURCHASES
MAY BE EXCHANGED FOR LOAD FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH
WILL THEN BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR
PURPOSES OF CALCULATING THE CONTINGENT DEFERRED SALES CHARGE ON THE LOAD FUND
SHARES ACQUIRED, THE 18-MONTH PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH
EXCHANGE; (iii) Class A shares may be exchanged for Class A shares, (iv) Class B
shares may be exchanged only for Class B shares; (v) Class C shares may only be
exchanged for Class C shares; and (vi) AIM Cash Reserve Shares of AIM MONEY
MARKET FUND may not be exchanged for Class A shares of AIM MONEY MARKET FUND or
for Class B or Class C shares.
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DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ----------------------- ----------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds..........
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
Funds.......... acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise, Of-
apply if No Load shares were fering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other), except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A, Class B, or Class C shares of
another Multiple Class Fund; (b) the dollar amount of the exchange must be at
least equal to the minimum investment applicable to the shares of the fund
acquired through such exchange; (c) the shares of the fund acquired through
exchange must be qualified for sale in the state in which the shareholder
resides; (d) the exchange must be made between accounts having identical
registrations and addresses; (e) the full amount of the purchase price for the
shares being exchanged must have already been received by the fund; (f) the
account from which shares have been exchanged must be coded as having a
certified taxpayer identification number on file or, in the alternative, an
appropriate Internal Revenue Service ("IRS") Form W-8 (certificate of foreign
status) or Form W-9 (certifying exempt status) must have been received by the
fund; (g) newly acquired shares (through either an initial or subsequent
investment) are held in an account for at least ten business days, and all other
shares are held in an account for at least one day, prior to the exchange; and
(h) certificates representing shares must be returned before shares can be
exchanged. There is no fee for exchanges among the AIM Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received
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after NYSE Close will result in the redemption of shares at their net asset
value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B shares or among
Class C shares. For purposes of determining a shareholder's holding period of
Class B or Class C shares in the calculation of the applicable contingent
deferred sales charge, the period of time during which Class B or Class C shares
were held prior to an exchange will be added to the holding period of the
applicable Class B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the obligation of the fund(s) named on the cover page to redeem
shares, AIM Distributors also repurchases shares. Although a contingent deferred
sales charge may be applicable to certain redemptions, as described below, there
is no redemption fee imposed when shares are redeemed or repurchased; however,
dealers may charge service fees for handling repurchase transactions.
MULTIPLE DISTRIBUTION SYSTEM. Class B shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attrib-
MCF-02/98
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<PAGE> 168
utable to Class B shares or (iii) on amounts that represent capital appreciation
in the shareholder's account above the purchase price of the Class B shares.
<TABLE>
<CAPTION>
YEAR CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
- -------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and distributions; third, of shares held
for more than six years from the date such shares were purchased; and fourth, of
shares held less than six years from the date such shares were purchased. The
applicable sales charge will be applied against the lesser of the current market
value of shares redeemed or their original cost.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from individual retirement accounts,
custodial accounts maintained pursuant to Code Section 403(b), deferred
compensation plans qualified under Code Section 457 and plans qualified under
Code Section 401 (collectively, "Retirement Plans"), (3) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class B or Class C shares at the time the shareholder elects to participate
in the Systematic Withdrawal Plan, (4) effected pursuant to the right of a
Multiple Class Fund to liquidate a shareholder's account if the aggregate net
asset value of shares held in the account is less than the designated minimum
account size described in the prospectus of such Multiple Class Fund, (5)
effected by AIM of its investment in Class B or Class C shares and (6) of Class
C shares where such investor's dealer of record, due to the nature of the
investor's account, notifies AIM Distributors prior to the time of investment
that the dealer waives the payment otherwise payable to the dealer described in
the fifth paragraph under the caption "Terms and Conditions of Purchase of the
AIM Funds -- All Groups of AIM Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70-1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
(ii) in kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
MCF-02/98
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<PAGE> 169
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in this program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gain distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD (i) shares of any Load
Fund or AIM Cash Reserve Shares of AIM MONEY MARKET FUND which were acquired
through an exchange of shares which previously were subject to the 1% contingent
deferred sales charge will be credited with the period of time such exchanged
shares were held, and (ii) shares of any Load Fund which are subject to the 1%
contingent deferred sales charge and which were acquired through an exchange of
shares of a Lower Load Fund or a No Load Fund which previously were not subject
to the 1% contingent deferred sales charge will not be credited with the period
of time such exchanged shares were held. The charge will be waived in the
following circumstances: (1) redemptions of shares by employee benefit plans
("Plans") qualified under Sections 401 or 457 of the Code, or Plans created
under Section 403(b) of the Code and sponsored by nonprofit organizations as
defined under Section 501(c)(3) of the Code, where shares are being redeemed in
connection with employee terminations or withdrawals, and (a) the total amount
invested in a Plan is at least $1,000,000, (b) the sponsor of a Plan signs a
letter of intent to invest at least $1,000,000 in one or more of the AIM Funds,
or (c) the shares being redeemed were purchased by an employer-sponsored Plan
with at least 100 eligible employees; provided, however, that Plans created
under Section 403(b) of the Code which are sponsored by public educational
institutions shall qualify under (a), (b) or (c) above on the basis of the value
of each Plan participant's aggregate investment in the AIM Funds, and not on the
aggregate investment made by the Plan or on the number of eligible employees;
(2) redemptions of shares following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust; (3) redemptions of shares purchased at net asset value by private
foundations or endowment funds where the initial amount invested was at least
$1,000,000; (4) redemptions of shares purchased by an investor in amounts of
$1,000,000 or more where such investor's dealer of record, due to the nature of
the investor's account, notifies AIM Distributors prior to the time of
investment that the dealer waives the payments otherwise payable to the dealer
as described in the third paragraph under the caption "Terms and Conditions of
Purchase of the AIM Funds -- All Groups of AIM Funds"; and (5) pursuant to a
Systematic Withdrawal Plan, provided that amounts withdrawn under such plan do
not exceed on an annual basis 12% of the value of the shareholder's investment
in Class A shares at the time the shareholder elects to participate in the
Systematic Withdrawal Plan.
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnerships, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish an IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares: (a) a statement
as to whether or not the shareholder has attained age 59-1/2; and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
his account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information; and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be gen-
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uine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM MONEY MARKET FUND ONLY). If a redemption order is
received prior to 11:30 a.m. Eastern Time, the redemption will be effective on
that day and AIM MONEY MARKET FUND will endeavor to transmit payment on that
same business day. If the redemption order is received after 11:30 a.m. and
prior to NYSE Close, the redemption will be made at the next determined net
asset value and payment will generally be transmitted on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of
AIM MONEY MARKET FUND). After completing the appropriate authorization form,
shareholders may use checks to effect redemptions from AIM TAX-EXEMPT CASH FUND
and the AIM Cash Reserve Shares of AIM MONEY MARKET FUND. This privilege does
not apply to retirement accounts or qualified plans. Checks may be drawn in any
amount of $250 or more. Checks drawn against insufficient shares in the account,
against shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented to the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer to ensure that all orders are
transmitted on a timely basis. Any resulting loss from the dealer's failure to
submit a request for redemption within the prescribed time frame will be borne
by that dealer. Telephone redemption requests must be made by NYSE Close on any
business day of an AIM Fund and will be confirmed at the price determined as of
the close of that day. No AIM Fund will accept requests which specify a
particular date for redemption or which specify any special conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner; (6)
telephone exchange and telephone redemption authorization forms; (7) changes in
previously designated wiring or electronic funds transfer instructions; and (8)
written redemptions or exchanges of shares previously reported as lost, whether
or not the redemption amount is under $50,000 or the proceeds are to be sent to
the address of record. These requirements may be waived or modified upon notice
to shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term is defined in rules adopted by the Securities and
Exchange Commission ("SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed
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the surety coverage amount indicated on the medallion. For information regarding
whether a particular institution or organization qualifies as an "eligible
guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within 90 days of a redemption,
a shareholder may invest all or part of the redemption proceeds in Class A
shares of any AIM Fund at the net asset value next computed after receipt by the
Transfer Agent of the funds to be reinvested; provided, however, if the
redemption was made from Class A shares of either AIM LIMITED MATURITY TREASURY
FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be subject
to the difference in sales charge between the shares redeemed and the shares the
proceeds are reinvested in. The shareholder must ask the Transfer Agent for such
privilege at the time of reinvestment. A realized gain on the redemption is
taxable, and reinvestment may alter any capital gains payable. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in (or exchanged for) shares of another AIM Fund
at a reduced sales charge within 90 days of the payment of the sales charge, the
shareholder's basis in the fund shares redeemed may not include the amount of
the sales charge paid, thereby reducing the loss or increasing the gain
recognized from the redemption; however, the shareholder's basis in the fund
shares purchased will include the sales charge. Each AIM Fund may amend, suspend
or cease offering this privilege at any time as to shares redeemed after the
date of such amendment, suspension or cessation. This privilege may only be
exercised once each year by a shareholder with respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
90 days after such redemption may do so at net asset value if such privilege is
claimed at the time of reinvestment. Such reinvested proceeds will not be
subject to either a front-end sales charge at the time of reinvestment or an
additional contingent deferred sales charge upon subsequent redemption. In order
to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND), on each "business day" of a fund as
previously defined. In the event the NYSE closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of an AIM Fund's share
will be determined as of the close of the NYSE on such day. For purposes of
determining net asset value per share, futures and options contracts generally
will be valued 15 minutes after the close of trading of the NYSE. The net asset
value per share is calculated by subtracting a class' liabilities from its
assets and dividing the result by the total number of class shares outstanding.
The determination of net asset value per share is made in accordance with
generally accepted accounting principles. Among other items, liabilities include
accrued expenses and dividends payable, and total assets include portfolio
securities valued at their market value, as well as income accrued but not yet
received. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the fund's officers and in accordance with methods which are specifically
authorized by its governing Board of Directors or Trustees. Short-term
obligations with maturities of 60 days or less, and the securities held by the
Money Market Funds, are valued at amortized cost as reflecting fair value. AIM
HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF
CONNECTICUT and AIM TAX-FREE INTERMEDIATE FUND value variable rate securities
that have an unconditional demand or put feature exercisable within seven days
or less at par, which reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 or Trustees of the
applicable AIM Fund.
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DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund's policy regarding the payment of dividends and distributions is
set forth below.
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM GROWTH FUND........................... declared and paid annually annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods.
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares are expected to be lower than those
for Class A shares or AIM Cash Reserve Shares because of higher distribution
fees paid by Class B and Class C shares. Dividends on all shares may also be
affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such
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payment. Any dividend and distribution election remains in effect until the
Transfer Agent receives a revised written election by the shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to qualify for treatment as a
regulated investment company under Subchapter M of the Code. As long as a fund
qualifies for this tax treatment, it is not subject to federal income taxes on
net investment income and capital gains that are distributed to shareholders.
Each fund, for purposes of determining taxable income, distribution requirements
and other requirements of Subchapter M, is treated as a separate corporation.
Therefore, no fund may offset its gains against another fund's losses and each
fund must individually comply with all of the provisions of the Code which are
applicable to its operations.
TAX TREATMENT OF DISTRIBUTIONS -- GENERAL. Because each AIM Fund intends to
distribute substantially all of its net investment income and net realized
capital gains to its shareholders, it is not expected that any such fund will be
required to pay any federal income tax. Each AIM Fund also intends to meet the
distribution requirements of the Code to avoid the imposition of a
non-deductible 4% excise tax calculated as a percentage of certain undistributed
amounts of taxable ordinary income and capital gain net income. Nevertheless,
shareholders normally are subject to federal income taxes, and any applicable
state and local income taxes, on the dividends and distributions received by
them from a fund whether in the form of cash or additional shares of a fund,
except for tax-exempt dividends paid by AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT
CASH FUND, and AIM TAX-FREE INTERMEDIATE FUND (the "Tax-Exempt Funds") which are
exempt from federal tax. Dividends paid by a fund (other than capital gain
distributions) may qualify for the federal 70% dividends received deduction for
corporate shareholders to the extent of the qualifying dividends received by the
fund on domestic common or preferred stock. It is not likely that dividends
received from AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE
FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM GLOBAL
AGGRESSIVE GROWTH FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM HIGH
INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM LIMITED MATURITY TREASURY
FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND
OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND or AIM TAX-FREE INTERMEDIATE FUND will
qualify for this dividends received deduction. Shortly after the end of each
year, shareholders will receive information regarding the amount and federal
income tax treatment of all distributions paid during the year. Certain
dividends declared in October, November or December of a calendar year are
taxable to shareholders as though received on December 31 of that year if paid
to shareholders during January of the following calendar year. No gain or loss
will be recognized by shareholders upon the automatic conversion of Class B
shares of a Multiple Class Fund into Class A shares of such Fund. With respect
to tax-exempt shareholders, distributions from the Funds will not be subject to
federal income taxation to the extent permitted under the applicable tax-
exemption.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, SHAREHOLDERS OF A FUND MUST
FURNISH THE FUND WITH THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER
PENALTIES OF PERJURY THAT THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT
SUBJECT TO BACKUP WITHHOLDING FOR ANY REASON.
Under existing provisions of the Code, nonresident alien individuals, foreign
partnerships and foreign corporations may be subject to federal income tax
withholding at a 30% rate on ordinary income dividends and distributions (other
than exempt-interest dividends and capital gain dividends) and return of capital
distributions. Under applicable treaty law, residents of treaty countries may
qualify for a reduced rate of withholding or a withholding exemption.
DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE OR LOCAL TAX
LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES DISCUSSED HEREIN.
ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE STATEMENT OF ADDITIONAL
INFORMATION.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may give rise to a federal alternative minimum tax liability, may
affect the amount of social security benefits subject to federal income tax, may
affect the deductibility of interest on certain indebtedness of the shareholder,
and may have other collateral federal income tax consequences. The Tax-Exempt
Funds may invest in Municipal Securities the interest on which will constitute
an item of tax preference and which therefore could give rise to a federal
alternative minimum tax liability for shareholders, and may invest up to 20% of
their net assets in such securities and
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other taxable securities. For additional information concerning the alternative
minimum tax and certain collateral tax consequences of the receipt of
exempt-interest dividends, see the Statements of Additional Information
applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders which are taxable, but
will endeavor to avoid investments which would result in taxable dividends. The
percentage of dividends which constitute exempt-interest dividends, and the
percentage thereof (if any) which constitute an item of tax preference, will be
determined annually. This percentage may differ from the actual percentages for
any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional shares.
Distributions of net long-term capital gains will be taxable as long-term
capital gains, whether received in cash or additional shares, and regardless of
the length of time a particular shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM INTERMEDIATE GOVERNMENT FUND and AIM LIMITED MATURITY TREASURY
FUND -- SPECIAL TAX INFORMATION. Certain states exempt from state income taxes
dividends paid by mutual funds out of interest on U.S. Treasury and certain
other U.S. government obligations, and investors should consult with their own
tax advisors concerning the availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM GLOBAL AGGRESSIVE GROWTH
FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND AND AIM GLOBAL UTILITIES
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to shareholders credits for
foreign taxes paid. If the fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders, and should note that if
such losses exceed other income during a taxable year, the fund would not be
able to pay ordinary income dividends.
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as
Sub-Custodian for retail purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
LEGAL COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, LLP,
Philadelphia, Pennsylvania, serves as counsel to the AIM Funds and passes upon
legal matters.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish between the year 2000 from the year 1900.
This defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers provide the AIM Funds
and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the fourth quarter of
1998. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm Year 2000 compliance
upon installation.
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OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
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APPENDIX A
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DESCRIPTION OF CORPORATE BOND RATINGS
Investment grade debt securities are those rating categories indicated by an
asterisk (*).
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS ARE AS FOLLOWS:
*Aaa -- Bonds which are rated 'Aaa' are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
*Aa -- Bonds which are rated 'Aa' are judged to be of high quality by all
standards. Together with the 'Aaa' group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in 'Aaa' securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in 'Aaa'
securities.
*A -- Bonds which are rated 'A' possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
*Baa -- Bonds which are rated 'Baa' are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds which are rated 'Ba' are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during other good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated 'B' generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds which are rated 'Caa' are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds which are rated 'Ca' represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated 'C' are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from 'Aa' through 'B' in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
STANDARD AND POOR'S RATINGS SERVICES CLASSIFICATIONS ARE AS FOLLOWS:
*AAA -- Debt rated 'AAA' has the highest rating assigned by Standard & Poor's
("S&P"). Capacity to pay interest and repay principal is extremely strong.
*AA -- Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
*A -- Debt rated 'A' has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
*BBB -- Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher categories.
BB, B, CCC, CC, C -- Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. 'BB'
indicates the lowest degree of speculation and 'C' the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
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<PAGE> 177
BB -- Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.
B -- Debt rated 'B' has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The 'B' rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
'BB' or 'BB-' rating.
CCC -- Debt rated 'CCC' has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The 'CCC' rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
'B' or 'B-' rating.
CC -- The rating 'CC' is typically applied to debt subordinated to senior debt
that is assigned an actual or implied 'CCC' rating.
C -- The rating 'C' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1 -- The rating 'C1' is reserved for income bonds on which no interest is
being paid.
D -- Debt rated 'D' is in payment default. The 'D' rating category is used
when interest payments or principal or principal payments are not made on the
date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The 'D'
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
PLUS (+) OR MINUS (-): The rating from 'AA' to 'CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
categories.
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APPENDIX B
- --------------------------------------------------------------------------------
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY
U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES
The following list includes certain common securities, issued or guaranteed by
U.S. Government Agencies or Instrumentalities and does not purport to be
exhaustive.
EXPORT-IMPORT BANK CERTIFICATES -- are certificates of beneficial interest and
participation certificates issued and guaranteed by the Export-Import Bank of
the United States.
FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS -- are bonds issued by a
cooperatively owned, nationwide system of banks and associations supervised by
the Farm Credit Administration, an independent agency of the U.S. Government.
FEDERAL HOME LOAN BANK NOTES AND BONDS -- are notes and bonds issued by the
Federal Home Loan Bank System.
FHA DEBENTURES -- are debentures issued by the Federal Housing Authority of
the U.S. Government.
FHA INSURED NOTES -- are bonds issued by the Farmers Home Administration of
the U.S. Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS -- are bonds issued and
guaranteed by FHLMC, a corporate instrumentality of the U.S. Government. The
Federal Home Loan Banks own all the capital stock of FHLMC, which obtains its
funds by selling mortgages (as well as participation interests in the mortgages)
and by borrowing funds through the issuance of debentures and otherwise.
FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS" -- represent undivided
interests in specified groups of conventional mortgage loans (and/or
participation interests in those loans) underwritten and owned by FHLMC. At
least 95% of the aggregate principal balance of the whole mortgage loans and/or
participations in a group formed by FHLMC typically consists of single-family
mortgage loans, and not more than 5% consists of multi-family loans. FHLMC
Participation Certificates are not guaranteed by, and do not constitute a debt
or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC
Participation Certificates are issued in fully registered form only, in original
unpaid principal balances of $25,000, $100,000, $200,000, $500,000, $1 million
and $5 million. FHLMC guarantees to each registered holder of a Participation
Certificate, to the extent of such holder's pro rata share (i) the timely
payment of interest accruing at the applicable certificate rate on the unpaid
principal balance outstanding on the mortgage loans, and (ii) collection of all
principal on the mortgage loans without any offset or deductions. Pursuant to
these guaranties, FHLMC indemnifies holders of Participation Certificates
against any reduction in principal by reason of charges for property repairs,
maintenance, and foreclosure.
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS -- are bonds issued and
guaranteed by FNMA, a federally chartered and privately-owned corporation.
FNMA PASS-THROUGH CERTIFICATES OR "FANNIE MAES" -- are mortgage pass-through
certificates issued and guaranteed by FNMA. FNMA Certificates represent a
fractional undivided ownership interest in a pool of mortgage loans either
provided from FNMA's own portfolio or purchased from primary lenders. The
mortgage loans included in the pool are conventional, insured by the Federal
Housing Administration or guaranteed by the Veterans Administration. FNMA
Certificates are not backed by, nor entitled to, the full faith and credit of
the U.S. Government.
Loans not provided from FNMA's own portfolio are purchased only from primary
lenders that satisfy certain criteria developed by FNMA, including depth of
mortgage origination experience, servicing experience and financial capacity.
FNMA may purchase an entire loan pool from a single lender, and issue
Certificates backed by that loan pool alone, or may package a pool made up of
loans purchased from various lenders.
Various types of mortgage loans, and loans with varying interest rates, may be
included in a single pool, although each pool will consist of mortgage loans
related to one-family or two-to-four family residential properties.
Substantially all FNMA mortgage pools currently consist of fixed interest rate
and growing equity mortgage loans, although FNMA mortgage pools may also consist
of adjustable interest rate mortgage loans or other types of mortgage loans.
Each mortgage loan must conform to FNMA's published requirements or guidelines
with respect to maximum principal amount, loan-to-value ratio, loan term,
underwriting standards and insurance coverage.
All mortgage loans are held by FNMA as trustee pursuant to a trust indenture
for the benefit of Certificate holders. The trust indenture gives FNMA
responsibility for servicing and administering the loans in a pool. FNMA
contracts with the lenders or other servicing institutions to perform all
services and duties customary to the servicing of mortgages, as well as duties
specifically prescribed by FNMA, all under FNMA supervision. FNMA may remove
service providers for cause.
The pass-through rate on FNMA Certificates is the lowest annual interest rate
borne by an underlying mortgage loan in the pool, less a fee to FNMA as
compensation for servicing and for FNMA's guarantee. Lenders servicing the
underlying mortgage loans receive as compensation a portion of the fee paid to
FNMA, the excess yields on pooled loans with coupon rates above the lowest rate
borne by any mortgage loan in the pool and certain other amounts collected, such
as late charges.
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<PAGE> 179
The minimum size of a FNMA pool is $1 million of mortgage loans. Registered
holders purchase Certificates in amounts not less than $25,000.
FNMA Certificates are marketed by the servicing lender banks, usually through
securities dealers. The lender of a single lender pool typically markets all
Certificates based on that pool, and lenders of multiple lender pools market
Certificates based on a pro rata interest in the aggregate pool. The amount of
FNMA Certificates currently outstanding is limited.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR "GINNIE
MAES" -- are mortgage-backed securities which represent a partial ownership
interest in a pool of mortgage loans issued by lenders such as mortgage bankers,
commercial banks and savings and loan associations. Each mortgage loan included
in the pool is either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled, and, after being approved by GNMA, is offered to investors through
securities dealers. GNMA is a U.S. Government corporation within the Department
of Housing and Urban Development.
GNMA Certificates differ from bonds in that the principal is paid back monthly
by the borrower over the term of the loan rather than returned in a lump sum at
maturity. GNMA Certificates are called "modified pass-through" securities
because they entitle the holder to receive its proportionate share of all
interest and principal payments owed on the mortgage pool, net of fees paid to
the issuer and GNMA, regardless of whether or not the mortgagor actually makes
the payment. Payment of principal of and interest on GNMA Certificates of the
"modified pass-through" type is guaranteed by GNMA and backed by the full faith
and credit of the U.S. Government.
The average life of a GNMA Certificate is likely to be substantially less than
the original maturity of the mortgage pools underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return on the greater part of principal invested far in advance of
the maturity of the mortgages in the pool. Foreclosures impose little risk to
principal investment because of the GNMA guarantee.
As the prepayment rates of individual mortgage pools will vary widely, it is
not possible to accurately predict the average life of a particular issue of
GNMA Certificates. However, statistics published by the Federal Housing
Authority indicate that the average life of a single-family dwelling mortgage
with 25- to 30-year maturity, the type of mortgage which backs the vast majority
of GNMA Certificates, is approximately 12 years. It is therefore customary
practice to treat GNMA Certificates as 30-year mortgage-backed securities which
prepay fully in the twelfth year.
As a consequence of the fees paid to GNMA and the issuer of GNMA Certificates,
the coupon rate of interest of GNMA Certificates is lower than the interest paid
on the VA-guaranteed or FHA-insured mortgages underlying the Certificates.
The yield which will be earned on GNMA Certificates may vary from their coupon
rates for the following reasons: (i) Certificates may be issued at a premium or
discount, rather than at par; (ii) Certificates may trade in the secondary
market at a premium or discount after issuance; (iii) interest is earned and
compounded monthly which has the effect of raising the effective yield earned on
the Certificates; and (iv) the actual yield of each Certificate is affected by
the prepayment of mortgages included in the mortgage pool underlying the
Certificates and the rate at which principal so prepaid is reinvested. In
addition, prepayment of mortgages included in the mortgage pool underlying a
GNMA Certificate purchased at a premium may result in a loss to the Fund.
Due to the large amount of GNMA Certificates outstanding and active
participation in the secondary market by securities dealers and investors, GNMA
Certificates are highly liquid instruments. Prices of GNMA Certificates are
readily available from securities dealers and depend on, among other things, the
level of market rates, the Certificate's coupon rate and the prepayment
experience of the pool of mortgages backing each Certificate.
GENERAL SERVICES ADMINISTRATION ("GSA") PARTICIPATION CERTIFICATES -- are
participation certificates issued by the General Services Administration of the
U.S. Government.
MARITIME ADMINISTRATION BONDS -- are bonds issued and provided by the
Department of Transportation of the U.S. Government.
NEW COMMUNITIES DEBENTURES -- are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which is guaranteed by the U.S. Government.
PUBLIC HOUSING NOTES AND BONDS -- are short-term project notes and long-term
bonds issued by public housing and urban renewal agencies in connection with
programs administered by the Department of Housing and Urban Development of the
U.S. Government, the payment of which is secured by the U.S. Government.
SBA DEBENTURES -- are debentures fully guaranteed as to principal and interest
by the Small Business Administration of the U.S. Government.
SLMA DEBENTURES -- are debentures backed by the Student Loan Marketing
Association.
TITLE XI BONDS -- are bonds issued in accordance with the provisions of Title
XI of the Merchant Marine Act of 1936, as amended, the payment of which is
guaranteed by the U.S. Government.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BONDS -- are bonds issued by
the Washington Metropolitan Area Transit Authority and are guaranteed by the
Secretary of Transportation of the U.S. Government.
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<PAGE> 180
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE SOCIAL SECURITY GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-02/98
B-1
<PAGE> 181
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-02/98
B-2
<PAGE> 182
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Advisor
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, Texas 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Independent Accountants
KPMG Peat Marwick LLP
700 Louisiana
Houston, TX 77002
For more complete information about any other Fund in The AIM
Family of Funds--Registered Trademark--, including charges and expenses,
please call (800) 347-4246 or write to A I M Distributors, Inc. and
request a free prospectus. Please read the prospectus carefully before you
invest or send money.
GLO-PRO-1
<PAGE> 183
APPENDIX IV
AIM INTERNATIONAL EQUITY FUND DISCUSSION AND ANALYSIS
Reproduced below is a discussion of the performance of AIM
International Equity Fund for the six-month period ended April 30,
1998, that was prepared by its officers and A I M Advisors, Inc.
and included in its Semiannual Report dated April 30, 1998.
EUROPEAN MARKETS CONTINUE TO DOMINATE INTERNATIONAL EQUITIES
A roundtable discussion with the Fund management team for AIM International
Equity Fund about the six-month reporting period ended April 30, 1998.
Q: HOW DID THE FUND PERFORM DURING THE SIX-MONTH REPORTING PERIOD?
A: The Fund posted another impressive period of performance. Total return was
17.27% for Class A shares, 16.78% for Class B shares, and 16.84% for Class C
shares for the six-month period ended April 30, 1998. The Fund's performance
surpassed both the Morgan Stanley Capital International (MSCI) Europe, Australia
and Far East Index (EAFE) of foreign stocks gain of 15.44% during the reporting
period and the Lipper International Fund Index advance of 16.53%.
Q: WHAT ACCOUNTED FOR THE FUND'S STRONG PERFORMANCE DURING THE PAST SIX MONTHS?
A: The impressive performance by European stocks was the story among
international equities during the past six months. European markets continued to
rise dramatically as markets there comprised all of the 10 to-performing
international markets during the six-month period ended April 30, 1998. Spain
led the way with an astounding 54.57% return, followed by Portugal with a 52.89%
advance. Furthermore, all of the Fund's top 10 holdings were European companies.
Almost 75% of the Fund's portfolio was invested in European equities at the end
of the reporting period, a figure that is unlikely to increase.
Q: WHY DID EUROPEAN MARKETS PERFORM SO WELL DURING THE REPORTING PERIOD?
A: The European Economic and Monetary Union, or EMU, is scheduled to begin on
January 1, 1999. In order to qualify for the EMU, European nations must adopt
strict budgetary guidelines and improve their finances. This process has lowered
interest rates and kept inflation - the thief of wealth - at bay. With 11
countries expected to join the EMU next year, this economic restructuring has
triggered a bull market never before seen in Europe.
Q: WERE THERE ANY OTHER FACTORS DRIVING THE EUROPEAN MARKETS?
A: We believe there were four fundamental, long-term themes that fueled this
incredible rally in Europe: privatization of state-run companies, increased
economic freedoms in Eastern Europe, corporate restructuring, and the growth of
investing in European markets.
Many state-run companies and industries have moved into private hands, such
as Telecom Italia S.p.A. and Portugal Telecom, two large holdings in the Fund's
portfolio. Additionally, the economic freedoms in Eastern Europe have created a
new market of consumers and sparked a wave of entrepreneurial efforts in the
former Communist Bloc countries. Once capitalism is planted it can grow very
quickly, and we have seen this since the fall of the Berlin Wall. The
restructuring by "Corporate Europe" has made companies leaner and more globally
competitive. We have seen immediate results of this restructuring as European
earnings growth continued to be strong during the reporting period. Finally,
thousands of Europeans have discovered the wonders of investing in equities. As
money has flowed into European markets, the markets themselves have become
larger and more liquid than ever before.
Q: HOW WAS THE FUND'S ASSETS DISTRIBUTED THROUGHOUT THE REST OF THE WORLD?
A: With approximately three-quarters of the Fund now positioned in Europe,
there's not much else to spread around the globe. The Fund finished the
reporting period with 7.4% of its net assets in Japan, 4.0% in Asia and
Australia, and 7.7% in Latin America. These three regions were decimated by the
"Asian Flu" last fall and have been slow to recover. In the first quarter, many
of the Asian markets did bounce off their bottoms, some as much as 40%, but keep
in mind they were coming off very low levels. What occurred in the last quarter
of 1997 was devastating to those fragile emerging markets, and we believe it's
going to take quite some time for Asia to recover fully from the economic crisis
of last autumn.
Appendix IV - page 1
<PAGE> 184
Q: WHY IS JAPAN IN SUCH AN ECONOMIC MALAISE?
A: Although it seems apparent to the rest of the world that real economic reform
is needed in Japan, the Japanese government has been extremely reluctant to
institute any fiscal stimulus or tax cuts to get their economy moving. Until the
government takes some real action to jump-start the economy, there is no real
reason to be significantly weighted in Japan. We continue to own recognizable
Japanese companies such as Honda Motor Company and Sony Corp., but the Japanese
market has significantly underperformed the rest of the world for some time now.
The Japanese market was off more than 10% during the reporting period.
Q: IN WHICH INDUSTRIES WAS THE FUND POSITIONED?
A: The Fund's largest industry position was major regional banks with almost
12.5% of net assets. Although one may not think of banking as a growth industry,
we have seen excellent earnings growth in this industry, especially in Europe.
Banking positions owned by the Fund included the Royal Bank of Canada,
Switzerland's Credit Suisse Group, and France's Societe Generale.
To no one's surprise during this age of communication breakthroughs, the
telecommunications sector demonstrated strong earnings during the reporting
period and commanded over 10% of the Fund's portfolio. The Fund was attracted to
such wireless telecommunications companies as Finland's Nokia Oyj A.B. and
Telecom Italia Mobile S.p.A. Finally, automobile companies comprised almost 4%
of the portfolio with the French automaker Renault S.A. having the honor of
being the Fund's largest single holding at 1.50% of the portfolio's assets.
Q: WHAT IS YOUR OUTLOOK FOR THE FUND IN THE NEAR TERM?
A: We are still very positive on Europe, and very cautious on the Pacific Rim.
Conditions worldwide remain very good for equities, although it is unrealistic
to expect continued equity returns of 20% or more. Things may continue to worsen
in Asia before those markets experience a recovery, so we do not anticipate our
Asian weightings to increase any time soon. In Europe, though, we believe there
will continue to be faster earnings growth with better valuations than in the
United States, because Europe's cash-to-price earnings, price-to-book,
price-to-dividend, and P/E ratios all are lower than in the U.S. The economic
outlook in Latin America seems positive as well, although the markets there
struggled during the six-month reporting period.
The economic indicators in the U.S. remain positive, and that is good for
markets around the world because they often take their lead from the U.S. As
long as we continue to see the combination of low inflation and low interest
rates around the globe, the short-term outlook for global equities will remain
promising.
Appendix IV - page 2
<PAGE> 185
APPENDIX V
AIM GLOBAL GROWTH FUND DISCUSSION AND ANALYSIS
Reproduced below is a discussion of the performance of AIM Global
Growth Fund for the six-month period ended April 30, 1998, that was
prepared by its officers and A I M Advisors, Inc. and included in
its Semiannual Report dated April 30, 1998.
EUROPEAN MARKETS AND U.S. BLUE CHIPS CONTINUE TO DOMINATE WORLD EQUITIES
A roundtable discussion with the Fund management team for AIM Global Growth Fund
about the six-month reporting period ended April 30, 1998.
Q: HOW DID THE FUND PERFORM DURING THE SIX-MONTH REPORTING PERIOD?
A: The Fund posted another impressive period of performance. Total return was
18.81% for Class A shares, 18.49% for Class B shares, and 18.43% for Class C
shares for the six-month period ended April 30, 1998. The Fund's performance was
right in line with the Morgan Stanley Capital International (MSCI) World Index
gain of 18.86% during the reporting period.
Q: WHAT ACCOUNTED FOR THE FUND'S STRONG PERFORMANCE DURING THE PAST SIX MONTHS?
A: The impressive performance by European stocks was the story among
international equities during the past six months. European markets continued to
rise dramatically as markets there comprised all of the 10 top-performing
international markets during the six-month period ended April 30, 1998. Spain
led the way with an astounding 54.57% return, followed by Portugal with a 52.89%
advance. Furthermore, eight of the Fund's top 10 holdings were European
companies. Almost 43% of the Fund's portfolio was invested in European equities
at the end of the reporting period.
In the United States, the stock market was still feeling the effects of the
Asian currency crisis during the first three months of the reporting period.
Markets were slow to recover from a significant drop in October, just before the
reporting period began, as investors were concerned about the impact of the
Asian currency devaluations on corporate profits around the globe.
However, in the U.S. and most other developed countries, the economic
fundamentals remained sound. While the economy grew at a brisk pace, inflation
and interest rates - two forces that could potentially undermine corporate
profits continued to be low. In this environment, the Dow Jones Industrial
Average (DJIA) resumed its upward climb in late January and broke the 9000 point
mark in April to set a record.
Q: IN THIS ENVIRONMENT, HOW DID LARGE-CAP STOCKS FARE?
A: When markets skyrocketed in the second half of the reporting period,
large-cap stocks-particularly the stocks of the very largest companies, the
so-called "mega caps"-led the charge. In the uncertain market environment
created by the Asian currency crises, investors gravitated to the stocks of
large, well-known companies such as General Electric Co., IBM, and Procter &
Gamble Co., which were represented in the Fund's portfolio. Additionally,
foreign investors were attracted to the equities of these large American
companies with global reputations. Just over 34% of the Fund was positioned in
the United States at the end of the reporting period.
Q: WHY DID EUROPEAN MARKETS PERFORM SO WELL DURING THE REPORTING PERIOD?
A: The European Economic and Monetary Union, or EMU, is scheduled to begin on
January 1, 1999. In order to qualify for the EMU, European nations must adopt
strict budgetary guidelines and improve their finances. This process has lowered
interest rates and kept inflation-the thief of wealth-at bay. With 11 countries
expected to join the EMU next year, this economic restructuring has triggered a
bull market unlike any before seen in Europe.
Appendix V - page 1
<PAGE> 186
Q: WERE THERE ANY OTHER FACTORS DRIVING THE EUROPEAN MARKETS?
A: We believe there were four fundamental, long-term themes that fueled this
incredible rally in Europe: privatization of state-run companies, increased
economic freedoms in Eastern Europe, corporate restructuring, and the growth of
investing in European markets.
Many state-run companies and industries have moved into private hands, such
as Telecom Italia S.p.A. and Portugal Telecom, two large holdings in the Fund's
portfolio. Additionally, the economic freedoms in Eastern Europe have created a
new market of consumers and sparked a wave of entrepreneurial efforts in the
former Communist Bloc countries. Once capitalism is planted it can grow very
quickly, and we have seen this since the fall of the Berlin Wall.
The restructuring by "Corporate Europe" has made companies leaner and more
globally competitive. We have seen immediate results of this rest restructuring
as European earnings growth continued to be strong during the reporting period.
Finally, thousands of Europeans have discovered the wonders of investing in
equities. As money has flowed into European markets, the markets themselves have
become larger and more liquid than ever before.
Q: HOW AS THE PORTFOLIO POSITIONED THROUGHOUT THE REST OF THE WORLD?
A: The Fund finished the reporting period with 5.1% of its net assets in Japan,
3.2% in Asia and Australia, and 7% in Latin America. These three regions were
decimated by the "Asian Flu" last fall and have been slow to recover. In the
first quarter, many of the Asian markets did bounce off their bottoms, some as
much as 40%, but keep in mind they were coming off very low levels. What
occurred in the last quarter of 1997 was devastating to those fragile emerging
markets, and we believe it's going to take quite some time for Asia to fully
recover from the economic crisis of last autumn.
Q: WHY IS THE JAPANESE ECONOMY IN SUCH AN ECONOMIC MALAISE?
A: Although it seems apparent to the rest of the world that real economic reform
is needed in Japan, the Japanese government has been extremely reluctant to
institute any fiscal stimulus or tax cuts to get their economy out of the
economic gutter. Until the government takes some real action to jump-start the
economy, there is no real reason to be significantly weighted in Japan. We
continue to own recognizable Japanese companies such as Honda Motor Company and
Sony Corp., but the Japanese market has significantly underperformed the rest of
the world for some time now. The Japanese market was off more than 10% during
the reporting period.
Q: IN WHICH INDUSTRIES WAS THE FUND POSITIONED?
A: The Fund's largest industry position was major regional banks with over 7% of
net assets. Although one may not think of banking as a growth industry, we have
seen excellent earnings growth in this industry, we have seen excellent earnings
growth in this industry, especially in Europe. Banking positions owned by the
Fund included the Royal Bank of Canada, Switzerland's Credit Suisse Group, and
France's Societe Generale.
To no one's surprise during this age of technology, the computer software
and services sector commanded over 5% of the Fund's portfolio. The Fund was
attracted to such recognizable technology companies as Dell Computer Corp.,
Compaq Computer Corp., America Online, and Cisco Systems, Inc. Finally,
automobile companies comprised over 2% of the portfolio with the German
automaker Volkswagen A.G. having the honor of being the Fund's largest single
holding at 0.95%.
Q: WHAT IS YOUR OUTLOOK FOR THE FUND IN THE NEAR TERM?
A: We are still very positive on the United States and Europe, and very cautious
on the Pacific Rim. Conditions worldwide remain very good for equities, although
it is unrealistic to expect continued equity returns of 20% or more. Things may
continue to worsen in Asia before those markets experience a recovery, so we do
not anticipate our Asian weightings to increase any time soon. In Europe,
though, we believe there will continue to be faster earnings growth with better
valuations than in the United States, because Europe's cash-to-price earnings,
price-to-book, price-to-dividend, and P/E ratios all are lower than in the U.S.
The economic outlook in Latin America seems positive as well, although the
markets there struggled during the six-month reporting period. The economic
indicators in the U.S. remain positive, and that is good for markets around the
world because they often take their lead from the U.S. As long as we continue to
see the combination of low inflation and low interest rates around the globe,
the short-term outlook for global equities will remain promising.
Appendix V - page 2
<PAGE> 187
AIM INTERNATIONAL EQUITY FUND
AIM GLOBAL GROWTH FUND
Portfolios of
AIM INTERNATIONAL FUNDS, INC.
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
Toll Free: (800) 347-4246
AIM INTERNATIONAL GROWTH FUND
AIM WORLDWIDE GROWTH FUND
Portfolios of
AIM GROWTH SERIES
Fifty California Street, 27th Floor
San Francisco, CA 94120-7345
Toll Free: (800) 347-4246
STATEMENT OF ADDITIONAL INFORMATION
(1998 Special Meeting of Shareholders of AIM International
Growth Fund and AIM Worldwide Growth Fund)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Proxy Statement and Prospectus dated
December __, 1998 of AIM International Funds, Inc. (the "Company") for use in
connection with the Special Meeting of Shareholders of AIM International Growth
Fund and AIM Worldwide Growth Fund (the "Acquired Funds") to be held on February
10, 1999. Copies of the Combined Proxy Statement and Prospectus may be obtained
at no charge by writing the Company at the address shown above or by calling
1-800-347-4246. Unless otherwise indicated, capitalized terms used herein and
not otherwise defined have the same meanings as are given to them in the
Combined Proxy Statement and Prospectus. A Statement of Additional Information
for the Company dated February 20, 1998, has been filed with the Securities and
Exchange Commission and is attached hereto as Appendix I which is incorporated
herein by this reference.
The date of this Statement of Additional Information is December __, 1998.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE COMPANY.............................................................. 2
DESCRIPTION OF PERMITTED INVESTMENTS..................................... 2
DIRECTORS AND OFFICERS OF THE COMPANY.................................... 2
ADVISORY AND MANAGEMENT - RELATED SERVICES AGREEMENTS AND PLANS OF
DISTRIBUTION.................................................... 2
PORTFOLIO TRANSACTIONS................................................... 2
DESCRIPTION OF SHARES.................................................... 2
DETERMINATION OF NET ASSET VALUE......................................... 2
TAXES ................................................................ 2
PERFORMANCE DATA......................................................... 3
FINANCIAL INFORMATION.................................................... 3
</TABLE>
1
<PAGE> 188
Appendix I - AIM International Funds, Inc. Statement of Additional
Information
Appendix II - AIM International Equity Fund Semiannual Report
Appendix III - AIM Global Growth Fund Semiannual Report
Appendix IV - Annual Report of G T Global International Growth Fund
(predecessor to AIM International Growth Fund)
Appendix V - AIM International Growth Fund Semiannual Report
Appendix VI - Annual Report of GT Global Worldwide Growth Fund
(predecessor to AIM Worldwide Growth Fund)
Appendix VII - AIM Worldwide Growth Fund Semiannual Report
Appendix VIII - Pro Forma Financial Statements
THE COMPANY
This Statement of Additional Information relates to AIM International Funds,
Inc. (the "Company") and two of its investment portfolios, AIM International
Equity Fund and AIM Global Growth Fund (the "Acquiring Funds"). The Company is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"). AIM International Equity Fund
and AIM Global Growth Fund are separate series of shares of capital stock of the
Company.
DESCRIPTION OF PERMITTED INVESTMENTS
For a discussion of the fundamental and nonfundamental investment policies of
the Acquiring Funds adopted by the Company's Board of Directors, see heading
"Investment Restrictions" in the Company's Statement of Additional Information
attached hereto as Appendix I.
DIRECTORS AND OFFICERS OF THE COMPANY
For a disclosure of the names and a brief occupational biography of each of the
Company's officers and directors identifying those who are interested persons of
the Company as well as stating their aggregate renumeration, see heading
"Management - Officers and Directors" in the Company's Statement of Additional
Information attached hereto as Appendix I.
ADVISORY AND MANAGEMENT - RELATED SERVICES AGREEMENTS AND PLANS OF DISTRIBUTION
For a discussion of the Company's advisory and management-related services
agreements and plans of distribution, see headings "Management - Investment
Advisory and Other Services," "The Distribution Plans," and "The Distributor" in
the Company's Statement of Additional Information attached hereto as Appendix I.
PORTFOLIO TRANSACTIONS
For a discussion of the Company's brokerage policy, see heading "Portfolio
Transactions and Brokerage" in the Company's Statement of Additional Information
attached hereto as Appendix I.
DESCRIPTION OF SHARES
For a discussion of the Company's authorized securities and the characteristics
of the Company's shares of capital stock, see heading "General Information about
the Company" in the Company's Statement of Additional Information attached
hereto as Appendix I.
2
<PAGE> 189
DETERMINATION OF NET ASSET VALUE
For a discussion of the Company's valuation and pricing procedures and a
description of its purchase and redemption procedures, see heading "Net Asset
Value Determination" in the Company's Statement of Additional Information
attached hereto as Appendix I.
TAXES
For a discussion of any tax information relating to ownership of the Company's
shares, see heading "Dividends, Distributions and Tax Matters" in the Company's
Statement of Additional information attached hereto as Appendix I.
PERFORMANCE DATA
For a description and quotation of certain performance data used by the Company,
see heading "General Information about the Company" in the Company's Statement
of Additional Information attached hereto as Appendix I.
FINANCIAL INFORMATION
The audited financial statements of AIM INTERNATIONAL EQUITY FUND and AIM GLOBAL
GROWTH FUND and the report thereon by KPMG Peat Marwick, LLP, are set forth
under the heading "Financial Statements" in the Company's Statement of
Additional Information attached hereto as Appendix I. The unaudited interim
financial statements for AIM INTERNATIONAL EQUITY FUND for the six-month period
ended April 30, 1998, are set forth in the Semiannual Report of AIM
International Equity Fund which is attached hereto as Appendix II. The unaudited
interim financial statements for AIM GLOBAL GROWTH Fund for the six-month period
ended April 30, 1998, are set forth in the Semiannual Report of AIM Global
Growth Fund which is attached hereto as Appendix III.
The audited financial statements of AIM INTERNATIONAL GROWTH FUND and the report
thereon by PricewaterhouseCoopers, LLP, are set forth in the Annual Report of GT
Global International Growth Fund, the predecessor to AIM International Growth
Fund, dated December 31, 1997, which is incorporated herein by reference and
attached hereto as Appendix IV. The unaudited interim financial statements for
AIM INTERNATIONAL GROWTH FUND for the six-month period ended June 30, 1998, are
set forth in the Semiannual Report of AIM International Growth Fund, which is
attached hereto as Appendix V. The audited financial statements of AIM WORLDWIDE
GROWTH FUND, and the report thereon by PricewaterhouseCoopers, LLP, are set
forth in the Annual Report of GT Global Worldwide Growth Fund, the predecessor
to AIM Worldwide Growth Fund, dated December 31, 1997, which is incorporated
herein by reference and attached hereto as Appendix VI. The unaudited interim
financial statements for AIM WORLDWIDE GROWTH FUND for the six-month period
ended June 30, 1998, are set forth in the Semiannual Report of AIM Worldwide
Growth Fund, which is attached hereto as Appendix VII.
Pro forma financial statements for AIM International Equity Fund and AIM Global
Growth Fund, giving effect to the Reorganizations, are attached hereto as
Appendix VIII.
3
<PAGE> 190
APPENDIX I
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
AIM INTERNATIONAL EQUITY FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
Supplement dated October 1, 1998
to the Statement of Additional Information dated February 20, 1998,
as supplemented July 1, 1998
The following information should be inserted within the discussion
under the heading "MANAGEMENT--Directors and Officers":
<TABLE>
<S> <C> <C>
"PREMA MATHAI-DAVIS (48) Director Chief Executive Officer, YWCA of
350 Fifth Avenue, Suite 301 the U.S.A.; Commissioner, New
New York, NY 10118 York City Department for
the Aging; and Member of the
Board of Directors, Metropolitan
Transportation Authority of New
York State.
EDWARD K. DUNN, JR. (63) Director Chairman of the Board of
2 Hopkins Plaza, 20th Floor Directors, Mercantile Mortgage
Baltimore, MD 21201 Corp; Formerly, Vice Chairman of
the Board of Directors and
President, Mercantile - Safe
Deposit & Trust Co.; and
President, Mercantile
Bankshares.
</TABLE>
Mr. Kroeger resigned as a Director of the Company on June 11, 1998 and on that
date became a consultant to the Company."
<PAGE> 191
AIM INTERNATIONAL FUNDS, INC.
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
AIM INTERNATIONAL EQUITY FUND
Supplement dated July 1, 1998 to the
Statement of Additional Information dated February 20, 1998
The fifth sentence in the paragraph under the caption "HEDGING STRATEGIES AND
OTHER INVESTMENT POLICIES - Asset Coverage for Futures and Options Positions"
on page 14 is deleted and replaced in its entirety by the
following:
"The Funds will comply with guidelines established by the SEC with respect to
coverage of options and futures strategies by mutual funds, and if the
guidelines so require will segregate liquid assets in the amount prescribed."
<PAGE> 192
STATEMENT OF
ADDITIONAL INFORMATION
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
AIM INTERNATIONAL EQUITY FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(713) 626-1919
-----------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS,
AND IT SHOULD BE READ IN CONJUNCTION WITH
A PROSPECTUS OF THE ABOVE-NAMED FUNDS,
A COPY OF WHICH MAY BE OBTAINED FROM AUTHORIZED DEALERS
OR BY WRITING
A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TEXAS 77210-4739,
OR BY CALLING (800) 347-4246
-----------------
Statement of Additional Information dated: February 20, 1998,
Relating to the AIM International Equity Fund Prospectus dated
February 20, 1998, the AIM Global Aggressive Growth Fund, AIM Global
Growth Fund and AIM Global Income Fund Prospectus dated February 20, 1998,
the AIM Asian Growth Fund Prospectus dated November 12, 1997, as revised
January 2, 1998, and the AIM European Development Fund Prospectus dated
November 12, 1997, as revised January 2, 1998
<PAGE> 193
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company and its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Total Return Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Yield Quotations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Historical Portfolio Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
General Brokerage Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Allocation of Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 28(e) Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Brokerage Commissions Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
HEDGING STRATEGIES AND OTHER INVESTMENT POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Privatized Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Hedging Foreign Currency Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Writing Covered Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Writing Covered Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Purchasing Put Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Purchasing Call Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Combined Option Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Stock Index Options and Futures and Financial Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Restrictions on the Use of Futures Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Restrictions on OTC Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Asset Coverage for Futures and Options Positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Risk Factors in Options, Futures, Forward and Currency Transactions . . . . . . . . . . . . . . . . . . . . 15
Repurchase Agreements and Reverse Repurchase Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Short Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Rule 144A Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Countries in Which Asian Fund and European Fund May Invest . . . . . . . . . . . . . . . . . . . . . . . . . 17
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Aggressive Growth Fund, Growth Fund, and Income Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Equity Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Asian Fund and European Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Remuneration of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
AIM Funds Retirement Plan for Eligible Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 29
Deferred Compensation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Investment Advisory, Sub-Advisory and Administrative Services Agreements . . . . . . . . . . . . . . . . . . 31
THE DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
i
<PAGE> 194
<TABLE>
<S> <C>
THE DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
HOW TO PURCHASE AND REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
NET ASSET VALUE DETERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Reinvestment of Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
MISCELLANEOUS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Audit Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Custodian and Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Shareholder Inquiries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
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<PAGE> 195
INTRODUCTION
AIM International Funds, Inc. (the "Company") is a series mutual fund.
The rules and regulations of the Securities and Exchange Commission (the "SEC")
require all mutual funds to furnish prospective investors certain information
concerning the activities of the fund being considered for investment. This
information is included in the AIM Asian Growth Fund Prospectus dated November
12, 1997, as revised January 2, 1998; the AIM European Development Fund
Prospectus dated November 12, 1997, as revised January 2, 1998; the AIM Global
Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund
Prospectus, dated February 20, 1998 and the AIM International Equity Fund
Prospectus dated February 20, 1998 (individually, a "Prospectus" and
collectively, the "Prospectuses"). Copies of each Prospectus and additional
copies of this Statement of Additional Information may be obtained without
charge by writing the principal distributor of the Fund's shares, A I M
Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas
77210-4739, or by calling (800) 347-4246. Investors must receive a Prospectus
before they invest in the Funds.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Funds
(hereinafter defined). Some of the information required to be in this
Statement of Additional Information is also included in each Fund's current
Prospectus, and in order to avoid repetition, reference will be made herein to
sections of the applicable Prospectus. Additionally, each Prospectus and this
Statement of Additional Information omit certain information contained in the
Company's Registration Statement filed with the SEC. Copies of the
Registration Statement, including items omitted from each Prospectus and this
Statement of Additional Information, may be obtained from the SEC by paying the
charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was organized in 1991 as a Maryland corporation, and is
registered with the SEC as an open-end, series, management investment company.
The Company currently consists of six separate portfolios: AIM Asian Growth
Fund (the "Asian Fund"), AIM European Development Fund ( the "European
Fund"), AIM Global Aggressive Growth Fund (the "Aggressive Growth Fund"), AIM
Global Growth Fund (the "Growth Fund") and AIM Global Income Fund ( the "Income
Fund") and AIM International Equity Fund (the "Equity Fund") (individually, a
"Fund" and collectively, the "Funds"). Each portfolio of the Company offers
Class A, Class B and Class C shares. This Statement of Additional Information
relates solely to the Funds.
As used in each Prospectus, the term "majority of the outstanding
shares" of the Company, of a particular Fund or of a class of a Fund means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Company, such Fund or such class present at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares of the Company, such Fund or
such class are present or represented by proxy or (ii) more than 50% of the
outstanding shares of the Company, such Fund or such class.
Each share of a Fund is entitled to one vote, to participate equally
in dividends and distributions declared by the Board of Directors with respect
to such Fund and, upon liquidation of the Fund, to participate proportionately
in the Fund's net assets remaining after satisfaction of the Fund's outstanding
liabilities. Fractional shares have proportionately the same rights, including
voting rights, as are provided for full shares.
PERFORMANCE
Total return and yield figures for the Funds are neither fixed nor
guaranteed, and no Fund's principal is insured. Performance quotations reflect
historical information and should not be considered representative of a Fund's
performance for any period in the future. Performance is a function of a
number of factors and
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<PAGE> 196
can be expected to fluctuate. The Funds may provide performance information in
reports, sales literature and advertisements. The Funds may also, from time to
time, quote information about the Funds published or aired by publications or
other media entities which contain articles or segments relating to investment
results or other data about one or more of the Funds. The following is a list
of such publications or media entities:
<TABLE>
<S> <C> <C>
Advertising Age Financial World Nation's Business
Barron's Forbes New York Times
Best's Review Fortune Pension World
Broker World Hartford Courant Inc. Pensions & Investments
Business Week Institutional Investor Personal Investor
Changing Times Insurance Forum Philadelphia Inquirer
Christian Science Monitor Insurance Week USA Today
Consumer Reports Investor's Daily U.S. News & World Report
Economist Journal of the American Wall Street Journal
FACS of the Week Society of CLU & ChFC Washington Post
Financial Planning Kiplinger Letter CNN
Financial Product News Money CNBC
Financial Services Week Mutual Fund Forecaster PBS
</TABLE>
Each Fund may also compare its performance to performance data of
similar mutual funds as published by the following services:
<TABLE>
<S> <C>
Bank Rate Monitor Stanger
Donoghue's Weisenberger
Mutual Fund Values (Morningstar) Lipper Analytical Services
</TABLE>
Although performance data may be useful to prospective investors when
comparing a Fund's performance with other funds and other potential
investments, investors should note that the methods of computing performance of
other potential investments are not necessarily comparable to the methods
employed by a Fund.
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the
applicable Fund's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in such Fund's net asset value per
share over the period. Average annual total returns are calculated by
determining the growth or decline in value of a hypothetical investment in a
particular Fund over a stated period of time, and then calculating the annually
compounded percentage rate that would have produced the same result if the rate
of growth or decline in value had been constant over the period. While average
annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a Fund's performance is not
constant over time, but changes from year to year, and that average annual
total returns do not represent the actual year-to-year performance of such
Fund.
In addition to average annual total returns, each Fund may quote
unaveraged or cumulative total returns reflecting the simple change in value of
an investment over a stated period. Average annual and cumulative total
returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series of
redemptions, over any time period. Total returns may be broken down into their
components of income and capital (including capital gains and changes in share
price) in order to illustrate the relationship of these factors and their
contributions to total return. Total returns and other performance information
may be quoted numerically or in tables, graphs or similar illustrations. For
Asian Fund and European Fund total returns may be quoted with or without taking
the Class A shares' 5.50% maximum sales charge, the Class B shares' 5% maximum
contingent deferred sales charge ("CDSC") or the Class C shares' 1% maximum
CDSC into account. For Aggressive Growth Fund, Growth
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<PAGE> 197
Fund and Income Fund total returns may be quoted with or without taking the
Class A shares' 4.75% maximum sales charge, the Class B shares' 5% maximum CDSC
or the Class C shares' 1% maximum CDSC into account. For Equity Fund total
returns may be quoted with or without taking the Class A shares' 5.50% maximum
sales charge, the Class B shares' 5% maximum CDSC or the Class C shares' 1%
maximum CDSC into account. Excluding sales charges from a total return
calculation produces a higher total return figure.
YIELD QUOTATIONS
The standard formula for calculating yield for the Income Fund, as
described in the Prospectus, is as follows:
6
YIELD = 2[((a-b)/(c x d) +1) -1]
Where a = dividends and interest earned during a stated 30-day
period. For purposes of this calculation, dividends
are accrued rather than recorded on the ex-dividend
date. Interest earned under this formula must
generally be calculated based on the yield to maturity
of each obligation (or, if more appropriate, based on
yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during
the period.
d = the maximum offering price per share on the last day of
the period.
The yields for the Class A, Class B and Class C shares of Income Fund
for the 30-day period ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
With Without
Waivers Waivers
------- -------
<S> <C> <C>
Class A . . . . . . . . . . . 5.59% 5.06%
Class B . . . . . . . . . . . 5.38% 4.82%
Class C . . . . . . . . . . . 5.38% 4.82%
</TABLE>
HISTORICAL PORTFOLIO RESULTS
Total returns for each of the named Funds, with respect to its Class A
shares, for the one- and five-year periods (or since inception, if shorter)
ended October 31, 1997 (which include the maximum sales charge and reinvestment
of all dividends and distributions), were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
--------------------------- -----------------
Periods ended October 31, 1997 Periods ended October 31, 1997
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
One Five One Five
Class A Shares: Year Years Year Years
- --------------- -------- ----- -------- -----
Aggressive Growth Fund 4.41% 17.41%* 4.41% 65.16%*
Equity Fund 5.33% 14.34% 5.33% 95.45%
Growth Fund 11.67% 16.55%* 11.67% 61.39%*
Income Fund 3.88% 9.84%* 3.88% 34.11%*
</TABLE>
* The inception date for the Class A shares of each of Aggressive Growth Fund,
Growth Fund and Income Fund was September 15, 1994.
Total returns for each of the named Funds, with respect to its Class B
shares, for the one-year period ended October 31, 1997 and the period September
15, 1994 (inception date) through October 31, 1997 (which
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<PAGE> 198
include the maximum contingent deferred sales charge and reinvestment of all
dividends and distributions) were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
--------------------------- -----------------
Periods ended October 31, 1997 Periods ended October 31, 1997
------------------------------ ------------------------------
One Since One Since
Class B Shares: Year Inception Year Inception
- --------------- -------- --------- -------- ---------
<S> <C> <C> <C> <C>
Aggressive Growth Fund 4.11% 17.97% 4.11% 67.61%
Equity Fund 9.03% 8.83% 9.03% 30.30%
Growth Fund 11.65% 17.09% 11.65% 63.76%
Income Fund 3.48% 10.22% 3.48% 35.55%
</TABLE>
Total returns for Class C shares of Aggressive Growth Fund, Equity Fund,
Growth Fund and Income Fund for the period August 4, 1997 (inception date)
through October 31, 1997 (which include the maximum contingent deferred sales
charge and reinvestment of all dividends and distributions) were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
--------------------------- -----------------
Periods ended October 31, 1997 Periods ended October 31, 1997
------------------------------ ------------------------------
One Since One Since
Class C Shares: Year Inception Year Inception
- --------------- -------- --------- -------- ---------
<S> <C> <C> <C> <C>
Aggressive Growth Fund N/A N/A N/A -8.48%
Equity Fund N/A N/A N/A -8.69%
Growth Fund N/A N/A N/A -6.69%
Income Fund N/A N/A N/A 1.99%
</TABLE>
Average annual total return is not available for Class A, B and C
shares of Asian Fund or European Fund as the inception date of the Class A, B
and C shares of such Funds was November 3, 1997.
During the one-year period ended October 31, 1997, a hypothetical
$1,000 investment in the Class A shares of Aggressive Growth Fund, Equity Fund,
Growth Fund and Income Fund at the beginning of such period would have been
worth $1,044.11, $1,053.32, $1,116.70 and $1,038.76, respectively, assuming the
maximum sales charge was paid and all distributions were reinvested. For the
period September 15, 1994 (inception date for Aggressive Growth Fund, Growth
Fund and Income Fund) through October 31, 1997, and the five-year period ended
October 31, 1997, for Equity Fund, a hypothetical $1,000 investment in the
Class A shares of Aggressive Growth Fund, Equity Fund, Growth Fund and Income
Fund at the beginning of such period would have been worth $1,651.60,
$1,986.22, $1,613.91 and $1,341.11, respectively, assuming the maximum sales
charge was paid and all distributions were reinvested.
During the one-year period ended October 31, 1997, a hypothetical
$1,000 investment in the Class B shares of Aggressive Growth Fund, Equity Fund,
Growth Fund and Income Fund at the beginning of such period would have been
worth $1,041.14, $1,056.11, $1,116.55 and $1,039.76, respectively, assuming
the maximum contingent deferred sales charge was paid and all distributions
were reinvested. For the period September 15, 1994 (inception date) through
October 31, 1997, a hypothetical $1,000 investment in the Class B shares of
Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund at the
beginning of such period would have been worth $1,302.97, $1,355.45, $1,637.62
and $1,676.12, respectively, assuming the maximum contingent deferred sales
charge was paid and all distributions were reinvested.
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<PAGE> 199
For the period August 4, 1997 (inception date) through October 31,
1997, a hypothetical $1,000 investment in the Class C shares of Aggressive
Growth Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such
period would have been worth $915.17, $913.11, $933.07, and $1,091.91,
respectively, assuming the maximum contingent deferred sales charge was paid
and all distributions were reinvested.
Each Fund's performance may be compared in advertising to the
performance of other mutual funds in general, or of particular types of mutual
funds, especially those with similar objectives. Such performance data may be
prepared by Lipper Analytical Services, Inc. and other independent services
which monitor the performance of mutual funds. The Funds may also advertise
mutual fund performance rankings which have been assigned to each respective
Fund by such monitoring services. Each Fund's performance may also be compared
in advertising and other materials to the performance of comparative benchmarks
such as indices of stocks comparable to those in which the Funds invest, as
well as the following:
<TABLE>
<S> <C>
Standard & Poor's 500 Stock Index Dow Jones Industrial Average
Consumer Price Index Morgan Stanley Capital International Indices,
Bond Buyer Index including:
NASDAQ EAFE Index
COFI Pacific Basin Index
First Boston High Yield Index Pacific Ex Japan Index (a widely
The Financial Times - Actuaries World Indices (a recognized series of
wide range of comprehensive measures of indices in international
stock price performance for the world's market
major stock markets and regional areas) performance)
</TABLE>
Each Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10 year Treasuries
30 year Treasuries
90 Day Treasury Bills
Advertising for the Income Fund may from time to time include
discussions of general economic conditions and interest rates.
From time to time, each Fund's advertising may include discussions of
general domestic and international economic conditions and interest rates, and
may make reference to international economic sources such as The Bundesbank
(the German equivalent of the U.S. Federal Reserve Board). Each Fund's
advertising may also include references to the use of the Fund as part of an
individual's overall retirement investment program.
From time to time, each Fund's sales literature and/or advertisements
may discuss generic topics pertaining to the mutual fund industry. This
includes, but is not limited to, literature addressing general information
about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds,
money markets, certificates of deposit, retirement, retirement plans, asset
allocation, tax-free investing, college planning and inflation. Also from time
to time, sales literature and/or advertisements for the Funds may disclose (i)
the largest holdings in the Funds' portfolios, (ii) certain selling group
members and/or (iii) certain institutional shareholders.
5
<PAGE> 200
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
A I M Advisors, Inc. ("AIM") makes decisions to buy and sell securities
for each Fund, selects broker-dealers, effects the Funds' investment portfolio
transactions, allocates brokerage fees in such transactions, and where
applicable, negotiates commissions and spreads on transactions. AIM's primary
consideration in effecting a security transaction is to obtain the most
favorable execution of the order, which includes the best price on the security
and a low commission rate. While AIM seeks reasonably competitive commission
rates, the Funds may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
Some of the securities in which the Funds invest are traded in
over-the-counter markets. In such transactions, a Fund deals directly with
dealers who make markets in the securities involved, except when better prices
are available elsewhere. Portfolio transactions placed through dealers who are
primary market makers are effected at net prices without commissions, but which
include compensation in the form of a mark up or mark down.
Traditionally, commission rates have not been negotiated on stock markets
outside the United States. Although in recent years many overseas stock markets
have adopted a system of negotiated rates, a number of markets maintain an
established schedule of minimum commission rates.
AIM may determine target levels of commission business with various
brokers on behalf of its clients (including the Funds) over a certain time
period. The target levels will be based upon the following factors, among
others: (1) the execution services provided by the broker; (2) the research
services provided by the broker; and (3) the broker's interest in mutual funds
in general and in the Funds and other mutual funds advised by AIM or A I M
Capital Management, Inc. (collectively, the "AIM Funds") in particular,
including sales of the Funds and of the other AIM Funds. In connection with (3)
above, the Funds' trades may be executed directly by dealers that sell shares
of the AIM Funds or by other broker-dealers with which such dealers have
clearing arrangements. AIM will not use a specific formula in connection with
any of these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a Fund
any commissions, fees, brokerage or similar payments paid by the Fund on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of a Fund, provided the conditions of an exemptive order received by
the Funds from the SEC are met. In addition, a Fund may purchase or sell a
security from or to another AIM Fund provided the Funds follow procedures
adopted by the Board of Directors/Trustees of the various AIM Funds, including
the Company. These intra-fund transactions do not generate brokerage
commissions but may result in custodial fees or taxes or other related expenses.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some of
these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by one of
the Funds and by another Fund or one or more of these investment accounts.
However, the position of each account in the same securities and the length of
time that each account may hold its investment in the same securities may vary.
The timing and amount of purchase by each account will also be determined by
its cash position. If the purchase or sale of securities is consistent with the
investment policies of the Fund(s) and one or more of these accounts, and is
considered at or about the same time, AIM may combine such
6
<PAGE> 201
transactions, in accordance with applicable laws and regulations, to obtain the
most favorable execution. Simultaneous transactions could, however, adversely
affect a Fund's ability to obtain or dispose of the full amount of a security
which it seeks to purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
AIM considers the investment objectives and policies of its advisory clients,
the relative size of portfolio holdings of the same or comparable securities,
the availability of cash for investment, the size of investment commitments
generally held, and the judgments of the persons responsible for recommending
the investment.
7
<PAGE> 202
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to
the value of the brokerage and research services provided ... viewed in terms
of either that particular transaction or [AIM's] overall responsibilities with
respect to the accounts as to which it exercises investment discretion." The
services provided by the broker also must lawfully and appropriately assist AIM
in the performance of its investment decision-making responsibilities.
Accordingly, in recognition of research services provided to it, a Fund may pay
a broker higher commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the [Company's directors] with respect to
the performance, investment activities, and fees and expenses of other mutual
funds. Broker-dealers may communicate such information electronically, orally or
in written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of
companies, and the providing of access to consultants who supply research
information.
The outside research assistance is useful to AIM since the broker-dealers
used by AIM tend to follow a broader universe of securities and other matters
than AIM's staff can follow. In addition, the research provides AIM with a
diverse perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or advised
by AIM or by its affiliates. Some broker-dealers may indicate that the provision
of research services is dependent upon the generation of certain specified
levels of commissions and underwriting concessions by AIM's clients, including
the Funds. However, the Funds are not under any obligation to deal with any
broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fee paid by the Funds is not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research
services had they not been provided by broker-dealers, the expenses to AIM
could be considered to have been reduced accordingly.
8
<PAGE> 203
BROKERAGE COMMISSIONS PAID
For the fiscal years ended October 31, 1997, 1996 and 1995, Aggressive
Growth Fund paid brokerage commissions of $6,227,671, $5,169,447 and
$1,409,761, respectively. The increase in brokerage commissions from October
31, 1995 through October 31, 1997 was due to the increase in Aggressive Growth
Fund's net assets during such period. For the fiscal year ended October 31,
1997, AIM allocated certain of Aggressive Growth Fund's brokerage transactions
to certain broker-dealers that provided AIM with certain research, statistical
and other information. Such transactions amounted to $79,719,730 and the
related brokerage commissions were $111,081.
For the fiscal years ended October 31, 1997, 1996, and 1995, Equity
Fund paid brokerage commissions of $6,002,915, $5,666,504 and $3,169,134,
respectively. The increase in brokerage commissions from October 31, 1995
through October 31, 1997 was due to the increase in Equity Fund's net assets
during such period. For the fiscal year ended October 31, 1997, AIM allocated
certain of Equity Fund's brokerage transactions to certain broker-dealers that
provided AIM with certain research, statistical and other information. Such
transactions amounted to $5,879,466 and the related brokerage commissions were
$2,967.
For the fiscal years ended October 31, 1997, 1996 and 1995, Growth
Fund paid brokerage commissions of $1,249,946, $826,284 and $161,100,
respectively. The increase in brokerage commissions from October 31, 1995
through October 31, 1997 was due to the increase in Growth Fund's net assets
during such period. For the fiscal year ended October 31, 1997, AIM allocated
certain of Growth Fund's brokerage transactions to certain broker-dealers that
provided AIM with certain research, statistical and other information. Such
transactions amounted to $22,934,086 and the related brokerage commissions were
$17,539.
For the fiscal years ended October 31, 1997, 1996 and 1995, Income
Fund paid brokerage commissions of $162, $1,570 and $6,939, respectively. For
the fiscal year ended October 31, 1997, none of Income Fund's brokerage
transactions were allocated to broker-dealers that provided AIM with certain
research, statistical and other information.
HEDGING STRATEGIES AND OTHER INVESTMENT POLICIES
The following discussion of certain investment strategies supplements
the discussion set forth in the Prospectus under the heading "Hedging
Strategies and Other Investment Techniques."
Each Fund may seek to hedge its portfolio against movements in the
equity markets, interest rates and exchange rates between currencies through
the use of options, futures transactions, options on futures and foreign
forward exchange transactions. Each Fund has authority to write (sell) covered
call and put options on its portfolio securities, purchase put and call options
on securities and engage in transactions in stock index options, stock index
futures and financial futures, and related options on such futures. The Funds
may also deal in certain forward contracts, including forward foreign exchange
transactions, foreign currency options and futures, and related options on such
futures. The Funds are authorized to enter into such options and futures
transactions either on exchanges or in the OTC markets. Although certain risks
are involved in options and futures transactions (as discussed in the
Prospectus and below), AIM believes that, because the Funds will only engage in
these transactions for hedging purposes, the options and futures portfolio
strategies of the Funds will not subject the Funds to the risks frequently
associated with the speculative use of options and futures transactions. While
the Funds' use of hedging strategies is intended to reduce the volatility of
the respective net asset value of each Fund's shares, a Fund's net asset value
will nevertheless fluctuate. There can be no assurance that the hedging
transactions of any of the Funds will be effective.
9
<PAGE> 204
PRIVATIZED ENTERPRISES
The governments of certain foreign countries have, to varying degrees,
embarked on privatization programs contemplating the sale of all or part of
their interests in state enterprises. European Fund's investments in the
securities of privatized enterprises include privately negotiated investments
in a government- or state-owned or controlled company or enterprise that has
not yet conducted an initial equity offering, investments in the initial
offering of equity securities of a state enterprise or former state enterprise
and investments in the securities of a state enterprise following its initial
equity offering.
In certain jurisdictions, the ability of foreign entities, such as
European Fund, to participate in privatizations may be limited by local law, or
the price or terms on which European Fund may be able to participate may be
less advantageous than for local investors. Moreover, there can be no
assurance that governments that have embarked on privatization programs will
continue to divest their ownership of state enterprises, that proposed
privatizations will be successful or that governments will not re-nationalize
enterprises that have been privatized.
In the case of the enterprises in which European Fund may invest,
large blocks of the stock of those enterprises may be held by a small group of
stockholders, even after the initial equity offerings by those enterprises.
The sale of some portion or all of those blocks could have an adverse effect on
the price of the stock of any such enterprise.
Prior to making an initial equity offering, most state enterprises or
former state enterprises go through an internal reorganization or management.
Such reorganizations are made in an attempt to better enable these enterprises
to compete in the private sector. However, certain reorganizations could
result in a management team that does not function as well as the enterprise's
prior management and may have a negative effect on such enterprise. In
addition, the privatization of an enterprise by its government may occur over a
number of years, with the government continuing to hold a controlling position
in the enterprise even after the initial equity offering for the enterprise.
Prior to privatization, most of the state enterprises in which
European Fund may invest enjoy the protection of and receive preferential
treatment from the respective sovereigns that own or control them. After
making an initial equity offering these enterprises may no longer have such
protection or receive such preferential treatment and may become subject to
market competition from which they were previously protected. Some of these
enterprises may not be able to effectively operate in a competitive market and
may suffer losses or experience bankruptcy due to such competition.
HEDGING FOREIGN CURRENCY RISKS
Generally, the foreign exchange transactions of a Fund will be
conducted on a spot (cash) basis at the spot rate then prevailing for
purchasing or selling currency in the foreign exchange market. However, the
Funds have authority to deal in forward foreign exchange between currencies
(including the U.S. dollar) as a hedge against possible variations in the
foreign exchange rate between such currencies. This is accomplished through
individually negotiated contractual agreements to purchase or to sell a
specified currency at a specified future date and price set at the time of the
contract. A Fund's dealings in forward foreign exchange may be with respect to
a specific purchase or sale of a security, or with respect to its portfolio
positions generally. The Funds will not attempt to hedge all of their
respective portfolio positions and will enter into such transactions only to
the extent, if any, deemed appropriate by AIM.
In addition to the forward exchange contracts, the Funds may also
purchase or sell listed or OTC foreign currency options, foreign currency
futures and related options as a short or long hedge against possible
variations in foreign exchange rates. The cost to a Fund of engaging in
foreign currency transactions varies with such factors as the currencies
involved, the length of the contract period and the market conditions then
prevailing. Since transactions in foreign currency exchange usually are
conducted on a principal basis,
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no fees or commissions are involved. Transactions involving forward exchange
contracts and futures contracts and options thereon are subject to certain
risks. A detailed discussion of such risks appears under the caption "Risk
Factors in Options, Futures, Forward and Currency Transactions."
WRITING COVERED CALL OPTIONS
Each Fund is authorized to write (sell) covered call options on the
securities in which it may invest and to enter into closing purchase
transactions with respect to such options. Writing a call option obligates a
Fund to sell or deliver the option's underlying security, in return for the
strike price, upon exercise of the option. By writing a call option, a Fund
receives an option premium from the purchaser of the call option. Writing
covered call options is generally a profitable strategy if prices remain the
same or fall. Through receipt of the option premium, a Fund would seek to
mitigate the effects of a price decline. By writing covered call options,
however, a Fund gives up the opportunity, while the option is in effect, to
profit from any price increase in the underlying security above the option
exercise price. In addition, a Fund's ability to sell the underlying security
will be limited while the option is in effect unless the Fund effects a closing
purchase transaction.
WRITING COVERED PUT OPTIONS
Each Fund is authorized to write (sell) covered put options on its
portfolio securities and to enter into closing transactions with respect to
such options.
When a Fund writes a put option, it takes the opposite side of the
transaction from the option's purchaser. In return for receipt of the premium,
a Fund assumes the obligation to pay the strike price for the option's
underlying instrument if the other party to the option chooses to exercise it.
A Fund may seek to terminate its position in a put option it writes before
exercise by closing out the option in the secondary market at its current
price. If the secondary market is not liquid for an option a Fund has written,
however, the Fund must continue to be prepared to pay the strike price while
the option is outstanding, regardless of price changes, and must continue to
set aside assets to cover its position.
Each Fund may write put options as an alternative to purchasing actual
securities. If security prices rise, a Fund would expect to profit from a
written put option, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it is
likely that a Fund will also profit, because it should be able to close out the
option at a lower price. If security prices fall, a Fund would expect to
suffer a loss. This loss should be less than the loss a Fund would have
experienced from purchasing the underlying instrument directly, however,
because the premium received for writing the option should mitigate the effects
of the decline.
PURCHASING PUT OPTIONS
Each Fund is authorized to purchase put options to hedge against a
decline in the market value of its portfolio securities. By buying a put
option a Fund has the right (but not the obligation) to sell the underlying
security at the exercise price, thus limiting the Fund's risk of loss through a
decline in the market value of the security until the put option expires. The
amount of any appreciation in the value of the underlying security will be
partially offset by the amount of the premium paid by a Fund for the put option
and any related transaction costs. Prior to its expiration, a put option may
be sold in a closing sale transaction and profit or loss from the sale will
depend on whether the amount received is more or less than the premium paid for
the put option plus the related transaction costs. A closing sale transaction
cancels out a Fund's position as the purchaser of an option by means of an
offsetting sale of an identical option prior to the expiration of the option it
has purchased. None of the Funds will purchase put options on securities
(including stock index options discussed below) if as a result of such
purchase, the aggregate cost of all outstanding options on securities held by a
Fund would exceed 5% of the market value of the Fund's total assets.
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PURCHASING CALL OPTIONS
Each Fund is also authorized to purchase call options. The features
of call options are essentially the same as those of put options, except that
the purchaser of a call option obtains the right to purchase, rather than sell,
the underlying instrument at the option's strike price (call options on futures
contracts are settled by purchasing the underlying futures contract). The
Funds will purchase call options only in connection with "closing purchase
transactions."
COMBINED OPTION POSITIONS
Each Fund, for hedging purposes, may purchase and write options in
combination with each other to adjust the risk and return characteristics of
the Fund's overall position. For example, a Fund may purchase a put option and
write a covered call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics are similar
to selling a futures contact. This technique, called a "straddle," enables a
Fund to offset the cost of purchasing a put option with the premium received
from writing the call option. However, by selling the call option, a Fund
gives up the ability for potentially unlimited profit from the put option.
Another possible combined position would involve writing a covered call option
at one strike price and buying a call option at a lower price, in order to
reduce the risk of the written covered call option in the event of a
substantial price increase. Because combined options positions involve
multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.
STOCK INDEX OPTIONS AND FUTURES AND FINANCIAL FUTURES
Each Fund is authorized to engage in transactions in stock index
options and futures and financial futures, and related options. A Fund may
purchase or write put and call options on stock indices to hedge against the
risks of market-wide stock price movements in the securities in which the Fund
invests. Options on indices are similar to options on securities except that
on exercise or assignment, the parties to the contract pay or receive an amount
of cash equal to the difference between the closing value of the index and the
exercise price of the option times a specified multiple. A Fund may invest in
stock index options based on a broad market index, such as the S&P 500 Index,
or on a narrow index representing an industry or market segment, such as the
AMEX Oil & Gas Index. The Funds' investments in foreign stock index futures
contracts and foreign interest rate futures contracts, and related options, are
limited to only those contracts and related options that have been approved by
the Commodities Futures Trading Commission ("CFTC") for investment by United
States investors. Additionally, with respect to a Fund's investments in
foreign options, unless such options are specifically authorized for investment
by order of the CFTC or meet the definition of "trade option" as set forth in
CFTC Regulation 32.4, a Fund will not make such investments.
Each Fund may also purchase and sell stock index futures contracts and
other financial futures contracts ("futures contracts") as a hedge against
adverse changes in the market value of its portfolio securities as described
below. A futures contract is an agreement between two parties which obligates
the purchaser of the futures contract to buy and the seller of a futures
contract to sell a security for a set price on a future date. Unlike most
other futures contracts a stock index futures contract does not require actual
delivery of securities, but results in cash settlement based upon the
difference in value of the index between the time the contract was entered into
and the time of its settlement. A Fund may effect transactions in stock index
futures contracts in connection with equity securities in which it invests and
in financial futures contracts in connection with the debt securities in which
it invests, if any. Transactions by a Fund in stock index futures and
financial futures are subject to limitations as described below under
"Restrictions on the Use of Futures Transactions."
A Fund may sell futures contracts in anticipation of or during a
market decline to attempt to offset the decrease in market value of the Fund's
securities portfolio that might otherwise result. When a Fund is not fully
invested in the securities markets and anticipates a significant market
advance, the Fund may purchase
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futures in order to gain rapid market exposure that may in part or entirely
offset increases in the cost of securities that the Fund intends to purchase.
As such purchases are made, an equivalent amount of futures contracts will be
terminated by offsetting sales. The Funds do not consider purchases of futures
contracts to be a speculative practice under these circumstances. It is
anticipated that, in a substantial majority of these transactions, the Fund
will purchase such securities upon termination of the long futures position,
whether the long position results from the purchase of a futures contract or
the purchase of a call option, but under unusual circumstances (e.g., the Fund
experiences a significant amount of redemptions) a long futures position may be
terminated without the corresponding purchase of securities.
The Funds are also authorized to purchase and write call and put
options on futures contracts and stock indices in connection with their hedging
activities. Generally, these strategies would be utilized under the same
market and market sector conditions (i.e., conditions relating to specific
types of investments) in which a Fund enters into futures transactions. A Fund
may purchase put options or write call options on futures contracts and stock
indices rather than selling the underlying futures contract in anticipation of
a decrease in the market value of securities. Similarly, a Fund can purchase
call options, or write put options on futures contracts and stock indices, as a
substitute for the purchase of such futures to hedge against the increased cost
resulting from an increase in the market value of securities which the Fund
intends to purchase.
Each Fund is also authorized to engage in options and futures
transactions on U.S. and foreign exchanges and in options in the OTC markets
("OTC options"). In general, exchange traded contracts are third-party
contracts (i.e., performance of the parties' obligations is guaranteed by an
exchange or clearing corporation) with standardized strike prices and
expiration dates. OTC options transactions are two-party contracts with price
and terms negotiated by the buyer and seller. See "Restrictions on OTC
Options" below for information as to restrictions on the use of OTC options.
Each Fund is authorized to purchase or sell listed or OTC foreign
security or currency options, foreign security or currency futures and related
options as a short or long hedge against possible variations in foreign
exchange rates and market movements. Such transactions could be effected with
respect to hedges on non-U.S. dollar denominated securities owned by the Fund,
sold by the Fund but not yet delivered, or committed or anticipated to be
purchased by the Fund. As an illustration, a Fund may use such techniques to
hedge the stated value in U.S. dollars of an investment in a yen-denominated
security. In such circumstances, for example, the Fund can purchase a foreign
currency put option enabling it to sell a specified amount of yen for U.S.
dollars at a specified price by a future date. To the extent the hedge is
successful, a loss in the value of the yen relative to the U.S. dollar will
tend to be offset by an increase in the value of the put option.
Certain differences exist between these hedging instruments. For
example, foreign currency options provide the holder thereof the rights to buy
or sell a currency at a fixed price on a future date. A futures contract on a
foreign currency is an agreement between two parties to buy and sell a
specified amount of a currency for a set price on a future date. Futures
contracts and options on futures contracts are traded on boards of trade or
futures exchanges. The Funds will not speculate in foreign security or
currency options, futures or related options. None of the Funds will hedge a
currency substantially in excess of the market value of securities which any
such Fund has committed or anticipates to purchase which are denominated in
such currency, and in the case of securities which have been sold by such Fund
but not yet delivered, the proceeds thereof in its denominated currency. None
of the Funds will incur potential net liabilities of more than 25% of its total
assets from foreign security or currency options, futures or related options.
RESTRICTIONS ON THE USE OF FUTURES TRANSACTIONS
The purchase or sale of a futures contract differs from the purchase
or sale of a security in that no price or premium is paid or received.
Instead, an amount of cash or securities acceptable to the broker and the
relevant contract market, which varies, but is generally about 5% of the
contract amount, must be
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deposited with the broker. This amount is known as "initial margin" and
represents a "good faith" deposit assuring the performance of both the
purchaser and seller under the futures contract. Subsequent payments to and
from the broker, called "variation margin," are required to be made on a daily
basis as the price of the futures contract fluctuates making the long and short
positions in the futures contracts more or less valuable, a process known as
"marking to market." At any time prior to the settlement date of the futures
contract, the position may be closed out by taking an opposite position which
will operate to terminate the position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid to or released by the broker and the purchaser realizes a loss or gain.
In addition, a nominal commission is paid on each completed sale transaction.
Regulations of the CFTC applicable to the Funds require that all of
the Funds' futures and options on futures transactions constitute bona fide
hedging transactions and that the Funds not enter into such transactions if,
immediately thereafter, the sum of the amount of initial margin deposits on a
Fund's existing futures positions and premiums paid for related options would
exceed 5% of the market value of such Fund's total assets. However, if an
option is "in-the-money" (the price of the option exceeds the strike price),
the in-the-money portion may be excluded in computing the 5% limit.
RESTRICTIONS ON OTC OPTIONS
The Funds will engage in transactions involving OTC options, including
over-the-counter stock index options, over-the-counter foreign security and
currency options and options on foreign security and currency futures, only
with member banks of the Federal Reserve System and primary dealers in U.S.
Government securities or with affiliates of such banks or dealers which have
capital of at least $50 million or whose obligations are guaranteed by an
entity having capital of at least $50 million. The Funds will acquire only
those OTC options for which AIM believes a Fund can receive on each business
day at least two independent bids or offers (one of which will be from an
entity other than a party to the option).
The Staff of the SEC has taken the position that purchased OTC options
and the assets used as cover for written OTC options are illiquid securities.
Therefore, the Funds have each adopted an operating policy pursuant to which
each Fund will not purchase or sell OTC options (including OTC options on
futures contracts) if, as a result of such transaction, the sum of (i) the
market value of OTC options currently outstanding which are held by a Fund,
(ii) the market value of the underlying securities covered by OTC call options
currently outstanding which were sold by such Fund, (iii) margin deposits on
the Fund's existing OTC options on futures contracts, and (iv) the market value
of all other assets of the Fund which are illiquid or are not otherwise readily
marketable, would exceed 10% of the net assets of Aggressive Growth Fund,
Growth Fund and Income Fund, and 15% of the net assets of Equity Fund, European
Fund and Asian Fund, taken at market value. However, if an OTC option is sold
by a Fund to a primary U.S. Government securities dealer recognized by the
Federal Reserve Bank of New York, and the Fund has the unconditional
contractual right to repurchase such OTC option from the dealer at a
predetermined price, then such Fund will treat as illiquid such amount of the
underlying securities as is equal to the repurchase price less the amount by
which the option is "in-the-money" (current market value of the underlying
security minus the option's strike price). The repurchase price with primary
dealers is typically a formula price which is generally based on a multiple of
the premium received for the option, plus the amount by which the option is
"in-the-money." This policy as to OTC options is not a fundamental policy of
the Funds and may be amended by the Board of Directors of the Company without
approval of the Funds' respective shareholders. However, the Funds will not
change or modify this policy prior to the change or modification by the SEC
staff of its position.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS
The Funds will not use leverage in their options and futures
strategies. Such investments will be made for hedging purposes only. The
Funds will hold securities or other options or futures positions whose values
are expected to offset their obligations under the hedge strategies. None of
the Funds will enter into an option or futures position that exposes a Fund to
an obligation to another party unless it owns either (i) an
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offsetting position in securities or other options or futures contracts or (ii)
cash, receivables and short-term debt securities with a value sufficient to
cover its potential obligations. The Funds will comply with guidelines
established by the SEC with respect to coverage of options and futures
strategies by mutual funds, and if the guidelines so require will segregate
liquid assets with its custodian bank in the amount prescribed. The segregated
liquid assets will not be sold while the futures or option strategy is
outstanding, unless they are replaced with similar liquid assets. As a result,
there is a possibility that segregation of a large percentage of a Fund's
liquid assets could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
RISK FACTORS IN OPTIONS, FUTURES, FORWARD AND CURRENCY TRANSACTIONS
The use of options and futures transactions to hedge a Fund's
portfolio involves the risk of imperfect correlation in movements in the price
of options and futures and movements in the price of securities or currencies
which are the subject of the hedge. If the price of the option or future moves
more or less than the price of hedged securities or currencies, the Fund will
experience a gain or loss which will not be completely offset by movements in
the price of the subject of the hedge. The successful use of options and
futures also depends on AIM's ability to correctly predict price movements in
the market involved in a particular options or futures transaction. To
compensate for imperfect correlations, the Funds may purchase or sell stock
index options or futures contracts in a greater dollar amount than the hedged
securities if the volatility of the hedged securities is historically greater
than the volatility of the stock index options or futures contracts.
Conversely, the Funds may purchase or sell fewer stock index options or futures
contracts, if the historical price volatility of the hedged securities is less
than that of the stock index options or futures contracts. The risk of
imperfect correlation generally tends to diminish as the maturity date of the
stock index option or futures contract approaches. Options are also subject to
the risks of an illiquid secondary market, particularly in strategies involving
writing options, which a Fund cannot terminate by exercise. In general,
options whose strike prices are close to their underlying instruments' current
value will have the highest trading volume, while options whose strike prices
are further away may be less liquid.
The Funds intend to enter into options and futures transactions, on an
exchange or in the OTC market, only if there appears to be a liquid secondary
market for such options or futures or, in the case of OTC transactions, AIM
believes a Fund can receive on each business day at least two independent bids
or offers. However, there can be no assurance that a liquid secondary market
will exist at any specific time. Thus, it may not be possible to close an
options or futures position. The inability to close options and futures
positions also could have an adverse impact on a Fund's ability to effectively
hedge its portfolio. There is also the risk of loss by a Fund of margin
deposits or collateral in the event of bankruptcy of a broker with whom the
Fund has an open position in an option, a futures contract or related option.
The exchanges on which options on portfolio securities and currency
options are traded have generally established limitations governing the maximum
number of call or put options on the same underlying security or currency
(whether or not covered) which may be written by a single investor, whether
acting alone or in concert with others (regardless of whether such options are
written on the same or different exchanges or are held or written in one or
more accounts or through one or more brokers). "Trading limits" are imposed on
the maximum number of contracts which any person may trade on a particular
trading day. AIM does not believe that these trading and position limits will
have any adverse impact on the portfolio strategies for hedging the Funds'
portfolios.
Because the Funds will engage in the options and futures transactions
described above solely in connection with their hedging activities, AIM does
not believe such options and futures transactions necessarily will have any
significant effect on the portfolio turnover rate of any of the Funds.
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REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements and reverse repurchase
agreements. A repurchase agreement is an instrument under which a Fund
acquires ownership of a debt security and the seller (usually a broker or bank)
agrees, at the time of the sale, to repurchase the obligation at a mutually
agreed upon time and price, thereby determining the yield during the Fund's
holding period. In the event of bankruptcy or other default of a seller of a
repurchase agreement, the Fund may experience both delays in liquidating the
underlying securities and losses, including: (a) a possible decline in the
value of the underlying security during the period in which the Fund seeks to
enforce its rights thereto; (b) a possible subnormal level of income and lack
of access to income during this period; and (c) expenses of enforcing its
rights. A repurchase agreement is collateralized by the security acquired by
the Fund and its value is marked to market daily in order to minimize the
Fund's risk. Repurchase agreements usually are for short periods, such as one
or two days, but may be entered into for longer periods of time.
A reverse repurchase agreement involves the sale of securities held by
a Fund, with an agreement that the Fund will repurchase such securities at an
agreed-upon price, date, and interest payment. During the time a reverse
repurchase agreement is outstanding, the applicable Fund will segregate liquid
assets having a value equal to the repurchase price under such reverse
repurchase agreement. Any investment gains made by a Fund with monies borrowed
through reverse repurchase agreements will cause the net asset value of the
Fund's shares to rise faster than would be the case if the Fund had no such
borrowings. On the other hand, if the investment performance resulting from
the investment of borrowings obtained through reverse repurchase agreements
fails to cover the cost of such borrowings to the Fund, the net asset value of
the Fund will decrease faster than would otherwise be the case.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Funds may make
secured loans of portfolio securities amounting to not more than 33-1/3% of
each Fund's respective total assets. Securities loans are made to banks,
brokers and other financial institutions pursuant to agreements requiring that
the loans be continuously secured by collateral at least equal at all times to
the value of the securities lent marked to market on a daily basis. The
collateral received will consist of cash, U.S. Government securities, letters
of credit or such other collateral as may be permitted under the applicable
Fund's investment program. While the securities are being lent, the Fund will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. The Funds have a right to call each of
their respective loans and obtain the securities on five business days' notice
or, in connection with securities trading on foreign markets, within such
longer period of time which coincides with the normal settlement period for
purchases and sales of such securities in such foreign markets. The Funds will
not have the right to vote securities while they are being lent, but each Fund
will call a loan in anticipation of any important vote. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower
fail financially. Loans will only be made to persons deemed by AIM to be of
good standing and will not be made unless, in the judgment of AIM, the
consideration to be earned from such loans would justify the risk.
SHORT SALES
Each Fund may from time to time enter into short sales transactions.
A Fund will not make short sales of securities or maintain a short position
unless at all times when a short position is open, the Fund owns an equal
amount of such securities or securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same issue
as, and equal in amount to, the securities sold short. This is a technique
known as selling short "against the box." Such short sales will be used by the
Funds for the purpose of deferring recognition of gain or loss for federal
income tax purposes. In no event may more than 10% of the value of a Fund's
total assets be deposited or pledged as collateral for such sales at any time.
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RULE 144A SECURITIES
Each Fund may purchase securities which, while privately placed, are
eligible for purchase and sale pursuant to Rule 144A under the Securities Act
of 1933 (the "1933 Act"). This Rule permits certain qualified institutional
buyers, such as the Funds, to trade in privately placed securities even though
such securities are not registered under the 1933 Act. AIM, under the
supervision of the Company's Board of Directors, will consider whether
securities purchased under Rule 144A are illiquid and thus subject to each
Fund's restriction of investing no more than 15% of its total assets in
illiquid securities. Determination of whether a Rule 144A security is liquid
or not is a question of fact. In making this determination AIM will consider
the trading markets for the specific security taking into account the
unregistered nature of a Rule 144A security. In addition, AIM could consider
the (i) frequency of trades and quotes, (ii) number of dealers and potential
purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the
security and of marketplace trades (for example, the time needed to dispose of
the security, the method of soliciting offers and the mechanics of transfer).
The liquidity of Rule 144A securities will also be monitored by AIM and, if as
a result of changed conditions, it is determined that a Rule 144A security is
no longer liquid, a Fund's holdings of illiquid securities will be reviewed to
determine what, if any, action is required to assure that the Fund does not
invest more than 15% of its total assets in illiquid securities. Investing in
Rule 144A securities could have the effect of increasing the amount of the
Fund's investments in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.
FOREIGN EXCHANGE TRANSACTIONS
Purchases and sales of foreign securities are usually made with
foreign currencies, and consequently the Funds may from time to time hold cash
balances in the form of foreign currencies and multinational currency units.
Such foreign currencies and multinational currency units will usually be
acquired on a spot (i.e. cash) basis at the spot rate prevailing in foreign
exchange markets and will result in currency conversion costs to the Funds.
The Funds attempt to purchase and sell foreign currencies on as favorable a
basis as practicable; however, some price spread on foreign exchange
transactions (to cover service charges) may be incurred, particularly when the
Funds change investments from one country to another, or when U.S. dollars are
used to purchase foreign securities. Certain countries could adopt policies
which would prevent the Funds from transferring cash out of such countries, and
the Funds may be affected either favorably or unfavorably by fluctuations in
relative exchange rates while the Funds hold foreign currencies.
COUNTRIES IN WHICH ASIAN FUND AND EUROPEAN FUND MAY INVEST
The Asian Fund considers issuers of securities located in the
following countries to be Asian issuers:
Bangladesh Indonesia Philippines Thailand
China Korea Singapore Vietnam
Hong Kong Malaysia Sri Lanka
India Pakistan Taiwan
In addition to Asian issuers, Asian Fund may invest up to 20% of its
total assets in securities of non-Asian issuers. The following is a list of
some of the non-Asian countries in which Asian Fund may invest from time to
time:
Australia New Zealand
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European Fund considers issuers of securities located in the following
countries to be European issuers:
Austria Germany Netherlands Slovenia
Belgium Greece Norway Spain
Croatia Hungary Poland Sweden
Czech Republic Ireland Portugal Switzerland
Denmark Italy Romania Turkey
Finland Liechtenstein Russia Ukraine
France Luxembourg Slovakia United Kingdom
In addition to European issuers, European Fund may invest up to 20% of
its total assets in securities of non-European issuers. The following is a
list of some of the non-European countries in which European Fund may invest
from time to time:
Bermuda Israel South Africa United States
Egypt
The above lists may include foreign countries that have not yet been
approved by the Company's board. Asian Fund and European Fund will only invest
in foreign countries that have been approved by the board.
The word "Development" in European Fund's name is designed to address
the general restructuring taking place in Europe as well as a more dramatic
political and economic restructuring taking place in regions such as Eastern
Europe. Also consistent with the name, the Fund has the ability to invest a
significant portion of its total assets in securities issued in emerging
markets.
INVESTMENT RESTRICTIONS
AGGRESSIVE GROWTH FUND, GROWTH FUND, AND INCOME FUND
The following fundamental policies and investment restrictions have
been adopted by Aggressive Growth Fund, Growth Fund and Income Fund and, except
as noted, such policies cannot be changed without approval by the vote of a
majority of the outstanding voting securities of the applicable Fund, as
defined in the 1940 Act.
The Funds may not:
1. Purchase or sell real estate or interests in real
estate (except that this restriction does not preclude
investments in marketable securities of companies
engaged in real estate activities).
2. Purchase or sell commodities or commodity contracts,
except that the Funds may purchase and sell stock
index and currency options, stock index futures,
interest rate futures, financial futures and currency
futures contracts and related options on such futures.
3. Purchase any security on margin, except that the Funds
may obtain such short-term credits as may be necessary
for the clearance of purchases and sales of portfolio
securities. The payment by the Fund of initial or
variation margin in connection with
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futures or related options transactions shall not be
considered the purchase of a security on margin.
4. Make loans, although the Funds may (a) purchase money
market securities and enter into repurchase
agreements, (b) acquire bonds, debentures, notes and
other debt securities, governmental obligations and
certificates of deposit, and (c) lend portfolio
securities.
5. Issue senior securities, except to the extent
permitted by the 1940 Act, including permitted
borrowings.
6. Underwrite securities of other persons, except to the
extent that a Fund may be deemed to be an underwriter
within the meaning of the 1933 Act in connection with
the purchase and sale of its portfolio securities in
the ordinary course of pursuing its investment
program.
7. Purchase or sell interests in oil, gas or other
mineral exploration or development programs.
8. Purchase the securities of any issuer if, as a result,
more than 25% of the value of a Fund's total assets,
taken at market value, would be invested in the
securities of issuers having their principal business
activities in the same industry. This restriction
does not apply to obligations issued or guaranteed by
the U.S. Government or by any of its agencies or
instrumentalities but will (unless and until SEC
changes its position) apply to foreign government
obligations unless the SEC permits their exclusion.
9. Purchase a security if, as a result, with respect to
75% of the value of a Fund's total assets, taken at
market value, more than 5% of a Fund's total assets,
taken at market value, would be invested in the
securities of any one issuer (including repurchase
agreements with any one entity), except securities
issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities and except that a
Fund may purchase securities of other investment
companies to the extent permitted by applicable law or
exemptive order. This restriction does not apply to
the Income Fund.
10. Purchase a security if, as a result, with respect to
50% of the value of the Fund's total assets taken at
market value, more than 5% of the value of the Fund's
total assets, taken at market value, would be invested
in securities of any one issuer, except securities
issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities and except that a
Fund may purchase securities of other investment
companies to the extent permitted by applicable law or
exemptive order. This restriction applies only to the
Income Fund.
11. Purchase a security if, as a result, more than 10% of
the outstanding voting securities of any issuer would
be held by a Fund, except that a Fund may purchase
securities of other investment companies to the extent
permitted by applicable law or exemptive order.
12. Borrow money, except that the Fund may borrow from
banks (including the Fund's custodian bank) and enter
into reverse repurchase agreements and dollar roll
transactions (Income Fund only). With respect to
Aggressive Growth Fund and Growth Fund, such permitted
borrowings shall be used as a temporary defensive
measure for extraordinary or emergency purposes.
Permitted borrowings shall be in amounts not exceeding
33- 1/3% of a Fund's total assets, taken at market
value, and
19
<PAGE> 214
each Fund may pledge amounts of up to 20% of its total
assets, taken at market value, to secure such
borrowings. Whenever bank borrowings exceed 5% of the
value of the total assets of Aggressive Growth Fund or
Growth Fund, such Fund will not make any additional
purchases of securities for investment purposes.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, the Funds will
not:
13. Make investments for the purpose of exercising control
or management.
14. Lend portfolio securities in excess of 33-1/3% of
total assets, taken at market value; provided that
loans of portfolio securities shall be made in
accordance with the guidelines set forth under the
heading "Lending of Portfolio Securities."
15. Invest in securities which are illiquid if more than
15% of a Fund's total assets, taken at market value,
would be invested in such securities.
16. Effect short sales of securities, except that a Fund
may make short sales "against the box" to the extent
that the value of the securities sold short, in the
aggregate, does not represent more than 10% of the
Fund's total assets, taken at market value, at any
given time.
Percentage restrictions apply as of the time of investment without
regard to later increases or decreases in the values of securities or total
assets.
EQUITY FUND
The following fundamental policies and investment restrictions
have been adopted by Equity Fund and, except as noted, such policies
cannot be changed without approval by the vote of a majority of the
outstanding voting securities of the Fund, as defined in the 1940 Act.
The Fund may not:
1. Purchase or sell real estate or interests in real
estate (except that this restriction does not preclude
investments in marketable securities of companies
engaged in real estate activities).
2. Purchase or sell commodities or commodity contracts,
except that the Fund may purchase and sell stock index
and currency options, stock index futures, financial
futures and currency futures contracts and related
options on such futures.
3. Purchase any security on margin, except that the Fund
may obtain such short-term credits as may be necessary
for the clearance of purchases and sales of portfolio
securities. The payment by the Fund of initial or
variation margin in connection with futures or related
options transactions shall not be considered the
purchase of a security on margin.
4. Make loans, although the Fund may (a) purchase money
market securities and enter into repurchase
agreements, (b) acquire bonds, debentures, notes and
other debt securities, governmental obligations and
certificates of deposit, and (c) lend portfolio
securities.
20
<PAGE> 215
5. Borrow money, except that the Fund may borrow from
banks (including the Fund's custodian bank) and enter
into reverse repurchase agreements as a temporary
defensive measure for extraordinary or emergency
purposes, and then only in amounts not exceeding 10%
of its total assets, taken at market value, and may
pledge amounts of up to 20% of its total assets, taken
at market value, to secure such borrowings. For
purposes of this restriction, collateral arrangements
with respect to the writing of options, futures
contracts, options on futures contracts, and
collateral arrangements with respect to initial and
variation margin are not deemed to be a pledge of
assets, and neither such arrangements nor the purchase
and sale of options, futures or related options shall
be deemed to be the issuance of a senior security.
Whenever bank borrowings and the value of the Fund's
reverse repurchase agreements exceed 5% of the value
of the Fund's total assets, the Fund will not make any
additional purchases of securities for investment
purposes.
6. Underwrite securities of other persons, except to the
extent that the Fund may be deemed to be an
underwriter within the meaning of the 1933 Act in
connection with the purchase and sale of its portfolio
securities in the ordinary course of pursuing its
investment program.
7. Purchase or sell interests in oil, gas or other
mineral exploration or development programs.
8. Purchase the securities of any issuer if, as a result,
more than 25% of the value of the Fund's total assets,
taken at market value, would be invested in the
securities of issuers having their principal business
activities in the same industry. This restriction does
not apply to obligations issued or guaranteed by the
U.S. Government or by any of its agencies or
instrumentalities but will apply to foreign government
obligations unless the Securities and Exchange
Commission permits their exclusion.
9. Purchase a security if, as a result, with respect to
75% of the value of the Fund's total assets, taken at
market value, more than 5% of the Fund's total assets,
taken at market value, would be invested in the
securities of any one issuer (including repurchase
agreements with any one entity), except securities
issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities, and except that the
Fund may purchase securities of other investment
companies to the extent permitted by applicable law or
exemptive order.
10. Purchase a security if, as a result, more than 10% of
the outstanding voting securities of any issuer would
be held by the Fund, except that the Fund may purchase
securities of other investment companies to the extent
permitted by applicable law or exemptive order.
11. Issue senior securities, except as provided in
restriction number 5 above.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, the Fund will not:
12. Make investments for the purpose of exercising control
or management.
13. Lend its portfolio securities in excess of 33-1/3% of
its total assets, taken at market value; provided that
loans of portfolio securities shall be made in
accordance with the guidelines set forth under the
heading "Lending of Portfolio Securities."
21
<PAGE> 216
14. Invest in securities which are illiquid if more than
15% of the Fund's total assets, taken at market value,
would be invested in such securities.
15. Effect short sales of securities, except that the Fund
may make short sales "against the box" to the extent
that the value of the securities sold short, in the
aggregate, does not represent more than 10% of the
Fund's total assets, taken at market value, at any
given time.
Percentage restrictions apply as of the time of investment without
regard to later increases or decreases in the values of securities or total
assets.
ASIAN FUND AND EUROPEAN FUND
The following fundamental policies and investment restrictions have been
adopted by Asian Fund and European Fund and, except as noted, such policies
cannot be changed without approval by the vote of a majority of the outstanding
voting securities of the applicable Fund, as defined in the 1940 Act.
The Funds may not:
1. Purchase or sell real estate or interests in real
estate (except that this restriction does not preclude
investments in marketable securities of companies
engaged in real estate activities).
2. Purchase or sell commodities or commodity contracts,
except that the Funds may purchase and sell stock
index and currency options, stock index futures,
interest rate futures, financial futures and currency
futures contracts and related options on such futures.
3. Purchase any security on margin, except that the Funds
may obtain such short-term credits as may be necessary
for the clearance of purchases and sales of portfolio
securities. The payment by the Fund of initial or
variation margin in connection with futures or related
options transactions shall not be considered the
purchase of a security on margin.
4. Make loans, although the Funds may (a) purchase money
market securities and enter into repurchase
agreements, (b) acquire bonds, debentures, notes and
other debt securities, governmental obligations and
certificates of deposit, and (c) lend portfolio
securities.
5. Issue senior securities, except to the extent
permitted by the 1940 Act, including permitted
borrowings.
6. Underwrite securities of other persons, except to the
extent that a Fund may be deemed to be an underwriter
within the meaning of the 1933 Act in connection with
the purchase and sale of its portfolio securities in
the ordinary course of pursuing its investment
program.
7. Purchase the securities of any issuer if, as a result,
more than 25% of the value of a Fund's total assets,
taken at market value, would be invested in the
securities of issuers having their principal business
activities in the same industry. This restriction
does not apply to obligations issued or guaranteed by
the U.S. Government or by any of its agencies or
instrumentalities but will (unless and until SEC
changes its position) apply to foreign government
obligations unless the SEC permits their exclusion.
22
<PAGE> 217
8. Purchase a security if, as a result, with respect to
75% of the value of a Fund's total assets, taken at
market value, more than 5% of a Fund's total assets,
taken at market value, would be invested in the
securities of any one issuer, except securities issued
or guaranteed by the U.S. Government or any of its
agencies or instrumentalities and except that a Fund
may purchase securities of other investment companies
to the extent permitted by applicable law or exemptive
order.
9. Purchase a security if, as a result, more than 10% of
the outstanding voting securities of any issuer would
be held by a Fund, except that a Fund may purchase
securities of other investment companies to the extent
permitted by applicable law or exemptive order.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, each of the Funds
will not:
10. Make investments for the purpose of exercising control
or management.
11. Lend its portfolio securities in excess of 33-1/3% of
its total assets, taken at market value; provided that
loans of portfolio securities shall be made in
accordance with the guidelines set forth under the
heading "Lending of Portfolio Securities."
12. Invest in securities which are illiquid if more than
15% of a Fund's total assets, taken at market value,
would be invested in such securities.
13. Effect short sales of securities, except that the Fund
may make short sales "against the box" to the extent
that the value of the securities sold short, in the
aggregate, does not represent more than 10% of the
Fund's total assets, taken at market value, at any
given time.
The following non-fundamental policies apply to all Funds. Subject to
the investment restriction on lending portfolio securities, number 13 for
Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund and number 11
for Asian Fund and European Fund, the Funds may from time to time lend
securities from their respective portfolios to brokers, dealers and financial
institutions such as banks and trust companies and receive collateral in cash
or securities issued or guaranteed by the U.S. Government which will be
maintained in an amount equal to at least 100% of the current market value of
the loaned securities. Such cash will be invested in short-term securities,
which will increase the current income of the applicable Fund. Such loans will
not be for more than 30 days and will be terminable at any time. The Funds
will have the right to regain record ownership of loaned securities to exercise
beneficial rights such as voting rights, subscription rights and rights to
dividends, interest or other distributions. The Funds may pay reasonable fees
to persons unaffiliated with the Funds for services in arranging such loans.
With respect to the lending of portfolio securities, there is the risk of
failure by the borrower to return the securities involved in such transactions.
See the information under the caption "Hedging Strategies and Other Investment
Techniques -- Lending of Portfolio Securities" above.
Each Fund's ability and decisions to purchase or sell portfolio
securities may be affected by laws or regulations relating to the
convertibility and repatriation of assets. Because the shares of a Fund are
redeemable on a daily basis in U.S. dollars, the Funds intend to manage their
portfolios so as to give reasonable assurance that they will be able to obtain
U.S. dollars to the extent necessary to meet anticipated redemptions. Under
present conditions, it is not believed that these considerations will have any
significant effect on the Funds' portfolio strategies.
23
<PAGE> 218
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during at least the last five years are set forth below.
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
------------------- ---------------------------------------------
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ---------- -------
<S> <C> <C>
*CHARLES T. BAUER (78) Director and Chairman of the Board of Directors,
11 Greenway Plaza, Suite 100 Chairman A I M Management Group Inc., A I M Advisors,
Houston, TX 77046 Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company;
and Vice Chairman and Director, AMVESCAP PLC.
BRUCE L. CROCKETT (53) Director Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief
McLean, VA 22102 Executive Officer, COMSAT Corporation; and
Chairman, Board of Governors of INTELSAT
(international communications company).
OWEN DALY II (73) Director Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel
Baltimore, MD 21210 Corp., Monumental Life Insurance Company and
Monumental General Insurance Company; and
Chairman of the Board of Equitable
Bancorporation.
JACK FIELDS (46) Director Chief Executive Officer, Texana Global, Inc.
Jetero Plaza, Suite E Formerly, Member of the U. S. House of
8810 Will Clayton Parkway Representatives.
Humble, TX 77338
</TABLE>
- ----------------
* A director who is an interested person of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
24
<PAGE> 219
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
------------------- ---------------------------------------------
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ---------- -------
<S> <C> <C>
**CARL FRISCHLING (60) Director Partner, Kramer, Levin, Naftalis & Frankel
919 Third Avenue (law firm). Director, ERD Waste, Inc. (waste
New York, NY 10022 management company), Aegis Consumer Finance
(auto leasing company) and Lazard Funds, Inc.
(investment companies). Formerly, Partner,
Reid & Priest (law firm); and, prior thereto,
Partner, Spengler Carlson Gubar Brodsky &
Frischling (law firm).
*ROBERT H. GRAHAM (51) Director and Director, President and Chief Executive
11 Greenway Plaza, Suite 100 President Officer, A I M Management Group Inc.;
Houston, TX 77046 Director and President, A I M Advisors, Inc.;
Director and Senior Vice President,
A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company;
and Director, AMVESCAP PLC.
JOHN F. KROEGER (73) Director Director, Flag Investors International Fund,
37 Pippins Way Inc., Flag Investors Emerging Growth Fund,
Morristown, NJ 07960 Inc., Flag Investors Telephone Income Fund,
Inc., Flag Investors Equity Partners Fund,
Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund,
Inc., Managed Municipal Fund, Inc., Flag
Investors Value Builder Fund, Inc., Flag
Investors Maryland Intermediate Tax-Free
Income Fund, Inc., Flag Investors Real Estate
Securities Fund, Inc., Alex. Brown Cash
Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (investment
companies). Formerly, Consultant, Wendell &
Stockel Associates, Inc. (consulting firm).
LEWIS F. PENNOCK (55) Director Attorney in private practice in Houston,
6363 Woodway, Suite 825 Texas.
Houston, TX 77057
</TABLE>
- ----------------
** A director who is an "interested person" of the Company as defined in the
1940 Act.
* A director who is an "interested person" of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
25
<PAGE> 220
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
------------------- ---------------------------------------------
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ---------- -------
<S> <C> <C>
IAN W. ROBINSON (74) Director Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management
Tequesta, FL 33469 Services, Inc. (provider of centralized
management services to telephone companies);
Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone
companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of
Pennsylvania and Diamond State Telephone
Company.
LOUIS S. SKLAR (58) Director Executive Vice President, Development and
Transco Tower, 50th Floor Operations, Hines Interests Limited
2800 Post Oak Blvd. Partnership (real estate development).
Houston, TX 77056
***JOHN J. ARTHUR (53) Senior Vice Director, Senior Vice President and
11 Greenway Plaza, Suite 100 President and Treasurer, A I M Advisors, Inc.; and Vice
Houston, TX 77046 Treasurer President and Treasurer, A I M Management
Group Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company.
GARY T. CRUM (50) Senior Vice Director and President, A I M Capital
11 Greenway Plaza, Suite 100 President Management, Inc.; Director and Senior Vice
Houston, TX 77046 President, A I M Management Group Inc. and
A I M Advisors, Inc.; and Director,
A I M Distributors, Inc. and AMVESCAP PLC.
</TABLE>
- -----------------
*** Mr. Arthur and Ms. Relihan are married to each other.
26
<PAGE> 221
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST
------------------- ---------------------------------------------
NAME, ADDRESS AND AGE REGISTRANT 5 YEARS
--------------------- ---------- -------
<S> <C> <C>
***CAROL F. RELIHAN (43) Senior Vice Director, Senior Vice President, General
11 Greenway Plaza, Suite 100 President and Counsel and Secretary, A I M Advisors, Inc.;
Houston, TX 77046 Secretary Vice President, General Counsel and
Secretary, A I M Management Group Inc.;
Director, Vice President and General Counsel,
Fund Management Company; Vice President,
A I M Capital Management, Inc. and
A I M Distributors, Inc.; and General Counsel
and Vice President, A I M Fund Services, Inc.
DANA R. SUTTON (39) Vice President and Vice President and Fund Controller,
11 Greenway Plaza, Suite 100 Assistant Treasurer A I M Advisors, Inc.; and Assistant Vice
Houston, TX 77046 President and Assistant Treasurer, Fund
Management Company.
ROBERT G. ALLEY (49) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 100 Management, Inc.; and Vice President,
Houston, TX 77046 A I M Advisors, Inc.
MELVILLE B. COX (54) Vice President Vice President and Chief Compliance Officer,
11 Greenway Plaza, Suite 100 A I M Advisors, Inc., A I M Capital
Houston, TX 77046 Management, Inc., A I M Distributors, Inc.,
A I M Fund Services, Inc. and Fund Management
Company.
JONATHAN C. SCHOOLAR (36) Vice President Senior Vice President, A I M Capital
11 Greenway Plaza, Suite 100 Management, Inc.; and Vice President,
Houston, TX 77046 A I M Advisors, Inc.
</TABLE>
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Fields,
Frischling, Kroeger (Chairman), Pennock, Robinson and Sklar. The Audit
Committee is responsible for meeting with the Company's auditors to review
audit procedures and results and to consider any matters arising from an audit
to be brought to the attention of the directors as a whole with respect to the
Company's fund accounting or its internal accounting controls, and for
considering such matters as may from time to time be set forth in a charter
adopted by the Board of Directors and such committee.
- -----------------
*** Mr. Arthur and Ms. Relihan are married to each other.
27
<PAGE> 222
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Fields, Frischling, Kroeger, Pennock, Robinson and Sklar. The
Investments Committee is responsible for reviewing portfolio compliance,
brokerage allocation, portfolio investment pricing issues, interim dividend and
distribution issues, and considering such matters as may from time to time be
set forth in a charter adopted by the Board of Directors and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Fields, Kroeger, Pennock (Chairman), Robinson and Sklar. The
Nominating and Compensation Committee is responsible for considering and
nominating individuals to stand for election as directors who are not
interested persons as long as the Company maintains a distribution plan
pursuant to Rule 12b-1 under the 1940 Act, reviewing from time to time the
compensation payable to the disinterested directors, and considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such committee.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in attending each
meeting of the Board of Directors or any committee thereof. Each director who
is not also an officer of the Company is compensated for his services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds. Each such director
receives a fee, allocated among the AIM Funds for which he serves as a director
or trustee, which consists of an annual retainer component and a meeting fee
component.
28
<PAGE> 223
Set forth below is information regarding compensation paid or
accrued for each director of the Company:
<TABLE>
<CAPTION>
RETIREMENT
BENEFITS TOTAL
AGGREGATE ACCRUED COMPENSATION
COMPENSATION BY ALL APPLICABLE FROM ALL APPLICABLE
DIRECTOR FROM COMPANY(1) AIM FUNDS(2)(3) AIM FUNDS(4)
-------- --------------- ----------------- -------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
Bruce L. Crockett 6,760 67,774 84,000
Owen Daly II 6,760 103,542 84,000
Jack Fields 4,548 0 71,000
Carl Frischling(5) 6,760 96,520 84,000
Robert H. Graham 0 0 0
John F. Kroeger 6,760 94,132 82,500
Lewis F. Pennock 6,760 55,777 84,000
Ian W. Robinson 6,760 85,912 84,000
Louis S. Sklar 6,680 84,370 83,500
</TABLE>
- ----------------
(1) The total amount of compensation deferred by all directors of the
Company during the fiscal year ended October 31, 1997, including interest
earned thereon, was $28,167.
(2) During the fiscal year ended October 31, 1997, the total amount of
expenses allocated to the Company in respect of such retirement benefits was
$27,879. Data reflect compensation earned for the calendar year ended December
31, 1997.
(3) As used herein, "Applicable AIM Funds" means the regulated investment
companies managed by AIM.
(4) Each Director serves as director or trustee of a total of eleven
registered investment companies advised by AIM (comprised of over 45
portfolios). Data reflect total compensation earned during the calendar year
ended December 31, 1997.
(5) The Company paid the law firm of Kramer, Levin, Naftalis & Frankel
$27,224 in legal fees for services provided to the Funds during the fiscal year
ended October 31, 1997. Mr. Frischling, a Director of the Company, is a
partner in such firm.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not a employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the Applicable AIM Funds. Each
29
<PAGE> 224
eligible director is entitled to receive an annual benefit from the Applicable
AIM Funds commencing on the first day of the calendar quarter coincident with
or following his date of retirement equal to 75% of the retainer paid or
accrued by the Applicable AIM Funds for such director during the twelve-month
period immediately preceding the director's retirement (including amounts
deferred under a separate agreement between the Applicable AIM Funds and the
director) for the number of such director's years of service (not in excess of
10 years of service) completed with respect to any of the Applicable AIM Funds.
Such benefit is payable to each eligible director in quarterly installments.
If an eligible director dies after attaining the normal retirement date but
before receipt of any benefits under the Plan commences, the director's
surviving spouse (if any) shall receive a quarterly survivor's benefit equal to
50% of the amount payable to the deceased director for no more than ten years
beginning the first day of the calendar quarter following the date of the
director's death. Payments under the Plan are not secured or funded by any AIM
Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming the retainer amount
reflected below and various years of service. The estimated credited years of
service for Messrs. Crockett, Daly, Fields, Frischling, Kroeger, Pennock,
Robinson and Sklar are 10,10, 0, 20, 19, 16, 10 and 8 years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
Number of Years Annual Retainer
of Service with Paid by all Applicable AIM Funds
the Applicable
AIM Funds $80,000
--------------- --------------------------------
<S> <C>
10 $60,000
9 $54,000
8 $48,000
7 $42,000
6 $36,000
5 $30,000
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Company, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of their deferral accounts shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will
be paid in cash, in generally equal quarterly installments over a period of
five (5) or ten (10) years (depending on the Agreement) beginning on the date
the deferring director's retirement benefits commence under the Plan. The
Company's Board of Directors, in its sole discretion, may accelerate or extend
the distribution of such deferral accounts after the deferring director's
termination of service as a director of the Company. If a deferring director
dies prior to the distribution of amounts in his deferral account, the balance
of the deferral account will be distributed to his designated beneficiary in a
single lump sum payment as soon as practicable after
30
<PAGE> 225
such deferring director's death. The Agreements are not funded and, with
respect to the payments of amounts held in the deferral accounts, the deferring
directors have the status of unsecured creditors of the Company and of each
other AIM Fund from which they are deferring compensation.
INVESTMENT ADVISORY, SUB-ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS
AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM
Management"), a holding company that has been engaged in the financial services
business since 1976. AIM Management is an indirect wholly owned subsidiary of
AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom.
AIM and the Company have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear personal
securities transactions subject to the Code of Ethics, (b) to file reports or
duplicate confirmations regarding such transactions, (c) to refrain from
personally engaging in (i) short-term trading of a security, (ii) transactions
involving a security within seven days of an AIM Fund transaction involving the
same security, and (iii) transactions involving securities being considered for
investment by an AIM Fund and (d) to abide by certain other provisions under
the Code of Ethics. The Code of Ethics also prohibits investment personnel and
all other AIM employees from purchasing securities in an initial public
offering. Personal trading reports are reviewed periodically by AIM, and the
Board of Directors reviews quarterly and annual reports (including information
on any substantial violations of the Code of Ethics). Sanctions for violations
of the Code of Ethics may include censure, monetary penalties, suspension or
termination of employment.
The Company, on behalf of the Funds, has entered into a Master
Investment Advisory Agreement ("Investment Advisory Agreement") and a Master
Administrative Services Agreement ("Administrative Services Agreement"), both
dated February 28, 1997, as amended, with AIM. In addition, AIM has entered
into a Master Sub-Advisory Agreement (the "Sub- Advisory Agreement") with
INVESCO Global Asset Management Limited ("IGAM") with respect to Asian Fund and
European Fund. In addition, IGAM has entered into a Sub-Sub-Advisory Agreement
with INVESCO Asia Limited ("IAL") with respect to Asian Fund and a
Sub-Sub-Advisory Agreement with INVESCO Asset Management Limited ("IAML") with
respect to European Fund. See "Management" in the Prospectus.
The Investment Advisory Agreement and, with respect to Asian Fund and
European Fund, the Sub-Advisory Agreement and Sub-Sub-Advisory Agreements
provide that each Fund will pay or cause to be paid all expenses of the Fund
not assumed by AIM (or IGAM, IAL and IAML), including, without limitation:
brokerage commissions; taxes, legal, accounting, auditing or governmental fees;
the cost of preparing share certificates; custodian, transfer and shareholder
service agent costs; expenses of issue, sale, redemption and repurchase of
shares; expenses of registering and qualifying shares for sale; expenses
relating to directors and shareholders meetings; the cost of preparing and
distributing reports and notices to shareholders; the fees and other expenses
incurred by the Company on behalf of a Fund in connection with membership in
investment company organizations; the cost of printing copies of prospectuses
and statements of additional information distributed to each Fund's
shareholders; and all other charges and costs of a Fund's operations unless
otherwise expressly provided.
The Investment Advisory Agreement for the Funds and the Sub-Advisory
Agreement and Sub-Sub-Advisory Agreements for Asian Fund and European Fund,
each provides that such agreement will continue in effect for two years, and
from year to year thereafter only if such continuance is specifically approved
at least annually by the Company's Board of Directors and by the affirmative
vote of a majority of the directors who are not parties to the agreement or
"interested persons" of any such party (the "Non-Interested Directors") by
votes cast in person at a meeting called for such purpose. The Investment
Advisory Agreement and the Sub-Advisory Agreement each provides that the Funds
or AIM and, with respect to the Sub-Sub-Advisory Agreements each provides that
the applicable Fund, Sub-Sub-Advisor or the Sub-Advisor, may terminate such
agreement on sixty (60) days' written notice without penalty. The
31
<PAGE> 226
Investment Advisory Agreement, Sub-Advisory Agreement and Sub-Sub-Advisory
Agreements each terminates automatically in the event of its assignment. Under
the Investment Advisory Agreement, AIM is entitled to receive from each Fund a
fee calculated at the following annual rates based on the average daily net
assets of the Fund:
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C> <C>
First $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.95%
Over $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.90%
AIM GLOBAL AGGRESSIVE GROWTH FUND
Net Assets Annual Rate
---------- -----------
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.90%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.85%
AIM GLOBAL GROWTH FUND
Net Assets Annual Rate
---------- -----------
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.85%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.80%
AIM GLOBAL INCOME FUND
Net Assets Annual Rate
---------- -----------
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.70%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.65%
AIM INTERNATIONAL EQUITY FUND
Net Assets Annual Rate
---------- -----------
First $1 billion . . . . . . . . . . . . . . . . . . . . . . . 0.95%
Over $1 billion . . . . . . . . . . . . . . . . . . . . . . . . 0.90%
</TABLE>
AIM has voluntarily agreed to waive advisory fees under the Investment
Advisory Agreement in order to achieve the following annual fee structure for
Equity Fund: 0.95% of the first $500 million of Equity Fund's average daily net
assets; 0.90% of the next $500 million of Equity Fund's average daily net
assets; and 0.85% of Equity Fund's average daily net assets exceeding $1
billion. AIM may terminate such fee waiver at any time without notice to
Shareholders.
AIM may from time to time voluntarily waive or reduce its fees, while
retaining its ability to be reimbursed for such fee prior to the end of each
fiscal year. Any fee waivers will be shared proportionately
32
<PAGE> 227
by the sub-advisor. Fee waivers or reductions other than those contained in
the Advisory Agreement, Sub-Advisory Agreement or Sub-Sub-Advisory Agreements,
may be modified or terminated at any time and without notice to investors.
For the fiscal years ended October 31, 1997, 1996 and 1995, AIM
received advisory fees, net of advisory fee waivers from each Fund as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ 19,996,061 $ 8,571,918 $ 1,106,108
Equity Fund $ 17,546,102 $ 10,085,495 $ 6,148,093
Growth Fund $ 2,895,282 $ 1,163,814 $ 125,323
Income Fund $ 44,375 $ -0- $ -0-
</TABLE>
Under the Sub-Advisory Agreement, IGAM is entitled to receive from AIM
with respect to each of Asian Fund and European Fund, a fee calculated at the
following annual rates based on the average daily net assets of the Fund:
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.20%
Over $ 500 million . . . . . . . . . . . . . . . . . . . . . . 0.175%
</TABLE>
Under the Sub-Sub-Advisory Agreements IAL, with respect to Asian Fund,
and IAML, with respect to European Fund, are each entitled to receive from IGAM
an annual fee equal to 100% of the fee received by the Sub-Advisor with respect
to the applicable Fund.
For the fiscal years ended October 31, 1997, 1996 and 1995, AIM waived
advisory fees for each Fund as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ -0- $ -0- $ -0-
Equity Fund $ 738,005 $ 299,147 $ 77,672
Growth Fund $ -0- $ -0- $ 19,558
Income Fund $ 302,278 $ 182,596 $ 55,087
</TABLE>
The Administrative Services Agreement for the Funds provides that AIM
may perform, or arrange for the performance of, certain accounting and other
administrative services to each Fund which are not required to be performed by
AIM under the Investment Advisory Agreement. For such services, AIM is entitled
to receive from each Fund reimbursement of AIM's costs or such reasonable
compensation as may be approved by the Company's Board of Directors. The
Administrative Services Agreement provides that such agreement will continue in
effect for two years, and shall continue in effect from year to year thereafter
only if such continuance is specifically approved at least annually by the
Company's Board of Directors, and by the affirmative note of the Non-Interested
Directors by votes cast in person at a meeting called for such purpose.
For the fiscal years ended October 31, 1997, 1996 and 1995, AIM
received reimbursement of administrative services costs from each Fund as
follows:
33
<PAGE> 228
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ 109,161 $ 86,330 $ 25,218
Equity Fund $ 105,163 $ 94,250 $ 29,858
Growth Fund $ 87,673 $ 78,151 $ 21,984
Income Fund $ 74,031 $ 74,433 $ 29,858
</TABLE>
In addition, the Transfer Agency and Service Agreement for the Funds
provides that A I M Fund Services, Inc. ("AFS"), a registered transfer agent
and wholly owned subsidiary of AIM, will perform certain shareholder services
for the Funds for a fee per account serviced. The Transfer Agency and Service
Agreement provides that AFS will process orders for purchases, redemptions and
exchanges of shares, prepare and transmit payments for dividends and
distributions declared by the Funds, maintain shareholder accounts and provide
shareholders with information regarding the Funds and their accounts.
For the fiscal years ended October 31, 1997, 1996 and 1995, AFS
received transfer agency and shareholder services fees with respect to each
Fund as follows:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ 3,429,751 $ 1,474,675 $ 258,683
Equity Fund $ 1,774,819 $ 1,170,699 $ 757,067
Growth Fund $ 479,472 $ 216,804 $ 33,579
Income Fund $ 72,578 $ 40,282 $ 9,321
</TABLE>
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN. The Company has adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A and
Class C shares of the Funds (the "Class A and C Plan"). The Class A and C Plan
provides that for Aggressive Growth Fund, Growth Fund and Income Fund the Class
A shares pay 0.50% per annum of their average daily net assets, for Equity Fund
the Class A shares pay 0.30% per annum of their average daily net assets and
for Asian Fund and European Fund the Class A shares pay 0.35% per annum of
their average daily net assets as compensation to AIM Distributors for the
purpose of financing any activity which is primarily intended to result in the
sale of Class A shares. Under the Class A and C Plan, Class C shares of each
Fund pay compensation to AIM Distributors at an annual rate of 1.00% of the
average daily net assets attributable to Class C shares. Of such amount, each
Fund pays a service fee of 0.25% of the average daily net assets attributable
to Class A and Class C shares to selected dealers and other institutions which
furnish continuing personal shareholder services to their customers who
purchase and own Class A and Class C shares. Activities appropriate for
financing under the Class A and C Plan include, but are not limited to, the
following: printing of prospectuses and statements of additional information
and reports for other than existing shareholders; overhead; preparation and
distribution of advertising material and sales literature; expenses of
organizing and conducting sales seminars; supplemental payments to dealers and
other institutions such as asset-based sales charges or as payments of service
fees under shareholder service arrangements; and costs of administering the
Class A and C Plan.
THE CLASS B PLAN. The Company has also adopted a Master Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of
the Funds (the "Class B Plan", and collectively with the Class A and C Plan,
the "Plans"). Under the Class B Plan, each Fund pays compensation to AIM
Distributors at an annual rate of 1.00% of the average daily net assets
attributable to Class B shares. Of such amount, each Fund pays a service fee of
0.25% of the average daily net assets attributable to Class B shares to
selected dealers and other institutions which furnish continuing personal
shareholder services to their
34
<PAGE> 229
customers who purchase and own Class B shares. Amounts paid in accordance with
the Class B Plan may be used to finance any activity primarily intended to
result in the sale of Class B shares, including but not limited to printing of
prospectuses and statements of additional information and reports for other
than existing shareholders; overhead; preparation and distribution of
advertising material and sales literature; expenses of organizing and
conducting sales seminars; supplemental payments to dealers and other
institutions such as asset-based sales charges or as payments of service fees
under shareholder service arrangements; and costs of administering the Class B
Plan. AIM Distributors may transfer and sell its rights to payments under the
Class B Plan in order to finance distribution expenditures in respect of Class
B shares.
BOTH PLANS. Pursuant to an incentive program, AIM Distributors may
enter into agreements ("Shareholder Service Agreements") with investment
dealers selected from time to time by AIM Distributors for the provision of
distribution assistance in connection with the sale of the Funds' shares to
such dealers' customers, and for the provision of continuing personal
shareholder services to customers who may from time to time directly or
beneficially own shares of the Funds. The distribution assistance and
continuing personal shareholder services to be rendered by dealers under the
Shareholder Service Agreements may include, but shall not be limited to, the
following: distributing sales literature; answering routine customer inquiries
concerning the Funds; assisting customers in changing dividend options, account
designations and addresses, and in enrolling in any of several special
investment plans offered in connection with the purchase of the Funds' shares;
assisting in the establishment and maintenance of customer accounts and records
and in the processing of purchase and redemption transactions; investing
dividends and any capital gains distributions automatically in the Funds'
shares; and providing such other information and services as the Funds or the
customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding a Fund and
the Company; performing sub-accounting; establishing and maintaining
shareholder accounts and records; processing customer purchase and redemption
transactions; providing periodic statements showing a shareholder's account
balance and the integration of such statements with those of other transactions
and balances in the shareholder's other accounts serviced by the bank;
forwarding applicable prospectuses, proxy statements, reports and notices to
bank clients who hold Fund shares; and such other administrative services as a
Fund reasonably may request, to the extent permitted by applicable statute,
rule or regulation. Similar agreements may be permitted under the Plans for
institutions which provide recordkeeping for and administrative services to
401(k) plans.
Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
Under a Shareholder Service Agreement, a Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement generally will be calculated at the end of each payment
period for each business day of the Funds during such period at the annual rate
of 0.25% of the average daily net asset value of the Funds' shares purchased or
acquired through exchange. Fees calculated in this manner shall be paid only
to those selected dealers or other institutions who are dealers or institutions
of record at the close of business on the last business day of the applicable
payment period for the account in which the Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments
made to dealers and other financial institutions who provide continuing
personal shareholder services to their customers who purchase and own shares of
the Funds to no more than 0.25% per annum of the average daily net assets of
the funds attributable to the customers of such dealers or financial
35
<PAGE> 230
institutions, and by imposing a cap on the total sales charges, including asset
based sales charges, that may be paid by the Funds and their respective
classes.
AIM Distributors does not act as principal, but rather as agent for
the Fund, in making dealer incentive and shareholder servicing payments under
the Plans. These payments are an obligation of the Fund and not of AIM
Distributors.
For the fiscal year ended October 31, 1997, the Funds paid the
following amounts under the Class A and C Plan and the Class B Plan:
<TABLE>
<CAPTION>
% of Class
Average Daily
Net Assets
------------------------------
Class A Class B Class C* Class A Class B Class C
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aggressive Growth Fund $ 5,877,002 $ 11,173,566 $ 6,233 0.50% 1.00% 1.00%
Equity Fund $ 4,249,575 $ 5,581,303 $ 13,568 0.30% 1.00% 1.00%
Growth Fund $ 778,588 $ 1,847,507 $ 1,532 0.50% 1.00% 1.00%
Income Fund $ 137,912 $ 219,155 $ 240 0.50% 1.00% 1.00%
</TABLE>
An estimate by category of actual fees paid by the Funds with regard to the
Class A shares under the Class A and C Plan during the year ended October 31,
1997 follows:
<TABLE>
<CAPTION>
Aggressive Equity Growth Income
Growth Fund Fund Fund Fund
----------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
CLASS A
Advertising . . . . . . . . . . . . $ 140,844 $ 439,918 $ 23,330 $ 4,444
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) . . . . . . . . . . . $ 12,986 $ 39,902 $ 2,029 $ -0-
Seminars . . . . . . . . . . . . . . $ 38,957 $ 120,702 $ 7,100 $ 1,111
Compensation to Underwriters to partially
offset other marketing expenses . . $ -0- $ -0- $ -0- $ -0-
Compensation to Dealers including
finder's fees . . . . . . . . . . . $ 5,684,215 $ 3,650,053 $ 746,129 $ 132,357
Compensation to Sales Personnel . . $ -0- $ -0- $ -0- $ -0-
Annual Report Total . . . . . . . . $ 5,877,002 $ 4,249,575 $ 778,588 $ 137,912
</TABLE>
- --------------
* The Class C shares of all Funds commenced sales on August 4, 1997.
36
<PAGE> 231
An estimate by category of actual fees paid by the Funds under the
Class B Plan during the year ended October 31, 1997 as follows:
<TABLE>
<CAPTION>
Aggressive Equity Growth Income
Growth Fund Fund Fund Fund
----------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
CLASS B
Advertising . . . . . . . . . . . . $ 1,170,558 $ 574,366 $ 191,750 $ 20,522
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) . . . . . . . . . . . $ 108,051 $ 51,943 $ 16,978 $ 1,954
Seminars . . . . . . . . . . . . . . $ 320,152 $ 156,827 $ 51,932 $ 6,840
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs . . . . . . . $ 8,380,175 $ 4,185,977 $ 1,385,630 $ 164,366
Compensation to Dealers . . . . . . $ 1,194,630 $ 612,190 $ 201,217 $ 25,473
Compensation to Sales Personnel . . $ -0- $ -0- $ -0- $ -0-
Annual Report Total . . . . . . . . $11,173,566 $ 5,581,303 $ 1,847,507 $ 219,155
</TABLE>
An estimate by category of actual fees paid by the Funds with regard
to the Class C shares under the Class A and C Plan during the period August 4,
1997 (inception date) through October 31, 1997 as follows:
<TABLE>
<CAPTION>
Aggressive Equity Growth Income
Growth Fund Fund Fund Fund
----------- ----------- ---------- -------
<S> <C> <C> <C> <C>
CLASS C
Advertising . . . . . . . . . . . . $ 1,095 $ 2,652 $ 310 $ 10
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) . . . . . . . . . . . $ 70 $ 222 $ 68 $ 1
Seminars . . . . . . . . . . . . . . $ 388 $ 411 $ -0- $ -0-
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs . . . . . . . $ 4,675 $ 10,176 $ 1,149 $ 180
Compensation to Dealers . . . . . . $ 5 $ 107 $ 5 $ 49
Compensation to Sales Personnel . . $ -0- $ -0- $ -0- $ -0-
Annual Report Total . . . . . . . . $ 6,233 $ 13,568 $ 1,532 $ 240
</TABLE>
37
<PAGE> 232
The Plans require AIM Distributors to provide the Board of Directors
at least quarterly with a written report of the amounts expended pursuant to
the Plans and the purposes for which such expenditures were made. The Board of
Directors reviews these reports in connection with their decisions with respect
to the Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Directors, including a
majority of the directors who are not "interested persons" (as defined in the
1940 Act) of the Company and who have no direct or indirect financial interest
in the operation of the Plans or in any agreements related to the Plans
("Qualified Directors"). In approving the Plans in accordance with the
requirements of Rule 12b-1, the directors considered various factors and
determined that there is a reasonable likelihood that the Plans would benefit
each class of the Funds and their respective shareholders.
The Plans do not obligate the Funds to reimburse AIM Distributors for
the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Plans. Thus, even if AIM Distributors' actual expenses exceed the
fee payable to AIM Distributors thereunder at any given time, the Funds will
not be obligated to pay more than that fee. If AIM Distributors' expenses are
less than the fee it receives, AIM Distributors will retain the full amount of
the fee.
Unless terminated earlier in accordance with their terms, the Plans
continue in effect until June 30, 1998 and each year thereafter, as long as
such continuance is specifically approved at least annually by the Board of
Directors, including a majority of the Qualified Directors.
The Plans may be terminated by the vote of a majority of the
Independent Directors, or, with respect to a particular class, by the vote of a
majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the
distribution expenses paid by the applicable class requires shareholder
approval; otherwise, it may be amended by the directors, including a majority
of the Qualified Directors, by votes cast in person at a meeting called for the
purpose of voting upon such amendment. As long as the Plans are in effect, the
selection or nomination of the Qualified Directors is committed to the
discretion of the Qualified Directors. In the event the Class A and C Plan is
amended in a manner which the Board of Directors determines would materially
increase the charges paid under the Class A and C Plan, the Class B shares of
the Funds will no longer convert into Class A shares of the same Funds unless
the Class B shares, voting separately, approve such amendment. If the Class B
shareholders do not approve such amendment, the Board of Directors will (i)
create a new class of shares of the Funds which is identical in all material
respects to the Class A shares as they existed prior to the implementation of
the amendment and (ii) ensure that the existing Class B shares of the Funds
will be exchanged or converted into such new class of shares no later than the
date the Class B shares were scheduled to convert into Class A shares.
The principal differences between the Class A and C Plan, on the one
hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan
allows payment to AIM Distributors or to dealers or financial institutions of
up to 0.50% of average daily net assets of the Class A shares of Aggressive
Growth Fund, Income Fund, and Growth Fund, of up to 0.35% of average daily net
assets of the Class A shares of Asian Fund and European Fund, and of up to
0.30% of average daily net assets of the Class A shares of Equity Fund, as
compared to 1.00% of such assets of each Fund's Class B shares; (ii) the Class
B Plan obligates the Class B shares to continue to make payments to AIM
Distributors following termination of the Class B shares Distribution Agreement
with respect to Class B shares sold by or attributable to the distribution
efforts of AIM Distributors unless there has been a complete termination of the
Class B Plan (as defined in such Plan) and (iii) the Class B Plan expressly
authorizes AIM Distributors to assign, transfer or pledge its rights to
payments pursuant to the Class B Plan.
38
<PAGE> 233
THE DISTRIBUTOR
Information concerning AIM Distributors and the continuous offering of
the Funds' shares is set forth in the Prospectus under the headings "How to
Purchase Shares" and "Terms and Conditions of Purchase of the AIM Funds." A
Master Distribution Agreement with AIM Distributors relating to the Class A
and Class C shares of the Funds was approved by the Board of Directors on June
11, 1997. A Master Distribution Agreement with AIM Distributors relating to
the Class B shares of the Funds was also approved by the Board of Directors on
December 11, 1996. Both such Master Distribution Agreements are hereinafter
collectively referred to as the "Distribution Agreements."
The Distribution Agreements provide that AIM Distributors will bear
the expenses of printing from the final proof and distributing the Funds'
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Funds), and any promotional or
sales literature used by AIM Distributors or furnished by AIM Distributors to
dealers in connection with the public offering of the Funds' shares, including
expenses of advertising in connection with such public offerings. AIM
Distributors has not undertaken to sell any specified number of shares of any
classes of the Funds.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B and Class C shares of
the Funds at the time of such sales. Payments with respect to Class B shares
will equal 4.0% of the purchase price of the Class B shares sold by the dealer
or institution, and will consist of a sales commission equal to 3.75% of the
purchase price of the Class B shares sold plus an advance of the first year
service fee of 0.25% with respect to such shares. The portion of the payments
to AIM Distributors under the Class B Plan which constitutes an asset-based
sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a
portion of such sales commissions plus financing costs. AIM Distributors
anticipates that it will require a number of years to recoup from Class B Plan
payments the sales commissions paid to dealers and institutions in connection
with sales of Class B shares. In the future, if multiple distributors serve a
Fund, each such distributor (or its assignee or transferee) would receive a
share of the payments under the Class B Plan based on the portion of the Fund's
Class B shares sold by or attributable to the distribution efforts of that
distributor.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares.
AIM Distributors will retain all payments received by it relating to Class C
shares for the first year after they are purchased. The portion of the
payments to AIM Distributors under the Class A and C Plan attributable to Class
C shares which constitutes an asset-based sales charge (0.75%) is intended in
part to permit AIM Distributors to recoup a portion of on-going sales
commissions to dealers plus financing costs, if any. After the first full
year, AIM Distributors will make such payments quarterly to dealers and
institutions based on the average net asset value of Class C shares which are
attributable to shareholders for whom the dealers and institutions are
designated as dealers of record.
The Company (on behalf of any class of the Funds) or AIM Distributors
may terminate the Distribution Agreements on sixty (60) days' written notice
without penalty. The Distribution Agreements will terminate automatically in
the event of their assignment. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based distribution fees in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors; provided,
however, that a complete termination of the Class B Plan (as defined in such
Plan) would terminate all payments to AIM Distributors. Termination of the
Class B Plan or Distribution Agreement does not affect the obligation of the
Funds and their Class B shareholders to pay contingent deferred sales charges.
39
<PAGE> 234
The following chart reflects the total sales charges paid in
connection with the sale of Class A shares of each Fund and the amount retained
by AIM Distributors for the fiscal years ended October 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- -----
Sales Amount Sales Amount Sales Amount
Charges Retained Charges Retained Charges Retained
------------ ---------- ------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund $12,462,271 $2,200,552 $17,453,757 $3,270,278 $4,770,524 $779,090
Equity Fund $ 7,481,513 $1,172,508 $ 8,663,571 $1,489,975 $3,662,531 $565,101
Growth Fund $ 1,621,736 $ 286,414 $ 2,044,262 $ 388,799 $ 473,172 $ 82,337
Income Fund $ 348,033 $ 59,763 $ 325,210 $ 57,096 $ 156,910 $ 27,115
</TABLE>
The following chart reflects the contingent deferred sales charges
paid by Class A, Class B and Class C shareholders for the fiscal years ended
October 31, 1997, 1996 and 1995 for Class A and Class B shares and for the
period August 4, 1997 (inception date) through October 31, 1997 for Class C
shares:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $133,018 $ 84,130 $ 68,427
Equity Fund $ 91,984 $ 39,753 $106,168
Growth Fund $ 25,870 $ 14,106 $ 25,155
Income Fund $ 3,397 $ 4,924 $ 3,877
</TABLE>
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of each Fund may
be purchased appears in the Prospectus under the headings "How to Purchase
Shares," "Terms and Conditions of Purchase of the AIM Funds" and "Special
Plans."
The sales charge normally deducted on purchases of Class A shares of
each Fund is used to compensate AIM Distributors and participating dealers for
their expenses incurred in connection with the distribution of the Fund's Class
A shares. Since there is little expense associated with unsolicited orders
placed directly with AIM Distributors by persons who, because of their
relationship with the Funds or with AIM and its affiliates, are familiar with
the Funds, or whose programs for purchase involve little expense (e.g., because
of the size of the transaction and shareholder records required), AIM
Distributors believes that it is appropriate and in the Funds' best interest
that such persons, and certain other persons whose purchases result in
relatively low expenses of distribution, be permitted to purchase Class A
shares of the Funds through AIM Distributors without payment of a sales charge.
The persons who may purchase Class A shares of the Funds without a sales charge
are set forth in the Prospectus.
Complete information concerning the method of exchanging shares of the
Funds for shares of the other AIM Funds is set forth in the Prospectus under
the heading "Exchange Privilege."
Information concerning redemption of the Funds' shares is set forth in
the Prospectus under the heading "How to Redeem Shares." AIM may redeem all
shares of Aggressive Growth Fund, Equity Fund and Growth Fund in cash. In
addition to the Funds' obligation to redeem shares, AIM Distributors may also
repurchase shares as an accommodation to shareholders. To effect a repurchase,
those dealers who have executed Selected Dealer Agreements with AIM
Distributors must phone orders to the order desk of the Fund (Telephone: (800)
959-4246) and guarantee delivery of all required documents in good order. A
repurchase is effected at the net asset value per share of a Fund next
determined after the repurchase order is received. Such arrangement is subject
to timely receipt by A I M Fund Services, Inc., the Funds' transfer agent, of
all required documents in good order. If such documents are not received
within a reasonable time after the order
40
<PAGE> 235
is placed, the order is subject to cancellation. While there is no charge
imposed by the Funds or by AIM Distributors (other than any applicable CDSC)
when shares are redeemed or repurchased, dealers may charge a fair service fee
for handling the transaction.
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange ("NYSE ") is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the NYSE is closed for other than customary weekend and holiday closings, (c)
the SEC has by order permitted such suspension, or (d) an emergency as
determined by the SEC exists making disposition of portfolio securities or the
valuation of the net assets of a Fund not reasonably practicable.
NET ASSET VALUE DETERMINATION
In accordance with current SEC rules and regulations, the net asset
value per share of a Fund is determined once daily as of the close of trading
of the NYSE (generally 4:00 p.m. Eastern Time) on each business day of the
Fund. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of a Fund share is determined as of
the close of the NYSE on such day. For purposes of determining net asset value
per share, futures and options contract closing prices which are available
fifteen (15) minutes after the close of trading of the NYSE will generally be
used. Each Class' net asset value per share is determined by subtracting the
Class' liabilities (e.g., the expenses) from the Class' assets, and dividing
the result by the total number of Class shares outstanding. Determination of
the Class' net asset value per share is made in accordance with generally
accepted accounting principles.
Equity securities listed or traded on U.S. or foreign securities
exchanges or included in a national market system are valued at the last quoted
sales price. Securities for which market quotations are not readily available
are valued at fair value as determined in good faith by or under the
supervision of the Company's officers in a manner specifically authorized by
the Board of Directors of the Company. Short-term obligations having 60 days
or less to maturity are valued at amortized cost, which approximates fair
market value.
Generally, trading in foreign securities, as well as corporate bonds,
U.S. Government securities and money market instruments, is substantially
completed each day at various times prior to the close of the New York Stock
Exchange. The values of such securities used in computing the net asset value
of a Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York Stock
Exchange. Occasionally, events affecting the values of such securities and
such exchange rates may occur between the times at which they are determined
and the close of the New York Stock Exchange which will not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Directors.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class of each Fund unless the
shareholder has requested in writing to receive such dividends and
distributions in cash or that they be invested in shares of another AIM Fund,
subject to the terms and conditions set forth in the Prospectus under the
caption "Special Plans -- Automatic Dividend Investment Plan." If a
shareholder's account does not have any shares in it on a dividend or capital
gains distribution payment date, the dividend or distribution will be paid in
cash whether or not the shareholder has elected to have such dividends or
distributions reinvested.
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<PAGE> 236
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting each Fund and its shareholders that are not
described in the Funds' Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussion here and in the Funds' Prospectus is not intended as a substitute
for careful tax planning. Investors are urged to consult their tax advisers
with specific reference to their own tax situation.
Qualification as a Regulated Investment Company. As stated in the
Funds' Prospectus, each Fund intends to qualify each year as a regulated
investment company under Part I of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). In order to qualify for tax treatment as a
regulated investment company under the Code, each Fund is required, among other
things, to derive at least 90% of its gross income in each taxable year from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
and other income (including but not limited to gains from options, futures or
forward contracts derived with respect to the Fund's business of investing in
such stock, securities or currencies) (the "Income Requirement"). Foreign
currency gains (including gains from options, futures or forward contracts on
foreign currencies) that are not "directly related" to a Fund's principal
business may, under regulations not yet issued, not be qualifying income for
purposes of the Income Requirement.
At the close of each quarter of its taxable year, at least 50% of the
value of each Fund's assets must consist of cash and cash items, U.S.
Government securities, securities of other regulated investment companies, and
securities of other issuers (as to which the Fund has not invested more than 5%
of the value of its total assets in securities of such issuer and as to which
the Fund does not hold more than 10% of the outstanding voting securities of
such issuer), and no more than 25% of the value of its total assets may be
invested in the securities of any one issuer (other than U.S. Government
securities and securities of other regulated investment companies), or in two
or more issuers which the Fund controls and which are engaged in the same or
similar trades or businesses (the "Asset Diversification Test"). For purposes
of the Asset Diversification Test, it is unclear under present law who should
be treated as the issuer of forward foreign currency exchange contracts, of
options on foreign currencies, or of foreign currency futures and related
options. It has been suggested that the issuer in each case may be the foreign
central bank or foreign government backing the particular currency.
Consequently, a Fund may find it necessary to seek a ruling from the Internal
Revenue Service on this issue or to curtail its trading in forward foreign
currency exchange contracts in order to stay within the limits of the Asset
Diversification Test.
If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and
such distributions will be taxable as ordinary dividends to the extent of the
Fund's current and accumulated earnings and profits. Such distributions will
be eligible for the dividends received deduction in the case of corporate
shareholders.
Fund Distributions. Under the Code, each Fund is exempt from U.S.
federal income tax on its net investment income and realized capital gains
which it distributes to shareholders, provided that it distributes at least 90%
of its investment company taxable income (net investment income and the excess
of net short-term capital gain over net long-term capital loss) and its net
exempt-interest income for the year. Distributions of investment company
taxable income will be taxable to shareholders as ordinary income, regardless
of whether such distributions are paid in cash or are reinvested in shares.
Each Fund also intends to distribute to shareholders substantially all
of the excess of its net long-term capital gain over net short-term capital
loss as a capital gain dividend. Capital gain dividends are taxable to
shareholders as a long-term capital gain, regardless of the length of time a
shareholder has held his shares.
42
<PAGE> 237
Treasury regulations permit a regulated investment company in
determining its investment company taxable income and undistributed net capital
gain for any taxable year to elect to treat all or part of any net capital
loss, any net long-term capital loss, or any net foreign currency loss incurred
after October 31 as if it had been incurred in the succeeding year.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to distribute in each calendar year an amount equal to 98%
of their ordinary taxable income for the calendar year plus 98% of their
"capital gain net income" (excess of capital gains over capital losses) for the
one-year period ending on October 31 of such calendar year. The balance of
such income must be distributed during the next calendar year. For the
foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable
year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) offset a net ordinary loss (but not below the net capital gain) for any
calendar year in determining its capital gain net income for the one-year
period ending on October 31 of such calendar year and (2) exclude foreign
currency gains and losses incurred after October 31 of any year in determining
the amount of ordinary taxable income for the current calendar year (and,
instead, to include such gains and losses in determining ordinary taxable
income for the succeeding calendar year). Each Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and
capital gain net income prior to the end of each calendar year to avoid
liability for the excise tax.
Investment in Foreign Financial Instruments. Under Code Section 988,
gains or losses from certain foreign currency forward contracts or fluctuations
in exchange rates will generally be treated as ordinary income or loss. Such
Code Section 988 gains or losses will increase or decrease the amount of a
Fund's investment company taxable income available to be distributed to
shareholders as ordinary income, rather than increasing or decreasing the
amount of the Fund's net capital gains. Additionally, if Code Section 988
losses exceed other investment company taxable income during a taxable year,
the Fund would not be able to pay any ordinary income dividends, and any such
dividends paid before the losses were realized, but in the same taxable year,
would be recharacterized as a return of capital to shareholders, thereby
reducing the tax basis of Fund shares.
Hedging Transactions. Some of the forward foreign currency exchange
contracts, options and futures contracts that the Funds may enter into will be
subject to special tax treatment as "Section 1256 contracts." Section 1256
contracts are treated as if they are sold for their fair market value on the
last business day of the taxable year, regardless of whether a taxpayer's
obligations (or rights) under such contracts have terminated (by delivery,
exercise, entering into a closing transaction or otherwise) as of such date.
Any gain or loss recognized as a consequence of the year-end deemed disposition
of Section 1256 contracts is combined with any other gain or loss that was
previously recognized upon the termination of Section 1256 contracts during
that taxable year. The net amount of such gain or loss for the entire taxable
year (including gain or loss arising as a consequence of the year-end deemed
sale of such contracts) is deemed to be 60% long-term (taxable at 20%) and 40%
short-term gain or loss. However, in the case of Section 1256 contracts that
are forward foreign currency exchange contracts, the net gain or loss is
separately determined and (as discussed above) generally treated as ordinary
income or loss.
The Funds may engage in certain hedging transactions (such as short
sales "against the box") that may be subject to special tax treatment as
"constructive sales" under section 1259 of the Code if a Fund holds certain
"appreciated Financial positions" (defined generally as any interest (including
a futures or forward contract, short sale or option) with respect to stock,
certain debt instruments, or partnership interests if there would be a gain
were such interest sold, assigned, or otherwise terminated at its fair market
value). Upon entering into a constructive sales transaction with respect to an
appreciated financial position, a Fund will be deemed to have constructively
sold such appreciated financial position and will recognize gain as if such
position were sold, assigned, or otherwise terminated at its fair market value
on the date of such constructive sale (and will take into account any gain in
the taxable year which includes such date unless the closed transaction
exception applies).
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<PAGE> 238
Other hedging transactions in which the Funds may engage may result in
"straddles" or "conversion transactions" for U.S. federal income tax purposes.
The straddle and conversion transaction rules may affect the character of gains
(or in the case of the straddle rules, losses) realized by the Funds. In
addition, losses realized by the Funds on positions that are part of a straddle
may be deferred under the straddle rules, rather than being taken into account
in calculating the taxable income for the taxable year in which the losses are
realized. Because only a few regulations implementing the straddle rules and
the conversion transaction rules have been promulgated, the tax consequences to
the Funds of hedging transactions are not entirely clear. The hedging
transactions may increase the amount of short-term capital gain realized by the
Funds (and, if they are conversion transactions, the amount of ordinary income)
which is taxed as ordinary income when distributed to shareholders.
Each Fund may make one or more of the elections available under the
Code which are applicable to straddles. If a Fund makes any of the elections,
the amount, character, and timing of the recognition of gains or losses from
the affected straddle positions will be determined under rules that vary
according to the election(s) made. The rules applicable under certain of the
elections may operate to accelerate the recognition of gains or losses from the
affected straddle positions.
Because application of any of the foregoing rules governing Section
1256 contracts, constructive sales, straddle and conversion transactions may
affect the character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected investment or straddle
positions, the amount which must be distributed to shareholders and which will
be taxed to shareholders as ordinary income or long-term capital gain may be
increased or decreased as compared to a fund that did not engage in such
transactions.
PFIC Investments. Each Fund may invest in stocks of foreign companies
that are classified under the Code as passive foreign investment companies
("PFICs"). In general, a foreign company is classified as a PFIC if at least
one-half of its assets constitute investment-type assets or 75% or more of its
gross income is investment-type income. Under the PFIC rules, an "excess
distribution" received with respect to PFIC stock is treated as having been
realized ratably over the period during which the Fund held the PFIC stock.
The Fund itself will be subject to tax on the portion, if any, of the excess
distribution that is allocated to the Fund's holding period in prior taxable
years (and an interest factor will be added to the tax, as if the tax had
actually been payable in such prior taxable years) even though the Fund
distributes the corresponding income to shareholders. Excess distributions
include any gain from the sale of PFIC stock as well as certain distributions
from a PFIC. All excess distributions are taxable as ordinary income.
Each Fund may be able to elect alternative tax treatment with respect
to PFIC stock. Under one such election (the "QEF Election"), a Fund generally
would be required to include in its gross income its share of the earnings of a
PFIC on a current basis, regardless of whether any distributions are received
from the PFIC. For Taxable years beginning after December 31, 1997, each Fund
will alternatively be able to make an election to mark any shares of PFIC stock
that it holds to market (the "Section 1296 Election"). If the Section 1296
election is made with respect to any PFIC stock, a Fund will recognize
ordinary income to the extent that the fair market value of such PFIC stock at
the close of any taxable year exceeds its adjusted basis and will also
recognize ordinary income in the event that it disposes of any shares of such
PFIC stock at a gain. In each case, such ordinary income will be treated as
dividend income for purposes of the Income Requirement. A Fund making the
Section 1296 Election with respect to any PFIC stock will similarly recognize a
deductible ordinary loss to the extent that the adjusted basis of such PFIC
stock exceeds its fair market value at the close of any taxable year and will
also recognize a deductible ordinary loss in the event that it disposes of such
PFIC stock at a loss. However, the amount of any ordinary loss recognized by a
Fund making a Section 1296 Election with respect to any PFIC stock may not
exceed the amount of ordinary income previously recognized by such Fund by
reason of marking such PFIC stock to market. If either the QEF Election or the
Section 1296 Election is made, the special rules, discussed above, relating to
the taxation of excess distributions, would not apply. The Funds' intentions
to qualify annually as regulated investment companies may limit their ability
to invest and hold PFIC stock.
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<PAGE> 239
Because the application of the PFIC rules may affect, among other
things, the character of gains, the amount of gain or loss and the timing of
the recognition of income with respect to PFIC stock, as well as subject the
Funds themselves to tax on certain income from PFIC stock, the amount that
must be distributed to shareholders, and which will be taxed to shareholders as
ordinary income or long-term capital gains, may be increased or decreased
substantially as compared to a fund that did not invest in PFIC stock.
Redemption or Exchange of Shares. Upon a redemption or exchange of
shares, a shareholder will recognize a taxable gain or loss depending upon his
or her basis in the shares. Unless the shares are disposed of as part of a
conversion transaction, such gain or loss will be treated as capital gain or
loss if the shares are capital assets in the shareholder's hands and will be
long-term or short-term, depending upon the shareholder's holding period for
the shares. Except to the extent otherwise provided in future Treasury
regulations any long-term capital gain recognized by a non-corporate
shareholder will be subject to tax at a maximum rate of 20% if the shares sold
or redeemed were held for more than 18 months. Any loss recognized by a
shareholder on the sale of Fund shares held six months or less will be treated
as a long-term capital loss to the extent of any distributions of net capital
gains received by the shareholder with respect to such shares.
If a shareholder exercises the exchange privilege within 90 days of
acquiring Class A shares, then the loss such shareholder recognizes on the
exchange will be reduced (or the gain increased) to the extent the sales charge
paid upon the purchase of Class A shares reduces any charge such shareholder
would have owed upon purchase of the new Class A shares in the absence of the
exchange privilege. Instead, such sales charge will be treated as an amount
paid for the new Class A shares. In addition, any loss recognized on a sale or
exchange will be disallowed to the extent that disposed Class A shares, Class B
shares or Class C shares are replaced within the 61-day period beginning 30
days before and ending 30 days after the disposition of such shares. In such a
case, the basis of the shares acquired will be increased to reflect the
disallowed loss. Shareholders should particularly note that this loss
disallowance rule applies even where shares are automatically replaced under
the dividend reinvestment plan.
Foreign Income Taxes. Investment income received by each Fund from
sources within foreign countries may be subject to foreign income taxes
withheld at the source. The United States has entered into tax treaties with
many foreign countries which entitle the Funds to a reduced rate of, or
exemption from, taxes on such income. It is impossible to determine the
effective rate of foreign tax in advance since the amount of a Fund's assets to
be invested in various countries is not known.
If more than 50% of the value of a Fund's total assets at the close of
each taxable year consists of the stock or securities of foreign corporations,
the Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant
to the Foreign Tax Election, shareholders will be required (i) to include in
gross income, even though not actually received, their respective pro-rata
shares of the foreign income taxes paid by the Fund that are attributable to
any distributions they receive; and (ii) either to deduct their pro-rata share
of foreign taxes in computing their taxable income, or to use it (subject to
various Code limitations) as a foreign tax credit against Federal income tax
(but not both). No deduction for foreign taxes may be claimed by a
non-corporate shareholder who does not itemize deductions or who is subject to
alternative minimum tax.
Generally, a credit for foreign taxes is subject to the limitation
that it may not exceed the shareholder's U.S. tax (determined without regard to
the availability of the credit) attributable to the shareholder's foreign
source taxable income. In determining the source and character of
distributions received from a Fund for this purpose, shareholders will be
required to allocate Fund distributions according to the source of the income
realized by the Fund. Each Fund's gains from the sale of stock and securities
and certain currency fluctuation gains and losses will generally be treated as
derived from U.S. sources. In addition, the limitation on the foreign tax
credit is applied separately to foreign source "passive" income, such as
dividend income. Because of these limitations, shareholders may be unable to
claim a credit for the full amount of their proportionate shares of the foreign
income taxes paid by a Fund.
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<PAGE> 240
Backup Withholding. Under certain provisions of the Code, the Funds
may be required to withhold 31% of reportable dividends, capital gains
distributions and redemption payments ("backup withholding"). Generally,
shareholders subject to backup withholding will be those for whom a certified
taxpayer identification number is not on file with the Company or who, to the
Company's knowledge, have furnished an incorrect number, or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. When establishing an account, an investor must provide his or her
taxpayer identification number and certify under penalty of perjury that such
number is correct and that he or she is not otherwise subject to backup
withholding. Corporate shareholders and other shareholders specified in the
Code are exempt from backup withholding. Backup withholding is not an
additional tax. Any amounts withheld may be credited against a shareholder's
U.S. federal income tax liability.
Foreign Shareholders. Dividends from a Fund's investment company
taxable income and distributions constituting returns of capital paid to a
nonresident alien individual, a foreign trust or estate, foreign corporation,
or foreign partnership (a "foreign shareholder") generally will be subject to
U.S. withholding tax at a rate of 30% (or lower treaty rate) upon the gross
amount of the dividend. Foreign shareholders may be subject to U.S.
withholding tax at a rate of 30% on the income resulting from the Fund's
election to treat any foreign income taxes paid by it as paid by its
shareholders, but may not be able to claim a credit or deduction with respect
to the withholding tax for the foreign taxes treated as having been paid by
them.
A foreign shareholder generally will not be subject to U.S. taxation
on gain realized upon the redemption or exchange of shares of a Fund or on
capital gain dividends. In the case of a foreign shareholder who is a
nonresident alien individual, however, gain realized upon the sale or
redemption of shares of a Fund and capital gain dividends ordinarily will be
subject to U.S. income tax at a rate of 30% (or lower applicable treaty rate)
if such individual is physically present in the U.S. for 183 days or more
during the taxable year and certain other conditions are met. In the case of a
foreign shareholder who is a nonresident alien individual, the Funds may be
required to withhold U.S. federal income tax at a rate of 31% unless proper
notification of such shareholder's foreign status is provided.
Notwithstanding the foregoing, if distributions by the Funds are
effectively connected with a U.S. trade or business of a foreign shareholder,
then dividends from such Fund's investment company taxable income, capital
gains, and any gains realized upon the sale of shares of the Fund will be
subject to U.S. income tax at the graduated rates applicable to U.S. citizens
or domestic corporations.
Transfers by gift of shares of a Fund by a foreign shareholder who is
a nonresident alien individual will not be subject to U.S. federal gift tax.
An individual who, at the time of death, is a foreign shareholder will
nevertheless be subject to U.S. federal estate tax with respect to shares at
the graduated rates applicable to U.S. citizens and residents, unless a treaty
exception applies. In the absence of a treaty, there is a $13,000 statutory
estate tax credit.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisors with
respect to the particular tax consequences to them of an investment in any of
the Funds.
Miscellaneous Considerations; Effect of Future Legislation. The
foregoing general discussion of federal income tax consequences is based on the
Code and the regulations issued thereunder as in effect on February 1, 1998.
Future legislative or administrative changes or court decisions may
significantly change the conclusions expressed herein, and any such changes or
decisions may have a retroactive effect with respect to the transactions
contemplated herein.
Rules of state and local taxation of dividend and capital gain
distributions from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. Shareholders are urged to
consult their tax advisors as to the consequences of these and other U.S. state
and local tax rules affecting investments in the Funds.
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<PAGE> 241
MISCELLANEOUS INFORMATION
AUDIT REPORTS
The Board of Directors will issue to shareholders at least
semi-annually the Funds' financial statements. Financial statements, audited
by independent auditors, will be issued annually. The firm of KPMG Peat
Marwick LLP, 700 Louisiana, Houston, Texas 77002, currently serves as the
auditors of each Fund.
LEGAL MATTERS
Legal matters for the Company are passed upon by Ballard Spahr Andrews
& Ingersoll, LLP, Philadelphia, Pennsylvania.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, Massachusetts 02110, is custodian of all securities and cash of
the Funds. Under its contract with the Company relating to each Fund, the
Custodian is authorized to establish separate accounts in foreign currencies
and to cause foreign securities owned by each Fund to be held in its offices
outside the United States and with certain foreign banks and securities
depositories. The Custodian attends to the collection of principal and income,
pays and collects all monies for securities bought and sold by each Fund, and
performs certain other ministerial duties. A I M Fund Services, Inc. (the
"Transfer Agent"), a wholly owned subsidiary of AIM, P.O. Box 4739, Houston,
Texas 77210-4739, is a transfer and dividend disbursing agent for the Class A,
Class B and Class C shares of each of the Funds. Each Fund pays the Custodian
and the Transfer Agent such compensation as may be agreed upon from time to
time.
Chase Bank of Texas, N.A. (formerly, Texas Commerce Bank National
Association), 712 Main, Houston, Texas 77002, serves as Sub-Custodian for
retail purchases of the AIM Funds.
SHAREHOLDER INQUIRIES
The Transfer Agent may impose certain copying charges for requests for
copies of shareholder account statements and other historical account
information older than the current year and the immediately preceding year.
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<PAGE> 242
PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Company, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of each of the
Company's portfolios as of February 2, 1998, and the amount of outstanding
shares held by such holders are set forth below:
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
AIM International Merrill Lynch, Pierce, 33.13%** -0-
Equity Fund - Fenner & Smith
Class A shares FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, 36.84%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, 47.42%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
AIM Global Aggressive Merrill Lynch, Pierce, 15.62% -0-
Growth Fund - Fenner & Smith
Class A shares FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
</TABLE>
- ------------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in
the 1940 Act.
48
<PAGE> 243
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
Class B shares Merrill Lynch, Pierce, 26.14%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, 46.94%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
AIM Global Growth Merrill Lynch, Pierce, 12.45% -0-
Fund - Fenner & Smith
Class A shares FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, 22.43% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
</TABLE>
- ------------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in
the 1940 Act.
49
<PAGE> 244
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
Class C shares Merrill Lynch, Pierce 36.29%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
AIM Global Income Fund - Merrill Lynch, Pierce 10.86% -0-
Class B shares Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Dain Rauscher Incorporated -0- 21.31%
FBO Guarantee & Trust Co.
Cust. J. Stuart Johnson IRA
3000 Penn Avenue W. Ext.
Warren, PA 16365
Merrill Lynch Pierce 12.45% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
Karl Walker & -0- 11.14%
Peggy Walker C/PROP
RT 2, Box 186
Hockley, TX 77447
Joyce N. Wilson -0- 6.19%
TRST. Wilson Family Trust
2524 E. Ames Ave.
Anaheim, CA 92806-4701
</TABLE>
- -----------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined
in the 1940 Act.
50
<PAGE> 245
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
Class B Shares PaineWebber -0- 5.97%
FBO Robert S. Carpenter &
Alma Lee Carpenter TTEES
FBO Robert S. Charit.
Remnder TR
9 Lowell Road
Wellesley, MA 02181-2723
Donaldson Lufkin, Jenrette 5.68% -0-
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
AIM European
Development Fund -
Class A shares Jonathan C. Schoolar -0- 26.00%**
3722 Tartan Lane
Houston, TX 77025
INVESCO Trust Company 25.04%** -0-
Attn: Sheila Wendland
7800 E. Union Avenue
Denver, CO 80237-0000
Michael J. Cemo -0- 12.18%
5604 Buffalo Speedway
Houston, TX 77005
Obie & Co. -0- 7.68%
FBO Charles T. Bauer
02 001 1365200
PO Box 200547
Mutual Fund Unti 16-HCB-09
Houston, TX 77216-0547
Joel Dobberpuhl and -0- 6.77%
Holly Dobberpuhl JTWROS
9006 Ensemble Ct
Houston, TX 77040-0000
</TABLE>
- ---------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in
the 1940 Act.
51
<PAGE> 246
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
Class B shares Merrill Lynch Pierce 29.60%* -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
PaineWebber for the Benefit of -0- 10.48%
William F. Manus and
Maryette Manus JT TEN
11 Meeker Street
West Orange, NJ 07052-4328
Fahnestock & Co. Inc. -0- 7.04%
FBO A013235138
Jack Sweeney
125 Broad Street
New York, NY 10004
Interstate/Johnson Lane -0- 7.04%
FBO 238-82128-19
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
Interstate/Johnson Lane -0- 5.26%
FBO 238-82073-14
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
Interstate/Johnson Lane -0- 5.06%
FBO 238-75290-15
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
</TABLE>
- ---------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in
the 1940 Act.
52
<PAGE> 247
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
Class C shares Donaldson Lufkin Jenrette 67.08%** -0-
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
Interstate/Johnson Lane -0- 39.32%**
FBO 238-75485-10
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
AIM Asian Growth Fund -
Class A shares INVESCO Trust Company 29.65%** -0-
Attn: Sheila Wendland
7800 E Union Ave.
Denver, CO 80237-0000
Arthur Dale Griffin III -0- 10.73%
36 Windemere Lane
Houston, TX 77063
Jonathan C. Schoolar -0- 10.57%
3722 Tartan Lane
Houston, TX 77025
Obie & Co -0- 10.36%
FBO Charles T. Bauer
02 001 1365200
PO Box 200547
Mutual Fund Unti 16-HCB-09
Houston, TX 77216-0547
Class B shares Merrill Lynch Pierce 23.18% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
</TABLE>
- ---------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in
the 1940 Act.
53
<PAGE> 248
<TABLE>
<CAPTION>
Percent Percent Owned
Name and Address Owned of of Record and
Fund of Record Owner Record Only* Beneficially
- ---- --------------- ------------ ------------
<S> <C> <C> <C>
John Hamilton Mueller TTEE -0- 14.29%
John Hamilton Mueller Revocable
Living Trust
DTD 02-26-88
3110 E. Fernan Hill Rd
Coeur D Alene, ID 83814-7564
Thomas F. Weigel and -0- 12.50%
Kathleen M. Weigel JTWROS
309 4th Ave NW
Mandan, ND 58554-0000
Donaldson Lufkin Jenrette 8.58% -0-
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
Class C shares Interstate/Johnson Lane -0- 54.87%**
FBO 238-75485-10
Interstate Tower
P. O. Box 1220
Charlotte, NC 28201-1220
NFSC FEBO # X33-102920 -0- 45.13%**
Gregory S. Beck
8217 W 146th Ter
Overland Park, KS 66223
</TABLE>
As of February 2, 1998, the directors and officers of the Company as a
group owned less than 1% of the outstanding shares of Aggressive Growth Fund,
Growth Fund, Equity Fund, Income Fund, Class B and Class C shares of Asian Fund
and Class B and Class C shares of European Fund. Also as February 2, 1998, the
directors and officers of the Company as a group owned 12.62% and 29.43% of the
outstanding Class A shares of Asian Fund and European Fund, respectively.
OTHER INFORMATION
The Prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement which the
portfolios of the Company have filed with the SEC under the 1933 Act and the
1940 Act, and reference is hereby made to the Registration Statement for
further information with respect to each portfolio of the Company and the
securities offered hereby. The Registration Statement is available for
inspection by the public at the Securities and Exchange Commission in
Washington, D.C.
- ---------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in
the 1940 Act.
54
<PAGE> 249
APPENDIX A
DESCRIPTION OF MONEY MARKET OBLIGATIONS
The following list does not purport to be an exhaustive list of all
Money Market Obligations, and the Funds reserve the right to invest in Money
Market Obligations other than those listed below:
1. GOVERNMENT OBLIGATIONS.
U.S. GOVERNMENT DIRECT OBLIGATIONS --Bills, notes, and bonds issued by
the U.S. Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES --Certain federal agencies such as
the Government National Mortgage Association have been established as
instrumentalities of the U. S. Government to supervise and finance certain
types of activities. Issues of these agencies, while not direct obligations of
the U. S. Government, are either backed by the full faith and credit of the
United States or are guaranteed by the Treasury or supported by the issuing
agencies' right to borrow from the Treasury.
FOREIGN GOVERNMENT OBLIGATIONS -- These are U.S. dollar denominated
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by the Fund's investment advisor to be of comparable quality to the other
obligations in which the Fund may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the
International Bank for Reconstruction and Development (the World Bank), the
European Coal and Steel Community, the Asian Development Bank and the
InterAmerican Development Bank. The percentage of the Fund's assets invested
in securities issued by foreign governments will vary depending on the relative
yields of such securities, the economic and financial markets of the countries
in which the investments are made and the interest rate climate of such
countries.
2. BANK INSTRUMENTS.
BANKERS' ACCEPTANCES --A bill of exchange or time draft drawn on and
accepted by a commercial bank. It is used by corporations to finance the
shipment and storage of goods and to furnish dollar exchange. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT -- A negotiable interest-bearing instrument
with a specific maturity. Certificates of deposit are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market, prior to maturity.
TIME DEPOSITS --A non-negotiable receipt issued by a bank in exchange
for the deposit of funds. Like a certificate of deposit, it earns a specified
rate of interest over a definite period of time; however, it cannot be traded
in the secondary market.
EURODOLLAR OBLIGATIONS -- A Eurodollar obligation is a U.S.
dollar-denominated obligation issued by a foreign branch of a domestic bank.
YANKEE DOLLAR OBLIGATIONS -- A Yankee dollar obligation is a U.S.
dollar-denominated obligation issued by a domestic branch of a foreign bank.
55
<PAGE> 250
3. COMMERCIAL INSTRUMENTS.
COMMERCIAL PAPER --The term used to designate unsecured short-term
promissory notes issued by corporations and other entities. Maturities on
these issues vary from a few days to nine months.
VARIABLE RATE MASTER DEMAND NOTES --Variable rate master demand notes
are unsecured demand notes that permit investment of fluctuating amounts of
money at variable rates of interest pursuant to arrangements with the issuers.
The interest rate on a variable amount master demand note is periodically
redetermined according to a prescribed formula. Although there is no secondary
market in master demand notes, the payee may demand payment of the principal
amount of the note on relatively short notice.
4. REPURCHASE AGREEMENTS -- A repurchase agreement is a contractual
undertaking whereby the seller of securities (limited to U.S. Government
securities, including securities issued or guaranteed by the U.S. Treasury or
the various agencies and instrumentalities of the U.S. Government) agrees to
repurchase the securities at a specified price on a future date determined by
negotiations.
56
<PAGE> 251
APPENDIX B
DESCRIPTION OF CORPORATE BOND RATINGS
Investment grade debt securities are those rating categories indicated
by an asterisk (*).
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS ARE AS FOLLOWS:
*Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
*Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. These are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than the Aaa
securities.
*A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium- grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
*Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
57
<PAGE> 252
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in the Aa and A
groups when assigning ratings to industrial development bonds and bonds secured
by either a letter of credit or bond insurance. The modifier 1 indicates that
the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic rating category.
STANDARD AND POOR'S RATINGS SERVICES CLASSIFICATIONS ARE AS FOLLOWS:
*AAA
Debt rated 'AAA' has the highest rating assigned by Standard & Poor's
("S&P"). Capacity to pay interest and repay principal is extremely strong.
*AA
Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in a small degree.
*A
Debt rated 'A' has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
*BBB
Debt rated 'BBB' regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher categories.
BB, B, CCC, CC, C
Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. 'BB' indicates the
lowest degree of speculation and 'C' the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
58
<PAGE> 253
BB
Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.
B
Debt rated 'B' has a greater vulnerability to default but currently
has the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The 'B' rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'BB' or 'BB-' rating.
CCC
Debt rated 'CCC' has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The 'CCC'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'B' or 'B-' rating.
CC
The rating 'CC' is typically applied to debt subordinated to senior
debt that is assigned an actual or implied 'CCC' rating.
C
The rating 'C' is typically applied to debt subordinated to senior
debt which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payments are continued.
C1
The rating 'C1' is reserved for income bonds on which no interest is
being paid.
D
Debt rated 'D' is in payment default. The 'D' rating category is used
when interest payments or principal or principal payments are not made on the
date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The 'D'
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
PLUS (+) OR MINUS (-)
The rating from 'AA' to 'CCC' may be modified by the addition of a
plus or minus sign to show relative standing within the major categories.
59
<PAGE> 254
DUFF & PHELPS FIXED-INCOME RATINGS ARE AS FOLLOWS:
*AAA
Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
*AA+, AA AND AA-
High credit quality. Protection factors are strong. Risk is modest
but may vary slightly from time to time because of economic conditions.
*A+, A AND A-
Protection factors are average but adequate. However, risk factors
are more variable and greater in periods of economic stress.
*BBB+, BBB AND BBB-
Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic cycles.
BB+, BB AND BB-
Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or down
frequently within this category.
B+, B AND B-
Below investment grade and possessing risk that obligations will not
be met when due. Financial protection factors will fluctuate widely according
to economic cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in quality rating within this category or into a
higher or lower quality rating grade.
CCC
Well below investment grade securities. May be in default or have
considerable uncertainty as to timely payment of interest, preferred dividends
and/or principal. Protection factors are narrow and risk can be substantial
with unfavorable economic/industry conditions, and/or with unfavorable company
developments.
DD
Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP
Preferred stock with dividend arrearages.
60
<PAGE> 255
FITCH INVESTORS SERVICE, INC.'S BOND RATINGS ARE AS FOLLOWS:
*AAA
Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
*AA
Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated 'AAA.' Because bonds rated
in the 'AAA' and 'AA' categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated 'F-1+.'
*A
Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions
and circumstances than bonds with higher ratings.
*BBB
Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these bonds,
and therefore impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.
BB
Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B
Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.
CCC
Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
61
<PAGE> 256
C
Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D
Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. 'DDD'
represents the highest potential for recovery on these bonds, and 'D'
represents the lowest potential for recovery.
PLUS (+) MINUS (-)
Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus
signs, however, are not used in the 'AAA', 'DDD', 'DD', or 'D' categories.
62
<PAGE> 257
FINANCIAL STATEMENTS
FS
<PAGE> 258
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 the AIM Global Aggressive Growth Fund (a
portfolio of AIM International Funds, Inc.), including
the schedule of investments, as of October 31, 1997, and
the related statement of operations for the year then
ended, the statement of changes in net assets for each of
the years in the two-year period then ended and the
financial highlights for the three-year period then ended
and the period September 15, 1994 (date operations
commenced) through October 31, 1994. These financial
statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures
included confirmation of securities owned as of October
31, 1997, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Aggressive Growth Fund as of October 31, 1997, 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, the financial highlights for
the three-year period then ended and the period September
15, 1994 (date operations commenced) through October 31,
1994, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-1
<PAGE> 259
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-31.90%
AEROSPACE/DEFENSE-0.27%
BE Aerospace, Inc.(a) 137,500 $ 3,867,188
- ---------------------------------------------------------------
Precision Castparts Corp. 50,000 2,940,625
- ---------------------------------------------------------------
6,807,813
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.02%
Borg-Warner Automotive, Inc. 8,000 436,000
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.30%
Bank United Corp.-Class A 150,000 6,300,000
- ---------------------------------------------------------------
First Savings Bank of Washington
Bancorp, Inc. 50,000 1,187,500
- ---------------------------------------------------------------
7,487,500
- ---------------------------------------------------------------
BIOTECHNOLOGY-0.09%
Curative Health Services, Inc.(a) 75,000 2,259,375
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.46%
Heftel Broadcasting Corp.(a) 130,000 8,645,000
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 65,500 2,742,812
- ---------------------------------------------------------------
11,387,812
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.36%
ADC Telecommunications, Inc.(a) 130,000 4,306,250
- ---------------------------------------------------------------
Brightpoint, Inc.(a) 218,750 7,218,750
- ---------------------------------------------------------------
Coherent Communications Systems
Corp.(a) 179,500 5,429,875
- ---------------------------------------------------------------
MasTec, Inc.(a) 200,000 6,487,500
- ---------------------------------------------------------------
P-COM, Inc.(a) 200,000 4,025,000
- ---------------------------------------------------------------
REMEC, Inc.(a) 75,000 1,903,125
- ---------------------------------------------------------------
Tellabs, Inc.(a) 84,800 4,579,200
- ---------------------------------------------------------------
33,949,700
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-0.53%
Concord EFS, Inc.(a) 199,737 5,929,692
- ---------------------------------------------------------------
Dell Computer Corp.(a) 50,000 4,006,250
- ---------------------------------------------------------------
IDX Systems Corp.(a) 100,000 3,375,000
- ---------------------------------------------------------------
13,310,942
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.23%
International Network Services(a) 100,000 2,200,000
- ---------------------------------------------------------------
Premiere Technologies, Inc.(a) 100,000 3,400,000
- ---------------------------------------------------------------
5,600,000
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.10%
Network Appliance, Inc.(a) 50,000 2,512,500
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-2.18%
Advanced Fibre Communications,
Inc.(a) 200,000 5,812,500
- ---------------------------------------------------------------
MARKET
SHARES VALUE
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Analysts International Corp. 81,000 $ 3,655,125
- ---------------------------------------------------------------
Computer Task Group, Inc. 107,400 3,034,050
- ---------------------------------------------------------------
Electronic Arts, Inc.(a) 77,200 2,615,150
- ---------------------------------------------------------------
Engineering Animation, Inc.(a) 126,800 5,595,050
- ---------------------------------------------------------------
HBO & Co. 111,800 4,863,300
- ---------------------------------------------------------------
JDA Software Group, Inc.(a) 50,000 1,562,500
- ---------------------------------------------------------------
NOVA Corp.(a) 150,000 4,031,250
- ---------------------------------------------------------------
Security Dynamics Technologies,
Inc.(a) 125,000 4,234,375
- ---------------------------------------------------------------
Simulation Sciences, Inc.(a) 300,000 5,475,000
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 104,200 3,458,139
- ---------------------------------------------------------------
Veritas Software Corp.(a) 112,500 4,682,813
- ---------------------------------------------------------------
Viasoft, Inc.(a) 54,100 2,218,100
- ---------------------------------------------------------------
Whittman-Hart, Inc.(a) 21,600 626,400
- ---------------------------------------------------------------
Wind River Systems(a) 60,750 2,331,282
- ---------------------------------------------------------------
54,195,034
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.33%
Action Performance Companies,
Inc.(a) 100,000 2,562,500
- ---------------------------------------------------------------
Blyth Industries, Inc.(a) 222,800 5,542,150
- ---------------------------------------------------------------
8,104,650
- ---------------------------------------------------------------
CONSUMER FINANCE-0.87%
AmeriCredit Corp.(a) 100,000 2,906,250
- ---------------------------------------------------------------
Delta Financial Corp.(a) 43,300 790,225
- ---------------------------------------------------------------
FIRSTPLUS Financial Group,
Inc.(a) 150,100 8,255,500
- ---------------------------------------------------------------
IMC Mortgage Co.(a) 200,000 3,475,000
- ---------------------------------------------------------------
Money Store, Inc. (The) 100,000 2,837,500
- ---------------------------------------------------------------
SLM Holding Corp. 25,000 3,509,375
- ---------------------------------------------------------------
21,773,850
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-0.12%
Patterson Dental Co.(a) 76,900 3,076,000
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.25%
Berg Electronics Corp.(a) 152,800 3,571,700
- ---------------------------------------------------------------
HADCO Corp.(a) 60,000 3,322,500
- ---------------------------------------------------------------
Kemet Corp.(a) 100,000 2,175,000
- ---------------------------------------------------------------
Sanmina Corp.(a) 111,000 8,297,250
- ---------------------------------------------------------------
Sawtek Inc.(a) 150,000 5,100,000
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 150,000 6,600,000
- ---------------------------------------------------------------
Solectron Corp.(a) 51,000 2,001,750
- ---------------------------------------------------------------
31,068,200
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.43%
Benchmarq Microelectronics,
Inc.(a) 250,000 5,187,500
- ---------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (COMPONENT
DISTRIBUTORS)-(CONTINUED)
Computer Products, Inc.(a) 200,000 $ 5,450,000
- ---------------------------------------------------------------
10,637,500
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.55%
CellStar Corp.(a) 275,000 9,332,812
- ---------------------------------------------------------------
Perkin-Elmer Corp. 55,500 3,468,750
- ---------------------------------------------------------------
ThermoQuest Corp.(a) 45,000 804,375
- ---------------------------------------------------------------
13,605,937
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-2.17%
Alliance Semiconductor Corp.(a) 150,000 1,125,000
- ---------------------------------------------------------------
Altera Corp.(a) 75,000 3,328,125
- ---------------------------------------------------------------
ANADIGICS, Inc.(a) 100,000 3,700,000
- ---------------------------------------------------------------
Burr-Brown Corp.(a) 115,400 3,490,850
- ---------------------------------------------------------------
Cypress Semiconductor Corp.(a) 270,000 3,037,500
- ---------------------------------------------------------------
Dallas Semiconductor Corp. 100,000 4,887,500
- ---------------------------------------------------------------
Integrated Device Technology,
Inc.(a) 300,000 3,468,750
- ---------------------------------------------------------------
Lattice Semiconductor Corp.(a) 55,100 2,758,444
- ---------------------------------------------------------------
Linear Technology Corp. 91,000 5,721,625
- ---------------------------------------------------------------
Micrel, Inc.(a) 100,000 3,587,500
- ---------------------------------------------------------------
National Semiconductor Corp.(a) 130,000 4,680,000
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 100,000 2,637,500
- ---------------------------------------------------------------
Sipex Corp.(a) 300,000 9,862,500
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 37,500 1,626,562
- ---------------------------------------------------------------
53,911,856
- ---------------------------------------------------------------
ENTERTAINMENT-0.09%
Regal Cinemas, Inc.(a) 100,000 2,300,000
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS)-1.15%
BMC Industries, Inc. 110,000 3,540,625
- ---------------------------------------------------------------
Credence Systems Corp.(a) 100,000 2,950,000
- ---------------------------------------------------------------
DuPont Photomasks, Inc.(a) 100,000 4,300,000
- ---------------------------------------------------------------
Electroglas, Inc.(a) 200,000 3,800,000
- ---------------------------------------------------------------
Photronics, Inc.(a) 125,000 5,359,375
- ---------------------------------------------------------------
Silicon Valley Group, Inc.(a) 175,000 5,031,250
- ---------------------------------------------------------------
Teradyne, Inc.(a) 100,000 3,743,750
- ---------------------------------------------------------------
28,725,000
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.28%
Amresco, Inc.(a) 100,000 3,137,500
- ---------------------------------------------------------------
SunAmerica, Inc. 105,000 3,773,438
- ---------------------------------------------------------------
6,910,938
- ---------------------------------------------------------------
FOOTWEAR-0.05%
Wolverine World Wide, Inc. 59,925 1,318,350
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.40%
Dura Pharmaceuticals, Inc.(a) 57,900 2,800,912
- ---------------------------------------------------------------
MARKET
SHARES VALUE
HEALTH CARE (DRUGS-GENERIC &
OTHER)-(CONTINUED)
Medicis Pharmaceutical Corp.(a) 150,000 $ 7,218,750
- ---------------------------------------------------------------
10,019,662
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.58%
Health Management Associates,
Inc.-Class A(a) 335,700 8,182,688
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 75,000 2,292,187
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 89,800 3,956,812
- ---------------------------------------------------------------
14,431,687
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM
CARE)-0.25%
HEALTHSOUTH Corp.(a) 150,000 3,834,375
- ---------------------------------------------------------------
Sunrise Assisted Living, Inc.(a) 63,200 2,346,300
- ---------------------------------------------------------------
6,180,675
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.45%
Concentra Managed Care, Inc.(a) 99,115 3,233,627
- ---------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 40,000 2,255,000
- ---------------------------------------------------------------
Oxford Health Plans, Inc.(a) 45,100 1,164,144
- ---------------------------------------------------------------
PhyCor, Inc.(a) 49,950 1,151,972
- ---------------------------------------------------------------
Wellpoint Health Networks,
Inc.(a) 75,000 3,431,250
- ---------------------------------------------------------------
11,235,993
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.35%
Physician Sales & Service,
Inc.(a) 50,000 1,225,000
- ---------------------------------------------------------------
Quintiles Transnational Corp.(a) 70,000 5,075,000
- ---------------------------------------------------------------
ResMed, Inc.(a) 40,000 1,120,000
- ---------------------------------------------------------------
Sybron International Corp.(a) 32,800 1,316,100
- ---------------------------------------------------------------
8,736,100
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-1.05%
American HomePatient, Inc.(a) 100,000 2,575,000
- ---------------------------------------------------------------
First Commonwealth, Inc.(a) 45,000 652,500
- ---------------------------------------------------------------
FPA Medical Management, Inc.(a) 200,000 4,825,000
- ---------------------------------------------------------------
NCS HealthCare, Inc.-Class A(a) 110,000 2,571,250
- ---------------------------------------------------------------
Omnicare, Inc. 173,300 4,819,906
- ---------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 123,000 2,129,438
- ---------------------------------------------------------------
Pediatrix Medical Group, Inc.(a) 15,200 642,200
- ---------------------------------------------------------------
Renal Care Group, Inc.(a) 92,400 3,095,400
- ---------------------------------------------------------------
Renal Treatment Centers, Inc.(a) 50,000 1,659,375
- ---------------------------------------------------------------
Superior Consultant Holdings
Corp.(a) 32,300 1,001,300
- ---------------------------------------------------------------
Total Renal Care Holdings,
Inc.(a) 62,667 1,930,916
- ---------------------------------------------------------------
Transition Systems, Inc.(a) 14,700 297,675
- ---------------------------------------------------------------
26,199,960
- ---------------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES-0.23%
Ethan Allen Interiors, Inc. 160,000 5,670,000
- ---------------------------------------------------------------
</TABLE>
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<PAGE> 261
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOUSEWARES-0.48%
Central Garden and Pet Co.(a) 75,000 $ 1,968,750
- ---------------------------------------------------------------
Helen of Troy Ltd.(a) 600,000 9,975,000
- ---------------------------------------------------------------
11,943,750
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.25%
CapMAC Holdings, Inc. 35,000 1,050,000
- ---------------------------------------------------------------
CMAC Investment Corp. 24,400 1,334,375
- ---------------------------------------------------------------
HCC Insurance Holdings, Inc. 137,550 3,215,231
- ---------------------------------------------------------------
Vesta Insurance Group, Inc. 12,000 697,500
- ---------------------------------------------------------------
6,297,106
- ---------------------------------------------------------------
LODGING (HOTELS)-0.07%
Prime Hospitality Corp.(a) 30,000 611,250
- ---------------------------------------------------------------
Suburban Lodges of America,
Inc.(a) 20,000 495,000
- ---------------------------------------------------------------
Wyndham Hotel Corp.(a) 16,700 750,456
- ---------------------------------------------------------------
1,856,706
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.13%
DT Industries, Inc. 105,000 3,150,000
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.59%
Halter Marine Group, Inc.(a) 187,700 9,819,056
- ---------------------------------------------------------------
US Filter Corp.(a) 120,150 4,821,019
- ---------------------------------------------------------------
14,640,075
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.27%
Daisytek International Corp.(a) 50,000 1,906,250
- ---------------------------------------------------------------
Herman Miller, Inc. 100,000 4,887,500
- ---------------------------------------------------------------
6,793,750
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-4.55%
Camco International, Inc. 100,000 7,225,000
- ---------------------------------------------------------------
Cliffs Drilling Co.(a) 100,000 7,268,750
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 100,000 7,225,000
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 100,000 6,225,000
- ---------------------------------------------------------------
ENSCO International, Inc. 140,000 5,888,750
- ---------------------------------------------------------------
EVI, Inc.(a) 200,000 12,837,500
- ---------------------------------------------------------------
Falcon Drilling Company, Inc.(a) 150,000 5,456,250
- ---------------------------------------------------------------
Global Industries Ltd.(a) 250,000 5,031,250
- ---------------------------------------------------------------
Global Marine, Inc.(a) 125,000 3,890,625
- ---------------------------------------------------------------
Marine Drilling Companies,
Inc.(a) 140,000 4,147,500
- ---------------------------------------------------------------
Maverick Tube Corp.(a) 77,200 2,721,300
- ---------------------------------------------------------------
National-Oilwell, Inc.(a) 150,000 11,484,375
- ---------------------------------------------------------------
Newpark Resources, Inc.(a) 200,000 8,300,000
- ---------------------------------------------------------------
Pride International, Inc.(a) 178,800 5,900,400
- ---------------------------------------------------------------
Tuboscope Vetco International
Corp. 156,600 4,972,050
- ---------------------------------------------------------------
Varco International, Inc.(a) 107,500 6,550,781
- ---------------------------------------------------------------
MARKET
SHARES VALUE
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Veritas DGC, Inc.(a) 200,000 $ 8,187,500
- ---------------------------------------------------------------
113,312,031
- ---------------------------------------------------------------
PERSONAL CARE-0.28%
Rexall Sundown, Inc.(a) 321,000 7,021,875
- ---------------------------------------------------------------
RESTAURANTS-0.60%
Apple South, Inc. 150,800 2,808,650
- ---------------------------------------------------------------
Foodmaker, Inc.(a) 300,000 4,931,250
- ---------------------------------------------------------------
Landry's Seafood Restaurants,
Inc.(a) 100,000 2,800,000
- ---------------------------------------------------------------
Papa John's International,
Inc.(a) 22,500 665,156
- ---------------------------------------------------------------
Showbiz Pizza Time, Inc.(a) 96,600 2,052,750
- ---------------------------------------------------------------
Starbucks Corp.(a) 50,000 1,650,000
- ---------------------------------------------------------------
14,907,806
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.17%
Eagle Hardware & Garden, Inc.(a) 250,000 4,250,000
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.75%
CompUSA, Inc.(a) 172,000 5,633,000
- ---------------------------------------------------------------
MicroAge, Inc.(a) 250,000 5,500,000
- ---------------------------------------------------------------
Tech Data Corp.(a) 166,600 7,413,700
- ---------------------------------------------------------------
18,546,700
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.14%
Men's Wearhouse, Inc. (The)(a) 87,400 3,386,750
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.13%
Quality Food Centers, Inc.(a) 67,900 3,233,738
- ---------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.29%
CDW Computer Centers, Inc.(a) 85,800 5,319,600
- ---------------------------------------------------------------
Micro Warehouse, Inc.(a) 134,700 2,020,500
- ---------------------------------------------------------------
7,340,100
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-1.65%
Garden Ridge Corp.(a) 75,000 1,003,125
- ---------------------------------------------------------------
Genesco Inc.(a) 200,000 2,537,500
- ---------------------------------------------------------------
Hollywood Entertainment Corp.(a) 200,000 2,450,000
- ---------------------------------------------------------------
Inacom Corp.(a) 50,000 1,540,625
- ---------------------------------------------------------------
Michaels Stores, Inc.(a) 100,000 3,006,250
- ---------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 200,000 4,875,000
- ---------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 67,000 2,060,250
- ---------------------------------------------------------------
Pier 1 Imports, Inc. 397,500 7,254,375
- ---------------------------------------------------------------
Staples, Inc.(a) 235,800 6,189,750
- ---------------------------------------------------------------
Tiffany & Co. 50,200 1,982,900
- ---------------------------------------------------------------
Viking Office Products, Inc.(a) 106,100 2,539,769
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 75,000 3,009,375
- ---------------------------------------------------------------
Zale Corp.(a) 100,000 2,525,000
- ---------------------------------------------------------------
40,973,919
- ---------------------------------------------------------------
</TABLE>
FS-4
<PAGE> 262
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-0.42%
Gap, Inc. 58,400 $ 3,106,150
- ---------------------------------------------------------------
Pacific Sunwear of California(a) 112,500 3,107,813
- ---------------------------------------------------------------
TJX Companies, Inc. 140,500 4,162,312
- ---------------------------------------------------------------
10,376,275
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.10%
Dime Bancorp, Inc. 100,000 2,400,000
- ---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.28%
CKS Group, Inc.(a) 190,000 6,887,500
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.27%
ABR Information Services, Inc.(a) 75,000 1,762,500
- ---------------------------------------------------------------
Caribiner International, Inc.(a) 100,000 4,456,250
- ---------------------------------------------------------------
Cerner Corp.(a) 202,000 4,898,500
- ---------------------------------------------------------------
Children's Comprehensive
Services, Inc.(a) 186,200 3,360,328
- ---------------------------------------------------------------
Equity Corp. International(a) 255,000 5,195,625
- ---------------------------------------------------------------
IntelliQuest Information Group,
Inc.(a) 245,000 4,165,000
- ---------------------------------------------------------------
MSC Industrial Direct Co.,
Inc.-Class A(a) 40,000 1,665,000
- ---------------------------------------------------------------
Rental Service Corp.(a) 92,900 2,485,075
- ---------------------------------------------------------------
Strayer Education, Inc. 75,000 3,581,250
- ---------------------------------------------------------------
31,569,528
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.31%
Insight Enterprises, Inc.(a) 150,000 5,868,750
- ---------------------------------------------------------------
SunGard Data Systems Inc.(a) 80,200 1,894,725
- ---------------------------------------------------------------
7,763,475
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.89%
Affiliated Computer Services,
Inc.(a) 128,400 3,226,050
- ---------------------------------------------------------------
BDM International Inc.(a) 126,500 2,798,813
- ---------------------------------------------------------------
BISYS Group, Inc. (The)(a) 81,900 2,549,137
- ---------------------------------------------------------------
Computer Data Systems, Inc. 75,100 3,107,262
- ---------------------------------------------------------------
CSG Systems International,
Inc.(a) 85,000 3,330,938
- ---------------------------------------------------------------
Envoy Corp.(a) 100,000 2,800,000
- ---------------------------------------------------------------
National Data Corp. 75,000 2,770,312
- ---------------------------------------------------------------
PMT Services, Inc.(a) 100,000 1,612,500
- ---------------------------------------------------------------
22,195,012
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.36%
RemedyTemp, Inc.- Class A(a) 38,000 874,000
- ---------------------------------------------------------------
Robert Half International,
Inc.(a) 111,000 4,544,063
- ---------------------------------------------------------------
Romac International, Inc.(a) 100,000 2,000,000
- ---------------------------------------------------------------
Vincam Group, Inc. (The)(a) 49,500 1,553,062
- ---------------------------------------------------------------
8,971,125
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.18%
Billing Information Concepts(a) 79,600 3,124,300
- ---------------------------------------------------------------
MARKET
SHARES VALUE
TELECOMMUNICATIONS (LONG DISTANCE)-(CONTINUED)
USLD Communications Corp.(a) 64,200 $ 1,271,963
- ---------------------------------------------------------------
4,396,263
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.85%
Jones Apparel Group, Inc.(a) 100,000 5,087,500
- ---------------------------------------------------------------
Liz Claiborne, Inc. 69,000 3,497,437
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(a) 125,000 3,328,125
- ---------------------------------------------------------------
Quicksilver, Inc.(a) 100,000 3,075,000
- ---------------------------------------------------------------
St. John Knits, Inc. 75,000 3,014,062
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 87,900 3,477,544
- ---------------------------------------------------------------
21,479,668
- ---------------------------------------------------------------
TEXTILES (HOME FURNISHINGS)-0.18%
Mohawk Industries, Inc.(a) 75,000 2,306,250
- ---------------------------------------------------------------
WestPoint Stevens, Inc.(a) 50,000 2,050,000
- ---------------------------------------------------------------
4,356,250
- ---------------------------------------------------------------
TRUCKING-0.24%
Caliber System, Inc. 25,000 1,303,125
- ---------------------------------------------------------------
Hub Group, Inc.(a) 100,000 3,050,000
- ---------------------------------------------------------------
Swift Transportation Co., Inc.(a) 50,000 1,600,000
- ---------------------------------------------------------------
5,953,125
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.33%
Thermo Instrument Systems Inc.(a) 20,000 721,250
- ---------------------------------------------------------------
USA Waste Services, Inc.(a) 200,000 7,400,000
- ---------------------------------------------------------------
8,121,250
- ---------------------------------------------------------------
Total Domestic Common Stocks 793,976,811
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-61.07%
ARGENTINA-2.22%
Banco de Galicia y Buenos Aires
S.A. de C.V.-ADR
(Banks-Regional) 500,439 12,127,826
- ---------------------------------------------------------------
Banco Rio de La Plata S.A.-ADR
(Banks-Money Center)(a) 461,000 4,840,500
- ---------------------------------------------------------------
Disco S.A.-ADR (Retail-Food
Chains)(a) 69,500 2,814,750
- ---------------------------------------------------------------
Perez Companc S.A.-Class B (Oil &
Gas-Refining & Marketing) 2,004,489 12,555,697
- ---------------------------------------------------------------
Telefonica de Argentina S.A.-ADR
(Telephone) 268,500 7,551,562
- ---------------------------------------------------------------
YPF S.A.-ADR (Oil-International
Integrated) 479,600 15,347,200
- ---------------------------------------------------------------
55,237,535
- ---------------------------------------------------------------
AUSTRALIA-0.48%
QBE Insurance Group Ltd.
(Insurance-Property-Casualty) 2,055,929 9,614,782
- ---------------------------------------------------------------
QBE Insurance Group Ltd.-Bonus
shares
(Insurance-Property-Casualty)(a) 513,982 2,342,248
- ---------------------------------------------------------------
11,957,030
- ---------------------------------------------------------------
</TABLE>
FS-5
<PAGE> 263
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
AUSTRIA-0.38%
VA Technologie A.G. (Engineering
& Construction) 53,200 $ 9,439,946
- ---------------------------------------------------------------
BELGIUM-0.74%
Barco Industries
(Manufacturing-Diversified) 41,000 7,909,040
- ---------------------------------------------------------------
COLRUYT S.A. (Retail-Food Chains) 8,800 4,720,923
- ---------------------------------------------------------------
UCB S.A.
(Manufacturing-Diversified) 1,650 5,701,352
- ---------------------------------------------------------------
18,331,315
- ---------------------------------------------------------------
BRAZIL-3.94%
Banco Bradesco S.A. (Banks-Major
Regional) 1,316,000 9,788,380
- ---------------------------------------------------------------
CESP-Companhia Energetica de Sao
Paulo (Electric Companies)(a) 65,000 4,068,212
- ---------------------------------------------------------------
Cia. Riograndense de
Telecomunicacoes-Pfd.
(Telephone) (Acquired 08/06/97;
Cost $181,844)(a)(b) 1,425 109,847
- ---------------------------------------------------------------
Cia. Riograndense de
Telecomunicacoes-Pfd.
(Telephone) 65,000 5,011,565
- ---------------------------------------------------------------
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar (Retail-Food Chains) 326,500 6,219,330
- ---------------------------------------------------------------
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar-ADR (Retail-Food Chains) 120,519 2,229,602
- ---------------------------------------------------------------
Companhia Energetica de Minas
Gerais (Electric Companies) 196,000 7,822,577
- ---------------------------------------------------------------
Companhia Paranaense de
Energia-Copel (Electric
Companies) 240,000 2,897,546
- ---------------------------------------------------------------
Companhia Paranaense de
Energia-Copel-ADR (Electric
Companies) 400,000 4,775,000
- ---------------------------------------------------------------
Companhia de Saneamento Basico do
Estado de Sao Paulo (Water
Utilities) 39,041 7,224,263
- ---------------------------------------------------------------
Eletricidade de Sao Paulo S.A.
(Electric Companies)(a) 13,600 2,319,198
- ---------------------------------------------------------------
Eletricidade de Sao Paulo S.A.
Rts. (Electric Companies)(a) 3,265 11,848
- ---------------------------------------------------------------
Multicanal Participacoes S.A.-ADR
(Broadcasting-Television, Radio &
Cable)(a) 315,000 1,949,063
- ---------------------------------------------------------------
Petroleo Brasileiro
S.A.-Petrobras (Oil &
Gas-Exploration & Production) 46,200 8,590,866
- ---------------------------------------------------------------
Telecomunicacoes de Sao Paulo
S.A.-TELESP-Pfd. (Telephone) 44,700 11,677,264
- ---------------------------------------------------------------
Telecomunicacoes Brasileiras
S.A.-Telebras-ADR (Telephone) 94,700 9,612,050
- ---------------------------------------------------------------
Uniao de Bancos Brasileiros
S.A.-GDR (Banks-Regional)(a) 278,200 7,580,950
- ---------------------------------------------------------------
Votorantim Celulose e Papel S.A.
(Paper & Forest Products) 259,500 6,192,975
- ---------------------------------------------------------------
98,080,536
- ---------------------------------------------------------------
CANADA-6.45%
ATI Technologies, Inc.
(Computers-Hardware)(a) 160,000 3,303,651
- ---------------------------------------------------------------
MARKET
SHARES VALUE
CANADA-(CONTINUED)
ATS Automation Tooling Systems,
Inc.
(Manufacturing-Diversified)
(Acquired 09/22/97; Cost
$2,432,112)(a)(b) 70,000 $ 2,446,163
- ---------------------------------------------------------------
ATS Automation Tooling Systems,
Inc.
(Manufacturing-Diversified)(a) 110,000 3,843,971
- ---------------------------------------------------------------
Biovail Corporation International
(Health Care-Drugs-Generic &
Other)(a) 160,000 4,620,000
- ---------------------------------------------------------------
Canadian Fracmaster Ltd. (Oil &
Gas-Exploration & Production) 155,000 2,557,030
- ---------------------------------------------------------------
Canadian Natural Resources Ltd.
(Oil & Gas-Exploration &
Production)(a) 345,000 10,036,542
- ---------------------------------------------------------------
CanWest Global Communications
Corp. (Broadcasting-Television,
Radio & Cable) 355,998 6,820,127
- ---------------------------------------------------------------
CGI Group, Inc.
(Services-Computer Systems)(a) 135,000 3,836,343
- ---------------------------------------------------------------
C-MAC Industries Inc.
(Electronics-Component
Distributors)(a) 200,000 2,909,143
- ---------------------------------------------------------------
Discreet Logic, Inc.
(Communications Equipment)(a) 175,000 3,423,438
- ---------------------------------------------------------------
Enerflex Systems Ltd.
(Manufacturing- Specialized) 96,000 2,724,660
- ---------------------------------------------------------------
Ensign Resource Service Group,
Inc. (Oil & Gas-Drilling &
Equipment) 200,000 7,287,047
- ---------------------------------------------------------------
Extendicare, Inc.-Class A (Health
Care-Long Term Care)(a) 350,000 5,389,009
- ---------------------------------------------------------------
Four Seasons Hotels, Inc.
(Lodging-Hotels) 85,000 2,816,547
- ---------------------------------------------------------------
Geac Computer Corporation Ltd.
(Services-Computer Systems)(a) 581,400 17,367,537
- ---------------------------------------------------------------
Gulf Canada Resources Ltd.
(Oil-International
Integrated)(a) 250,000 2,093,750
- ---------------------------------------------------------------
Hummingbird Communications Ltd.
(Computers-Software &
Services)(a) 72,000 2,567,141
- ---------------------------------------------------------------
Imax Corp. (Communications
Equipment)(a) 150,000 3,806,250
- ---------------------------------------------------------------
IPSCO, Inc. (Iron & Steel) 60,000 2,596,942
- ---------------------------------------------------------------
JDS Fitel Inc. (Manufacturing
Specialized)(a) 200,000 11,459,183
- ---------------------------------------------------------------
Leitch Technology Corp.
(Electronics-Instrumentation)
(Acquired 06/25/97; Cost
$376,739)(a)(b) 16,500 504,594
- ---------------------------------------------------------------
Leitch Technology Corp.
(Electronics-Instrumentation)(a) 147,000 4,495,477
- ---------------------------------------------------------------
Linamar Corp. (Machinery
Diversified) 58,000 3,656,508
- ---------------------------------------------------------------
MDS, Inc.-Class B (Health
Care-Specialized Services) 218,000 5,034,874
- ---------------------------------------------------------------
Mitel Corp. (Communications
Equipment)(a) 370,200 3,244,027
- ---------------------------------------------------------------
Newcourt Credit Group, Inc.
(Savings & Loan Companies) 120,000 4,150,850
- ---------------------------------------------------------------
Northern Telecom Ltd.
(Communications Equipment) 25,000 2,242,188
- ---------------------------------------------------------------
Philip Services Corp. (Waste
Management)(a) 200,000 3,500,000
- ---------------------------------------------------------------
</TABLE>
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<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Precision Drilling Corp. (Oil &
Gas-Drilling & Equipment)(a) 250,000 $ 7,687,500
- ---------------------------------------------------------------
Prudential Steel Ltd. (Oil &
Gas-Drilling & Equipment) 200,000 8,372,654
- ---------------------------------------------------------------
Royal Group Technologies Ltd.
(Manufacturing-Specialized)(a) 105,000 2,674,637
- ---------------------------------------------------------------
Sears Canada, Inc.
(Retail-Department Stores) 300,000 4,959,733
- ---------------------------------------------------------------
Shaw Industries Ltd. (Oil &
Gas-Exploration & Production) 14,200 574,307
- ---------------------------------------------------------------
Suncor, Inc. (Oil-International
Integrated) 210,000 7,561,997
- ---------------------------------------------------------------
160,563,820
- ---------------------------------------------------------------
CHILE-1.12%
Cia. de Telecomunicaciones de
Chile S.A.-ADR (Telephone) 287,300 7,972,575
- ---------------------------------------------------------------
Distribucion y Servicio D&S
S.A.-ADR (Retail-Food
Chains)(a) 650,000 11,415,625
- ---------------------------------------------------------------
Quinenco S.A.-ADR
(Financial-Diversified)(a) 580,900 8,495,663
- ---------------------------------------------------------------
27,883,863
- ---------------------------------------------------------------
DENMARK-0.56%
Bang & Olufsen Holding A/S-Class
B (Electronics-Component
Distributors) 90,000 5,487,721
- ---------------------------------------------------------------
Kobenhavns Lufthavne A/S
(Shipping) 35,000 4,188,199
- ---------------------------------------------------------------
Olicom A/S
(Computers-Networking)(a) 150,000 4,312,500
- ---------------------------------------------------------------
13,988,420
- ---------------------------------------------------------------
FINLAND-0.71%
KCI Konecranes
(Machinery-Diversified) 76,750 2,893,007
- ---------------------------------------------------------------
Hartwall OY A.B.
(Beverages-Alcoholic) 80,000 6,572,272
- ---------------------------------------------------------------
TT Tieto OY -Class B
(Computers-Software & Services) 74,000 8,296,525
- ---------------------------------------------------------------
17,761,804
- ---------------------------------------------------------------
FRANCE-1.91%
BERTRAND FAURE (Auto Parts &
Equipment) 110,000 6,636,328
- ---------------------------------------------------------------
Christian Dalloz
(Manufacturing-Diversified) 11,400 1,353,790
- ---------------------------------------------------------------
Compagnie Generale de Geophysique
S.A. (Services-Commercial &
Consumer)(a) 26,000 3,605,946
- ---------------------------------------------------------------
Coflexip S.A. (Metal Fabricators) 48,161 5,310,171
- ---------------------------------------------------------------
Coflexip S.A.-ADR (Metal
Fabricators) 15,900 874,500
- ---------------------------------------------------------------
Dassault Systemes S.A.-ADR
(Computers-Software & Services) 200,000 6,000,000
- ---------------------------------------------------------------
Grand Optical Photoservice
(Services- Commercial &
Consumer) 26,400 4,251,828
- ---------------------------------------------------------------
ISIS (Oil-International
Integrated) (Acquired 10/23/97;
Cost $2,222,817)(a)(b) 19,400 2,270,186
- ---------------------------------------------------------------
Labinal S.A. (Aerospace/Defense) 8,300 2,151,172
- ---------------------------------------------------------------
LDC S.A. (Foods) 7,500 1,209,206
- ---------------------------------------------------------------
MARKET
SHARES VALUE
FRANCE-(CONTINUED)
Le Carbone-Lorraine (Housewares) 9,100 $ 2,413,730
- ---------------------------------------------------------------
Moulinex (Household Furnishings &
Appliances)(a) 250,000 5,634,291
- ---------------------------------------------------------------
Penauille Polyservices
(Services-Facilities &
Environmental) 5,300 1,068,591
- ---------------------------------------------------------------
Vallourec S.A.
(Manufacturing-Diversified) 73,000 4,796,429
- ---------------------------------------------------------------
47,576,168
- ---------------------------------------------------------------
GERMANY-1.79%
BETA Systems Software A.G.
(Computers-Software &
Services)(Acquired 06/26/97;
Cost $289,738)(a)(b) 5,000 478,996
- ---------------------------------------------------------------
Boewe Systec A.G. (Office
Equipment & Supplies) 75,000 2,220,803
- ---------------------------------------------------------------
Continental A.G. (Auto Parts &
Equipment) 185,000 4,414,607
- ---------------------------------------------------------------
Fresenius A.G.-Pfd. (Health
Care-Medical Products &
Supplies) 26,000 4,392,835
- ---------------------------------------------------------------
Hugo Boss A.G.-Pfd.
(Textile-Apparel) 1,750 2,214,997
- ---------------------------------------------------------------
IWKA A.G. (Machinery-Diversified) 8,100 2,017,534
- ---------------------------------------------------------------
Plettac A.G.
(Manufacturing-Diversified) 10,000 1,817,285
- ---------------------------------------------------------------
Plettac A.G.-Rts.
(Manufacturing-Diversified)(a) 10,000 581
- ---------------------------------------------------------------
Porsche A.G. (Automobiles) 6,300 9,272,506
- ---------------------------------------------------------------
ProSieben Media A.G.-Pfd.
(Broadcasting-Television, Radio, &
Cable)(a) 54,000 2,649,287
- ---------------------------------------------------------------
SCHMALBACH LUBECA A.G.
(Containers-Metal & Glass) 20,000 3,715,853
- ---------------------------------------------------------------
Schwarz Pharma A.G. (Health
Care-Drugs-Generic & Other) 85,000 6,020,844
- ---------------------------------------------------------------
SKW Trostberg A.G.
(Chemicals-Diversified) 77,600 2,667,240
- ---------------------------------------------------------------
Vossloh A.G.
(Manufacturing-Specialized) 50,200 2,541,551
- ---------------------------------------------------------------
44,424,919
- ---------------------------------------------------------------
GREECE-0.12%
Titan Cement Co. S.A.
(Construction-Cement &
Aggregates) 60,000 2,932,041
- ---------------------------------------------------------------
HONG KONG-4.94%
Asia Satellite Telecommunications Holdings
Ltd.
(Telecommunications-Cellular/Wireless) 1,530,000 3,680,786
- ---------------------------------------------------------------
Asia Satellite Telecommunications
Holdings Ltd.-ADR
(Telecommunications-Cellular/Wireless) 177,300 4,144,389
- ---------------------------------------------------------------
China Resources Enterprise Ltd.
(Manufacturing-Diversified) 5,414,000 14,845,347
- ---------------------------------------------------------------
China Telecom (Hong Kong) Ltd.
ADR
(Telecommunications-Cellular &
Wireless)(a) 202,000 6,539,750
- ---------------------------------------------------------------
Cosco Pacific Ltd.
(Financial-Diversified) 9,100,000 10,593,029
- ---------------------------------------------------------------
Esprit Asia Holdings Ltd.
(Retail-Specialty- Apparel) 10,520,000 3,741,835
- ---------------------------------------------------------------
</TABLE>
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<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HONG KONG-(CONTINUED)
First Pacific Company Ltd.
(Distributors-Food & Health) 13,326,033 $ 8,402,562
- ---------------------------------------------------------------
Hong Kong & China Gas Co. Ltd.
(Natural Gas) 6,723,840 12,697,156
- ---------------------------------------------------------------
Hutchison Whampoa Ltd.
(Retail-Food Chains) 2,255,000 15,604,023
- ---------------------------------------------------------------
Johnson Electric Holdings Ltd.
(Electrical Equipment) 4,968,000 13,558,145
- ---------------------------------------------------------------
New World Infrastructure Ltd.
(Services-Commercial &
Consumer)(a) 3,080,000 6,095,066
- ---------------------------------------------------------------
Shanghai Industrial Holdings Ltd.
(Manufacturing-Diversified) 2,532,000 11,265,705
- ---------------------------------------------------------------
South China Morning Post Ltd.
(Publishing-Newspapers) 8,168,000 7,078,264
- ---------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Land Development) 625,000 4,607,773
- ---------------------------------------------------------------
122,853,830
- ---------------------------------------------------------------
HUNGARY-0.19%
Richter Gedeon Rt.-GDR (Health
Care-Drugs-Major
Pharmaceuticals) 50,000 4,650,000
- ---------------------------------------------------------------
INDONESIA-0.58%
Gulf Indonesia Resources Ltd.
(Oil-International
Integrated)(a) 310,000 6,510,000
- ---------------------------------------------------------------
PT Indosat (Telephone) 808,000 1,821,082
- ---------------------------------------------------------------
PT Indosat-ADR (Telephone) 87,500 2,072,656
- ---------------------------------------------------------------
PT Ramayana Lestari Sentosa
(Retail- Department Stores) 2,324,000 3,932,427
- ---------------------------------------------------------------
14,336,165
- ---------------------------------------------------------------
ITALY-0.26%
Autogrill S.p.A (Restaurants)(a) 775,000 3,556,852
- ---------------------------------------------------------------
Gewiss S.p.A. (Electrical
Equipment) 150,000 2,923,804
- ---------------------------------------------------------------
6,480,656
- ---------------------------------------------------------------
IRELAND-0.72%
CBT Group PLC-ADR
(Computers-Software &
Services)(a) 7,600 583,300
- ---------------------------------------------------------------
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 200,000 9,975,000
- ---------------------------------------------------------------
Saville Systems Ireland
PLC-ADR(a)(Services- Data
Processing) 125,000 7,468,750
- ---------------------------------------------------------------
18,027,050
- ---------------------------------------------------------------
ISRAEL-2.60%
Blue Square-Israel Ltd.-ADR
(Retail-Food Chains)(a) 550,000 6,393,750
- ---------------------------------------------------------------
Crystal Systems Solutions
(Computers- Software &
Services)(a) 110,000 2,310,000
- ---------------------------------------------------------------
ESC Medical Systems Ltd. (Health
Care- Medical Products &
Supplies)(a) 300,000 11,775,000
- ---------------------------------------------------------------
MARKET
SHARES VALUE
ISRAEL-(CONTINUED)
NICE-Systems Ltd. ADR
(Communications Equipment)(a) 113,000 $ 5,268,625
- ---------------------------------------------------------------
Orbotech, Ltd.
(Computers-Software & Services) 138,000 5,899,500
- ---------------------------------------------------------------
Panamerican Beverages, Inc.-Class
A (Beverages-Non-Alcoholic) 574,400 17,806,400
- ---------------------------------------------------------------
Tecnomatix Technologies Ltd.
(Computers-Software &
Services)(a) 87,500 2,701,563
- ---------------------------------------------------------------
Teledata Communication Ltd.
(Communications Equipment)(a) 70,100 2,173,100
- ---------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care-Drugs-Generic & Other) 198,500 9,279,875
- ---------------------------------------------------------------
Tower Semiconductor Ltd.
(Electronics-Semiconductors) 100,000 1,175,000
- ---------------------------------------------------------------
64,782,812
- ---------------------------------------------------------------
JAPAN-2.78%
Aderans Co. Ltd. (Personal Care) 394,000 10,607,063
- ---------------------------------------------------------------
Bellsystem 24, Inc.
(Services-Commercial &
Consumer) 48,000 6,620,690
- ---------------------------------------------------------------
Capcom Co., Ltd.
(Computers-Software & Services) 201,000 3,340,257
- ---------------------------------------------------------------
Circle K Japan Co. Ltd.
(Retail-Food Chains) 222,000 11,399,751
- ---------------------------------------------------------------
FCC Co. Ltd. (Auto Parts &
Equipment) 143,110 2,259,319
- ---------------------------------------------------------------
Fujitsu Denso Ltd. (Electrical
Equipment) 340,000 5,311,175
- ---------------------------------------------------------------
Hokuto Corp. (Agricultural
Products) 185,250 5,248,878
- ---------------------------------------------------------------
Noritsu Koki Co. Ltd.
(Photography/Imaging) 315,600 10,489,406
- ---------------------------------------------------------------
77 Bank (Banks-Major Regional) 770,000 7,293,727
- ---------------------------------------------------------------
Shohkoh Fund & Co.
(Financial-Diversified) 20,600 6,675,529
- ---------------------------------------------------------------
69,245,795
- ---------------------------------------------------------------
MEXICO-4.62%
Cifra S.A. de C.V.
(Retail-General Merchandise)(a) 6,454,900 11,162,320
- ---------------------------------------------------------------
Coca-Cola Femsa S.A.-ADR
(Beverages-Non-Alcoholic) 363,700 15,707,294
- ---------------------------------------------------------------
Corporacion Interamericana de
Entretenimiento S.A.
(Entertainment)(a) 683,000 3,958,712
- ---------------------------------------------------------------
Fomento Economico Mexicano, S.A.
de C.V.-Class B
(Beverages-Alcoholic) 2,852,700 20,072,665
- ---------------------------------------------------------------
Grupo Financiero Banamex Accival,
S.A. de C.V.
(Financial-Diversified)(a) 5,850,000 11,581,395
- ---------------------------------------------------------------
Grupo Industrial Maseca S.A. de
C.V.-Class B (Foods) 5,844,600 5,645,945
- ---------------------------------------------------------------
Grupo Modelo S.A. de C.V.
(Beverages- Alcoholic) 1,056,000 7,820,823
- ---------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 424,700 13,165,700
- ---------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de
C.V.-Class A (Paper & Forest
Products) 2,460,500 10,783,945
- ---------------------------------------------------------------
</TABLE>
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<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO-(CONTINUED)
Organizacion Soriana S.A. de C.V.
(Retail-Department Stores) 2,900,000 $ 9,649,374
- ---------------------------------------------------------------
Tubos de Acero de Mexico S.A.
(Oil & Gas-Drilling &
Equipment)(a) 125,000 2,523,438
- ---------------------------------------------------------------
TV Azteca, S.A. de C.V.-ADR
(Broadcasting-Television, Radio &
Cable)(a) 156,100 2,985,413
- ---------------------------------------------------------------
115,057,024
- ---------------------------------------------------------------
NETHERLANDS-4.43%
Aalberts Industries N.V.
(Manufacturing-Diversified) 115,000 3,014,937
- ---------------------------------------------------------------
Beter Bed Holding N.V. (Household
Furnishings & Appliances) 115,000 2,505,537
- ---------------------------------------------------------------
Brunel International N.V.
(Services- Employment)
(Acquired 06/19/97; Cost
$1,997,948)(a)(b) 95,000 2,006,181
- ---------------------------------------------------------------
CMG PLC (Computers-Software &
Services) 517,200 12,174,113
- ---------------------------------------------------------------
Draka Holding N.V. (Metal
Fabricators) 60,000 2,898,790
- ---------------------------------------------------------------
Fugro N.V. (Services-Commercial &
Consumer) 180,000 6,350,760
- ---------------------------------------------------------------
Gamma Holding N.V.
(Textiles-Apparel) 53,000 2,839,042
- ---------------------------------------------------------------
Getronics N.V.
(Computers-Software & Services) 300,000 9,904,713
- ---------------------------------------------------------------
IHC Caland N.V.
(Manufacturing-Specialized) 114,000 7,010,868
- ---------------------------------------------------------------
Internatio-Muller N.V.
(Manufacturing-Diversified) 288,000 9,152,511
- ---------------------------------------------------------------
Koninklijke Ahrend Groep N.V.
(Household Furnishings &
Appliances) 210,000 6,998,197
- ---------------------------------------------------------------
Koninklijke Van Ommeren N.V.
(Shipping) 122,000 4,367,242
- ---------------------------------------------------------------
NORIT N.V. (Chemicals Specialty) 200,000 3,224,311
- ---------------------------------------------------------------
Nutreco Holding N.V.
(Agricultural Products)(a) 235,000 5,277,363
- ---------------------------------------------------------------
Oce-Van Der Grinten N.V. (Office
Equipment & Supplies) 67,000 7,643,832
- ---------------------------------------------------------------
Ordina Beheer N.V.-W.I.
(Services-Commercial &
Consumer)(a) 400,000 6,469,225
- ---------------------------------------------------------------
Randstad Holdings N.V.
(Services-Commercial &
Consumer) 292,500 11,675,895
- ---------------------------------------------------------------
Simac Techniek N.V.
(Electronics-Instrumentation) 25,000 3,197,270
- ---------------------------------------------------------------
Vedior N.V. (Services-Commercial & Consumer)
(Acquired 06/05/97; Cost
$1,500,539)(a)(b) 75,000 1,541,333
- ---------------------------------------------------------------
Vedior N.V. (Services-Commercial
& Consumer) 100,000 2,055,112
- ---------------------------------------------------------------
110,307,232
- ---------------------------------------------------------------
NORWAY-2.56%
ASK A.S.A. (Computer
Peripherals)(a) 405,000 3,627,785
- ---------------------------------------------------------------
Blom A.S.A. (Services-Facilities
& Environmental)(a) 244,000 2,412,933
- ---------------------------------------------------------------
MARKET
SHARES VALUE
NORWAY-(CONTINUED)
Blom A.S.A.-Rts.
(Services-Facilities &
Environmental)(a) 34,268 $ 4,911
- ---------------------------------------------------------------
Det Sondenfjelds-Norske
Dampskibsselskab (Oil &
Gas-Refining & Marketing)(a) 250,000 5,625,305
- ---------------------------------------------------------------
Ekornes A.S.A. (Household
Furnishings & Appliances) 300,000 2,751,741
- ---------------------------------------------------------------
Farstad Shipping A.S.A.
(Shipping) 406,000 2,612,635
- ---------------------------------------------------------------
Fred. Olsen Energy A.S.A. (Oil &
Gas-Drilling & Equipment)
(Acquired 10/07/97; Cost
$3,100,584)(a)(b) 152,900 3,856,795
- ---------------------------------------------------------------
Merkantildata A.S.A.
(Services-Commercial &
Consumer) 150,000 5,052,025
- ---------------------------------------------------------------
NetCom A.S.A.
(Cellular/Wireless
Telecommunications) (a) 150,000 3,633,158
- ---------------------------------------------------------------
Saevik Supply A.S.A.
(Oil-International
Integrated)(a) 160,000 3,668,988
- ---------------------------------------------------------------
Seateam Technology A.S.A.
(Oil & Gas-Exploration &
Production)(a) 150,000 3,009,717
- ---------------------------------------------------------------
Smedvig A.S.A.-Class A (Oil &
Gas-Drilling & Equipment) 160,000 4,838,479
- ---------------------------------------------------------------
Smedvig A.S.A.-Class B (Oil &
Gas-Drilling & Equipment) 140,000 4,133,345
- ---------------------------------------------------------------
Tandberg A.S.A. (Communications
Equipment)(a) 110,000 1,734,170
- ---------------------------------------------------------------
Tandberg Television A.S.A.
(Communications Equipment)(a) 440,000 4,225,070
- ---------------------------------------------------------------
Tomra Systems A.S.A.
(Manufacturing Specialized) 486,000 12,537,621
- ---------------------------------------------------------------
63,724,678
- ---------------------------------------------------------------
PERU-0.47%
Telefonica del Peru S.A.-ADR
(Telephone) 486,500 9,608,375
- ---------------------------------------------------------------
Telefonica del Peru S.A.-Class B
(Telephone) 1,026,000 2,044,442
- ---------------------------------------------------------------
11,652,817
- ---------------------------------------------------------------
PHILIPPINES-0.98%
DMCI Holdings Inc.
(Homebuilding)(a) 23,400,000 1,848,236
- ---------------------------------------------------------------
International Container Terminal
Services, Inc. (Air Freight)(a) 12,225,000 2,413,963
- ---------------------------------------------------------------
Ionics Circuit Inc.
(Electronics-Component
Distributors) 6,040,000 3,535,402
- ---------------------------------------------------------------
Metro Pacific Corp.
(Manufacturing-Diversified) 36,247,820 2,413,113
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co. (Telephone) 194,920 4,811,142
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co.-ADR (Telephone) 159,400 3,865,450
- ---------------------------------------------------------------
SM Prime Holdings Inc. (Land
Development) 32,000,000 5,596,615
- ---------------------------------------------------------------
24,483,923
- ---------------------------------------------------------------
</TABLE>
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<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PORTUGAL-1.51%
Cimpor-Cimentos de Portugal S.A.
(Construction-Cement &
Aggregates) 250,000 $ 6,326,415
- ---------------------------------------------------------------
Electricidade de Portugal,
S.A.-ADR (Electric
Companies)(a) 158,500 5,537,594
- ---------------------------------------------------------------
Jeronimo Martins & Filho, S.A.
(Retail General Merchandise) 56,000 3,662,212
- ---------------------------------------------------------------
Portugal Telecom S.A. (Telephone) 265,000 10,872,761
- ---------------------------------------------------------------
Semapa (Building Materials) 110,000 2,539,664
- ---------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.
(Cellular/Wireless
Telecommunications) (a) 34,900 3,149,725
- ---------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.-ADR
(Cellular/Wireless
Telecommunications) (a) 60,000 5,425,078
- ---------------------------------------------------------------
37,513,449
- ---------------------------------------------------------------
SINGAPORE-0.80%
City Developments Ltd. (Land
Development) 789,000 3,306,286
- ---------------------------------------------------------------
Creative Technology Limited
(Computers-Peripherals)(a) 100,000 2,543,750
- ---------------------------------------------------------------
DBS Land Ltd. (Land Development) 3,205,000 5,453,587
- ---------------------------------------------------------------
Overseas Union Bank Ltd.
(Banks-Major Regional) 1,236,000 4,120,000
- ---------------------------------------------------------------
Wing Tai Holdings Ltd. (Land
Development) 3,600,000 4,571,429
- ---------------------------------------------------------------
19,995,052
- ---------------------------------------------------------------
SOUTH AFRICA-0.54%
Dimension Data Holdings Ltd.
(Computers-Software &
Services)(a) 1,500,000 6,233,766
- ---------------------------------------------------------------
Persetel Holdings Ltd.
(Computers-Software & Services) 760,000 4,777,143
- ---------------------------------------------------------------
Protea Furnishers Ltd. (Household
Furnishings & Appliances) 4,700,000 2,441,559
- ---------------------------------------------------------------
13,452,468
- ---------------------------------------------------------------
SPAIN-1.12%
Azkoyen S.A.
(Manufacturing-Specialized) 17,000 1,870,970
- ---------------------------------------------------------------
Corp. Financiera Reunida, S.A.
(Investment Management)(a) 1,475,000 7,908,847
- ---------------------------------------------------------------
Mapfre Vida (Insurance-Life &
Health) 54,000 3,303,774
- ---------------------------------------------------------------
Prosegur, CIA de Seguridad S.A.
(Services- Commercial &
Consumer) 400,000 4,482,024
- ---------------------------------------------------------------
Tele Pizza, S.A. (Restaurants)(a) 100,000 6,867,395
- ---------------------------------------------------------------
Vidrala S.A.
(Manufacturing-Specialized) 80,000 3,514,127
- ---------------------------------------------------------------
27,947,137
- ---------------------------------------------------------------
SWEDEN-1.27%
AB Lindex
(Retail-Specialty-Apparel) 130,000 3,662,265
- ---------------------------------------------------------------
Allgon A.B.-Class B (Electronic
Components/Miscellaneous) 57,000 913,230
- ---------------------------------------------------------------
MARKET
SHARES VALUE
SWEDEN-(CONTINUED)
Assa Abloy A.B.-Class B (Metal
Fabricators) 230,000 $ 5,251,071
- ---------------------------------------------------------------
B.T. Industries A.B.
(Machinery-Diversified) 130,000 2,777,073
- ---------------------------------------------------------------
Europolitan Holdings A.B.
(Telecommunications-Cellular &
Wireless)(a) 94,400 3,377,775
- ---------------------------------------------------------------
Hemkopskedjan A.B. (Retail-Food
Chains)(a)(b) 100,000 1,034,727
- ---------------------------------------------------------------
Hoganas A.B. (Metals Mining) 170,000 6,309,831
- ---------------------------------------------------------------
Munters A.B.(Services-Facilities
& Environmental)(a) (b) 185,000 1,877,195
- ---------------------------------------------------------------
Scandic Hotels A.B.
(Lodging-Hotels)(a) 39,500 896,541
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-ADR (Communications
Equipment) 122,360 5,414,430
- ---------------------------------------------------------------
31,514,138
- ---------------------------------------------------------------
SWITZERLAND-2.33%
Ares-Serono Group-Class B (Health
Care-Drugs-Generic & Other) 4,000 7,570,077
- ---------------------------------------------------------------
Georg Fischer A.G. (Auto Parts &
Equipment) 1,800 2,398,715
- ---------------------------------------------------------------
Gurit-Heberlein A.G. (Chemicals
Diversified) 1,400 4,424,210
- ---------------------------------------------------------------
Kuoni Reisen A.G.
(Services-Commercial &
Consumer) 1,600 6,056,061
- ---------------------------------------------------------------
Mikron Holding A.G.
(Machinery-Diversified)(a) 17,000 2,828,781
- ---------------------------------------------------------------
Mikron Holding A.G. Wts.,
expiring 12/10/97
(Machinery-Diversified)(a) 17,000 29,138
- ---------------------------------------------------------------
Rieter Holdings Ltd.
(Machinery-Diversified) 24,500 10,585,610
- ---------------------------------------------------------------
Saurer A.G.
(Machinery-Diversified) 18,500 12,234,244
- ---------------------------------------------------------------
Selecta Group (The) (Retail-Speciality)
(Acquired 05/12/97; Cost
$2,339,099)(a)(b) 16,150 2,260,596
- ---------------------------------------------------------------
Sika Finanz A.G. (Engineering &
Construction) 16,500 4,854,847
- ---------------------------------------------------------------
Sulzer Medica (Health
Care-Medical Products &
Supplies)(a) 120,600 3,226,050
- ---------------------------------------------------------------
TAG Heuer International S.A.
(Consumer Jewelry, Novelties &
Gift)(a) 13,900 1,588,287
- ---------------------------------------------------------------
58,056,616
- ---------------------------------------------------------------
TAIWAN-0.11%
ASE Test Ltd.
(Electronics-Semiconductors)(a) 49,100 2,688,225
- ---------------------------------------------------------------
UNITED KINGDOM-7.55%
Aegis Group PLC
(Services-Advertising/Marketing) 6,000,000 6,090,233
- ---------------------------------------------------------------
Airtours PLC (Services-Commercial
& Consumer) 815,000 16,134,922
- ---------------------------------------------------------------
Alexon Group PLC
(Textiles-Apparel)(a) 555,000 2,206,828
- ---------------------------------------------------------------
</TABLE>
FS-10
<PAGE> 268
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Amersham International PLC
(Health Care-Drugs-Generic &
Other) 245,000 $ 9,423,293
- ---------------------------------------------------------------
Avis Europe PLC
(Services-Commercial &
Consumer) (Acquired 03/26/97;
Cost $2,977,263)(b) 1,484,550 3,711,149
- ---------------------------------------------------------------
Blacks Leisure Group PLC (Retail
General Merchandise) 200,000 1,469,709
- ---------------------------------------------------------------
British-Borneo Petroleum
Syndicate PLC (Oil &
Gas/Exploration & Production) 1,080,000 8,624,977
- ---------------------------------------------------------------
Capita Group PLC (Services
Commercial & Consumer) 570,000 2,945,458
- ---------------------------------------------------------------
Compass Group PLC (Services
Commercial & Consumer) 335,000 3,571,804
- ---------------------------------------------------------------
Danka Business Systems PLC-ADR
(Office Equipment & Supplies) 114,700 4,243,900
- ---------------------------------------------------------------
Dewhirst Group PLC
(Textiles-Apparel) 404,000 1,721,640
- ---------------------------------------------------------------
Dr. Solomon's Group PLC-ADR
(Computers-Software &
Services)(a) 109,600 3,356,500
- ---------------------------------------------------------------
FirstBus PLC (Shipping) 1,350,000 4,552,575
- ---------------------------------------------------------------
Games Workshop Group PLC (Leisure
Time- Products) 165,000 1,896,277
- ---------------------------------------------------------------
Goode Durrant PLC (Manufacturing
Diversified) 214,000 1,784,421
- ---------------------------------------------------------------
Graseby PLC (Electronics
Instrumentation) 425,000 1,493,827
- ---------------------------------------------------------------
Holliday Chemical Holdings PLC
(Chemicals Specialty) 675,000 2,151,714
- ---------------------------------------------------------------
Independent Insurance Group PLC
(Insurance-Property-Casualty) 185,000 3,569,413
- ---------------------------------------------------------------
Jarvis Hotels PLC
(Lodging-Hotels) 675,000 1,653,423
- ---------------------------------------------------------------
JBA Holdings PLC (Computer
Software & Services) 150,000 2,378,211
- ---------------------------------------------------------------
J.D. Wetherspoon PLC (Leisure
Time- Products) 105,000 2,853,853
- ---------------------------------------------------------------
JJB Sports PLC (Retail-General
Merchandise) 430,000 4,112,165
- ---------------------------------------------------------------
Kwik-Fit Holdings PLC
(Retail-General Merchandise) 880,500 4,778,932
- ---------------------------------------------------------------
Manchester United PLC (Leisure
Time-Products) 500,000 5,360,411
- ---------------------------------------------------------------
Mayflower Corp. PLC (The)
(Auto Parts & Equipment) 890,000 2,971,463
- ---------------------------------------------------------------
Micro Focus Group PLC ADR
(Computer Software/Services)(a) 80,000 2,685,000
- ---------------------------------------------------------------
Millennium & Copthorne Hotels PLC
(Lodging-Hotels) 350,000 2,266,640
- ---------------------------------------------------------------
Misys PLC (Services-Commercial &
Consumer) 500,000 12,604,097
- ---------------------------------------------------------------
Parity PLC (Services Commercial &
Consumer) 350,000 3,388,216
- ---------------------------------------------------------------
PizzaExpress PLC (Restaurants) 387,000 4,876,162
- ---------------------------------------------------------------
MARKET
SHARES VALUE
UNITED KINGDOM-(CONTINUED)
Powerscreen International PLC
(Machinery-Diversified) 515,000 $ 6,035,328
- ---------------------------------------------------------------
Provident Financial PLC (Consumer
Finance) 1,000,000 11,576,475
- ---------------------------------------------------------------
Sage Group PLC (The)
(Computers-Software & Services) 300,000 3,623,940
- ---------------------------------------------------------------
Scholl PLC (Health
Care-Diversified) 200,000 934,507
- ---------------------------------------------------------------
Select Appointments Holdings PLC
(Services-Commercial &
Consumer) 300,000 2,753,187
- ---------------------------------------------------------------
SEMA Group PLC (Manufacturing
Diversified) 500,000 11,232,536
- ---------------------------------------------------------------
Senior Engineering Group PLC
(Metal Fabricators) 1,100,000 3,063,572
- ---------------------------------------------------------------
Stagecoach Holdings PLC
(Shipping) 790,000 9,662,330
- ---------------------------------------------------------------
Stanley Leisure PLC (Leisure
Time-Products) 425,000 2,185,478
- ---------------------------------------------------------------
Taylor Woodrow PLC (Engineering &
Construction) 1,450,000 4,451,910
- ---------------------------------------------------------------
TBI PLC (Land Development) 500,000 721,433
- ---------------------------------------------------------------
Weir Group PLC (The)
(Machinery-Diversified) 600,000 2,793,454
- ---------------------------------------------------------------
187,911,363
- ---------------------------------------------------------------
VENEZUELA-0.29%
Cia. Anonima Nacional Telefonos
de Venezuela
(Telecommunications-Long
Distance) 165,000 7,218,750
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity
Interests 1,520,076,577
- ---------------------------------------------------------------
DOMESTIC PREFERRED STOCK-0.23%
LODGING (HOTELS)-0.23%
Royal Caribbean Cruises
Ltd.-$3.63 Conv. Pfd. 76,000 5,776,000
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE CORPORATE NOTES-0.15%
ADVERTISING/BROADCASTING-0.06%
Jacor Communications Inc., Conv.
Sr. LYON, 5.50%, 06/12/11(c) $ 2,350,000 1,439,210
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.09%
Loews Corp., Conv. Sub. Notes,
3.125%, 09/15/07 2,100,000 2,396,415
- ---------------------------------------------------------------
Total Domestic Convertible
Corporate
Notes 3,835,625
- ---------------------------------------------------------------
FOREIGN CONVERTIBLE CORPORATE BONDS-0.12%
HONG KONG-0.12%
New World Infrastructure Ltd.
(Services-Commercial &
Consumer), Conv. Bonds, 5.00%,
07/15/01 (Acquired
04/10/97-04/11/97; Cost
$2,172,563)(b) 1,850,000 1,748,250
- ---------------------------------------------------------------
</TABLE>
FS-11
<PAGE> 269
<TABLE>
<CAPTION>
PRINCIPAL MARKET
FOREIGN CONVERTIBLE CORPORATE AMOUNT VALUE
BONDS-(CONTINUED)
<S> <C> <C>
New World Infrastructure Ltd.
(Services-Commercial &
Consumer), Conv. Bonds, 5.00%,
07/15/01 $ 1,170,000 $ 1,105,650
- ---------------------------------------------------------------
Total Foreign Convertible
Corporate
Bonds 2,853,900
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
REPURCHASE AGREEMENT(D)-5.40%
SBC Warburg Inc., 5.40%,
11/03/97(e) $134,491,340 $ 134,491,340
- ---------------------------------------------------------------
TOTAL INVESTMENTS-98.87% 2,461,010,253
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.13% 28,169,726
- ---------------------------------------------------------------
NET ASSETS-100.00% 2,489,179,979
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
GDR - Global Depository Receipt
LYON - Liquid Yield Option Notes
Pfd. - Preferred
Rts. - Rights
Sr. - Senior
Sub. - Subordinated
Wts. - Warrants
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at 10/31/97 was $20,934,090,
which represented 0.84% of the Fund's net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of the
original issue discount.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts, private accounts and certain
non-registered investment companies managed by the investment advisor or its
affiliates.
(e) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$300,135,000. Collateralized by $295,632,000 U.S. Government obligations,
5.25% to 8.875% due 12/31/97 to 08/15/02 with an aggregate market value at
10/31/97 of $306,259,515.
See Notes to Financial Statements.
FS-12
<PAGE> 270
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,987,194,427) $2,461,010,253
- ------------------------------------------------------------
Foreign currencies, at market value (cost
$19,159,068) 19,307,806
- ------------------------------------------------------------
Receivables for:
Investments sold 11,150,791
- ------------------------------------------------------------
Capital stock sold 18,652,156
- ------------------------------------------------------------
Dividends and interest 1,503,948
- ------------------------------------------------------------
Investment for deferred compensation plan 17,360
- ------------------------------------------------------------
Other assets 69,112
- ------------------------------------------------------------
Total assets 2,511,711,426
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 11,143,700
- ------------------------------------------------------------
Capital stock reacquired 6,695,997
- ------------------------------------------------------------
Deferred compensation 17,360
- ------------------------------------------------------------
Accrued advisory fees 1,984,585
- ------------------------------------------------------------
Accrued administrative services fees 8,156
- ------------------------------------------------------------
Accrued directors' fees 6,600
- ------------------------------------------------------------
Accrued distribution fees 1,704,146
- ------------------------------------------------------------
Accrued transfer agent fees 542,373
- ------------------------------------------------------------
Accrued operating expenses 428,530
- ------------------------------------------------------------
Total liabilities 22,531,447
- ------------------------------------------------------------
Net assets applicable to shares outstanding $2,489,179,979
============================================================
NET ASSETS:
Class A $1,242,504,885
============================================================
Class B $1,241,999,324
============================================================
Class C $ 4,675,770
============================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
CLASS A:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 71,884,207
============================================================
CLASS B:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 73,069,124
============================================================
CLASS C:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 275,023
============================================================
CLASS A:
Net asset value and redemption price per
share $ 17.28
============================================================
Offering price per share:
(Net asset value $17.28 divided by 95.25%)$ 18.14
============================================================
CLASS B:
Net asset value and offering price per
share $ 17.00
============================================================
CLASS C:
Net asset value and offering price per
share $ 17.00
============================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,998,577 foreign
withholding tax) $ 17,106,552
- -------------------------------------------------------------
Interest 2,731,848
- -------------------------------------------------------------
Total investment income 19,838,400
- -------------------------------------------------------------
EXPENSES:
Advisory fees 19,996,061
- -------------------------------------------------------------
Administrative services fees 109,161
- -------------------------------------------------------------
Directors' fees 20,096
- -------------------------------------------------------------
Distribution fees-Class A 5,877,002
- -------------------------------------------------------------
Distribution fees-Class B 11,173,566
- -------------------------------------------------------------
Distribution fees-Class C 6,233
- -------------------------------------------------------------
Custodian fees 1,728,899
- -------------------------------------------------------------
Transfer agent fees-Class A 2,809,254
- -------------------------------------------------------------
Transfer agent fees-Class B 3,311,554
- -------------------------------------------------------------
Transfer agent fees-Class C 1,951
- -------------------------------------------------------------
Other 1,293,733
- -------------------------------------------------------------
Total expenses 46,327,510
- -------------------------------------------------------------
Less: Expenses paid indirectly (61,449)
- -------------------------------------------------------------
Net expenses 46,266,061
- -------------------------------------------------------------
Net investment income (loss) (26,427,661)
- -------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) on sales of:
Investment securities (60,146,645)
- -------------------------------------------------------------
Foreign currencies (1,044,469)
- -------------------------------------------------------------
(61,191,114)
- -------------------------------------------------------------
Net unrealized appreciation of:
Investment securities 272,184,029
- -------------------------------------------------------------
Foreign currencies 217,562
- -------------------------------------------------------------
272,401,591
- -------------------------------------------------------------
Net gain (loss) on investment securities
and foreign
currencies 211,210,477
- -------------------------------------------------------------
Net increase in net assets resulting from
operations $184,782,816
=============================================================
</TABLE>
See Notes to Financial Statements.
FS-13
<PAGE> 271
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (26,427,661) $ (8,221,031)
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities
and foreign currencies (61,191,114) (32,408,407)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 272,401,591 171,434,202
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 184,782,816 130,804,764
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized capital gains:
Class A -- (766,625)
- -----------------------------------------------------------------------------------------------
Class B -- (520,242)
- -----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 221,978,537 657,118,189
- -----------------------------------------------------------------------------------------------
Class B 350,877,196 635,669,948
- -----------------------------------------------------------------------------------------------
Class C 5,007,454 --
- -----------------------------------------------------------------------------------------------
Net increase in net assets 762,646,003 1,422,306,034
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,726,533,976 304,227,942
- -----------------------------------------------------------------------------------------------
End of period $2,489,179,979 $1,726,533,976
===============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $2,116,538,293 $1,557,038,579
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (36,158) (14,054)
- -----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities and
foreign currencies (101,414,669) (32,181,471)
- -----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 474,092,513 201,690,922
- -----------------------------------------------------------------------------------------------
$2,489,179,979 $1,726,533,976
===============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Aggressive Growth 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 operating
series portfolios: AIM Global Aggressive Growth Fund, AIM Global Growth Fund,
AIM Global Income Fund and AIM International Equity Fund. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
and Class C 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 above-average long-term growth of capital appreciation. The Fund seeks
to achieve its objective by investing in a portfolio of global equity securities
including securities of selected companies with relatively small market
capitalization.
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 -- A security listed or traded on an exchange (except
convertible bonds) 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. If a mean is not
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. 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. Debt obligations
(including convertible bonds) are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may be
determined
FS-14
<PAGE> 272
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate and maturity date.
Securities for which market quotations are 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, 1997,
capital was decreased by $18,363,473, undistributed net investment income was
increased by $26,405,557 and undistributed net realized gains decreased by
$8,042,084 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. The Fund has a capital loss
carryforward of $91,801,587 (which may be carried forward to offset future
taxable capital gains, if any) which expires, if not previously utilized,
through the year 2005.
F. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 0.90% of the first $1
billion of the Fund's average daily net assets, plus 0.85% of the Fund's average
daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1997, AIM was
reimbursed $109,161 for such services.
The Fund, pursuant to a transfer agency and services 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, 1997,
AFS was paid $3,429,751 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class
A, Class B and Class C 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 and Class C shares (the "Class A and Class C Plan"), and the Fund's
Class B shares (the "Class B Plan"), (collectively, the "Plans"). The Fund,
pursuant to the Class A and Class C Plan, pays AIM Distributors compensation at
the annual rate of 0.50% of the average daily net assets of Class A shares and
1.00% of the average daily net assets of Class C shares. The Class A and Class C
Plan is designed to compensate AIM Distributors for certain promotional and
other sales related costs, and to implement a dealer incentive program which
provides for periodic payments to selected dealers who furnish continuing
personal shareholder services to their customers who purchase and own Class A or
Class C shares of the Fund. The Fund, pursuant to the Class B Plan, will pay 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 pays 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-
FS-15
<PAGE> 273
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, 1997, Class A shares and
Class B shares and the period August 4, 1997 through October 31, 1997 Class C
shares paid AIM Distributors $5,877,002, $11,173,566 and $6,233, respectively,
as compensation under the Plans.
AIM Distributors received commissions of $2,200,552 from the sales of the
Class A shares of the Fund during the year ended October 31, 1997. 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, 1997, AIM Distributors received commissions of $133,018 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, 1997, the Fund paid legal fees of $8,986 for
services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced the
Fund's expenses by $8,359 for the year ended October 31, 1997. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
custodian fees of $29,827 and $23,263, respectively, under expense offset
arrangements. The effect of the above arrangements resulted in a reduction of
the Fund's total expenses of $61,449 during the year ended October 31, 1997.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-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) $500,000,000 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 15, 1997, the Fund was
limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by
its prospectus for borrowings. During the year ended October 31, 1997, 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 0.05% 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 6-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, 1997 was
$1,686,305,972 and $1,247,124,354, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1997, on a tax basis, is as follows.
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 600,581,618
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (136,378,875)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 464,202,743
=========================================================
</TABLE>
Cost of investments for tax purposes is $1,996,807,510.
NOTE 7-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- --------------
<S> <C> <C> <C> <C>
Sold:
Class A 41,562,019 $ 712,389,030 50,205,954 $ 748,519,743
- --------------------- ----------- ------------- ---------- --------------
Class B 31,043,322 516,329,374 45,280,451 673,914,740
- --------------------- ----------- ------------- ---------- --------------
Class C* 281,009 5,113,170 -- --
- --------------------- ----------- ------------- ---------- --------------
Issued as
reinvestment of
dividends:
Class A -- -- 56,549 727,221
- --------------------- ----------- ------------- ---------- --------------
Class B -- -- 38,442 491,285
- --------------------- ----------- ------------- ---------- --------------
Reacquired:
Class A (28,025,133) (490,410,493) (6,124,044) (92,128,775)
- --------------------- ----------- ------------- ---------- --------------
Class B (9,784,297) (165,452,178) (2,588,161) (38,736,077)
- --------------------- ----------- ------------- ---------- --------------
Class C* (5,986) (105,716) -- --
- --------------------- ----------- ------------- ---------- --------------
35,070,934 $ 577,863,187 86,869,191 $1,292,788,137
===================== =========== ============= ========== ==============
</TABLE>
* Class C commenced sales on August 4, 1997.
FS-16
<PAGE> 274
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
capital stock outstanding during each of the years in the three-year period
ended October 31, 1997 and the period September 15, 1994 (date sales commenced)
through October 31, 1994, and for a share of Class C capital stock outstanding
for the period August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
1997 1996 1995 1994
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 15.76 $ 13.09 $ 10.22 $ 10.00
- ------------------------------------------------------------ ---------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.09)(a) (0.09)(a) --
- ------------------------------------------------------------ ---------- -------- -------- --------
Net gains on securities (both realized and unrealized) 1.67 2.81 2.96 0.22
- ------------------------------------------------------------ ---------- -------- -------- --------
Total from investment operations 1.52 2.72 2.87 0.22
- ------------------------------------------------------------ ---------- -------- -------- --------
Less distributions:
Distributions from net realized gains -- (0.05) -- --
- ------------------------------------------------------------ ---------- -------- -------- --------
Net asset value, end of period $ 17.28 $ 15.76 $ 13.09 $ 10.22
============================================================ ========== ======== ======== ========
Total return(b) 9.65% 20.83% 28.08% 2.20%
============================================================ ========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,242,505 $919,319 $186,029 $ 18,410
============================================================ ========== ======== ======== ========
Ratio of expenses to average net assets 1.75%(c)(d) 1.83% 2.11% 2.02%(e)(f)
============================================================ ========== ======== ======== ========
Ratio of net investment income (loss) to average net assets (0.88)%(c) (0.62)% (0.68)% 0.27%(f)(g)
============================================================ ========== ======== ======== ========
Portfolio turnover rate 57% 44% 64% 2%
============================================================ ========== ======== ======== ========
Average brokerage commission rate paid(h) $ 0.0131 $ 0.0155 N/A N/A
============================================================ ========== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are based on average net assets of $1,175,400,376.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements is
4.03% (annualized) for 1994.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements is (1.74)% (annualized) for 1994.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<TABLE>
<CAPTION>
1997 1996 1995 1994
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 15.58 $ 13.02 $ 10.21 $ 10.00
- ------------------------------------------------------------ ---------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.24)(a) (0.17)(a) (0.14)(a) --
- ------------------------------------------------------------ ---------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 1.66 2.78 2.95 0.21
- ------------------------------------------------------------ ---------- -------- -------- --------
Total from investment operations 1.42 2.61 2.81 0.21
- ------------------------------------------------------------ ---------- -------- -------- --------
Less distributions:
Distributions from net realized gains -- (0.05) -- --
- ------------------------------------------------------------ ---------- -------- -------- --------
Net asset value, end of period $ 17.00 $ 15.58 $ 13.02 $ 10.21
============================================================ ========== ======== ======== ========
Total return(b) 9.11% 20.09% 27.52% 2.10%
============================================================ ========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,241,999 $807,215 $118,199 $ 6,201
============================================================ ========== ======== ======== ========
Ratio of expenses to average net assets 2.30%(c)(d) 2.37% 2.62% 2.54%(e)(f)
============================================================ ========== ======== ======== ========
Ratio of net investment income (loss) to average net assets (1.44)%(c) (1.16)% (1.19)% (0.25)%(f)(g)
============================================================ ========== ======== ======== ========
Portfolio turnover rate 57% 44% 64% 2%
============================================================ ========== ======== ======== ========
Average brokerage commission rate paid(h) $ 0.0131 $ 0.0155 N/A N/A
============================================================ ========== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are based on average net assets of $1,117,630,574.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average assets would have been the same.
(e) After fee waivers and expense reimbursements. Ratio of expenses to average
net assets prior to fee waivers and/or expense reimbursements is 4.43%
(annualized) for 1994.
(f) Annualized.
(g) After fee waivers and expense reimbursements. Ratio of net investment income
(loss) to average net assets prior to fee waivers and/or expense
reimbursements is (2.14)% (annualized) for 1994.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-17
<PAGE> 275
<TABLE>
<CAPTION>
1997
----------
<S> <C>
CLASS C:
Net asset value, beginning of period $ 18.39
- ------------------------------------------------------------ ----------
Income from investment operations:
Net investment income (loss) (0.04)(a)
- ------------------------------------------------------------ ----------
Net gains (losses) on securities (both realized and
unrealized) (1.35)
- ------------------------------------------------------------ ----------
Total from investment operations (1.39)
- ------------------------------------------------------------ ----------
Less distributions:
Distributions from net realized gains --
- ------------------------------------------------------------ ----------
Net asset value, end of period $ 17.00
============================================================ ==========
Total return(b) (7.56)%
============================================================ ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 4,676
============================================================ ==========
Ratio of expenses to average net assets 2.36%(c)(d)
============================================================ ==========
Ratio of net investment income (loss) to average net assets (1.50)%(c)
============================================================ ==========
Portfolio turnover rate 57%
============================================================ ==========
Average brokerage commission rate paid(e) $ 0.0131
============================================================ ==========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) Ratios are annualized and based on average net assets of $2,556,355.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average assets would have been the same.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-18
<PAGE> 276
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 Global Growth Fund (a portfolio of AIM
International Funds, Inc.), including the schedule of
investments, as of October 31, 1997, and the related
statement of operations for the year then ended, the
statement of changes in net assets for the two-year
period then ended and the financial highlights for the
three-year period then ended and the period September 15,
1994 (date operations commenced) through October 31,
1994. These financial statements and financial highlights
are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1997, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Growth Fund as of October 31, 1997, the results of its
operations for the year then ended, and changes in its
net assets for the two-year period then ended and the
financial highlights for the three-year period then ended
and the period September 15, 1994 (date operations
commenced) through October 31, 1994, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-19
<PAGE> 277
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-29.98%
AGRICULTURAL PRODUCTS-0.41%
DIMON, Inc. 25,000 $ 648,437
- ---------------------------------------------------------------
Universal Corp. 26,000 999,375
- ---------------------------------------------------------------
1,647,812
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.13%
NationsBank Corp. 9,000 538,875
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-0.94%
BankAmerica Corp. 17,000 1,215,500
- ---------------------------------------------------------------
Chase Manhattan Corp. 11,500 1,326,812
- ---------------------------------------------------------------
Citicorp 10,000 1,250,625
- ---------------------------------------------------------------
3,792,937
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.21%
Crompton & Knowles Corp. 34,600 873,650
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.49%
Lucent Technologies, Inc. 15,500 1,277,781
- ---------------------------------------------------------------
Tellabs, Inc.(a) 13,000 702,000
- ---------------------------------------------------------------
1,979,781
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-1.52%
Compaq Computer Corp. 29,000 1,848,750
- ---------------------------------------------------------------
Dell Computer Corp.(a) 21,000 1,682,625
- ---------------------------------------------------------------
Digital Equipment Corp.(a) 30,000 1,501,875
- ---------------------------------------------------------------
International Business Machines Corp. 11,500 1,127,719
- ---------------------------------------------------------------
6,160,969
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.67%
Bay Networks, Inc.(a) 45,000 1,423,125
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 16,000 1,312,500
- ---------------------------------------------------------------
2,735,625
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.21%
EMC Corp.(a) 15,000 840,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-1.15%
BMC Software, Inc.(a) 11,400 688,275
- ---------------------------------------------------------------
Computer Associates International, Inc. 19,000 1,416,687
- ---------------------------------------------------------------
Compuware Corp.(a) 21,000 1,388,625
- ---------------------------------------------------------------
Microsoft Corp.(a) 9,000 1,170,000
- ---------------------------------------------------------------
4,663,587
- ---------------------------------------------------------------
CONSUMER FINANCE-1.12%
FIRSTPLUS Financial Group, Inc.(a) 11,500 632,500
- ---------------------------------------------------------------
Green Tree Financial Corp. 32,000 1,348,000
- ---------------------------------------------------------------
Household International, Inc. 10,000 1,132,500
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER FINANCE-(CONTINUED)
SLM Holding Corp. 10,000 $ 1,403,750
- ---------------------------------------------------------------
4,516,750
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.56%
AmeriSource Health Corp.-Class A(a) 25,000 1,484,375
- ---------------------------------------------------------------
Cardinal Health, Inc. 10,650 790,762
- ---------------------------------------------------------------
2,275,137
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.76%
General Electric Co. 23,000 1,484,937
- ---------------------------------------------------------------
Solectron Corp.(a) 25,400 996,950
- ---------------------------------------------------------------
Symbol Technologies, Inc. 15,000 596,250
- ---------------------------------------------------------------
3,078,137
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.27%
Waters Corp.(a) 25,000 1,100,000
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.65%
Intel Corp. 18,000 1,386,000
- ---------------------------------------------------------------
Texas Instruments, Inc. 11,500 1,226,906
- ---------------------------------------------------------------
2,612,906
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS)-0.55%
Applied Materials, Inc.(a) 25,700 857,737
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 15,000 659,062
- ---------------------------------------------------------------
Teradyne, Inc.(a) 18,400 688,850
- ---------------------------------------------------------------
2,205,649
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.27%
American Express Co. 15,000 1,170,000
- ---------------------------------------------------------------
Federal Home Loan Mortgage Corp. 31,800 1,204,425
- ---------------------------------------------------------------
Federal National Mortgage Association 27,200 1,317,500
- ---------------------------------------------------------------
MBIA, Inc. 2,400 143,400
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter, Discover
& Co. 25,900 1,269,100
- ---------------------------------------------------------------
SunAmerica, Inc. 450 16,172
- ---------------------------------------------------------------
5,120,597
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.06%
Abbott Laboratories 12,300 754,144
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 11,500 1,009,125
- ---------------------------------------------------------------
Johnson & Johnson 19,500 1,118,812
- ---------------------------------------------------------------
Warner-Lambert Co. 9,900 1,417,556
- ---------------------------------------------------------------
4,299,637
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.28%
Watson Pharmaceuticals, Inc.(a) 35,800 1,136,650
- ---------------------------------------------------------------
</TABLE>
FS-20
<PAGE> 278
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-0.53%
Merck & Co., Inc. 8,000 $ 714,000
- ---------------------------------------------------------------
Pfizer, Inc. 4,200 297,150
- ---------------------------------------------------------------
Schering-Plough Corp. 20,000 1,121,250
- ---------------------------------------------------------------
2,132,400
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.35%
Quorum Health Group, Inc.(a) 41,250 1,000,312
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 13,900 424,819
- ---------------------------------------------------------------
1,425,131
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.26%
HEALTHSOUTH Corp.(a) 41,000 1,048,063
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.22%
Baxter International Inc. 21,000 971,250
- ---------------------------------------------------------------
Becton, Dickinson & Co. 30,000 1,381,875
- ---------------------------------------------------------------
Boston Scientific Corp.(a) 22,500 1,023,750
- ---------------------------------------------------------------
Guidant Corp. 4,400 253,000
- ---------------------------------------------------------------
Stryker Corp. 23,000 855,313
- ---------------------------------------------------------------
Sybron International Corp.(a) 10,700 429,337
- ---------------------------------------------------------------
4,914,525
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.18%
Maytag Corp. 22,200 740,925
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.36%
Dial Corp. 51,000 860,625
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 9,000 612,000
- ---------------------------------------------------------------
1,472,625
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.38%
AFLAC Inc. 10,400 529,100
- ---------------------------------------------------------------
Conseco Inc. 18,000 785,250
- ---------------------------------------------------------------
Torchmark Corp. 6,000 239,250
- ---------------------------------------------------------------
1,553,600
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.73%
Ace, Ltd. 13,900 1,291,831
- ---------------------------------------------------------------
Allmerica Financial Corp. 4,200 196,875
- ---------------------------------------------------------------
American International Group, Inc. 5,250 535,828
- ---------------------------------------------------------------
Travelers Group, Inc. 13,000 910,000
- ---------------------------------------------------------------
2,934,534
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.32%
Everest Reinsurance Holdings, Inc. 34,000 1,279,250
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.30%
Merrill Lynch & Co., Inc. 17,900 1,210,488
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INVESTMENT MANAGEMENT-0.47%
Franklin Resources, Inc. 5,900 $ 530,263
- ---------------------------------------------------------------
T. Rowe Price Associates, Inc. 20,500 1,358,125
- ---------------------------------------------------------------
1,888,388
- ---------------------------------------------------------------
LODGING-HOTELS-0.51%
Doubletree Corp.(a) 8,700 362,137
- ---------------------------------------------------------------
ITT Corp. 22,500 1,680,469
- ---------------------------------------------------------------
2,042,606
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.76%
Caterpillar Inc. 16,000 820,000
- ---------------------------------------------------------------
Deere & Co. 21,000 1,105,125
- ---------------------------------------------------------------
Dover Corp. 17,000 1,147,500
- ---------------------------------------------------------------
3,072,625
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.96%
Carlisle Companies, Inc. 7,500 324,375
- ---------------------------------------------------------------
Eaton Corp. 16,000 1,546,000
- ---------------------------------------------------------------
Thermo Electron Corp.(a) 26,000 970,125
- ---------------------------------------------------------------
Tyco International Ltd. 16,000 604,000
- ---------------------------------------------------------------
U.S. Industries, Inc. 16,050 431,344
- ---------------------------------------------------------------
3,875,844
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.21%
U.S. Filter Corp.(a) 21,000 842,625
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.70%
Halliburton Co. 23,000 1,371,375
- ---------------------------------------------------------------
Nabors Industries, Inc.(a) 21,000 863,625
- ---------------------------------------------------------------
Schlumberger Ltd. 6,600 577,500
- ---------------------------------------------------------------
2,812,500
- ---------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-0.27%
Exxon Corp. 18,000 1,105,875
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.24%
Bowater, Inc. 23,000 961,688
- ---------------------------------------------------------------
PERSONAL CARE-0.66%
Avon Products, Inc. 19,400 1,270,700
- ---------------------------------------------------------------
Gillette Co.(The) 15,500 1,380,469
- ---------------------------------------------------------------
2,651,169
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.29%
Xerox Corp. 14,900 1,181,756
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-0.21%
Starwood Lodging Trust 14,000 837,375
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.68%
CompUSA, Inc.(a) 39,500 1,293,625
- ---------------------------------------------------------------
</TABLE>
FS-21
<PAGE> 279
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (COMPUTERS & ELECTRONICS)-(CONTINUED)
Tech Data Corp.(a) 33,000 $ 1,468,500
- ---------------------------------------------------------------
2,762,125
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.90%
Fred Meyer, Inc.(a) 37,400 1,068,238
- ---------------------------------------------------------------
Federated Department Stores, Inc.(a) 26,000 1,144,000
- ---------------------------------------------------------------
Proffitt's, Inc.(a) 50,000 1,434,375
- ---------------------------------------------------------------
3,646,613
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.55%
CVS Corp. 21,000 1,287,563
- ---------------------------------------------------------------
Rite Aid Corp. 16,000 950,000
- ---------------------------------------------------------------
2,237,563
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.73%
Kroger Co.(a) 50,000 1,631,250
- ---------------------------------------------------------------
Safeway, Inc.(a) 23,000 1,336,875
- ---------------------------------------------------------------
2,968,125
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.18%
Wal-Mart Stores, Inc. 20,900 734,113
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.77%
Bed Bath & Beyond, Inc.(a) 25,000 793,750
- ---------------------------------------------------------------
Office Depot, Inc.(a) 64,000 1,320,000
- ---------------------------------------------------------------
Payless ShoeSource, Inc.(a) 17,700 986,775
- ---------------------------------------------------------------
3,100,525
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.26%
TJX Companies, Inc. (The) 35,000 1,036,875
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.58%
Ahmanson (H.F.) & Co. 25,000 1,475,000
- ---------------------------------------------------------------
Washington Mutual, Inc. 12,500 855,469
- ---------------------------------------------------------------
2,330,469
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.85%
HFS, Inc.(a) 21,000 1,480,500
- ---------------------------------------------------------------
Service Corp. International 64,800 1,972,350
- ---------------------------------------------------------------
3,452,850
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.88%
Equifax, Inc. 36,000 1,118,250
- ---------------------------------------------------------------
First Data Corp. 26,000 755,625
- ---------------------------------------------------------------
Fiserv, Inc.(a) 14,100 630,975
- ---------------------------------------------------------------
National Data Corp. 29,000 1,071,188
- ---------------------------------------------------------------
3,576,038
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.11%
AccuStaff, Inc.(a) 16,000 457,000
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-0.69%
MCI Communications Corp. 45,000 $ 1,597,500
- ---------------------------------------------------------------
WorldCom, Inc.(a) 34,930 1,174,521
- ---------------------------------------------------------------
2,772,021
- ---------------------------------------------------------------
TELEPHONE-0.22%
Bell Atlantic Corp. 10,900 870,638
- ---------------------------------------------------------------
TOBACCO-0.25%
Philip Morris Companies, Inc. 25,000 990,625
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.17%
USA Waste Services, Inc.(a) 19,000 703,000
- ---------------------------------------------------------------
Total Domestic Common Stocks 121,201,271
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-60.34%
ARGENTINA-1.77%
Banco de Galicia y Buenos Aires
S.A. de C.V.-ADR (Banks-Regional) 45,609 1,105,305
- ---------------------------------------------------------------
Banco Rio de La Plata S.A.-ADR
(Banks-Money Center)(a) 75,000 787,500
- ---------------------------------------------------------------
Perez Companc S.A.-Class B (Oil
& Gas-Refining & Marketing) 311,717 1,952,530
- ---------------------------------------------------------------
Telefonica de Argentina S.A.-ADR
(Telephone) 43,300 1,217,812
- ---------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil-International Integrated) 65,600 2,099,200
- ---------------------------------------------------------------
7,162,347
- ---------------------------------------------------------------
AUSTRALIA-0.72%
Boral Ltd. (Engineering & Construction) 369,000 970,527
- ---------------------------------------------------------------
Coca-Cola Amatil Ltd.
(Beverages-Non-Alcoholic) 115,510 869,187
- ---------------------------------------------------------------
QBE Insurance Group Ltd.- Bonus Shares
(Insurance-Property-Casualty)(a) 45,281 206,349
- ---------------------------------------------------------------
QBE Insurance Group Ltd.
(Insurance-Property-Casualty) 181,125 847,052
- ---------------------------------------------------------------
2,893,115
- ---------------------------------------------------------------
AUSTRIA-0.66%
OMV A.G. (Oil & Gas-Refining &
Marketing) 9,400 1,336,383
- ---------------------------------------------------------------
VA Technologie A.G. (Engineering
& Construction) 7,400 1,313,075
- ---------------------------------------------------------------
2,649,458
- ---------------------------------------------------------------
BELGIUM-0.86%
Barco Industries
(Manufacturing-Diversified) 5,700 1,099,549
- ---------------------------------------------------------------
COLRUYT S.A. (Retail-Food Chains) 1,100 590,116
- ---------------------------------------------------------------
UCB S.A.
(Manufacturing-Diversified) 520 1,796,790
- ---------------------------------------------------------------
3,486,455
- ---------------------------------------------------------------
</TABLE>
FS-22
<PAGE> 280
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BRAZIL-0.88%
Companhia Energetica de Minas
Gerais (Electric Companies) 31,000 $ 1,237,244
- ---------------------------------------------------------------
Telecomunicacoes Brasileiras
S.A.-Telebras-ADR (Telephone) 7,100 720,650
- ---------------------------------------------------------------
Uniao de Bancos Brasileiros
S.A.-GDR (Banks-Regional)(a) 58,800 1,602,300
- ---------------------------------------------------------------
3,560,194
- ---------------------------------------------------------------
CANADA-1.65%
Bank of Montreal (Banks-Money Center) 20,500 885,107
- ---------------------------------------------------------------
Canadian National Railway Co.
(Railroads) 8,800 474,650
- ---------------------------------------------------------------
Canadian Natural Resources Ltd.
(Oil & Gas-Exploration & Production)(a) 48,000 1,396,388
- ---------------------------------------------------------------
Magna International, Inc.-Class A
(Machinery-Diversified) 8,750 576,773
- ---------------------------------------------------------------
Northern Telecom Ltd.
(Communications Equipment) 4,200 376,688
- ---------------------------------------------------------------
Philip Services Corp.
(Waste Management)(a) 54,000 945,000
- ---------------------------------------------------------------
Suncor Energy, Inc.
(Oil-International Integrated) 56,000 2,016,532
- ---------------------------------------------------------------
6,671,138
- ---------------------------------------------------------------
CHILE-0.54%
Cia. de Telecomunicaciones de
Chile S.A.-ADR (Telephone) 30,600 849,150
- ---------------------------------------------------------------
Quinenco S.A.-ADR (Financial
Diversified)(a) 89,600 1,310,400
- ---------------------------------------------------------------
2,159,550
- ---------------------------------------------------------------
DENMARK-0.36%
Novo Nordisk A/S -Class B
(Health Care/Drugs-Generic & Other) 13,500 1,461,106
- ---------------------------------------------------------------
FINLAND-0.52%
Enso Oy-R Shares(Paper & Forest
Products) 96,000 911,149
- ---------------------------------------------------------------
Nokia Oy A.B.-Class A
(Telecommunications-Cellular/Wireless) 13,800 1,205,741
- ---------------------------------------------------------------
2,116,890
- ---------------------------------------------------------------
FRANCE-7.26%
Accor S.A. (Lodging-Hotels) 11,200 2,085,346
- ---------------------------------------------------------------
Alcatel Alsthom
(Manufacturing-Diversified) 17,000 2,051,229
- ---------------------------------------------------------------
AXA-UAP (Insurance-Multi-Line) 11,250 770,381
- ---------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 21,500 950,461
- ---------------------------------------------------------------
Cap Gemini Sogeti S.A.
(Computers- Software & Services) 27,000 2,143,804
- ---------------------------------------------------------------
Carrefour Supermarche S.A.
(Retail-Food Chains) 1,250 652,278
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Compagnie Francaise d'Etudes et
de Construction Technip (Oil &
Gas-Refining & Marketing 13,000 $ 1,377,021
- ---------------------------------------------------------------
Elf Aquitaine S.A. (Oil &
Gas-Refining & Marketing) 13,500 1,671,044
- ---------------------------------------------------------------
Essilor International
(Manufacturing-Specialized) 2,200 587,353
- ---------------------------------------------------------------
Etablissements Economiques du
Casino Guichard-Perrachon
(Retail-Food Chains) 33,000 1,830,711
- ---------------------------------------------------------------
Lafarge S.A. (Engineering &
Construction) 23,800 1,487,023
- ---------------------------------------------------------------
Legrand S.A. (Housewares) 5,300 986,816
- ---------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 2,900 1,326,260
- ---------------------------------------------------------------
Promodes (Retail-Food Chains) 4,800 1,562,762
- ---------------------------------------------------------------
Renault S.A. (Automobiles)(a) 40,000 1,112,989
- ---------------------------------------------------------------
Rexel S.A. (Distributors-Food & Health) 2,600 689,637
- ---------------------------------------------------------------
Rhone-Poulenc-Class A
(Chemicals-Diversified) 46,500 2,027,435
- ---------------------------------------------------------------
Schneider S.A. (Housewares) 5,500 293,677
- ---------------------------------------------------------------
Societe BIC S.A. (Office
Equipment & Supplies) 20,000 1,368,179
- ---------------------------------------------------------------
Societe Generale (Banks-Major Regional) 8,000 1,095,653
- ---------------------------------------------------------------
Sodexho S.A.
(Services-Commercial & Consumer) 1,100 548,641
- ---------------------------------------------------------------
Total S.A.-Class B (Oil &
Gas-Refining & Marketing) 13,100 1,453,474
- ---------------------------------------------------------------
Valeo S.A. (Automobile Parts & Equipment) 19,400 1,293,838
- ---------------------------------------------------------------
29,366,012
- ---------------------------------------------------------------
GERMANY-3.76%
Adidas A.G. (Footwear) 7,200 1,042,993
- ---------------------------------------------------------------
Adidas A.G. (Footwear)(b)
(Acquired 04/11/97; Cost $963,943) 9,150 1,325,471
- ---------------------------------------------------------------
Allianz A.G.
(Insurance-Multi-Line) 4,000 891,805
- ---------------------------------------------------------------
Bayerische Vereinsbank A.G.
(Banks-Major Regional) 17,000 987,024
- ---------------------------------------------------------------
Commerzbank A.G. (Banks-Major Regional) 44,000 1,494,470
- ---------------------------------------------------------------
Continental A.G. (Automobile
Parts & Equipment) 29,600 706,337
- ---------------------------------------------------------------
Deutsche Bank A.G. (Banks-Major
Regional) 29,000 1,899,266
- ---------------------------------------------------------------
Dresdner Bank A.G. (Banks-Major
Regional) 36,000 1,473,568
- ---------------------------------------------------------------
Henkel KGaA
(Chemicals-Diversified) 7,500 389,729
- ---------------------------------------------------------------
Mannesmann A.G.
(Machinery-Diversified) 2,150 908,758
- ---------------------------------------------------------------
Merck KGaA (Health
Care/Drugs-Generic & Other) 26,000 964,612
- ---------------------------------------------------------------
SAP A.G. (Computers-Software & Services) 4,600 1,320,696
- ---------------------------------------------------------------
</TABLE>
FS-23
<PAGE> 281
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GERMANY-(CONTINUED)
Schering A.G. (Health
Care/Drugs-Generic & Other) 8,000 $ 776,149
- ---------------------------------------------------------------
VEBA A.G. (Manufacturing-Diversified) 18,000 1,004,325
- ---------------------------------------------------------------
15,185,203
- ---------------------------------------------------------------
HONG KONG-2.94%
Asia Satellite
Telecommunications Holdings Ltd.-ADR(a)
(Telecommunication-Cellular/Wireless) 24,500 572,688
- ---------------------------------------------------------------
Asia Satellite
Telecommunications Holding Ltd.
(Telecommunications-Cellular/
Wireless) 232,000 558,132
- ---------------------------------------------------------------
Cheung Kong (Holdings) Ltd.
(Land Development) 86,000 597,879
- ---------------------------------------------------------------
China Telecom (Hong Kong) Ltd.-ADR
(Telecommunications-Cellular &
Wireless)(a) 31,900 1,032,763
- ---------------------------------------------------------------
Cosco Pacific Ltd.
(Financial-Diversified) 1,294,000 1,506,305
- ---------------------------------------------------------------
First Pacific Company Ltd.
(Distributors-Food & Health) 1,323,000 834,201
- ---------------------------------------------------------------
Hong Kong & China Gas Co. Ltd.
(Natural Gas) 1,075,640 2,031,216
- ---------------------------------------------------------------
HSBC Holdings PLC (Banks-Major
Regional) 63,400 1,435,038
- ---------------------------------------------------------------
Hutchison Whampoa Ltd.
(Retail-Food Chains) 338,000 2,338,874
- ---------------------------------------------------------------
New World Infrastructure Ltd.
(Services-Commercial & Consumer)(a) 303,600 600,799
- ---------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Land Development) 53,600 395,163
- ---------------------------------------------------------------
11,903,058
- ---------------------------------------------------------------
INDONESIA-0.35%
Gulf Indonesia Resources Ltd.
(Oil-International Integrated)(a) 48,000 1,008,000
- ---------------------------------------------------------------
PT Indosat-ADR (Telephone) 9,050 214,372
- ---------------------------------------------------------------
PT Indosat (Telephone) 84,500 190,447
- ---------------------------------------------------------------
1,412,819
- ---------------------------------------------------------------
IRELAND-0.11%
Elan Corp. PLC-ADR (Health
Care/Drugs-Generic & Other)(a) 9,000 448,875
- ---------------------------------------------------------------
ISRAEL-0.17%
Teva Pharmaceutical Industries Ltd.-ADR
(Health Care/Drugs-Generic & Other) 14,500 677,875
- ---------------------------------------------------------------
ITALY-3.38%
Assicurazioni Generali
(Insurance/Multi-Line) 92,200 2,058,571
- ---------------------------------------------------------------
Credito Italiano S.p.A.
(Banks-Major Regional)(a) 1,040,000 2,783,981
- ---------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Refining & Marketing) 290,000 1,639,108
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ITALY-(CONTINUED)
Fiat S.p.A. (Automobiles) 566,500 $ 1,797,207
- ---------------------------------------------------------------
Istituto Mobiliare Italiano
S.p.A. (Banks-Major Regional) 138,000 1,249,091
- ---------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular/Wireless) 460,000 1,698,169
- ---------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 388,888 2,432,560
- ---------------------------------------------------------------
13,658,687
- ---------------------------------------------------------------
JAPAN-9.78%
Advantest Corp.
(Electronics-Instrumentation) 20,930 1,730,399
- ---------------------------------------------------------------
Bridgestone Corp. (Automobile
Parts & Equipment) 101,000 2,181,969
- ---------------------------------------------------------------
Canon, Inc. (Office Equipment &
Supplies) 97,000 2,353,469
- ---------------------------------------------------------------
Denso Corp. (Automobile Parts &
Equipment) 48,000 1,036,975
- ---------------------------------------------------------------
Fuji Photo Film Co.(Leisure
Time-Products) 61,000 2,209,888
- ---------------------------------------------------------------
Hitachi Cable, Ltd. (Metal Fabricators) 224,000 1,488,990
- ---------------------------------------------------------------
Honda Motor Co., Ltd. (Automobiles) 73,000 2,456,585
- ---------------------------------------------------------------
Hoya Corp.(Manufacturing-Specialized) 39,000 1,354,549
- ---------------------------------------------------------------
Ibiden Co., Ltd.
(Electronics-Component Distributors) 144,000 2,393,020
- ---------------------------------------------------------------
Kyocera Corp.
(Electronics-Component Distributors) 13,000 744,246
- ---------------------------------------------------------------
Matsushita Electric Industrial
Co. Ltd. (Electric Equipment) 61,000 1,023,847
- ---------------------------------------------------------------
Minebea Company Ltd.
(Electronics-Component Distributors) 193,000 1,924,387
- ---------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics-Components Distributors) 46,000 1,865,227
- ---------------------------------------------------------------
Nippon Telegraph & Telephone
Corp. (Telephone) 2,500 2,118,820
- ---------------------------------------------------------------
Nippon Television Network
(Broadcasting-Television, Radio
& Cable) 2,050 729,040
- ---------------------------------------------------------------
NTT Data Communications Systems
Co. (Computers-Software & Services) 470 2,245,534
- ---------------------------------------------------------------
Ricoh Corp. Ltd. (Office
Equipment & Supplies) 124,000 1,597,009
- ---------------------------------------------------------------
Rohm Co. Ltd.
(Electronics-Component Distributors) 29,000 2,867,470
- ---------------------------------------------------------------
SMC Corp.(Machinery-Diversified) 6,800 587,620
- ---------------------------------------------------------------
Sony Corp. (Electronics-Component
Distributors) 30,000 2,490,237
- ---------------------------------------------------------------
TDK Corp. (Electronic Equipment) 31,000 2,570,669
- ---------------------------------------------------------------
Tokyo Electron Ltd. (Electronic
Semiconductors) 31,600 1,575,405
- ---------------------------------------------------------------
39,545,355
- ---------------------------------------------------------------
</TABLE>
FS-24
<PAGE> 282
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO-3.67%
Cifra S.A. de C.V.
(Retail-General Merchandise) 1,009,000 $ 1,744,842
- ---------------------------------------------------------------
Coca-Cola Femsa S.A.-ADR
(Beverages- Non-Alcoholic) 52,400 2,263,025
- ---------------------------------------------------------------
Fomento Economico Mexicano, S.A.
de C.V.-Class B (Beverages-Alcoholic) 384,050 2,702,320
- ---------------------------------------------------------------
Grupo Industrial Maseca S.A. de
CV-Class B (Foods) 807,600 780,150
- ---------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 67,700 2,098,700
- ---------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de C.V.-
Class A (Paper & Forest Products) 483,400 2,118,658
- ---------------------------------------------------------------
Panamerican Beverages, Inc.-Class A
(Beverages-Non-Alcoholic) 86,300 2,675,300
- ---------------------------------------------------------------
TV Azteca, S.A. de C.V.-ADR
(Broadcasting-Television,
Radio & Cable)(a) 24,200 462,825
- ---------------------------------------------------------------
14,845,820
- ---------------------------------------------------------------
NETHERLANDS-4.32%
Akzo Nobel N.V.
(Chemicals-Diversified) 6,500 1,145,326
- ---------------------------------------------------------------
ASM Lithography Holding N.V.
(Machinery- Diversified)(a) 5,700 413,958
- ---------------------------------------------------------------
CMG PLC (Computers-Software &
Services) 61,700 1,452,326
- ---------------------------------------------------------------
Getronics N.V.
(Computers-Software & Services) 41,000 1,353,644
- ---------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food Chains) 30,600 783,322
- ---------------------------------------------------------------
Koninklijke Nutricia Verenigde
Bedrijven N.V. (Foods) 26,000 743,240
- ---------------------------------------------------------------
Koninklijke Pakhoed N.V. (Shipping) 27,500 900,850
- ---------------------------------------------------------------
Oce-Van Der Grinten N.V. (Office
Equipment & Supplies) 7,000 798,609
- ---------------------------------------------------------------
Philips Electronics N.V.
(Household Furniture & Appliances)(a) 32,000 2,505,279
- ---------------------------------------------------------------
Randstad Holdings N.V.
(Services-Commercial & Consumer) 44,500 1,776,333
- ---------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil-International Integrated) 26,400 1,396,487
- ---------------------------------------------------------------
Stork N.V.
(Manufacturing-Diversified) 24,000 1,038,372
- ---------------------------------------------------------------
Vendex International N.V.
(Retail-General Merchandise) 38,000 2,074,685
- ---------------------------------------------------------------
Verenigde Nederlandse
Uitgeversbedrijven Verenigd
Bezit (Publishing) 15,500 367,242
- ---------------------------------------------------------------
Wolters Kluwer N.V. (Specialty
Printing) 5,700 699,912
- ---------------------------------------------------------------
17,449,585
- ---------------------------------------------------------------
NORWAY-0.32%
Petroleum Geo-Services A.S.A.
(Oil-International Integrated)(a) 18,800 1,296,013
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PHILIPPINES-0.26%
Metro Pacific Corp.
(Manufacturing-Diversified)(a) 3,070,970 $ 204,443
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co. (Telephone) 16,460 406,276
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co.-ADR (Telephone) 17,800 431,650
- ---------------------------------------------------------------
1,042,369
- ---------------------------------------------------------------
PORTUGAL-0.64%
Electricidade de Portugal,
S.A.-ADR (Electric Companies)(a) 24,200 845,488
- ---------------------------------------------------------------
Portugal Telecom S.A. (Telephone) 42,000 1,723,230
- ---------------------------------------------------------------
2,568,718
- ---------------------------------------------------------------
SINGAPORE-0.47%
City Developments Ltd. (Land
Development) 129,000 540,571
- ---------------------------------------------------------------
DBS Land Ltd. (Land Development) 507,000 862,705
- ---------------------------------------------------------------
Overseas Union Bank Ltd.
(Banks-Major Regional) 150,000 500,000
- ---------------------------------------------------------------
1,903,276
- ---------------------------------------------------------------
SPAIN-1.42%
Banco Bilbao Vizcaya, S.A.
(Banks-Major Regional) 73,500 1,965,457
- ---------------------------------------------------------------
Endesa S.A. (Electric Companies) 73,200 1,378,758
- ---------------------------------------------------------------
Iberdrola S.A. (Electric Companies) 60,000 717,674
- ---------------------------------------------------------------
Telefonica de Espana (Telephone) 62,000 1,692,033
- ---------------------------------------------------------------
5,753,922
- ---------------------------------------------------------------
SWEDEN-1.44%
Electrolux A.B. (Household
Furniture & Appliances)(a) 27,000 2,235,010
- ---------------------------------------------------------------
Hennes & Mauritz A.B.-Class B
(Retail-Specialty-Apparel) 51,500 2,107,471
- ---------------------------------------------------------------
Sparbanken Sverige A.B.-Class A
(Banks-Major Regional) 46,000 1,044,073
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-ADR (Communications
Equipment) 10,000 442,500
- ---------------------------------------------------------------
5,829,054
- ---------------------------------------------------------------
SWITZERLAND-2.59%
Adecco S.A. (Services-Commercial
& Consumer) 5,000 1,589,002
- ---------------------------------------------------------------
Ciba Specialty Chemicals A.G.
(Chemicals-Specialty)(a) 11,000 1,080,164
- ---------------------------------------------------------------
Clariant A.G. (Chemicals-Specialty) 1,650 1,269,095
- ---------------------------------------------------------------
Credit Suisse Group (Banks-Major
Regional) 14,500 2,042,582
- ---------------------------------------------------------------
Holderbank Financiere Glarus
A.G.-Class B
(Construction-Cement & Aggregates) 1,050 845,099
- ---------------------------------------------------------------
Nestle S.A. (Foods) 680 958,143
- ---------------------------------------------------------------
Novartis A.G. (Health Care-Diversified) 1,060 1,660,118
- ---------------------------------------------------------------
</TABLE>
FS-25
<PAGE> 283
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND-(CONTINUED)
Zurich Versicherungs-Gesellschaft
(Insurance-Multi-Line) 2,500 $ 1,031,958
- ---------------------------------------------------------------
10,476,161
- ---------------------------------------------------------------
UNITED KINGDOM-9.50%
Airtours PLC (Services-Commercial &
Consumer) 71,900 1,423,437
- ---------------------------------------------------------------
Barclays PLC (Banks-Major Regional) 18,500 463,403
- ---------------------------------------------------------------
Blue Circle Industries PLC
(Construction-Cement & Aggregates) 55,000 322,967
- ---------------------------------------------------------------
Bodycote International PLC
(Chemicals-Specialty) 71,000 1,230,512
- ---------------------------------------------------------------
British Aerospace PLC
(Aerospace/Defense) 64,000 1,698,688
- ---------------------------------------------------------------
British Petroleum Co. PLC (Oil &
Gas-Refining & Marketing) 62,000 911,220
- ---------------------------------------------------------------
Compass Group PLC (Services
Commercial & Consumer) 59,200 631,196
- ---------------------------------------------------------------
Dixons Group PLC
(Retail-Specialty) 200,000 2,338,784
- ---------------------------------------------------------------
EMAP PLC (Publishing) 51,000 732,011
- ---------------------------------------------------------------
General Electric Co. PLC
(Manufacturing-Diversified) 316,500 2,021,812
- ---------------------------------------------------------------
GKN PLC (Manufacturing-Diversified) 39,000 874,829
- ---------------------------------------------------------------
Granada Group PLC (Leisure Time-
Products) 61,400 846,774
- ---------------------------------------------------------------
Hays PLC (Services Commercial &
Consumer) 178,000 2,090,477
- ---------------------------------------------------------------
Kingfisher PLC
(Retail-Department Stores) 140,000 2,015,313
- ---------------------------------------------------------------
Ladbroke Group PLC (Leisure
Time-Products) 382,000 1,711,204
- ---------------------------------------------------------------
Lloyds TSB Group PLC
(Banks-Major Regional) 96,000 1,199,927
- ---------------------------------------------------------------
Misys PLC (Services-Commercial &
Consumer) 45,000 1,134,369
- ---------------------------------------------------------------
Next PLC (Retail-General Merchandise) 77,000 917,226
- ---------------------------------------------------------------
Nycomed Amersham PLC (Health
Care/Drugs-Generic & Other) 37,000 1,423,109
- ---------------------------------------------------------------
Pearson PLC (Specialty Printing) 70,000 916,051
- ---------------------------------------------------------------
Provident Financial PLC
(Consumer Finance) 137,400 1,590,608
- ---------------------------------------------------------------
Railtrack Group PLC (Shipping) 100,000 1,598,896
- ---------------------------------------------------------------
Rentokil Initial PLC
(Services-Commercial & Consumer) 240,000 966,384
- ---------------------------------------------------------------
Royal & Sun Alliance Insurance
Group PLC (Insurance-Multi-Line) 50,000 479,417
- ---------------------------------------------------------------
Siebe PLC (Electronics-Component
Distributors) 75,000 1,440,768
- ---------------------------------------------------------------
SmithKline Beecham PLC-ADR
(Health Care/Drugs-Major
Pharmaceuticals) 13,000 619,125
- ---------------------------------------------------------------
Smiths Industries PLC
(Machinery- Diversified) 30,000 435,376
- ---------------------------------------------------------------
Tarmac PLC (Engineering &
Construction) 1,244,000 2,421,060
- ---------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Unilever PLC (Foods) 224,000 $ 1,668,623
- ---------------------------------------------------------------
Vodafone Group PLC
(Telecommunications-Cellular/Wireless) 150,000 817,903
- ---------------------------------------------------------------
WPP Group PLC
(Services-Advertising/Marketing) 316,000 1,444,711
- ---------------------------------------------------------------
38,386,180
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 243,909,235
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
DOMESTIC CONVERTIBLE PREFERRED
STOCKS-0.27%
FINANCIAL (DIVERSIFIED)-0.27%
MGIC Investment Corp.-$3.12
Conv. Pfd. 7,000 714,000
- ---------------------------------------------------------------
SunAmerica, Inc.-Series E, $3.10
Conv. Pfd. 3,300 384,450
- ---------------------------------------------------------------
Total Domestic Convertible
Preferred Stocks 1,098,450
- ---------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE PREFERRED STOCKS-1.03%
BRAZIL-0.69%
Petroleo Brasileiro S.A.-Petrobras
(Oil & Gas-Exploration & Production) 5,416 1,007,009
- ---------------------------------------------------------------
Telecomunicacoes de Sao Paulo
S.A.-TELESP (Telephone) 6,900 1,802,531
- ---------------------------------------------------------------
2,809,540
- ---------------------------------------------------------------
GERMANY-0.34%
SAP A.G. (Computers-Software & Services) 4,600 1,371,440
- ---------------------------------------------------------------
Total Non-U.S. Dollar Denominated
Non-Convertible Preferred Stocks 4,180,980
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT(c)
<S> <C> <C>
U.S. DOLLAR DENOMINATED FOREIGN
BONDS & NOTES-0.46%
GERMANY-0.39%
Volkswagen International Finance
N.V., (Automobiles) Conv. Gtd.
Notes, 3.00%, 01/24/02 $ 1,330,000 1,566,075
- ---------------------------------------------------------------
HONG KONG-0.07%
New World Infrastructure Ltd.
(Services-Commercial &
Consumer), Conv. Bonds 5.00%,
07/15/01 100,000 94,500
- ---------------------------------------------------------------
New World Infrastructure Ltd.
(Services-Commercial & Consumer),
Conv. Bonds 5.00%, 07/15/01(b)
(Acquired 4/10/97-4/11/97; Cost
$234,938) 200,000 189,000
- ---------------------------------------------------------------
283,500
- ---------------------------------------------------------------
Total U.S. Dollar
Denominated Foreign Bonds & Notes 1,849,575
- ---------------------------------------------------------------
</TABLE>
FS-26
<PAGE> 284
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(c) VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED
FOREIGN BONDS & NOTES-0.74%
FRANCE-0.18%
AXA-UAP (Insurance-Multi-Line),
Conv. Sr. Deb., 4.50%,
01/01/99 FRF $ 2,835,000 $ 750,741
- ---------------------------------------------------------------
ITALY-0.38%
Pirelli S.p.A., (Electrical
Equipment), Conv. Bonds,
4.375%, 12/31/98 ITL 1,591,686,200 1,527,756
- ---------------------------------------------------------------
JAPAN-0.18%
Ricoh Co., Ltd. (Office
Equipment & Supplies), Conv.
Bonds, 0.35%, 03/31/03 JPY 65,000,000 715,621
- ---------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Foreign Bonds
& Notes 2,994,118
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(c) VALUE
<S> <C> <C>
U.S. TREASURY BILLS-2.95%(d)
5.093%, 01/02/1998 $ 12,000,000(e)$ 11,904,240
- ---------------------------------------------------------------
REPURCHASE AGREEMENT-0.10%(f)
Sanua Securities (USA) L.P.,
5.73%, 11/03/97(g) 398,411 398,411
- ---------------------------------------------------------------
TOTAL INVESTMENTS-95.87% 387,536,280
- ---------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-4.13% 16,704,462
- ---------------------------------------------------------------
NET ASSETS-100.00% $404,240,742
===============================================================
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
Conv. -- Convertible
Deb. -- Debentures
FRF -- French Franc
GDR -- Global Depository Receipt
Gtd. -- Guaranteed
ITL -- Italian Lire
JPY -- Japanese Yen
Pfd. -- Preferred
Sr. -- Senior
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of the securities at 10/31/97 was $1,514,471 which
represented 0.37% of the Fund's net assets.
(c) Principal in U. S. Dollars unless otherwise indicated.
(d) U.S. Treasury Bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(e) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(f) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investment 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 it affiliates.
(g) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$200,095,500. Collateralized by $201,314,000 U.S. Government obligations, 0%
to 8.875% due 11/03/97 to 08/15/27 with an aggregate market value at
10/31/97 of $204,000,545.
See Notes to Financial Statements.
FS-27
<PAGE> 285
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$327,440,754) $ 387,536,280
- --------------------------------------------------------
Foreign currencies, at market value
(cost $7,633,284) 7,667,754
- --------------------------------------------------------
Receivables for:
Investments sold 12,950,025
- --------------------------------------------------------
Capital stock sold 4,700,631
- --------------------------------------------------------
Dividends and interest 668,936
- --------------------------------------------------------
Variation margin 271,700
- --------------------------------------------------------
Investment for deferred compensation
plan 11,215
- --------------------------------------------------------
Other assets 23,824
- --------------------------------------------------------
Total assets 413,830,365
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 6,828,079
- --------------------------------------------------------
Capital stock reacquired 1,962,826
- --------------------------------------------------------
Deferred compensation 11,215
- --------------------------------------------------------
Accrued advisory fees 308,513
- --------------------------------------------------------
Accrued administrative services fees 9,966
- --------------------------------------------------------
Accrued distribution fees 281,782
- --------------------------------------------------------
Accrued transfer agent fees 70,776
- --------------------------------------------------------
Accrued operating expenses 116,466
- --------------------------------------------------------
Total liabilities 9,589,623
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 404,240,742
========================================================
NET ASSETS:
Class A $ 178,916,560
========================================================
Class B $ 224,224,631
========================================================
Class C $ 1,099,551
========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 10,747,564
========================================================
Class B:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 13,684,612
========================================================
Class C:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 67,094
========================================================
Class A:
Net asset value and redemption price
per share $ 16.65
========================================================
Offering price per share:
(Net asset value $16.65
divided by 95.25%) $ 17.48
========================================================
Class B:
Net asset value and offering price per
share $ 16.39
========================================================
Class C:
Net asset value and offering price per
share $ 16.39
========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $505,201 foreign
withholding tax) $ 4,455,134
- --------------------------------------------------------
Interest 506,016
- --------------------------------------------------------
Total investment income 4,961,150
- --------------------------------------------------------
EXPENSES:
Advisory fees 2,895,282
- --------------------------------------------------------
Administrative services fees 87,673
- --------------------------------------------------------
Custodian fees 284,017
- --------------------------------------------------------
Directors' fees 10,557
- --------------------------------------------------------
Distribution fees -- Class A 778,588
- --------------------------------------------------------
Distribution fees -- Class B 1,847,507
- --------------------------------------------------------
Distribution fees -- Class C 1,532
- --------------------------------------------------------
Transfer agent fees -- Class A 334,050
- --------------------------------------------------------
Transfer agent fees -- Class B 480,075
- --------------------------------------------------------
Transfer agent fees -- Class C 343
- --------------------------------------------------------
Other 263,588
- --------------------------------------------------------
Total expenses 6,983,212
- --------------------------------------------------------
Less: Expenses paid indirectly (8,327)
- --------------------------------------------------------
Net expenses 6,974,885
- --------------------------------------------------------
Net investment income (loss) (2,013,735)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 12,314,226
- --------------------------------------------------------
Foreign currencies (418,972)
- --------------------------------------------------------
11,895,254
- --------------------------------------------------------
Net unrealized appreciation of:
Investment securities 37,009,027
- --------------------------------------------------------
Foreign currencies 12,676
- --------------------------------------------------------
Futures contracts 51,000
- --------------------------------------------------------
37,072,703
- --------------------------------------------------------
Net gain on investment securities, foreign
currencies and futures contracts 48,967,957
- --------------------------------------------------------
Net increase in net assets resulting from
operations $46,954,222
========================================================
</TABLE>
See Notes to Financial Statements.
FS-28
<PAGE> 286
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (2,013,735) $ (548,400)
- -------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities
and foreign currencies 11,895,254 (604,088)
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and futures contracts 37,072,703 20,032,132
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 46,954,222 18,879,644
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A - (516,173)
- -------------------------------------------------------------------------------------------
Class B - (413,018)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 41,376,928 81,693,730
- -------------------------------------------------------------------------------------------
Class B 77,933,131 96,263,897
- -------------------------------------------------------------------------------------------
Class C 1,157,289 -
- -------------------------------------------------------------------------------------------
Net increase in net assets 167,421,570 195,908,080
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 236,819,172 40,911,092
- -------------------------------------------------------------------------------------------
End of period $404,240,742 $ 236,819,172
===========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $334,919,809 $ 214,452,461
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (14,582) 7,538
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities, foreign currencies and futures
contracts 9,241,432 (662,207)
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 60,094,083 23,021,380
- -------------------------------------------------------------------------------------------
$404,240,742 $ 236,819,172
===========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Growth Fund (the "Fund") is an investment portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company consisting of four operating
series portfolios: AIM Global Growth Fund, AIM Global Aggressive Growth Fund,
AIM Global Income Fund and AIM International Equity Fund. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
Class C shares commenced sales on August 4, 1997. 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 objectives by
investing in a portfolio of global equity securities of selected companies 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--A security listed or traded on an exchange (except
convertible bonds) 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. If a mean is not
available, as is the case in some foreign markets, the closing bid will be
used absent a last sales price. 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.
FS-29
<PAGE> 287
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. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by an independent pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate and
maturity date. Securities for which market quotations are 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 will
not be reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period,
then these securities will be valued at their fair value as determined in
good faith by or under the supervision of the Board of Directors.
B. Foreign Currency Translations--Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts--A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a 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 Distribu-
tions--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, 1997,
undistributed net investment income was increased by $1,991,615 and
undistributed net realized gains was decreased by $1,991,615 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. Stock Index Futures Contracts--The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the Fund's
basis in the contract. Risks include the possibility of an illiquid market
and that a change in the value of contracts may not correlate with changes in
the value of the securities being hedged.
G. Expenses - Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated between the
classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% of
the first $1 billion of the Fund's average daily net assets, plus 0.80% of the
Fund's average daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1997, AIM was
reimbursed $87,673 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the year ended October 31, 1997, AFS was paid
$479,472 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class
A, Class B and Class C 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"), the Fund's Class B shares (the "Class B Plan"),
and the Fund's Class C shares (the "Class C Plan") (collectively, the "Plans").
The Fund, pursuant to the Plan, pays AIM Distribu-
FS-30
<PAGE> 288
tors compensation at the annual rate of 0.50% of the average daily net assets of
Class A shares and 1.00% of the average daily net assets of Class C shares. The
Plan is designed to compensate AIM Distributors for certain promotional and
other sales related costs, and to implement a dealer incentive program which
provides for periodic payments to selected dealers who furnish continuing
personal shareholder services to their customers who purchase and own Class A or
Class C shares of the Fund. The Fund, pursuant to the Class B Plan, pays AIM
Distributors at an annual rate of 1.00% of the average daily net assets
attributable to the Class B shares. Of this amount, the Fund pays 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, 1997 for the
Class A shares and Class B shares and the period August 4, 1997 (date sales
commenced) through October 31, 1997, the respective classes paid AIM
Distributors $778,588, $1,847,507 and $1,532, as compensation under the Plans.
AIM Distributors received commissions of $286,414 from the sales of the Class
A shares of the Fund during the year ended October 31, 1997. 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,
1997, AIM Distributors received commissions of $25,870 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, 1997, the Fund incurred legal fees of $4,793
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-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced the
Fund's expenses by $1,382 during the year ended October 31, 1997. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodian fees of $4,390 and $2,555, respectively, under expense
offset arrangements. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $8,327 during the year ended October
31, 1997.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-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) $500,000,000 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 15, 1997, the Fund was
limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set
by its prospectus for borrowings. During the year ended October 31, 1997, 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 0.05% 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 6-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, 1997 was
$410,474,400 and $315,085,765, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of October 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 72,845,545
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (13,799,402)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 59,046,143
- ---------------------------------------------------------
</TABLE>
Cost of investments for tax purposes is $328,490,137.
NOTE 7-FUTURES CONTRACTS
On October 31, 1997, $506,000 principal amount of U.S. Treasury obligations were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts were as follows:
<TABLE>
<CAPTION>
NO. OF MONTH/ UNREALIZED
CONTRACT CONTRACTS COMMITMENT APPRECIATION
-------- --------- ---------- ------------
<S> <C> <C> <C>
S&P 500 Index 26 Dec. '97 $ 51,000
</TABLE>
FS-31
<PAGE> 289
NOTE 8-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 6,399,974 $103,567,757 7,117,057 $ 94,636,553
- ------------------------------------------------------------ ---------- ------------ ----------- ------------
Class B 6,303,261 98,414,198 7,683,810 101,786,913
- ------------------------------------------------------------ ---------- ------------ ----------- ------------
Class C* 67,094 1,157,289 - -
- ------------------------------------------------------------ ---------- ------------ ----------- ------------
Issued as reinvestment of distributions:
Class A - - 36,930 453,130
- ------------------------------------------------------------ ---------- ------------ ----------- ------------
Class B - - 31,124 379,711
- ------------------------------------------------------------ ---------- ------------ ----------- ------------
Reacquired:
Class A (3,750,438) (62,190,829) (983,830) (13,395,953)
- ------------------------------------------------------------ ---------- ------------ ----------- ------------
Class B (1,291,769) (20,481,067) (441,521) (5,902,727)
- ------------------------------------------------------------ ---------- ------------ ----------- ------------
Class C* - - - -
- ------------------------------------------------------------ ---------- ------------ ----------- ------------
7,728,122 $120,467,348 13,443,570 $177,957,627
============================================================ ========== ============ =========== ============
</TABLE>
* Class C shares commenced sales on August 4, 1997.
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
and a share of Class B capital stock outstanding during each of the years in the
three-year period ended October 31, 1997 and the period September 15, 1994 (date
operations commenced) through October 31, 1994 and for a share of Class C
capital stock outstanding during the period August 4, 1997 (date sales
commenced) through October 31, 1997.
<TABLE>
<CAPTION>
1997 1996 1995 1994
-------- --------- -------- --------
<S> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 14.20 $ 12.32 $ 10.23 $ 10.00
- ------------------------------------------------------------ -------- --------- -------- --------
Income from investment operations:
Net investment income (loss) (0.04) (0.01) (0.02) -
- ------------------------------------------------------------ -------- --------- -------- --------
Net gains on securities (both realized and unrealized) 2.49 2.11 2.11 0.23
- ------------------------------------------------------------ -------- --------- -------- --------
Total from investment operations 2.45 2.10 2.09 0.23
- ------------------------------------------------------------ -------- --------- -------- --------
Less distributions:
Dividends from net investment income - - (0.004) -
- ------------------------------------------------------------ -------- --------- -------- --------
Distributions from net realized gains - (0.22) - -
- ------------------------------------------------------------ -------- --------- -------- --------
Total distributions - (0.22) (0.004) -
- ------------------------------------------------------------ -------- --------- -------- --------
Net asset value, end of period $ 16.65 $ 14.20 $ 12.32 $ 10.23
============================================================ ======== ========= ======== ========
Total return(a) 17.25% 17.26% 20.48% 2.30%
============================================================ ======== ========= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $178,917 $ 114,971 $ 23,754 $ 3,093
============================================================ ======== ========= ======== ========
Ratio of expenses to average net assets(b) 1.76%(c)(d) 1.93% 2.12% 1.95%(e)
============================================================ ======== ========= ======== ========
Ratio of net investment income (loss) to average net
assets(f) (0.30)%(c) (0.13)% (0.28)% 0.10%(e)
============================================================ ======== ========= ======== ========
Portfolio turnover rate 96% 82% 79% 6%
============================================================ ======== ========= ======== ========
Average brokerage commission rate paid(g) $ 0.0239 $ 0.0234 N/A N/A
============================================================ ======== ========= ======== ========
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.94%, 2.98% and 5.67% (annualized) for the periods 1996-1994, respectively.
(c) Ratios are based on average net assets of $155,717,515.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.14)%, (1.14)% and (3.63)% (annualized) for the
periods 1996-1994, respectively.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-32
<PAGE> 290
<TABLE>
<CAPTION>
1997 1996 1995 1994
--------- -------- -------- --------
<S> <C> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 14.05 $ 12.26 $ 10.22 $ 10.00
- ------------------------------------------------------------ --------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.11) (0.05) (0.04) -
- ------------------------------------------------------------ --------- -------- -------- --------
Net gains on securities (both realized and unrealized) 2.45 2.06 2.08 0.22
- ------------------------------------------------------------ --------- -------- -------- --------
Total from investment operations 2.34 2.01 2.04 0.22
- ------------------------------------------------------------ --------- -------- -------- --------
Less distributions:
Distributions from net realized gains - (0.22) - -
- ------------------------------------------------------------ --------- -------- -------- --------
Total distributions - (0.22) - -
- ------------------------------------------------------------ --------- -------- -------- --------
Net asset value, end of period $ 16.39 $ 14.05 $ 12.26 $ 10.22
=========================================================== ========= ======== ======== ========
Total return(a) 16.65% 16.60% 19.96% 2.20%
=========================================================== ========= ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 224,225 $121,848 $ 17,157 $ 1,277
=========================================================== ========= ======== ======== ========
Ratio of expenses to average net assets(b) 2.29%(c)(d) 2.48% 2.64% 2.51%(e)
=========================================================== ========= ======== ======== ========
Ratio of net investment income (loss) to average net
assets(f) (0.83)%(c) (0.69)% (0.79)% (0.47)%(e)
=========================================================== ========= ======== ======== ========
Portfolio turnover rate 96% 82% 79% 6%
=========================================================== ========= ======== ======== ========
Average brokerage commission rate paid(g) $ 0.0239 $ 0.0234 N/A N/A
=========================================================== ========= ======== ======== ========
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.49%, 3.38% and 6.20% (annualized) for the periods 1996-1994, respectively.
(c) Ratios are based on average net assets of $184,750,715.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.69)%, (1.54)% and (4.16)% (annualized) for the
periods 1996-1994, respectively.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<TABLE>
<CAPTION>
1997
CLASS C: -------
<S> <C>
Net asset value, beginning of period $ 17.39
- ------------------------------------------------------------ -------
Income from investment operations:
Net investment income (loss) (0.03)
- ------------------------------------------------------------ -------
Net gains (losses) on securities (both realized and
unrealized) (0.97)
- ------------------------------------------------------------ -------
Total from investment operations (1.00)
- ------------------------------------------------------------ -------
Net asset value, end of period $ 16.39
============================================================ =======
Total return(a) (5.75)%
============================================================ =======
Ratios/supplement data:
Net assets, end of period (000s omitted) $ 1,100
============================================================ =======
Ratio of expenses to average net assets(b) 2.29%(c)
============================================================ =======
Ratio of net investment income (loss) to average net
assets(b) (0.83)%
============================================================ =======
Portfolio turnover rate 96%
============================================================ =======
Average brokerage commission rate paid(d) $0.0239
============================================================ =======
</TABLE>
(a) Does not deduct sales charges and periods for less than one year,
total returns are not annualized.
(b) Ratios are annualized and based on average net assets of $628,292.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have
been the same.
(d) The average commission rate paid is the total brokerage commissions
paid on applicable purchases and sales of securities for the period
divided by the total number of related shares purchased and sold,
which is required to be disclosed for fiscal years beginning
September 1, 1995 and thereafter.
FS-33
<PAGE> 291
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of the AIM Global Income Fund (a portfolio of
AIM International Funds, Inc.), including the schedule of
investments, as of October 31, 1997, and the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and the financial
highlights for each of the years or periods in the
three-year period then ended, and for the period
September 15, 1994 (date operations commenced) through
October 31, 1994. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1997, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and
financial highlights referred to above present fairly, in
all material respects, the financial position of AIM
Global Income Fund as of October 31, 1997, 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 or periods in the three-year period then
ended and for the period September 15, 1994 (date
operations commenced) through October 31, 1994, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-34
<PAGE> 292
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS & NOTES-50.55%
AGRICULTURAL PRODUCTS-0.20%
Hines Horticulture, Inc.,
Series B Sr. Gtd. Sub. Notes,
11.75%, 10/15/05 $ 100,000 $ 110,750
- --------------------------------------------------------------
AIRLINES-3.32%
Airplanes Pass Through Trust,
Sub. Bonds, 10.875%, 03/15/19 230,000 263,495
- --------------------------------------------------------------
America West Airlines, Inc.,
Pass Thru Certificates, 6.86%,
07/02/04 587,999 591,675
- --------------------------------------------------------------
Delta Air Lines, Inc.,
Deb., 9.00%, 05/15/16 550,000 652,636
- --------------------------------------------------------------
United Air Lines, Inc.,
Pass Thru Certificates, 9.56%,
10/19/18 300,000 362,391
- --------------------------------------------------------------
1,870,197
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-1.25%
First Union Bancorp,
Sub. Deb., 7.50%, 04/15/35 200,000 220,060
- --------------------------------------------------------------
Royal Bank of Scotland PLC (United
Kingdom),
Yankee Sub. Notes, 6.375%,
02/01/11 500,000 481,780
- --------------------------------------------------------------
701,840
- --------------------------------------------------------------
BANKS (MONEY CENTER)-2.08%
Bankers Trust New York Corp.,
Gtd. Notes, 7.875%, 02/25/27 400,000 409,974
- --------------------------------------------------------------
Deutsche Bank Financial,
Gtd. Unsec. Sub. Deb., 6.70%,
12/13/06 750,000 760,808
- --------------------------------------------------------------
1,170,782
- --------------------------------------------------------------
BANKS (REGIONAL)-1.86%
Mercantile Bancorp Inc.,
Unsec. Sub. Notes, 7.30%,
06/15/07 1,000,000 1,046,320
- --------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-1.13%
Coca-Cola Enterprises, Inc.,
Putable Notes, 7.15%, 06/20/20(b) 3,113,000 635,301
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-4.44%
Capstar Broadcasting Partners,
Sr. Disc. Notes, 12.75%,
02/01/09(c) 390,000 278,850
- --------------------------------------------------------------
Comcast Cable Communications,
Notes, 8.50%, 05/01/27
(acquired 04/24/97; cost
$499,145)(d) 500,000 572,980
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO &
CABLE)-(CONTINUED)
Diamond Cable Communications PLC
(United Kingdom), Sr. Yankee
Disc. Notes, 10.75%, 02/15/07(c) $ 870,000 $ 567,675
- --------------------------------------------------------------
Echostar DBS Corp.,
Sr. Sec. Gtd. Notes, 12.50%,
07/01/02
(acquired 06/20/97; cost
$320,000)(d) 320,000 340,800
- --------------------------------------------------------------
Kabelmedia Holdings GmbH (Germany),
Sr. Yankee Unsec. Disc. Notes,
13.625%, 08/01/06(c) 200,000 146,000
- --------------------------------------------------------------
Rifkin Acquisition Partners L.L.P.,
Sr. Sub. Notes, 11.125%, 01/15/06 40,000 43,500
- --------------------------------------------------------------
TCI Communications Inc.,
Sr. Notes, 8.00%, 08/01/05 150,000 157,845
- --------------------------------------------------------------
TeleWest Communications PLC
(United Kingdom), Sr. Yankee
Disc. Deb., 11.00%, 10/01/07(c) 300,000 226,500
- --------------------------------------------------------------
United International Holdings,
Inc.,
Sr. Sec. Disc. Notes, 10.28%,
11/15/99(b) 200,000 163,000
- --------------------------------------------------------------
2,497,150
- --------------------------------------------------------------
CHEMICALS-1.40%
Nova Chemicals Ltd. (Canada),
Yankee Deb., 7.00%, 08/15/26 600,000 620,898
- --------------------------------------------------------------
Sterling Chemicals, Inc.,
Sr. Unsec. Sub. Notes, 11.75%,
08/15/06 150,000 167,250
- --------------------------------------------------------------
788,148
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.08%
Crain Industries, Inc.,
Sr. Sub. Notes, 13.50%, 08/15/05 40,000 45,800
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.48%
ProNet, Inc.,
Sr. Sub. Notes, 11.875%, 06/15/05 250,000 271,250
- --------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.15%
Commemorative Brands,
Sr. Sub. Notes, 11.00%, 01/15/07 85,000 86,488
- --------------------------------------------------------------
CONSUMER FINANCE-1.28%
Household Finance Corp.,
Notes, 7.125%, 09/01/05 700,000 720,076
- --------------------------------------------------------------
CONTAINERS & PACKAGING
(PAPER)-0.77%
BPC Holding Corp.,
Series B Sr. Notes, 12.50%,
06/15/06 100,000 110,500
- --------------------------------------------------------------
</TABLE>
FS-35
<PAGE> 293
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CONTAINERS & PACKAGING (PAPER)-(CONTINUED)
MVE Inc.,
Sr. Sec. Notes, 12.50%, 02/15/02 $ 100,000 $ 101,500
- --------------------------------------------------------------
Tekni-Plex Inc.,
Sr. Sub. Notes, 11.25%, 04/01/07 200,000 219,500
- --------------------------------------------------------------
431,500
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.45%
AmeriServ Food Co.,
Sr. Sub. Notes, 10.125%, 07/15/07
(acquired 07/09/97; cost
$240,000)(d) 240,000 250,800
- --------------------------------------------------------------
ELECTRIC COMPANIES-0.99%
El Paso Electric Co.,
Series D Sec. 1st Mortgage Bonds,
8.90%, 02/01/06 250,000 272,545
- --------------------------------------------------------------
Series E Sec. 1st Mortgage Bonds,
9.40%, 05/01/11 250,000 283,700
- --------------------------------------------------------------
556,245
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.54%
Electronic Retailing Systems
International, Inc.,
Sr. Disc. Notes, 13.25%,
02/01/04(c) 440,000 305,800
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.58%
Advanced Micro Devices, Inc.,
Sr. Sec. Notes, 11.00%, 08/01/03 110,000 119,213
- --------------------------------------------------------------
Panda Funding Corp.,
Series A-1 Pooled Project Bonds,
11.625%, 08/20/12 199,591 208,573
- --------------------------------------------------------------
327,786
- --------------------------------------------------------------
ENTERTAINMENT-1.83%
Time Warner, Inc.
Deb., 9.125%, 01/15/13 500,000 582,845
- --------------------------------------------------------------
Notes, 8.18%, 08/15/07 200,000 218,086
- --------------------------------------------------------------
Unsec. Deb., 6.85%, 01/15/26 125,000 126,673
- --------------------------------------------------------------
Viacom, Inc.,
Sr. Notes, 7.75%, 06/01/05 100,000 101,629
- --------------------------------------------------------------
1,029,233
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.13%
Associates Corp. of North America,
Series B Sr. Deb., 7.95%,
02/15/10 100,000 111,814
- --------------------------------------------------------------
Finova Capital Corp.,
Unsec. Notes, 7.40%, 05/06/06 500,000 524,850
- --------------------------------------------------------------
636,664
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
FOODS-2.34%
ConAgra Inc.,
Sr. Unsec. Notes, 7.125%,
10/01/26 $ 900,000 $ 952,389
- --------------------------------------------------------------
Del Monte Corp./Foods Co.,
Sr. Unsec. Sub. Notes, 12.25%,
04/15/07 260,000 288,600
- --------------------------------------------------------------
Pilgrim's Pride Corp.,
Sr. Sub. Notes, 10.875%, 08/01/03 70,000 73,850
- --------------------------------------------------------------
1,314,839
- --------------------------------------------------------------
GAMING, LOTTERY & PARI-MUTUEL COMPANIES-0.21%
Showboat Marina Casino Partnership
&
Showboat Marina Financial Corp.,
Series B Sec. 1st Mortgage Notes,
13.50%, 03/15/03 100,000 115,500
- --------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.90%
Tenet Healthcare Corp., Sr. Notes,
8.00%, 01/15/05 500,000 507,500
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.81%
Sun Healthcare Group, Inc.,
Sr. Sub. Notes, 9.50%, 07/01/07
(acquired 07/01/97; cost
$448,200)(d) 450,000 455,625
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.56%
Alaris Medical Systems,
Sr. Unsec. Gtd. Sub. Deb., 9.75%,
12/01/06 200,000 205,000
- --------------------------------------------------------------
Dade International Inc.,
Series B Sr. Sub. Notes, 11.125%,
05/01/06 100,000 111,500
- --------------------------------------------------------------
316,500
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.15%
Dynacare Inc. (Canada),
Sr. Yankee Notes, 10.75%,
01/15/06 80,000 84,200
- --------------------------------------------------------------
HOMEBUILDING-0.10%
Continental Homes Holdings Corp.,
Sr. Unsec. Gtd. Notes, 10.00%,
04/15/06 55,000 58,025
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.40%
Torchmark Corp.,
Notes, 7.875%, 05/15/23 750,000 790,035
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.54%
Travelcenters of America Inc.,
Sr. Gtd. Unsec. Sub. Deb.,
10.25%, 04/01/07 290,000 303,050
- --------------------------------------------------------------
IRON & STEEL-0.15%
GS Industries, Inc.,
Sr. Gtd. Notes, 12.00%, 09/01/04 75,000 81,937
- --------------------------------------------------------------
</TABLE>
FS-36
<PAGE> 294
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
LODGING-HOTELS-0.59%
Coast Hotels & Casinos Inc.,
Series B Sec. 1st Mortgage Gtd.
Notes, 13.00%, 12/15/02 $ 70,000 $ 78,750
- --------------------------------------------------------------
ITT Corp.,
Unsec. Gtd. Deb., 7.375%,
11/15/15 150,000 151,119
- --------------------------------------------------------------
John Q. Hammons Hotels Inc.,
Sec. 1st Mortgage Notes, 9.75%,
10/01/05 100,000 104,750
- --------------------------------------------------------------
334,619
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.10%
Fairfield Manufacturing Co., Inc.,
Sr. Sub. Notes, 11.375%, 07/01/01 50,000 53,500
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.51%
MMI Products Inc.,
Sr. Unsec. Sub. Notes, 11.25%,
04/15/07 260,000 284,700
- --------------------------------------------------------------
METAL FABRICATORS-0.11%
Gulf States Steel Corp.,
1st Mortgage Notes, 13.50%,
04/15/03 60,000 61,950
- --------------------------------------------------------------
METALS MINING-0.23%
Rio Algom Ltd. (Canada),
Yankee Unsec. Deb., 7.05%,
11/01/05 130,000 131,940
- --------------------------------------------------------------
NATURAL GAS-0.56%
Ferrellgas Partners,
Series B Sr. Sec. Gtd. Notes,
9.375%, 06/15/06 300,000 316,500
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.24%
United Stationer Supply, Sr. Sub.
Notes, 12.75%, 05/01/05 120,000 135,900
- --------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-1.08%
Gulf Canada Resources, Ltd.
(Canada),
Sr. Yankee Unsec. Notes, 8.35%,
08/01/06 550,000 607,189
- --------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.04%
Falcon Drilling Co., Inc.,
Series B Sr. Notes, 9.75%,
01/15/01 20,000 21,050
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.64%
Abraxas Petroleum Corp.,
Series B Sr. Notes, 11.50%,
11/01/04 95,000 104,500
- --------------------------------------------------------------
Talisman Energy, Inc. (Canada),
Yankee Deb., 7.125%, 06/01/07 250,000 256,875
- --------------------------------------------------------------
361,375
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
PAPER & FOREST PRODUCTS-1.15%
Indah Kiat Fin Mauritius,
Sr. Gtd. Unsec. Notes, 10.00%,
07/01/07
(acquired 06/26/97; cost
$466,931)(d) $ 470,000 $ 434,750
- --------------------------------------------------------------
National Fiberstock Corp.,
Series B Sr. Notes, 11.625%,
06/15/02 200,000 210,500
- --------------------------------------------------------------
645,250
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.52%
News America Holdings, Inc.,
Sr. Gtd. Deb., 9.25%, 02/01/13 250,000 291,293
- --------------------------------------------------------------
RAILROADS-0.84%
Norfolk Southern Corp.,
Bonds, 7.05%, 05/01/37 450,000 474,638
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.18%
Loehmann's Holdings, Inc.,
Sr. Unsec. Notes, 11.875%,
05/15/03 100,000 102,500
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.78%
Carr-Gottstein Foods Co.,
Sr. Sub. Notes, 12.00%, 11/15/05 100,000 110,500
- --------------------------------------------------------------
Great Atlantic & Pacific Tea Co.,
Inc. (Canada),
Yankee Gtd. Notes, 7.78%,
11/01/00
(acquired 10/18/95; cost
$100,000)(d) 100,000 103,642
- --------------------------------------------------------------
Jitney-Jungle Stores of America
Inc., Sr. Gtd. Notes, 12.00%,
03/01/06 200,000 225,500
- --------------------------------------------------------------
439,642
- --------------------------------------------------------------
RETAIL (SPECIALTY)-0.80%
CSK Auto Inc.,
Sr. Gtd. Sub. Deb., 11.00%,
11/01/06 60,000 64,500
- --------------------------------------------------------------
Icon Health & Fitness,
Series B Sr. Sub. Notes, 13.00%,
07/15/02 70,000 78,750
- --------------------------------------------------------------
United Auto Group, Inc.,
Sr. Sub. Notes, 11.00%, 07/15/07
(acquired 07/22/97; cost
$197,500)(d) 200,000 206,000
- --------------------------------------------------------------
Wilsons The Leather Experts Inc.,
Sr. Notes, 11.25%, 08/15/04
(acquired 08/14/97; cost
$100,000)(d) 100,000 99,250
- --------------------------------------------------------------
448,500
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.47%
Sovereign Bancorp, Inc.,
Sub. Notes, 8.00%, 03/15/03 250,000 263,523
- --------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.38%
MDC Communications Corp.(Canada),
Sr. Yankee Unsec. Sub. Notes,
10.50%, 12/01/06 200,000 215,500
- --------------------------------------------------------------
</TABLE>
FS-37
<PAGE> 295
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
SHIPPING-0.99%
Hutchison Whampoa Ltd. (Cayman
Islands),
Series D Sr. Yankee Gtd. Unsec. Unsub. Deb.,
6.988%, 08/01/37
(acquired 10/02/97; cost
$502,005)(d) $ 500,000 $ 467,595
- --------------------------------------------------------------
Stena A.B. (Sweden),
Sr. Yankee Unsec. Notes, 10.50%,
12/15/05 80,000 87,400
- --------------------------------------------------------------
554,995
- --------------------------------------------------------------
SOVEREIGN DEBT-0.59%
Province of Manitoba (Canada),
Yankee Bonds, 7.75%, 07/17/16 300,000 334,791
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-3.96%
Celcaribe S.A.,
Sr. Secured Notes, 13.50%,
03/15/04(c) 500,000 502,500
- --------------------------------------------------------------
GST Equipment Funding,
Sr. Sec. Notes, 13.25%, 05/01/07
(acquired 05/08/97; cost
$200,000)(d) 200,000 225,500
- --------------------------------------------------------------
ICG Holdings Inc.,
Gtd. Unsec. Sr. Disc. Notes,
11.625%,
03/15/07(c) 290,000 194,300
- --------------------------------------------------------------
Orion Network Systems, Inc.,
Sr. Notes, 11.25%, 01/15/07(e) 420,000 476,700
- --------------------------------------------------------------
Pricellular Wireless Corp.,
Sr. Notes, 10.75%, 11/01/04 130,000 141,050
- --------------------------------------------------------------
Sygnet Wireless Inc.,
Sr. Unsec. Notes, 11.50%,
10/01/06 160,000 173,600
- --------------------------------------------------------------
360 Communications Co.,
Sr. Unsec. Notes, 7.50%, 03/01/06 500,000 516,700
- --------------------------------------------------------------
2,230,350
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.00%
MCI Communications Corp.,
Putable Deb., 7.125%, 06/15/27 450,000 480,402
- --------------------------------------------------------------
PhoneTel Technologies, Inc.,
Sr. Gtd. Unsec. Notes, 12.00%,
12/15/06 80,000 82,600
- --------------------------------------------------------------
563,002
- --------------------------------------------------------------
TELEPHONE-0.70%
Esat Holdings Ltd. (Ireland),
Sr. Yankee Notes, 12.50%,
02/01/07(c) 350,000 243,250
- --------------------------------------------------------------
Hermes Europe Railtel BV,
Sr. Notes, 11.50%, 08/15/07
(acquired 08/14/97; cost
$142,413)(d) 140,000 153,300
- --------------------------------------------------------------
396,550
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TRUCKERS-0.56%
AmeriTruck Distribution Corp.,
Series B Sr. Sub. Notes, 12.25%,
11/15/05 $ 300,000 $ 318,000
- --------------------------------------------------------------
TRUCKS & PARTS-0.15%
Blue Bird Body Co.,
Series B Sr. Sub. Notes, 10.75%,
11/15/06 80,000 84,500
- --------------------------------------------------------------
WASTE MANAGEMENT-2.26%
Allied Waste Industries, Inc.,
Sr. Disc. Notes, 11.30%, 06/01/07
(acquired 05/01/97; cost
$356,103)(c)(d) 620,000 424,700
- --------------------------------------------------------------
Norcal Waste Systems Inc.,
Series B Sr. Gtd. Notes, 13.00%,
11/15/05 150,000 172,875
- --------------------------------------------------------------
WMX Technologies, Inc.,
Unsec. Notes, 7.10%, 08/01/26 650,000 677,417
- --------------------------------------------------------------
1,274,992
- --------------------------------------------------------------
Total U.S. Dollar Denominated
Non-Convertible Bonds & Notes 28,456,090
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
NON-CONVERTIBLE BONDS &
NOTES(F)-14.34%
CANADA-7.21%
Bank of Montreal (Banks-Money
Center),
Sub. Deb., 7.92%, 07/31/12 CAD 300,000 $ 242,897
- --------------------------------------------------------------
Bell Canada (Telephone),
Unsec. Deb., 10.875, 10/11/04 250,000 228,786
- --------------------------------------------------------------
Bell Mobility Cellular
(Telecommunications-Cellular/Wireless),
Bonds, 6.55%, 06/02/08 750,000 540,042
- --------------------------------------------------------------
Canadian Oil Debco Inc.
(Oil & Gas-Exploration &
Production),
Deb., 11.00%, 10/31/00 250,000 203,876
- --------------------------------------------------------------
Clearnet Communications
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes, 11.75%, 08/13/07
(acquired 07/31/97; cost
$347,582)(c)(d) 850,000 366,392
- --------------------------------------------------------------
NAV Canada (Services-Commercial &
Consumer), Bonds, 7.40%, 06/01/27 1,000,000 800,731
- --------------------------------------------------------------
Telegobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 650,000 523,496
- --------------------------------------------------------------
Trans-Canada Pipelines
(Oil & Gas-Exploration &
Production),
Series Q Deb., 10.625%, 10/20/09 375,000 365,477
- --------------------------------------------------------------
Unsec. Notes, 8.55%, 02/01/06 500,000 417,784
- --------------------------------------------------------------
</TABLE>
FS-38
<PAGE> 296
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Westcoast Energy, Inc. (Oil & Gas-
Exploration & Production), Deb.,
6.45%, 12/18/06
(acquired 12/03/96; cost
$369,632)(d) CAD 500,000 $ 368,955
- --------------------------------------------------------------
4,058,436
- --------------------------------------------------------------
FRANCE-0.26%
Credit Foncier de France
(Financial-Diversified)
Sr. Unsec. Unsub. Eurobonds,
6.50%, 02/22/99 SEK 750,000 101,061
- --------------------------------------------------------------
Sr. Unsec. Unsub. Eurobonds,
6.00%, 11/15/01 FRF 250,000 44,838
- --------------------------------------------------------------
145,899
- --------------------------------------------------------------
GERMANY-2.36%
Daimler-Benz A.G. (Automobiles),
Gtd. Unsub. Eurobonds, 4.125%,
07/05/03 DEM 430,000 314,258
- --------------------------------------------------------------
International Bank for
Reconstruction &
Development (Banks-Money Center),
Unsec. Global Bonds, 7.125%,
04/12/05 475,000 301,434
- --------------------------------------------------------------
LKB Global (Financial-Diversified),
Gtd. Notes, 6.00%, 01/25/06 1,200,000 712,120
- --------------------------------------------------------------
1,327,812
- --------------------------------------------------------------
ITALY-1.33%
KFW International Finance Inc.
(Investment Banking/Brokerage),
Gtd. Eurobonds, 11.625%,
11/27/98 ITL 1,200,000,000 749,592
- --------------------------------------------------------------
NEW ZEALAND-0.44%
International Bank for
Reconstruction &
Development (Banks-Money Center),
Bonds, 6.63%, 08/20/07(b) NZD 750,000 245,869
- --------------------------------------------------------------
SWEDEN-0.78%
Swedish Export Credit
(Financial-Diversified),
Unsec. Unsub. Eurobonds, 11.70%,
12/04/98 ITL 700,000,000 437,965
- --------------------------------------------------------------
UNITED KINGDOM-1.96%
Ford Credit Europe PLC
(Financial-Diversified),
Deb., 6.00%, 03/30/99 DEM 200,000 118,298
- --------------------------------------------------------------
KFW International Finance
(Investment Banking/Brokerage),
Gtd. Eurobonds, 10.625%,
09/03/01 GBP 100,000 186,255
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Sutton Bridge
(Financial-Diversified),
Gtd. Eurobonds, 8.625%, 06/30/22
(acquired 05/29/97; cost
$733,585)(d) GBP 450,000 $ 800,287
- --------------------------------------------------------------
1,104,840
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated
Non-Convertible Bonds & Notes 8,070,413
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS &
NOTES(F)-2.58%
FRANCE-0.08%
Societe Generale (Banks-Money
Center),
Conv. Deb., 3.50%, 01/01/00 FRF 231,000 48,841
- --------------------------------------------------------------
JAPAN-0.64%
Glaxo Wellcome PLC
(Financial-Diversified),
Conv. Unsub. Notes, 4.30%,
09/28/98 JPY 4,000,000 55,708
- --------------------------------------------------------------
Sony Corp. (Electronic Equipment),
Conv. Deb., 1.40%, 03/31/05 8,000,000 87,744
- --------------------------------------------------------------
Toyota Motor Corp. (Automobiles),
Conv. Bonds, 1.20%, 01/28/98 15,000,000 215,060
- --------------------------------------------------------------
358,512
- --------------------------------------------------------------
SWITZERLAND-0.38%
Yamada Denki Co. Ltd. (Retail-
Computers & Electronics), Unsec.
Conv. Notes, 0.25%, 03/31/00 CHF 300,000 212,105
- --------------------------------------------------------------
UNITED KINGDOM-1.48%
British Airport Authority
(Airlines),
Eurobonds, 5.75%, 03/29/06 GBP 450,000 834,261
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Convertible Bonds
& Notes 1,453,719
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED
GOVERNMENT BONDS &
NOTES(F)-20.94%
CANADA-3.21%
B.C. Generic Residual,
Deb., 13.88%, 06/21/04(b) CAD 150,000 74,269
- --------------------------------------------------------------
Canadian Government,
Bonds, 7.00%, 12/01/06 1,000,000 787,824
- --------------------------------------------------------------
</TABLE>
FS-39
<PAGE> 297
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
Municipal Finance Authority of
British Columbia,
Bonds, 7.75%, 12/01/05 CAD 500,000 $ 404,842
- --------------------------------------------------------------
Ontario Province,
Sr. Unsec. Unsub. Deb.,
6.875%, 09/15/00 GBP 35,000 58,193
- --------------------------------------------------------------
Sr. Unsec. Unsub. Global Bonds,
8.00%, 03/11/03 CAD 600,000 480,021
- --------------------------------------------------------------
1,805,149
- --------------------------------------------------------------
FRANCE-1.09%
French Treasury Bill,
Notes, 5.75%, 11/12/98 FRF 3,500,000 617,085
- --------------------------------------------------------------
GERMANY-1.29%
Bundesrepublik Deutschland,
Bonds, 6.75%, 07/15/04 DEM 750,000 471,006
- --------------------------------------------------------------
Bonds, 6.875%, 05/12/05 400,000 252,736
- --------------------------------------------------------------
723,742
- --------------------------------------------------------------
ITALY-0.48%
Republic of Italy,
Conv. Bonds, 6.50%, 06/28/01 ITL 400,000,000 273,172
- --------------------------------------------------------------
NEW ZEALAND-4.73%
Federal National Mortgage
Association,
Notes, 7.25%, 06/20/02 NZD 750,000 469,042
- --------------------------------------------------------------
New Zealand Government,
Bonds, 8.00%, 02/15/01 1,000,000 644,440
- --------------------------------------------------------------
Bonds, 10.00%, 03/15/02 1,500,000 1,047,453
- --------------------------------------------------------------
Bonds, 8.00%, 04/15/04 750,000 500,116
- --------------------------------------------------------------
2,661,051
- --------------------------------------------------------------
SWEDEN-4.19%
Swedish Government,
Bonds, 13.00%, 06/15/01 SEK 3,000,000 492,824
- --------------------------------------------------------------
Bonds, 10.25%, 05/05/03 5,000,000 797,374
- --------------------------------------------------------------
Bonds, 6.00%, 02/09/05 4,000,000 527,110
- --------------------------------------------------------------
Bonds, 6.50%, 10/25/06 4,000,000 539,527
- --------------------------------------------------------------
2,356,835
- --------------------------------------------------------------
UNITED KINGDOM-5.95%
Federal National Mortgage
Association,
Sr. Unsec. Notes, 6.875%,
06/07/02 GBP 350,000 585,451
- --------------------------------------------------------------
United Kingdom Treasury,
Bonds, 8.00%, 12/07/00 350,000 606,708
- --------------------------------------------------------------
Gtd. Notes, 7.00%, 11/06/01 800,000 1,354,548
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Bonds, 7.50%, 12/07/06 GBP 450,000 $ 801,823
- --------------------------------------------------------------
3,348,530
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Government Bonds
& Notes 11,785,564
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
DOMESTIC COMMON STOCK-0.03%
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.03%
Nextel Communications, Inc.(g) 557 $ 14,621
- --------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS-2.16%
BANKS (REGIONAL)-0.88%
Westpac Banking Corp. STRYPES
Trust-$3.135 Conv. Pfd. 16,000 496,000
- --------------------------------------------------------------
ENTERTAINMENT-0.00%
Time Warner Inc.-Series M,
$102.50 PIK Conv. Pfd. 1 1,165
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.08%
Conseco Inc.-$4.278 Conv. PRIDES 4,000 608,000
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.20%
Citizens Utilities Co.-$2.50 Conv.
Pfd. 2,300 109,681
- --------------------------------------------------------------
Total Domestic Convertible
Preferred Stocks 1,214,846
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-2.20%
UNITED KINGDOM-2.20%
J Sainsbury PLC (Retail-Food
Chains)(g) 148,367 1,238,390
- --------------------------------------------------------------
WARRANTS-0.09%
BROADCASTING (TELEVISION, RADIO & CABLE)-0.00%
Wireless One, Inc., expiring
10/19/00(h) 150 0
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.04%
Electronic Retailing Systems,
expiring 01/24/98(h) 440 22,000
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.01%
MVE Inc., expiring 02/15/02(h) 100 3,000
- --------------------------------------------------------------
METAL FABRICATORS-0.00%
Gulf States Steel Corp.,
expiring 04/15/03(h) 60 270
- --------------------------------------------------------------
PERSONAL CARE-0.01%
IHF Capital Inc., expiring
11/14/99(h)
(acquired 11/04/94-12/07/94; cost
$0)(d) 70 3,465
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.01%
Clearnet Communications Inc.,
expiring 09/15/05(h) 330 2,970
- --------------------------------------------------------------
</TABLE>
FS-40
<PAGE> 298
<TABLE>
<CAPTION>
MARKET
WARRANTS-(CONTINUED) SHARES VALUE
<S> <C> <C>
Orion Network Systems, Inc.,
expiring 01/15/07(h) 420 $ 5,880
- --------------------------------------------------------------
8,850
- --------------------------------------------------------------
TELEPHONE-0.02%
ESAT Holdings Ltd., expiring
02/01/07(h)
(acquired 06/16/97; cost $0)(d) 350 1,137
- --------------------------------------------------------------
Intermedia Communications Inc.,
expiring 06/01/00(h) 150 10,500
- --------------------------------------------------------------
11,637
- --------------------------------------------------------------
Total Warrants 49,222
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY SECURITIES-1.65%
Notes, 6.50%, 05/31/01 $ 400,000 $ 409,844
- --------------------------------------------------------------
Notes, 6.625%, 02/15/27 100,000 106,047
- --------------------------------------------------------------
Notes, 6.375%, 08/15/27 400,000 412,360
- --------------------------------------------------------------
Total U.S. Treasury Securities 928,251
- --------------------------------------------------------------
U.S. GOVERNMENT AGENCY
SECURITIES-0.73%
Tennessee Valley Authority, Bonds,
5.98%, 04/01/36 400,000 410,280
- --------------------------------------------------------------
REPURCHASE AGREEMENT(i)-2.13%
Sanwa Securities (U.S.A.) Co., L.P.
5.73%, 11/03/97(j) 1,201,988 1,201,988
- --------------------------------------------------------------
TOTAL INVESTMENTS-97.40% 54,823,384
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-2.60% 1,463,735
- --------------------------------------------------------------
NET ASSETS-100.00% $ 56,287,119
- --------------------------------------------------------------
</TABLE>
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as indicated by
note (f).
(b) Zero coupon bond issued at a discount. The interest rate
shown represents the rate of original issue discount.
(c) Discounted bond at purchase. Interest rate shown represents
the coupon rate at which the bond will accrue at a specified
future date.
(d) Restricted Security. May be resold to qualified
institutional buyers in accordance with the provisions of
Rule 144A under the Securities Act of 1933, as amended. The
valuation of these securities has been determined in
accordance with procedures established by the Board of
Directors. The aggregate market value of these securities at
10/31/97 was $5,275,178 which represented 9.37% of the
Fund's net assets.
(e) Issued as a unit. Each unit consists of $1,000 Sr. notes
plus warrants to purchase 0.8463 shares of common stock.
(f) Foreign denominated security. Par value and coupon are
denominated in currency of country indicated.
(g) Non-income producing security.
(h) Non-income producing security acquired as part of a unit
with or in exchange for other securities.
(i) Collateral on repurchase agreements, including the Fund's
pro-rata interest in joint repurchase agreements, is taken
into possession by the Fund upon entering into the
repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales
price of the repurchase agreement. The investments in some
repurchase agreements are through participation in joint
accounts with other mutual funds, private accounts, and
certain non-registered investment companies managed by the
investment advisor or its affiliates.
(j) Joint repurchase agreement entered into 10/31/97 with a
maturing value of $200,095,500. Collateralized by
$201,314,000 U.S. Government obligations, 0% to 8.875% due
11/15/97 to 08/15/27 with an aggregate market value at
10/31/97 of $204,000,545.
Abbreviations:
<TABLE>
<S> <C>
CAD - Canadian Dollar Pfd. - Preferred
CHF - Swiss Franc PIK - Payment in Kind
Conv. - Convertible PRIDES - Preferred Redemption
Deb. - Debentures Increased Dividend Equity Securities
DEM - German Deutschemark Sec. - Secured
Disc. - Discounted SEK - Swedish Krona
FRF - French Franc Sr. - Senior
GBP - British Pound Sterling STRYPES - Structured Yield Product
Gtd. - Guaranteed Exchangeable for Stock
ITL - Italian Lire Sub. - Subordinated
JPY - Japanese Yen Unsec. - Unsecured
NZD - New Zealand Dollar Unsub. - Unsubordinated
</TABLE>
See Notes to Financial Statements.
FS-41
<PAGE> 299
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$53,006,761) $54,823,384
- -----------------------------------------------------------
Foreign currencies, at market value (cost
$57,610) 57,391
- -----------------------------------------------------------
Receivables for:
Capital stock sold 349,669
- -----------------------------------------------------------
Dividends and interest 1,249,220
- -----------------------------------------------------------
Investment for deferred compensation plan 10,356
- -----------------------------------------------------------
Other assets 17,042
- -----------------------------------------------------------
Total assets 56,507,062
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 34,206
- -----------------------------------------------------------
Forward contracts 47,608
- -----------------------------------------------------------
Dividends 63,819
- -----------------------------------------------------------
Deferred compensation plan 10,356
- -----------------------------------------------------------
Accrued advisory fees 7,612
- -----------------------------------------------------------
Accrued administrative service fees 2,604
- -----------------------------------------------------------
Accrued distribution fees 34,324
- -----------------------------------------------------------
Accrued transfer agent fees 9,826
- -----------------------------------------------------------
Accrued operating expenses 9,588
- -----------------------------------------------------------
Total liabilities 219,943
- -----------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $56,287,119
===========================================================
NET ASSETS:
Class A $30,924,029
===========================================================
Class B $25,120,996
===========================================================
Class C $ 242,094
===========================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
CLASS A:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 2,830,028
===========================================================
CLASS B:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 2,300,947
===========================================================
CLASS C:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 22,178
===========================================================
CLASS A:
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 10.93
===========================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.93 divided
by 95.25%) $ 11.48
===========================================================
CLASS B:
NET ASSET VALUE AND OFFERING PRICE PER SHARE $ 10.92
===========================================================
CLASS C:
NET ASSET VALUE AND OFFERING PRICE PER SHARE $ 10.92
===========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $3,826,335
- -----------------------------------------------------------
Dividends 31,675
- -----------------------------------------------------------
Total investment income 3,858,010
- -----------------------------------------------------------
EXPENSES:
Advisory fees 346,653
- -----------------------------------------------------------
Administrative service fees 74,031
- -----------------------------------------------------------
Directors' fees 8,735
- -----------------------------------------------------------
Distribution fees-Class A 137,912
- -----------------------------------------------------------
Distribution fees-Class B 219,155
- -----------------------------------------------------------
Distribution fees-Class C 240
- -----------------------------------------------------------
Custodian fees 25,984
- -----------------------------------------------------------
Transfer agent fees-Class A 62,912
- -----------------------------------------------------------
Transfer agent fees-Class B 54,149
- -----------------------------------------------------------
Transfer agent fees-Class C 59
- -----------------------------------------------------------
Other 103,320
- -----------------------------------------------------------
Total expenses 1,033,150
- -----------------------------------------------------------
Less: Fees waived by advisor (302,278)
- -----------------------------------------------------------
Expenses paid indirectly (2,232)
- -----------------------------------------------------------
Net expenses 728,640
- -----------------------------------------------------------
Net investment income 3,129,370
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 109,553
- -----------------------------------------------------------
Foreign currencies (101,917)
- -----------------------------------------------------------
Forward currency contracts 389,609
- -----------------------------------------------------------
397,245
- -----------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 884,081
- -----------------------------------------------------------
Foreign currencies (1,291)
- -----------------------------------------------------------
Forward currency contracts (88,451)
- -----------------------------------------------------------
794,339
- -----------------------------------------------------------
Net gain from investment securities, foreign
currencies and forward currency contracts. 1,191,584
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $4,320,954
===========================================================
</TABLE>
See Notes to Financial Statements.
FS-42
<PAGE> 300
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,129,370 $ 1,844,305
- -----------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies and forward currency contracts 397,245 418,371
- -----------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and forward currency contracts 794,339 543,300
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 4,320,954 2,805,976
- -----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (1,835,866) (1,175,361)
- -----------------------------------------------------------------------------------------
Class B (1,337,369) (705,239)
- -----------------------------------------------------------------------------------------
Class C (767) --
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (311,081) (122,866)
- -----------------------------------------------------------------------------------------
Class B (242,850) (57,565)
- -----------------------------------------------------------------------------------------
Class C (605) --
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 8,692,165 11,543,105
- -----------------------------------------------------------------------------------------
Class B 8,049,066 12,214,514
- -----------------------------------------------------------------------------------------
Class C 239,702
- -----------------------------------------------------------------------------------------
Net increase in net assets 17,573,349 24,502,564
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 38,713,770 14,211,206
- -----------------------------------------------------------------------------------------
End of period $56,287,119 $ 38,713,770
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $54,262,086 $ 37,281,153
- -----------------------------------------------------------------------------------------
Undistributed net investment income (10,921) 123,655
- -----------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies and forward currency
contracts 263,067 330,414
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and forward currency contracts 1,772,887 978,548
- -----------------------------------------------------------------------------------------
$56,287,119 $ 38,713,770
=========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Income Fund (the "Fund") is an investment portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company consisting of four operating
series portfolios: AIM Global Income Fund, AIM Global Aggressive Growth Fund,
AIM Global Growth Fund and AIM International Equity Fund. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
and Class C shares are sold with a contingent deferred sales charge. Class C
shares commenced sales on August 4, 1997. Matters affecting each portfolio or
class are voted on exclusively by the shareholders of such portfolio or class.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in the financial statements pertains only to
the Fund. The Fund's investment objective is to provide high current income.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations-Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as institution-
size trading in similar groups of securities, developments
FS-43
<PAGE> 301
related to special securities, yield, quality, coupon rate, maturity, type of
issue, individual trading characteristics and other market data. Investment
securities for which prices are not provided by the pricing service and which
are listed or traded on an exchange (except convertible bonds) are valued at
the last sales price on the exchange where the security is principally traded
or, lacking any sales on a particular day, at the mean between the closing
bid and asked prices on that day unless the Board of Directors, or persons
designated by the Board of Directors, determines that the over-the-counter
quotations more closely reflect the current market value of the security.
Securities traded in the over-the-counter market, except (i) securities
priced by the pricing service, (ii) securities for which representative
exchange prices are available, and (iii) securities reported in the NASDAQ
National Market System, are valued at the mean between representative last
bid and asked prices obtained from an electronic quotation reporting system,
if such prices are available, or from established market makers. Each
security reported in the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the mean
between the closing bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in accordance with methods which are specifically
authorized by the Board of Directors. Short-term obligations having 60 days
or less to maturity are valued at amortized cost which approximates market
value. Generally, trading in foreign securities, as well as corporate bonds
and U.S. Government securities, is substantially completed each day at
various times prior to the close of the New York Stock Exchange. The values
of such securities used in computing the net asset value of a Fund's shares
are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which would not be reflected in the
computation of a Fund's net asset value. If events materially affecting the
value of such securities and exchange rates occur during such period, then
these securities and exchange rates will be valued at their fair value as
determined in good faith by or under the supervision of the Board of
Directors.
B. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts-A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
Outstanding contracts at October 31, 1997 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACT TO APPRECIATION
DATE DELIVER VALUE RECEIVE (DEPRECIATION)
---------- ------------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
11/18/97 NZD 3,580,000 $ 2,229,087 $ 2,279,923 $ 50,836
11/20/97 DEM 1,400,000 812,843 763,734 (49,109)
12/05/97 JPY 41,000,000 340,690 352,536 11,846
12/10/97 CHF 300,000 215,180 204,026 (11,154)
12/19/97 NZD 1,000,000 623,387 633,000 9,613
01/14/97 DEM 570,000 332,383 327,210 (5,173)
01/28/98 DEM 1,850,000 1,079,618 1,046,380 (33,238)
01/29/98 SEK 18,000,000 2,410,316 2,420,005 9,689
01/30/98 GBP 1,200,000 2,035,398 2,004,480 (30,918)
----------- ----------- --------
$10,078,902 $10,031,294 $(47,608)
=========== =========== ========
</TABLE>
D. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on an accrual basis. Dividend income is recorded on the ex-dividend
date. It is the policy of the Fund to declare daily dividends from net
investment income. Such dividends are paid annually. On October 31, 1997,
undistributed net investment income was decreased by $89,944 and
undistributed net realized gains increased by $89,944 in order to comply with
the requirements of the American Institute of Certified Public Accountants
Statement of Position 93-2. Net assets of the Fund were unaffected by the
reclassifications discussed above.
E. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements.
F. Expenses-Distribution and transfer agency expenses directly attributable to a
class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated between the
classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.70% of
the first $1 billion of the Fund's average daily net assets, plus 0.65% of the
Fund's average daily net assets in excess of $1 billion. During the year ended
October 31, 1997, AIM waived fees of $302,278.
The Fund, pursuant to a master administrative services agreement, has agreed
to reimburse AIM for administrative costs incurred in providing accounting
services to the Fund. During the year ended October 31, 1997, AIM was reimbursed
$74,031 for such services.
FS-44
<PAGE> 302
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the year ended October 31, 1997, the Fund paid AFS
$72,578 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class
A, Class B and Class C 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"), the Fund's Class B shares (the "Class B Plan"),
and the Fund's Class C shares (the "Class C Plan") (collectively, the "Plans").
The Fund, pursuant to the Plan, pays AIM Distributors compensation at the annual
rate of 0.50% of the average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class C shares. The Plan is designed to compensate
AIM Distributors for certain promotional and other sales related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of the Fund. The Fund,
pursuant to the Class B Plan, pays AIM Distributors at an annual rate of 1.00%
of the average daily net assets attributable to the Class B shares. Of this
amount, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee under such
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges, that may be
paid by the respective classes. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more designees, its rights to all or a designated
portion of (a) compensation received by AIM Distributors from the Fund pursuant
to the Class B Plan (but not AIM Distributors' duties and obligations pursuant
to the Class B Plan) and (b) any contingent deferred sales charges received by
AIM Distributors related to the Class B shares. During the year ended October
31, 1997 for the Class A shares and Class B shares and the period August 4, 1997
(date sales commenced) through October 31, 1997, the Class C shares paid AIM
Distributors $137,912, $219,155 and $240, respectively, as compensation under
the Plans.
AIM Distributors received commissions of $59,763 from sales of the Class A
shares of the Fund during the year ended October 31, 1997. 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, 1997,
AIM Distributors received commissions of $3,397 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, 1997, the Fund incurred legal fees of $3,931
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-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced the
Fund's expenses by $190 during the year ended October 31, 1997. The Fund also
received reductions in transfer agency fees from AFS (an affiliate of AIM) and
reductions in custodian fees of $649 and $1,393, respectively, under expense
offset arrangements. The effect of the above arrangements resulted in a
reduction of the Fund's total expenses of $2,232 during the year ended October
31, 1997.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-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) $500,000,000 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 15, 1997, the Fund was
limited to borrowing up to the lessor of (i) $325,000,000 or (ii) the limit set
by its prospectus for borrowings. During the year ended October 31, 1997, 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 0.05% 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 6-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, 1997 was
$45,325,570 and $28,881,069, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1997, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 2,907,693
- ------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (1,091,792)
- ------------------------------------------------------
Net unrealized appreciation
(depreciation) of investment securities $ 1,815,901
======================================================
Cost of investments for tax purposes is $53,007,483.
</TABLE>
FS-45
<PAGE> 303
NOTE 7-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the year ended October
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------ -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold:
Class A 1,677,097 $17,985,938 1,609,644 $17,019,341
- ----------------------------------------------------------------------------------------------------------------
Class B 1,244,806 13,337,043 1,313,279 13,876,204
- ----------------------------------------------------------------------------------------------------------------
Class C* 23,915 258,631 -- --
- ----------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 168,472 1,809,673 92,969 985,383
- ----------------------------------------------------------------------------------------------------------------
Class B 118,888 1,275,952 58,431 618,362
- ----------------------------------------------------------------------------------------------------------------
Class C* 71 779 -- --
- ----------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (1,035,690) (11,103,446) (613,922) (6,461,619)
- ----------------------------------------------------------------------------------------------------------------
Class B (610,857) (6,563,929) (215,814) (2,280,052)
- ----------------------------------------------------------------------------------------------------------------
Class C* (1,808) (19,708) -- --
- ----------------------------------------------------------------------------------------------------------------
1,584,894 $16,980,933 2,244,587 $23,757,619
================================================================================================================
</TABLE>
* Class C Shares commenced sales on August 4, 1997.
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
and a share of Class B capital stock outstanding during each of the years in the
three-year period ended October 31, 1997 and the period September 15, 1994
(dates operations commenced) through October 31, 1994 and for a share of Class C
capital stock outstanding during the period August 4, 1997 (date sales
commenced) through October 31, 1997.
<TABLE>
<CAPTION>
1997 1996 1995 1994
---------- ------- ------- ------
<S> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 10.85 $10.74 $10.02 $10.00
- -----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.72 0.79(a) 0.79 0.08
- -----------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.21 0.25 0.75 0.01
- -----------------------------------------------------------------------------------------------------------
Total from investment operations 0.93 1.04 1.54 0.09
- -----------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from investment income (0.72) (0.81) (0.82) (0.07)
- -----------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.13) (0.12) -- --
- -----------------------------------------------------------------------------------------------------------
Total distributions (0.85) (0.93) (0.82) (0.07)
- -----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.93 $10.85 $10.74 $10.02
===========================================================================================================
Total return(b) 9.05% 10.22% 16.07% 0.93%
===========================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $30,924 $21,926 $10,004 $2,661
===========================================================================================================
Ratio of expenses to average net assets(c) 1.25%(d)(e) 1.25% 1.25% 1.25%(f)
===========================================================================================================
Ratio of net investment income to average net assets(g) 6.54%(d) 7.27% 7.38% 6.01%(f)
===========================================================================================================
Portfolio turnover rate 61% 83% 128% 6%
===========================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.86%, 2.02%, 3.03% and 5.61% (annualized) for the periods 1997-1994,
respectively.
(d) Ratios are based on average net assets of $27,582,444.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been 1.24%.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. The ratios of net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 5.93%, 6.51%, 5.59% and 1.65% (annualized) for the
periods 1997-1994, respectively.
FS-46
<PAGE> 304
<TABLE>
<CAPTION>
1997 1996 1995 1994
---------- ------- ------ ------
<S> <C> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 10.84 $10.73 $10.01 $10.00
- -------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.67 0.74(a) 0.74 0.07
- -------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.21 0.24 0.75 0.01
- -------------------------------------------------------------------------------------------------------
Total from investment operations 0.88 0.98 1.49 0.08
- -------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from investment income (0.67) (0.75) (0.77) (0.07)
- -------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.13) (0.12) -- --
- -------------------------------------------------------------------------------------------------------
Total distributions (0.80) (0.87) (0.77) (0.07)
- -------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.92 $10.84 $10.73 $10.01
=======================================================================================================
Total return(b) 8.48% 9.66% 15.56% 0.79%
=======================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $25,121 $16,787 $4,207 $362
=======================================================================================================
Ratio of expenses to average net assets(c) 1.76%(d)(e) 1.75% 1.74% 1.73%(f)
=======================================================================================================
Ratio of net investment income to average net assets(g) 6.03%(d) 6.77% 6.88% 3.59%(f)
=======================================================================================================
Portfolio turnover rate 61% 83% 128% 6%
=======================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.37%, 2.53%, 3.57% and 22.09% (annualized) for the periods 1997-1994,
respectively.
(d) Ratios are based on average net assets of $21,915,481.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. The ratios of net
investment income (loss) to average net assets prior to fee waivers and/or
expense reimbursements were 5.42%, 6.00%, 5.05% and (16.77)% (annualized)
for the periods 1997-1994, respectively.
<TABLE>
<CAPTION>
1997
CLASS C: ----------
<S> <C>
Net asset value, beginning of period $10.76
- ------------------------------------------------------------ ------
Income from investment operations:
Net investment income 0.15(a)
- ------------------------------------------------------------ ------
Net gains on securities (both realized and unrealized) 0.17
- ------------------------------------------------------------ ------
Total from investment operations 0.32
- ------------------------------------------------------------ ------
Less distributions:
Dividends from net investment income (0.13)
- ------------------------------------------------------------ ------
Distributions from net realized gains (0.03)
- ------------------------------------------------------------ ------
Total distributions (0.16)
- ------------------------------------------------------------ ------
Net asset value, end of period $10.92
============================================================ ======
Total return(b) 2.99%
============================================================ ======
Ratios/supplement data:
Net assets, end of period (000s omitted) $ 242
============================================================ ======
Ratio of expenses to average net assets(c) 1.76%(e)(d)
============================================================ ======
Ratio of net investment income (loss) to average net
assets(f) 6.03%(c)(d)
============================================================ ======
Portfolio turnover rate 61%
============================================================ ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and periods for less than one year,
total returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses
to average net assets prior to fee waivers and/or expense
reimbursements was 2.37% (annualized).
(d) Ratios are annualized and based on average net assets of $98,262.
(e) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have
remained the same.
(f) After fee waivers and/or expense reimbursements. Ratio of net
investment income to average net assets prior to fee waivers and/or
expense reimbursements was 5.42% (annualized).
FS-47
<PAGE> 305
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM International Equity Fund (a portfolio
of AIM International Funds, Inc.), including the schedule
of investments, as of October 31, 1997, 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 and periods in the
five-year period then ended. These financial statements
and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an
opinion on these financial statements and 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 and financial highlights. Our procedures
included confirmation of securities owned as of October
31, 1997, 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, 1997, 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 and periods in the five-year period
then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
FS-48
<PAGE> 306
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-91.55%
ARGENTINA-2.07%
Banco de Galicia y Buenos Aires
S.A. de C.V.-ADR
(Banks-Regional) 354,880 $ 8,600,295
- ---------------------------------------------------------------
Banco Rio de La Plata S.A.
(Banks-Money Center)(a) 415,000 4,357,500
- ---------------------------------------------------------------
Perez Companc S.A.-Class B (Oil
& Gas-Refining & Marketing) 1,763,181 11,044,194
- ---------------------------------------------------------------
Telefonica de Argentina S.A.-ADR
(Telephone) 240,600 6,766,875
- ---------------------------------------------------------------
YPF Sociedad Anonima-ADR (Oil-
International Integrated) 508,200 16,262,400
- ---------------------------------------------------------------
47,031,264
- ---------------------------------------------------------------
AUSTRALIA-1.22%
Boral Ltd. (Engineering &
Construction) 4,080,000 10,731,032
- ---------------------------------------------------------------
Coca-Cola Amatil Ltd.
(Beverages-Non-Alcoholic) 813,536 6,121,675
- ---------------------------------------------------------------
QBE Insurance Group Ltd.
(Insurance-Property-Casualty) 1,870,277 8,746,561
- ---------------------------------------------------------------
QBE Insurance Group Ltd.-Bonus
Shares
(Insurance-Property-Casualty) 467,569 2,130,741
- ---------------------------------------------------------------
27,730,009
- ---------------------------------------------------------------
AUSTRIA-0.77%
OMV A.G. (Oil & Gas-Refining &
Marketing) 66,000 9,383,113
- ---------------------------------------------------------------
VA Technologie A.G. (Engineering
& Construction) 45,700 8,109,128
- ---------------------------------------------------------------
17,492,241
- ---------------------------------------------------------------
BELGIUM-1.17%
Barco Industries (Manufacturing-
Diversified) 41,000 7,909,040
- ---------------------------------------------------------------
Colruyt S.A. (Retail-Food
Chains) 14,600 7,832,442
- ---------------------------------------------------------------
UCB S.A.
(Manufacturing-Diversified) 3,100 10,711,631
- ---------------------------------------------------------------
26,453,113
- ---------------------------------------------------------------
BRAZIL-1.97%
Companhia Energetica de Minas
Gerais (Electric Companies) 173,000 6,904,622
- ---------------------------------------------------------------
Petroleo Brasileiro
S.A.-Petrobras - Preferred
(Oil & Gas-Exploration &
Production) 30,271 5,628,951
- ---------------------------------------------------------------
Telecomunicacoes Brasileiras
S.A.-Telebras-ADR (Telephone) 124,500 12,636,750
- ---------------------------------------------------------------
Telecomunicacoes de Sao Paulo
S.A.-TELESP-Preferred
(Telephone) 39,000 10,188,217
- ---------------------------------------------------------------
Uniao de Bancos Brasileiros
S.A.-GDR (Banks-Regional)(a) 343,000 9,346,750
- ---------------------------------------------------------------
44,705,290
- ---------------------------------------------------------------
CANADA-2.86%
Bank of Montreal (Banks-Money
Center) 118,000 5,094,760
- ---------------------------------------------------------------
Canadian National Railway Co.
(Railroads) 170,000 9,169,375
- ---------------------------------------------------------------
Canadian Natural Resources Ltd.
(Oil & Gas-Exploration &
Production)(a) 335,000 9,745,627
- ---------------------------------------------------------------
Canadian Pacific, Ltd.
(Railroads) 307,000 9,152,438
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Magna International, Inc.-Class
A (Machinery-Diversified) 101,900 $ 6,716,933
- ---------------------------------------------------------------
Northern Telecom Ltd.
(Communications Equipment) 124,700 11,184,031
- ---------------------------------------------------------------
Suncor, Inc. (Oil-International
Integrated) 380,000 13,683,613
- ---------------------------------------------------------------
64,746,777
- ---------------------------------------------------------------
CHILE-0.65%
Cia. de Telecomunicaciones de
Chile S.A.-ADR (Telephone) 263,925 7,323,919
- ---------------------------------------------------------------
Quinenco S.A.-ADR (Financial-
Diversified)(a) 513,900 7,515,788
- ---------------------------------------------------------------
14,839,707
- ---------------------------------------------------------------
DENMARK-0.84%
Novo Nordisk A/S-Class B (Health
Care/Drugs-Generic & Other) 176,600 19,113,428
- ---------------------------------------------------------------
FINLAND-0.78%
Enso Oy (Paper & Forest
Products) 560,000 5,315,034
- ---------------------------------------------------------------
Nokia Oy A.B.-Class A
(Telecommunications-
Cellular/Wireless) 141,000 12,319,528
- ---------------------------------------------------------------
17,634,562
- ---------------------------------------------------------------
FRANCE-11.74%
Accor S.A. (Lodging-Hotels) 63,200 11,767,312
- ---------------------------------------------------------------
Alcatel Alsthom
(Manufacturing-Diversified) 160,000 19,305,681
- ---------------------------------------------------------------
AXA S.A. (Insurance-Multi-Line) 132,000 9,039,137
- ---------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 250,000 11,051,879
- ---------------------------------------------------------------
Cap Gemini Sogeti S.A.
(Computers-Software &
Services) 162,000 12,862,827
- ---------------------------------------------------------------
Carrefour Supermarche S.A.
(Retail-Food Chains) 7,500 3,913,665
- ---------------------------------------------------------------
Compagnie Francaise d'Etudes et
de Construction Technip (Oil &
Gas-Refining & Marketing) 86,000 9,109,522
- ---------------------------------------------------------------
Elf Aquitaine S.A. (Oil &
Gas-Refining & Marketing) 180,500 22,342,477
- ---------------------------------------------------------------
Essilor International
(Manufacturing-Specialized) 24,940 6,658,449
- ---------------------------------------------------------------
Etablissements Economiques du
Casino Guichard-Perrachon
(Retail-Food Chains) 195,000 10,817,839
- ---------------------------------------------------------------
Lafarge S.A. (Engineering &
Construction) 138,500 8,653,474
- ---------------------------------------------------------------
Legrand S.A. (Housewares) 30,500 5,678,845
- ---------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 34,800 15,915,122
- ---------------------------------------------------------------
Promodes (Retail-Food Chains) 28,000 9,116,110
- ---------------------------------------------------------------
Renault S.A. (Automobiles)(a) 465,000 12,938,500
- ---------------------------------------------------------------
Renault S.A. (Automobiles)
(Acquired 07/31/97; cost
$5,810,539)(a)(b) 210,000 5,843,193
- ---------------------------------------------------------------
Rexel S.A. (Distributors-Food &
Health) 23,200 6,153,686
- ---------------------------------------------------------------
Rhone-Poulenc-Class A
(Chemicals-Diversified) 270,000 11,772,201
- ---------------------------------------------------------------
Schneider S.A. (Housewares) 160,000 8,543,319
- ---------------------------------------------------------------
</TABLE>
FS-49
<PAGE> 307
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Societe BIC S.A. (Office
Equipment & Supplies) 222,000 $ 15,186,790
- ---------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 177,000 24,241,321
- ---------------------------------------------------------------
Sodexho S.A.
(Services-Commercial &
Consumer) 9,200 4,588,636
- ---------------------------------------------------------------
Total S.A.-Class B (Oil &
Gas-Refining & Marketing) 111,000 12,315,694
- ---------------------------------------------------------------
Valeo S.A. (Automobile Parts &
Equipment) 128,500 8,570,008
- ---------------------------------------------------------------
266,385,687
- ---------------------------------------------------------------
GERMANY-5.81%
Adidas A.G. (Footwear) 42,000 6,084,129
- ---------------------------------------------------------------
Adidas A.G. (Footwear) (Acquired
04/11/97; cost $8,533,263)(b) 81,000 11,733,678
- ---------------------------------------------------------------
Allianz A.G.
(Insurance-Multi-Line) 23,500 5,239,353
- ---------------------------------------------------------------
Bayerische Vereinsbank A.G.
(Banks-Major Regional) 187,000 10,857,259
- ---------------------------------------------------------------
Commerzbank A.G. (Banks-Major
Regional) 295,000 10,019,740
- ---------------------------------------------------------------
Continental A.G. (Automobile
Parts & Equipment) 285,000 6,800,883
- ---------------------------------------------------------------
Deutsche Bank A.G. (Banks-Major
Regional) 170,500 11,166,372
- ---------------------------------------------------------------
Dresdner Bank A.G. (Banks-Major
Regional) 240,000 9,823,787
- ---------------------------------------------------------------
Henkel KGaA
(Chemicals-Diversified) 105,000 5,456,208
- ---------------------------------------------------------------
Mannesmann A.G.
(Machinery-Diversified) 24,250 10,249,949
- ---------------------------------------------------------------
Merck KGaA (Health
Care/Drugs-Generic & Other) 290,000 10,759,137
- ---------------------------------------------------------------
SAP A.G. (Computers-Software &
Services) 27,000 7,751,909
- ---------------------------------------------------------------
SAP A.G.-Preferred
(Computers-Software &
Services) 27,000 8,049,758
- ---------------------------------------------------------------
Schering A.G. (Health
Care/Drugs-Generic & Other) 94,000 9,119,749
- ---------------------------------------------------------------
VEBA A.G.
(Manufacturing-Diversified) 155,000 8,648,358
- ---------------------------------------------------------------
131,760,269
- ---------------------------------------------------------------
HONG KONG-4.14%
Asia Satellite
Telecommunications Holdings
Ltd. (Telecommunications-
Cellular/Wireless) 1,000,000 2,405,743
- ---------------------------------------------------------------
Asia Satellite
Telecommunications Holdings
Ltd.-ADR (Telecommunications-
Cellular/Wireless) 174,500 4,078,938
- ---------------------------------------------------------------
Cheung Kong (Holdings) Ltd.
(Land Development) 904,000 6,284,680
- ---------------------------------------------------------------
China Telecom Ltd.-ADR
(Telecommunications-Cellular &
Wireless)(a) 179,700 5,817,788
- ---------------------------------------------------------------
Cosco Pacific Ltd.
(Financial-Diversified) 9,772,000 11,375,283
- ---------------------------------------------------------------
First Pacific Co. Ltd.
(Distributors-Food & Health) 11,493,908 7,247,339
- ---------------------------------------------------------------
Hong Kong & China Gas Co. Ltd.
(Natural Gas) 9,280,960 17,525,967
- ---------------------------------------------------------------
HSBC Holdings PLC (Banks-Major
Regional) 490,000 11,090,991
- ---------------------------------------------------------------
Hutchison Whampoa Ltd.
(Retail-Food Chains) 2,552,000 17,659,186
- ---------------------------------------------------------------
New World Infrastructure Ltd.
(Services-Commercial &
Consumer)(a) 2,968,400 5,874,218
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HONG KONG-(CONTINUED)
Sun Hung Kai Properties Ltd.
(Land Development) 628,100 $ 4,630,628
- ---------------------------------------------------------------
93,990,761
- ---------------------------------------------------------------
INDONESIA-0.39%
Gulf Indonesia Resources Ltd.
(Oil-International
Integrated)(a) 250,000 5,250,000
- ---------------------------------------------------------------
PT Indosat (Telephone) 933,000 2,102,809
- ---------------------------------------------------------------
PT Indosat-ADR (Telephone) 63,500 1,504,156
- ---------------------------------------------------------------
8,856,965
- ---------------------------------------------------------------
IRELAND-0.35%
Elan Corp. PLC-ADR (Health
Care/Drugs-Generic & Other)(a) 158,800 7,920,150
- ---------------------------------------------------------------
ISRAEL-0.38%
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care/Drugs-Generic & Other) 186,800 8,732,900
- ---------------------------------------------------------------
ITALY-3.92%
Assicurazioni Generali
(Insurance-Multi-Line) 508,500 11,353,396
- ---------------------------------------------------------------
Credito Italiano S.p.A.
(Banks-Major Regional) 6,200,000 16,596,810
- ---------------------------------------------------------------
Ente Nazionale Idrocarburi
S.p.A. (Oil & Gas-Refining &
Marketing) 2,050,000 11,586,799
- ---------------------------------------------------------------
Fiat S.p.A. (Automobiles) 3,300,000 10,469,167
- ---------------------------------------------------------------
Istituto Mobiliare Italiano
S.p.A. (Banks-Major Regional) 825,000 7,467,395
- ---------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications-
Cellular/Wireless) 3,800,000 14,028,352
- ---------------------------------------------------------------
Telecom Italia S.p.A.
(Telephone) 2,777,777 17,375,463
- ---------------------------------------------------------------
88,877,382
- ---------------------------------------------------------------
JAPAN-14.52%
Advantest Corp. (Electronics-
Instrumentation) 249,700 20,644,080
- ---------------------------------------------------------------
Bridgestone Corp. (Automobile
Parts & Equipment) 477,000 10,304,944
- ---------------------------------------------------------------
Canon, Inc. (Office Equipment &
Supplies) 797,000 19,337,266
- ---------------------------------------------------------------
Denso Corp. (Automobile Parts &
Equipment) 370,000 7,993,353
- ---------------------------------------------------------------
Fuji Photo Film Co. (Leisure
Time-Products) 530,000 19,200,665
- ---------------------------------------------------------------
Hitachi Cable, Ltd. (Metal
Fabricators) 1,254,000 8,335,688
- ---------------------------------------------------------------
Honda Motor Co., Ltd.
(Automobiles) 610,000 20,527,628
- ---------------------------------------------------------------
Hoya
Corp.(Manufacturing-Specialized) 236,000 8,196,759
- ---------------------------------------------------------------
Ibiden Co., Ltd.
(Electronics-Component
Distributors) 1,205,000 20,024,927
- ---------------------------------------------------------------
Kyocera
Corp.(Electronics-Component
Distributors) 71,000 4,064,728
- ---------------------------------------------------------------
Matsushita Electric Industrial
Co. Ltd. (Electrical
Equipment) 569,000 9,550,312
- ---------------------------------------------------------------
Minebea Co. Ltd.
(Electronics-Component
Distributors) 1,614,000 16,093,062
- ---------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics-Component
Distributors) 326,000 13,218,779
- ---------------------------------------------------------------
Nippon Telegraph & Telephone
Corp. (Telephone) 23,200 19,662,651
- ---------------------------------------------------------------
Nippon Television Network
(Broadcasting-Television,
Radio & Cable) 26,530 9,434,848
- ---------------------------------------------------------------
</TABLE>
FS-50
<PAGE> 308
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
NTT Data Communications Systems Co.
(Computers-Software &
Services) 4,500 $ 21,499,792
- ---------------------------------------------------------------
Ricoh Corp. Ltd. (Office
Equipment & Supplies) 1,095,000 14,102,617
- ---------------------------------------------------------------
Rohm Co. (Electronics-Component
Distributors) 209,000 20,665,559
- ---------------------------------------------------------------
SMC Corp.(Machinery-Diversified) 100,000 8,641,462
- ---------------------------------------------------------------
Sony Corp.
(Electronics-Component
Distributors) 234,000 19,423,847
- ---------------------------------------------------------------
TDK Corp. (Electrical Equipment) 244,000 20,233,652
- ---------------------------------------------------------------
Tokyo Electron Ltd.
(Electronics-Semiconductors) 367,100 18,301,620
- ---------------------------------------------------------------
329,458,239
- ---------------------------------------------------------------
MEXICO-4.13%
Cifra S.A. de C.V.
(Retail-General Merchandise) 5,637,000 9,747,943
- ---------------------------------------------------------------
Coca-Cola Femsa S.A.-ADR
(Beverages-Non-Alcoholic) 320,500 13,841,594
- ---------------------------------------------------------------
Fomento Economico Mexicano, S.A.
de C.V.-Class B
(Beverages-Alcoholic) 2,350,050 16,535,832
- ---------------------------------------------------------------
Grupo Industrial Maseca S.A. de
CV- Class B (Foods) 6,469,600 6,249,703
- ---------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 374,200 11,600,200
- ---------------------------------------------------------------
Kimberly-Clark de Mexico, S.A.
de C.V.-Class A (Paper &
Forest Products) 3,260,000 14,288,014
- ---------------------------------------------------------------
Panamerican Beverages,
Inc.-Class A
(Beverages-Non-Alcoholic) 609,200 18,885,200
- ---------------------------------------------------------------
TV Azteca, S.A. de C.V.-ADR
(Broadcasting-Television,
Radio & Cable)(a) 136,200 2,604,825
- ---------------------------------------------------------------
93,753,311
- ---------------------------------------------------------------
NETHERLANDS-6.57%
Akzo Nobel N.V.
(Chemicals-Diversified) 75,000 13,215,297
- ---------------------------------------------------------------
ASM Lithography Holding N.V.
(Machinery-Diversified)(a) 65,000 4,720,577
- ---------------------------------------------------------------
CMG PLC (Computers-Software &
Services) 357,800 8,422,076
- ---------------------------------------------------------------
Getronics N.V.
(Computers-Software &
Services) 292,000 9,640,587
- ---------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food Chains) 426,000 10,905,073
- ---------------------------------------------------------------
Koninklijke Nutricia Verenigde
Bedrijven N.V. (Foods) 153,000 4,373,680
- ---------------------------------------------------------------
Koninklijke Pakhoed N.V.
(Shipping) 323,000 10,580,891
- ---------------------------------------------------------------
Oce-Van Der Grinten N.V. (Office
Equipment & Supplies) 60,000 6,845,223
- ---------------------------------------------------------------
Philips Electronics N.V.
(Household Furniture &
Appliances) 358,000 28,027,814
- ---------------------------------------------------------------
Randstad Holdings N.V.
(Services-Commercial &
Consumer) 257,500 10,278,779
- ---------------------------------------------------------------
Royal Dutch Petroleum Co. (Oil-
International Integrated) 178,000 9,415,710
- ---------------------------------------------------------------
Stork N.V.
(Manufacturing-Diversified) 135,000 5,840,845
- ---------------------------------------------------------------
Vendex International N.V.
(Retail-General Merchandise) 215,000 11,738,347
- ---------------------------------------------------------------
VNU-Verenigde Nederlandse
Uitgeversbedrijven Verenigd
Bezit (Publishing) 332,000 7,866,083
- ---------------------------------------------------------------
Wolters Kluwer N.V. (Specialty
Printing) 58,000 7,121,916
- ---------------------------------------------------------------
148,992,898
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NORWAY-0.65%
Petroleum Geo-Services A.S.A.
(Oil-International
Integrated)(a) 215,000 $ 14,821,423
- ---------------------------------------------------------------
PHILIPPINES-0.44%
Metro Pacific Corp.
(Manufacturing-Diversified) 45,013,850 2,996,691
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co. (Telephone) 168,960 4,170,381
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co.- ADR (Telephone) 119,200 2,890,600
- ---------------------------------------------------------------
10,057,672
- ---------------------------------------------------------------
PORTUGAL-1.14%
Electricidade de Portugal,
S.A.-ADR (Electric
Companies)(a) 140,800 4,919,200
- ---------------------------------------------------------------
Portugal Telecom S.A.
(Telephone) 510,000 20,924,936
- ---------------------------------------------------------------
25,844,136
- ---------------------------------------------------------------
SINGAPORE-0.87%
City Developments Ltd. (Land
Development) 1,600,000 6,704,762
- ---------------------------------------------------------------
DBS Land Ltd. (Land Development) 4,096,000 6,969,702
- ---------------------------------------------------------------
Overseas Union Bank Ltd.
(Banks-Major Regional) 1,846,800 6,156,000
- ---------------------------------------------------------------
19,830,464
- ---------------------------------------------------------------
SPAIN-2.00%
Banco Bilbao Vizcaya, S.A.
(Banks-Major Regional) 432,000 11,552,073
- ---------------------------------------------------------------
Endesa S.A. (Electric Companies) 501,000 9,436,585
- ---------------------------------------------------------------
Iberdrola S.A. (Electric
Companies) 745,000 8,911,116
- ---------------------------------------------------------------
Telefonica de Espana (Telephone) 565,000 15,419,330
- ---------------------------------------------------------------
45,319,104
- ---------------------------------------------------------------
SWEDEN-2.75%
Electrolux A.B. (Household
Furniture & Appliances) 290,900 24,080,161
- ---------------------------------------------------------------
Hennes & Mauritz A.B.-Class B
(Retail/Specialty-Apparel) 370,000 15,141,057
- ---------------------------------------------------------------
Sparbanken Sverige A.B.-Class A
(Banks-Major Regional) 530,000 12,029,533
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-ADR (Communications
Equipment) 250,000 11,062,500
- ---------------------------------------------------------------
62,313,251
- ---------------------------------------------------------------
SWITZERLAND-4.23%
Adecco S.A. (Services-Commercial
& Consumer) 30,000 9,534,012
- ---------------------------------------------------------------
Ciba Specialty Chemicals A.G.
(Chemicals-Specialty)(a) 122,000 11,980,004
- ---------------------------------------------------------------
Clariant A.G.
(Chemicals-Specialty) 19,200 14,767,649
- ---------------------------------------------------------------
Credit Suisse Group (Banks-Major
Regional) 82,300 11,593,412
- ---------------------------------------------------------------
Holderbank Financiere Glarus
A.G.-Class B
(Construction-Cement &
Aggregates) 12,100 9,738,761
- ---------------------------------------------------------------
Nestle S.A. (Foods) 7,800 10,990,466
- ---------------------------------------------------------------
Novartis A.G. (Health
Care-Diversified) 13,696 21,449,975
- ---------------------------------------------------------------
Zurich
Versicherungs-Gesellschaft
(Insurance-Multi-Line) 14,500 5,985,360
- ---------------------------------------------------------------
96,039,639
- ---------------------------------------------------------------
</TABLE>
FS-51
<PAGE> 309
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-15.19%
Airtours PLC
(Services-Commercial &
Consumer) 466,450 $ 9,234,521
- -------------------------------------------------------------------
Amersham International PLC
(Health Care/Drugs-Generic &
Other) 215,000 8,269,420
- -------------------------------------------------------------------
Barclays PLC (Banks-Major
Regional) 500,000 12,524,404
- -------------------------------------------------------------------
Blue Circle Industries PLC
(Construction-Cement &
Aggregates) 1,570,000 9,219,236
- -------------------------------------------------------------------
Bodycote International PLC
(Chemicals-Specialty) 410,000 7,105,775
- -------------------------------------------------------------------
British Aerospace PLC
(Aerospace/Defense) 425,000 11,280,352
- -------------------------------------------------------------------
British Petroleum Co. PLC (Oil &
Gas-Refining & Marketing) 1,410,000 20,722,897
- -------------------------------------------------------------------
Compass Group PLC
(Services-Commercial &
Consumer) 970,000 10,342,238
- -------------------------------------------------------------------
Dixons Group PLC
(Retail-Specialty) 1,110,000 12,980,248
- -------------------------------------------------------------------
EMAP PLC (Publishing) 625,000 8,970,720
- -------------------------------------------------------------------
General Electric Co. PLC
(Manufacturing-Diversified) 1,769,800 11,305,541
- -------------------------------------------------------------------
GKN PLC
(Manufacturing-Diversified) 530,000 11,888,704
- -------------------------------------------------------------------
Granada Group PLC (Leisure Time-
Products) 435,000 5,999,130
- -------------------------------------------------------------------
Hays PLC (Services-Commercial &
Consumer) 1,050,050 12,332,050
- -------------------------------------------------------------------
Kingfisher PLC
(Retail-Department Stores) 825,000 11,875,953
- -------------------------------------------------------------------
Ladbroke Group PLC (Leisure
Time-Products) 4,325,000 19,374,238
- -------------------------------------------------------------------
Lloyds TSB Group PLC
(Banks-Major Regional) 570,000 7,124,565
- -------------------------------------------------------------------
Misys PLC (Services-Commercial &
Consumer) 250,000 6,302,048
- -------------------------------------------------------------------
Next PLC (Retail-General
Merchandise) 1,010,000 12,031,145
- -------------------------------------------------------------------
Pearson PLC (Specialty Printing) 950,000 12,432,128
- -------------------------------------------------------------------
Provident Financial PLC
(Consumer Finance) 942,400 10,909,670
- -------------------------------------------------------------------
Railtrack Group PLC (Shipping) 1,450,000 23,183,987
- -------------------------------------------------------------------
Rentokil Initial PLC
(Services-Commercial &
Consumer) 2,760,000 11,113,416
- -------------------------------------------------------------------
Royal & Sun Alliance Insurance
Group PLC
(Insurance-Multi-Line) 1,350,000 12,944,261
- -------------------------------------------------------------------
Siebe PLC (Electronics-Component
Distributors) 370,000 7,107,788
- -------------------------------------------------------------------
Smiths Industries PLC
(Machinery-Diversified) 256,000 3,715,210
- -------------------------------------------------------------------
Tarmac PLC (Engineering &
Construction) 8,709,800 16,950,926
- -------------------------------------------------------------------
Unilever PLC (Foods) 2,064,000 15,375,169
- -------------------------------------------------------------------
Vodafone Group PLC
(Telecommunications-
Cellular/Wireless) 1,865,000 10,169,262
- -------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
WPP Group PLC (Services-
Advertising/Marketing) 2,575,000 $ 11,772,562
- ---------------------------------------------------------------
344,557,564
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 2,077,258,206
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT
FOREIGN CONVERTIBLE BONDS-1.55%
FRANCE-0.40%
AXA-UAP (Insurance-Multi-Line),
Conv. Sr. Deb., 4.50%,
01/01/99(c) FRF 33,885,000 8,973,144
- -------------------------------------------------------------------
GERMANY-0.41%
Volkswagen International Finance
N.V. (Automobiles), Conv. Gtd.
Notes, 3.00%, 01/24/02 $ 7,880,000 9,278,700
- -------------------------------------------------------------------
HONG KONG-0.12%
New World Infrastructure Ltd.
(Services-Commercial &
Consumer), Conv. Bonds, 5.00%,
07/15/01 (Acquired
04/10/97-04/11/97; cost
$2,056,313)(b) $ 1,750,000 1,653,750
- -------------------------------------------------------------------
New World Infrastructure Ltd.
(Services-Commercial &
Consumer), Conv. Bonds, 5.00%,
07/15/01 $ 1,150,000 1,086,750
- -------------------------------------------------------------------
2,740,500
- -------------------------------------------------------------------
ITALY-0.43%
Pirelli S.p.A. (Electrical
Equipment), Conv. Bonds,
5.00%, 12/31/98(c) ITL 10,062,964,600 9,658,782
- -------------------------------------------------------------------
JAPAN-0.19%
Ricoh Co., Ltd. (Office
Equipment & Supplies), Conv.
Bonds, 0.35%, 03/31/03(c) JPY 395,000,000 4,348,774
- -------------------------------------------------------------------
Total Foreign Convertible
Bonds 34,999,900
- -------------------------------------------------------------------
REPURCHASE AGREEMENT-4.92%(d)
SBC Warburg Inc., 5.40%,
11/03/1997(e) 111,732,336 111,732,336
- -------------------------------------------------------------------
TOTAL INVESTMENTS-98.02% 2,223,990,442
- -------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.98% 45,037,322
- -------------------------------------------------------------------
NET ASSETS-100.00% $ 2,269,027,764
===================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debenture
FRF - French Franc
GDR - Global Depository Receipt
Gtd. - Guaranteed
ITL - Italian Lira
JPY - Japanese Yen
Sr. - Senior
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with provisions of Rule 144A under the Securities Act of 1933, as
amended. The valuation of these securities has been determined in accordance
with procedures established by the Board of Directors. The aggregate market
value of these securities at 10/31/97 was $19,230,621 which represented
0.85% of the Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value 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.
(e) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$300,135,000. Collateralized by $295,632,000 U.S. Government obligations,
5.25% to 8.875% due 12/31/97 to 08/15/02 with an aggregate market value at
10/31/97 of $306,259,515.
See Notes to Financial Statements.
FS-52
<PAGE> 310
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,836,302,147) $2,223,990,442
- ------------------------------------------------------------
Foreign currencies, at market value
(cost $42,794,789) 43,045,352
- ------------------------------------------------------------
Receivables for:
Investments sold 14,136,654
- ------------------------------------------------------------
Capital stock sold 44,111,370
- ------------------------------------------------------------
Dividends and interest 4,967,585
- ------------------------------------------------------------
Investment for deferred compensation plan 26,785
- ------------------------------------------------------------
Other assets 75,088
- ------------------------------------------------------------
Total assets 2,330,353,276
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 49,044,157
- ------------------------------------------------------------
Capital stock reacquired 8,290,939
- ------------------------------------------------------------
Deferred compensation 26,785
- ------------------------------------------------------------
Accrued advisory fees 1,796,123
- ------------------------------------------------------------
Accrued administrative services fees 7,878
- ------------------------------------------------------------
Accrued directors' fees 6,184
- ------------------------------------------------------------
Accrued distribution fees 1,044,063
- ------------------------------------------------------------
Accrued transfer agent fees 367,018
- ------------------------------------------------------------
Accrued operating expenses 742,365
- ------------------------------------------------------------
Total liabilities 61,325,512
- ------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $2,269,027,764
============================================================
NET ASSETS:
Class A $1,577,389,921
============================================================
Class B $ 678,808,929
============================================================
Class C $ 12,828,914
============================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 94,802,921
============================================================
Class B:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 41,731,824
============================================================
Class C:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 788,620
============================================================
Class A:
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 16.64
============================================================
OFFERING PRICE PER SHARE:
(Net asset value of $16.64 divided
by 94.50%) $ 17.61
============================================================
Class B:
NET ASSET VALUE AND OFFERING PRICE PER
SHARE $ 16.27
============================================================
Class C:
NET ASSET VALUE AND OFFERING PRICE PER
SHARE $ 16.27
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $4,176,776 foreign
withholding tax) $ 29,139,495
- -----------------------------------------------------------
Interest 4,617,214
- -----------------------------------------------------------
Total investment income 33,756,709
- -----------------------------------------------------------
EXPENSES:
Advisory fees 18,284,107
- -----------------------------------------------------------
Administrative services fees 105,163
- -----------------------------------------------------------
Directors' fees 20,121
- -----------------------------------------------------------
Distribution fees-Class A 4,249,575
- -----------------------------------------------------------
Distribution fees-Class B 5,581,303
- -----------------------------------------------------------
Distribution fees-Class C 13,568
- -----------------------------------------------------------
Custodian fees 1,521,866
- -----------------------------------------------------------
Transfer agent fees-Class A 2,237,953
- -----------------------------------------------------------
Transfer agent fees-Class B 1,303,468
- -----------------------------------------------------------
Transfer agent fees-Class C 5,037
- -----------------------------------------------------------
Other 882,828
- -----------------------------------------------------------
Total expenses 34,204,989
- -----------------------------------------------------------
Less: Advisory fees waived (738,005)
- -----------------------------------------------------------
Expenses paid indirectly (38,529)
- -----------------------------------------------------------
Net expenses 33,428,455
- -----------------------------------------------------------
Net investment income 328,254
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) on sales of:
Investment securities (14,679,896)
- -----------------------------------------------------------
Foreign currencies (1,876,119)
- -----------------------------------------------------------
(16,556,015)
- -----------------------------------------------------------
Net unrealized appreciation of:
Investment securities 192,756,147
- -----------------------------------------------------------
Foreign currencies 438,913
- -----------------------------------------------------------
193,195,060
- -----------------------------------------------------------
Net gain on investment securities and
foreign
currencies 176,639,045
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $176,967,299
===========================================================
</TABLE>
See Notes to Financial Statements.
FS-53
<PAGE> 311
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 328,254 $ 1,130,094
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities
and foreign currencies (16,556,015) 43,829,404
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 193,195,060 98,461,748
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 176,967,299 143,421,246
- -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (1,250,230) (295,965)
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (31,812,536) (18,468,041)
- -----------------------------------------------------------------------------------------------
Class B (11,361,858) (1,875,276)
- -----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 363,888,653 350,398,961
- -----------------------------------------------------------------------------------------------
Class B 282,384,176 296,841,074
- -----------------------------------------------------------------------------------------------
Class C 13,462,792 --
- -----------------------------------------------------------------------------------------------
Net increase in net assets 792,278,296 770,021,999
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,476,749,468 706,727,469
- -----------------------------------------------------------------------------------------------
End of period $2,269,027,764 $1,476,749,468
- -----------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,897,861,942 $1,238,126,321
- -----------------------------------------------------------------------------------------------
Undistributed net investment income 5,863,515 1,113,111
- -----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales of
investment securities
and foreign currencies (22,453,519) 42,949,270
- -----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 387,755,826 194,560,766
- -----------------------------------------------------------------------------------------------
$2,269,027,764 $1,476,749,468
===============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
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 operating
series portfolios: AIM International Equity Fund, AIM Global Aggressive Growth
Fund, AIM Global Growth Fund and AIM Global Income Fund. The Fund currently
offers three different classes of shares: Class A shares, Class B shares and
Class C shares. Class A shares are sold with a front-end sales charge. Class B
and Class C shares are sold with a contingent deferred sales charge. Class C
shares commenced sales August 4, 1997. 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-A security listed or traded on an exchange (except
convertible bonds) is valued at the last sales price on the exchange where
the security is principally traded or, lacking any sales on a particular day,
at the mean between the closing bid and asked prices on that day. If a mean
is not available, as is the case in some foreign markets, the closing bid
will be used absent a last sales price. 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 last bid and asked prices
based upon quotes furnished by market makers for such securities. Securities
reported on the NASDAQ National Market System are valued at
FS-54
<PAGE> 312
the last sales price on the valuation date or absent a last sales price, at
the mean of the closing bid and asked prices. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors, such as yield, type of issue, coupon rate and maturity
date. Securities for which market quotations are 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 the 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, 1997,
undistributed net investment income was increased by $5,672,380 and
undistributed net realized gains decreased by $5,672,380 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. The Fund has a capital loss carryforward of
$14,969,471 (which may be carried forward to offset future capital gains, if
any) which expires, if not previously utilized, through the year 2005.
F. Expenses--Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated between the
classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 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, 1997, AIM waived fees of $738,005.
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, 1997, AIM was
reimbursed $105,163 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, 1997,
AFS was paid $1,774,819 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class
A, Class B and Class C 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 and Class C shares (the "Class A and Class C Plan"), and the Fund's
Class B shares (the "Class B Plan") (collectively, the "Plans"). The Fund,
pursuant to the Class A Plan and Class C Plan, pays AIM Distributors
compensation at the annual rate of 0.30% of the average daily net assets of
Class A shares and 1.00% of the average daily net assets of Class C shares. The
Class A Plan and the Class C Plan are designed to compensate AIM Distributors
for certain promotional and other sales related costs, and to
FS-55
<PAGE> 313
implement a dealer incentive program which provides periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C 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, 1997, the Class A shares and Class B shares, and the period August 4, 1997
through October 31, 1997 the Class C shares paid AIM Distributors $4,249,575,
$5,581,303 and $13,568, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,172,508 from sales of the Class A
shares of the Fund during the year ended October 31, 1997. 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, 1997,
AIM Distributors received commissions of $91,984 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, 1997, the Fund incurred legal fees of $9,514
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-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the year ended
October 31, 1997, the Fund's expenses were reduced by $7,691. The Fund received
reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions
in custodian fees of $25,598 and $5,240, respectively, under expense offset
arrangements. The effect of the above arrangements resulted in reductions of the
Fund's total expenses of $38,529 during the year ended October 31, 1997.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-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) $500,000,000 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 15, 1997, the Fund was
limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by
its prospectus for borrowings. During the year ended October 31, 1997, 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 0.05% 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 6-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, 1997 was
$1,525,690,965 and $943,814,904, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of October 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $463,067,699
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (82,747,088)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $380,320,611
=========================================================
Cost of investments for tax purposes is $1,843,669,831.
</TABLE>
NOTE 7-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 105,291,824 $ 1,764,668,535 41,055,911 $ 601,559,902
- -----------------------------------------------------------------------------------
Class B 21,599,075 352,871,134 21,641,528 313,690,762
- -----------------------------------------------------------------------------------
Class C* 1,372,281 23,795,456 -- --
- -----------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 2,035,986 31,231,975 1,305,811 17,576,215
- -----------------------------------------------------------------------------------
Class B 707,879 10,688,975 130,593 1,741,975
- -----------------------------------------------------------------------------------
Class C* -- -- -- --
- -----------------------------------------------------------------------------------
Reacquired:
Class A (84,633,652) (1,432,011,857) (18,205,834) (268,737,156)
- -----------------------------------------------------------------------------------
Class B (4,913,096) (81,175,933) (1,270,776) (18,591,663)
- -----------------------------------------------------------------------------------
Class C* (583,661) (10,332,664) -- --
- -----------------------------------------------------------------------------------
40,876,636 $ 659,735,621 44,657,233 $ 647,240,035
===================================================================================
</TABLE>
* Class C commenced sales on August 4, 1997.
FS-56
<PAGE> 314
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share outstanding during
each of the years in the five-year period ended October 31, 1997, for a Class B
share outstanding during each of the years in the three-year period ended
October 31, 1997 and the period September 15, 1994 (date sales commenced)
through October 31, 1994, and for a Class C share outstanding for the period
August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CLASS A:
Net asset value, beginning of period $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88
- --------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.04(a) 0.04(a) 0.01 0.02 0.02
- --------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.68 2.07 0.62 1.31 3.29
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.72 2.11 0.63 1.33 3.31
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.02) (0.01) (0.04) (0.01) (0.01)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.43) (0.38) (0.44) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.45) (0.39) (0.48) (0.01) (0.01)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.64 $ 15.37 $ 13.65 $ 13.50 $ 12.18
================================================================================================================================
Total return(b) 11.43% 15.79% 5.24% 10.94% 37.36%
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,577,390 $ 1,108,395 $ 654,764 $ 708,159 $ 372,282
================================================================================================================================
Ratio of expenses to average net assets(c) 1.47%(d)(e) 1.58% 1.67% 1.64% 1.78%
================================================================================================================================
Ratio of net investment income to average net assets(f) 0.24%(d) 0.25% 0.10% 0.22% 0.28%
================================================================================================================================
Portfolio turnover rate 50% 66% 68% 67% 62%
================================================================================================================================
Average brokerage commission rate(g) $ 0.0168 $ 0.0192 N/A N/A N/A
================================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements are
1.51%, 1.60% and 1.68, respectively for 1997-1995.
(d) Ratios are based on average net assets of $1,416,524,861.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements are 0.20%, 0.22% and 0.09%, respectively for 1997-1995.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<TABLE>
<CAPTION>
1997 1996 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
CLASS B:
Net asset value, beginning of period $ 15.13 $ 13.54 $ 13.49 $ 13.42
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.07)(a) (0.09) (0.01)
- --------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 1.66 2.04 0.61 0.08
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.57 1.97 0.52 0.07
- --------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- -- (0.03) --
- --------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.43) (0.38) (0.44) --
- --------------------------------------------------------------------------------------------------------------------
Total distributions (0.43) (0.38) (0.47) --
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.27 $ 15.13 $ 13.54 $ 13.49
====================================================================================================================
Total return(b) 10.61% 14.88% 4.35% 0.52%
====================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 678,809 $ 368,355 $ 51,964 $ 4,833
====================================================================================================================
Ratio of expenses to average net assets(c) 2.25%(d)(e) 2.35% 2.55% 2.53%(f)
====================================================================================================================
Ratio of net investment income (loss) to average net
assets(g) (0.53)%(d) (0.53)% (0.78)% (0.67)%(f)
====================================================================================================================
Portfolio turnover rate 50% 66% 68% 67%
====================================================================================================================
Average brokerage commission rate(h) $ 0.0168 $ 0.0192 N/A N/A
====================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements are
2.28%, 2.37% and 2.56%, respectively for 1997-1995.
(d) Ratios are based on average net assets of $558,130,289.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been 2.24%.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements are (0.57)%, (0.55)% and (0.79)%, respectively for 1997-1995.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-57
<PAGE> 315
<TABLE>
<CAPTION>
1997
--------
<S> <C>
CLASS C:
Net asset value, beginning of period $ 17.64
- ----------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.02)(a)
- ----------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) (1.35)
- ----------------------------------------------------------------------
Total from investment operations (1.37)
- ----------------------------------------------------------------------
Less distributions:
Dividends from net investment income --
- ----------------------------------------------------------------------
Distributions from net realized gains --
- ----------------------------------------------------------------------
Total distributions --
- ----------------------------------------------------------------------
Net asset value, end of period $ 16.27
======================================================================
Total return(b) (7.77)%
======================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 12,829
======================================================================
Ratio of expenses to average net assets(c) 2.27%(d)(e)
======================================================================
Ratio of net investment income (loss) to average net
assets(f) (0.55)%(d)
======================================================================
Portfolio turnover rate 50%
======================================================================
Average brokerage commission rate(g) $ 0.0168
======================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(c) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements is
2.30% (annualized).
(d) Ratio is annualized and based on average net assets of $5,564,501.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been 2.26%.
(f) After fee waivers and/or expense reimbursements. Ratio of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements is (0.59)% (annualized).
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
FS-58
<PAGE> 316
APPENDIX II
AIM INTERNATIONAL
EQUITY FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1998
<PAGE> 317
------------------------------------------
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.
------------------------------------------
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 CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differing fees and expenses.
o Because Class C shares have been offered for less than one year (since
8/4/97), all total return figures for Class C shares reflect cumulative
total return that has not been annualized.
o The Fund's average annual total returns, including sales charges, for
periods ended 3/31/98 (the most recent calendar quarter-end) are as follows:
For Class A shares, one year, 14.55%; five years, 15.56%; since inception
4/7/92, 14.91%. For Class B shares, one year, 15.28%; since inception
9/15/94, 12.25%. For C shares, cumulative total return since inception
8/4/97, 5.29%.
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 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 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.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 318
The Chairman's Letter
Dear Fellow Shareholder:
Last October, equity markets worldwide had just been shaken
[PHOTO OF by the currency crisis in Southeast Asia. By the April 30,
Charles T. 1998, end of this reporting period, most markets had
Bauer, recovered nicely, with domestic equities reaching new highs
Chairman of and European markets outdoing even the U.S.'s heady pace.
the Board of Only Asian markets remained in the doldrums. Bonds have
THE FUND turned in a solid performance with generous real returns,
APPEARS HERE] though not as spectacular as some had predicted when the
Asian crisis first broke.
However, by the close of this reporting period, many
market participants were uneasy. Some participants fretted
about signs of speculative fever, particularly in U.S. stock
markets, where equity prices continued to rise despite
evidence that earnings growth, especially for larger
companies, had slowed considerably. The growth of European
markets also exceeded everyone's expectations, and some
wondered how long the rise could continue. All were aware that the Asian story
was not yet completed, and no one was certain how serious its ultimate impact
would be.
Of course, bull markets do end, and markets became less ebullient shortly
after this reporting period closed. For investors, the best course is to remain
realistic and ready. A well-diversified portfolio is still one of the most
effective tools for coping with shifts in a market's direction because different
asset classes and different national markets tend to move independently of one
another. Of course, your financial consultant remains your best source of
information about how to allocate your investments based on your particular
goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly after the close of this reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds--Registered Trademark--.
In addition to making a more varied group of investments available to our
shareholders, this transaction helps strengthen AIM's position as a major
participant in the money-management industry worldwide. Such strength will
enable us to continue expanding both the scope of our fund offerings and our
menu of services for our shareholders.
YOUR FUND MANAGERS COMMENT
On the pages that follow, the managers of your AIM Fund discuss how the Fund
performed during the six months covered by this report and give their near-term
market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
--------------------------
Despite recent activities,
the fiscal year
ended October 31
brought domestic equity investors
excellent returns
--------------------------
<PAGE> 319
The Managers' Overview
EUROPEAN MARKETS CONTINUE TO DOMINATE
INTERNATIONAL EQUITIES
A roundtable discussion with the Fund management team for AIM International
Equity Fund about the six-month reporting period ended April 30, 1998.
- --------------------------------------------------------------------------------
---------------------------
The impressive performance by
European stocks was the story among
international equities during the past
six months.
---------------------------
Q. HOW DID THE FUND PERFORM DURING THE SIX-MONTH REPORTING PERIOD?
A. The Fund posted another impressive period of performance. Total return was
17.27% for Class A shares, 16.78% for Class B shares, and 16.84% for Class C
shares for the six-month period ended April 30, 1998. The Fund's performance
surpassed both the Morgan Stanley Capital International (MSCI) Europe,
Australia and Far East Index (EAFE) of foreign stocks gain of 15.44% during
the reporting period and the Lipper International Fund Index advance of
16.53%.
================================================================================
FUND OUTPERFORMED BENCHMARKS
- --------------------------------------------------------------------------------
Cumulative Total Returns for period
10/31/97-4/30/98
17.27% 16.84% 16.78% 16.53% 15.44%
AIM Fund AIM Fund AIM Fund Lipper MSCI
Class A Class C Class B Int'l EAFE
shares shares shares Index Index
================================================================================
Q. WHAT ACCOUNTED FOR THE FUND'S STRONG PERFORMANCE DURING THE PAST SIX MONTHS?
A. The impressive performance by European stocks was the story among
international equities during the past six months. European markets
continued to rise dramatically as markets there comprised all of the 10
top-performing international markets during the six-month period ended April
30, 1998. Spain led the way with an astounding 54.57% return, followed by
Portugal with a 52.89% advance. Furthermore, all of the Fund's top 10
holdings were European companies. Almost 75% of the Fund's portfolio was
invested in European equities at the end of the reporting period, a figure
that is unlikely to increase.
Q. WHY DID EUROPEAN MARKETS PERFORM SO WELL DURING THE REPORTING PERIOD?
A. The European Economic and Monetary Union, or EMU, is scheduled to begin on
January 1, 1999. In order to qualify for the EMU, European nations must
adopt strict budgetary guidelines and improve their finances. This process
has lowered interest rates and kept inflation - the thief of wealth - at
bay. With 11 countries expected to join the EMU next year, this economic
restructuring has triggered a bull market never before seen in Europe.
Q. WERE THERE ANY OTHER FACTORS DRIVING THE EUROPEAN MARKETS?
A. We believe there were four fundamental, long-term themes that fueled this
incredible rally in Europe: privatization of state-run companies, increased
economic freedoms in Eastern Europe, corporate restructuring, and the growth
of investing in European markets.
Many state-run companies and industries have moved into private hands,
such as Telecom Italia S.p.A. and Portugal Telecom, two large holdings in
the Fund's portfolio. Additionally, the economic freedoms in Eastern Europe
have created a new market of consumers and sparked a wave of entrepreneurial
efforts in the former Communist Bloc countries. Once capitalism is planted
it can grow very quickly, and we have seen this since the fall of the Berlin
Wall.
The restructuring by "Corporate Europe" has made companies leaner and
more globally competitive. We have seen immediate results of this
restructuring as European earnings growth continued to be strong during the
reporting period. Finally, thousands of Europeans have discovered the
wonders of investing in equities. As money has flowed into European markets,
the markets themselves have become larger and more liquid than ever before.
Q. HOW WAS THE FUND'S ASSETS DISTRIBUTED THROUGHOUT THE REST OF THE WORLD?
A. With approximately three-quarters of the Fund now positioned in Europe,
there's not much else to spread around the globe. The Fund finished the
reporting period with 7.4% of its net assets in Japan, 4.0% in Asia and
Australia, and 7.7% in Latin America. These three regions were decimated by
the "Asian Flu" last fall and have been slow to recover. In the first
quarter, many of the Asian markets did bounce off their bottoms, some as
much as 40%, but keep in mind they were coming off very low levels. What
occurred in the last quarter of 1997 was devastating to those fragile
emerging markets, and we
See important Fund & index disclosures inside front cover.
2
<PAGE> 320
PORTFOLIO COMPOSITION
As of 4/30/98, based on total net assets
<TABLE>
<CAPTION>
====================================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 COUNTRIES TOP 10 INDUSTRIES
<S> <C> <C> <C> <C> <C>
1. Renault S.A. (France) 1.50% 1. France 16.59% 1. Banks (Major Regional) 12.47%
2. Nokia Oyj A.B. (Finland) 1.18 2. United Kingdom 14.09 2. Telecommunications (Cellular/Wireless) 5.65
3. Alcatel Alsthom (France) 1.12 3. Germany 7.43 3. Telephone 5.59
4. Telecom Italia Mobile S.p.A. (Italy) 1.10 4. Japan 7.39 4. Manufacturing (Diversified) 4.57
5. Nestle S.A. (Switzerland) 1.10 5. Switzerland 5.63 5. Services (Commercial & Consumer) 3.98
6. Novo Nordisk A/S-Class B (Denmark) 1.08 6. Canada 5.12 6. Computers (Software & Services) 3.82
7. Endesa S.A. (Spain) 1.07 7. Italy 4.91 7. Automobiles 3.77
8. Cap Gemini S.A. (France) 1.05 8. Netherlands 4.44 8. Insurance (Multi-line) 3.61
9. Telecom Italia S.p.A. (Italy) 1.04 9. Spain 3.94 9. Foods 3.24
10. Portugal Telecom S.A. (Portugal) 1.04 10. Mexico 3.00 10. Oil & Gas (Refining & Marketing) 2.96
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.
====================================================================================================================================
</TABLE>
believe it's going to take quite some time for Asia to recover fully from
the economic crisis of last autumn.
Q. WHY IS JAPAN IN SUCH AN ECONOMIC MALAISE?
A. Although it seems apparent to the rest of the world that real economic
reform is needed in Japan, the Japanese government has been extremely
reluctant to institute any fiscal stimulus or tax cuts to get their economy
moving. Until the government takes some real action to jump-start the
economy, there is no real reason to be significantly weighted in Japan. We
continue to own recognizable Japanese companies such as Honda Motor Company
and Sony Corp., but the Japanese market has significantly underperformed
================================================================================
MORNINGSTAR RATINGS (CLASS A SHARES)
As of 4/30/98
- --------------------------------------------------------------------------------
AIM Int'l Funds in
Equity Fund International
Period Rating Category
- --------------------------------------------------------------------------------
Overall **** N/A
5 Years **** 326
3 Years **** 740
================================================================================
*Morningstar proprietary ratings reflect risk-adjusted performance through April
30, 1998. The ratings are subject to change every month. Ratings are calculated
from the funds' three-, five-, and 10-year returns (with fee adjustments) in
excess of 90-day Treasury bill returns, and a risk factor that reflects
performance below 90-day T-bill returns. If a fund scores in the top 10% of its
rating category it earns five stars, the next 22.5% receive four stars, the
middle 35% receive three stars, the next 22.5% receive two stars, and the bottom
10% receive one star.
================================================================================
the rest of the world for some time now. The Japanese market was off more
than 10% during the reporting period.
Q. IN WHICH INDUSTRIES WAS THE FUND POSITIONED?
A. The Fund's largest industry position was major regional banks with almost
12.5% of net assets. Although one may not think of banking as a growth
industry, we have seen excellent earnings growth in this industry,
especially in Europe. Banking positions owned by the Fund included the Royal
Bank of Canada, Switzerland's Credit Suisse Group, and France's Societe
Generale.
To no one's surprise during this age of communication breakthroughs, the
telecommunications sector demonstrated strong earnings during the reporting
period and commanded over 10% of the Fund's portfolio. The Fund was
attracted to such wireless telecommunications companies as Finland's Nokia
Oyj A.B. and Telecom Italia Mobile S.p.A. Finally, automobile companies
comprised almost 4% of the portfolio with the French automaker Renault S.A.
having the honor of being the Fund's largest single holding at 1.50% of the
portfolio's assets.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND IN THE NEAR TERM?
A. We are still very positive on Europe, and very cautious on the Pacific Rim.
Conditions worldwide remain very good for equities, although it is
unrealistic to expect continued equity returns of 20% or more. Things may
continue to worsen in Asia before those markets experience a recovery, so we
do not anticipate our Asian weightings to increase any time soon. In Europe,
though, we believe there will continue to be faster earnings growth with
better valuations than in the United States, because Europe's cash-to-price
earnings, price-to-book, price-to-dividend, and P/E ratios all are lower
than in the U.S. The economic outlook in Latin America seems positive as
well, although the markets there struggled during the six-month reporting
period.
The economic indicators in the U.S. remain positive, and that is good
for markets around the world because they often take their lead from the
U.S. As long as we continue to see the combination of low inflation and low
interest rates around the globe, the short-term outlook for global equities
will remain promising.
------------------
In Europe we believe there will
continue to be faster earnings growth
with better valuations than in
the United States.
------------------
See important Fund & index disclosures inside front cover.
3
<PAGE> 321
Long-Term Performance
AIM INTERNATIONAL EQUITY FUND CLASS A SHARES 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 4/30/98. It is important to understand the difference
between your Fund and an index. Your Fund's total return includes sales charges,
expenses, and management fees. An index measures the performance of hypothetical
portfolios, in this case the MSCI 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.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 4/30/98, including sales charges
CLASS A SHARES
Inception (4/7/92) 14.97%
5 years 14.82
1 year 16.50
CLASS B SHARES
Inception (9/15/94) 12.39%
1 year 17.27
CLASS C SHARES
Inception (8/4/97) 6.77%*
*Total return provided is cumulative total return that has not been annualized.
================================================================================
GROWTH OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
AIM INTERNATIONAL LIPPER MSCI EUROPE,
EQUITY FUND, INTERNATIONAL AUSTRALIA, AND
CLASS A SHARES FUND INDEX FAR EAST INDEX
- --------------------------------------------------------------------------------
(In Thousands)
4/92 9454 10000 10000
4/93 11044 11158.5 12219
4/94 13993 13809.4 14250
4/95 14146 13647.9 15046
4/96 17484 16011 16763.9
4/97 8916 17496.9 16616
4/98 23293 21265.4 19756.8
Past performance is no guarantee of comparable future results.
================================================================================
Your Fund's total return includes sales charges, expenses, and management fees.
The performance of the Fund's Class B and Class C shares will differ from Class
A shares due to differing fees and expenses. For Fund performance calculations
and descriptions of indexes cited on this page, please refer to the inside front
cover. Source:Towers Data Systems Hypo--Registered Trademark--
<PAGE> 322
For Consideration
THE ROTH IRA: THE POWER TO KEEP MORE
Contribute After-Tax Dollars Now . . . So You Can Get Federally Tax-Free Savings
Later
- --------------------------------------------------------------------------------
A new and potentially more powerful type of IRA--the Roth IRA--became available
on January 1, 1998. What makes it more powerful? The Roth IRA gives you the
opportunity to keep more of what you earn.
Are you eligible to open a Roth IRA? The answer is yes if you or your spouse
has earned income for the tax year for which you want to make the contribution,
and your adjusted gross income is below $110,000 if you are a single tax filer,
$160,000 if you file jointly.
TWO KEY ROTH IRA BENEFITS:
TAX-FREE AND PENALTY-FREE WITHDRAWALS
o Of earnings after five years. Earnings on your Roth IRA are federally
tax-free if your Roth IRA account has been open for five years and you are at
least 59 1/2 years old, or in the case of death or disability. You may also use
up to $10,000 of your earnings to buy a first home (after five years).
o Of contributions at any time. For instance, if you make annual contributions
of $2,000 for the next three years, you may take out up to $6,000 and use that
money for any purpose.
HOW YOU MIGHT PUT BOTH BENEFITS TO WORK FOR YOU
Here's an example of how you may take full advantage of a Roth IRA. You are 39
1/2 years old. You contribute $2,000 after-tax annually in your Roth IRA every
year for 20 years, earning an average annual return of 10%. After 20 years, your
account has grown to $126,005. Now at age 59 1/2 you can begin taking
withdrawals and pay no federal income tax or penalty on any of your $126,005. Or
you can keep your money invested and take it out whenever you need it.
THE ROTH IRA: TO CONVERT OR NOT TO CONVERT
Can you convert your Traditional IRA to a Roth IRA? The answer is yes if you
meet these requirements:
You must pay taxes on the amount you convert. If you convert in 1998, you
can spread your tax payments over the next four years. This four-year allowance
will not be available after December 31, 1998.
You cannot convert to a Roth IRA if you are married and file your tax return
separately, or if your annual gross income is over $100,000.
SOME ROTH IRA CONVERSION GUIDELINES
If you can check most of these boxes, converting your Traditional IRA to a Roth
IRA may make sense for you.
- --------------------------------------------------------------------------------
o You have assets outside your retirement savings with which you can easily
afford to pay the taxes due when you convert.
o You have 10 years or more before you retire. The longer you invest tax-free,
the more you benefit.
o Your tax rate will probably be higher in retirement than it is now. If so,
you'll pay less taxes now to convert than you would pay at retirement if you
withdrew from a traditional IRA.
o You plan to convert in 1998. On January 1, 1999, the ability to spread tax
payments over four years disappears.
o You want to keep making contributions after age 70 1/2 and may wish to pass
your IRA assets on to your heirs after your death.
ROTH IRA CALCULATOR & ANALYZER
The Roth IRA Analyzer & Calculator at AIM's Internet Web site--
www.aimfunds.com-- can help you determine your IRA eligibility status and
whether it makes sense for you to convert an existing IRA into a Roth IRA.
MAKE YOUR IRA CONVERSION DECISION A TRULY INFORMED ONE
Talk to your financial consultant, who knows your specific needs and goals. You
may also wish to talk with a tax adviser.
This discussion does not constitute tax advice. Your tax adviser can provide
guidance concerning your particular situation.
<PAGE> 323
SCHEDULE OF INVESTMENTS
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-90.98%
ARGENTINA-1.85%
Banco Rio de La Plata S.A.
(Banks-Major Regional) 415,000 $ 5,706,250
- ---------------------------------------------------------------
Perez Companc S.A.-Class B (Oil
& Gas-Refining & Marketing) 1,467,264 8,819,535
- ---------------------------------------------------------------
Telefonica de Argentina S.A.-ADR
(Telephone) 432,000 16,659,000
- ---------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil-International Integrated) 508,200 17,723,475
- ---------------------------------------------------------------
48,908,260
- ---------------------------------------------------------------
AUSTRALIA-0.62%
Australia & New Zealand Banking
Group Ltd. (Banks-Major Regional) 1,791,423 12,505,981
- ---------------------------------------------------------------
Telstra Corp. Ltd. (Telephone) 1,700,640 3,993,273
- ---------------------------------------------------------------
16,499,254
- ---------------------------------------------------------------
AUSTRIA-0.37%
OMV A.G. (Oil & Gas-Refining &
Marketing) 66,000 9,795,589
- ---------------------------------------------------------------
BELGIUM-1.47%
Barco Industries
(Manufacturing-Diversified) 41,000 10,860,046
- ---------------------------------------------------------------
Colruyt N.V. (Retail-Food Chains) 22,000 13,379,102
- ---------------------------------------------------------------
UCB S.A. (Manufacturing-Diversified) 3,100 14,822,153
- ---------------------------------------------------------------
39,061,301
- ---------------------------------------------------------------
BRAZIL-2.35%
Companhia Energetica de Minas
Gerais (Electric Companies) 173,000 8,395,488
- ---------------------------------------------------------------
Petroleo Brasileiro S.A.-Petrobras-
Preferred (Oil & Gas-Exploration &
Production) 30,271 7,676,042
- ---------------------------------------------------------------
Telecomunicacoes Brasileiras S.A.
(Telecommunications-
Cellular/Wireless) 190,600 18,915,840
- ---------------------------------------------------------------
Telecomunicacoes de Sao Paulo
S.A.-TELESP-Preferred (Telephone) 59,100 20,102,217
- ---------------------------------------------------------------
Telecomunicacoes do Rio de Janeiro
S.A. (Telecommunications-
Cellular/Wireless) 44,988 7,080,698
- ---------------------------------------------------------------
62,170,285
- ---------------------------------------------------------------
CANADA-5.12%
Bank of Montreal (Banks-Major
Regional) 281,500 15,356,156
- ---------------------------------------------------------------
BCE Inc. (Telecommunications-
Cellular/Wireless) 302,700 12,892,562
- ---------------------------------------------------------------
Bombardier Inc. (Aerospace/Defense) 498,000 13,443,928
- ---------------------------------------------------------------
Canadian National Railway Co.
(Railroads) 170,000 11,060,625
- ---------------------------------------------------------------
Geac Computer Corp. Ltd.
(Services-Computer Systems)(a) 170,000 6,699,654
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Imasco Ltd.
(Manufacturing-Diversified) 334,100 $ 12,582,638
- ---------------------------------------------------------------
Mitel Corp. (Communications
Equipment)(a) 690,000 9,796,132
- ---------------------------------------------------------------
Northern Telecom Ltd.-ADR
(Communications Equipment) 249,400 15,182,225
- ---------------------------------------------------------------
Royal Bank of Canada
(Banks-Major Regional) 200,000 11,945,309
- ---------------------------------------------------------------
Suncor, Inc. (Oil-International
Integrated) 380,000 13,102,074
- ---------------------------------------------------------------
Toronto-Dominion Bank
(Banks-Regional) 298,000 13,609,400
- ---------------------------------------------------------------
135,670,703
- ---------------------------------------------------------------
CHILE-0.45%
Cia. de Telecomunicaciones de
Chile S.A.-ADR (Telephone) 263,925 6,614,620
- ---------------------------------------------------------------
Quinenco S.A.-ADR
(Financial-Diversified) 513,900 5,299,594
- ---------------------------------------------------------------
11,914,214
- ---------------------------------------------------------------
DENMARK-1.08%
Novo Nordisk A/S-Class B (Health
Care-Drugs-Generic & Other) 176,600 28,651,023
- ---------------------------------------------------------------
FINLAND-1.18%
Nokia Oyj A.B.-Class A
(Communications Equipment) 464,000 31,129,205
- ---------------------------------------------------------------
FRANCE-16.03%
Accor S.A. (Lodging-Hotels) 91,000 24,812,677
- ---------------------------------------------------------------
Alcatel Alsthom
(Manufacturing-Diversified) 160,000 29,678,922
- ---------------------------------------------------------------
AXA S.A. (Insurance-Multi-Line) 132,000 15,503,577
- ---------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 250,000 21,086,342
- ---------------------------------------------------------------
Cap Gemini Sogeti S.A.
(Computers-Software & Services) 213,500 27,739,727
- ---------------------------------------------------------------
Compagnie Francaise d'Etudes et
de Construction Technip (Oil &
Gas-Refining & Marketing) 103,000 13,091,332
- ---------------------------------------------------------------
Danone (Foods) 89,000 21,024,788
- ---------------------------------------------------------------
Elf Aquitaine S.A. (Oil &
Gas-Refining & Marketing) 97,500 12,797,787
- ---------------------------------------------------------------
Essilor International S.A.
(Manufacturing-Specialized) 47,940 19,380,170
- ---------------------------------------------------------------
Lafarge S.A. (Engineering &
Construction) 212,000 20,032,607
- ---------------------------------------------------------------
Legrand S.A. (Housewares) 56,000 14,812,843
- ---------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 34,800 25,924,871
- ---------------------------------------------------------------
Promodes (Retail-Food Chains) 28,000 13,494,593
- ---------------------------------------------------------------
PSA Peugeot Citreon (Automobiles) 73,000 12,678,756
- ---------------------------------------------------------------
Renault S.A. (Automobiles)(a) 855,000 39,684,745
- ---------------------------------------------------------------
Rexel S.A. (Distributors-Food &
Health) 37,000 14,865,247
- ---------------------------------------------------------------
Schneider S.A. (Housewares) 287,000 21,485,610
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 324
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Societe BIC S.A. (Office
Equipment & Supplies) 136,550 $ 9,400,165
- ---------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 87,000 18,120,778
- ---------------------------------------------------------------
Sodexho Alliance S.A.
(Services-Commercial & Consumer) 36,800 6,740,442
- ---------------------------------------------------------------
Suez Lyonnaise des Eaux
(Manufacturing-Diversified) 75,000 12,726,668
- ---------------------------------------------------------------
Total S.A.-Class B (Oil &
Gas-Refining & Marketing) 111,000 13,203,294
- ---------------------------------------------------------------
Valeo S.A. (Auto Parts & Equipment) 161,000 16,016,969
- ---------------------------------------------------------------
424,302,910
- ---------------------------------------------------------------
GERMANY-7.43%
Adidas A.G. (Footwear) 146,000 24,209,910
- ---------------------------------------------------------------
Allianz A.G.
(Insurance-Multi-Line) 43,500 13,383,869
- ---------------------------------------------------------------
Bayerische Vereinsbank A.G.
(Banks-Major Regional) 285,000 21,683,574
- ---------------------------------------------------------------
Continental A.G. (Auto Parts &
Equipment) 285,000 8,101,555
- ---------------------------------------------------------------
Dresdner Bank A.G. (Banks-Major
Regional) 240,000 12,989,243
- ---------------------------------------------------------------
Henkel KGaA (Chemicals-Diversified) 266,500 20,795,942
- ---------------------------------------------------------------
Mannesmann A.G.
(Machinery-Diversified) 32,250 25,597,235
- ---------------------------------------------------------------
Porsche A.G. (Automobiles) 3,300 8,258,737
- ---------------------------------------------------------------
SAP A.G. (Computers-Software &
Services) 27,000 12,791,929
- ---------------------------------------------------------------
SAP A.G.-Preferred
(Computers-Software & Services) 27,000 13,469,149
- ---------------------------------------------------------------
VEBA A.G. (Manufacturing-Diversified) 155,000 10,246,363
- ---------------------------------------------------------------
Volkswagen A.G. (Automobiles) 31,500 25,089,739
- ---------------------------------------------------------------
196,617,245
- ---------------------------------------------------------------
HONG KONG-2.19%
Cosco Pacific Ltd.
(Financial-Diversified) 9,772,000 6,623,160
- ---------------------------------------------------------------
Hong Kong & China Gas Co. Ltd.
(Natural Gas) 10,209,056 13,904,666
- ---------------------------------------------------------------
HSBC Holdings PLC (Banks-Major
Regional) 490,000 13,980,119
- ---------------------------------------------------------------
Hutchison Whampoa Ltd.
(Retail-Food Chains) 2,552,000 15,781,152
- ---------------------------------------------------------------
New World Infrastructure Ltd.
(Services-Commercial &
Consumer)(a) 1,484,200 3,190,283
- ---------------------------------------------------------------
Ng Fung Hong Ltd. (Foods) 4,986,000 4,505,809
- ---------------------------------------------------------------
57,985,189
- ---------------------------------------------------------------
HUNGARY-0.23%
Gedeon Richter (Health
Care-Drugs-Major Pharmaceuticals) 57,200 6,091,800
- ---------------------------------------------------------------
INDONESIA-0.28%
Gulf Indonesia Resources Ltd.
(Oil-International Integrated)(a) 488,400 7,509,150
- ---------------------------------------------------------------
IRELAND-1.43%
Allied Irish Banks PLC
(Banks-Regional) 915,000 12,751,284
- ---------------------------------------------------------------
Bank of Ireland (Banks-Major
Regional) 750,000 15,315,919
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
IRELAND-(CONTINUED)
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 158,800 $ 9,865,450
- ---------------------------------------------------------------
37,932,653
- ---------------------------------------------------------------
ITALY-4.91%
Assicurazioni Generali
(Insurance-Multi-Line) 508,500 15,230,168
- ---------------------------------------------------------------
Credito Italiano S.p.A.
(Banks-Major Regional) 2,400,000 12,562,622
- ---------------------------------------------------------------
Ente Nazionale Idrocarburi
S.p.A. (Oil & Gas-Refining &
Marketing) 2,050,000 13,737,263
- ---------------------------------------------------------------
Istituto Mobiliare Italiano
S.p.A. (Banks-Major Regional) 825,000 13,439,114
- ---------------------------------------------------------------
Pirelli S.p.A. (Electrical
Equipment) 5,520,371 18,234,505
- ---------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications-
Cellular/Wireless) 5,100,000 29,217,715
- ---------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 3,650,000 27,498,377
- ---------------------------------------------------------------
129,919,764
- ---------------------------------------------------------------
JAPAN-7.39%
Advantest Corp.
(Electronics-Instrumentation) 217,910 14,649,135
- ---------------------------------------------------------------
Bridgestone Corp. (Auto Parts &
Equipment) 477,000 10,881,033
- ---------------------------------------------------------------
Canon, Inc. (Office Equipment &
Supplies) 398,000 9,409,623
- ---------------------------------------------------------------
Fuji Photo Film Co. (Leisure
Time-Products) 265,000 9,427,827
- ---------------------------------------------------------------
Hitachi Cable, Ltd. (Metal
Fabricators) 1,254,000 6,242,058
- ---------------------------------------------------------------
Honda Motor Co., Ltd. (Automobiles) 391,000 14,176,297
- ---------------------------------------------------------------
Ibiden Co., Ltd.
(Electronics-Component
Distributors) 634,000 10,008,762
- ---------------------------------------------------------------
Minebea Co. Ltd.
(Electronics-Component
Distributors) 1,614,000 18,043,055
- ---------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics-Component
Distributors) 326,000 9,554,196
- ---------------------------------------------------------------
Nippon Telegraph & Telephone
Corp. (Telephone) 15,790 13,835,184
- ---------------------------------------------------------------
Nippon Television Network Corp.
(Broadcasting-Television,
Radio & Cable) 26,530 7,835,358
- ---------------------------------------------------------------
NTT Data Communications Systems
Co. (Computers-Software & Services) 2,960 12,788,881
- ---------------------------------------------------------------
Rohm Co. (Electronics-Component
Distributors) 104,000 11,736,234
- ---------------------------------------------------------------
SMC Corp. (Machinery-Diversified) 100,000 8,308,785
- ---------------------------------------------------------------
Sony Corp. (Electronics-Component
Distributors) 234,000 19,460,231
- ---------------------------------------------------------------
TDK Corp. (Electrical Equipment) 244,000 19,278,193
- ---------------------------------------------------------------
195,634,852
- ---------------------------------------------------------------
MEXICO-3.00%
Cifra S.A. de C.V.-Series C
(Retail-General Merchandise)(a) 5,637,000 9,589,242
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 325
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO-(CONTINUED)
Cifra S.A. de C.V.-Series V
(Retail-General Merchandise)(a) 656,432 $ 1,146,059
- ---------------------------------------------------------------
Coca-Cola Femsa S.A.-ADR
(Beverages-Non-Alcoholic) 554,600 9,428,200
- ---------------------------------------------------------------
Fomento Economico Mexicano, S.A.
de C.V.-Class B
(Beverages-Alcoholic) 1,282,350 9,487,139
- ---------------------------------------------------------------
Grupo Industrial Maseca S.A. de
C.V.-Class B (Foods) 5,457,500 3,934,723
- ---------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 374,200 15,342,200
- ---------------------------------------------------------------
Kimberly-Clark de Mexico, S.A.
de C.V.-Class A (Paper &
Forest Products) 2,700,000 13,247,924
- ---------------------------------------------------------------
Panamerican Beverages, Inc.-Class A
(Beverages-Non-Alcoholic) 370,000 14,753,750
- ---------------------------------------------------------------
TV Azteca, S.A. de C.V.-ADR
(Broadcasting-Television,
Radio & Cable) 136,200 2,536,725
- ---------------------------------------------------------------
79,465,962
- ---------------------------------------------------------------
NETHERLANDS-4.44%
CMG PLC (Computers-Software &
Services) 357,800 16,011,643
- ---------------------------------------------------------------
Getronics N.V.
(Computers-Software & Services) 417,000 18,454,433
- ---------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food Chains) 661,000 20,614,326
- ---------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 153,000 5,112,371
- ---------------------------------------------------------------
Philips Electronics N.V.
(Household Furniture & Appliances) 225,000 19,825,751
- ---------------------------------------------------------------
Randstad Holdings N.V.
(Services-Commercial & Consumer) 137,000 6,727,588
- ---------------------------------------------------------------
Vendex International N.V.
(Retail-General Merchandise) 215,000 13,793,377
- ---------------------------------------------------------------
VNU-Verenigde Nederlandse
Uitgeversbedrijven Verenigd
Bezit (Publishing) 525,000 16,996,682
- ---------------------------------------------------------------
117,536,171
- ---------------------------------------------------------------
NORWAY-0.53%
Petroleum Geo-Services A.S.A.
(Oil-International Integrated)(a) 215,000 13,955,515
- ---------------------------------------------------------------
PHILIPPINES-0.29%
Philippine Long Distance
Telephone Co. (Telephone) 168,960 4,523,836
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co.-ADR (Telephone) 119,200 3,218,400
- ---------------------------------------------------------------
7,742,236
- ---------------------------------------------------------------
PORTUGAL-2.57%
Banco Comercial Portugues, S.A.
(Banks-Major Regional) 440,000 15,428,230
- ---------------------------------------------------------------
Cimpor-Cimentos de Portugal S.A.
(Construction-Cement & Aggregates) 215,000 7,952,615
- ---------------------------------------------------------------
Electricidade de Portugal,
S.A.-ADR (Electric Companies) 140,800 7,321,600
- ---------------------------------------------------------------
Portugal Telecom S.A. (Telephone) 510,000 27,410,559
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PORTUGAL-(CONTINUED)
Telecel-Comunicacaoes Pessoais,
S.A. (Telecommunications-Cellular/
Wireless)(a) 55,000 $ 9,868,421
- ---------------------------------------------------------------
67,981,425
- ---------------------------------------------------------------
SINGAPORE-0.26%
Overseas Union Bank Ltd.
(Banks-Major Regional) 1,846,800 6,999,874
- ---------------------------------------------------------------
SPAIN-3.94%
Banco Bilbao Vizcaya, S.A.
(Banks-Major Regional) 432,000 22,238,214
- ---------------------------------------------------------------
Banco Popular Espanol S.A.
(Banks-Major Regional) 144,300 11,843,401
- ---------------------------------------------------------------
Endesa S.A. (Electric Companies) 1,171,000 28,448,457
- ---------------------------------------------------------------
Iberdrola S.A. (Electric Companies) 1,100,000 17,695,338
- ---------------------------------------------------------------
Telefonica de Espana (Telephone) 565,000 23,594,222
- ---------------------------------------------------------------
Telefonica de Espana-Rights,
expiring 05/30/98 (Telephone)(a) 565,000 445,174
- ---------------------------------------------------------------
104,264,806
- ---------------------------------------------------------------
SWEDEN-1.73%
Hennes & Mauritz A.B.-Class B
(Retail-Specialty-Apparel) 133,992 6,974,784
- ---------------------------------------------------------------
Sparbanken Sverige A.B.-Class A
(Banks-Major Regional) 530,000 16,566,778
- ---------------------------------------------------------------
Svenska Handelsbanken-Class A
(Banks-Major Regional) 490,000 22,215,190
- ---------------------------------------------------------------
45,756,752
- ---------------------------------------------------------------
SWITZERLAND-5.63%
Clariant A.G. (Chemicals-Specialty) 19,200 20,662,358
- ---------------------------------------------------------------
Credit Suisse Group (Banks/Major
Regional) 122,300 26,893,450
- ---------------------------------------------------------------
Holderbank Financiere Glarus
A.G.-Class B (Construction-Cement
& Aggregates) 12,000 12,698,074
- ---------------------------------------------------------------
Nestle S.A. (Foods) 15,000 29,086,426
- ---------------------------------------------------------------
Rieter Holdings Ltd.
(Machinery-Diversified) 23,000 13,808,889
- ---------------------------------------------------------------
Schweizerischer Bankverein
(Banks-Major Regional) 71,000 24,649,164
- ---------------------------------------------------------------
Zurich Versicherungs-Gesellschaft
(Insurance-Multi-Line) 35,000 21,316,719
- ---------------------------------------------------------------
149,115,080
- ---------------------------------------------------------------
TAIWAN-0.12%
Taiwan Semiconductor
Manufacturing Co.-ADR
(Electronics-Semiconductors)(a) 131,300 3,225,056
- ---------------------------------------------------------------
UNITED KINGDOM-14.09%
Airtours PLC
(Services-Commercial &
Consumer) 1,399,350 12,257,912
- ---------------------------------------------------------------
Bodycote International PLC
(Chemicals-Specialty) 410,000 8,214,985
- ---------------------------------------------------------------
British Aerospace PLC
(Aerospace/Defense) 425,000 14,202,034
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 326
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
British Petroleum Co. PLC (Oil &
Gas-Refining & Marketing) 437,200 $ 6,906,345
- ---------------------------------------------------------------
Cable & Wireless PLC
(Telecommunications-
Cellular/Wireless) 1,755,000 20,106,377
- ---------------------------------------------------------------
Compass Group PLC
(Services-Commercial & Consumer) 970,000 16,791,064
- ---------------------------------------------------------------
EMAP PLC (Publishing) 965,000 19,641,924
- ---------------------------------------------------------------
General Electric Co. PLC
(Manufacturing-Diversified) 1,769,800 14,651,953
- ---------------------------------------------------------------
GKN PLC
(Manufacturing-Diversified) 530,000 15,308,560
- ---------------------------------------------------------------
Granada Group PLC (Leisure
Time-Products) 435,000 7,493,636
- ---------------------------------------------------------------
Hays PLC (Services-Commercial &
Consumer) 1,050,050 17,816,737
- ---------------------------------------------------------------
Kingfisher PLC
(Retail-Department Stores) 1,003,800 18,232,371
- ---------------------------------------------------------------
Ladbroke Group PLC (Leisure
Time-Products) 2,500,000 13,745,859
- ---------------------------------------------------------------
Lloyds TSB Group PLC
(Banks-Major Regional) 570,000 8,537,025
- ---------------------------------------------------------------
Misys PLC (Services-Commercial &
Consumer) 390,000 18,752,906
- ---------------------------------------------------------------
Pearson PLC (Specialty Printing) 950,000 14,887,759
- ---------------------------------------------------------------
Provident Financial PLC
(Consumer Finance) 909,333 15,193,391
- ---------------------------------------------------------------
Railtrack Group PLC (Shipping) 1,461,448 26,703,669
- ---------------------------------------------------------------
Rentokil Initial PLC
(Services-Commercial & Consumer) 2,760,000 17,783,525
- ---------------------------------------------------------------
Royal & Sun Alliance Insurance
Group PLC (Insurance-Multi-Line) 1,350,000 15,082,605
- ---------------------------------------------------------------
Siebe PLC (Electronics-
Component/Distributors) 370,000 8,267,502
- ---------------------------------------------------------------
Smiths Industries PLC
(Machinery-Diversified) 256,000 3,684,317
- ---------------------------------------------------------------
Unilever PLC (Foods) 2,064,000 21,989,495
- ---------------------------------------------------------------
Vodafone Group PLC
(Telecommunications-
Cellular/Wireless) 1,865,000 20,430,842
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
WPP Group PLC
(Services-Advertising/Marketing) 2,575,000 $ 16,343,879
- ---------------------------------------------------------------
373,026,672
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$1,675,471,312) 2,408,862,946
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
FOREIGN CONVERTIBLE BONDS-0.77%
FRANCE-0.57%
AXA-UAP (Insurance-Multi-Line),
Conv. Sr. Deb., 4.50%,
01/01/99(b) FRF 33,885,000 $ 14,958,838
- ---------------------------------------------------------------
HONG KONG-0.20%
New World Infrastructure Ltd.
(Services-Commercial &
Consumer), Conv. Bonds, 5.00%,
07/15/01 (acquired 04/10/97 -
04/11/97; cost $2,056,313)(c) $ 1,750,000 1,758,750
- ---------------------------------------------------------------
New World Infrastructure Ltd.
(Services-Commercial &
Consumer), Conv. Bonds, 5.00%,
07/15/01 $ 3,650,000 3,668,250
- ---------------------------------------------------------------
5,427,000
- ---------------------------------------------------------------
Total Foreign Convertible
Bonds (Cost $14,910,209) 20,385,838
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS-6.19%(d)
Dean Witter Reynolds, 5.55%,
05/01/98(e) 42,092 42,092
- ---------------------------------------------------------------
Goldman Sachs & Co., 5.53%,
05/01/98(f) 505,897 505,897
- ---------------------------------------------------------------
Lehman Brothers Inc.,
5.32%, 05/01/98(g) 70,494,103 70,494,103
- ---------------------------------------------------------------
5.30%, 05/01/98(h) 93,000,000 93,000,000
- ---------------------------------------------------------------
Total Repurchase Agreements
(Cost $164,042,092) 164,042,092 164,042,092
- ---------------------------------------------------------------
TOTAL INVESTMENTS-97.94% 2,593,290,876
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-2.06% 54,413,600
- ---------------------------------------------------------------
NET ASSETS-100.00% $2,647,704,476
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debenture
FRF - French Franc
GDR - Global Depositary Receipt
Sr. - Senior
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(c)Restricted security. May be resold to qualified institutional buyers in
accordance with provisions of Rule 144A under the Securities Act of 1933, as
amended. The valuation of this security has been determined in accordance
with procedures established by the Board of Directors. The aggregate market
value of this security represented 0.07% of the Fund's net assets.
(d)Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreements. The collateral is marked to market
daily to ensure its market value 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.
(e)Joint repurchase agreement entered into 04/30/98 with a maturing value of
$300,046,250. Collateralized by $307,111,000 U.S. Government obligations, 0%
to 9.40% due 06/10/98 to 09/26/19 with an aggregate market value at 04/30/98
of $306,000,308.
(f)Joint repurchase agreement entered into 04/30/98 with a maturing value of
$500,076,806. Collaterized by $495,889,000 U.S. obligations, 0% to 7.75% due
07/23/98 to 01/15/08 with an aggregate market value at 04/30/98 of
$510,500,080.
(g)Joint repurchase agreement entered into 04/30/98 with a maturing value of
$450,066,250. Collateralized by $522,302,000 U.S. Government obligations, 0%
to 7.45% due 08/14/98 to 10/08/27 with an aggregate market value at 04/30/98
of $459,005,491.
(h)Joint repurchase agreement entered into 04/30/98 with a maturing value of
$450,066,500. Collateralized by $557,597,000 U.S. Government obligations, 0%
to 8.60% due 05/26/98 to 11/12/27 with an aggregate market value at 04/30/98
of $459,003,592.
See Notes to Financial Statements.
9
<PAGE> 327
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,854,423,613) $2,593,290,876
- ------------------------------------------------------------
Foreign currencies, at value (cost
$39,795,295) 39,909,798
- ------------------------------------------------------------
Receivables for:
Investments sold 55,680,888
- ------------------------------------------------------------
Capital stock sold 21,561,568
- ------------------------------------------------------------
Dividends and interest 7,650,132
- ------------------------------------------------------------
Investment for deferred compensation plan 30,987
- ------------------------------------------------------------
Other assets 78,119
- ------------------------------------------------------------
Total assets 2,718,202,368
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 56,007,863
- ------------------------------------------------------------
Capital stock reacquired 10,478,190
- ------------------------------------------------------------
Deferred compensation 30,987
- ------------------------------------------------------------
Accrued advisory fees 1,866,012
- ------------------------------------------------------------
Accrued administrative services fees 9,020
- ------------------------------------------------------------
Accrued directors' fees 3,171
- ------------------------------------------------------------
Accrued distribution fees 1,116,490
- ------------------------------------------------------------
Accrued transfer agent fees 449,100
- ------------------------------------------------------------
Accrued operating expenses 537,059
- ------------------------------------------------------------
Total liabilities 70,497,892
- ------------------------------------------------------------
Net assets applicable to shares outstanding $2,647,704,476
============================================================
NET ASSETS:
Class A $1,795,441,087
============================================================
Class B $ 810,320,352
============================================================
Class C $ 41,943,037
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 92,375,514
============================================================
Class B:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 42,646,310
============================================================
Class C:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 2,206,392
============================================================
Class A:
Net asset value and redemption price per
share $ 19.44
============================================================
Offering price per share:
(Net asset value of $19.44
divided by 94.50%) $ 20.57
============================================================
Class B:
Net asset value and offering price per
share $ 19.00
============================================================
Class C:
Net asset value and offering price per
share $ 19.01
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,376,801 foreign
withholding tax) $ 11,416,813
- -----------------------------------------------------------
Interest 4,046,927
- -----------------------------------------------------------
Total investment income 15,463,740
- -----------------------------------------------------------
EXPENSES:
Advisory fees 10,734,834
- -----------------------------------------------------------
Administrative services fees 52,690
- -----------------------------------------------------------
Custodian fees 875,718
- -----------------------------------------------------------
Directors' fees 11,494
- -----------------------------------------------------------
Distribution fees-Class A 2,392,026
- -----------------------------------------------------------
Distribution fees-Class B 3,573,314
- -----------------------------------------------------------
Distribution fees-Class C 105,364
- -----------------------------------------------------------
Transfer agent fees-Class A 1,302,309
- -----------------------------------------------------------
Transfer agent fees-Class B 857,137
- -----------------------------------------------------------
Transfer agent fees-Class C 23,095
- -----------------------------------------------------------
Other 370,732
- -----------------------------------------------------------
Total expenses 20,298,713
- -----------------------------------------------------------
Less: Fees waived by advisor (458,632)
- -----------------------------------------------------------
Expenses paid indirectly (15,154)
- -----------------------------------------------------------
Net expenses 19,824,927
- -----------------------------------------------------------
Net investment income (loss) (4,361,187)
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 45,242,054
- -----------------------------------------------------------
Foreign currencies (4,049,506)
- -----------------------------------------------------------
41,192,548
- -----------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 351,178,968
- -----------------------------------------------------------
Foreign currencies (11,635)
- -----------------------------------------------------------
351,167,333
- -----------------------------------------------------------
Net gain from investment securities and
foreign
currencies 392,359,881
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $387,998,694
===========================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 328
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1998 and the year ended October 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1998 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (4,361,187) $ 328,254
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies 41,192,548 (16,556,015)
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 351,167,333 193,195,060
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 387,998,694 176,967,299
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (5,802,803) (1,250,230)
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (31,812,536)
- -----------------------------------------------------------------------------------------------
Class B -- (11,361,858)
- -----------------------------------------------------------------------------------------------
Share transactions-net:
Class A (44,913,515) 363,888,653
- -----------------------------------------------------------------------------------------------
Class B 16,973,074 282,384,176
- -----------------------------------------------------------------------------------------------
Class C 24,421,262 13,462,792
- -----------------------------------------------------------------------------------------------
Net increase in net assets 378,676,712 792,278,296
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,269,027,764 1,476,749,468
- -----------------------------------------------------------------------------------------------
End of period $2,647,704,476 $2,269,027,764
===============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,894,342,763 $1,897,861,942
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (4,300,475) 5,863,515
- -----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies 18,739,029 (22,453,519)
- -----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 738,923,159 387,755,826
- -----------------------------------------------------------------------------------------------
$2,647,704,476 $2,269,027,764
===============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
(Unaudited)
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 series management investment company consisting of six
separate portfolios: AIM International Equity Fund, AIM Asian Growth Fund, AIM
European Development Fund, AIM Global Aggressive Growth Fund, AIM Global Growth
Fund and AIM Global Income Fund. The Fund currently offers three different
classes of shares: Class A shares, Class B shares and Class C shares. Class A
shares are sold with a front-end sales charge. Class B and Class C 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at the last sales price on the exchange where
the security is principally traded or, lacking any sales on a particular day,
at the mean between the closing bid and asked prices on that day. If a mean
is not available, as is the case in some foreign markets, the closing bid
will be used absent a last sales price. Securities traded in the over-the-
counter market (but not including securities reported on the NASDAQ National
Market System) are valued at the mean
11
<PAGE> 329
between the last bid and asked prices based upon quotes furnished by market
makers for such securities. 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. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors, such as yield, type of issue, coupon rate
and maturity date. Securities for which market quotations are 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 the date of valuation. Purchases and sales of portfolio securities
and income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts--A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
D. Securities Transactions, Investment Income and Distributions--Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on an accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
E. Federal Income Taxes--The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements. The Fund has a capital loss carryforward of
$14,969,471 (which may be carried forward to offset future capital gains, if
any) which expires, if not previously utilized, through the year 2005.
F. Expenses--Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated among the
classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 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 six months ended April 30, 1998, AIM waived fees of $458,632.
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 six months ended April 30, 1998, AIM
was reimbursed $52,690 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 six months ended April 30,
1998, AFS was paid $998,792 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor of the Class
A, Class B and Class C 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 and Class C shares (the "Class A and Class C Plan"), and the Fund's
Class B shares (the "Class B Plan") (collectively, the "Plans"). The Fund,
pursuant to the Class A and C Plan, pays AIM Distributors compensation at the
annual rate of 0.30% of the average daily net assets of Class A shares and 1.00%
of the average daily net assets of Class C shares. The Fund, pursuant to the
Class B Plan, pays AIM Distributors compensation at an annual rate of 1.00% of
the average daily net assets attributable to the Class B shares. Of these
amounts, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class A, Class B or C shares to selected dealers and financial
institutions who furnish continuing
12
<PAGE> 330
personal shareholder services to their customers who purchase and own the
appropriate class of shares of the Fund. Any amounts not paid as a service fee
under the Plans would constitute an asset-based sales charge. The Plans also
impose a cap on the total sales charges, including asset-based sales charges
that may be paid by the respective classes. 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
six months ended April 30, 1998, the Class A and Class B and Class C shares paid
AIM Distributors $2,392,026, $3,573,314 and $105,364, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $314,771 from sales of the Class A
shares of the Fund during the six months ended April 30, 1998. 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 six months ended April 30,
1998, AIM Distributors received commissions of $74,322 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 six months ended April 30, 1998, the Fund incurred legal fees of
$2,872 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-INDIRECT EXPENSES
During the six months ended April 30, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $13,194 and $1,960, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $15,154 during the six months ended April 30, 1998.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-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) $500,000,000 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.
During the six months ended April 30, 1998, 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 0.05% 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.
Pursuant to an amendment to the line of credit agreement effective May 1,
1998, the Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the
limits set by the prospectus for borrowings.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1998 was
$664,094,127 and $742,599,080, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of April 30, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $768,024,595
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (36,019,695)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $732,004,900
=========================================================
</TABLE>
Cost of investments for tax purposes is $1,861,285,976.
NOTE 7-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the six months ended
April 30, 1998 and the year ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1998 1997
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 108,917,465 $ 1,914,533,895 105,291,824 $ 1,764,668,535
- ----------------------------------------------------------------------------------------
Class B 5,530,453 95,396,155 21,599,075 352,871,134
- ----------------------------------------------------------------------------------------
Class C* 11,381,107 199,489,258 1,372,281 23,795,456
- ----------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Class A 332,410 5,441,423 2,035,986 31,231,975
- ----------------------------------------------------------------------------------------
Class B -- -- 707,879 10,688,975
- ----------------------------------------------------------------------------------------
Reacquired:
Class A (111,677,282) (1,964,888,833) (84,633,652) (1,432,011,857)
- ----------------------------------------------------------------------------------------
Class B (4,615,967) (78,423,081) (4,913,096) (81,175,933)
- ----------------------------------------------------------------------------------------
Class C* (9,963,335) (175,067,996) (583,661) (10,332,664)
- ----------------------------------------------------------------------------------------
(95,149) $ (3,519,179) 40,876,636 $ 659,735,621
========================================================================================
</TABLE>
* Class C commenced sales on August 4, 1997.
13
<PAGE> 331
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the six months ended April 30, 1998 and each of the years in
the five-year period ended October 31, 1997, for a share of Class B capital
stock outstanding during the six months ended April 30, 1998, each of the years
in the three-year period ended October 31, 1997 and the period September 15,
1994 (date sales commenced) through October 31, 1994, and for a share of Class C
capital stock outstanding during the six months ended April 30, 1998 and the
period August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------
OCTOBER 31,
APRIL 30, ----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.64 $ 15.37 $ 13.65 $ 13.50 $ 12.18 $ 8.88
- ------------------------------------------------ ---------- ---------- ----------- --------- --------- ---------
Income from investment operations:
Net investment income (loss) (0.01)(a) 0.04(a) 0.04(a) 0.01 0.02 0.02
- ------------------------------------------------ ---------- ---------- ----------- --------- --------- ---------
Net gains on securities (both realized and
unrealized) 2.87 1.68 2.07 0.62 1.31 3.29
- ------------------------------------------------ ---------- ---------- ----------- --------- --------- ---------
Total from investment operations 2.86 1.72 2.11 0.63 1.33 3.31
- ------------------------------------------------ ---------- ---------- ----------- --------- --------- ---------
Less distributions:
Dividends from net investment income (0.06) (0.02) (0.01) (0.04) (0.01) (0.01)
- ------------------------------------------------ ---------- ---------- ----------- --------- --------- ---------
Distributions from net realized gains -- (0.43) (0.38) (0.44) -- --
- ------------------------------------------------ ---------- ---------- ----------- --------- --------- ---------
Total distributions (0.06) (0.45) (0.39) (0.48) (0.01) (0.01)
- ------------------------------------------------ ---------- ---------- ----------- --------- --------- ---------
Net asset value, end of period $ 19.44 $ 16.64 $ 15.37 $ 13.65 $ 13.50 $ 12.18
================================================ ========== ========== =========== ========= ========= =========
Total return(b) 17.27% 11.43% 15.79% 5.24% 10.94% 37.36%
================================================ ========== ========== =========== ========= ========= =========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,795,441 $1,577,390 $ 1,108,395 $ 654,764 $ 708,159 $ 372,282
================================================ ========== ========== =========== ========= ========= =========
Ratio of expenses to average net assets(c) 1.46%(d)(e) 1.47% 1.58% 1.67% 1.64% 1.78%
================================================ ========== ========== =========== ========= ========= =========
Ratio of net investment income (loss) to average
net assets(f) (0.13)%(d) 0.24% 0.25% 0.10% 0.22% 0.28%
================================================ ========== ========== =========== ========= ========= =========
Portfolio turnover rate 30% 50% 66% 68% 67% 62%
================================================ ========== ========== =========== ========= ========= =========
Average brokerage commission rate(g) $ 0.0229 $ 0.0168 $ 0.0192 N/A N/A N/A
================================================ ========== ========== =========== ========= ========= =========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and are not annualized for periods less than
one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.50% (annualized), 1.51%, 1.60% and 1.68% for 1998-1995.
(d) Ratios are annualized and based on average net assets of $1,607,899,814.
(e) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.17)% (annualized), 0.20%, 0.22% and 0.09% for
1998-1995.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
14
<PAGE> 332
NOTE 8-FINANCIAL HIGHLIGHTS-continued
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------------------------------- -------------------------
OCTOBER 31,
APRIL 30, ------------------------------------------- APRIL 30, OCTOBER 31,
1998 1997 1996 1995 1994 1998 1997
--------- -------- -------- ------ ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.27 $ 15.13 $ 13.54 $13.49 $13.42 $ 16.27 $ 17.64
- ---------------------------------------- -------- -------- -------- ------ ------ ------- -------
Income from investment operations:
Net investment income (loss) (0.08)(a) (0.09)(a) (0.07)(a) (0.09) (0.01) (0.09)(a) (0.02)(a)
- ---------------------------------------- -------- -------- -------- ------ ------ ------- -------
Net gains (losses) on securities (both
realized and unrealized) 2.81 1.66 2.04 0.61 0.08 2.83 (1.35)
- ---------------------------------------- -------- -------- -------- ------ ------ ------- -------
Total from investment operations 2.73 1.57 1.97 0.52 0.07 2.74 (1.37)
- ---------------------------------------- -------- -------- -------- ------ ------ ------- -------
Less distributions:
Dividends from net investment income -- -- -- (0.03) -- -- --
- ---------------------------------------- -------- -------- -------- ------ ------ ------- -------
Distributions from net realized gains -- (0.43) (0.38) (0.44) -- -- --
- ---------------------------------------- -------- -------- -------- ------ ------ ------- -------
Total distributions -- (0.43) (0.38) (0.47) -- -- --
- ---------------------------------------- -------- -------- -------- ------ ------ ------- -------
Net asset value, end of period $ 19.00 $ 16.27 $ 15.13 $13.54 $13.49 $ 19.01 $ 16.27
======================================== ======== ======== ======== ====== ====== ======= =======
Total return(b) 16.78% 10.61% 14.88% 4.35% 0.52% 16.84% (7.77)%
======================================== ======== ======== ======== ====== ====== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $810,320 $678,809 $368,355 $51,964 $4,833 $41,943 $12,829
======================================== ======== ======== ======== ====== ====== ======= =======
Ratio of expenses to average net
assets(c) 2.23%(d)(e) 2.25% 2.35% 2.55% 2.53%(f) 2.21%(d)(e) 2.27%(f)
======================================== ======== ======== ======== ====== ====== ======= =======
Ratio of net investment income (loss) to
average net assets(g) (0.90)%(d) (0.53)% (0.53)% (0.78)% (0.67)%(f) (0.88)%(d) (0.55)%(f)
======================================== ======== ======== ======== ====== ====== ======= =======
Portfolio turnover rate 30% 50% 66% 68% 67% 30% 50%
======================================== ======== ======== ======== ====== ====== ======= =======
Average brokerage commission rate(h) $ 0.0229 $ 0.0168 $ 0.0192 N/A N/A $0.0229 $0.0168
======================================== ======== ======== ======== ====== ====== ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and are not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.27% (annualized), 2.28%, 2.37% and 2.56% for 1998-1995 for Class B and
2.25% (annualized) and 2.30% (annualized) for 1998-1997 for Class C.
(d) Ratios are annualized and based on average net assets of $720,585,336 and
$21,247,464 for Class B and Class C, respectively.
(e) Ratios include indirectly paid expenses. Excluding indirectly paid expenses,
the ratios of expenses to average net assets would have been the same for
Class B and Class C.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements are (0.94)% (annualized), (0.57)%, (0.55)% and (0.79)%, for
1998-1995 for Class B and (0.92)% (annualized) and (0.57)% (annualized) for
1998-1997 for Class C.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
15
<PAGE> 333
Directors & Officers
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II TRANSFER AGENT
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Assistant Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Robert G. Alley
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Melville B. Cox Boston, MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Jonathan C. Schoolar
of the U.S. House of Representatives Vice President Ballard Spahr
Andrews & Ingersoll, LLP
Carl Frischling Renee A. Bamford 1735 Market Street
Partner Assistant Secretary Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel
P. Michelle Grace COUNSEL TO THE DIRECTORS
Robert H. Graham Assistant Secretary
President and Chief Executive Officer Kramer, Levin, Naftalis & Frankel
A I M Management Group Inc. Jeffrey H. Kupor 919 Third Avenue
Assistant Secretary New York, NY 10022
John F. Kroeger
Formerly Consultant Nancy L. Martin DISTRIBUTOR
Wendell & Stockel Associates, Inc. Assistant Secretary
A I M Distributors, Inc.
Lewis F. Pennock Ofelia M. Mayo 11 Greenway Plaza
Attorney Assistant Secretary Suite 100
Houston, TX 77046
Ian W. Robinson Lisa A. Moss
Consultant; Formerly Executive Assistant Secretary
Vice President and
Chief Financial Officer Kathleen J. Pflueger
Bell Atlantic Management Assistant Secretary
Services, Inc.
Samuel D. Sirko
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Stephen I. Winer
Limited Partnership Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
16
<PAGE> 334
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds--Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds. Certain restrictions
apply.
o RETIREMENT PLANS. You may purchase shares of the fund for your Individual
Retirement Account (IRA) or any other type of retirement plan, and earn
tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o WWW.AIMFUNDS.COM. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
------------
<PAGE> 335
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
FOR AGGRESSIVE GROWTH
[PHOTO OF 11 AIM Aggressive Growth Fund*
GREENWAY PLAZA AIM Asian Growth Fund
APPEARS HERE] AIM Capital Development Fund
AIM Constellation Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
FOR GROWTH OF CAPITAL
AIM Advisor International Value Fund
AIM Blue Chip Fund
AIM Global Growth Fund
AIM International Equity Fund
AIM Select Growth Fund**
AIM Value Fund
AIM Weingarten Fund
FOR GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
FOR HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
FOR CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
FOR CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided *AIM Aggressive Growth Fund was closed to new
leadership in the mutual fund industry since 1976 investors on June 5, 1997. ** On May 1, 1998, AIM
and managed approximately $89 billion in assets Growth Fund was renamed AIM Select Growth Fund.
for more than 4.4 million shareholders, including For more complete information about any AIM
individual investors, corporate clients, and Fund(s), including sales charges and expenses, ask
financial institutions, as of March 31, 1998. The your financial consultant or securities dealer for
AIM Family of Funds--Registered Trademark-- is a free prospectus(es). Please read the
distributed nationwide, and AIM today ranks among prospectus(es) carefully before you invest or send
the nation's top 15 mutual fund companies in money.
assets under management, according to Lipper
Analytical Services, Inc.
INVEST WITH DISCIPLINE-SM-
</TABLE>
<PAGE> 336
APPENDIX III
AIM GLOBAL
GROWTH FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1998
<PAGE> 337
-------------------------------------
AIM GLOBAL GROWTH FUND
For shareholders who seek
long-term growth of capital.
The Fund invests in a portfolio
of global equity securities
of companies with
strong earnings momentum.
-------------------------------------
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Growth Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed without a sales
charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 4.75% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differing fees and expenses.
o Because Class C shares have been offered for less than one year (since
8/4/97), all total return figures for Class C shares reflect cumulative
total return that has not been annualized.
o The Fund's average annual total returns, including sales charges, for
periods ended 3/31/98 (the most recent calendar quarter-end) are as follows:
For Class A shares, one year, 24.86%; since inception 9/15/94, 19.73%. For
Class B shares, one year, 25.28%; since inception 9/15/94, 20.23%. For C
shares, cumulative total return since inception 8/4/97, 9.20%.
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 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 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 The Morgan Stanley Capital International World Index is a group of unmanaged
global securities tracked by Morgan Stanley Capital International.
o The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30
actively traded primarily industrial stocks.
o An investment cannot be made in any index. 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.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 338
The Chairman's Letter
Dear Fellow Shareholder:
Last October, equity markets worldwide had just been shaken
[PHOTO OF by the currency crisis in Southeast Asia. By the April 30,
Charles T. 1998, end of this reporting period, most markets had
Bauer, recovered nicely, with domestic equities reaching new highs
Chairman of and European markets outdoing even the U.S.'s heady pace.
the Board of Only Asian markets remained in the doldrums. Bonds have
THE FUND turned in a solid performance with generous real returns,
APPEARS HERE] though not as spectacular as some had predicted when the
Asian crisis first broke.
However, by the close of this reporting period, many
market participants were uneasy. Some participants fretted
about signs of speculative fever, particularly in U.S. stock
markets, where equity prices continued to rise despite
evidence that earnings growth, especially for larger
companies, had slowed considerably. The growth of European
markets also exceeded everyone's expectations, and some
wondered how long the rise could continue. All were aware that the Asian story
was not yet completed, and no one was certain how serious its ultimate impact
would be.
Of course, bull markets do end, and markets became less ebullient shortly
after this reporting period closed. For investors, the best course is to remain
realistic and ready. A well-diversified portfolio is still one of the most
effective tools for coping with shifts in a market's direction because different
asset classes and different national markets tend to move independently of one
another. Of course, your financial consultant remains your best source of
information about how to allocate your investments based on your particular
goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly after the close of this reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds--Registered Trademark--.
In addition to making a more varied group of investments available to our
shareholders, this transaction helps strengthen AIM's position as a major
participant in the money-management industry worldwide. Such strength will
enable us to continue expanding both the scope of our fund offerings and our
menu of services for our shareholders.
YOUR FUND MANAGERS COMMENT
On the pages that follow, the managers of your AIM Fund discuss how the Fund
performed during the six months covered by this report and give their near-term
market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your Fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
- --Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 339
The Managers' Overview
EUROPEAN MARKETS AND U.S. BLUE CHIPS
CONTINUE TO DOMINATE WORLD EQUITIES
A roundtable discussion with the Fund management team for AIM Global Growth Fund
about the six-month reporting period ended April 30, 1998.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM DURING THE SIX-MONTH REPORTING PERIOD?
A. The Fund posted another impressive period of performance. Total return was
18.81% for Class A shares, 18.49% for Class B shares, and 18.43% for Class C
shares for the six-month period ended April 30, 1998. The Fund's performance
was right in line with the Morgan Stanley Capital International (MSCI) World
Index gain of 18.86% during the reporting period.
Q. WHAT ACCOUNTED FOR THE FUND'S STRONG PERFORMANCE DURING THE PAST SIX MONTHS?
A. The impressive performance by European stocks was the story among
international equities during the past six months. European markets
continued to rise dramatically as markets there comprised all of the 10
top-performing international markets during the six-month period ended April
30, 1998. Spain led the way with an astounding 54.57% return, followed by
Portugal with a 52.89% advance. Furthermore, eight of the Fund's top 10
holdings were European companies. Almost 43% of the Fund's portfolio was
invested in European equities at the end of the reporting period.
In the United States, the stock market was still feeling the effects of
the Asian currency crisis during the first three months of the reporting
period. Markets were slow to recover from a significant drop in October,
just before the reporting period began, as investors were concerned about
the impact of the Asian currency devaluations on corporate profits around
the globe.
However, in the U.S. and most other developed countries, the economic
fundamentals remained sound. While the economy grew at a brisk pace,
inflation and interest rates - two forces that could potentially undermine
corporate profits - continued to be low. In this environment, the Dow Jones
Industrial Average (DJIA) resumed its upward climb in late January and broke
the 9000 point mark in April to set a record.
Q. IN THIS ENVIRONMENT, HOW DID LARGE-CAP STOCKS FARE?
A. When markets skyrocketed in the second half of the reporting period,
large-cap stocks--particularly the stocks of the very largest companies, the
so-called Omega caps--led the charge. In the uncertain market environment
created by the Asian currency crisis, investors gravitated to the stocks of
large, well-known companies such as General Electric Co., IBM, and Procter &
Gamble Co., which were represented in the Fund's portfolio. Additionally,
foreign investors were attracted to the equities of these large American
companies with global reputations. Just over 34% of the Fund was positioned
in the United States at the end of the reporting period.
Q. WHY DID EUROPEAN MARKETS PERFORM SO WELL DURING THE REPORTING PERIOD?
A. The European Economic and Monetary Union, or EMU, is scheduled to begin on
January 1, 1999. In order to qualify for the EMU, European nations must
adopt strict budgetary guidelines and improve their finances. This process
has lowered interest rates and kept inflation--the thief of wealth--at bay.
With 11 countries expected to join the EMU next year, this economic
restructuring has triggered a bull market unlike any before seen in Europe.
Q. WERE THERE ANY OTHER FACTORS DRIVING THE EUROPEAN MARKETS?
A. We believe there were four fundamental, long-term themes that fueled this
incredible rally in Europe: privatization of state-run companies, increased
economic freedoms in Eastern Europe, corporate restructuring, and the growth
of investing in European markets.
Many state-run companies and industries have moved into private hands,
such as Telecom Italia S.p.A. and Portugal Telecom, two large holdings in
the Fund's portfolio. Additionally, the economic freedoms in Eastern Europe
have created a new market of consumers and sparked a wave of entrepreneurial
efforts in the former Communist Bloc countries. Once capitalism is planted
it can grow very quickly, and we have seen this since the fall of the Berlin
Wall.
The restructuring by "Corporate Europe" has made companies leaner and
================================================================================
MORNINGSTAR RATINGS (CLASS A SHARES)
- --------------------------------------------------------------------------------
As of 4/30/98
AIM GLOBAL FUNDS IN
PERIOD GROWTH FUND INTERNATIONAL
RATING CATEGORY
OVERALL ***** N/A
3 YEARS ***** 740
================================================================================
*Morningstar proprietary ratings reflect risk-adjusted performance through April
30, 1998. The ratings are subject to change every month. Ratings are calculated
from the funds' three-, five-, and 10-year returns (with fee adjustments) in
excess of 90-day Treasury bill returns, and a risk factor that reflects
performance below 90-day T-bill returns. If a fund scores in the top 10% of its
rating category it earns five stars, the next 22.5% receive four stars, the
middle 35% receive three stars, the next 22.5% receive two stars, and the bottom
10% receive one star.
================================================================================
--------------------------------
The impressive performance by
European stocks was the story among
international equities during the past
six months.
--------------------------------
See important fund and index disclosures inside front cover.
2
<PAGE> 340
PORTFOLIO COMPOSITION
As of April 30, 1998, based on total net assets
<TABLE>
<CAPTION>
==============================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 COUNTRIES TOP 10 INDUSTRIES
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Volkswagen A. G. (Germany) 0.95% 1. United States 34.62% 1. Banks (Major Regional) 7.71
2. Banco Bilbao Vizcaya, S.A. (Spain) 0.75 2. United Kingdom 9.80 2. Computer 5.55
(Software & Services)
3. MCI Communications Corp. 0.75 3. France 8.45 3. Manufacturing 4.18
(Diversified)
4. Nokia Oyj A.B. - Class A (Finland) 0.75 4. Japan 5.07 4. Telecommunications 3.72
(Cellular/Wireless)
5. Cap Gemini Sogeti S.A. (France) 0.70 5. Germany 4.42 5. Telephone 3.63
6. Panamerican Beverages, Inc.- 0.68 6. Canada 3.68 6. Services 3.25
Class A (Mexico) (Commercial & Consumer)
7. Vodafone Group PLC (United Kingdom) 0.65 7. Italy 3.53 7. Insurance (Multi-Line) 3.12
8. Credit Suisse Group (Switzerland) 0.63 8. Mexico 3.15 8. Financial (Diversified) 2.35
9. Alcatel Alsthom (France) 0.63 9. Netherlands 2.99 9. Retail (Food Chains) 2.28
10. Accor S.A. (France) 0.61 10. Switzerland 2.76 10. Automobiles 2.21
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.
==============================================================================================================================
</TABLE>
more globally competitive. We have seen immediate results of this
restructuring as European earnings growth continued to be strong during the
reporting period. Finally, thousands of Europeans have discovered the
wonders of investing in equities. As money has flowed into European markets,
the markets themselves have become larger and more liquid than ever before.
Q. HOW WAS THE PORTFOLIO POSITIONED THROUGHOUT THE REST OF THE WORLD?
A. The Fund finished the reporting period with 5.1% of its net assets in Japan,
3.2% in Asia and Australia, and 7% in Latin America. These three regions
were decimated by the "Asian Flu" last fall and have been slow to recover.
In the first quarter, many of the Asian markets did bounce off their
bottoms, some as much as 40%, but keep in mind they were coming off very low
levels. What occurred in the last quarter of 1997 was devastating to those
fragile emerging markets, and we believe it's going to take quite some time
for Asia to fully recover from the economic crisis of last autumn.
Q. WHY IS THE JAPANESE ECONOMY IN SUCH AN ECONOMIC MALAISE?
A. Although it seems apparent to the rest of the world that real economic
reform is needed in Japan, the Japanese government has been extremely
reluctant to institute any fiscal stimulus or tax cuts to get their economy
out of the economic gutter. Until the government takes some real action to
jump-start the economy, there is no real reason to be significantly weighted
in Japan. We continue to own recognizable Japanese companies such as Honda
Motor Company and Sony Corp., but the Japanese market has significantly
underperformed the rest of the world for some time now. The Japanese market
was off more than 10% during the reporting period.
Q. IN WHICH INDUSTRIES WAS THE FUND POSITIONED?
A. The Fund's largest industry position was major regional banks with over 7%
of net assets. Although one may not think of banking as a growth industry,
we have seen excellent earnings growth in this industry, especially in
Europe. Banking positions owned by the Fund included the Royal Bank of
Canada, Switzerland's Credit Suisse Group, and France's Societe Generale.
To no one's surprise during this age of technology, the computer
software and services sector commanded over 5% of the Fund's portfolio. The
Fund was attracted to such recognizable technology companies as Dell
Computer Corp., Compaq Computer Corp., America Online, and Cisco Systems,
Inc. Finally, automobile companies comprised over 2% of the portfolio with
the German automaker Volkswagen A. G. having the honor of being the Fund's
largest single holding at 0.95%.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND IN THE NEAR TERM?
A. We are still very positive on the United States and Europe, and very
cautious on the Pacific Rim. Conditions worldwide remain very good for
equities, although it is unrealistic to expect continued equity returns of
20% or more. Things may continue to worsen in Asia before those markets
experience a recovery, so we do not anticipate our Asian weightings to
increase any time soon. In Europe, though, we believe there will continue to
be faster earnings growth with better valuations than in the United States,
because Europe's cash-to-price earnings, price-to-book, price-to-dividend,
and P/E ratios all are lower than in the U.S. The economic outlook in Latin
America seems positive as well, although the markets there struggled during
the six-month reporting period.
The economic indicators in the U.S. remain positive, and that is good
for markets around the world because they often take their lead from the
U.S. As long as we continue to see the combination of low inflation and low
interest rates around the globe, the short-term outlook for global equities
will remain promising.
See important fund and index disclosures inside front cover.
3
<PAGE> 341
AIM GLOBAL GROWTH FUND VS. BENCHMARK INDEX
The chart below compares your Fund to a benchmark index. It is intended to give
you a general idea of how your Fund performed compared to the stock market over
the period 9/15/94 to 4/30/98. It is important to understand the difference
between your Fund and an index. Your Fund's total return is shown with a sales
charge and includes fund expenses and management fees. An index measures the
performance of a hypothetical portfolio, in this case the Morgan Stanley Capital
International World Index. Unlike your Fund, an index is not managed; therefore,
there are no sales charges, expenses, or fees. You cannot invest in an index.
But if you could buy all the securities that make up a particular index, you
would incur expenses that would affect the return on your investment.
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/98. Including sales charges.
CLASS A SHARES
Inception (9/15/94) 19.69%
1 year 24.89
CLASS B SHARES
Inception (9/15/94) 20.18%
1 year 25.43
CLASS C SHARES
Inception (8/4/97) 10.62%*
*Total return provided is cumulative total
return that has not been annualized.
===============================================================================
Past performance is no guarantee of comparable future results
===============================================================================
A B MSCI
- -------------------------------------------------------------------------------
9/15/94 $10,000.00 $ 9,524.00 $10,000.00
4/30/95 $10,550.00 $10,090.00 $10,749.00
4/30/96 $13,797.00 $13,241.00 $12,759.00
4/30/97 $15,150.00 $14,627.00 $14,079.00
4/30/98 $19,460.00 $19,175.00 $18,166.00
- --------------------------------------------------------------------------------
Your Fund's total return include 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. The performance of the Fund's
Class C shares will differ from that of Class A and B shares due to differing
fees and expenses. Source: Towers Data Systems Hypo--Registered Trademark--.
4
<PAGE> 342
For Consideration
THE ROTH IRA: THE POWER TO KEEP MORE
Contribute After-Tax Dollars Now...So You Can Get Federally Tax-Free Savings
Later
- -------------------------------------------------------------------------------
A new and potentially more powerful type of IRA--the Roth IRA--became available
on January 1, 1998. What makes it more powerful? The Roth IRA gives you the
opportunity to keep more of what you earn.
Are you eligible to open a Roth IRA? The answer is yes if you or your spouse
has earned income for the tax year for which you want to make the contribution,
and your adjusted gross income is below $110,000 if you are a single tax filer,
$160,000 if you file jointly.
TWO KEY ROTH IRA BENEFITS:
TAX-FREE AND PENALTY-FREE WITHDRAWALS
o Of earnings after five years. Earnings on your Roth IRA are federally
tax-free if your Roth IRA account has been open for five years and you are at
least 59 1/2 years old, or in the case of death or disability. You may also use
up to $10,000 of your earnings to buy a first home (after five years).
o Of contributions at any time. For instance, if you make annual contributions
of $2,000 for the next three years, you may take out up to $6,000 and use that
money for any purpose.
HOW YOU MIGHT PUT BOTH BENEFITS TO WORK FOR YOU
Here's an example of how you may take full advantage of a Roth IRA. You are 39
1/2 years old. You contribute $2,000 after-tax annually in your Roth IRA every
year for 20 years, earning an average annual return of 10%. After 20 years, your
account has grown to $126,005. Now at age 59 1/2 you can begin taking
withdrawals and pay no federal income tax or penalty on any of your $126,005. Or
you can keep your money invested and take it out whenever you need it.
THE ROTH IRA: TO CONVERT OR NOT TO CONVERT
Can you convert your Traditional IRA to a Roth IRA? The answer is yes if you
meet these requirements:
You must pay taxes on the amount you convert. If you convert in 1998, you
can spread your tax payments over the next four years. This four-year allowance
will not be available after December 31, 1998.
You cannot convert to a Roth IRA if you are married and file your tax return
separately, or if your annual gross income is over $100,000.
SOME ROTH IRA CONVERSION GUIDELINES
If you can check most of these boxes,
converting your Traditional IRA to a Roth IRA may make sense for you.
- -------------------------------------------------------------------------------
o You have assets outside your retirement savings with which you can easily
afford to pay the taxes due when you convert.
o You have 10 years or more before you retire. The longer you invest tax-free,
the more you benefit.
o Your tax rate will probably be higher in retirement than it is now. If so,
you'll pay less taxes now to convert than you would pay at retirement if you
withdrew from a traditional IRA.
o You plan to convert in 1998. On January 1, 1999, the ability to spread tax
payments over four years disappears.
o You want to keep making contributions after age 70 1/2 and may wish to pass
your IRA assets on to your heirs after your death.
ROTH IRA CALCULATOR & ANALYZER
The Roth IRA Analyzer & Calculator at AIM's Internet Web site
- --www.aimfunds.com-- can help you determine your IRA eligibility status and
whether it makes sense for you to convert an existing IRA into a Roth IRA.
MAKE YOUR IRA CONVERSION DECISION A TRULY INFORMED ONE
Talk to your financial consultant, who knows your specific needs and goals. You
may also wish to talk with a tax adviser.
This discussion does not constitute tax advice. Your tax adviser can provide
guidance concerning your particular situation.
5
<PAGE> 343
SCHEDULE OF INVESTMENTS
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-34.62%
AEROSPACE/DEFENSE-0.41%
Sundstrand Corp. 30,000 $ 2,071,875
- ---------------------------------------------------------------
AGRICULTURAL PRODUCTS-0.19%
Universal Corp. 26,000 973,375
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.32%
Federal-Mogul Corp. 25,000 1,617,187
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-1.00%
BankAmerica Corp. 14,200 1,207,000
- ---------------------------------------------------------------
Chase Manhattan Corp. (The) 11,500 1,593,469
- ---------------------------------------------------------------
Citicorp 15,000 2,257,500
- ---------------------------------------------------------------
5,057,969
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-1.06%
CBS Corp. 50,000 1,781,250
- ---------------------------------------------------------------
Comcast Corp.-Class A 50,000 1,790,625
- ---------------------------------------------------------------
Tele-Communications, Inc.(a) 55,000 1,773,750
- ---------------------------------------------------------------
5,345,625
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.65%
Lucent Technologies, Inc. 31,000 2,359,875
- ---------------------------------------------------------------
Tellabs, Inc.(a) 13,000 921,375
- ---------------------------------------------------------------
3,281,250
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-1.47%
Compaq Computer Corp.(a) 45,500 1,276,844
- ---------------------------------------------------------------
Dell Computer Corp.(a) 30,000 2,422,500
- ---------------------------------------------------------------
Gateway 2000, Inc.(a) 40,500 2,376,844
- ---------------------------------------------------------------
International Business Machines
Corp. 11,500 1,332,563
- ---------------------------------------------------------------
7,408,751
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.22%
Cisco Systems, Inc.(a) 15,000 1,098,750
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.45%
EMC Corp.(a) 50,000 2,306,250
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-2.65%
America Online, Inc.(a) 37,000 2,960,000
- ---------------------------------------------------------------
BMC Software, Inc.(a) 21,000 1,964,812
- ---------------------------------------------------------------
Computer Associates
International, Inc. 28,500 1,669,031
- ---------------------------------------------------------------
Computer Sciences Corp.(a) 32,000 1,688,000
- ---------------------------------------------------------------
Compuware Corp.(a) 42,000 2,052,750
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 28,500 897,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Microsoft Corp.(a) 24,000 $ 2,163,000
- ---------------------------------------------------------------
13,395,343
- ---------------------------------------------------------------
CONSUMER FINANCE-0.59%
FIRSTPLUS Financial Group,
Inc.(a) 50,000 2,425,000
- ---------------------------------------------------------------
SLM Holding Corp. 13,200 563,475
- ---------------------------------------------------------------
2,988,475
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.84%
AmeriSource Health Corp.-Class
A(a) 29,200 1,591,400
- ---------------------------------------------------------------
Bergen Brunswig Corp.-Class A 35,600 1,615,350
- ---------------------------------------------------------------
Cardinal Health, Inc. 10,650 1,025,062
- ---------------------------------------------------------------
4,231,812
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.51%
General Electric Co. 20,000 1,702,500
- ---------------------------------------------------------------
Symbol Technologies, Inc. 22,500 866,250
- ---------------------------------------------------------------
2,568,750
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.27%
Waters Corp.(a) 25,000 1,337,500
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.67%
Altera Corp.(a) 40,500 1,640,250
- ---------------------------------------------------------------
Intel Corp. 21,800 1,761,713
- ---------------------------------------------------------------
3,401,963
- ---------------------------------------------------------------
ENTERTAINMENT-0.31%
Viacom, Inc.-Class B(a) 27,100 1,571,800
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.20%
Applied Materials, Inc.(a) 43,000 1,553,375
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 35,000 1,410,938
- ---------------------------------------------------------------
Lam Research Corp.(a) 57,000 1,767,000
- ---------------------------------------------------------------
Teradyne, Inc.(a) 36,000 1,314,000
- ---------------------------------------------------------------
6,045,313
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.51%
American Express Co. 15,000 1,530,000
- ---------------------------------------------------------------
Fannie Mae 27,200 1,628,600
- ---------------------------------------------------------------
Freddie Mac 39,000 1,806,187
- ---------------------------------------------------------------
MBIA, Inc. 2,400 179,100
- ---------------------------------------------------------------
MGIC Investment Corp. 6,700 422,100
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 25,900 2,042,863
- ---------------------------------------------------------------
7,608,850
- ---------------------------------------------------------------
FOODS-0.16%
Keebler Foods Co.(a) 28,000 798,000
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 344
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HARDWARE & TOOLS-0.33%
Black & Decker Corp. (The) 32,500 $ 1,677,812
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.19%
Abbott Laboratories 19,400 1,418,625
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 11,500 1,217,562
- ---------------------------------------------------------------
Johnson & Johnson 19,500 1,391,813
- ---------------------------------------------------------------
Warner-Lambert Co. 10,500 1,986,469
- ---------------------------------------------------------------
6,014,469
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.31%
Watson Pharmaceuticals, Inc.(a) 35,800 1,539,400
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-0.81%
Merck & Co., Inc. 16,500 1,988,250
- ---------------------------------------------------------------
Pfizer Inc. 4,200 478,013
- ---------------------------------------------------------------
Schering-Plough Corp. 20,000 1,602,500
- ---------------------------------------------------------------
4,068,763
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.51%
HEALTHSOUTH Corp.(a) 41,000 1,237,687
- ---------------------------------------------------------------
Quorum Health Group, Inc.(a) 41,250 1,325,156
- ---------------------------------------------------------------
2,562,843
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.85%
Arterial Vascular Engineering,
Inc.(a) 53,000 1,874,875
- ---------------------------------------------------------------
Baxter International Inc. 24,900 1,380,394
- ---------------------------------------------------------------
Biomet, Inc. 46,800 1,404,000
- ---------------------------------------------------------------
Guidant Corp. 24,000 1,605,000
- ---------------------------------------------------------------
Medtronic, Inc. 32,000 1,684,000
- ---------------------------------------------------------------
Stryker Corp. 17,600 792,000
- ---------------------------------------------------------------
Sybron International Corp.(a) 21,400 567,100
- ---------------------------------------------------------------
9,307,369
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.23%
Maytag Corp. 22,200 1,143,300
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.54%
Dial Corp. (The) 51,000 1,243,125
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 18,000 1,479,375
- ---------------------------------------------------------------
2,722,500
- ---------------------------------------------------------------
HOUSEWARES-0.20%
Sunbeam Corp. 40,000 1,005,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.32%
Torchmark Corp. 36,500 1,626,531
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.01%
Ace, Ltd. 30,000 1,136,250
- ---------------------------------------------------------------
Allmerica Financial Corp. 33,000 2,066,625
- ---------------------------------------------------------------
American International Group,
Inc. 5,250 690,703
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (MULTI-LINE)-(CONTINUED)
Travelers Group, Inc. 19,500 $ 1,193,156
- ---------------------------------------------------------------
5,086,734
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.09%
Everest Reinsurance Holdings,
Inc. 11,300 466,125
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.38%
Merrill Lynch & Co., Inc. 22,000 1,930,500
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.43%
Franklin Resources, Inc. 11,800 631,300
- ---------------------------------------------------------------
T. Rowe Price Associates, Inc. 20,500 1,547,750
- ---------------------------------------------------------------
2,179,050
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.55%
Harley-Davidson, Inc. 47,400 1,706,400
- ---------------------------------------------------------------
Mattel, Inc. 27,000 1,034,438
- ---------------------------------------------------------------
2,740,838
- ---------------------------------------------------------------
LODGING-HOTELS-0.08%
Promus Hotel Corp.(a) 8,700 393,131
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.06%
Thermo Electron Corp.(a) 26,000 1,035,125
- ---------------------------------------------------------------
Tyco International Ltd. 16,000 872,000
- ---------------------------------------------------------------
United Technologies Corp. 19,000 1,870,313
- ---------------------------------------------------------------
U.S. Industries, Inc. 57,050 1,547,481
- ---------------------------------------------------------------
5,324,919
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-1.70%
Cooper Cameron Corp.(a) 23,500 1,561,281
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 30,000 1,518,750
- ---------------------------------------------------------------
ENSCO International, Inc. 40,000 1,130,000
- ---------------------------------------------------------------
Halliburton Co. 23,000 1,265,000
- ---------------------------------------------------------------
Santa Fe International Corp. 35,000 1,371,562
- ---------------------------------------------------------------
Western Atlas Inc.(a) 22,000 1,738,000
- ---------------------------------------------------------------
8,584,593
- ---------------------------------------------------------------
PERSONAL CARE-0.67%
Avon Products, Inc. 19,400 1,594,437
- ---------------------------------------------------------------
Gillette Co. (The) 15,500 1,789,281
- ---------------------------------------------------------------
3,383,718
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST-0.39%
Starwood Hotels & Resorts 38,996 1,957,112
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.35%
Lowe's Companies, Inc. 25,500 1,783,407
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.28%
Circuit City Stores-Circuit City
Group 35,000 1,421,875
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.65%
Federated Department Stores,
Inc.(a) 26,000 1,278,875
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 345
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (DEPARTMENT STORES)-(CONTINUED)
Proffitt's, Inc.(a) 50,000 $ 1,987,500
- ---------------------------------------------------------------
3,266,375
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.31%
CVS Corp. 21,000 1,548,750
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.08%
Albertson's, Inc. 32,000 1,600,000
- ---------------------------------------------------------------
Kroger Co.(a) 50,000 2,093,750
- ---------------------------------------------------------------
Safeway, Inc.(a) 46,000 1,759,500
- ---------------------------------------------------------------
5,453,250
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.86%
Fred Meyer, Inc.(a) 34,200 1,534,725
- ---------------------------------------------------------------
Kmart Corp.(a) 100,500 1,752,469
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 20,900 1,056,756
- ---------------------------------------------------------------
4,343,950
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.66%
Bed Bath & Beyond, Inc.(a) 25,000 1,231,250
- ---------------------------------------------------------------
Office Depot, Inc.(a) 64,000 2,120,000
- ---------------------------------------------------------------
3,351,250
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.38%
Brylane Inc.(a) 5,900 346,625
- ---------------------------------------------------------------
TJX Companies, Inc. (The) 35,000 1,548,750
- ---------------------------------------------------------------
1,895,375
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.72%
H&R Block, Inc. 35,000 1,575,000
- ---------------------------------------------------------------
Service Corp. International 49,300 2,033,625
- ---------------------------------------------------------------
3,608,625
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.54%
Equifax, Inc. 33,300 1,288,294
- ---------------------------------------------------------------
Fiserv, Inc.(a) 21,600 1,412,100
- ---------------------------------------------------------------
2,700,394
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.11%
AccuStaff, Inc.(a) 16,000 574,000
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-1.07%
AT&T Corp. 27,000 1,621,687
- ---------------------------------------------------------------
MCI Communications Corp. 75,000 3,773,438
- ---------------------------------------------------------------
5,395,125
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.25%
Columbia Sportswear Co.(a) 7,000 148,750
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 18,000 1,098,000
- ---------------------------------------------------------------
1,246,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-0.23%
Waste Management, Inc. 34,200 $ 1,145,700
- ---------------------------------------------------------------
Total Domestic Common Stocks
(Cost $131,121,288) 174,558,371
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER
EQUITY INTERESTS-58.28%
ARGENTINA-1.58%
Banco Rio de La Plata S.A.-ADR
(Banks-Major Regional)(a) 75,000 1,031,250
- ---------------------------------------------------------------
Perez Companc S.A.-Class B (Oil &
Gas-Refining & Marketing) 280,140 1,683,886
- ---------------------------------------------------------------
Telefonica de Argentina S.A.-ADR
(Telephone) 77,000 2,969,313
- ---------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil-International Integrated) 65,600 2,287,800
- ---------------------------------------------------------------
7,972,249
- ---------------------------------------------------------------
AUSTRALIA-0.50%
Australia & New Zealand Banking
Group Ltd. (Banks-Major
Regional) 260,087 1,815,676
- ---------------------------------------------------------------
Telstra Corp. Ltd. (Telephone) 304,960 716,077
- ---------------------------------------------------------------
2,531,753
- ---------------------------------------------------------------
AUSTRIA-0.28%
OMV A.G. (Oil & Gas-Refining &
Marketing) 9,400 1,395,129
- ---------------------------------------------------------------
BELGIUM-0.93%
Barco N.V.
(Manufacturing-Diversified) 5,700 1,509,811
- ---------------------------------------------------------------
COLRUYT S.A. (Retail-Food Chains) 1,100 668,955
- ---------------------------------------------------------------
UCB S.A.
(Manufacturing-Diversified) 520 2,486,297
- ---------------------------------------------------------------
4,665,063
- ---------------------------------------------------------------
BRAZIL-1.95%
Companhia Energetica de Minas
Gerais (Electric Companies) 31,000 1,504,394
- ---------------------------------------------------------------
Petroleo Brasileiro
S.A.-Petrobras
(Oil & Gas-Exploration &
Production) 5,416 1,373,231
- ---------------------------------------------------------------
Telecomunicacoes Brasileiras
S.A.-ADR
(Telecommunications-Cellular/Wireless) 26,800 2,659,730
- ---------------------------------------------------------------
Telecomunicacoes do Rio de
Janeiro S.A.
(Telecommunications-Cellular/Wireless) 8,689 1,367,569
- ---------------------------------------------------------------
Telecomunicacoes de Sao Paulo
S.A.-TELESP (Telephone) 8,600 2,925,195
- ---------------------------------------------------------------
9,830,119
- ---------------------------------------------------------------
CANADA-3.68%
Bank of Montreal (Banks-Major
Regional) 20,500 1,118,299
- ---------------------------------------------------------------
BCE Inc.
(Telecommunications-Cellular/Wireless) 58,300 2,483,107
- ---------------------------------------------------------------
Bombardier Inc.
(Aerospace/Defense) 48,000 1,295,800
- ---------------------------------------------------------------
Canadian National Railway Co.
(Railroads) 8,800 572,550
- ---------------------------------------------------------------
Geac Computer Corp. Ltd.
(Services-Computer Systems)(a) 32,000 1,261,111
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 346
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Imasco Ltd.
(Manufacturing-Diversified) 32,400 $ 1,220,226
- ---------------------------------------------------------------
Mitel Corp. (Communications
Equipment)(a) 125,000 1,774,662
- ---------------------------------------------------------------
Newcourt Credit Group, Inc.
(Financial-Diversified) 35,000 1,719,375
- ---------------------------------------------------------------
Northern Telecom Ltd.-ADR
(Communications Equipment) 8,200 499,175
- ---------------------------------------------------------------
Royal Bank of Canada (Banks-Major
Regional) 36,500 1,930,832
- ---------------------------------------------------------------
Suncor Energy, Inc. (Oil-International
Integrated) 56,000 2,180,019
- ---------------------------------------------------------------
Toronto-Dominion Bank
(Banks-Regional) 54,500 2,488,967
- ---------------------------------------------------------------
18,544,123
- ---------------------------------------------------------------
CHILE-0.34%
Cia. de Telecomunicaciones de
Chile S.A.-ADR (Telephone) 30,600 766,913
- ---------------------------------------------------------------
Quinenco S.A.-ADR
(Financial-Diversified) 89,600 924,000
- ---------------------------------------------------------------
1,690,913
- ---------------------------------------------------------------
DENMARK-0.43%
Novo Nordisk A/S-Class B (Health
Care/Drugs-Generic & Other) 13,500 2,190,197
- ---------------------------------------------------------------
FINLAND-0.75%
Nokia Oyj A.B.-Class A
(Communications Equipment) 56,000 3,756,973
- ---------------------------------------------------------------
FRANCE-8.20%
Accor S.A. (Lodging-Hotels) 11,200 3,053,868
- ---------------------------------------------------------------
Alcatel Alsthom
(Manufacturing-Diversified) 17,000 3,153,386
- ---------------------------------------------------------------
AXA UAP (Insurance-Multi-Line) 11,250 1,321,328
- ---------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 21,500 1,813,425
- ---------------------------------------------------------------
Cap Gemini Sogeti S.A.
(Computers-Software & Services) 27,000 3,508,069
- ---------------------------------------------------------------
Compagnie Francaise d'Etudes et
de Construction Technip (Oil &
Gas-Refining & Marketing) 6,500 826,152
- ---------------------------------------------------------------
Danone (Foods) 5,400 1,275,661
- ---------------------------------------------------------------
Elf Aquitaine S.A. (Oil &
Gas-Refining & Marketing) 13,500 1,772,002
- ---------------------------------------------------------------
Essilor International S.A.
(Manufacturing-Specialized) 2,200 889,370
- ---------------------------------------------------------------
Lafarge S.A. (Engineering &
Construction) 23,800 2,248,944
- ---------------------------------------------------------------
Legrand S.A. (Housewares) 5,300 1,401,930
- ---------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 2,900 2,160,406
- ---------------------------------------------------------------
Promodes (Retail-Food Chains) 4,800 2,313,359
- ---------------------------------------------------------------
PSA Peugeot Citreon (Automobiles) 7,000 1,215,771
- ---------------------------------------------------------------
Renault S.A. (Automobiles)(a) 40,000 1,856,596
- ---------------------------------------------------------------
Rexel S.A. (Distributors-Food &
Health) 2,600 1,044,585
- ---------------------------------------------------------------
Schneider S.A. (Housewares) 29,500 2,208,451
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Societe BIC S.A.
(Office Equipment & Supplies) 12,300 $ 846,737
- ---------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 8,000 1,666,279
- ---------------------------------------------------------------
Sodexho Alliance S.A.
(Services-Commercial &
Consumer) 4,400 805,923
- ---------------------------------------------------------------
Suez Lyonnaise des Eaux
(Manufacturing-Diversified) 14,500 2,460,490
- ---------------------------------------------------------------
Total S.A.-Class B (Oil &
Gas-Refining & Marketing) 13,100 1,558,228
- ---------------------------------------------------------------
Valeo S.A. (Auto Parts &
Equipment) 19,400 1,929,995
- ---------------------------------------------------------------
41,330,955
- ---------------------------------------------------------------
GERMANY-4.42%
Adidas Salomon A.G. (Footwear) 16,350 2,711,178
- ---------------------------------------------------------------
Allianz A.G.
(Insurance-Multi-Line) 4,000 1,230,701
- ---------------------------------------------------------------
Bayerische Vereinsbank A.G.
(Banks-Major Regional) 17,000 1,293,406
- ---------------------------------------------------------------
Continental A.G. (Auto Parts &
Equipment) 29,600 841,425
- ---------------------------------------------------------------
Dresdner Bank A.G. (Banks-Major
Regional) 36,000 1,948,386
- ---------------------------------------------------------------
Henkel KGaA
(Chemicals-Diversified) 7,500 585,252
- ---------------------------------------------------------------
Mannesmann A.G.
(Machinery-Diversified) 2,150 1,706,482
- ---------------------------------------------------------------
Porsche A.G. (Automobiles) 600 1,501,589
- ---------------------------------------------------------------
SAP A.G. (Computers-Software &
Services) 4,600 2,179,366
- ---------------------------------------------------------------
SAP A.G. (Computers-Software &
Services) 4,600 2,294,744
- ---------------------------------------------------------------
VEBA A.G.
(Manufacturing-Diversified) 18,000 1,189,900
- ---------------------------------------------------------------
Volkswagen A.G. (Automobiles) 6,000 4,778,998
- ---------------------------------------------------------------
22,261,427
- ---------------------------------------------------------------
HONG KONG-1.49%
Cosco Pacific Ltd.
(Financial-Diversified) 1,294,000 877,033
- ---------------------------------------------------------------
Hong Kong & China Gas Co. Ltd.
(Natural Gas) 1,183,204 1,611,516
- ---------------------------------------------------------------
HSBC Holdings PLC (Banks-Major
Regional) 63,400 1,808,856
- ---------------------------------------------------------------
Hutchison Whampoa Ltd.
(Retail-Food Chains) 338,000 2,090,137
- ---------------------------------------------------------------
New World Infrastructure Ltd.
(Services-Commercial &
Consumer)(a) 151,800 326,293
- ---------------------------------------------------------------
Ng Fung Hong Ltd. (Foods) 898,000 811,516
- ---------------------------------------------------------------
7,525,351
- ---------------------------------------------------------------
HUNGARY-0.23%
Gedeon Richter (Health
Care-Drugs-Major
Pharmaceuticals)(a) 11,000 1,171,500
- ---------------------------------------------------------------
INDONESIA-0.22%
Gulf Indonesia Resources Ltd.
(Oil-International
Integrated)(a) 71,100 1,093,162
- ---------------------------------------------------------------
IRELAND-0.91%
Allied Irish Banks PLC
(Banks-Regional) 180,000 2,508,449
- ---------------------------------------------------------------
</TABLE>
9
<PAGE> 347
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
IRELAND-(CONTINUED)
Bank of Ireland (Banks-Major
Regional) 75,000 $ 1,531,592
- ---------------------------------------------------------------
Elan Corp. PLC-ADR (Health
Care/Drugs-Generic & Other)(a) 9,000 559,125
- ---------------------------------------------------------------
4,599,166
- ---------------------------------------------------------------
ITALY-3.53%
Assicurazioni Generali
(Insurance/Multi-Line) 92,200 2,761,498
- ---------------------------------------------------------------
Credito Italiano S.p.A.
(Banks-Major Regional) 465,000 2,434,008
- ---------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Refining &
Marketing) 290,000 1,943,320
- ---------------------------------------------------------------
Istituto Mobiliare Italiano
S.p.A. (Banks-Major Regional) 138,000 2,247,997
- ---------------------------------------------------------------
Pirelli S.p.A. (Electrical
Equipment) 862,187 2,847,916
- ---------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications-
Cellular/Wireless) 460,000 2,635,323
- ---------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 388,888 2,929,805
- ---------------------------------------------------------------
17,799,867
- ---------------------------------------------------------------
JAPAN-5.07%
Advantest Corp.
(Electronics-Instrumentation) 23,023 1,547,735
- ---------------------------------------------------------------
Bridgestone Corp. (Auto Parts &
Equipment) 101,000 2,303,950
- ---------------------------------------------------------------
Canon, Inc. (Office Equipment &
Supplies) 48,000 1,134,829
- ---------------------------------------------------------------
Fuji Photo Film Co.(Leisure
Time-Products) 30,000 1,067,301
- ---------------------------------------------------------------
Hitachi Cable, Ltd. (Metal
Fabricators) 224,000 1,115,009
- ---------------------------------------------------------------
Honda Motor Co., Ltd.
(Automobiles) 50,000 1,812,826
- ---------------------------------------------------------------
Ibiden Co., Ltd.
(Electronics-Component
Distributors) 75,000 1,184,002
- ---------------------------------------------------------------
Minebea Company Ltd.
(Electronics-Component
Distributors) 193,000 2,157,565
- ---------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics-Component
Distributors) 46,000 1,348,138
- ---------------------------------------------------------------
Nippon Telegraph & Telephone
Corp. (Telephone) 2,500 2,190,497
- ---------------------------------------------------------------
Nippon Television Network Corp.
(Broadcasting-Television, Radio
& Cable) 2,050 605,446
- ---------------------------------------------------------------
NTT Data Corp. (Computer Software
& Services) 470 2,030,667
- ---------------------------------------------------------------
Rohm Co. (Electronics-Component
Distributors) 14,000 1,579,877
- ---------------------------------------------------------------
SMC Corp. (Machinery-Diversified) 6,800 564,997
- ---------------------------------------------------------------
Sony Corp. (Electronics-Component
Distributors) 30,000 2,494,901
- ---------------------------------------------------------------
TDK Corp. (Electronic Equipment) 31,000 2,449,279
- ---------------------------------------------------------------
25,587,019
- ---------------------------------------------------------------
MEXICO-3.15%
Cifra S.A. de C.V.-Series C
(Retail-General Merchandise) 1,009,000 1,716,435
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO-(CONTINUED)
Cifra S.A. de C.V.-Series V
(Retail-General Merchandise) 117,499 $ 205,140
- ---------------------------------------------------------------
Coca-Cola Femsa S.A.-ADR
(Beverages-Non-Alcoholic) 145,800 2,478,600
- ---------------------------------------------------------------
Fomento Economico Mexicano, S.A.
de C.V.-Class B
(Beverages-Alcoholic) 265,450 1,963,864
- ---------------------------------------------------------------
Grupo Industrial Maseca S.A. de
C.V.-Class B (Foods) 681,200 491,128
- ---------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 67,700 2,775,700
- ---------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de
C.V.-Class A (Paper & Forest
Products) 483,400 2,371,869
- ---------------------------------------------------------------
Panamerican Beverages, Inc.-Class
A (Beverages-Non-Alcoholic) 86,300 3,441,212
- ---------------------------------------------------------------
TV Azteca, S.A. de C.V.-ADR
(Broadcasting-Television, Radio
& Cable) 24,200 450,725
- ---------------------------------------------------------------
15,894,673
- ---------------------------------------------------------------
NETHERLANDS-2.99%
CMG PLC
(Computers-Software & Services) 61,700 2,761,091
- ---------------------------------------------------------------
Getronics N.V.
(Computers-Software & Services) 41,000 1,814,464
- ---------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food Chains) 30,600 954,309
- ---------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 26,000 868,769
- ---------------------------------------------------------------
Philips Electronics N.V.
(Household Furniture &
Appliances) 29,000 2,555,319
- ---------------------------------------------------------------
Randstad Holdings N.V.
(Services-Commercial &
Consumer) 25,000 1,227,662
- ---------------------------------------------------------------
Vendex International N.V.
(Retail-General Merchandise) 38,000 2,437,899
- ---------------------------------------------------------------
Verenigde Nederlandse
Uitgeversbedrijven Verenigd
Bezit (Publishing) 75,500 2,444,285
- ---------------------------------------------------------------
15,063,798
- ---------------------------------------------------------------
NORWAY-0.24%
Petroleum Geo-Services A.S.A.
(Oil-International
Integrated)(a) 18,800 1,220,296
- ---------------------------------------------------------------
PHILIPPINES-0.18%
Philippine Long Distance
Telephone Co. (Telephone) 16,460 440,709
- ---------------------------------------------------------------
Philippine Long Distance
Telephone Co.-ADR (Telephone) 17,800 480,600
- ---------------------------------------------------------------
921,309
- ---------------------------------------------------------------
PORTUGAL-1.27%
Banco Comercial Portugues, S.A.
(Banks-Major Regional) 82,000 2,875,261
- ---------------------------------------------------------------
Electric de Portugal, S.A.-ADR
(Electric Companies)(a) 24,200 1,258,400
- ---------------------------------------------------------------
Portugal Telecom S.A. (Telephone) 42,000 2,257,340
- ---------------------------------------------------------------
6,391,001
- ---------------------------------------------------------------
</TABLE>
10
<PAGE> 348
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SINGAPORE-0.11%
Overseas Union Bank Ltd.
(Banks-Major Regional) 150,000 $ 568,541
- ---------------------------------------------------------------
SPAIN-2.18%
Banco Bilbao Vizcaya, S.A.
(Banks-Major Regional) 73,500 3,783,585
- ---------------------------------------------------------------
Banco Popular Espanol S.A.
(Banks-Major Regional) 13,000 1,066,973
- ---------------------------------------------------------------
Endesa S.A. (Electric Companies) 104,200 2,531,451
- ---------------------------------------------------------------
Iberdrola S.A. (Electric
Companies) 60,000 965,200
- ---------------------------------------------------------------
Telefonica de Espana (Telephone) 62,000 2,589,101
- ---------------------------------------------------------------
Telefonica de Espana
(Telephone)-Rights, expiring
05/30/98(a) 62,000 48,851
- ---------------------------------------------------------------
10,985,161
- ---------------------------------------------------------------
SWEDEN-0.81%
Forenings Sparbanken A.B.-Class A
(Banks-Major Regional) 46,000 1,437,871
- ---------------------------------------------------------------
Hennes & Mauritz A.B.-Class B
(Retail-Specialty-Apparel) 24,400 1,270,111
- ---------------------------------------------------------------
Svenska Handelsbanken-Class A
(Banks-Major Regional) 30,000 1,360,113
- ---------------------------------------------------------------
4,068,095
- ---------------------------------------------------------------
SWITZERLAND-2.76%
Clariant A.G.
(Chemicals-Specialty) 1,650 1,775,671
- ---------------------------------------------------------------
Credit Suisse Group (Banks-Major
Regional) 14,500 3,188,513
- ---------------------------------------------------------------
Holderbank Financiere Glarus
A.G.-Class B
(Construction-Cement &
Aggregates) 2,400 2,539,615
- ---------------------------------------------------------------
Nestle S.A. (Foods) 680 1,318,585
- ---------------------------------------------------------------
Rieter Holdings Ltd.
(Machinery-Diversified) 2,200 1,320,850
- ---------------------------------------------------------------
Schweizerischer Bankverein
(Banks-Major Regional) 6,500 2,256,614
- ---------------------------------------------------------------
Zurich Versicherungs-Gesellschaft
(Insurance-Multi-Line) 2,500 1,522,623
- ---------------------------------------------------------------
13,922,471
- ---------------------------------------------------------------
TAIWAN-0.28%
Taiwan Semiconductor
Manufacturing Co.-ADR
(Electronics-Semiconductors)(a) 58,500 1,436,906
- ---------------------------------------------------------------
UNITED KINGDOM-9.80%
Airtours PLC (Services-Commercial
& Consumer) 215,700 1,889,471
- ---------------------------------------------------------------
Bodycote International PLC
(Chemicals-Specialty) 71,000 1,422,595
- ---------------------------------------------------------------
British Aerospace PLC
(Aerospace/Defense) 64,000 2,138,659
- ---------------------------------------------------------------
British Petroleum Co. PLC (Oil &
Gas-Refining & Marketing) 62,000 979,399
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Cable & Wireless PLC
(Telecommunications-
Cellular/Wireless) 226,000 $ 2,589,197
- ---------------------------------------------------------------
Compass Group PLC
(Services-Commercial &
Consumer) 59,200 1,024,774
- ---------------------------------------------------------------
EMAP PLC (Publishing) 102,000 2,076,141
- ---------------------------------------------------------------
General Electric Co. PLC
(Manufacturing-Diversified) 316,500 2,620,263
- ---------------------------------------------------------------
GKN PLC
(Manufacturing-Diversified) 39,000 1,126,479
- ---------------------------------------------------------------
Granada Group PLC (Leisure
Time-Products) 61,400 1,057,723
- ---------------------------------------------------------------
Hays PLC (Services-Commercial &
Consumer) 178,000 3,020,217
- ---------------------------------------------------------------
Kingfisher PLC (Retail-Department
Stores) 165,000 2,996,953
- ---------------------------------------------------------------
Ladbroke Group PLC (Leisure
Time-Products) 382,000 2,100,367
- ---------------------------------------------------------------
Lloyds TSB Group PLC (Banks-Major
Regional) 96,000 1,437,815
- ---------------------------------------------------------------
Misys PLC (Services-Commercial &
Consumer) 45,000 2,163,797
- ---------------------------------------------------------------
Pearson PLC (Specialty Printing) 70,000 1,096,993
- ---------------------------------------------------------------
Provident Financial PLC (Consumer
Finance) 132,579 2,215,166
- ---------------------------------------------------------------
Railtrack Group PLC (Shipping) 100,789 1,841,623
- ---------------------------------------------------------------
Rentokil Initial PLC
(Services-Commercial &
Consumer) 240,000 1,546,394
- ---------------------------------------------------------------
Royal & Sun Alliance Insurance
Group PLC
(Insurance-Multi-Line) 230,000 2,569,629
- ---------------------------------------------------------------
Siebe PLC
(Electronics-Component/
Distributors) 75,000 1,675,845
- ---------------------------------------------------------------
Smiths Industries PLC
(Machinery-Diversified) 150,000 2,158,779
- ---------------------------------------------------------------
Unilever PLC (Foods) 224,000 2,386,457
- ---------------------------------------------------------------
Vodafone Group PLC
(Telecommunications-
Cellular/Wireless) 300,000 3,286,463
- ---------------------------------------------------------------
WPP Group PLC
(Services-Advertising/Marketing) 316,000 2,005,695
- ---------------------------------------------------------------
49,426,894
- ---------------------------------------------------------------
Total Foreign Stocks & Other Equity
Interests (Cost $209,690,371) 293,844,111
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCK-0.14%
FINANCIAL (DIVERSIFIED)-0.14%
MGIC Investment Corp.-$3.12 Conv.
Pfd.
(Cost $464,814) 7,000 735,000
- ---------------------------------------------------------------
</TABLE>
11
<PAGE> 349
FINANCIAL (DIVERSIFIED)-(CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(b) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED FOREIGN BONDS-0.15%
HONG KONG-0.15%
New World Infrastructure Ltd.
(Services-Commercial &
Consumer), Conv. Bonds, 5.00%,
07/15/01(c) (Acquired from
04/10/97 - 04/11/97; Cost
$234,938) $ 200,000 $ 201,000
- --------------------------------------------------------------
Conv. Bonds, 5.00%, 07/15/01 580,000 582,900
- --------------------------------------------------------------
Total U.S. Dollar
Denominated Foreign Bonds
(Cost $876,955) 783,900
- --------------------------------------------------------------
NON-U.S. DOLLAR DENOMINATED FOREIGN BONDS &
NOTES-0.25%
FRANCE-0.25%
AXA-UAP (Insurance-Multi-Line),
Conv. Sr.
Deb., 4.50%, 01/01/99
(Cost $732,700) FRF 2,835,000 1,251,536
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS-5.59%(d)
Dean Witter Reynolds, Inc.
5.55%, 05/01/98(e) $ 179,511 $ 179,511
- --------------------------------------------------------------
Lehman Brothers Inc. 5.30%,
05/01/98(f) 28,000,000 28,000,000
- --------------------------------------------------------------
Total Repurchase Agreements
(Cost $28,179,511) 28,179,511
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.03% 499,352,429
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.97% 4,903,416
- --------------------------------------------------------------
NET ASSETS-100.00% $504,255,845
==============================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
FRF - French Francs
GDR - Global Depositary Receipt
Pfd. - Preferred
Sr. - Senior
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Principal in U.S. Dollars unless otherwise indicated.
(c) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of this security at 04/30/98 represented 0.04% of the
Fund's net assets.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts, private accounts, and certain
non-registered investment companies managed by the investment advisor or its
affiliates.
(e) Joint repurchase agreement entered into 04/30/98 with a maturing value of
$300,046,250. Collateralized by $307,111,000 U.S. Government obligations, 0%
to 9.40% due 06/10/98 to 09/26/19 with an aggregate market value at 04/30/98
of $306,000,308.
(f) Joint repurchase agreement entered into 04/30/98 with a maturing value of
$450,066,250. Collateralized by $522,302,000 U.S. Government obligations, 0%
to 7.45% due 08/14/98 to 10/08/27 with an aggregate market value at 04/30/98
of $459,005,491.
See Notes to Financial Statements.
12
<PAGE> 350
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$371,065,639) $499,352,429
- -------------------------------------------------------
Foreign currencies, at value (cost
$3,494,978) 3,510,328
- -------------------------------------------------------
Receivables for:
Investments sold 5,232,008
- -------------------------------------------------------
Capital stock sold 2,252,580
- -------------------------------------------------------
Dividends and interest 1,119,844
- -------------------------------------------------------
Investment for deferred compensation plan 13,186
- -------------------------------------------------------
Other assets 25,785
- -------------------------------------------------------
Total assets 511,506,160
- -------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 4,599,003
- -------------------------------------------------------
Capital stock reacquired 1,727,767
- -------------------------------------------------------
Deferred compensation 13,186
- -------------------------------------------------------
Accrued advisory fees 347,387
- -------------------------------------------------------
Accrued administrative services fees 11,735
- -------------------------------------------------------
Accrued directors' fees 2,243
- -------------------------------------------------------
Accrued distribution fees 319,085
- -------------------------------------------------------
Accrued transfer agent fees 77,260
- -------------------------------------------------------
Accrued operating expenses 152,649
- -------------------------------------------------------
Total liabilities 7,250,315
- -------------------------------------------------------
Net assets applicable to shares
outstanding $504,255,845
=======================================================
NET ASSETS:
Class A $217,916,181
=======================================================
Class B $281,432,014
=======================================================
Class C $ 4,907,650
=======================================================
CAPITAL STOCK, $0.001 PAR VALUE PER
SHARE:
Class A:
Authorized 200,000,000
- -------------------------------------------------------
Outstanding 11,304,102
=======================================================
Class B:
Authorized 200,000,000
- -------------------------------------------------------
Outstanding 14,878,249
=======================================================
Class C:
Authorized 200,000,000
- -------------------------------------------------------
Outstanding 259,527
=======================================================
Class A:
Net asset value and redemption price
per share $ 19.28
=======================================================
Offering price per share:
(Net asset value $19.28 / 95.25%) $ 20.24
=======================================================
Class B:
Net asset value and offering price per
share $ 18.92
=======================================================
Class C:
Net asset value and offering price per
share $ 18.91
=======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $168,783 foreign
withholding tax) $ 2,002,141
- --------------------------------------------------------
Interest 719,736
- --------------------------------------------------------
Total investment income 2,721,877
- --------------------------------------------------------
EXPENSES:
Advisory fees 1,844,970
- --------------------------------------------------------
Administrative services fees 40,519
- --------------------------------------------------------
Custodian fees 176,160
- --------------------------------------------------------
Directors' fees 5,250
- --------------------------------------------------------
Distribution fees -- Class A 472,471
- --------------------------------------------------------
Distribution fees -- Class B 1,213,414
- --------------------------------------------------------
Distribution fees -- Class C 12,198
- --------------------------------------------------------
Transfer agent fees -- Class A 201,137
- --------------------------------------------------------
Transfer agent fees -- Class B 296,709
- --------------------------------------------------------
Transfer agent fees -- Class C 3,566
- --------------------------------------------------------
Other 171,458
- --------------------------------------------------------
Total expenses 4,437,852
- --------------------------------------------------------
Less:
Expenses paid indirectly (3,145)
- --------------------------------------------------------
Net expenses 4,434,707
- --------------------------------------------------------
Net investment income (loss) (1,712,830)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 9,732,168
- --------------------------------------------------------
Foreign currencies (402,967)
- --------------------------------------------------------
Futures contracts 727,924
- --------------------------------------------------------
Option contracts (27,489)
- --------------------------------------------------------
10,029,636
- --------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 68,191,263
- --------------------------------------------------------
Foreign currencies 61,692
- --------------------------------------------------------
Futures contracts (51,000)
- --------------------------------------------------------
68,201,955
- --------------------------------------------------------
Net gain from investment securities,
foreign currencies futures and option
contracts 78,231,591
- --------------------------------------------------------
Net increase in net assets resulting from
operations $76,518,761
========================================================
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 351
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 1998 AND THE YEAR ENDED OCTOBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1998 1997
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,712,830) $ (2,013,735)
- -------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 10,029,636 11,895,254
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 68,201,955 37,072,703
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 76,518,761 46,954,222
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (4,454,600) -
- -------------------------------------------------------------------------------------------
Class B (5,820,423) -
- -------------------------------------------------------------------------------------------
Class C (40,919) -
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 9,625,327 41,376,928
- -------------------------------------------------------------------------------------------
Class B 20,787,870 77,933,131
- -------------------------------------------------------------------------------------------
Class C 3,399,087 1,157,289
- -------------------------------------------------------------------------------------------
Net increase in net assets 100,015,103 167,421,570
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 404,240,742 236,819,172
- -------------------------------------------------------------------------------------------
End of period $504,255,845 $ 404,240,742
===========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $368,732,093 $ 334,919,809
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (1,727,412) (14,582)
- -------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies, futures and option
contracts 8,955,126 9,241,432
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 128,296,038 60,094,083
- -------------------------------------------------------------------------------------------
$504,255,845 $ 404,240,742
===========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Growth Fund (the "Fund") is an investment portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of six
separate portfolios: AIM Global Growth Fund, AIM Asian Growth Fund, AIM European
Development Fund, AIM Global Aggressive Growth Fund, AIM Global Income Fund and
AIM International Equity Fund. The Fund currently offers three different classes
of shares: Class A shares, Class B shares and Class C shares. Class A shares are
sold with a front-end sales charge. Class B shares and Class C shares are sold
with a contingent deferred sales charge. Matters affecting each portfolio or
class 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 preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) 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. If a mean
is not available, as is the case in some foreign markets, the closing bid
will be used absent a last sales price. Securities traded in the
over-the-counter market (but not including securities reported on the NASDAQ
National Market System) are valued at the mean
14
<PAGE> 352
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. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by an independent pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate and maturity date.
Securities for which market quotations are 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 will not be reflected in
the computation of the Fund's net asset value. If events materially
affecting the value of such securities occur during such period, then these
securities will be valued at their fair value as determined in good faith by
or under the supervision of the Board of Directors.
B. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts-A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
D. Securities Transactions, Investment Income and Distribu- tions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on an accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
E. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed
to shareholders. Therefore, no provision for federal income taxes is
recorded in the financial statements.
F. Stock Index Futures Contracts-The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the
Fund's basis in the contract. Risks include the possibility of an illiquid
market and that a change in the value of contracts may not correlate with
changes in the value of the securities being hedged.
G. Covered Call Options-The Fund may write call options, but only on a covered
basis; that is, the Fund will own the underlying security. Options written
by the Fund normally will have expiration dates between three and nine
months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "market-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option
was written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the
15
<PAGE> 353
option period, the Fund may be required at any time to deliver the underlying
security against payment of the exercise price. This obligation is terminated
upon the expiration of the option period or at such earlier time at which the
Fund effects a closing purchase transaction by purchasing (at a price which
may be higher than that received when the call option was written) a call
option identical to the one originally written.
H. Put options-The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, a
Fund pays an option premium. The option's underlying instrument may be a
security, or a futures contract. Put options may be used by a Fund to hedge
securities it owns by locking in a minimum price at which the Fund can sell.
If security prices fall, the put option could be exercised to offset all or a
portion of the Fund's resulting losses. At the same time, because the maximum
the Fund has at risk is the cost of the option, purchasing put options does
not eliminate the potential for the Fund to profit from an increase in the
value of the securities hedged.
I. Expenses-Distribution and transfer agency expenses directly attributable to a
class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated among the
classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% of
the first $1 billion of the Fund's average daily net assets, plus 0.80% of the
Fund's average daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for administrative costs incurred in providing
accounting services to the Fund. During the six months ended April 30, 1998, AIM
was reimbursed $40,519 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Fund. During the six months ended April 30, 1998, AFS was paid
$301,921 for such services.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C 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 and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.50% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of Class C shares. The Fund, pursuant
to the Class B Plan, pays AIM Distributors compensation at an annual rate of
1.00% of the average daily net assets attributable to the Class B shares. Of
these amounts, the Fund may pay a service fee of 0.25% of the average daily net
assets of the Class A, Class B or C shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. 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 six months ended April 30, 1998, the
Class A, Class B and Class C shares, paid AIM Distributors $472,471, $1,213,414
and $12,198, respectively as compensation under the Plans.
AIM Distributors received commissions of $97,142 from the sales of the Class A
shares of the Fund during the six months ended April 30, 1998. 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 six months ended April 30,
1998. AIM Distributors received commissions of $16,610 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 six months ended April 30, 1998, the Fund incurred legal fees of
$3,172 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-INDIRECT EXPENSES
During the six months ended April 30, 1998, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $2,468 and $677, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $3,145 during the six months ended April 30, 1998.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-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) $500,000,000 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.
During the six months ended April 30, 1998, the Fund did not borrow under the
line of credit agreement. The funds which are
16
<PAGE> 354
party to the line of credit are charged a commitment fee of 0.05% 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.
Pursuant to an amendment to the line of credit agreement effective May 1,
1998, the Fund may borrow up to the lessor of (i) $1,000,000,000 or (ii) the
limits set by the prospectus for borrowings.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1998 was
$169,234,961 and $151,078,972, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of April 30, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $136,377,976
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (8,394,011)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $127,983,965
=========================================================
</TABLE>
Cost of investments for tax purposes is $371,368,464.
NOTE 7-OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 1998
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
---------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of period - -
- --------------------------------------------------------
Written 51 $ 27,335
- --------------------------------------------------------
Exercised (51) (27,335)
- --------------------------------------------------------
End of period 0 $ 0
========================================================
</TABLE>
NOTE 8-PUT OPTIONS PURCHASED
Transactions in put options purchased during the six months ended April 30, 1998
are summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS PAID
--------- -----------
<S> <C> <C>
Beginning of period - -
- --------------------------------------------------------
Purchased 51 $ 27,489
- --------------------------------------------------------
Expired (51) (27,489)
- --------------------------------------------------------
End of period 0 $ 0
========================================================
</TABLE>
NOTE 9-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the six months ended
April 30, 1998 and the year ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
-------------------------- -------------------------
1998 1997
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 6,817,691 $ 120,490,697 6,399,974 $103,567,757
- -----------------------------------------------------------------------------
Class B 1,936,054 33,801,397 6,303,261 98,414,198
- -----------------------------------------------------------------------------
Class C* 228,828 4,057,497 67,094 1,157,289
- -----------------------------------------------------------------------------
Issued as reinvestment of
distributions:
Class A 259,539 4,204,528 - -
- -----------------------------------------------------------------------------
Class B 340,750 5,428,145 - -
- -----------------------------------------------------------------------------
Class C* 2,447 38,984 - -
- -----------------------------------------------------------------------------
Reacquired:
Class A (6,520,692) (115,069,898) (3,750,438) (62,190,829)
- -----------------------------------------------------------------------------
Class B (1,083,167) (18,441,672) (1,291,769) (20,481,067)
- -----------------------------------------------------------------------------
Class C* (38,842) (697,394) - -
- -----------------------------------------------------------------------------
1,942,608 $ 33,812,284 7,728,122 $120,467,348
=============================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
17
<PAGE> 355
NOTE 10-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
capital stock outstanding during the six months ended April 30, 1998, each of
the years in the three-year period ended October 31, 1997 and the period
September 15, 1994 (date operations commenced) through October 31, 1994 and for
a share of Class C capital stock outstanding during the six months ended April
30, 1998 and the period August 4, 1997 (date sales commenced) through October
31, 1997.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
OCTOBER 31,
APRIL 30, ---------------------------------------------
1998 1997 1996 1995 1994
--------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.65 $ 14.20 $ 12.32 $ 10.23 $ 10.00
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Income from investment operations:
Net investment income (loss) (0.04) (0.04) (0.01) (0.02) -
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Net gains on securities (both realized and unrealized) 3.09 2.49 2.11 2.11 0.23
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Total from investment operations 3.05 2.45 2.10 2.09 0.23
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Less distributions:
Dividends from net investment income - - - (0.004) -
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Distributions from net realized gains (0.42) - (0.22) - -
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Total distributions (0.42) - (0.22) (0.004) -
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Net asset value, end of period $ 19.28 $ 16.65 $ 14.20 $ 12.32 $ 10.23
============================================================ ======== ======== ========= ======== ========
Total return(a) 18.81% 17.25% 17.26% 20.48% 2.30%
============================================================ ======== ======== ========= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $217,916 $178,917 $ 114,971 $ 23,754 $ 3,093
============================================================ ======== ======== ========= ======== ========
Ratio of expenses to average net assets(b) 1.74%(c)(d) 1.76% 1.93% 2.12% 1.95%(e)
============================================================ ======== ======== ========= ======== ========
Ratio of net investment income (loss) to average net
assets(f) (0.49)%(c) (0.30)% (0.13)% (0.28)% 0.10%(e)
============================================================ ======== ======== ========= ======== ========
Portfolio turnover rate 36% 96% 82% 79% 6%
============================================================ ======== ======== ========= ======== ========
Average brokerage commission rate paid(g) $ 0.0277 $ 0.0239 $ 0.0234 N/A N/A
============================================================ ======== ======== ========= ======== ========
</TABLE>
(a) Does not deduct sales charges and are not annualized for periods less than
one year.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.94%, 2.98% and 5.67% (annualized) for 1996-1994.
(c) Ratios are annualized and based on average net assets of $190,554,477.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been the same
(annualized).
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.14)%, (1.14)% and (3.63)% (annualized) for
1996-1994.
(g) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
18
<PAGE> 356
NOTE 10-FINANCIAL HIGHLIGHTS-continued
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------------------------------
OCTOBER 31,
APRIL 30, ---------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------- ---------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 16.39 $ 14.05 $ 12.26 $ 10.22 $10.00
- ----------------------------------- -------- -------- -------- ------- ------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.11) (0.05) (0.04) -
- ----------------------------------- -------- -------- -------- ------- ------
Net gains (losses) on securities
(both realized and unrealized) 3.04 2.45 2.06 2.08 0.22
- ----------------------------------- -------- -------- -------- ------- ------
Total from investment
operations 2.95 2.34 2.01 2.04 0.22
- ----------------------------------- -------- -------- -------- ------- ------
Less distributions:
Distributions from net realized
gains (0.42) - (0.22) - -
- ----------------------------------- -------- -------- -------- ------- ------
Total distributions (0.42) - (0.22) - -
- ----------------------------------- -------- -------- -------- ------- ------
Net asset value, end of period $ 18.92 $ 16.39 $ 14.05 $ 12.26 $10.22
=================================== ======== ======== ======== ======= ======
Total return(b) 18.49% 16.65% 16.60% 19.96% 2.20%
=================================== ======== ======== ======== ======= ======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $281,432 $224,225 $121,848 $17,157 $1,277
=================================== ======== ======== ======== ======= ======
Ratio of expenses to average net
assets 2.28%(c)(d) 2.29% 2.48%(e) 2.64%(e) 2.51%(e)(f)
=================================== ======== ======== ======== ======= ======
Ratio of net investment income
(loss) to average net assets (1.02)%(c) (0.83)% (0.69)%(g) (0.79)%(g) (0.47)%(f)(g)
=================================== ======== ======== ======== ======= ======
Portfolio turnover rate 36% 96% 82% 79% 6%
=================================== ======== ======== ======== ======= ======
Average brokerage commission rate
paid(h) $ 0.0277 $ 0.0239 $ 0.0234 N/A N/A
=================================== ======== ======== ======== ======= ======
<CAPTION>
CLASS C
-------------------------------
APRIL 30, OCTOBER 31,
1998 1997
--------------- -----------
<S> <C> <C>
Net asset value, beginning of
period $ 16.39 $ 17.39
- ----------------------------------- ------- -------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.03)
- ----------------------------------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 3.03 (0.97)
- ----------------------------------- ------- -------
Total from investment
operations 2.94 (1.00)
- ----------------------------------- ------- -------
Less distributions:
Distributions from net realized
gains (0.42) -
- ----------------------------------- ------- -------
Total distributions (0.42) -
- ----------------------------------- ------- -------
Net asset value, end of period $ 18.91 $ 16.39
=================================== ======= =======
Total return(b) 18.43% (5.75)%
=================================== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 4,908 $ 1,100
=================================== ======= =======
Ratio of expenses to average net
assets 2.28%(c)(d) 2.29%(f)
=================================== ======= =======
Ratio of net investment income
(loss) to average net assets (1.02)%(c) (0.83)%(f)
=================================== ======= =======
Portfolio turnover rate 36% 96%
=================================== ======= =======
Average brokerage commission rate
paid(h) $0.0277 $0.0239
=================================== ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and are not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $244,693,916 and
$2,459,925 for Class B and Class C, respectively.
(d) Ratios include indirectly paid expenses. Excluding indirectly paid expenses,
the ratios of expenses to average net assets would have been 2.27%
(annualized) and 2.27% (annualized) for Class B and Class C, respectively.
(e) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.49%, 3.38% and 6.20% (annualized) for 1996-1994.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.69)%, (1.54)% and (4.16)% (annualized) for 1996-1994.
(h) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
19
<PAGE> 357
---------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
---------------
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds--Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds. Certain restrictions
apply.
o RETIREMENT PLANS. You may purchase shares of the fund for your Individual
Retirement Account (IRA) or any other type of retirement plan, and earn
tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o www.aimfunds.com. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
<PAGE> 358
Directors & Officers
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II TRANSFER AGENT
Director Gary T. Crum
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Assistant Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Robert G. Alley
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Melville B. Cox Boston, MA 02110
Chief Executive Officer Vice President
Texana Global, Inc.; COUNSEL TO THE FUND
Formerly Member Jonathan C. Schoolar
of the U.S. House of Representatives Vice President Ballard Spahr
Andrews & Ingersoll, LLP
Carl Frischling Renee A. Bamford 1735 Market Street
Partner Assistant Secretary Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel
P. Michelle Grace COUNSEL TO THE DIRECTORS
Robert H. Graham Assistant Secretary
President and Chief Executive Officer Kramer, Levin, Naftalis & Frankel
A I M Management Group Inc. Jeffrey H. Kupor 919 Third Avenue
Assistant Secretary New York, NY 10022
John F. Kroeger
Formerly Consultant Nancy L. Martin DISTRIBUTOR
Wendell & Stockel Associates, Inc. Assistant Secretary
A I M Distributors, Inc.
Lewis F. Pennock Ofelia M. Mayo 11 Greenway Plaza
Attorney Assistant Secretary Suite 100
Houston, TX 77046
Ian W. Robinson Lisa A. Moss
Consultant; Formerly Executive Assistant Secretary
Vice President and
Chief Financial Officer Kathleen J. Pflueger
Bell Atlantic Management Assistant Secretary
Services, Inc.
Samuel D. Sirko
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Stephen I. Winer
Limited Partnership Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
20
<PAGE> 359
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
FOR AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Asian Growth Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
[PHOTO OF FOR GROWTH OF CAPITAL
11 GREENWAY PLAZA
APPEARS HERE] AIM Advisor International Value Fund
AIM Blue Chip Fund
AIM Global Growth Fund
AIM International Equity Fund
AIM Select Growth Fund**
AIM Value Fund
AIM Weingarten Fund
FOR GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
FOR HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
FOR CURRENT TAX-FREE INCOME
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
FOR CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided * AIM Aggressive Growth Fund was closed to new
leadership in the mutual fund industry since 1976 investors on June 5, 1997. ** On May 1, 1998, AIM
and managed approximately $89 billion in assets Growth Fund was renamed AIM Select Growth Fund.
for more than 4.4 million shareholders, including For more complete information about any AIM
individual investors, corporate clients, and Fund(s), including sales charges and expenses, ask
Financial institutions, as of March 31, 1998. The your Financial consultant or securities dealer for
AIM Family of Funds--Registered Trademark-- is a free prospectus(es). Please read the
distributed nationwide, and AIM today ranks among prospectus(es) carefully before you invest or send
the nation's top 15 mutual fund companies in money.
assets under management, according to Lipper
Analytical Services, Inc.
INVEST WITH DISCIPLINE-SM-
</TABLE>
<PAGE> 360
APPENDIX IV
GT GLOBAL
OVER 25 YEARS
OF INVESTING
WORLDWIDE
/ /
GT GLOBAL
INTERNATIONAL
GROWTH FUND
/ /
ANNUAL REPORT
DECEMBER 31, 1997
[LOGO]
<PAGE> 361
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Message from the
Chairman............. 1
Report from the Fund
Managers and Key
Portfolio Holdings... 2
Report of Independent
Accountants.......... F1
Financial
Statements........... F2
Views of the Funds' management
described in this report are as
of the date written. Portfolio
holdings and allocations are as
of December 31, 1997, unless
otherwise noted. These views,
portfolio holdings and
allocations may have changed
subsequently.
</TABLE>
<PAGE> 362
MESSAGE FROM THE CHAIRMAN
Dear Shareholder,
Nineteen ninety-seven has been a challenging and exciting year. The volatility
of the market--and the resulting record highs and lows--has made investing a
sometimes awe-inspiring endeavor for investors and investment professionals
alike.
Across the GT Global family, our Funds have remained true to their investment
goals and objectives regardless of world events. Whether it be the recent
turmoil in the Asian markets, the privatization and reform underway across
eastern Europe, deregulation occurring in Latin America or the ups and downs of
the U.S. market, our Funds have maintained their focus. In fact, we believe
these changes are yielding new investment opportunities in both established
economies and dynamic new markets around the world. Looking forward to 1998, our
commitment is to continue to monitor world markets and seek additional ways to
capitalize on events as they unfold for the benefit of our shareholders.
In an effort to provide our customers easier access to information about the GT
Global Funds, we launched our website, www.gtglobal.com, during the latter part
of 1997. We hope to continually enhance the information it contains, from our
worldwide economic outlook, to fund price and performance reporting, to the
Millennium Minute message of the day. Used in conjunction with annual and
semiannual reports and your quarterly statement on our Funds, we hope it helps
you monitor your investments and achieve your financial goals.
Be assured that we will continue to strive to offer you the quality investment
products you need to build a well-diversified portfolio. As always, we
appreciate your continued confidence in our Funds. Should you or your adviser
have any questions regarding GT Global Funds, please call us at 800-824-1580.
One of our representatives will be happy to assist you.
Sincerely,
/s/ William J. Guilfoyle
William J. Guilfoyle
Chairman of the Board and President
GT Global Funds
1
<PAGE> 363
[GRAPHIC]
INVESTMENT OBJECTIVE
The GT Global International Growth Fund seeks long-term growth of capital by
investing primarily in equity securities of companies located outside the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
PERFORMANCE SUMMARY
[GRAPH]
/ / GT GLOBAL INTERNATIONAL GROWTH FUND CLASS A
/ / MSCI-EAFE Index
<TABLE>
<CAPTION>
<S> <C> <C>
7/19/85 "$9,525" "$10,000"
"9,535" "9,904"
"9,449" "10,225"
"9,849" "10,827"
"10,506" "11,567"
"11,144" "12,045"
"11,878" "12,619"
"12,163" "12,939"
"12,954" "14,376"
"14,168" "16,402"
"15,310" "17,480"
"14,893" "16,707"
"16,006" "17,850"
"17,407" "18,955"
"18,400" "20,828"
"17,923" "20,619"
"16,423" "19,247"
"17,645" "20,360"
"18,251" "21,445"
"18,728" "23,727"
"19,473" "24,443"
"20,356" "26,452"
"21,427" "29,255"
"21,900" "29,261"
"22,148" "28,334"
"23,579" "28,289"
"24,433" "30,416"
"25,185" "29,943"
"18,256" "25,753"
"17,774" "26,013"
"19,379" "26,791"
"19,786" "27,276"
"20,431" "29,101"
"21,313" "30,896"
"21,833" "31,350"
"21,403" "30,352"
"21,268" "29,559"
"21,460" "30,492"
"20,747" "28,515"
"21,268" "29,767"
"22,330" "32,321"
"22,930" "34,253"
"23,138" "34,450"
"24,311" "35,063"
"24,686" "35,250"
"25,176" "34,565"
"26,167" "34,893"
"25,882" "33,000"
"25,745" "32,452"
"27,545" "36,534"
"28,626" "34,898"
"29,788" "36,494"
"28,455" "35,035"
"29,685" "36,803"
"32,060" "38,170"
"31,540" "36,758"
"30,674" "34,200"
"31,090" "30,644"
"30,258" "30,409"
"31,818" "33,888"
"32,476" "33,598"
"33,585" "34,080"
"30,362" "30,779"
"27,208" "26,499"
"28,802" "30,636"
"27,970" "28,838"
"27,474" "29,316"
"28,071" "30,273"
"29,863" "33,527"
"30,390" "31,522"
"30,495" "31,841"
"31,584" "32,183"
"30,390" "29,826"
"31,514" "31,300"
8/31/91 "30,741" "30,672"
"31,408" "32,410"
"31,549" "32,877"
"30,073" "31,351"
"31,104" "32,980"
"31,176" "32,285"
"31,709" "31,138"
"30,677" "29,091"
"31,532" "29,237"
"33,560" "31,203"
"32,386" "29,733"
"30,998" "28,982"
"30,713" "30,810"
"29,218" "30,211"
"29,147" "28,635"
"29,325" "28,914"
"29,290" "29,072"
"29,076" "29,077"
"29,504" "29,964"
"31,002" "32,585"
"32,501" "35,686"
"32,965" "36,448"
"32,501" "35,888"
"33,714" "37,153"
"35,676" "39,167"
"35,533" "38,294"
"36,996" "39,482"
"35,355" "36,039"
"39,315" "38,650"
"41,741" "41,926"
"40,242" "41,818"
"37,317" "40,026"
"37,852" "41,733"
"37,602" "41,502"
"37,317" "42,098"
"38,494" "42,512"
"40,421" "43,528"
"38,815" "42,167"
"39,029" "43,581"
"37,353" "41,496"
"36,256" "41,765"
"33,488" "40,171"
"32,579" "40,066"
"32,658" "42,576"
"33,646" "44,189"
"33,567" "43,673"
"33,962" "42,919"
"36,453" "45,603"
"36,611" "43,874"
"37,086" "44,742"
"36,453" "43,551"
"36,335" "44,774"
"37,661" "46,590"
"38,324" "46,792"
"38,366" "46,962"
"38,988" "47,971"
"39,818" "49,378"
"39,361" "48,481"
"39,693" "48,766"
"38,117" "47,352"
"38,864" "47,468"
"39,403" "48,741"
"39,278" "48,255"
"40,855" "50,187"
"41,154" "49,553"
"41,062" "47,830"
"41,154" "48,624"
"41,385" "48,812"
"41,939" "49,083"
"43,646" "52,289"
"45,260" "55,185"
"46,460" "56,089"
"43,784" "51,912"
"47,106" "54,831"
"43,369" "50,629"
"43,230" "50,124"
12/31/97 "44,657" "50,573"
</TABLE>
The chart above shows the performance of the GT Global International Growth
Fund, Class A shares, since the Fund's inception, versus the MSCI EAFE Index.
This represents a cumulative return of 346.57% and an average annual total
return of 12.77% for the Fund. The chart assumes a hypothetical $10,000 initial
investment in the Fund's Class A shares and reflects all Fund expenses and the
maximum 4.75% sales charge. A $10,000 investment in the Fund's Class B shares at
inception on April 1, 1993, would have been valued at $13,732 on December 31,
1997. This figure reflects all Fund expenses and the applicable contingent
deferred sales charge (5% in the first year, decreasing to 0% after six years),
assuming complete redemption at the end of the period. A $10,000 investment in
Advisor Class shares at inception on June 1, 1995, would have been worth $13,412
on December 31, 1997.
AVERAGE ANNUAL TOTAL RETURNS %(1)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARE CLASS WITHOUT SALES CHARGE(2) WITH SALES CHARGE
1-YEAR 5-YEAR 10-YEAR LOF 1-YEAR 5-YEAR 10-YEAR LOF
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A(3) 8.51 8.80 8.71 13.21 3.36 7.75 8.18 12.77
CLASS B(3) 7.71 N/A N/A 7.18 3.47 N/A N/A 6.90
ADVISOR CLASS(4) 8.53 N/A N/A 12.02 N/A N/A N/A N/A
</TABLE>
HISTORICAL PERFORMANCE(2)
ANNUAL TOTAL RETURNS % (LAST 10 YEARS)
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A 19.39 38.56 -14.31 13.22 -5.83 34.23 -7.78 3.88 9.28 8.51
CLASS B N/A N/A N/A N/A N/A 25.63(3) -8.36 3.15 8.67 7.71
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gains
distributions at net asset value.
(2) This performance data do not reflect the maximum 4.75% sales charge and the
contingent deferred sales charge for Class A and Class B shares,
respectively, which if included, would have reduced performance quoted.
(3) The Fund began operations on July 19, 1985; Class B shares commenced on
April 1, 1993.
(4) The Fund began offering Advisor Class shares on June 1, 1995. Advisor Class
shares are not sold directly to the general public. They are only available
through certain employee benefit plans, financial institutions and other
entities that have entered into specific agreements with GT Global. Please
see the Fund's prospectus for more complete information.
The above data represent past performance of the Fund's shares, which does not
guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
2
<PAGE> 364
INTERVIEW WITH PORTFOLIO MANAGER
MICHAEL LINDSELL
Q HOW DID THE FUND PERFORM?
A Concern over the likely scope of Asian weakness had a chilling impact on
equity markets worldwide in the fourth quarter. Some companies'
preannouncements of earnings disappointments spurred a flight to quality, as
many investors either channeled their holdings into large cap, liquid stocks --
causing a slump in performance of small and mid cap issues -- or reduced
equity positions to buy bonds.
Taking into account this difficult environment, the Fund's Class A shares
returned 8.51% (3.36% including the maximum 4.75% sales charge) over the
12-month period ended December 31, 1997. Total return for Class B shares for
the same period was 7.71% (3.47% including the maximum 5% contingent deferred
sales charge). The Morgan Stanley Capital International Europe, Australia and
the Far East (MSCI-EAFE) Index(5) returned 2.06% over the same period.
Q WHAT FACTORS CONTRIBUTED TO THE FUND'S OUTPERFORMANCE RELATIVE TO THE
INDEX?
A Although global equity markets were considerably more volatile in 1997,
during this period the Fund outperformed the index. The Fund's overweighting to
several continental European countries -- Sweden, Norway and Italy, in
particular -- contributed positively to performance. Most continental bourses
continued to advance, thanks to a rally in bond markets and low inflation. We
were also significantly underweighted in Japan, relative to the index. We
invested cautiously in this difficult market and benefited from security
selection there. Similarly, the Fund was buoyed by holdings in Brazil, Mexico
and Portugal (Brazil and Mexico are not represented in the index while the index
held a small allocation to Portugal). These markets posted solid returns for the
year, although they were tempered during the final few months.
Q WHAT CHANGES DID YOU IMPLEMENT IN THE PORTFOLIO DURING THE YEAR?
A In Europe we sold our positions in German cyclicals -- Bayer, Hoechst and
Volkswagen -- following strong price performance. We also sold our positions in
Adecco and in Telecom Italia Mobile and increased our weightings in European
financials -- Foreningssparbanken and Nordbanken in Scandinavia and SBC Warburg
in Switzerland. We bought a large position in Roche and introduced an exposure
to the oil service sector through our purchase of PGS in Norway.
Additionally, we introduced positions in two emerging markets -- Hungary and
India. Hungary's three-year commitment to economic austerity has nurtured a
positive investment climate, with local investment and healthy foreign
capital inflows resulting in another strong year for its stock market
overall. Inflation has begun to fall and its current account deficit
continues to improve. However, despite improved inflation figures and
positive earnings results for many companies, the Hungarian market was not
immune to the turmoil in world equity markets that became entrenched in
October as the crisis in Asia took root.
India, on the other hand, is at a much earlier stage of development than most
Asian markets, and we are optimistic about continued reform there. We
introduced a position in this market in August as we felt the overall
economic environment was conducive to equity performance, with interest rates
and inflation likely to remain subdued.
Q WHAT ARE SOME OF THE IMPLICATIONS OF EUROPEAN MONETARY UNION IN 1998?
A We believe that monetary union is likely to go forward in May 1998. This
possibility was priced into bond and equity markets in 1997, as bond yields fell
in peripheral countries such as Spain to converge with German levels. At some
point, however, we believe EMU could potentially create serious structural
problems and interest rates would rise.
CONTINUED P.4
(5) The MSCI-EAFE World Index is a market value weighted average of the
performance of 1,086 securities listed on 20 major world stock
exchanges. It includes the effect of reinvested dividends and is measured
in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not
include the effects of sales charges and professional management fees.
3
<PAGE> 365
INTERVIEW WITH PORTFOLIO MANAGER CONTINUED
Similarly, if monetary union is delayed or canceled, we believe the impact would
be negative for Spain and Italy, where bond yields would rise sharply. However,
in the event of a rise in interest rates, we believe the Fund is well positioned
relative to the European market. The Fund currently has no exposure to Spanish
equities and considerably underweighted in Italy relative to the index. The Fund
is also overweighted in the UK and has a large weighting in the Netherlands,
which we think could be relative winners. We feel the Fund's substantial
exposure to the UK offers good value because its equity market is home to some
excellent financial services and health care companies.
Q RELATIVE TO THE INDEX, WHY IS THE FUND CONSIDERABLY UNDERWEIGHTED IN JAPAN?
A While we believe fundamental changes are likely in 1998, our top-down
analysis suggests the year will continue to be a very difficult one for Japan
with limited economic growth. The course of the stock market rests on the policy
response of Japanese authorities. Clearly, Japan has the resources to produce a
domestic demand-led recovery, but we believe the policy response must be
rigorous, wide ranging and implemented quickly.
At the same time, more action by Japanese corporations is necessary. As yet,
remarkably little active restructuring is taking place in Japan. Although the
unemployment rate has recently been creeping up, it remains at relatively modest
levels. However, we look for this to change in 1998-99.
In addition, without policy action and corporate restructuring, we foresee no
substantial rally in the Japanese stock market; indeed, further falls are
possible. In this environment, we have continued to focus on companies we feel
can exploit major trends, such as the graying of Japan, companies that are
beneficiaries of the long-term weakness of the yen, companies entering new
markets and businesses that can maintain pricing power.
Q HOW DID AUSTRALASIAN MARKETS FARE?
A Despite our positive outlook, the second half of the year was disappointing
for investors in both Australia and New Zealand. The two stock markets fell by
15.25% and 18.15%, respectively, in U.S. dollars (based on MSCI country
indices). In the fourth quarter, foreign investors also had to bear the effects
of falls in both Australian and New Zealand dollars of around 10% against the
U.S. dollar.
During this time, two factors had additional impact on both countries. First,
many experts felt prospects for economic and corporate earnings growth would be
constrained by the financial crises in Asia, the destination of over half the
exports from both Australia and New Zealand. This view, which overlooked the
importance of foodstuffs exported to Asia, was prevalent despite growth in many
sectors of the Australian economy remaining robust through the third quarter.
Second, commodity prices had already been weakening. For example, the outlook
for base metals was clouded by developments in East Asia, while sales by central
banks (and falling inflation expectations) had caused the price of gold to
slide.
Q WHAT IS YOUR OUTLOOK OVER THE LONGER TERM?
A We feel the portfolio is well positioned to take advantage of opportunities
in the European marketplace over the coming year. We believe European markets
will continue to provide attractive returns boosted by consolidation and
increasing emphasis on the creation of shareholder value. Currently, the Fund is
concentrated in companies with visible earnings growth and those we believe have
the ability to rerate substantially against their global peers. Our stock
selection has focused on service industries, such as management consulting and
temporary labor, which are relatively underdeveloped but are expanding rapidly.
We have also identified particular consumer goods, healthcare and
telecommunications stocks that we feel can look forward to strong organic
growth.
In Latin America, we have investments in Brazil and Mexico. While both markets
were not immune to the Asian turmoil, Brazil, in particular, suffered as
volatility in Southeast Asian currency markets intensified concerns about
overvaluation of the real. Renewed momentum of the reform process and
privatization, however, are seemingly back on track and we feel the state sector
continues to be compelling. Mexico, on the other hand, has been the least
affected of all the Latin American markets. Indeed, confidence in the economy
and its growth prospects has given it
CONTINUED P.5
4
<PAGE> 366
INTERVIEW WITH PORTFOLIO MANAGER CONTINUED
regional safe haven status. Moreover, with the U.S. as its largest trading
partner (nearly 85% of exports are bound for the U.S.), we expect Mexico to
continue to benefit from steady, relatively low inflationary growth in the U.S.
Conversely, as we enter 1998, we believe Asian recovery will take time and its
stock markets are likely to remain extremely volatile. At present, we anticipate
maintaining our Hong Kong presence and will continue to invest elsewhere on a
very selective basis.
ABOUT THE PORTFOLIO MANAGERS
ROGER YATES - Global Chief Investment Officer for Chancellor LGT Asset
Management since October 1997. Mr. Yates was International Chief Investment
Officer for Chancellor LGT from September '96 to October '97, and from '94 to
'96, he was Chief Investment Officer and Portfolio Manager for Europe and the
UK. Previously, Mr. Yates was an Investment Manager at Morgan Grenfell and
Director of their UK pension fund business. Prior to that, he worked for LGT
Asset Management (London) for seven years, and was appointed a director in 1986
and Chief Investment Officer for unit trusts in 1987. In 1994, he rejoined
Chancellor LGT. He received a bachelor's degree from Oxford University and
completed postgraduate research at Reading University.
MICHAEL LINDSELL - Head of investment strategy for Global Equities; Chief
Investment Officer, Japan, 1992-96. Previously, Mr. Lindsell was a director at
Warburg Asset Management from 1989 to 1992; Senior Fund Manager at Scimitar
Asset Management from 1985 to 1988; and Fund Manager, Lazard Brothers & Co. Ltd.
from 1982 to 1985. He received his B.Sc from Bristol University.
GEOGRAPHIC ALLOCATION OF NET ASSETS %
<TABLE>
<CAPTION>
1997 1996
DECEMBER 31 DECEMBER 31
<S> <C> <C>
Australia 5.7 2.8
Brazil 3.5 1.2
Denmark 1.2 N/A
Finland 1.0 N/A
France 6.6 7.1
Germany 2.8 7.1
Hong Kong 4.9 5.3
Hungary 1.3 N/A
India 1.1 N/A
Indonesia N/A 1.1
Italy 2.9 4.7
Japan 9.3 16.5
Korea 0.2 0.9
Mexico 2.0 1.3
Netherlands 7.9 5.8
New Zealand 1.7 1.8
Norway 1.5 N/A
Portugal 1.9 1.9
Singapore 0.6 1.7
South Africa 0.5 N/A
Spain N/A 4.2
Sweden 4.7 3.6
Switzerland 8.4 5.9
Thailand 0.3 0.9
UK 22.4 21.7
U.S. & Other 7.6 4.5
</TABLE>
Allocations will change based on current market conditions.
5
<PAGE> 367
SECTOR ALLOCATION OF NET ASSETS %
DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Finance 26.7
Services 20.0
Energy 10.5
Health Care 8.7
Material/Basic Industry 7.1
Consumer Non-Durables 6.0
Capital Goods 4.9
Multi-Industry/Misc. 3.3
Technology 3.3
Consumer Durables 1.9
Short Term & Other 7.6
</TABLE>
A complete listing of holdings and allocations may be found in the Financial
Statements section of this report.
<TABLE>
<CAPTION>
% of
GT GLOBAL INTERNATIONAL GROWTH FUND Country Net Assets
KEY PORTFOLIO HOLDINGS(6)
<S> <C> <C>
ROCHE HOLDING AG Develops and manufactures pharmaceutical and chemical products and Switzerland 2.6
distributes them throughout Europe, the United States, Asia and Latin America.
EMI GROUP PLC A music recording and retailing company, EMI owns the Capitol, EMI, UK 2.4
and Virgin record labels and sells recorded music through its HMV stores and books
at its Dillons chain.
PETROLEO BRASILEIRO S.A.-PETROBRAS Produces oil and natural gas liquids (mainly oil Brazil 2.3
products and fuel oil) through approximately 7,258 active wells. Petrobras also
provides maritime freight services.
HSBC HOLDINGS PLC The holding company for the HSBC Group, an international banking Hong Kong 2.2
and financial services organization with operations in the Asia-Pacific region,
Europe, the Middle East and the Americas.
NORDBANKEN HOLDING AB Owns the Merita Nordbanken Group, operating mainly in Finland Sweden 2.1
and Sweden, to provide banking, financial, loan and insurance services to
individuals, corporations and institutions in Scandinavia and the Baltic region
under the names of Nordbanken and Merita.
WOOLWORTHS LTD. Operates grocery and discount stores throughout Australia, offering Australia 2.1
general merchandise, men's/women's/children's clothing, footwear, accessories and
sporting goods.
AUSTRALIA & NEW ZEALAND BANKING GROUP LTD. A general trading and savings bank. The Australia 2.0
group operates approximately 1,600 offices in 48 countries.
ROYAL & SUN ALLIANCE INSURANCE GROUP PLC The holding company for multinational UK 2.0
insurance companies Sun Alliance Group PLC and Royal Insurance Holdings PLC, which
provide major classes of general and life insurance to customers throughout the world.
KIMBERLY-CLARK DE MEXICO, S.A. DE C.V. Manufactures and sells consumer and industrial Mexico 2.0
paper products, including feminine hygiene products under the Kotex brand name, paper
towels, paper napkins and toilet paper.
M & G GROUP PLC Provides services through unit trusts, personal equity plans, UK 2.0
investment trusts and unit-linked life and pension policies, as well as investment
management services.
</TABLE>
Source: Bloomberg, January, 1998
(6) There can be no assurance the Fund will continue to hold these securities.
6
<PAGE> 368
GT GLOBAL
INTERNATIONAL
GROWTH FUND
FINANCIAL
STATEMENTS
<PAGE> 369
GT GLOBAL INTERNATIONAL GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global International Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1997, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global International Growth Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
F1
<PAGE> 370
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.7%)
HSBC Holdings PLC ......................................... HK 180,100 $ 4,439,453 2.2
BANKS-MONEY CENTER
Nordbanken Holding AB-/- .................................. SWDN 772,120 4,367,701 2.1
OTHER FINANCIAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 625,600 4,132,897 2.0
BANKS-REGIONAL
Royal & Sun Alliance Insurance Group PLC .................. UK 405,000 4,076,601 2.0
INSURANCE - MULTI-LINE
M & G Group PLC ........................................... UK 175,000 4,044,540 2.0
INVESTMENT MANAGEMENT
ForeningsSparbanken AB .................................... SWDN 145,230 3,302,595 1.6
BANKS-REGIONAL
Abbey National PLC ........................................ UK 182,400 3,267,626 1.6
BANKS-SUPER REGIONAL
ING Groep N.V. ............................................ NETH 76,097 3,205,744 1.6
OTHER FINANCIAL
National Westminster Bank PLC ............................. UK 162,000 2,692,020 1.3
BANKS-MONEY CENTER
Lloyds TSB Group PLC ...................................... UK 196,000 2,532,874 1.2
BANKS-REGIONAL
Unidanmark AS "A" ......................................... DEN 34,300 2,518,341 1.2
BANKS-REGIONAL
Axa - UAP ................................................. FR 32,050 2,479,968 1.2
INSURANCE - MULTI-LINE
Nichiei Co., Ltd. ......................................... JPN 22,800 2,428,506 1.2
OTHER FINANCIAL
Schroders PLC ............................................. UK 76,000 2,387,323 1.2
BANKS-MONEY CENTER
State Bank of India Ltd. - GDR{\/} ........................ IND 125,000 2,234,375 1.1
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 6,554 2,037,187 1.0
BANKS-MONEY CENTER
Banque Nationale de Paris ................................. FR 35,379 1,880,492 0.9
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 222,300 1,235,000 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement Certificates){\/}
{=} ...................................................... THAI 320,000 588,800 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 84,910 448,345 0.2
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer ........................ SWTZ 275 397,645 0.2
BANKS-MONEY CENTER
------------
54,698,033
------------
Services (20.0%)
EMI Group PLC ............................................. UK 578,000 4,821,412 2.4
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 1,279,000 4,274,721 2.1
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE> 371
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecom Italia SpA ........................................ ITLY 609,900 $ 3,903,636 1.9
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ................... NZ 725,500 3,515,509 1.7
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 305,000 3,330,460 1.6
BROADCASTING & PUBLISHING
Koninklijke Ahold N.V. .................................... NETH 117,919 3,077,109 1.5
RETAILERS-FOOD
EMAP PLC .................................................. UK 180,000 2,682,266 1.3
BROADCASTING & PUBLISHING
Great Universal Stores PLC ................................ UK 208,000 2,619,639 1.3
RETAILERS-OTHER
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 21,400 2,491,763 1.2
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 370,000 2,390,115 1.2
RETAILERS-FOOD
Portugal Telecom S.A. - Registered ........................ PORT 46,400 2,153,565 1.0
TELEPHONE NETWORKS
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 17,619 1,877,764 0.9
WIRELESS COMMUNICATIONS
Vendex International N.V. ................................. NETH 31,755 1,752,853 0.9
RETAILERS-OTHER
Vodafone Group PLC ........................................ UK 165,928 1,196,098 0.6
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 437,200 922,880 0.4
TELEPHONE NETWORKS
Fast Retailing Co., Ltd. .................................. JPN 44 705 --
RETAILERS-APPAREL
------------
41,010,495
------------
Energy (10.5%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 197,900 4,724,863 2.3
GAS PRODUCTION & DISTRIBUTION
Shell Transport & Trading Co., PLC ........................ UK 478,000 3,453,530 1.7
OIL
Viag AG ................................................... GER 5,792 3,120,627 1.5
ELECTRICAL & GAS UTILITIES
Total S.A. "B" ............................................ FR 28,580 3,110,393 1.5
OIL
Petroleum Geo-Services ASA-/- ............................. NOR 47,990 3,022,967 1.5
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 355,200 2,029,542 1.0
OIL
Coflexip - ADR{\/} ........................................ FR 35,230 1,955,265 1.0
ENERGY EQUIPMENT & SERVICES
------------
21,417,187
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE> 372
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (8.7%)
Roche Holding AG .......................................... SWTZ 543 $ 5,392,449 2.6
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 1,709 2,773,059 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 23,400 2,688,075 1.3
PHARMACEUTICALS
Schering AG ............................................... GER 26,700 2,575,730 1.3
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 80,000 2,280,460 1.1
PHARMACEUTICALS
Astra AB "A" .............................................. SWDN 115,313 1,997,573 1.0
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 21,368 28,947 --
PHARMACEUTICALS
------------
17,736,293
------------
Materials/Basic Industry (7.1%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 829,400 4,060,647 2.0
PAPER/PACKAGING
Ciba Specialty Chemicals AG-/- ............................ SWTZ 31,880 3,797,837 1.9
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 15,210 2,623,035 1.3
CHEMICALS
BOC Group PLC ............................................. UK 136,000 2,235,402 1.1
CHEMICALS
CRH PLC ................................................... UK 138,600 1,604,483 0.8
BUILDING MATERIALS & COMPONENTS
------------
14,321,404
------------
Consumer Non-Durables (6.0%)
Asahi Breweries Ltd. ...................................... JPN 210,000 3,057,471 1.5
BEVERAGES - ALCOHOLIC
Nestle S.A. - Registered .................................. SWTZ 1,771 2,654,196 1.3
FOOD
Amway Japan Ltd. .......................................... JPN 125,000 2,394,636 1.2
HOUSEHOLD PRODUCTS
Diageo PLC ................................................ UK 235,000 2,158,990 1.0
BEVERAGES - ALCOHOLIC
South African Breweries Ltd. .............................. SAFR 42,000 1,036,184 0.5
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ..................................... NETH 24,500 1,013,985 0.5
HOUSEHOLD PRODUCTS
------------
12,315,462
------------
Capital Goods (4.9%)
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 31,500 4,003,905 2.0
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 120,000 2,795,402 1.4
OFFICE EQUIPMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE> 373
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
Nokia AB "A" .............................................. FIN 28,300 $ 1,979,602 1.0
TELECOM EQUIPMENT
Kurita Water Industries Ltd. .............................. JPN 95,000 968,199 0.5
ENVIRONMENTAL
------------
9,747,108
------------
Multi-Industry/Miscellaneous (3.3%)
BBA Group PLC ............................................. UK 395,000 2,646,305 1.3
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ......................... HK 686,000 2,549,758 1.2
MULTI-INDUSTRY
Hutchison Whampoa ......................................... HK 279,000 1,749,939 0.8
MULTI-INDUSTRY
------------
6,946,002
------------
Technology (3.3%)
Cap Gemini N.V. ........................................... NETH 69,120 2,356,054 1.1
COMPUTERS & PERIPHERALS
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 88,000 2,211,801 1.1
COMPUTERS & PERIPHERALS
Baan Company N.V.-/- {\/} ................................. NETH 65,360 2,156,880 1.0
SOFTWARE
Koei Co., Ltd. ............................................ JPN 43,300 205,716 0.1
SOFTWARE
------------
6,930,451
------------
Consumer Durables (1.9%)
Futuris Corp., Ltd. ....................................... AUSL 2,226,000 2,436,432 1.2
AUTO PARTS
Cheung Kong (Holdings) Ltd. ............................... HK 212,000 1,388,527 0.7
HOUSING
------------
3,824,959
------------ -----
TOTAL EQUITY INVESTMENTS (cost $171,991,305) ................ 188,947,394 92.4
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE> 374
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of 5.80%,
collateralized by $20,795,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $20,814,506,
including accrued interest).
(cost $20,403,000) ...................................... $ 20,403,000 10.0
------------ -----
TOTAL INVESTMENTS (cost $192,394,305) * .................... 209,350,394 102.4
Other Assets and Liabilities ................................ (4,900,370) (2.4)
------------ -----
NET ASSETS .................................................. $204,450,024 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $193,457,059 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 27,995,828
Unrealized depreciation: (12,102,493)
-------------
Net unrealized appreciation: $ 15,893,335
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F6
<PAGE> 375
GT GLOBAL INTERNATIONAL GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.7 5.7
Brazil (BRZL/BRL) .................... 3.5 3.5
Denmark (DEN/DKK) .................... 1.2 1.2
Finland (FIN/FIM) .................... 1.0 1.0
France (FR/FRF) ...................... 6.6 6.6
Germany (GER/DEM) .................... 2.8 2.8
Hong Kong (HK/HKD) ................... 4.9 4.9
Hungary (HGRY/HUF) ................... 1.3 1.3
India (IND/INR) ...................... 1.1 1.1
Italy (ITLY/ITL) ..................... 2.9 2.9
Japan (JPN/JPY) ...................... 9.3 9.3
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 2.0 2.0
Netherlands (NETH/NLG) ............... 7.9 7.9
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.5 1.5
Portugal (PORT/PTE) .................. 1.9 1.9
Singapore (SING/SGD) ................. 0.6 0.6
South Africa (SAFR/ZAR) .............. 0.5 0.5
Sweden (SWDN/SEK) .................... 4.7 4.7
Switzerland (SWTZ/CHF) ............... 8.4 8.4
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 22.4 22.4
United States (US/USD) ............... 7.6 7.6
------ --- ----------
Total ............................... 92.4 7.6 100.0
------ --- ----------
------ --- ----------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $204,450,024.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,904,418 1.72492 2/23/98 $ 153,742
French Francs........................... 5,079,036 5.72800 2/6/98 245,685
French Francs........................... 1,998,309 5.77490 2/6/98 79,649
Japanese Yen............................ 4,528,736 120.70000 1/7/98 367,702
Japanese Yen............................ 770,321 118.82300 2/4/98 71,267
Japanese Yen............................ 8,992,174 122.40000 2/12/98 533,970
Swiss Francs............................ 5,872,843 1.42180 3/19/98 105,494
-------------- --------------
Total Contracts to Sell (Receivable
amount $32,703,346).................. 31,145,837 1,557,509
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.23%.
Total Open Forward Foreign Currency Contracts................................... $ 1,557,509
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F7
<PAGE> 376
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $171,991,305) (Note 1).......................... $188,947,394
Repurchase agreement, at value and cost................................................... 20,403,000
U.S. currency.................................................................. $ 518
Foreign currencies (cost $2,476,057)........................................... 2,469,130 2,469,648
---------
Receivable for open forward foreign currency contracts (Note 1)........................... 1,557,509
Receivable for securities sold............................................................ 409,819
Dividends and dividend withholding tax reclaims receivable................................ 280,212
Receivable for Fund shares sold........................................................... 36,825
Interest receivable....................................................................... 3,502
-----------
Total assets............................................................................ 214,107,909
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 8,454,213
Payable for securities purchased.......................................................... 746,544
Payable for investment management and administration fees (Note 2)........................ 164,822
Payable for service and distribution expenses (Note 2).................................... 88,263
Payable for printing and postage expenses................................................. 67,943
Payable for transfer agent fees (Note 2).................................................. 45,803
Payable for professional fees............................................................. 32,257
Payable for registration and filing fees.................................................. 17,314
Payable for custodian fees................................................................ 16,939
Payable for Trustees' fees and expenses (Note 2).......................................... 5,340
Payable for fund accounting fees (Note 2)................................................. 2,463
Other accrued expenses.................................................................... 15,984
-----------
Total liabilities....................................................................... 9,657,885
-----------
Net assets.................................................................................. $204,450,024
-----------
-----------
Class A:
Net asset value and redemption price per share ($148,143,474 DIVIDED BY 19,320,762 shares
outstanding)............................................................................... $ 7.67
-----------
-----------
Maximum offering price per share (100/95.25 of $7.67) *..................................... $ 8.05
-----------
-----------
Class B:+
Net asset value and offering price per share ($56,022,575 DIVIDED BY 7,606,803 shares
outstanding)............................................................................... $ 7.36
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($283,975 DIVIDED
BY 36,797 shares outstanding).............................................................. $ 7.72
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $182,591,933
Accumulated net realized gain on investments and foreign currency transactions............ 3,346,785
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 1,555,217
Net unrealized appreciation of investments................................................ 16,956,089
-----------
Total -- representing net assets applicable to capital shares outstanding................... $204,450,024
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE> 377
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $720,333).............................. $ 4,147,307
Interest income........................................................................... 693,646
-----------
Total investment income................................................................. 4,840,953
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 2,309,873
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 607,400
Class B.................................................................... 625,899 1,233,299
-----------
Transfer agent fees (Note 2).............................................................. 645,736
Custodian fees............................................................................ 199,701
Professional fees......................................................................... 82,923
Registration and filing fees.............................................................. 78,995
Fund accounting fees (Note 2)............................................................. 59,416
Printing and postage expenses............................................................. 42,984
Trustees' fees and expenses (Note 2)...................................................... 13,387
Other expenses (Note 1)................................................................... 44,923
-----------
Total expenses before reductions........................................................ 4,711,237
-----------
Expense reductions (Notes 1 & 5)...................................................... (298,050)
-----------
Total net expenses...................................................................... 4,413,187
-----------
Net investment income....................................................................... 427,766
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 32,730,836
Net realized gain on foreign currency transactions........................... 5,375,057
-----------
Net realized gain during the year....................................................... 38,105,893
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 286,534
Net change in unrealized appreciation of investments......................... (14,668,685)
-----------
Net unrealized depreciation during the year............................................. (14,382,151)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 23,723,742
-----------
Net increase in net assets resulting from operations........................................ $24,151,508
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE> 378
GT GLOBAL INTERNATIONAL GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 427,766 $ (860,684)
Net realized gain on investments and foreign currency transactions....... 38,105,893 37,931,580
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies....................................... 286,534 205,239
Net change in unrealized depreciation of investments..................... (14,668,685) (7,070,173)
------------- -------------
Net increase in net assets resulting from operations................... 24,151,508 30,205,962
------------- -------------
Class A:
Distributions to shareholders:
From net investment income............................................... (425,877) --
From net realized gain on investments.................................... (29,789,043) (20,343,820)
Class B:
Distributions to shareholders:
From net investment income............................................... -- --
From net realized gain on investments.................................... (10,955,953) (6,672,791)
Advisor Class:
Distributions to shareholders:
From net investment income............................................... (1,888) --
From net realized gain on investments.................................... (56,864) (46,941)
------------- -------------
Total distributions.................................................... (41,229,625) (27,063,552)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 663,662,225 1,289,311,201
Decrease from capital shares repurchased................................. (703,298,069) (1,410,140,865)
------------- -------------
Net decrease from capital share transactions........................... (39,635,844) (120,829,664)
------------- -------------
Total decrease in net assets............................................... (56,713,961) (117,687,254)
Net assets:
Beginning of year........................................................ 261,163,985 378,851,239
------------- -------------
End of year *............................................................ $204,450,024 $ 261,163,985
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ -- $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE> 379
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.03 (0.01) 0.03 (0.04) 0.03
Net realized and unrealized gain
(loss) on investments................ 0.69 0.84 0.32 (0.82) 2.78
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.72 0.83 0.35 (0.86) 2.81
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.03) -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.97) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 8.51% 9.28% 3.88% (7.78)% 34.23%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 148,143 $ 196,601 $ 308,816 $ 430,701 $ 523,397
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.35% (0.14)% 0.24% (0.04)% 0.3%
Without expense reductions............ 0.22% (0.25)% 0.16% (0.09)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.69% 1.80% 1.70% 1.70% 1.80%
Without expense reductions............ 1.82% 1.91% 1.78% 1.75% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F11
<PAGE> 380
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain
(loss) on investments................ 0.65 0.83 0.32 (0.82) 2.25
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.62 0.76 0.28 (0.92) 2.24
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- (0.04) --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- (0.20) -- --
---------- ---------- ---------- ---------- -------------
Total distributions................. (1.94) (0.99) (0.44) (0.99) --
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 7.71% 8.67% 3.15% (8.36)% 25.63%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 56,023 $ 64,102 $ 69,654 $ 71,794 $ 30,745
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%(a)
Without expense reductions............ (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.34% 2.45% 2.35% 2.35% 2.4%(a)
Without expense reductions............ 2.47% 2.56% 2.43% 2.40% N/A
Portfolio turnover rate++++............. 72% 74% 75% 96% 90%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE> 381
GT GLOBAL INTERNATIONAL GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------
YEAR ENDED DECEMBER JUNE 1, 1995
31, TO
---------------------- DECEMBER 31,
1997 (D) 1996 (D) 1995
---------- ---------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.01 $ 9.11 $ 8.49
---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.07 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.65 0.87 1.03
---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.72 0.89 1.06
---------- ---------- -------------
Distributions to shareholders:
From net investment income............ (0.07) -- --
From net realized gain on
investments.......................... (1.94) (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- -- (0.20)
---------- ---------- -------------
Total distributions................. (2.01) (0.99) (0.44)
---------- ---------- -------------
Net asset value, end of period.......... $ 7.72 $ 9.01 $ 9.11
---------- ---------- -------------
---------- ---------- -------------
Total investment return (c)............. 8.53% 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 284 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.70% 0.21% 0.59%(a)
Without expense reductions............ 0.57% 0.10% 0.51%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.34% 1.45% 1.35%(a)
Without expense reductions............ 1.47% 1.56% 1.43%(a)
Portfolio turnover rate++++............. 72% 74% 75%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0269 $ 0.0267 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F13
<PAGE> 382
GT GLOBAL INTERNATIONAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global International Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
Company has eight series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
F14
<PAGE> 383
GT GLOBAL INTERNATIONAL GROWTH FUND
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately
$13,985,826 were on loan to brokers. The loans were secured by cash collateral
of $14,709,765, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $277,743. Fees received from
securities loaned were used to reduce the Fund's custodian and administrative
expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTION TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
F15
<PAGE> 384
GT GLOBAL INTERNATIONAL GROWTH FUND
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
the GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $3,563,759 with a weighted average interest rate of 6.32%. Interest expense
for the year ended December 31, 1997 was $18,147, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $11,166
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. During the year ended December
31, 1997, GT Global collected CDSC's in the amount of $6,515. GT Global also
makes ongoing shareholder servicing and trail commission payments to dealers
whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $351,900. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, and 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer
F16
<PAGE> 385
GT GLOBAL INTERNATIONAL GROWTH FUND
agent services, GT Services receives an annual maintenance fee of $17.50 per
account, a new account fee of $4.00 per account, a per transaction fee of $1.75
for all transactions other than exchanges and a per exchange fee of $2.25. GT
Services also is reimbursed by the Fund for its out-of-pocket expenses for such
items as postage, forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $157,702,649 and $236,135,186, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 40,276,923 $ 372,306,238 122,327,179 $ 1,141,723,541
Shares issued in connection with
reinvestment of distributions......... 3,306,465 24,897,200 1,912,490 16,848,644
--------------- ------------------ ---------------- --------------------
43,583,388 397,203,438 124,239,669 1,158,572,185
Shares repurchased...................... (46,298,211) (433,072,839) (136,198,803) (1,274,970,792)
--------------- ------------------ ---------------- --------------------
Net decrease............................ (2,714,823) $ (35,869,401) (11,959,134) $ (116,398,607)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 25,433,444 $ 233,714,318 11,345,619 $ 103,852,840
Shares issued in connection with
reinvestment of distributions......... 1,311,193 9,480,349 678,796 5,819,941
--------------- ------------------ ---------------- --------------------
26,744,637 243,194,667 12,024,415 109,672,781
Shares repurchased...................... (26,525,397) (246,915,890) (12,451,843) (114,133,394)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. 219,240 $ (3,721,223) (427,428) $ (4,460,613)
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------------- --------------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ ---------------- --------------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,419,305 $ 23,205,242 2,233,829 $ 21,033,137
Shares issued in connection with
reinvestment of distributions......... 7,757 58,878 3,723 33,098
--------------- ------------------ ---------------- --------------------
2,427,062 23,264,120 2,237,552 21,066,235
Shares repurchased...................... (2,441,431) (23,309,340) (2,228,201) (21,036,679)
--------------- ------------------ ---------------- --------------------
Net increase (decrease)................. (14,369) $ (45,220) 9,351 $ 29,556
--------------- ------------------ ---------------- --------------------
--------------- ------------------ ---------------- --------------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $20,307 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2321 per share (representing an approximate total of
$4,876,007). The total amount of taxes paid by the Fund to such countries was
approximately $.0343 per share (representing an approximate total of $720,333).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$26,594,230 as a capital gain dividend for the fiscal year ended December 31,
1997.
F17
<PAGE> 386
GT GLOBAL INTERNATIONAL GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE> 387
GT GLOBAL INTERNATIONAL GROWTH FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
FUNDS, PLEASE CONTACT YOUR INVESTMENT ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING
CHARGES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET INVESTING.
INVESTORS SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Focuses on worldwide opportunities from the demand for consumer products and
services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Focuses on equity securities of U.S. companies believed to be undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government securities
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
GT GLOBAL FLOATING RATE FUND, INC.
Invests primarily in senior secured floating rate loans with the potential to
achieve a high level of current income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high-quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS.
<PAGE> 388
[LOGO]
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, California
94111-4624
DATED MATERIAL
PLEASE EXPEDITE
GT Global International Growth Fund
INTAR802030M
<PAGE> 389
APPENDIX V
[LOGO]
/ /
AIM INTERNATIONAL
GROWTH FUND
FORMERLY GT GLOBAL
INTERNATIONAL
GROWTH FUND
/ /
SEMIANNUAL REPORT
JUNE 30, 1998
INVEST WITH
DISCIPLINE-SM-
<PAGE> 390
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Message from the
Chairman............. 1
Report from the Fund
Managers and Key
Portfolio Holdings... 2
Financial
Statements........... F1
Views of the Fund's management
described in this report are as
of the date written. Portfolio
holdings and allocations are as
of June 30, 1998, unless
otherwise noted. These views,
portfolio holdings and
allocations may have changed
subsequently.
</TABLE>
<PAGE> 391
MESSAGE FROM THE CHAIRMAN
Dear Fellow Shareholder,
We are pleased to send you this semiannual report. In the time since you
received your last report, there have been a few changes. Your Fund is now a
part of The AIM Family of Funds-REGISTERED TRADEMARK- and has adopted the AIM
name. Thanks to a vote of approval by GT Global shareholders, A I M Advisors,
Inc., became the new investment advisor to GT Global Funds, effective
May 29, 1998.
We believe you'll enjoy many advantages as a member of The AIM Family of
Funds-REGISTERED TRADEMARK-. You'll have access to a greater variety of
investment choices, and you'll benefit from AIM's commitment to excellence in
shareholder service. Most of all, you'll be part of an expanded fund family
that is one of the largest and most respected in the industry. A complete
list of Funds included in the AIM family can be found inside the back cover
of this report. If you would like more information on any of these Funds, we
suggest you talk with your financial consultant to discuss their suitability
for your investment objectives, risk tolerance, and asset allocation.
Though the Funds are wearing a new name, your investments will continue to
seek their stated objectives and receive expert, professional management. In
the report that follows, you'll find commentary from managers you know, with
the depth of coverage you've come to expect.
Effective September 8, GT Global accounts will be fully integrated into the
AIM Family of Funds-REGISTERED TRADEMARK-. For account information, service,
and transactions, you will contact AIM's Client Services Department at
800-959-4246. Account information is also available on the AIM website at
www.aimfunds.com or on our automated AIM Investor Line at 800-246-5463.
Thank you for your past support of GT Global Funds. AIM is looking forward to
continuing a satisfying relationship with you and helping you reach your
financial goals.
Sincerely,
/s/ Charles T. Bauer
Chairman
The AIM Family of Funds-REGISTERED TRADEMARK-
1
<PAGE> 392
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital by investing
primarily in equity securities of companies located outside the U.S.
AIM INTERNATIONAL GROWTH FUND
PERFORMANCE SUMMARY
[EDGAR REPRESENTATION OF CHART]
<TABLE>
<CAPTION>
AIM INTERNATIONAL
GROWTH FUND CLASS A MSCI-EAFE Index
<S> <C> <C>
7/19/85 $ 9,525 $10,000
9,534.52 9,903.93
9,448.8 10,225.1
9,848.85 10,826.7
10,506.1 11,566.6
11,144.2 12,044.9
11,877.7 12,618.9
12,163.4 12,938.9
12,954 14,376.2
14,167.8 16,401.8
15,310.3 17,480.2
14,893.1 16,707
16,005.8 17,850.4
17,406.7 18,955.4
18,400.2 20,828.4
17,923.3 20,619.5
16,423.1 19,246.7
17,645.1 20,360.4
18,251.2 21,444.5
18,728.1 23,726.9
19,473.2 24,443
20,356 26,451.9
21,426.8 29,255.4
21,900.5 29,260.7
22,147.6 28,333.8
23,578.8 28,289.3
24,433.4 30,416.3
25,185 29,943
18,255.5 25,753
17,773.8 26,012.5
19,379.4 26,791.3
19,786.4 27,275.8
20,430.9 29,100.9
21,312.8 30,895.7
21,832.9 31,350.4
21,403.2 30,352.4
21,267.5 29,558.6
21,459.7 30,492.1
20,747.4 28,515.5
21,267.5 29,767.1
22,330.4 32,321.1
22,929.6 34,253.1
23,137.9 34,450.2
24,310.7 35,063.4
24,686.4 35,250.4
25,176.1 34,565.3
26,166.7 34,892.8
25,882.1 33,000.4
25,745.4 32,452.2
27,544.5 36,534.2
28,626.3 34,897.9
29,787.7 36,494
28,455.5 35,034.9
29,685.2 36,803.3
32,060.3 38,170.1
31,540.4 36,757.5
30,673.9 34,199.8
31,089.8 30,644.1
30,258 30,409
31,817.6 33,888
32,476.2 33,597.6
33,585.3 34,079.6
30,361.9 30,779.4
27,207.9 26,498.8
28,802.2 30,636.3
27,970.4 28,837.9
27,473.5 29,316.3
28,070.8 30,272.7
29,862.5 33,526.8
30,389.5 31,522.2
30,494.9 31,840.9
31,584 32,182.6
30,389.5 29,826.2
31,513.7 31,299.7
30,740.8 30,671.7
31,408.3 32,409.6
31,548.9 32,877.1
12/31/91 30,073.3 31,351
31,104.5 32,979.9
31,175.6 32,285.1
31,709.5 31,138.4
30,677.4 29,091.4
31,531.5 29,237.1
33,560.1 31,203
32,385.7 29,733.4
30,997.7 28,981.9
30,713 30,809.6
29,218.3 30,210.9
29,147.1 28,635.4
29,325 28,913.7
29,289.9 29,072
29,075.8 29,077.1
29,503.9 29,964
31,002.3 32,584.6
32,500.7 35,685.9
32,964.5 36,448.3
32,500.7 35,888
33,713.7 37,152.6
35,675.9 39,166.6
36,995.9 39,482.1
35,354.8 36,039.2
39,314.8 38,649.7
41,740.8 41,925.7
40,242.4 41,818.2
37,317 40,025.9
37,852.1 41,733.1
37,602.4 41,502.4
37,317 42,098.2
38,494.3 42,512.3
40,420.8 43,528.2
38,815.3 42,166.8
39,029.4 43,580.8
37,352.6 41,495.9
36,255.6 41,765.4
33,488 40,170.9
32,578.6 40,065.9
32,657.7 42,576.1
33,646.1 44,188.7
33,567.1 43,673.3
33,962.4 42,919
36,453.3 45,602.7
36,611.4 43,874.2
37,085.9 44,742.4
36,453.3 43,551.2
36,334.6 44,774.4
37,660.9 46,589.8
38,324.5 46,792.1
38,366 46,962
38,988.1 47,971.2
39,817.7 49,377.7
39,361.4 48,480.8
39,693.2 48,765.5
38,117.1 47,352.4
38,863.7 47,468.4
39,402.9 48,741.4
39,278.5 48,254.8
40,854.6 50,186.8
41,154.3 49,553.3
41,062 47,830.5
41,154.3 48,624.3
41,385 48,812.4
41,938.6 49,083.2
43,645.7 52,289.4
45,260.5 55,184.9
46,460 56,089.1
43,784.1 51,911.6
47,106 54,831.4
43,368.9 50,628.7
43,230.4 50,124.4
44,656.9 50,573
44,598.7 52,897.7
48,616 56,304.2
50,362.7 58,050.6
51,061.4 58,523.3
49,722.3 58,252.5
6/30/98 58,631 49,265
</TABLE>
The chart above shows the performance of AIM International Growth Fund
Class A shares since the Fund's inception, versus the MSCI EAFE Index.
This represents a cumulative return of 392.65% and an average annual
total return of 13.11% for the Fund. The chart assumes a hypothetical
$10,000 initial investment in the Fund's Class A shares and reflects
all Fund expenses and the maximum 5.50% sales charge. A $10,000
investment in the Fund's Class B shares at inception on April 1, 1993,
would have been valued at $15,298 on June 30, 1998. This figure reflects
all Fund expenses and the applicable contingent deferred sales charge
(5% in the first year, decreasing to 0% at the beginning of the seventh
year), assuming complete redemption at the end of the period. A $10,000
investment in Advisor Class shares at inception on June 1, 1995, would
have been worth $14,646 on June 30, 1998.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS %(1)
JUNE 30, 1998
SHARE CLASS WITHOUT SALES CHARGE(2) WITH SALES CHARGE
1-YEAR 5-YEAR 10-YEAR LOF 1-YEAR 5-YEAR 10-YEAR LOF
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A(3) 9.60 8.82 8.84 13.59 3.57 7.60 8.22 13.11
CLASS B(3) 8.97 8.13 N/A 8.57 4.67 7.87 N/A 8.44
ADVISOR CLASS(4) 9.16 N/A N/A 13.19 N/A N/A N/A N/A
</TABLE>
HISTORICAL PERFORMANCE(2)
ANNUAL TOTAL RETURNS % (LAST 10 YEARS)
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A 19.39 38.56 -14.31 13.22 -5.83 34.23 -7.78 3.88 9.28 8.51
CLASS B N/A N/A N/A N/A N/A 25.633 -8.36 3.15 8.67 7.71
</TABLE>
(1)Figures assume reinvestment of all dividends and capital gains
distributions at net asset value.
(2)Performance data do not reflect the maximum 5.50% sales charge and the
contingent deferred sales charge for Class A and Class B shares,
respectively, which, if included, would have reduced performance quoted.
(3)The Fund began operations (Class A shares) on July 19, 1985; Class B
shares commenced on April 1, 1993.
(4)The Fund began offering Advisor Class shares on June 1, 1995. Advisor
Class shares are not sold directly to the general public. They are only
available through certain employee benefit plans, financial institutions and
other entities that have entered into specific agreements with the Fund's
distributor. Please see the Fund's prospectus for more complete information.
The above data represent past performance of the Fund's shares, which does
not guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
From time to time, the Fund's investment advisor may waive some fees and/or
reimburse some expenses, without which performance would be lower. Waivers
and reimbursements are subject to change.
2
<PAGE> 393
INTERVIEW WITH PORTFOLIO MANAGEMENT TEAM
Q HOW DID THE FUND PERFORM?
A The world's financial markets have been severely tested in recent months by
the barrage of negative news from Asia, with Japan's weakening economy
producing heightened investor concerns throughout the region. Nonetheless, in
an impressive showing, stock prices in Europe continued to climb to record
highs, supported by a positive macroeconomic background. The robust nature of
European stock markets and the protracted bull market in the U.S. have been
the key positives in global investing so far in 1998.
In a mixed global environment, the Fund's Class A shares returned 11.08% over
the six-month period ended June 30, 1998 excluding sales charges. Total
return for Class B shares for the same period was 10.72% excluding sales
charges. The Morgan Stanley Capital International Europe, Australia and the
Far East (MSCI-EAFE) Index(5) returned 15.93% over the same period.
Despite the lag in the Fund's returns relative to the index over the shorter
term, the Fund has continued to outperform over the one- and three-year
periods based on total returns. Over the six-month review period, the Fund's
underweighted position in Germany and lack of holdings in Spain, caused the
Fund to trail the index. Stock selection in Italy also contributed to
relative underperformance. In particular, the Fund's holdings of ENI and
Telecom Italia underperformed the market. ENI, an energy conglomerate,
performed poorly with the correction in oil prices, and Telecom Italia
experienced weak returns as a result of concerns over a transition in
management.
Q WHAT'S DRIVING EUROPEAN MARKETS?
A The Fund continues to benefit from a number of factors fueling European
markets. While European economies are steaming ahead, European corporations
have embraced the challenge to become more globally competitive. Corporations
are trimming down, becoming more efficient, and focusing on ways to add value
to shareholders. The deep structural changes these corporations are making
have spurred corporate profitability and earnings growth.
EUROPEAN MARKETS HAVE BEEN RIDING HIGH ON AN UNPRECEDENTED WAVE OF GROWTH.
Consolidation through mergers and acquisitions has also been very widespread.
Many companies are looking farther ahead to when monetary union will be more
established. The rewards to companies that can consolidate their positions
and dominate a market across Europe are potentially far higher than for those
that only maintain their local franchises.
Overall, a new European culture that favors investing is also contributing to
the market surge. Historically bank savers, Europeans are now turning to
equities, helping markets become broader, larger and more liquid.
Q DID YOU IMPLEMENT ANY CHANGES IN THE PORTFOLIO DURING THE SIX-MONTH PERIOD?
A Our investment strategy remains essentially unchanged. In an environment of
disinflation, we are looking for companies with the ability to maintain
prices and margins in the face of relentless competition. This approach leads
us to prefer world-class companies in the UK, where we find media and
financial services stocks attractive.
We are also bullish on the outlook for the stock markets of Australia and New
Zealand, and slightly increased our allocation to this region over the
period. We believe corporate profits are set to recover at a time when equity
valuations are relatively attractive. We are, however, avoiding stocks
exposed to softness in commodity prices.
While we continue to hold particular world-class stocks in continental Europe
(especially in media, telecommunications, pharmaceuticals and service
industries such as management consulting), we have been reducing our
weighting to this region. After a very strong bull run, valuations now appear
to discount the cyclical upturn in earnings. We are also
CONTINUED P.4
(5) The MSCI-EAFE World Index is a market value-weighted average of the
performance of 1,106 securities listed on 20 major world stock exchanges. It
includes the effect of reinvested dividends and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
3
<PAGE> 394
INTERVIEW WITH PORTFOLIO MANAGEMENT TEAM CONTINUED
concerned that many European bond markets are vulnerable to any setback in
European Economic and Monetary Union (EMU).
The Fund continues to maintain minimal exposure to Japan, where we feel the
government has not done nearly enough to restore the country's banking
system, economy and property market to health. We also remain pessimistic
about the outlook for the East Asian newly industrializing countries.
However, we have found selective opportunities in emerging markets elsewhere.
Q RELATIVE TO THE INDEX, HOW HAS THE FUND'S UNDERWEIGHTING IN JAPAN
CONTRIBUTED TO PERFORMANCE?
A The Fund has continued to benefit from its underweighted position in Japan.
With the Japanese banking system in disarray, we firmly believe, as we have
for some time, that political leaders need to shut down insolvent banks and
further address the tremendous number of bad loans. Moreover, the failure of
Japanese banks to provide the necessary amount of capital to get the economy
going has contributed to weakness.
Additionally, we believe the government should increase the money supply and
cut income and corporate taxes to stimulate domestic demand. Due to the lack
of confidence in their economy and financial institutions, many Japanese are
hoarding cash instead of spending it.
In this economic environment we continue to believe four kinds of stocks may
grow: those that can take advantage of major trends, such as the graying of
Japan; beneficiaries of the yen's long-term weakness; companies entering new
markets; and businesses that can maintain pricing power. Within this
framework, we have identified such companies as Canon, Inc., Asahi Breweries
and Takeda Chemical Industries, a leading pharmaceutical manufacturer.
Q WHAT ARE YOUR EXPECTATIONS FOR THE FUND OVER THE REMAINDER OF THE YEAR?
A In general, we expect to continue focusing on high-quality companies that
provide broad portfolio diversification, with a goal of achieving predictable
and consistent returns.
More specifically, we believe the Fund is well positioned to take advantage
of opportunities in the European marketplace during the rest of this year,
where consolidation and restructuring will continue to be the key themes.
Most European companies have a long way to go before they can provide the
kind of returns investors expect from U.S. companies, but many companies are
committed to streamlining operations and improving profitability. We predict
inflation will remain subdued and European economies will strengthen. Long
term, we will be watching EMU to see how markets are affected.
The Fund is likely to remain conservatively positioned in Asia, with an
underweighted position in Japan and limited exposure to the rest of the
region. Given the severity of Asia's problems, we expect markets there to
remain volatile.
In Latin America, we sold off our small position in Mexico, while continuing
to maintain an exposure to Brazil where our current stock selection
concentrates on privatization plays. These companies tend to be less exposed
to the economy, which has been sluggish recently, yet are positively affected
by progress on political reform and privatization. We believe these stocks
should also benefit from any further recovery in sentiment toward the country.
<TABLE>
<CAPTION>
SECTOR ALLOCATION OF NET ASSETS %
JUNE 30, 1998
<S> <C>
Finance 32.3
Services 22.9
Consumer Non-Durables 10.8
Energy 9.8
Health Care 8.9
Capital Goods 4.6
Consumer Durables 3.6
Technology 1.6
Material/Basic Industry 1.3
Multi-Industry/Misc. 0.6
Short Term & Other 3.6
</TABLE>
A complete listing of holdings and allocations may be found in the Investment
Portfolio section of this report.
4
<PAGE> 395
AIM INTERNATIONAL GROWTH FUND
<TABLE>
<CAPTION>
GEOGRAPHIC ALLOCATION OF NET ASSETS %
JUNE 30, 1998
<S> <C>
UK 30.3
Switzerland 10.5
Japan 7.4
Netherlands 7.2
Sweden 6.8
Australia 6.7
France 5.0
Italy 3.8
U.S. 3.6
Brazil 2.6
Germany 2.1
Finland 2.0
New Zealand 2.0
Portugal 1.8
Hong Kong 1.6
Norway 1.6
Canada 1.1
Hungary 1.0
India 0.9
Luxembourg 0.9
South Africa 0.5
Singapore 0.4
Korea 0.2
</TABLE>
Allocations will change based on current market conditions.
<TABLE>
<CAPTION>
KEY PORTFOLIO HOLDINGS(6) % of
Country Net Assets
<S> <C> <C>
UBS AG Switzerland 3.1
TELECOMM ITALIA SPA Italy 2.7
ORANGE PLC UK 2.6
EMI GROUP PLC UK 2.4
NORDBANKEN HOLDING AB Sweden 2.4
VODAFONE GROUP PLC UK 2.4
AUSTRALIA & NEW ZEALAND BANKING GROUP LTD. Australia 2.2
ABBEY NATIONAL PLC UK 2.1
NESTLE S.A. Switzerland 2.1
ROCHE HOLDING AG Switzerland 2.1
</TABLE>
(6) There is no assurance the Fund will continue to hold these or any other
securities mentioned in this report.
5
<PAGE> 396
AIM
INTERNATIONAL
GROWTH FUND
(FORMERLY
GT GLOBAL
INTERNATIONAL
GROWTH FUND)
FINANCIAL
STATEMENTS
<PAGE> 397
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (32.3%)
UBS AG - Registered-/- .................................... SWTZ 16,213 $ 6,033,399 3.1
BANKS-MONEY CENTER
Nordbanken Holding AB ..................................... SWDN 640,020 4,697,468 2.4
BANKS-REGIONAL
Australia & New Zealand Banking Group Ltd. ................ AUSL 625,600 4,327,073 2.2
BANKS-REGIONAL
Abbey National PLC ........................................ UK 235,000 4,178,911 2.1
BANKS-SUPER REGIONAL
Royal & Sun Alliance Insurance Group PLC .................. UK 387,000 4,003,114 2.1
INSURANCE - MULTI-LINE
Lloyds TSB Group PLC ...................................... UK 254,400 3,561,770 1.8
BANKS-REGIONAL
ForeningsSparbanken AB .................................... SWDN 116,030 3,493,783 1.8
BANKS-REGIONAL
ING Groep N.V. ............................................ NETH 51,236 3,357,259 1.7
BANKS-MONEY CENTER
Axa - UAP ................................................. FR 28,350 3,188,976 1.6
INSURANCE - MULTI-LINE
Schroders PLC ............................................. UK 114,000 2,942,795 1.5
BANKS-MONEY CENTER
Zurich Versicherungsgesellschaft .......................... SWTZ 4,439 2,835,149 1.5
INSURANCE - MULTI-LINE
National Westminster Bank PLC ............................. UK 136,000 2,432,059 1.2
BANKS-MONEY CENTER
M & G Group PLC ........................................... UK 83,500 2,255,155 1.2
INVESTMENT MANAGEMENT
Royal Bank of Canada ...................................... CAN 34,200 2,056,601 1.1
BANKS-REGIONAL
CGU PLC ................................................... UK 110,000 2,053,431 1.1
INSURANCE - MULTI-LINE
Banque Nationale de Paris ................................. FR 24,379 1,992,196 1.0
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 79,520 1,945,020 1.0
BANKS-MONEY CENTER
Safra Republic Holdings S.A.{\/} .......................... LUX 24,400 1,830,000 0.9
OTHER FINANCIAL
State Bank of India Ltd. - Reg. S GDR-/- {c} {\/} ......... IND 144,410 1,704,038 0.9
BANKS-REGIONAL
BPI-SGPS S.A. ............................................. PORT 44,210 1,427,914 0.7
BANKS-MONEY CENTER
Nichiei Co., Ltd. ......................................... JPN 18,000 1,228,900 0.6
OTHER FINANCIAL
United Overseas Bank Ltd. - Foreign ....................... SING 222,300 691,190 0.4
BANKS-MONEY CENTER
Kokusai Securities Co., Ltd. .............................. JPN 41,000 406,234 0.2
SECURITIES BROKER
Kookmin Bank-/- ........................................... KOR 99,604 370,789 0.2
BANKS-MONEY CENTER
------------
63,013,224
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F1
<PAGE> 398
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (22.9%)
Telecom Italia SpA ........................................ ITLY 708,900 $ 5,183,248 2.7
TELEPHONE NETWORKS
Orange PLC-/- ............................................. UK 468,000 4,962,097 2.6
WIRELESS COMMUNICATIONS
EMI Group PLC ............................................. UK 540,000 4,724,662 2.4
LEISURE & TOURISM
Vodafone Group PLC ........................................ UK 366,500 4,653,920 2.4
WIRELESS COMMUNICATIONS
Telecom Corporation of New Zealand Ltd.: .................. NZ -- -- 2.0
TELEPHONE NETWORKS
Common .................................................. -- 891,300 3,679,954 --
Installment Receipts .................................... -- 52,600 112,415 --
Woolworths Ltd. ........................................... AUSL 1,029,000 3,354,185 1.7
RETAILERS-OTHER
EMAP PLC .................................................. UK 154,000 3,116,514 1.6
BROADCASTING & PUBLISHING
Reuters Group PLC ......................................... UK 272,000 3,111,037 1.6
BROADCASTING & PUBLISHING
Great Universal Stores PLC ................................ UK 182,000 2,400,735 1.2
RETAILERS-OTHER
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 21,400 2,336,613 1.2
TELEPHONE NETWORKS
Telecel - Comunicacaoes Pessoais S.A. ..................... PORT 11,746 2,087,499 1.1
WIRELESS COMMUNICATIONS
Koninklijke Ahold N.V. .................................... NETH 59,119 1,899,090 1.0
RETAILERS-FOOD
Ezaki Glico Co., Ltd. ..................................... JPN 270,000 1,536,776 0.8
RETAILERS-FOOD
Telstra Corp. Ltd. - Installment Receipts ................. AUSL 437,200 1,123,810 0.6
TELEPHONE NETWORKS
Vendex International N.V. ................................. NETH 62 2,333 --
RETAILERS-OTHER
Fast Retailing Co., Ltd. .................................. JPN 44 414 --
RETAILERS-APPAREL
------------
44,285,302
------------
Consumer Non-Durables (10.8%)
Nestle S.A. - Registered .................................. SWTZ 1,881 4,028,587 2.1
FOOD
Diageo PLC ................................................ UK 278,000 3,295,709 1.7
BEVERAGES - ALCOHOLIC
Gucci Group - NY Registered Shares{\/} .................... NETH 47,900 2,538,700 1.3
TEXTILES & APPAREL
Foster's Brewing Group Ltd. ............................... AUSL 970,600 2,290,004 1.2
BEVERAGES - ALCOHOLIC
Asahi Breweries Ltd. ...................................... JPN 180,000 2,278,151 1.2
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ..................................... NETH 35,800 2,203,158 1.1
HOUSEHOLD PRODUCTS
United Biscuits (Holdings) PLC ............................ UK 509,000 2,039,740 1.0
FOOD
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE> 399
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Amway Japan Ltd. .......................................... JPN 125,000 $ 1,328,922 0.7
HOUSEHOLD PRODUCTS
South African Breweries Ltd. .............................. SAFR 44,200 910,878 0.5
BEVERAGES - ALCOHOLIC
------------
20,913,849
------------
Energy (9.8%)
Viag AG ................................................... GER 5,792 3,989,388 2.1
ELECTRICAL & GAS UTILITIES
Petroleum Geo-Services ASA-/- ............................. NOR 100,600 3,139,030 1.6
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ........................ UK 412,000 2,903,056 1.5
OIL
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 147,900 2,736,150 1.4
GAS PRODUCTION & DISTRIBUTION
Burmah Castrol PLC ........................................ UK 130,000 2,322,591 1.2
OIL
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 315,300 2,055,610 1.1
OIL
Coflexip - ADR{\/} ........................................ FR 30,260 1,849,643 0.9
OIL
------------
18,995,468
------------
Health Care (8.9%)
Roche Holding AG .......................................... SWTZ 409 4,019,567 2.1
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 535,095 3,987,079 2.1
PHARMACEUTICALS
Novartis AG ............................................... SWTZ 1,945 3,239,100 1.7
PHARMACEUTICALS
Astra AB "A" .............................................. SWDN 97,313 1,990,091 1.0
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 70,000 1,868,084 1.0
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR-/- {c} {\/} ................ HGRY 23,400 1,866,150 1.0
PHARMACEUTICALS
------------
16,970,071
------------
Capital Goods (4.6%)
Nokia Oyj "A" ............................................. FIN 52,600 3,889,325 2.0
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 14,440 2,940,455 1.5
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 90,000 2,050,336 1.1
OFFICE EQUIPMENT
------------
8,880,116
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE> 400
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (3.6%)
Volvo AB "B" .............................................. SWDN 106,320 $ 3,168,057 1.6
AUTOMOBILES
Mabuchi Motor Co., Ltd. ................................... JPN 31,000 1,972,951 1.0
AUTOMOBILES
Futuris Corp., Ltd. ....................................... AUSL 2,226,000 1,962,573 1.0
AUTO PARTS
------------
7,103,581
------------
Technology (1.6%)
Baan Company N.V.-/- {\/} ................................. NETH 42,920 1,534,390 0.8
SOFTWARE
Matsushita-Kotobuki Electronics Ltd. ...................... JPN 60,000 1,501,410 0.8
COMPUTERS & PERIPHERALS
------------
3,035,800
------------
Materials/Basic Industry (1.3%)
Akzo Nobel N.V. ........................................... NETH 11,570 2,573,767 1.3
------------
CHEMICALS
Multi-Industry/Miscellaneous (0.6%)
Shanghai Industrial Holdings Ltd. ......................... HK 486,000 1,144,821 0.6
MULTI-INDUSTRY
Vedior .................................................... NETH 61 1,731 --
MISCELLANEOUS
------------
1,146,552
------------ -----
TOTAL EQUITY INVESTMENTS (cost $161,426,444) ................ 186,917,730 96.4
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Trust Co.,
due July 1, 1998, for an effective yield of 5.70%,
collateralized by $10,640,000 U.S. Treasury Bills, 5.75%
due 12/31/98 (market value of collateral is $10,653,300,
including accrued interest) (cost $10,444,000) .......... 10,444,000 5.4
------------ -----
TOTAL INVESTMENTS (cost $171,870,444) * .................... 197,361,730 101.8
Other Assets and Liabilities ................................ (3,584,545) (1.8)
------------ -----
NET ASSETS .................................................. $193,777,185 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $172,933,198 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 35,868,141
Unrealized depreciation: (11,439,609)
-------------
Net unrealized appreciation: $ 24,428,532
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F4
<PAGE> 401
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS{d}
--------------------------------
SHORT-TERM
&
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY OTHER TOTAL
- -------------------------------------- ------------- ----- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 6.7 6.7
Brazil (BRZL/BRL) .................... 2.6 2.6
Canada (CAN/CAD) ..................... 1.1 1.1
Finland (FIN/FIM) .................... 2.0 2.0
France (FR/FRF) ...................... 5.0 5.0
Germany (GER/DEM) .................... 2.1 2.1
Hong Kong (HK/HKD) ................... 1.6 1.6
Hungary (HGRY/HUF) ................... 1.0 1.0
India (IND/INR) ...................... 0.9 0.9
Italy (ITLY/ITL) ..................... 3.8 3.8
Japan (JPN/JPY) ...................... 7.4 7.4
Korea (KOR/KRW) ...................... 0.2 0.2
Luxembourg (LUX/LUF) ................. 0.9 0.9
Netherlands (NETH/NLG) ............... 7.2 7.2
New Zealand (NZ/NZD) ................. 2.0 2.0
Norway (NOR/NOK) ..................... 1.6 1.6
Portugal (PORT/PTE) .................. 1.8 1.8
Singapore (SING/SGD) ................. 0.4 0.4
South Africa (SAFR/ZAR) .............. 0.5 0.5
Sweden (SWDN/SEK) .................... 6.8 6.8
Switzerland (SWTZ/CHF) ............... 10.5 10.5
United Kingdom (UK/GBP) .............. 30.3 30.3
United States (US/USD) ............... 3.6 3.6
----- ----- -----
Total ............................... 96.4 3.6 100.0
----- ----- -----
----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $193,777,185.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- ------------
<S> <C> <C> <C> <C>
British Pounds.......................... 5,170,795 0.59400 7/20/98 $ 48,055
British Pounds.......................... 4,771,542 0.60196 10/2/98 46,083
Deutsche Marks.......................... 2,198,262 1.74900 8/26/98 60,171
French Francs........................... 5,057,106 5.94360 8/6/98 74,464
Japanese Yen............................ 3,616,113 133.29000 7/7/98 135,106
Japanese Yen............................ 727,347 130.50000 8/6/98 38,937
Japanese Yen............................ 7,279,847 131.10000 8/12/98 347,918
Swiss Francs............................ 5,655,612 1.47700 9/21/98 96,571
-------------- ------------
Total Contracts to Sell (Receivable
amount $35,323,929).................. 34,476,624 847,305
-------------- ------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 17.79%.
Total Open Forward Foreign Currency Contracts................................... $ 847,305
------------
------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F5
<PAGE> 402
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $171,870,444) (Note 1)....................... $197,361,730
U.S. currency................................................................. $ 42
Foreign currencies (cost $43,627)............................................. 43,621 43,663
-------
Receivable for open forward foreign currency contracts (Note 1)........................ 847,305
Dividends and dividend withholding tax reclaims receivable............................. 611,952
Receivable for Fund shares sold........................................................ 44,949
Interest receivable.................................................................... 1,654
------------
Total assets......................................................................... 198,911,253
------------
Liabilities:
Payable for Fund shares repurchased.................................................... 4,495,643
Payable for securities purchased....................................................... 167,496
Payable for investment management and administration fees (Note 2)..................... 157,585
Payable for transfer agent fees (Note 2)............................................... 87,461
Payable for service and distribution expenses (Note 2)................................. 84,627
Payable for printing and postage expenses.............................................. 61,636
Payable for custodian fees............................................................. 29,469
Payable for professional fees.......................................................... 25,276
Payable for Trustees' fees and expenses (Note 2)....................................... 3,505
Payable for registration and filing fees............................................... 3,270
Payable for fund accounting fees (Note 2).............................................. 2,807
Other accrued expenses................................................................. 15,293
------------
Total liabilities.................................................................... 5,134,068
------------
Net assets............................................................................... $193,777,185
------------
------------
Class A:
Net asset value and redemption price per share ($143,957,678 DIVIDED BY 16,887,447 shares
outstanding)............................................................................ $ 8.52
------------
------------
Maximum offering price per share (100/94.5 of $8.52) *................................... $ 9.02
------------
------------
Class B:+
Net asset value and offering price per share ($49,567,348 DIVIDED BY 6,072,995 shares
outstanding)............................................................................ $ 8.16
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($252,159
DIVIDED BY 29,471 shares outstanding)................................................... $ 8.56
------------
------------
Net assets consist of:
Paid in capital (Note 4)............................................................... $147,699,757
Undistributed net investment income.................................................... 736,445
Accumulated net realized gain on investments and foreign currency transactions......... 19,005,373
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................ 844,324
Net unrealized appreciation of investments............................................. 25,491,286
------------
Total -- representing net assets applicable to capital shares outstanding................ $193,777,185
------------
------------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE> 403
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $288,274)............................... $ 2,361,211
Interest income............................................................................ 322,812
Securities lending income.................................................................. 171,562
-----------
Total investment income.................................................................. 2,855,585
-----------
Expenses:
Investment management and administration fees (Note 2)..................................... 996,492
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 261,811
Class B..................................................................... 270,170 531,981
-----------
Transfer agent fees (Note 2)............................................................... 325,600
Custodian fees............................................................................. 81,050
Professional Fees.......................................................................... 55,029
Registration and filing fees............................................................... 51,200
Printing and postage expenses.............................................................. 42,250
Fund accounting fees (Note 2).............................................................. 27,640
Trustees' fees and expenses (Note 2)....................................................... 6,516
Other expenses (Note 1).................................................................... 8,219
-----------
Total expenses before reductions......................................................... 2,125,977
-----------
Expense reductions (Note 5)............................................................ (6,837)
-----------
Total net expenses....................................................................... 2,119,140
-----------
Net investment income........................................................................ 736,445
-----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 13,546,039
Net realized gain on foreign currency transactions............................ 2,112,549
-----------
Net realized gain during the period...................................................... 15,658,588
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (710,893)
Net change in unrealized appreciation of investments.......................... 8,535,197
-----------
Net unrealized appreciation during the period............................................ 7,824,304
-----------
Net realized and unrealized gain on investments and foreign currencies....................... 23,482,892
-----------
Net increase in net assets resulting from operations......................................... $24,219,337
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE> 404
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
---------------- -----------------
Decrease in net assets
Operations:
Net investment income......................................................... $ 736,445 $ 427,766
Net realized gain on investments and foreign currency transactions............ 15,658,588 38,105,893
Net change in unrealized appreciation (depreciation) on translation of assets
and liabilities in foreign currencies........................................ (710,893) 286,534
Net change in unrealized appreciation (depreciation) of investments........... 8,535,197 (14,668,685)
---------------- -----------------
Net increase in net assets resulting from operations........................ 24,219,337 24,151,508
---------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.................................................... -- (425,877)
From net realized gain on investments......................................... -- (29,789,043)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... -- (10,955,953)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.................................................... -- (1,888)
From net realized gain on investments......................................... -- (56,864)
---------------- -----------------
Total distributions......................................................... -- (41,229,625)
---------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.............................. 479,246,906 663,662,225
Decrease from capital shares repurchased...................................... (514,139,082) (703,298,069)
---------------- -----------------
Net decrease from capital share transactions................................ (34,892,176) (39,635,844)
---------------- -----------------
Total decrease in net assets.................................................... (10,672,839) (56,713,961)
Net assets:
Beginning of period........................................................... 204,450,024 261,163,985
---------------- -----------------
End of period *............................................................... $ 193,777,185 $ 204,450,024
---------------- -----------------
---------------- -----------------
* Includes undistributed net investment income of.............................. $ 736,445 $ --
---------------- -----------------
---------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE> 405
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ----------------------------------------------------------
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.04 0.03 (0.01) 0.03 (0.04) 0.03
Net realized and unrealized gain
(loss) on investments................ 0.81 0.69 0.84 0.32 (0.82) 2.78
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.85 0.72 0.83 0.35 (0.86) 2.81
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.03) -- -- (0.04) --
From net realized gain on
investments.......................... -- (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- -- (0.20) -- --
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (1.97) (0.99) (0.44) (0.99) --
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.52 $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.08%(b) 8.51% 9.28% 3.88% (7.78)% 34.23%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 143,958 $ 148,143 $ 196,601 $ 308,816 $ 430,701 $ 523,397
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.89%(a) 0.35% (0.14)% 0.24% (0.04)% 0.3%
Without expense reductions............ 0.88%(a) 0.22% (0.25)% 0.16% (0.09)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.90%(a) 1.69% 1.80% 1.70% 1.70% 1.80%
Without expense reductions............ 1.91%(a) 1.82% 1.91% 1.78% 1.75% N/A
Portfolio turnover rate++++............. 51%(a) 72% 74% 75% 96% 90%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F9
<PAGE> 406
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED APRIL 1, 1993
JUNE 30, YEAR ENDED DECEMBER 31, TO
1998 ---------------------------------------------- DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995 1994 1993 (D)
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.01 (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain
(loss) on investments................ 0.79 0.65 0.83 0.32 (0.82) 2.25
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 0.80 0.62 0.76 0.28 (0.92) 2.24
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- (0.04) --
From net realized gain on
investments.......................... -- (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on
investments.......................... -- -- -- (0.20) -- --
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (1.94) (0.99) (0.44) (0.99) --
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 8.16 $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 10.72%(b) 7.71% 8.67% 3.15% (8.36)% 25.63%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 49,567 $ 56,023 $ 64,102 $ 69,654 $ 71,794 $ 30,745
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.24%(a) (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%(a)
Without expense reductions............ 0.23%(a) (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.55%(a) 2.34% 2.45% 2.35% 2.35% 2.4%(a)
Without expense reductions............ 2.56%(a) 2.47% 2.56% 2.43% 2.40% N/A
Portfolio turnover rate++++............. 51%(a) 72% 74% 75% 96% 90%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F10
<PAGE> 407
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, JUNE 1, 1995
JUNE 30, TO
1998 ------------------------ DECEMBER 31,
(UNAUDITED) (D) 1997 (D) 1996 (D) 1995
-------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 7.72 $ 9.01 $ 9.11 $ 8.49
-------------- ----------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.05 0.07 0.02 0.03
Net realized and unrealized gain
(loss) on investments................ 0.79 0.65 0.87 1.03
-------------- ----------- ----------- -------------
Net increase (decrease) from
investment operations.............. 0.84 0.72 0.89 1.06
-------------- ----------- ----------- -------------
Distributions to shareholders:
From net investment income............ -- (0.07) -- --
From net realized gain on
investments.......................... -- (1.94) (0.99) (0.24)
In excess of net realized gain on
investments.......................... -- -- -- (0.20)
-------------- ----------- ----------- -------------
Total distributions................. -- (2.01) (0.99) (0.44)
-------------- ----------- ----------- -------------
Net asset value, end of period.......... $ 8.56 $ 7.72 $ 9.01 $ 9.11
-------------- ----------- ----------- -------------
-------------- ----------- ----------- -------------
Total investment return (c)............. 10.75 %(b) 8.53% 9.79% 12.56%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 252 $ 284 $ 461 $ 381
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 1.24 %(a) 0.70% 0.21% 0.59%(a)
Without expense reductions............ 1.23 %(a) 0.57% 0.10% 0.51%(a)
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.55 %(a) 1.34% 1.45% 1.35%(a)
Without expense reductions............ 1.56 %(a) 1.47% 1.56% 1.43%(a)
Portfolio turnover rate++++............. 51 %(a) 72% 74% 75%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F11
<PAGE> 408
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM International Growth Fund (the "Fund" formerly, GT Global International
Growth Fund), is a separate series of AIM Growth Series (the "Trust" formerly,
G.T. Global Growth Series ). The Trust is organized as a Delaware business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as a diversified, open-end management investment company. The Trust has
eight series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
F12
<PAGE> 409
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $21,489,285
were on loan to brokers. The loans were secured by cash collateral of
$22,551,564, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to 120 days
or less. For the period ended June 30, 1998, the Fund received securities
lending fees of $171,562.
F13
<PAGE> 410
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restrictions securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $1,201,545 with a weighted average interest rate of 6.26%. Interest expense
for the period ended June 30, 1998 was $2,297, and is included in "Other
expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales were made. For the period ended June 30, 1998, AIM
Distributors and GT Global retained $2,985 and $2,625, respectively, of such
sales charges. Purchases of Class A shares exceeding $500,000 may be subject to
a contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No CDSC's were collected for the period ended
June 30, 1998. AIM Distributors also
F14
<PAGE> 411
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
makes ongoing shareholder servicing and trail commission payments to dealers
whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $12,093 and $118,618,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which the Fund compensates AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services is also
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $48,153,983 and $72,265,377, respectively. There were no purchases or
sales of U.S. government obligations by the Fund during the period.
F15
<PAGE> 412
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 40,426,588 $335,523,591 40,276,923 $372,306,238
Shares issued in connection with reinvestment of
distributions................................................ -- -- 3,306,465 24,897,200
----------- ------------ ----------- ------------
40,426,588 335,523,591 43,583,388 397,203,438
Shares repurchased............................................. (42,859,903) (357,980,924) (46,298,211) (433,072,839)
----------- ------------ ----------- ------------
Net decrease................................................... (2,433,315) $(22,457,333) (2,714,823) $(35,869,401)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
CLASS B
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 15,955,626 $125,312,223 25,433,444 $233,714,318
Shares issued in connection with reinvestment of
distributions................................................ -- -- 1,311,193 9,480,349
----------- ------------ ----------- ------------
15,955,626 125,312,223 26,744,637 243,194,667
Shares repurchased............................................. (17,489,434) (137,511,761) (26,525,397) (246,915,890)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (1,533,808) $(12,199,538) 219,240 $ (3,721,223)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
ADVISOR CLASS
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 2,272,018 $ 18,411,092 2,419,305 $ 23,205,242
Shares issued in connection with reinvestment of
distributions................................................ -- -- 7,757 58,878
----------- ------------ ----------- ------------
2,272,018 18,411,092 2,427,062 23,264,120
Shares repurchased............................................. (2,279,344) (18,646,397) (2,441,431) (23,309,340)
----------- ------------ ----------- ------------
Net decrease................................................... (7,326) $ (235,305) (14,369) $ (45,220)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $6,837 under these arrangements.
F16
<PAGE> 413
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
NOTES
- --------------------------------------------------------------------------------
<PAGE> 414
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
GROWTH FUNDS
AIM Aggressive Growth Fund(1)
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM Mid Cap Growth Fund(2)
AIM Select Growth Fund(3)
AIM Small Cap Equity Fund(2)
AIM Small Cap Opportunities Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM America Value Fund(2)
AIM Balanced Fund
AIM Charter Fund
INCOME FUNDS
AIM Floating Rate Fund(2)
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
TAX-FREE INCOME FUNDS
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
MONEY MARKET FUNDS
AIM Dollar Fund(2)
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
INTERNATIONAL GROWTH FUNDS
AIM Advisor International Value Fund
AIM Asian Growth Fund
AIM Developing Markets Fund(2)
AIM Emerging Markets Fund(2)
AIM Europe Growth Fund(2)
AIM European Development Fund
AIM International Equity Fund
AIM International Growth Fund(2)
AIM Japan Growth Fund(2)
AIM Latin American Growth Fund(2)
AIM New Pacific Growth Fund(2)
GLOBAL GROWTH FUNDS
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Worldwide Growth Fund(2)
GLOBAL GROWTH & INCOME FUNDS
AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund
GLOBAL INCOME FUNDS
AIM Global Government Income Fund(2)
AIM Global High Income Fund(2)
AIM Global Income Fund
AIM Strategic Income Fund(2)
THEME FUNDS
AIM Global Consumer Products and Services Fund(2)
AIM Global Financial Services Fund(2)
AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM New Dimension Fund(2)
(1)AIM Aggressive Growth Fund closed to new investors on June 5, 1997.
(2) Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former
GT Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select
Growth Fund. For more complete information about any AIM Fund, including
sales charges and expenses, obtain the appropriate prospectus(es) from your
financial consultant. Please read the prospectus(es) carefully before you
invest or send money.
[LOGO] www.aimfunds.com A I M Distributors, Inc. Invest with Discipline-SM-
<PAGE> 415
APPENDIX VI
GT GLOBAL
OVER 25 YEARS
OF INVESTING
WORLDWIDE
/ /
GT GLOBAL
WORLDWIDE
GROWTH FUND
/ /
ANNUAL REPORT
DECEMBER 31, 1997
[LOGO]
<PAGE> 416
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Message from the
Chairman............. 1
Report from the Fund
Managers and Key
Portfolio Holdings... 2
Report of Independent
Accountants.......... F1
Financial
Statements........... F2
Views of the Funds' management
described in this report are as
of the date written. Portfolio
holdings and allocations are as
of December 31, 1997, unless
otherwise noted. These views,
portfolio holdings and
allocations may have changed
subsequently.
</TABLE>
<PAGE> 417
MESSAGE FROM THE CHAIRMAN
Dear Shareholder,
Nineteen ninety-seven has been a challenging and exciting year. The volatility
of the market--and the resulting record highs and lows--has made investing a
sometimes awe-inspiring endeavor for investors and investment professionals
alike.
Across the GT Global family, our Funds have remained true to their investment
goals and objectives regardless of world events. Whether it be the recent
turmoil in the Asian markets, the privatization and reform underway across
eastern Europe, deregulation occurring in Latin America or the ups and downs of
the U.S. market, our Funds have maintained their focus. In fact, we believe
these changes are yielding new investment opportunities in both established
economies and dynamic new markets around the world. Looking forward to 1998, our
commitment is to continue to monitor world markets and seek additional ways to
capitalize on events as they unfold for the benefit of our shareholders.
In an effort to provide our customers easier access to information about the GT
Global Funds, we launched our website, www.gtglobal.com, during the latter part
of 1997. We hope to continually enhance the information it contains, from our
worldwide economic outlook, to fund price and performance reporting, to the
Millennium Minute message of the day. Used in conjunction with annual and
semiannual reports and your quarterly statement on our Funds, we hope it helps
you monitor your investments and achieve your financial goals.
Be assured that we will continue to strive to offer you the quality investment
products you need to build a well-diversified portfolio. As always, we
appreciate your continued confidence in our Funds. Should you or your adviser
have any questions regarding GT Global Funds, please call us at
800-824-1580. One of our representatives will be happy to assist you.
Sincerely,
/s/ William J. Guilfoyle
William J. Guilfoyle
Chairman of the Board and President
GT Global Funds
1
<PAGE> 418
GT GLOBAL WORLDWIDE GROWTH FUND
PERFORMANCE SUMMARY
[GRAPHIC]
INVESTMENT OBJECTIVE
The GT Global Worldwide Growth Fund seeks long-term growth of capital by
investing primarily in equity securities of companies in markets around the
world.
[GRAPH]
/ / GT GLOBAL WORLDWIDE GROWTH FUND CLASS A
/ / MSCI World Index
6/9/87 "$9,525" "$10,000"
"9,887" "9,718"
"10,449" "9,914"
"10,897" "10,502"
"11,059" "10,321"
"7,858" "8,570"
"7,763" "8,363"
"8,420" "8,727"
"8,525" "8,942"
"9,058" "9,462"
"9,087" "9,750"
"9,458" "9,874"
"9,315" "9,679"
"9,401" "9,667"
"9,439" "9,851"
"8,944" "9,311"
"9,011" "9,708"
"9,392" "10,356"
"9,611" "10,718"
"9,794" "10,817"
"10,361" "11,210"
"10,419" "11,142"
"10,717" "11,072"
"11,179" "11,329"
"11,304" "11,053"
"11,208" "10,931"
"12,045" "12,168"
"12,266" "11,875"
"12,564" "12,212"
"12,045" "11,807"
"12,516" "12,280"
"13,475" "12,677"
"13,099" "12,087"
"12,862" "11,571"
"12,971" "10,874"
"12,645" "10,719"
"13,722" "11,850"
"13,841" "11,768"
"14,246" "11,877"
"12,625" "10,767"
"11,458" "9,634"
"11,864" "10,535"
"11,834" "10,364"
"11,786" "10,583"
"12,135" "10,972"
"12,972" "11,990"
"13,231" "11,638"
"13,231" "11,731"
"13,769" "11,999"
"13,141" "11,260"
"13,888" "11,794"
"13,958" "11,758"
"13,998" "12,069"
"14,088" "12,267"
"13,420" "11,734"
"14,174" "12,590"
"14,224" "12,359"
"14,617" "12,148"
"14,305" "11,578"
"14,577" "11,741"
"15,030" "12,211"
"14,566" "11,804"
"14,415" "11,836"
"14,133" "12,126"
"13,720" "12,017"
10/31/92 "14,033" "11,694"
"14,274" "11,905"
"14,637" "12,004"
"14,971" "12,046"
"15,032" "12,334"
"15,790" "13,051"
"15,881" "13,658"
"16,488" "13,975"
"16,306" "13,860"
"16,721" "14,148"
"17,672" "14,799"
"17,621" "14,528"
"18,087" "14,930"
"17,237" "14,088"
"18,672" "14,780"
"19,602" "15,757"
"18,896" "15,556"
"17,774" "14,888"
"18,116" "15,351"
"18,020" "15,393"
"17,667" "15,353"
"18,127" "15,647"
"19,025" "16,121"
"18,565" "15,701"
"18,629" "16,150"
"17,870" "15,452"
"17,430" "15,605"
"16,285" "15,374"
"16,117" "15,601"
"16,229" "16,356"
"16,958" "16,929"
"17,127" "17,077"
"17,733" "17,075"
"18,878" "17,933"
"18,878" "17,537"
"19,416" "18,051"
"19,024" "17,770"
"19,203" "18,390"
"19,388" "18,931"
"19,687" "19,277"
"19,584" "19,398"
"19,929" "19,725"
"20,275" "20,192"
"20,194" "20,213"
"20,252" "20,319"
"19,468" "19,605"
"20,056" "19,834"
"20,494" "20,614"
"20,552" "20,761"
"21,359" "21,929"
"21,506" "21,581"
"21,686" "21,845"
"21,210" "22,100"
"21,068" "21,667"
"21,480" "22,379"
"22,497" "23,764"
"23,217" "24,953"
"24,878" "26,106"
"23,822" "24,363"
"25,251" "25,691"
"23,243" "24,343"
"23,063" "24,777"
12/31/97 "23,657" "25,083"
The chart above shows the performance of the GT Global Worldwide Growth Fund,
Class A shares, since the Fund's inception, versus the MSCI World Index. This
represents a cumulative return of 136.57% and an average annual total return of
8.49% for the Fund. The chart assumes a hypothetical $10,000 initial investment
in the Fund's Class A shares and reflects all Fund expenses and the maximum
4.75% sales charge. A $10,000 investment in the Fund's Class B shares at
inception on April 1, 1993, would have been valued at $14,280 on December 31,
1997. This figure reflects all Fund expenses and the applicable contingent
deferred sales charge (5% in the first year, decreasing to 0% after six years),
assuming complete redemption at the end of the period. A $10,000 investment in
Advisor Class shares at inception on June 1, 1995, would have been worth $13,947
on December 31, 1997.
AVERAGE ANNUAL TOTAL RETURNS%(1)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARE CLASS WITHOUT SALES CHARGE(2) WITH SALES CHARGE
1-YEAR 5-YEAR 10-YEAR LOF 1-YEAR 5-YEAR 10-YEAR LOF
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A(3) 10.00 10.08 10.88 9.00 4.78 9.01 10.34 8.49
CLASS B(3) 9.22 N/A N/A 8.06 5.02 N/A N/A 7.79
ADVISOR CLASS(4) 10.43 N/A N/A 13.73 N/A N/A N/A N/A
</TABLE>
HISTORICAL PERFORMANCE(2)
ANNUAL TOTAL RETURNS % (LAST 10 YEARS)
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A 16.31 37.59 -12.53 20.26 3.27 27.56 -6.65 11.23 10.92 10.00
CLASS B N/A N/A N/A N/A N/A 17.29(3) -7.32 10.52 10.16 9.22
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gains
distributions at net asset value.
(2) This performance data do not reflect the maximum 4.75% sales charge and the
contingent deferred sales charge for Class A and Class B shares,
respectively, which if included, would have reduced performance quoted.
(3) The Fund began operations on June 9, 1987; Class B shares commenced on
April 1, 1993.
(4) The Fund began offering Advisor Class shares on June 1, 1995. Advisor Class
shares are not sold directly to the general public. They are only available
through certain employee benefit plans, financial institutions and other
entities that have entered into specific agreements with GT Global. Please
see the Fund's prospectus for more complete information.
The above data represent past performance of the Fund's shares, which does not
guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
2
<PAGE> 419
INTERVIEW WITH PORTFOLIO MANAGER
MICHAEL LINDSELL
Q HOW DID THE FUND PERFORM?
A Concern over the likely scope of Asian weakness had a chilling impact on
equity markets worldwide in the fourth quarter. Some companies' preannouncements
of earnings disappointments spurred a flight to quality, as many investors
either channeled their holdings into large cap, liquid stocks-causing a slump in
performance of small and mid cap issues-or reduced equity positions to buy
bonds.
Taking into account this difficult environment, the Fund's Class A shares
returned 10.00% (4.78% including the maximum 4.75% sales charge) over the
12-month period ended December 31, 1997. Total return for Class B shares for
the same period was 9.22% (5.02% including the maximum 5% contingent deferred
sales charge). The Morgan Stanley Capital International (MSCI) World Index(5)
returned 16.23% over the same period.
Q WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE RELATIVE TO THE INDEX?
A Although global equity markets were considerably more volatile in the
second half of 1997, during this period the Fund enjoyed a significant
turnaround in performance relative to the index. Over the first half of the
year, however, the Fund underperformed largely because of underweighting to and
security selections in the U.S. Security selection also hindered performance in
the UK, where the Fund held an overweighted position. While we continue to find
UK companies attractive, over the 12-month period the Fund experienced several
disappointments, including Premier Farnell,(6) the electrical distributor, which
was negatively impacted by weak European growth.
The Fund also had small exposure to two Asian markets-South Korea and Thailand-
markets not represented in the index. Although the Fund held only a few
selective companies in these markets, severe declines in share prices over the
last half of the year impacted Fund performance.
On the other hand, the Fund's overweighting to several continental European
countries-Sweden, Norway and Italy, in particular-contributed positively to
performance. As in the U.S., most continental bourses continued to advance,
thanks to a rally in bond markets and low inflation. We were also significantly
underweighted in Japan relative to the index. We invested cautiously in this
difficult market and benefited from security selection there. Similarly, the
Fund's performance was buoyed by our allocation to Brazil and Mexico, neither of
which are represented in the index. These markets posted solid returns for the
year, although they were tempered during the final
few months.
Q WHAT CHANGES DID YOU IMPLEMENT IN THE PORTFOLIO DURING THE YEAR?
A We reduced a number of our European positions in favor of the U.S. European
markets have performed well and become increasingly expensive. We think current
valuations are generally too high, particularly in the context of upcoming
monetary union, which we believe will compound market instabilities. We also
introduced several smaller positions in eastern Europe, specifically the Czech
Republic and Hungary. We think this region has significant long-term potential,
as future trend economic growth rates are forecasted to surpass those of more
developed European countries. Many of these markets, however, may be vulnerable
to relatively greater volatility.
Additionally, we introduced a position in India. We feel the country's overall
economic environment is conducive to equity performance, with the potential for
interest rates and inflation to remain subdued. India is at a much earlier stage
of development than most Asian markets, and we are optimistic about continued
reform there.
CONTINUED P.4
(5) The MSCI World Index is a market value weighted average of the
performance of 1,560 securities listed on major world stock exchanges -
the U.S., Europe, Canada, Australia, New Zealand and the Far East. It
includes the effect of reinvested dividends and is measured in U.S.
dollars.
(6) Shares in Premier Farnell were sold prior to December 31, 1997.
Indices are unmanaged, not available for direct investment and do not
include the effects of sales charges and professional management fees.
3
<PAGE> 420
INTERVIEW WITH PORTFOLIO MANAGER CONTINUED
Q WHAT CONTRIBUTED TO IMPRESSIVE U.S. STOCK MARKET RETURNS?
A The stock market continued its remarkable upsurge in 1997, reflecting what
has been an almost ideal environment for equities-steady GDP growth, declining
inflation and firm Federal Reserve policy. Gains in 1997 were all the more
impressive given the extended length of the current seven year bull market,
concerns about a tightening labor market with rising wage costs, the periodic
threat of Federal Reserve tightening and toward year-end, the Asian currency
crisis.
Strong performance of the equity market was accompanied by higher volatility
than in the two previous years. In addition, better-than-expected economic
growth and resulting fears of higher interest rates clouded market prospects
during the first quarter. However, in the second and third quarters, moderating
growth and a continued deceleration of inflation reversed some of these fears,
resulting in a rally that broadened into small and mid capitalization issues
after three years of large cap leadership. October's collapse of the Thai baht
and the Korean won, however, touched off a period of volatility and led
investors back to larger cap issues, fueling modest gains for larger cap issues
as a whole in the fourth quarter.
Q WHAT ARE SOME OF THE IMPLICATIONS OF EUROPEAN MONETARY UNION IN 1998?
A We believe that monetary union is likely to go forward in May 1998. This
possibility was priced into bond and equity markets in 1997, as bond yields fell
in peripheral countries such as Spain to converge with German levels. At some
point, however, we believe EMU could potentially create serious structural
problems and interest rates would rise.
Similarly, if monetary union is delayed or canceled, we believe the impact would
be negative for Spain and Italy, where bond yields would rise sharply. However,
in the event of a rise in interest rates, we believe the Fund is well positioned
relative to the European market. The Fund currently has no exposure to Spanish
equities and is considerably underweighted in Italy relative to the index. The
Fund is also overweighted in the UK and the Netherlands, which we think could be
relative winners. We feel the Fund's substantial exposure to the UK offers good
value because its equity market is home to some excellent financial services and
health care companies.
Q RELATIVE TO THE INDEX, WHY IS THE FUND CONSIDERABLY UNDERWEIGHTED IN JAPAN?
A While we believe fundamental changes are likely to occur in 1998, our top-
down analysis suggests the year will continue to be a very difficult one for
Japan with limited economic growth. The course of the stock market rests on the
policy response of Japanese authorities. Clearly, Japan has the resources to
produce a domestic demand-led recovery, but we believe the policy response must
be rigorous, wide ranging and implemented quickly.
At the same time, more action by Japanese corporations is necessary. As yet,
remarkably little active restructuring is taking place in Japan. Although the
unemployment rate has recently been creeping up, it remains at relatively modest
levels. However, we look for this to change in 1998-99.
In addition, without policy action and corporate restructuring, we foresee no
substantial rally in the Japanese stock market; indeed, further falls are
possible. In this environment, we have continued to focus on companies we feel
can exploit major trends, such as the graying of Japan, companies that are
beneficiaries of the long-term weakness of the yen, companies entering new
markets and businesses that can maintain pricing power.
Q HOW DID AUSTRALASIAN MARKETS FARE?
A Despite our positive outlook, the second half of the year was disappointing
for investors in both Australia and New Zealand. The two stock markets fell by
15.25% and 18.15%, respectively, in U.S. dollars (based on MSCI country
indices). In the fourth quarter, foreign investors also had to bear the effects
of falls in both Australian and New Zealand dollars of around 10% against the
U.S. dollar.
During this time, two factors had additional impact on both countries. First,
many experts felt prospects for economic and corporate earnings growth would be
constrained by the financial crises in Asia, the destination of over half the
exports from both Australia and New Zealand. This view, which overlooked the
importance of foodstuffs exported to Asia,
CONTINUED P.5
4
<PAGE> 421
INTERVIEW WITH PORTFOLIO MANAGER CONTINUED
was prevalent despite growth in many sectors of the Australian economy remaining
robust through the third quarter.
Second, commodity prices had already been weakening. For example, the outlook
for base metals was clouded by developments in East Asia, while sales by central
banks (and falling inflation expectations) had caused the price of gold to
slide.
Q WHAT IS YOUR OUTLOOK OVER THE LONGER TERM?
A After seven years of solid economic growth, improving corporate profits and
a rising equity market in the U.S., our outlook for the stock market remains
positive. We believe the focus of U.S. corporate management on improving
profitability and competitiveness on a global basis should continue to drive
earnings. We expect weakness in Asia will moderate growth somewhat, but see
increasing potential for the Federal Reserve to ease interest rates later in
1998.
In Europe, although we reduced the Fund's weighting, we feel the portfolio is
well positioned to take advantage of opportunities in the European marketplace
over the coming year. We believe European markets will continue to provide
attractive returns boosted by consolidation and increasing emphasis on the
creation of shareholder value. Currently, the Fund is concentrated in companies
with visible earnings growth and those we believe have the ability to rerate
substantially against their global peers.
Conversely, as we enter 1998, we believe Asian recovery will take time and its
stock markets are likely to remain extremely volatile. At present, we anticipate
maintaining our Hong Kong presence and will continue to invest elsewhere on a
very selective basis.
ABOUT THE PORTFOLIO MANAGERS
ROGER YATES - Global Chief Investment Officer for Chancellor LGT Asset
Management since October 1997. Mr. Yates was International Chief Investment
Officer for Chancellor LGT from September '96 to October '97, and from '94 to
'96, he was Chief Investment Officer and Portfolio Manager for Europe and the
UK. Previously, Mr. Yates was an Investment Manager at Morgan Grenfell and
Director of their UK pension fund business. Prior to that, he worked for LGT
Asset Management (London) for seven years, and was appointed a director in 1986
and Chief Investment Officer for unit trusts in 1987. In 1994, he rejoined
Chancellor LGT. He received a bachelor's degree from Oxford University and
completed postgraduate research at Reading University.
MICHAEL LINDSELL - Head of investment strategy for Global Equities; Chief
Investment Officer, Japan, 1992-96. Previously, Mr. Lindsell was a director at
Warburg Asset Management from 1989 to 1992; Senior Fund Manager at Scimitar
Asset Management from 1985 to 1988; and Fund Manager, Lazard Brothers & Co. Ltd.
from 1982 to 1985. He received his B.Sc from Bristol University.
RICHARD COLLINS - Senior Equity Portfolio Manager and Managing Director since
1993. Previously, Mr. Collins spent 10 years at Scudder, Stevens & Clark. From
1970 to 1973, he was an oil and gas Analyst at Salomon Brothers.
Mr. Collins was an employee of Chancellor Capital Management until October 31,
1996, when LGT Asset Management merged with Chancellor. The resulting entity
was renamed Chancellor LGT Asset Management and is the investment manager to
GT Global Funds.
<TABLE>
<CAPTION>
GEOGRAPHIC ALLOCATION OF NET ASSETS %
1997 1996
DECEMBER 31 DECEMBER 31
<S> <C> <C>
Australia 5.2 3.0
Brazil 3.5 1.2
Czech Republic 1.1 N/A
France 2.6 4.1
Germany 1.1 4.2
Hong Kong 2.9 4.3
Hungary 1.2 N/A
India 1.2 N/A
Italy 1.3 2.7
Japan 5.6 8.2
Korea 0.2 0.8
Mexico 0.9 1.2
Netherlands 3.8 3.5
New Zealand 1.7 3.6
Norway 1.3 0.6
Portugal 2.2 1.2
Singapore 0.6 2.9
Spain N/A 2.5
Sweden 2.8 2.2
Switzerland 2.2 3.4
Thailand 0.3 1.3
United Kingdom 15.8 15.4
U.S. & Other 42.5 33.7
</TABLE>
Allocations will change based on current market conditions.
5
<PAGE> 422
SECTOR ALLOCATION OF NET ASSETS %
DECEMBER 31, 1997
Finance 26.9
Services 23.2
Health Care 10.3
Material/Basic Industry 8.3
Energy 6.1
Technology 5.2
Capital Goods 4.0
Consumer Durables 3.5
Consumer Non-Durables 3.4
Multi-Industry/Misc. 1.2
Short Term & Other 7.9
A complete listing of holdings and allocations may be found in the Financial
Statements section of this report.
<TABLE>
<CAPTION>
GT GLOBAL WORLDWIDE GROWTH FUND % of
KEY PORTFOLIO HOLDINGS(7) Country Net Assets
<S> <C> <C>
STUDENT LOAN MARKETING ASSOCIATION A financial intermediary serving the U.S. 2.9
education credit market, the company purchases and services student loans made
under federally sponsored student loan programs, and provides financial and
operational services to originators of such loans.
CITICORP The parent of Citibank, Citicorp provides a broad range of financial U.S. 2.6
services from over 3,200 locations in 98 countries and territories throughout
the world.
TRAVELERS GROUP, INC. Through its subsidiaries, Travelers offers multiline U.S. 2.5
insurance and financial and health care services, primarily to customers in the
United States.
CHASE MANHATTAN CORP. Chase Manhattan is a bank holding company providing U.S. 2.4
domestic and international financial services through various bank and non-bank
subsidiaries.
FEDERATED DEPARTMENT STORES, INC. The company operates more than 400 full-line U.S. 2.3
department stores and 150 specialty stores in 36 states.
BRISTOL MYERS SQUIBB CO. Researches, develops, manufactures and markets U.S. 2.3
prescription and non-prescription drugs, medical devices, health and skin care
products, toiletries and beauty aids. Product lines include cardiovascular
drugs, antibiotics, central nervous system drugs, and chemotherapeutic and
diagnostic agents.
COMPAQ COMPUTER CORP. Compaq designs, develops, manufactures and markets U.S. 2.2
personal computers for professional users and consumers.
PETROLEO BRASILEIRO S.A. (PETROBRAS) Produces oil and natural gas liquids Brazil 2.2
(mainly oil products and fuel alcohol) through approximately 7,258 active wells.
Petroleo also provides maritime freight services.
SERVICE CORPORATION INTERNATIONAL This company provides death care services U.S. 2.1
worldwide, as well as capital financing to independent funeral home and cemetery
operators.
INTEL CORP. Intel designs and manufactures microcomputer components and related U.S. 2.1
products, which are sold worldwide.
</TABLE>
Source: Bloomberg, January 1998
(7) There can be no assurance the Fund will continue to hold these securities.
6
<PAGE> 423
GT GLOBAL
WORLDWIDE
GROWTH FUND
FINANCIAL
STATEMENTS
<PAGE> 424
GT GLOBAL WORLDWIDE GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Worldwide Growth Fund, one of the funds organized as a series of GT
Global Growth Series, including the schedule of portfolio investments, as of
December 31, 1997, the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimated
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 the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Worldwide Growth Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998
F1
<PAGE> 425
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.9%)
Student Loan Marketing Association ........................ US 31,800 $ 4,424,175 2.9
OTHER FINANCIAL
Citicorp .................................................. US 31,600 3,995,420 2.6
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 70,500 3,798,187 2.5
INSURANCE - MULTI-LINE
Chase Manhattan Corp. ..................................... US 33,500 3,668,250 2.4
BANKS-MONEY CENTER
HSBC Holdings PLC ......................................... HK 104,000 2,563,593 1.7
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 235,000 2,365,435 1.6
INSURANCE - MULTI-LINE
Australia & New Zealand Banking Group Ltd. ................ AUSL 350,000 2,312,203 1.5
BANKS-REGIONAL
Nordbanken Holding AB-/- .................................. SWDN 398,006 2,251,426 1.5
OTHER FINANCIAL
Schroders PLC ............................................. UK 70,000 2,198,851 1.5
BANKS-MONEY CENTER
ING Groep N.V. ............................................ NETH 47,300 1,992,610 1.3
OTHER FINANCIAL
ForeningsSparbanken AB .................................... SWDN 84,560 1,922,932 1.3
BANKS-REGIONAL
State Bank of India Ltd. - GDR{\/} ........................ IND 103,400 1,848,275 1.2
BANKS-REGIONAL
Lloyds TSB Group PLC ...................................... UK 139,000 1,796,273 1.2
BANKS-REGIONAL
Old Mutual South Africa Trust PLC ......................... UK 971,000 1,550,571 1.0
REAL ESTATE INVESTMENT TRUST
Nichiei Co., Ltd. ......................................... JPN 10,400 1,107,739 0.7
OTHER FINANCIAL
Union Bank of Switzerland - Bearer ........................ SWTZ 588 850,237 0.6
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ....................... SING 152,000 844,444 0.6
BANKS-MONEY CENTER
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/}{=} ..................................... THAI 249,000 458,160 0.3
OTHER FINANCIAL
Kookmin Bank .............................................. KOR 62,644 330,775 0.2
BANKS-MONEY CENTER
Abbey National PLC ........................................ UK 12,644 226,512 0.2
BANKS-SUPER REGIONAL
Kokusai Securities Co., Ltd. .............................. JPN 23,000 160,383 0.1
INVESTMENT MANAGEMENT
Bank Inicjatyw Gospodarczych BIG S.A. - GDR{\/} ........... POL 3,066 46,757 --
BANKS-REGIONAL
------------
40,713,208
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE> 426
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (23.2%)
Federated Department Stores, Inc.-/- ...................... US 82,200 $ 3,539,738 2.3
RETAILERS-APPAREL
Service Corporation International ......................... US 86,400 3,191,400 2.1
CONSUMER SERVICES
CVS Corp. ................................................. US 45,100 2,889,219 1.9
RETAILERS-OTHER
EMI Group PLC ............................................. UK 333,000 2,777,734 1.8
LEISURE & TOURISM
Woolworths Ltd. ........................................... AUSL 813,000 2,717,239 1.8
RETAILERS-OTHER
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 68,000 2,635,000 1.7
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 158,000 2,354,433 1.6
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 308,900 1,977,100 1.3
TELEPHONE NETWORKS
Reuters Holdings PLC ...................................... UK 179,000 1,954,598 1.3
BROADCASTING & PUBLISHING
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 16,300 1,897,931 1.3
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 70,359 1,836,026 1.2
RETAILERS-FOOD
Telecel - Comunicacaoes Pessoais S.A.-/- .................. PORT 16,716 1,781,526 1.2
WIRELESS COMMUNICATIONS
SPT Telecom-/- ............................................ CZCH 15,100 1,616,328 1.1
TELEPHONE NETWORKS
Portugal Telecom S.A. - Registered ........................ PORT 33,450 1,552,516 1.0
TELEPHONE NETWORKS
Ezaki Glico Co., Ltd. ..................................... JPN 150,000 968,966 0.6
RETAILERS-FOOD
Vodafone Group PLC ........................................ UK 113,586 818,789 0.5
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ..................................... AUSL 333,100 703,136 0.5
TELEPHONE NETWORKS
------------
35,211,679
------------
Health Care (10.3%)
Bristol Myers Squibb Co. .................................. US 37,300 3,529,513 2.3
PHARMACEUTICALS
Warner-Lambert Co. ........................................ US 23,800 2,951,200 1.9
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 239 2,373,473 1.6
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 55,400 2,057,714 1.4
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR{c} {\/} .................... HGRY 15,800 1,815,025 1.2
PHARMACEUTICALS
Schering AG ............................................... GER 16,580 1,599,461 1.1
PHARMACEUTICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE> 427
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
Takeda Chemical Industries ................................ JPN 40,000 $ 1,140,230 0.8
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 1,091 1,478 --
PHARMACEUTICALS
------------
15,468,094
------------
Materials/Basic Industry (8.3%)
Monsanto Co. .............................................. US 67,900 2,851,800 1.9
CHEMICALS
Hercules, Inc. ............................................ US 54,000 2,703,375 1.8
CHEMICALS
Imperial Chemical Industries PLC - ADR{\/} ................ UK 35,300 2,292,294 1.5
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 11,290 1,947,013 1.3
CHEMICALS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 285,600 1,398,265 0.9
PAPER/PACKAGING
CRH PLC ................................................... UK 114,500 1,325,493 0.9
BUILDING MATERIALS & COMPONENTS
------------
12,518,240
------------
Energy (6.1%)
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 138,200 3,299,525 2.2
GAS PRODUCTION & DISTRIBUTION
Petroleum Geo-Services ASA-/- ............................. NOR 31,920 2,010,692 1.3
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ........................ UK 265,000 1,914,614 1.3
OIL
Total S.A. "B" ............................................ FR 17,380 1,891,485 1.3
OIL
------------
9,116,316
------------
Technology (5.2%)
Compaq Computer Corp.-/- .................................. US 60,000 3,386,250 2.2
COMPUTERS & PERIPHERALS
Intel Corp. ............................................... US 44,500 3,126,125 2.1
SEMICONDUCTORS
Texas Instruments, Inc. ................................... US 31,144 1,401,480 0.9
SEMICONDUCTORS
------------
7,913,855
------------
Capital Goods (4.0%)
Textron, Inc. ............................................. US 43,800 2,737,500 1.8
AEROSPACE/DEFENSE
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 15,440 1,962,549 1.3
TELECOM EQUIPMENT
Canon, Inc. ............................................... JPN 60,000 1,397,701 0.9
OFFICE EQUIPMENT
------------
6,097,750
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE> 428
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (3.5%)
Futuris Corp., Ltd. ....................................... AUSL 2,000,000 $ 2,189,068 1.4
AUTO PARTS
Ford Motor Co. ............................................ US 36,200 1,762,488 1.2
AUTOMOBILES
Bridgestone Corp. ......................................... JPN 65,000 1,409,579 0.9
AUTO PARTS
------------
5,361,135
------------
Consumer Non-Durables (3.4%)
RJR Nabisco Holdings Corp. ................................ US 73,300 2,748,750 1.8
TOBACCO
Asahi Breweries Ltd. ...................................... JPN 95,000 1,383,142 0.9
BEVERAGES - ALCOHOLIC
Amway Japan Ltd. .......................................... JPN 55,400 1,061,303 0.7
HOUSEHOLD PRODUCTS
------------
5,193,195
------------
Multi-Industry/Miscellaneous (1.2%)
Shanghai Industrial Holdings Ltd. ......................... HK 490,000 1,821,256 1.2
MULTI-INDUSTRY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $124,048,794) ................ 139,414,728 92.1
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Co., due
January 2, 1998, for an effective yield of 5.80%,
collateralized by $11,755,000 U.S. Treasury Notes, 5.75%
due 12/31/98 (market value of collateral is $11,766,026,
including accrued interest). (cost $11,535,000) .......... 11,535,000 7.6
------------ -----
TOTAL INVESTMENTS (cost $135,583,794) * .................... 150,949,728 99.7
Other Assets and Liabilities ................................ 457,079 0.3
------------ -----
NET ASSETS .................................................. $151,406,807 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $136,039,555 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 21,802,933
Unrealized depreciation: (6,892,760)
-------------
Net unrealized appreciation: $ 14,910,173
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F5
<PAGE> 429
GT GLOBAL WORLDWIDE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.2 5.2
Brazil (BRZL/BRL) .................... 3.5 3.5
Czech Republic (CZCH/CSK) ............ 1.1 1.1
France (FR/FRF) ...................... 2.6 2.6
Germany (GER/DEM) .................... 1.1 1.1
Hong Kong (HK/HKD) ................... 2.9 2.9
Hungary (HGRY/HUF) ................... 1.2 1.2
India (IND/INR) ...................... 1.2 1.2
Italy (ITLY/ITL) ..................... 1.3 1.3
Japan (JPN/JPY) ...................... 5.6 5.6
Korea (KOR/KRW) ...................... 0.2 0.2
Mexico (MEX/MXN) ..................... 0.9 0.9
Netherlands (NETH/NLG) ............... 3.8 3.8
New Zealand (NZ/NZD) ................. 1.7 1.7
Norway (NOR/NOK) ..................... 1.3 1.3
Portugal (PORT/PTE) .................. 2.2 2.2
Singapore (SING/SGD) ................. 0.6 0.6
Sweden (SWDN/SEK) .................... 2.8 2.8
Switzerland (SWTZ/CHF) ............... 2.2 2.2
Thailand (THAI/THB) .................. 0.3 0.3
United Kingdom (UK/GBP) .............. 15.8 15.8
United States (US/USD) ............... 34.6 7.9 42.5
------ ----- -----
Total ............................... 92.1 7.9 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $151,406,807.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ---------- --------- ------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 613,677 1.76130 2/27/98 $ (10,861)
---------- -------------
Total Contracts to Buy (Payable amount
$624,538)............................ 613,677 (10,861)
---------- -------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 0.41%
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
British Pounds.......................... 1,476,511 0.61245 1/20/98 $ (6,991)
British Pounds.......................... 1,476,511 0.60002 1/20/98 23,429
Deutsche Marks.......................... 1,729,455 1.73540 2/27/98 56,876
French Francs........................... 2,830,938 5.72800 2/6/98 136,939
Japanese Yen............................ 2,310,962 118.82300 2/4/98 213,801
Japanese Yen............................ 4,318,711 122.20000 2/12/98 263,940
Swiss Francs............................ 1,174,569 1.42180 3/19/98 21,099
---------- -------------
Total Contracts to Sell (Receivable
amount $16,026,750).................. 15,317,657 709,093
---------- -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 10.12%
Total Open Forward Foreign Currency
Contracts, Net....................... $ 698,232
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F6
<PAGE> 430
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $135,583,794) (Note 1).......................... $150,949,728
U.S. currency.................................................................. $ 48
Foreign currencies (cost $1,578,009)........................................... 1,536,226 1,536,274
---------
Receivable for Fund shares sold........................................................... 1,036,495
Receivable for open forward foreign currency contracts, net (Note 1)...................... 698,232
Dividends and dividend withholding tax reclaims receivable................................ 221,497
Receivable for securities sold............................................................ 194,078
Interest receivable....................................................................... 1,858
Miscellaneous receivable.................................................................. 646
-----------
Total assets............................................................................ 154,638,808
-----------
Liabilities:
Payable for Fund shares repurchased....................................................... 2,788,587
Payable for investment management and administration fees (Note 2)........................ 121,861
Payable for printing and postage expenses................................................. 96,022
Payable for transfer agent fees (Note 2).................................................. 89,810
Payable for service and distribution expenses (Note 2).................................... 67,726
Payable for professional fees............................................................. 37,204
Payable for custodian fees................................................................ 12,019
Payable for Trustees' fees and expenses (Note 2).......................................... 6,727
Payable for registration and filing fees.................................................. 5,626
Payable for fund accounting fees (Note 2)................................................. 1,924
Other accrued expenses.................................................................... 4,495
-----------
Total liabilities....................................................................... 3,232,001
-----------
Net assets.................................................................................. $151,406,807
-----------
-----------
Class A:
Net asset value and redemption price per share ($103,769,443 DIVIDED BY 7,275,753 shares
outstanding)............................................................................... $ 14.26
-----------
-----------
Maximum offering price per share (100/95.25 of $14.26) *.................................... $ 14.97
-----------
-----------
Class B:+
Net asset value and offering price per share ($45,009,871 DIVIDED BY 3,300,587 shares
outstanding)............................................................................... $ 13.64
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($2,627,493
DIVIDED BY 182,671 shares outstanding)..................................................... $ 14.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $133,904,092
Undistributed net investment income....................................................... 95,296
Accumulated net realized gain on investments and foreign currency transactions............ 1,383,082
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 658,403
Net unrealized appreciation of investments................................................ 15,365,934
-----------
Total -- representing net assets applicable to capital shares outstanding................... $151,406,807
-----------
-----------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE> 431
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $275,397).............................. $ 2,764,013
Interest income........................................................................... 645,128
-----------
Total investment income................................................................. 3,409,141
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 1,619,691
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 400,318
Class B.................................................................... 496,417 896,735
-----------
Transfer agent fees (Note 2).............................................................. 455,298
Custodian fees............................................................................ 111,017
Printing and postage expenses (Note 2).................................................... 63,005
Registration and filing fees.............................................................. 53,920
Audit fees................................................................................ 47,254
Fund accounting fees...................................................................... 41,680
Legal fees................................................................................ 29,476
Trustees' fees and expenses (Note 2)...................................................... 13,218
Other expenses (Note 1)................................................................... 12,217
-----------
Total expenses before reductions........................................................ 3,343,511
-----------
Expense reductions (Notes 1 & 5)...................................................... (146,965)
-----------
Total net expenses...................................................................... 3,196,546
-----------
Net investment income....................................................................... 212,595
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 25,979,995
Net realized gain on foreign currency transactions........................... 2,164,063
-----------
Net realized gain during the year....................................................... 28,144,058
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies........................................... 162,616
Net change in unrealized appreciation of investments......................... (11,824,112)
-----------
Net unrealized depreciation during the year............................................. (11,661,496)
-----------
Net realized and unrealized gain on investments and foreign currencies...................... 16,482,562
-----------
Net increase in net assets resulting from operations........................................ $16,695,157
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE> 432
GT GLOBAL WORLDWIDE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ 212,595 $ (81,643)
Net realized gain on investments and foreign currency transactions....... 28,144,058 21,499,978
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ 162,616 111,081
Net change in unrealized appreciation (depreciation) of investments...... (11,824,112) (1,481,639)
------------- -------------
Net increase in net assets resulting from operations................... 16,695,157 20,047,777
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (109,138) --
From net realized gain on investments.................................... (22,666,381) (13,087,564)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments.................................... (10,444,406) (5,727,628)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (8,161) --
From net realized gain on investments.................................... (358,231) (175,598)
------------- -------------
Total distributions.................................................... (33,586,317) (18,990,790)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 243,618,368 290,210,249
Decrease from capital shares repurchased................................. (256,140,244) (314,217,462)
------------- -------------
Net decrease from capital share transactions........................... (12,521,876) (24,007,213)
------------- -------------
Total decrease in net assets............................................... (29,413,036) (22,950,226)
Net assets:
Beginning of year........................................................ 180,819,843 203,770,069
------------- -------------
End of year *............................................................ $151,406,807 $180,819,843
------------- -------------
------------- -------------
* Includes undistributed net investment income of......................... $ 95,296 $ --
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE> 433
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.05 0.03 -- -- 0.04
Net realized and unrealized gain
(loss) on investments................ 1.55 1.79 1.74 (1.16) 3.92
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.60 1.82 1.74 (1.16) 3.96
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.02) -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Total distributions................. (4.05) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 10.00% 10.92% 11.23% (6.65)% 27.6%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 103,769 $ 125,556 $ 145,982 $ 182,467 $ 193,997
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.32% 0.14% (0.06)% (0.01)% 0.9%
Without expense reductions............ 0.23% 0.06% (0.12)% (0.04)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.73% 1.72% 1.87% 1.81% 1.9%
Without expense reductions............ 1.82% 1.80% 1.93% 1.84% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F10
<PAGE> 434
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------
APRIL 1, 1993
YEAR ENDED DECEMBER 31, TO
---------------------------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D) 1994 1993 (D)
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain
(loss) on investments................ 1.49 1.75 1.73 (1.16) 2.72
---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.44 1.66 1.61 (1.27) 2.68
---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Total distributions................. (4.03) (1.93) (0.45) (0.78) (0.96)
---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
---------- ---------- ---------- ---------- -------------
---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 9.22% 10.16% 10.52% (7.32)% 17.3%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 45,010 $ 52,809 $ 56,095 $ 52,567 $ 20,592
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%(a)
Without expense reductions............ (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.38% 2.37% 2.52% 2.46% 2.5%(a)
Without expense reductions............ 2.47% 2.45% 2.58% 2.49% N/A
Portfolio turnover rate++++............. 92% 80% 113% 86% 92%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F11
<PAGE> 435
GT GLOBAL WORLDWIDE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
-------------------------------------------
JUNE 1, 1995
YEAR ENDED DECEMBER 31, TO
---------------------------- DECEMBER 31,
1997 1996 (D) 1995 (D)
------------- ------------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.81 $ 16.86 $ 15.26
------------- ------------- -------------
Income from investment operations:
Net investment income (loss).......... 0.12 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.57 1.79 2.02
------------- ------------- -------------
Net increase (decrease) from
investment operations.............. 1.69 1.88 2.05
------------- ------------- -------------
Distributions to shareholders:
From net investment income............ (0.09) -- --
From net realized gain on
investments.......................... (4.03) (1.93) (0.45)
------------- ------------- -------------
Total distributions................. (4.12) (1.93) (0.45)
------------- ------------- -------------
Net asset value, end of period.......... $ 14.38 $ 16.81 $ 16.86
------------- ------------- -------------
------------- ------------- -------------
Total investment return (c)............. 10.43% 11.31% 13.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 2,627 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.67% 0.49% 0.29%(a)
Without expense reductions............ 0.58% 0.41% 0.23%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.38% 1.37% 1.52%(a)
Without expense reductions............ 1.47% 1.45% 1.58%(a)
Portfolio turnover rate++++............. 92% 80% 113%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0288 $ 0.0263 N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the year.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE> 436
GT GLOBAL WORLDWIDE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Worldwide Growth Fund ("Fund"), is a separate series of GT Global
Growth Series ("Company"). The Company is organized as a Massachusetts business
trust and is registered under the Investment Company Act of 1940, as amended
("1940 Act"), as a diversified, open-end management investment company. The
Company has eight series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
F13
<PAGE> 437
GT GLOBAL WORLDWIDE GROWTH FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a counter
party is unable to meet the terms of a contract or if the value of the currency
changes unfavorably. The Fund may enter into Forward Contracts in connection
with planned purchases or sales of securities, or to hedge against adverse
fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1997, stocks with an aggregate value of approximately
$12,659,388 were on loan to brokers. The loans were secured by cash collateral
of $13,106,152, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For the year ended December 31, 1997,
the Fund received securities lending fees of $137,889 which were used to reduce
the Fund's custodian and administrative expenses.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
F14
<PAGE> 438
GT GLOBAL WORLDWIDE GROWTH FUND
(J) DISTRIBUTION TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised and/or
administered by the Manager, has a line of credit with the BankBoston and State
Street Bank & Trust Company. The arrangements with the banks allow the Fund and
GT Funds to borrow an aggregate maximum amount of $250,000,000. The Fund is
limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $2,000,000 with a weighted average interest rate of 6.44%. Interest expense
for the year ended December 31, 1997 was $1,431, included in "Other Expenses" on
the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays investment management and administration fees at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any year to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended December 31, 1997, GT Global retained $8,456
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $3,645 for the year ended December 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1997, GT Global collected CDSC's
in the amount of $272,024. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% of the average daily net assets of the Fund's Class A
shares, less any amounts paid by the Fund as the aforementioned service fee, for
its expenditures incurred in providing services as distributor. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.
F15
<PAGE> 439
GT GLOBAL WORLDWIDE GROWTH FUND
The Manager and GT Global have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest and extraordinary
items) to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
Effective January 1, 1998, the Manager and GT Global have undertaken to limit
the Fund's Expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.65%, and 1.65% of the
average daily net assets of the Fund's Class A, Class B, and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $138,743,808 and $176,373,627, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
year.
4. CAPITAL SHARES
At December 31, 1997, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold...................................................... 9,536,130 $163,326,296 14,357,786 $250,471,583
Shares issued in connection with reinvestment of distributions... 1,372,411 19,227,529 670,053 11,082,654
---------- ------------ ---------- ------------
10,908,541 182,553,825 15,027,839 261,554,237
Shares repurchased............................................... (11,147,719) (193,303,890) (16,192,391) (283,412,820)
---------- ------------ ---------- ------------
Net decrease..................................................... (239,178) $(10,750,065) (1,164,552) $(21,858,583)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,034,341 $ 17,020,574 854,412 $ 14,531,361
Shares issued in connection with reinvestment of distributions... 688,809 9,238,884 308,538 4,961,416
---------- ------------ ---------- ------------
1,723,150 26,259,458 1,162,950 19,492,777
Shares repurchased............................................... (1,675,941) (28,047,548) (1,309,880) (22,330,821)
---------- ------------ ---------- ------------
Net increase (decrease).......................................... 47,209 $ (1,788,090) (146,930) $ (2,838,044)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 1,924,783 $ 34,438,694 521,049 $ 8,987,637
Shares issued in connection with reinvestment of distributions... 25,931 366,391 10,546 175,598
---------- ------------ ---------- ------------
1,950,714 34,805,085 531,595 9,163,235
Shares repurchased............................................... (1,914,043) (34,788,806) (485,979) (8,473,821)
---------- ------------ ---------- ------------
Net increase..................................................... 36,671 $ 16,279 45,616 $ 689,414
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
F16
<PAGE> 440
GT GLOBAL WORLDWIDE GROWTH FUND
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $9,076 under these arrangements.
6. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the AIM and INVESCO asset management
businesses.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1997, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.2723 per share (representing an approximate total of
$2,266,869). The total amount of taxes paid by the Fund to such countries was
approximately $.0331 per share (representing an approximate total of $275,397).
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$22,856,473 as a capital gain dividend for the fiscal year ended December 31,
1997.
Pursuant to Section 854 of the Internal Revenue Code, the Fund designates 5.14%
of ordinary income dividends paid (including short-term capital gain
distributions, if any) by the Fund as income qualifying for the dividends
received deduction for corporations for the fiscal year ended December 31, 1997.
F17
<PAGE> 441
GT GLOBAL WORLDWIDE GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE> 442
GT GLOBAL WORLDWIDE GROWTH FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
FUNDS, PLEASE CONTACT YOUR INVESTMENT ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING
CHARGES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET INVESTING.
INVESTORS SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Focuses on worldwide opportunities from the demand for consumer products and
services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Focuses on equity securities of U.S. companies believed to be undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government securities
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
GT GLOBAL FLOATING RATE FUND, INC.
Invests primarily in senior secured floating rate loans with the potential to
achieve a high level of current income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high-quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS.
<PAGE> 443
[LOGO]
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, California
94111-4624
DATED MATERIAL
PLEASE EXPEDITE
GT Global Worldwide Growth Fund
WORAR802021M
<PAGE> 444
APPENDIX VII
[LOGO]
/ /
AIM WORLDWIDE
GROWTH FUND
FORMERLY GT GLOBAL
WORLDWIDE GROWTH FUND
/ /
SEMIANNUAL REPORT
JUNE 30, 1998
INVEST WITH
DISCIPLINE-SM-
<PAGE> 445
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Message from the
Chairman............. 1
Report from the Fund
Managers and Key
Portfolio Holdings... 2
Financial
Statements........... F1
Views of the Fund's management
described in this report are as
of the date written. Portfolio
holdings and allocations are as
of June 30, 1998, unless
otherwise noted. These views,
portfolio holdings and
allocations may have changed
subsequently.
</TABLE>
<PAGE> 446
Message from the Chairman
Dear Fellow Shareholder,
We are pleased to send you this semiannual report. In the time since you
received your last report, there have been a few changes. Your Fund is now a
part of The AIM Family of Funds-Registered Trademark- and has adopted the AIM
name. Thanks to a vote of approval by GT Global shareholders, A I M Advisors,
Inc., became the new investment advisor to GT Global Funds, effective May 29,
1998.
We believe you'll enjoy many advantages as a member of The AIM Family of
Funds-Registered Trademark-. You'll have access to a greater variety of
investment choices, and you'll benefit from AIM's commitment to excellence in
shareholder service. Most of all, you'll be part of an expanded fund family
that is one of the largest and most respected in the industry. A complete
list of Funds included in the AIM family can be found inside the back cover
of this report. If you would like more information on any of these Funds, we
suggest you talk with your financial consultant to discuss their suitability
for your investment objectives, risk tolerance, and asset allocation.
Though the Funds are wearing a new name, your investments will continue to
seek their stated objectives and receive expert, professional management. In
the report that follows, you'll find commentary from managers you know, with
the depth of coverage you've come to expect.
Effective September 8, GT Global accounts will be fully integrated into the
AIM Family of Funds-Registered Trademark-. For account information, service,
and transactions, you will contact AIM's Client Services Department at
800-959-4246. Account information is also available on the AIM website at
www.aimfunds.com or on our automated AIM Investor Line at 800-246-5463.
Thank you for your past support of GT Global Funds. AIM is looking forward to
continuing a satisfying relationship with you and helping you reach your
financial goals.
Sincerely,
/s/ Charles T. Bauer
Charles T. Bauer
Chairman
The AIM Family of Funds-Registered Trademark
1
<PAGE> 447
AIM Worldwide Growth Fund
Performance Summary
[Graphic]
INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital by investing primarily in equity
securities of companies in markets around the world.
EDGAR REPRESENTATION OF PLOT POINTS USED IN PRINTED GRAPHICS
<TABLE>
<CAPTION>
AIM Global Worldwide MSCI World
Growth Fund Class A Index
<S> <C> <C>
6/09/87 $ 9525 $10000
9886.95 9718.05
10448.9 9913.93
10896.6 10501.7
11058.5 10320.5
7858.12 8569.81
7762.88 8363.01
8420.1 8726.96
8524.88 8941.58
9058.27 9462.19
9086.85 9749.67
9458.33 9874.44
9315.45 9678.91
9401.17 9667.25
9439.27 9850.79
8943.98 9311.34
9010.65 9708.1
9391.65 10356
9610.73 10718.4
9793.71 10817.1
10361.3 11210.3
10419 11141.6
10717.3 11072
11179.1 11329.4
11304.1 11053.4
11207.9 10930.6
12044.9 12167.6
12266.2 11875
12564.4 12212.2
12044.9 11806.9
12516.3 12280.3
13475.1 12677
13099.4 12087
12862.1 11570.7
12970.9 10873.9
12644.6 10719.2
13722.2 11850
13840.9 11767.5
14246.2 11876.7
12624.9 10767
11458.3 9633.69
11863.6 10535
11833.9 10364
11786.1 10583
12134.8 10972.1
12971.7 11989.8
13230.7 11638.3
13230.7 11731.2
13768.7 11999
13141.1 11260.2
13888.3 11793.9
13958 11758.4
13997.9 12068.8
14087.5 12266.6
13420 11734.1
14173.5 12590.4
14223.9 12359.4
14616.8 12148.2
14304.5 11578
14576.5 11741.4
15029.8 12210.6
14566.4 11803.8
14415.3 11836.1
14133.3 12126.1
13720.2 12017.2
14032.5 11693.9
14274.3 11905.3
12/31/97 14637.1 12003.7
14970.9 12046
15031.6 12333.6
15790.3 13050.9
15881.3 13658.1
16488.2 13975.2
16306.2 13860.2
16720.9 14147.9
17671.8 14798.8
17621.2 14527.7
18086.5 14930.4
17236.8 14088.2
18671.8 14780
19601.6 15757.3
18896.2 15555.9
17774 14887.8
18116 15350.7
18019.8 15392.8
17667.1 15352.8
18126.7 15647.4
19024.5 16121.3
18564.9 15700.5
18629 16150
17870.2 15452.4
17429.8 15605
16285 15373.6
16116.7 15600.7
16228.9 16355.8
16958.4 16929.1
17126.8 17077.1
17732.9 17075.2
18877.6 17932.9
18877.6 17536.6
19416.4 18050.8
19023.5 17769.9
19203.1 18390.3
19387.5 18931.4
19687.2 19277.3
19583.5 19398.2
19929.3 19724.5
20275.1 20191.9
20194.4 20213
20252 20318.8
19468.2 19604.5
20056.1 19833.5
20494.1 20613.8
20551.7 20761.4
21358.6 21928.5
21505.5 21581.1
21685.7 21844.8
21209.5 22099.8
21068 21666.5
21479.8 22378.5
22496.5 23763.8
23217.2 24952.8
24877.5 26105.9
23822.1 24363.3
25250.7 25690.8
23243 24342.5
23062.8 24777.2
23656.9 25083
23789.7 25786
25813.6 27534.4
26659.7 28701.3
27008.1 28986.1
26195.2 28627.1
6/30/98 26241 29285
</TABLE>
The chart above shows the performance of AIM Worldwide Growth Fund Class A
shares since the Fund's inception, versus the MSCI World Index. This
represents a cumulative return of 162.41% and an average annual total return
of 9.12% for the Fund. The chart assumes a hypothetical $10,000 initial
investment in the Fund's Class A shares and reflects all Fund expenses and
the maximum 5.50% sales charge. A $10,000 investment in the Fund's Class B
shares at inception on April 1, 1993, would have been valued at $16,012 on
June 30, 1998. This figure reflects all Fund expenses and the applicable
contingent deferred sales charge (5% in the first year, decreasing to 0% at
the beginning of the seventh year), assuming complete redemption at the end
of the period. A $10,000 investment in Advisor Class shares at inception on
June 1, 1995, would have been worth $15,424 on June 30, 1998.
AVERAGE ANNUAL TOTAL RETURNS % (1)
JUNE 30, 1998
<TABLE>
<CAPTION>
SHARE CLASS WITHOUT SALES CHARGE(2) WITH SALES CHARGE
1-YEAR 5-YEAR 10-YEAR LOF 1-YEAR 5-YEAR 10-YEAR LOF
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A(3) 13.90 10.15 10.90 9.67 7.63 8.91 10.27 9.12
CLASS B(3) 13.08 9.41 N/A 9.51 8.73 9.15 N/A 9.39
ADVISOR CLASS(4) 14.33 N/A N/A 15.11 N/A N/A N/A N/A
</TABLE>
HISTORICAL PERFORMANCE(2)
ANNUAL TOTAL RETURNS % (LAST 10 YEARS)
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A 16.31 37.59 -12.53 20.26 3.27 27.56 -6.65 11.23 10.92 10.00
CLASS B N/A N/A N/A N/A N/A 17.29(3) -7.32 10.52 10.16 9.22
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gains
distributions at net asset value.
(2) Performance data do not reflect the maximum 5.50% sales charge and the
contingent deferred sales charge for Class A and Class B shares,
respectively, which, if included, would have reduced performance quoted.
(3) The Fund began (Class A shares) operations on June 9, 1987; Class B
shares commenced on April 1, 1993.
(4) The Fund began offering Advisor Class shares on June 1, 1995. Advisor
Class shares are not sold directly to the general public. They are only
available through certain employee benefit plans, financial institutions
and other entities that have entered into specific agreements with the
Fund's distributor. Please see the Fund's prospectus for more complete
information.
The above data represent past performance of the Fund's shares, which does
not guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
From time to time, the Fund's investment advisor may waive some fees and/or
reimburse some expenses, without which performance would be lower. Waivers
and reimbursements are subject to change.
2
<PAGE> 448
INTERVIEW WITH PORTFOLIO MANAGEMENT TEAM
Q HOW DID THE FUND PERFORM?
A The world's financial markets have been severely tested in recent months
by the barrage of negative news from Asia, with Japan's weakening economy
producing heightened investor concerns throughout the region. Nonetheless, in
an impressive showing, stock prices in Europe continued to climb to record
highs, supported by a positive macroeconomic background. The robust nature of
European stock markets and the protracted bull market in the U.S. have been
the key positives in global investing so far in 1998.
In a mixed global environment, the Fund's Class A shares returned 11.78% over
the six-month period ended June 30, 1998. Total return for Class B shares for
the same period was 11.45%. The Morgan Stanley Capital International (MSCI)
World Index5 returned 16.64% over the same period.
Over the six-month period, the Fund's underweighted positions in France and
Germany, and lack of holdings in Spain, caused the Fund to trail the index.
Stock selection in Italy also contributed to relative underperformance. In
particular, the Fund's position in Telecom Italia underperformed the market
as a result of concerns over a transition in management. Additionally, the
Fund had a small exposure to India--a market not represented in the index.
Although the Fund held only the stock of one company, a severe decline in its
share price impacted Fund performance.
Q WHAT'S DRIVING EUROPEAN MARKETS?
A The Fund continues to benefit from a number of factors fueling European
markets. While European economies are steaming ahead, European corporations
have embraced the challenge of becoming more globally competitive.
Corporations are trimming down, becoming more efficient, and focusing on ways
to add value to shareholders. The deep structural changes these corporations
are making have spurred corporate profitability and earnings growth.
Consolidation through mergers and acquisitions has also been very widespread.
Many companies are looking farther ahead to when monetary union will be more
established. The rewards to companies that can consolidate their positions
and dominate a market across Europe are potentially far higher than for those
that only maintain their local franchises.
Overall, a new European culture that favors investing is also contributing to
the market surge. Historically bank savers, Europeans are now turning to
equities, helping markets become broader, larger, and more liquid.
Q DID YOU IMPLEMENT ANY CHANGES IN THE PORTFOLIO DURING THE SIX-MONTH
PERIOD?
A Our investment strategy remains essentially unchanged. In an environment
of disinflation, we are looking for companies with the ability to maintain
prices and margins in the face of relentless competition. This approach leads
us to prefer world-class companies in the UK, where we find media and
financial services stocks attractive.
Despite recent weakness, we are also bullish on the outlook for the stock
markets of Australia and New Zealand, and slightly increased our allocation
to this region over the period. We believe corporate profits are set to
recover at a time when equity valuations are relatively attractive. We are,
however, avoiding stocks exposed to softness in commodity prices.
While we continue to hold particular world-class stocks in continental Europe
(especially in media, telecommunications, pharmaceuticals and service
industries such as management consulting), we have been reducing our
weighting to this region. After a very strong bull run, valuations appear to
now discount the cyclical upturn in earnings. We are also concerned that many
European bond markets are vulnerable to any setback in European Economic and
Monetary Union (EMU).
Our exposure to the U.S. remained constant at about 42%. Steady U.S. economic
growth provided a basis for continued gains in corporate earnings during the
first half of 1998. Additionally, the long-term downward trend in interest
rates created a favorable environment for continuing economic growth and may
lead to further expansion in the earnings multiples investors are willing to
pay. Against this background,
CONTINUED P.4
(5) The MSCI World Index is a market value-weighted average of the
performance of 1,571 securities listed on major world stock exchanges--the
U.S., Europe, Canada, Australia, New Zealand and the Far East. It includes
the effect of reinvested dividends and is measured in U.S. dollars. Indices
are unmanaged, not available for direct investment and do not include the
effects of sales charges and professional management fees.
3
<PAGE> 449
INTERVIEW WITH PORTFOLIO MANAGEMENT TEAM CONTINUED
the Fund's holdings produced favorable returns, with Chase Manhattan Corp.,
Ford Motor Co. and Warner-Lambert among the notable performers.
The Fund continues to maintain minimal exposure to Japan, where we feel the
government has not done nearly enough to restore the country's banking
system, economy and property market to health. We also remain pessimistic
about the outlook for the East Asian newly industrializing countries.
However, we have found selective opportunities in emerging markets elsewhere.
Q RELATIVE TO THE INDEX, HOW HAS THE FUND'S UNDERWEIGHTING IN JAPAN
CONTRIBUTED TO PERFORMANCE?
A The Fund has continued to benefit from its underweighted position in
Japan. With the Japanese banking system in disarray, we firmly believe, as we
have for some time, that political leaders need to shut down insolvent banks
and further address the tremendous number of bad loans. Moreover, the failure
of Japanese banks to provide the necessary amount of capital to get the
economy going has contributed to weakness.
Additionally, we believe the government should increase the money supply and
cut income and corporate taxes to stimulate domestic demand. Due to the lack
of confidence in their economy and financial institutions, many Japanese are
hoarding cash instead of spending it.
In this economic environment we continue to believe four kinds of stocks may
grow: those that can take advantage of major trends, such as the graying of
Japan; beneficiaries of the yen's long-term weakness; companies entering new
markets; and businesses that can maintain pricing power. Within this
framework, we have identified such companies as Canon, Inc., Asahi Breweries
and Takeda Chemical Industries, a leading pharmaceutical manufacturer.
Q WHAT ARE YOUR EXPECTATIONS FOR THE FUND OVER THE REMAINDER OF THE YEAR?
A In general, we expect to continue focusing on high-quality companies that
provide broad portfolio diversification, with a goal of achieving predictable
and consistent returns.
More specifically, we believe the Fund is well positioned to take advantage
of opportunities in the European marketplace during the rest of this year,
where consolidation and restructuring will continue to be the key themes.
Most European companies have a long way to go before they can provide the
kind of returns investors expect from U.S. companies, but many companies are
committed to streamlining operations and improving profitability. We predict
inflation will remain subdued and European economies will strengthen. Long
term, we will be watching EMU to see how markets are affected.
In the U.S., we remain cautiously optimistic. It is difficult to imagine,
given the current economic background, that interest rates will move.
Inflation seems likely to remain contained as global competition and lower
energy costs offset the inflationary potential of tight labor markets. The
Federal Reserve Board has left rates unchanged for more than a year.
The Fund is likely to remain conservatively positioned in Asia, with an
underweighted position in Japan and limited exposure to the rest of the
region. Given the severity of Asia's problems, we expect markets there to
remain volatile.
In Latin America, we sold off our small position in Mexico, while continuing
to maintain an exposure to Brazil where our current stock selection
concentrates on privatization plays. These companies tend to be less exposed
to the economy, which has been sluggish recently, yet are positively affected
by progress on political reform and privatization. We believe these stocks
should also benefit from any further recovery in sentiment toward the
country.
SECTOR ALLOCATION OF NET ASSETS %
JUNE 30, 1998
<TABLE>
<CAPTION>
<S> <C>
Finance 32.8
Services 24.1
Health Care 10.1
Materials/Basic Industry 7.0
Technology 5.1
Consumer Durables 4.6
Consumer Non-Durables 4.4
Capital Goods 3.8
Energy 3.3
Multi-Industry/Misc. 0.6
Short Term & Other 4.2
</TABLE>
A complete listing of holdings and allocations may be found in the Investment
Portfolio section of this report.
4
<PAGE> 450
AIM WORLDWIDE
GROWTH FUND
(FORMERLY
GT GLOBAL
WORLDWIDE
GROWTH FUND)
FINANCIAL
STATEMENTS
<PAGE> 451
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (32.8%)
SLM Holding Corp. ......................................... US 92,000 $ 4,508,001 3.2
OTHER FINANCIAL
Chase Manhattan Corp. ..................................... US 55,600 4,197,797 3.0
BANKS-MONEY CENTER
Citicorp .................................................. US 26,200 3,910,350 2.8
BANKS-MONEY CENTER
Travelers Group, Inc. ..................................... US 58,400 3,540,500 2.6
INSURANCE - MULTI-LINE
ING Groep N.V. ............................................ NETH 39,487 2,587,401 1.9
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 235,000 2,430,832 1.8
INSURANCE - MULTI-LINE
UBS AG - Registered-/- .................................... SWTZ 6,521 2,426,573 1.7
BANKS-MONEY CENTER
Australia & New Zealand Banking Group Ltd. ................ AUSL 350,000 2,420,837 1.7
BANKS-REGIONAL
Nordbanken Holding AB ..................................... SWDN 325,006 2,385,403 1.7
BANKS-REGIONAL
Schroders PLC ............................................. UK 84,000 2,168,375 1.6
BANKS-MONEY CENTER
Abbey National PLC ........................................ UK 117,000 2,080,564 1.5
BANKS-SUPER REGIONAL
Lloyds TSB Group PLC ...................................... UK 139,000 1,946,093 1.4
BANKS-REGIONAL
ForeningsSparbanken AB .................................... SWDN 59,720 1,798,231 1.3
BANKS-REGIONAL
Royal Bank of Canada ...................................... CAN 27,200 1,635,659 1.2
BANKS-REGIONAL
Bank Hapoalim Ltd.-/- ..................................... ISRL 437,400 1,324,623 1.0
BANKS-REGIONAL
HSBC Holdings PLC ......................................... HK 51,496 1,259,567 0.9
BANKS-MONEY CENTER
Old Mutual South Africa Trust PLC ......................... UK 661,500 1,253,636 0.9
REAL ESTATE INVESTMENT TRUST
State Bank of India Ltd. - Reg. S GDR-/- {c} {\/} ......... IND 104,140 1,228,852 0.9
BANKS-REGIONAL
Kokusai Securities Co., Ltd. .............................. JPN 103,000 1,020,540 0.7
SECURITIES BROKER
Nichiei Co., Ltd. ......................................... JPN 9,900 675,895 0.5
OTHER FINANCIAL
United Overseas Bank Ltd. - Foreign ....................... SING 152,000 472,609 0.3
BANKS-MONEY CENTER
Kookmin Bank-/- ........................................... KOR 73,781 274,659 0.2
BANKS-MONEY CENTER
------------
45,546,997
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F1
<PAGE> 452
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (24.1%)
Federated Department Stores, Inc.-/- ...................... US 67,900 $ 3,653,869 2.6
RETAILERS-APPAREL
Service Corporation International ......................... US 71,400 3,061,275 2.2
CONSUMER SERVICES
EMI Group PLC ............................................. UK 333,000 2,913,541 2.1
LEISURE & TOURISM
CVS Corp. ................................................. US 74,800 2,912,525 2.1
RETAILERS-OTHER
Woolworths Ltd. ........................................... AUSL 813,000 2,650,099 1.9
RETAILERS-OTHER
EMAP PLC .................................................. UK 118,000 2,387,978 1.7
BROADCASTING & PUBLISHING
Telecom Italia SpA ........................................ ITLY 321,900 2,353,629 1.7
TELEPHONE NETWORKS
Vodafone Group PLC ........................................ UK 182,000 2,311,087 1.7
WIRELESS COMMUNICATIONS
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 68,000 2,227,000 1.6
TELEPHONE NETWORKS
Koninklijke Ahold N.V. .................................... NETH 56,959 1,829,704 1.3
RETAILERS-FOOD
Reuters Group PLC ......................................... UK 155,133 1,774,355 1.3
BROADCASTING & PUBLISHING
Telecel - Comunicacaoes Pessoais S.A. ..................... PORT 9,661 1,716,953 1.2
WIRELESS COMMUNICATIONS
SPT Telecom-/- ............................................ CZCH 121,000 1,670,473 1.2
TELEPHONE NETWORKS
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 11,500 1,255,656 0.9
TELEPHONE NETWORKS
Telstra Corp. Ltd. - Installment Receipts ................. AUSL 333,100 856,224 0.6
TELEPHONE NETWORKS
------------
33,574,368
------------
Health Care (10.1%)
Warner-Lambert Co. ........................................ US 59,200 4,107,000 3.0
PHARMACEUTICALS
Bristol Myers Squibb Co. .................................. US 30,900 3,551,569 2.6
PHARMACEUTICALS
Nycomed Amersham PLC ...................................... UK 286,418 2,134,146 1.5
PHARMACEUTICALS
Roche Holding AG .......................................... SWTZ 189 1,857,452 1.3
PHARMACEUTICALS
Richter Gedeon Rt. - Reg S GDR-/- {c} {\/} ................ HGRY 16,200 1,291,950 0.9
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 39,000 1,040,790 0.8
PHARMACEUTICALS
------------
13,982,907
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE> 453
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (7.0%)
Monsanto Co. .............................................. US 56,200 $ 3,140,175 2.3
CHEMICALS
Millenium Chemicals, Inc. ................................. US 79,400 2,689,675 1.9
CHEMICALS
Akzo Nobel N.V. ........................................... NETH 8,790 1,955,351 1.4
CHEMICALS
Imperial Chemical Industries PLC - ADR{\/} ................ UK 29,400 1,896,300 1.4
CHEMICALS
------------
9,681,501
------------
Technology (5.1%)
Compaq Computer Corp. ..................................... US 99,200 2,814,800 2.0
COMPUTERS & PERIPHERALS
Intel Corp. ............................................... US 36,900 2,735,213 2.0
SEMICONDUCTORS
Texas Instruments, Inc. ................................... US 25,844 1,507,028 1.1
SEMICONDUCTORS
------------
7,057,041
------------
Consumer Durables (4.6%)
Ford Motor Co. ............................................ US 30,400 1,793,600 1.3
AUTOMOBILES
Futuris Corp., Ltd. ....................................... AUSL 2,000,000 1,763,318 1.3
AUTO PARTS
Volvo AB "B" .............................................. SWDN 51,200 1,525,626 1.1
AUTOMOBILES
Mabuchi Motor Co., Ltd. ................................... JPN 20,000 1,272,872 0.9
AUTOMOBILES
------------
6,355,416
------------
Consumer Non-Durables (4.4%)
Diageo PLC ................................................ UK 164,160 1,946,128 1.4
BEVERAGES - ALCOHOLIC
RJR Nabisco Holdings Corp. ................................ US 61,300 1,455,875 1.1
TOBACCO
Asahi Breweries Ltd. ...................................... JPN 95,000 1,202,358 0.9
BEVERAGES - ALCOHOLIC
Gucci Group - NY Registered Shares{\/} .................... NETH 16,600 879,800 0.6
TEXTILES & APPAREL
Amway Japan Ltd. .......................................... JPN 55,400 588,978 0.4
HOUSEHOLD PRODUCTS
------------
6,073,139
------------
Capital Goods (3.8%)
Textron, Inc. ............................................. US 34,500 2,473,219 1.8
AEROSPACE/DEFENSE
Alcatel Alsthom Compagnie Generale d'Electricite .......... FR 8,310 1,692,187 1.2
TELECOM EQUIPMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE> 454
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
Canon, Inc. ............................................... JPN 50,000 $ 1,139,076 0.8
OFFICE EQUIPMENT
------------
5,304,482
------------
Energy (3.3%)
Shell Transport & Trading Co., PLC ........................ UK 265,000 1,867,257 1.3
OIL
Petroleum Geo-Services ASA-/- ............................. NOR 49,240 1,536,440 1.1
ENERGY EQUIPMENT & SERVICES
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} ............ BRZL 64,800 1,198,800 0.9
GAS PRODUCTION & DISTRIBUTION
------------
4,602,497
------------
Multi-Industry/Miscellaneous (0.6%)
Shanghai Industrial Holdings Ltd. ......................... HK 370,000 871,571 0.6
MULTI-INDUSTRY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $109,904,796) ................ 133,049,919 95.8
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1998, with State Street Bank & Co., due July
1, 1998, for an effective yield of 5.70%, collateralized
by $11,960,000 U.S. Treasury Bills, 5.75% due 12/31/98
(market value of collateral is $11,974,950, including
accrued interest). (cost $11,738,000) ................... 11,738,000 8.4
------------ -----
TOTAL INVESTMENTS (cost $121,642,796) * .................... 144,787,919 104.2
Other Assets and Liabilities ................................ (5,861,658) (4.2)
------------ -----
NET ASSETS .................................................. $138,926,261 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $122,098,557 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 30,443,660
Unrealized depreciation: (7,754,298)
-------------
Net unrealized appreciation: $ 22,689,362
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
The accompanying notes are an integral part of the financial statements.
F4
<PAGE> 455
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1998, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
--------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ---------- ----------- ------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.5 5.5
Brazil (BRZL/BRL) .................... 1.8 1.8
Canada (CAN/CAD) ..................... 1.2 1.2
Czech Republic (CZCH/CSK) ............ 1.2 1.2
France (FR/FRF) ...................... 1.2 1.2
Hong Kong (HK/HKD) ................... 1.5 1.5
Hungary (HGRY/HUF) ................... 0.9 0.9
India (IND/INR) ...................... 0.9 0.9
Israel (ISRL/ILS) .................... 1.0 1.0
Italy (ITLY/ITL) ..................... 1.7 1.7
Japan (JPN/JPY) ...................... 5.0 5.0
Korea (KOR/KRW) ...................... 0.2 0.2
Netherlands (NETH/NLG) ............... 5.2 5.2
New Zealand (NZ/NZD) ................. 1.6 1.6
Norway (NOR/NOK) ..................... 1.1 1.1
Portugal (PORT/PTE) .................. 1.2 1.2
Singapore (SING/SGD) ................. 0.3 0.3
Sweden (SWDN/SEK) .................... 4.1 4.1
Switzerland (SWTZ/CHF) ............... 3.0 3.0
United Kingdom (UK/GBP) .............. 19.6 19.6
United States (US/USD) ............... 37.6 4.2 41.8
----- --- ------
Total ............................... 95.8 4.2 100.0
----- --- ------
----- --- ------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $138,926,261.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
VALUE
(U.S. CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- ---------- --------- ------- -------------
<S> <C> <C> <C> <C>
British Pounds.......................... 5,337,595 0.59400 7/20/98 $ 49,605
French Francs........................... 1,094,325 5.94360 8/6/98 16,113
Japanese Yen............................ 2,254,774 130.50000 8/6/98 120,705
Japanese Yen............................ 2,256,752 130.86000 8/12/98 112,192
Swiss Francs............................ 1,131,122 1.47770 9/21/98 19,314
---------- -------------
Total Contracts to Sell (Receivable
amount $12,392,497).................. 12,074,568 $ 317,929
---------- -------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 8.69%
Total Open Forward Foreign Currency
Contracts............................ $ 317,929
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F5
<PAGE> 456
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $121,642,796) (Note 1)............................. $144,787,919
U.S. currency..................................................................... $ 701
Foreign currencies (cost $11,376)................................................. 11,376 12,077
---------
Receivable for open forward foreign currency contracts (Note 1).............................. 317,929
Dividends and dividend withholding tax reclaims receivable................................... 285,982
Receivable for Fund shares sold.............................................................. 7,508
Interest receivable.......................................................................... 1,859
-----------
Total assets............................................................................... 145,413,274
-----------
Liabilities:
Payable for Fund shares repurchased.......................................................... 5,999,730
Payable for investment management and administration fees (Note 2)........................... 114,066
Payable for transfer agent fees (Note 2)..................................................... 110,943
Payable for printing and postage expenses.................................................... 92,874
Payable for service and distribution expenses (Note 2)....................................... 63,646
Payable for custodian fees................................................................... 30,896
Payable for professional fees................................................................ 28,206
Payable for securities purchased............................................................. 25,005
Payable for registration and filing fees..................................................... 10,549
Payable for Trustees' fees and expenses (Note 2)............................................. 4,581
Payable for fund accounting fees (Note 2).................................................... 2,102
Other accrued expenses....................................................................... 4,415
-----------
Total liabilities.......................................................................... 6,487,013
-----------
Net assets..................................................................................... $138,926,261
-----------
-----------
Class A:
Net asset value and redemption price per share ($95,789,457 DIVIDED BY 6,010,096 shares
outstanding).................................................................................. $ 15.94
-----------
-----------
Maximum offering price per share (100/94.5 of $15.94) *........................................ $ 16.87
-----------
-----------
Class B:+
Net asset value and offering price per share ($41,963,181 DIVIDED BY 2,762,324 shares
outstanding).................................................................................. $ 15.19
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,173,623 DIVIDED
BY 72,854 shares outstanding)................................................................. $ 16.11
-----------
-----------
Net assets consist of:
Paid in capital (Note 4)..................................................................... $103,912,599
Undistributed net investment income.......................................................... 167,690
Accumulated net realized gain on investments and foreign currency transactions............... 11,383,706
Net unrealized appreciation on translation of assets and liabilities in foreign currencies... 317,143
Net unrealized appreciation of investments................................................... 23,145,123
-----------
Total -- representing net assets applicable to capital shares outstanding...................... $138,926,261
-----------
-----------
<FN>
- --------------
* On sales of $25,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE> 457
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $128,555)............................... $1,344,061
Interest income............................................................................ 211,993
Securities lending income.................................................................. 60,268
----------
Total investment income.................................................................. 1,616,322
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 730,851
Service and distribution expenses: (Note 2)
Class A....................................................................... $ 179,462
Class B....................................................................... 224,655 404,117
---------
Transfer agent fees (Note 2)............................................................... 215,028
Custodian fees............................................................................. 49,232
Printing and postage expenses (Note 2)..................................................... 34,933
Registration and filing fees............................................................... 34,503
Audit fees................................................................................. 24,978
Legal fees................................................................................. 20,747
Fund accounting fees....................................................................... 20,266
Trustees' fees and expenses (Note 2)....................................................... 6,154
Other expenses (Note 1).................................................................... 6,048
----------
Total expenses before reductions......................................................... 1,546,857
----------
Expense reductions (Note 5)............................................................ (2,929)
----------
Total net expenses....................................................................... 1,543,928
----------
Net investment income........................................................................ 72,394
----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments................................................ 9,255,158
Net realized gain on foreign currency transactions.............................. 745,466
---------
Net realized gain during the period...................................................... 10,000,624
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies.......................................................... (341,260)
Net change in unrealized appreciation of investments............................ 7,779,189
---------
Net unrealized appreciation during the period............................................ 7,437,929
----------
Net realized and unrealized gain on investments and foreign currencies....................... 17,438,553
----------
Net increase in net assets resulting from operations......................................... $17,510,947
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE> 458
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------- -------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income..................................................... $ 72,394 $ 212,595
Net realized gain on investments and foreign currency transactions........ 10,000,624 28,144,058
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. (341,260) 162,616
Net change in unrealized appreciation (depreciation) of investments....... 7,779,189 (11,824,112)
------------- -------------
Net increase in net assets resulting from operations.................... 17,510,947 16,695,157
------------- -------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (109,138)
From net realized gain on investments..................................... -- (22,666,381)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (10,444,406)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (8,161)
From net realized gain on investments..................................... -- (358,231)
------------- -------------
Total distributions..................................................... -- (33,586,317)
------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 206,230,402 243,618,368
Decrease from capital shares repurchased.................................. (236,221,895) (256,140,244)
------------- -------------
Net decrease from capital share transactions............................ (29,991,493) (12,521,876)
------------- -------------
Total decrease in net assets................................................ (12,480,546) (29,413,036)
Net assets:
Beginning of period....................................................... 151,406,807 180,819,843
------------- -------------
End of period *........................................................... $138,926,261 $151,406,807
------------- -------------
------------- -------------
* Includes undistributed net investment income of.......................... $ 167,690 $ 95,296
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE> 459
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, Year ended December 31,
1998 ----------------------------------------------------------
(UNAUDITED)(d) 1997 1996(d) 1995(d) 1994 1993(d)
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... 0.02 0.05 0.03 -- -- 0.04
Net realized and unrealized gain
(loss) on investments................ 1.66 1.55 1.79 1.74 (1.16) 3.92
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.68 1.60 1.82 1.74 (1.16) 3.96
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.02) -- -- -- --
From net realized gain on
investments.......................... -- (4.03) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. -- (4.05) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 15.94 $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 11.78%(b) 10.00% 10.92% 11.23% (6.65)% 27.6%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 95,789 $ 103,769 $ 125,556 $ 145,982 $ 182,467 $ 193,997
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.28%(a) 0.32% 0.14% (0.06)% (0.01)% 0.9%
Without expense reductions............ 0.28%(a) 0.23% 0.06% (0.12)% (0.04)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.87%(a) 1.73% 1.72% 1.87% 1.81% 1.9%
Without expense reductions............ 1.87%(a) 1.82% 1.80% 1.93% 1.84% N/A
Portfolio turnover rate++++............. 34%(a) 92% 80% 113% 86% 92%
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F9
<PAGE> 460
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Class B++
----------------------------------------------------------------------------
SIX MONTHS
ENDED April 1, 1993
JUNE 30, Year ended December 31, to
1998 ---------------------------------------------- December 31,
(UNAUDITED)(d) 1997 1996(d) 1995(d) 1994 1993(d)
------------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
------------- ---------- ---------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.03) (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain
(loss) on investments................ 1.58 1.49 1.75 1.73 (1.16) 2.72
------------- ---------- ---------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.55 1.44 1.66 1.61 (1.27) 2.68
------------- ---------- ---------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... -- (4.03) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- -------------
Total distributions................. -- (4.03) (1.93) (0.45) (0.78) (0.96)
------------- ---------- ---------- ---------- ---------- -------------
Net asset value, end of period.......... $ 15.19 $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
------------- ---------- ---------- ---------- ---------- -------------
------------- ---------- ---------- ---------- ---------- -------------
Total investment return (c)............. 11.45%(b) 9.22% 10.16% 10.52% (7.32)% 17.3%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 41,963 $ 45,010 $ 52,809 $ 56,095 $ 52,567 $ 20,592
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... (0.37)%(a) (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%(a)
Without expense reductions............ (0.37)%(a) (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 2.52%(a) 2.38% 2.37% 2.52% 2.46% 2.5%(a)
Without expense reductions............ 2.52%(a) 2.47% 2.45% 2.58% 2.49% N/A
Portfolio turnover rate++++............. 34%(a) 92% 80% 113% 86% 92%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F10
<PAGE> 461
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
Advisor Class+++
-----------------------------------------------------
SIX MONTHS
ENDED Year ended December June 1, 1995
JUNE 30, 31, to
1998 ---------------------- December 31,
(UNAUDITED)(d) 1997 1996(d) 1995
-------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.38 $ 16.81 $ 16.86 $ 15.26
-------------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... 0.05 0.12 0.09 0.03
Net realized and unrealized gain
(loss) on investments................ 1.68 1.57 1.79 2.02
-------------- ---------- ---------- -------------
Net increase (decrease) from
investment operations.............. 1.73 1.69 1.88 2.05
-------------- ---------- ---------- -------------
Distributions to shareholders:
From net investment income............ -- (0.09) -- --
From net realized gain on
investments.......................... -- (4.03) (1.93) (0.45)
-------------- ---------- ---------- -------------
Total distributions................. -- (4.12) (1.93) (0.45)
-------------- ---------- ---------- -------------
Net asset value, end of period.......... $ 16.11 $ 14.38 $ 16.81 $ 16.86
-------------- ---------- ---------- -------------
-------------- ---------- ---------- -------------
Total investment return (c)............. 11.96 %(b) 10.43% 11.31% 13.46%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,174 $ 2,627 $ 2,455 $ 1,693
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Note 5)...... 0.63 %(a) 0.67% 0.49% 0.29%(a)
Without expense reductions............ 0.63 %(a) 0.58% 0.41% 0.23%(a)
Ratio of operating expenses to average
net assets:
With expense reductions (Note 5)...... 1.52 %(a) 1.38% 1.37% 1.52%(a)
Without expense reductions............ 1.52 %(a) 1.47% 1.45% 1.58%(a)
Portfolio turnover rate++++............. 34 %(a) 92% 80% 113%(a)
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) Calculated based upon average shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rates are calculated on the basis of the Fund as a
whole without distinguishing between the classes of shares issued.
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F11
<PAGE> 462
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES (SEE ALSO NOTE 2)
AIM Worldwide Growth Fund (the "Fund" formerly, GT Global Worldwide Growth
Fund), is a separate series of AIM Growth Series (the "Trust" formerly, G.T.
Global Growth Series ). The Trust is organized as a Delaware business trust and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a diversified, open-end management investment company. The Trust has eight
series of shares in operation, each series corresponding to a distinct portfolio
of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares and completes orders to
purchase, exchange or repurchase Fund shares on each business day, with the
exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by A I M Advisors, Inc. (the
"Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Trust's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Trust's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set
F12
<PAGE> 463
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
price on a future date. The market value of the Forward Contract fluctuates with
changes in currency exchange rates. The Forward Contract is marked-to-market
daily and the change in market value is recorded by the Fund as an unrealized
gain or loss. When the Forward Contract is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time it was opened
and the value at the time it was closed. The Fund could be exposed to risk if a
counter party is unable to meet the terms of a contract or if the value of the
currency changes unfavorably. The Fund may enter into Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
market-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of on over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other then normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1998, stocks with an aggregate value of approximately $9,461,607
were on loan to brokers. The loans were secured by cash collateral of
$9,905,382, received by the Fund. Cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. The cash collateral is invested in a
securities lending trust which consists of a portfolio of high quality short
duration securities whose average effective duration is restricted to 120 days
or less. For the period ended June 30, 1998, the Fund received securities
lending fees of $60,268.
F13
<PAGE> 464
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, or excise tax on income
and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distribution to shareholders are recorded by the Fund on the ex-date. Income and
capital gain distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised and/or administered by the
Manager, has a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Fund and certain other funds
to borrow, on a first come, first serve basis, an aggregate maximum amount of
$250,000,000. The Fund is limited to borrowing up to 33 1/3% of the value of the
Fund's total assets. On June 30, 1998, the Fund had no loans outstanding.
For the period ended June 30, 1998, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $12,876,000 with a weighted average interest rate of 6.24%. Interest expense
for the period ended June 30, 1998 was $2,230, and is included in "Other
Expenses" on the Statement of Operations.
2. RELATED PARTIES
A I M Advisors, Inc. ("AIM" or the "Manager") is the Fund's investment manager
and administrator, and INVESCO (NY), Inc., (formerly, Chancellor LGT Asset
Management, Inc.) is the Fund's investment sub-adviser and/or sub-administrator.
As of the close of business on May 29, 1998, Liechtenstein Global Trust AG
("LGT"), the former indirect parent organization of Chancellor LGT Asset
Management, Inc. ("Chancellor LGT"), consummated a purchase agreement with
AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset Management
Division, which included Chancellor LGT and certain other affiliates. As a
result of this transaction, Chancellor LGT was renamed INVESCO (NY), Inc., and
is now an indirect wholly-owned subsidiary of AMVESCAP PLC. In connection with
this transaction, A I M Advisors, Inc., an indirect wholly-owned subsidiary of
AMVESCAP PLC, became the investment manager and administrator of the Fund and
INVESCO (NY), Inc. became the sub-adviser and sub-administrator of the Fund.
A I M Distributors, Inc. ("AIM Distributors") became the Fund's distributor.
Finally, the Trust was reorganized from a Massachusetts business trust into a
Delaware business trust. All of the changes became effective as of the close of
business on May 29, 1998.
The Fund pays investment management and administration fees to the Manager at
the following annualized rates: 0.975% on the first $500 million of the average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly, and are subject to reduction in any period to the extent that the
Fund's expenses (exclusive of brokerage commissions, taxes, interest,
distribution-related expenses and extraordinary expenses) exceed the most
stringent limits prescribed by the laws or regulations of any state in which the
Fund's shares are offered for sale, based on the average total net asset value
of the Fund.
AIM Distributors, an affiliate of the Manager, serves as the Fund's distributor.
For the period ended May 29, 1998, GT Global, Inc. ("GT Global"), an affiliate
of the investment sub-advisor, served as the Fund's distributor. The Fund offers
Class A, Class B, and Advisor Class shares for purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. AIM Distributors and GT Global collected the sales charges imposed
on sales of Class A shares, and reallowed a portion of such charges to dealers
through which the sales were made. For the period ended June 30, 1998, AIM
Distributors and GT Global retained $331 and $2,657, respectively, of such sales
charges. Purchases of Class A shares exceeding $500,000 may be subject to a
contingent deferred sales charge ("CDSC") upon redemption, in accordance with
the Fund's current prospectus. No CDSC's were collected for Class A for the
period ended June 30, 1998. AIM
F14
<PAGE> 465
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
Distributors also makes ongoing shareholder servicing and trail commission
payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, AIM Distributors from its own resources pays commissions to dealers
through which the sales are made. Certain redemptions of Class B shares made
within six years of purchase are subject to CDSCs, in accordance with the Fund's
current prospectus. During the period ended June 30, 1998, AIM Distributors and
GT Global collected such CDSCs in the amount of $9,640 and $103,837,
respectively. In addition, AIM Distributors makes ongoing shareholder servicing
and trail commission payments to dealers whose clients hold Class B shares.
For the period ended May 29, 1998, pursuant to the then effective separate
distribution plans adopted under the 1940 Act Rule 12b-1 by the Trust's Board of
Trustees with respect to the Fund's Class A shares ("Class A Plan") and Class B
shares ("Class B Plan"), the Fund reimbursed GT Global for a portion of its
shareholder servicing and distribution expenses. Under the Class A Plan, the
Fund was permitted to pay GT Global a service fee at the annualized rate of up
to 0.25% of the average daily net assets of the Fund's Class A shares for GT
Global's expenditures incurred in servicing and maintaining shareholder
accounts, and was permitted to pay GT Global a distribution fee at the
annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global was reimbursed under the Class A Plan would have
been incurred within one year of such reimbursement.
For the period ended May 29, 1998, pursuant to the Class B Plan, the Fund was
permitted to pay GT Global a service fee at the annualized rate of up to 0.25%
of the average daily net assets of the Fund's Class B shares for its
expenditures incurred in servicing and maintaining shareholder accounts, and was
permitted to pay GT Global a distribution fee at the annualized rate of up to
0.75% of the average daily net assets of the Fund's Class B shares for GT
Global's expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually were permitted to be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
Effective as of the close of business May 29, 1998, pursuant to Rule 12b-1 under
the 1940 Act, the Trust's Board of Trustees adopted a Master Distribution Plan
applicable to the Fund's Class A shares ("Class A Plan") and Class B shares
("Class B Plan"), pursuant to which a Fund compensates AIM Distributors for the
purpose of financing any activity that is intended to result in the sale of
Class A or Class B shares of the Fund. Under the Class A Plan, the Fund
compensates AIM Distributors at the annualized rate of 0.35% of the average
daily net assets of the Fund's Class A shares.
Pursuant to the Fund's Class B Plan, the Fund compensates AIM Distributors at an
annualized rate of 1.00% of the average daily net assets of the Fund's Class B
shares.
The Manager and AIM Distributors have voluntarily undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes,interest, and extraordinary
items) to the maximum annual level of 2.00%, 2.65%, and 1.65% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by AIM
Distributors of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or AIM Distributors of portions of the Fund's
other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and AIM Distributors, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Trust pays each of its Trustees who is not an employee, officer or director
of the Manager, AIM Distributors or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1998, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $19,806,884 and $43,210,209, respectively. There were no purchases or
sales of U.S. government obligations by the Fund during the period.
F15
<PAGE> 466
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
4. CAPITAL SHARES
At June 30, 1998, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
------------------------- -------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 9,222,918 $143,043,076 9,536,130 $163,326,296
Shares issued in connection with reinvestment of
distributions................................................ -- -- 1,372,411 19,227,529
----------- ------------ ----------- ------------
9,222,918 143,043,076 10,908,541 182,553,825
Shares repurchased............................................. (10,488,575) (163,123,097) (11,147,719) (193,303,890)
----------- ------------ ----------- ------------
Net decrease................................................... (1,265,657) $(20,080,021) (239,178) $(10,750,065)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
CLASS B
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 2,281,310 $ 33,570,859 1,034,341 $ 17,020,574
Shares issued in connection with reinvestment of
distributions................................................ -- -- 688,809 9,238,884
----------- ------------ ----------- ------------
2,281,310 33,570,859 1,723,150 26,259,458
Shares repurchased............................................. (2,819,573) (41,571,005) (1,675,941) (28,047,548)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (538,263) $ (8,000,146) 47,209 $ (1,788,090)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
<CAPTION>
ADVISOR CLASS
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold.................................................... 1,898,297 $ 29,616,467 1,924,783 $ 34,438,694
Shares issued in connection with reinvestment of
distributions................................................ -- -- 25,931 366,391
----------- ------------ ----------- ------------
1,898,297 29,616,467 1,950,714 34,805,085
Shares repurchased............................................. (2,008,114) (31,527,793) (1,914,043) (34,788,806)
----------- ------------ ----------- ------------
Net increase (decrease)........................................ (109,817) $ (1,911,326) 36,671 $ 16,279
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
5 EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who then paid a
portion of the Fund's expenses. For the period ended June 30, 1998, the Fund's
expenses were reduced by $2,929 under these arrangements.
F16
<PAGE> 467
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
NOTES
- --------------------------------------------------------------------------------
<PAGE> 468
THE AIM FAMILY OF FUNDS-REGISTERED TRADEMARK-
GROWTH FUNDS
AIM Aggressive Growth Fund(1)
AIM Blue Chip Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM Mid Cap Growth Fund(2)
AIM Select Growth Fund(3)
AIM Small Cap Equity Fund(2)
AIM Small Cap Opportunities Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM America Value Fund(2)
AIM Balanced Fund
AIM Charter Fund
INCOME FUNDS
AIM Floating Rate Fund(2)
AIM High Yield Fund
AIM Income Fund
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
TAX-FREE INCOME FUNDS
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
MONEY MARKET FUNDS
AIM Dollar Fund(2)
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
INTERNATIONAL GROWTH FUNDS
AIM Advisor International Value Fund
AIM Asian Growth Fund
AIM Developing Markets Fund(2)
AIM Emerging Markets Fund(2)
AIM Europe Growth Fund(2)
AIM European Development Fund
AIM International Equity Fund
AIM International Growth Fund(2)
AIM Japan Growth Fund(2)
AIM Latin American Growth Fund(2)
AIM New Pacific Growth Fund(2)
GLOBAL GROWTH FUNDS
AIM Global Aggressive Growth Fund
AIM Global Growth Fund
AIM Worldwide Growth Fund(2)
GLOBAL GROWTH & INCOME FUNDS
AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund
GLOBAL INCOME FUNDS
AIM Global Government Income Fund(2)
AIM Global High Income Fund(2)
AIM Global Income Fund
AIM Strategic Income Fund(2)
THEME FUNDS
AIM Global Consumer Products and Services Fund(2)
AIM Global Financial Services Fund(2)
AIM Global Health Care Fund(2)
AIM Global Infrastructure Fund(2)
AIM Global Resources Fund(2)
AIM Global Telecommunications Fund(2)
AIM New Dimension Fund(2)
(1) AIM Aggressive Growth Fund closed to new investors on June 5, 1997.
(2) Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former
GT Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select
Growth Fund. For more complete information about any AIM Fund, including
sales charges and expenses, obtain the appropriate prospectus(es) from your
financial consultant. Please read the prospectus(es) carefully before you
invest or send money.
[LOGO] www.aimfunds.com A I M Distributors, Inc. Invest with Discipline-SM-
<PAGE> 469
APPENDIX VIII
AIM GLOBAL GROWTH FUND
AIM WORLDWIDE GROWTH FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
APRIL 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
AIM AIM AIM AIM PRO
WORLDWIDE GLOBAL PRO WORLDWIDE GLOBAL FORMA
GROWTH GROWTH FORMA GROWTH GROWTH MARKET
FUND FUND COMBINING FUND FUND VALUE
SHARES
<S> <C> <C> <C> <C> <C> <C>
DOMESTIC COMMON STOCKS - 35.27%
AEROSPACE/DEFENSE - 0.78%
30,000 30,000 Sundstrand Corp. $2,071,875 $2,071,875
39,500 39,500 Textron, Inc. $3,090,875 3,090,875
----------
5,162,750
----------
AGRICULTURAL PRODUCTS - 0.15%
26,000 26,000 Universal Corp. 973,375 973,375
----------
AUTOMOBILES - 0.24%
34,500 34,500 Ford Motor Co. 1,580,531 1,580,531
----------
AUTO PART & EQUIPMENT - 0.25%
25,000 25,000 Federal-Mogul Corp. 1,617,187 1,617,187
----------
BANKS (MONEY CENTER) - 2.12%
14,200 14,200 BankAmerica Corp. 1,207,000 1,207,000
31,800 11,500 43,300 Chase Manhattan Corp. (The) 4,406,288 1,593,469 5,999,757
30,000 15,000 45,000 Citicorp 4,515,000 2,257,500 6,772,500
----------
13,979,257
----------
BROADCASTING (TELEVISION, RADIO & CABLE) - 0.81%
50,000 50,000 CBS Corp. 1,781,250 1,781,250
50,000 50,000 Comcast Corp.-Class A 1,790,625 1,790,625
55,000 55,000 Tele-Communications, Inc. (a) 1,773,750 1,773,750
----------
5,345,625
----------
CHEMICALS (DIVERSIFIED) - 1.02%
91,200 91,200 Millenium Chemicals, Inc. 3,271,800 3,271,800
64,500 64,500 Monsanto Co. 3,410,438 3,410,438
----------
6,682,238
----------
COMMUNICATIONS EQUIPMENT - 0.50%
31,000 31,000 Lucent Technologies, Inc. 2,359,875 2,359,875
13,000 13,000 Tellabs, Inc. (a) 921,375 921,375
----------
3,281,250
----------
COMPUTERS (HARDWARE) - 2.42%
114,000 45,500 159,500 Compaq Computer Corp. (a) 3,199,125 1,276,844 4,475,969
30,000 30,000 Dell Computer Corp. (a) 2,422,500 2,422,500
40,500 40,500 Gateway 2000, Inc. (a) 2,376,844 2,376,844
42,300 42,300 Intel Corp. 3,418,369 3,418,369
11,500 11,500 International Business Machines Corp. 1,332,563 1,332,563
29,644 29,644 Texas Instruments, Inc. 1,899,069 1,899,069
----------
15,925,314
----------
COMPUTERS (NETWORKING) - 0.17%
15,000 15,000 Cisco Systems, Inc. (a) 1,098,750 1,098,750
----------
COMPUTERS (PERIPHERALS) - 0.35%
50,000 50,000 EMC Corp. (a) 2,306,250 2,306,250
----------
COMPUTERS (SOFTWARE & SERVICES) - 2.03%
37,000 37,000 America Online, Inc. (a) 2,960,000 2,960,000
21,000 21,000 BMC Software, Inc. (a) 1,964,812 1,964,812
28,500 28,500 Computer Associates International, Inc. 1,669,031 1,669,031
32,000 32,000 Computer Sciences Corp. (a) 1,688,000 1,688,000
42,000 42,000 Compuware Corp. (a) 2,052,750 2,052,750
28,500 28,500 Concord EFS, Inc. (a) 897,750 897,750
24,000 24,000 Microsoft Corp. (a) 2,163,000 2,163,000
----------
13,395,343
----------
CONSUMER FINANCE - 0.45%
50,000 50,000 FIRSTPLUS Financial Group, Inc. (a) 2,425,000 2,425,000
13,200 13,200 SLM Holding Corp. 563,475 563,475
----------
2,988,475
----------
DISTRIBUTORS (FOOD & HEALTH) - 0.64%
29,200 29,200 AmeriSource Health Corp.-Class A (a) 1,591,400 1,591,400
35,600 35,600 Bergen Brunswig Corp.-Class A 1,615,350 1,615,350
10,650 10,650 Cardinal Health, Inc. 1,025,062 1,025,062
----------
4,231,812
----------
ELECTRICAL EQUIPMENT - 0.39%
20,000 20,000 General Electric Co. 1,702,500 1,702,500
22,500 22,500 Symbol Technologies, Inc. 866,250 866,250
----------
2,568,750
----------
ELECTRONICS (INSTRUMENTATION) - 0.20%
25,000 25,000 Waters Corp. (a) 1,337,500 1,337,500
----------
ELECTRONICS (SEMICONDUCTORS) - 0.52%
40,500 40,500 Altera Corp. (a) 1,640,250 1,640,250
21,800 21,800 Intel Corp. 1,761,713 1,761,713
----------
3,401,963
----------
ENTERTAINMENT - 0.24%
27,100 27,100 Viacom, Inc.- Class B (a) 1,571,800 1,571,800
----------
EQUIPMENT (SEMICONDUCTOR) - 0.92%
43,000 43,000 Applied Materials, Inc. (a) 1,553,375 1,553,375
35,000 35,000 KLA-Tencor Corp. (a) 1,410,938 1,410,938
57,000 57,000 Lam Research Corp. (a) 1,767,000 1,767,000
36,000 36,000 Teradyne, Inc. (a) 1,314,000 1,314,000
----------
6,045,313
----------
</TABLE>
<PAGE> 470
<TABLE>
<CAPTION>
AIM AIM AIM AIM PRO
WORLDWIDE GLOBAL PRO WORLDWIDE GLOBAL FORMA
GROWTH GROWTH FORMA GROWTH GROWTH MARKET
FUND FUND COMBINING FUND FUND VALUE
SHARES
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL (DIVERSIFIED) - 1.84%
15,000 15,000 American Express Co. 1,530,000 1,530,000
27,200 27,200 Fannie Mae 1,628,600 1,628,600
39,000 39,000 Freddie Mac 1,806,187 1,806,187
2,400 2,400 MBIA, Inc. 179,100 179,100
6,700 6,700 MGIC Investment Corp. 422,100 422,100
25,900 25,900 Morgan Stanley, Dean Witter, Discover & Co. 2,042,863 2,042,863
105,700 105,700 SLM Holding Corp. 4,512,069 4,512,069
----------
12,120,919
----------
FOODS - 0.12%
28,000 28,000 Keebler Foods Co. (a) 798,000 798,000
----------
HARDWARE & TOOLS - 0.25%
32,500 32,500 Black & Decker Corp. (The) 1,677,812 1,677,812
----------
HEALTH CARE (DIVERSIFIED) - 2.13%
19,400 19,400 Abbott Laboratories 1,418,625 1,418,625
35,500 11,500 47,000 Bristol-Myers Squibb Co. 3,758,562 1,217,562 4,976,124
19,500 19,500 Johnson & Johnson 1,391,813 1,391,813
22,600 10,500 33,100 Warner-Lambert Co. 4,275,637 1,986,469 6,262,106
----------
14,048,668
----------
HEALTH CARE (DRUGS-GENERIC & OTHER) - 0.23%
35,800 35,800 Watson Pharmaceuticals, Inc. (a) 1,539,400 1,539,400
----------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) - 0.62%
16,500 16,500 Merck & Co., Inc. 1,988,250 1,988,250
4,200 4,200 Pfizer Inc. 478,013 478,013
20,000 20,000 Schering-Plough Corp. 1,602,500 1,602,500
----------
4,068,763
----------
HEALTH CARE (LONG TERM CARE) - 0.39%
41,000 41,000 HEALTHSOUTH Corp. (a) 1,237,687 1,237,687
41,250 41,250 Quorum Health Group, Inc. (a) 1,325,156 1,325,156
----------
2,562,843
----------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 1.41%
53,000 53,000 Arterial Vascular Engineering, Inc. (a) 1,874,875 1,874,875
24,900 24,900 Baxter International Inc. 1,380,394 1,380,394
46,800 46,800 Biomet, Inc. 1,404,000 1,404,000
24,000 24,000 Guidant Corp. 1,605,000 1,605,000
32,000 32,000 Medtronic, Inc. 1,684,000 1,684,000
17,600 17,600 Stryker Corp. 792,000 792,000
21,400 21,400 Sybron International Corp. (a) 567,100 567,100
----------
9,307,369
----------
HOUSEHOLD FURNITURE & APPLIANCES - 0.17%
22,200 22,200 Maytag Corp. 1,143,300 1,143,300
----------
HOUSEHOLD PRODUCTS (NON-DURABLE) - 0.41%
51,000 51,000 Dial Corp. (The) 1,243,125 1,243,125
18,000 18,000 Procter & Gamble Co. (The) 1,479,375 1,479,375
----------
2,722,500
----------
HOUSEWARES - 0.15%
40,000 40,000 Sunbeam Corp. 1,005,000 1,005,000
----------
INSURANCE (LIFE/HEALTH) - 0.25%
36,500 36,500 Torchmark Corp. 1,626,531 1,626,531
----------
INSURANCE (MULTI-LINE) - 1.40%
30,000 30,000 Ace, Ltd. 1,136,250 1,136,250
33,000 33,000 Allmerica Financial Corp. 2,066,625 2,066,625
5,250 5,250 American International Group, Inc. 690,703 690,703
67,000 19,500 86,500 Travelers Group, Inc. 4,099,562 1,193,156 5,292,718
----------
9,186,296
----------
INSURANCE (PROPERTY-CASUALTY) - 0.07%
11,300 11,300 Everest Reinsurance Holdings, Inc. 466,125 466,125
----------
INVESTMENT BANKING/BROKERAGE - 0.29%
22,000 22,000 Merrill Lynch & Co., Inc. 1,930,500 1,930,500
----------
INVESTMENT MANAGEMENT - 0.33%
11,800 11,800 Franklin Resources, Inc. 631,300 631,300
20,500 20,500 T. Rowe Price Associates, Inc. 1,547,750 1,547,750
----------
2,179,050
----------
LEISURE TIME (PRODUCTS) - 0.42%
47,400 47,400 Harley-Davidson, Inc. 1,706,400 1,706,400
27,000 27,000 Mattel, Inc. 1,034,438 1,034,438
----------
2,740,838
----------
LODGING-HOTELS - 0.06%
8,700 8,700 Promus Hotel Corp. (a) 393,131 393,131
----------
MANUFACTURING (DIVERSIFIED) - 0.81%
26,000 26,000 Thermo Electron Corp. (a) 1,035,125 1,035,125
16,000 16,000 Tyco International Ltd. 872,000 872,000
19,000 19,000 United Technologies Corp. 1,870,313 1,870,313
57,050 57,050 U.S. Industries, Inc. 1,547,481 1,547,481
----------
5,324,919
----------
OIL & GAS (DRILLING & EQUIPMENT) - 1.30%
23,500 23,500 Cooper Cameron Corp. (a) 1,561,281 1,561,281
30,000 30,000 Diamond Offshore Drilling, Inc. 1,518,750 1,518,750
40,000 40,000 ENSCO International, Inc. 1,130,000 1,130,000
23,000 23,000 Halliburton Co. 1,265,000 1,265,000
35,000 35,000 Santa Fe International Corp. 1,371,562 1,371,562
</TABLE>
<PAGE> 471
<TABLE>
<CAPTION>
AIM AIM AIM AIM PRO
WORLDWIDE GLOBAL PRO WORLDWIDE GLOBAL FORMA
GROWTH GROWTH FORMA GROWTH GROWTH MARKET
FUND FUND COMBINING FUND FUND VALUE
SHARES
<S> <C> <C> <C> <C> <C> <C>
22,000 22,000 Western Atlas Inc. (a) 1,738,000 1,738,000
----------
8,584,593
----------
PERSONAL CARE - 0.51%
19,400 19,400 Avon Products, Inc. 1,594,437 1,594,437
15,500 15,500 Gillette Co. (The) 1,789,281 1,789,281
----------
3,383,718
----------
REAL ESTATE INVESTMENT TRUST - 0.30%
38,996 38,996 Starwood Hotels & Resorts 1,957,112 1,957,112
----------
RETAIL (BUILDING SUPPLIES) - 0.27%
25,500 25,500 Lowe's Companies, Inc. 1,783,407 1,783,407
----------
RETAIL (COMPUTERS & ELECTRONICS) - 0.22%
35,000 35,000 Circuit City Stores-Circuit City Group 1,421,875 1,421,875
----------
RETAIL (DEPARTMENT STORES) - 1.08%
78,000 26,000 104,000 Federated Department Stores, Inc. (a) 3,836,625 1,278,875 5,115,500
50,000 50,000 Proffitt's, Inc. (a) 1,987,500 1,987,500
----------
7,103,000
----------
RETAIL (DRUG STORES) - 0.72%
42,900 21,000 63,900 CVS Corp. 3,163,875 1,548,750 4,712,625
----------
RETAIL (FOOD CHAINS) - 0.83%
32,000 32,000 Albertson's, Inc. 1,600,000 1,600,000
50,000 50,000 Kroger Co. (a) 2,093,750 2,093,750
46,000 46,000 Safeway, Inc. (a) 1,759,500 1,759,500
----------
5,453,250
----------
RETAIL (GENERAL MERCHANDISE) - 0.66%
34,200 34,200 Fred Meyer, Inc. (a) 1,534,725 1,534,725
100,500 100,500 Kmart Corp. (a) 1,752,469 1,752,469
20,900 20,900 Wal-Mart Stores, Inc. 1,056,756 1,056,756
----------
4,343,950
----------
RETAIL (SPECIALTY) - 0.51%
25,000 25,000 Bed Bath & Beyond, Inc. (a) 1,231,250 1,231,250
64,000 64,000 Office Depot, Inc. (a) 2,120,000 2,120,000
----------
3,351,250
----------
RETAIL (SPECIALTY-APPAREL) - 0.29%
5,900 5,900 Brylane Inc. (a) 346,625 346,625
35,000 35,000 TJX Companies, Inc. (The) 1,548,750 1,548,750
----------
1,895,375
----------
SERVICES (COMMERCIAL & CONSUMER) - 1.06%
35,000 35,000 H&R Block, Inc. 1,575,000 1,575,000
82,000 49,300 131,300 Service Corp. International 3,382,500 2,033,625 5,416,125
----------
6,991,125
----------
SERVICES (DATA PROCESSING) - 0.41%
33,300 33,300 Equifax, Inc. 1,288,294 1,288,294
21,600 21,600 Fiserv, Inc. (a) 1,412,100 1,412,100
----------
2,700,394
----------
SERVICES (EMPLOYMENT) - 0.09%
16,000 16,000 AccuStaff, Inc. (a) 574,000 574,000
----------
TOBACCO - 0.29%
69,600 69,600 RJR Nabisco Holdings Corp. 1,935,750 1,935,750
----------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.82%
27,000 27,000 AT&T Corp. 1,621,687 1,621,687
75,000 75,000 MCI Communications Corp. 3,773,438 3,773,438
----------
5,395,125
----------
TEXTILES (APPAREL) - 0.19%
7,000 7,000 Columbia Sportswear Co. (a) 148,750 148,750
18,000 18,000 Tommy Hilfiger Corp. (a) 1,098,000 1,098,000
----------
1,246,750
----------
WASTE MANAGEMENT - 0.17%
34,200 34,200 Waste Management, Inc. 1,145,700 1,145,700
----------
------------------------------------
TOTAL DOMESTIC COMMON STOCKS 57,756,075 174,558,371 232,314,446
------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 57.52%
ARGENTINA - 1.21%
75,000 75,000 Banco Rio de La Plata S.A.-ADR (Banks-Major Regional) (a) 1,031,250 1,031,250
280,140 280,140 Perez Companc S.A.-Class B (Oil & Gas-Refining & Marketing) 1,683,886 1,683,886
77,000 77,000 Telefonica de Argentina S.A.-ADR (Telephone) 2,969,313 2,969,313
65,600 65,600 YPF Sociedad Anonima-ADR (Oil-International Integrated) 2,287,800 2,287,800
----------
7,972,249
----------
AUSTRALIA - 1.60%
350,000 260,087 610,087 Australia & New Zealand Banking Group Ltd.
(Banks-Major Regional) 2,438,676 1,815,676 4,254,352
2,000,000 2,000,000 Futuris Corp., Ltd. (Auto Parts & Equipment) 2,005,078 2,005,078
333,100 304,960 638,060 Telstra Corp. Ltd. (Telephone) 780,652 716,077 1,496,729
813,000 813,000 Woolworths Ltd. (Retail-Specialty) 2,794,506 2,794,506
----------
10,550,665
----------
AUSTRIA - 0.21%
9,400 9,400 OMV A.G. (Oil & Gas-Refining & Marketing) 1,395,129 1,395,129
----------
BELGIUM - 0.71%
5,700 5,700 Barco N.V. (Manufacturing-Diversified) 1,509,811 1,509,811
1,100 1,100 COLRUYT S.A. (Retail-Food Chains) 668,955 668,955
520 520 UCB S.A. (Manufacturing-Diversified) 2,486,297 2,486,297
----------
4,665,063
----------
BRAZIL - 1.95%
31,000 31,000 Companhia Energetica de Minas Gerais (Electric Companies) 1,504,394 1,504,394
</TABLE>
<PAGE> 472
<TABLE>
<CAPTION>
AIM AIM AIM AIM PRO
WORLDWIDE GLOBAL PRO WORLDWIDE GLOBAL FORMA
GROWTH GROWTH FORMA GROWTH GROWTH MARKET
FUND FUND COMBINING FUND FUND VALUE
SHARES
<S> <C> <C> <C> <C> <C> <C>
64,800 5,416 70,216 Petroleo Brasileiro S.A.-Petrobras (Oil & Gas -
Exploration & Production) 1,636,200 1,373,231 3,009,431
11,500 26,800 38,300 Telecomunicacoes Brasileiras S.A.-ADR
(Telecommunications-Cellular/Wireless) 1,400,844 2,659,730 4,060,574
8,689 8,689 Telecomunicacoes do Rio de Janeiro S.A.
(Telecommunications - Cellular/Wireless) 1,367,569 1,367,569
8,600 8,600 Telecomunicacoes de Sao Paulo S.A. - TELESP (Telephone) 2,925,195 2,925,195
----------
12,867,163
----------
CANADA - 3.06%
20,500 20,500 Bank of Montreal (Banks-Major Regional) 1,118,299 1,118,299
58,300 58,300 BCE Inc. (Telecommunications-Cellular/Wireless) 2,483,107 2,483,107
48,000 48,000 Bombardier Inc. (Aerospace/Defense) 1,295,800 1,295,800
8,800 8,800 Canadian National Railway Co. (Railroads) 572,550 572,550
32,000 32,000 Geac Computer Corp. Ltd. (Services-Computer Systems) (a) 1,261,111 1,261,111
32,400 32,400 Imasco Ltd. (Manufacturing-Diversified) 1,220,226 1,220,226
125,000 125,000 Mitel Corp. (Communications Equipment) (a) 1,774,662 1,774,662
35,000 35,000 Newcourt Credit Group, Inc. (Financial-Diversified) 1,719,375 1,719,375
8,200 8,200 Northern Telecom Ltd.-ADR (Communications Equipment) 499,175 499,175
27,200 36,500 63,700 Royal Bank of Canada (Banks-Major Regional) 1,624,732 1,930,832 3,555,564
56,000 56,000 Suncor Energy, Inc. (Oil-International Integrated) 2,180,019 2,180,019
54,500 54,500 Toronto-Dominion Bank (Banks-Regional) 2,488,967 2,488,967
----------
20,168,855
----------
CHILE - 0.26%
30,600 30,600 Cia. de Telecomunicaciones de Chile S.A.-ADR (Telephone) 766,913 766,913
89,600 89,600 Quinenco S.A.-ADR (Financial-Diversified) 924,000 924,000
----------
1,690,913
----------
CZECHOSLOVAKIA - 0.27%
12,100 12,100 SPT Telecom (Telephone) (a) 1,760,288 1,760,288
----------
DENMARK - 0.33%
13,500 13,500 Novo Nordisk A/S - Class B (Health Care-Drugs-
Generic & Other) 2,190,197 2,190,197
----------
FINLAND - 0.57%
56,000 56,000 Nokia Oyj A.B.-Class A (Communications Equipment) 3,756,973 3,756,973
----------
FRANCE - 6.51%
11,200 11,200 Accor S.A. (Lodging-Hotels) 3,053,868 3,053,868
8,310 17,000 25,310 Alcatel Alsthom (Manufacturing-Diversified) 1,541,705 3,153,386 4,695,091
11,250 11,250 AXA UAP (Insurance-Multi-Line) 1,321,328 1,321,328
21,500 21,500 Banque Nationale de Paris (Banks - Major Regional) 1,813,425 1,813,425
27,000 27,000 Cap Gemini Sogeti S.A. (Computer-Software & Services) 3,508,069 3,508,069
6,500 6,500 Compagnie Francaise d'Etudes et de Construction Technip
(Oil & Gas-Refining & Marketing) 826,152 826,152
5,400 5,400 Danone (Foods) 1,275,661 1,275,661
13,500 13,500 Elf Aquitaine S.A. (Oil & Gas - Refining & Marketing) 1,772,002 1,772,002
2,200 2,200 Essilor International S.A. (Manufacturing-Specialized) 889,370 889,370
23,800 23,800 Lafarge S.A. (Engineering & Construction) 2,248,944 2,248,944
5,300 5,300 Legrand S.A. (Housewares) 1,401,930 1,401,930
2,900 2,900 Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 2,160,406 2,160,406
4,800 4,800 Promodes (Retail-Food Chains) 2,313,359 2,313,359
7,000 7,000 PSA Peugeot Citreon (Automobiles) 1,215,771 1,215,771
40,000 40,000 Renault S.A. (Automobiles) (a) 1,856,596 1,856,596
2,600 2,600 Rexel S.A. (Distributors-Food & Health) 1,044,585 1,044,585
29,500 29,500 Schneider S.A. (Housewares) 2,208,451 2,208,451
12,300 12,300 Societe BIC S.A. (Office Equipment & Supplies) 846,737 846,737
8,000 8,000 Societe Generale (Banks - Major Regional) 1,666,279 1,666,279
4,400 4,400 Sodexho Alliance S.A. (Services-Commercial & Consumer) 805,923 805,923
14,500 14,500 Suez Lyonnaise des Eaux (Manufacturing-Diversified) 2,460,490 2,460,490
13,100 13,100 Total S.A. - Class B (Oil & Gas-Refining & Marketing) 1,558,228 1,558,228
19,400 19,400 Valeo S.A. (Auto Parts & Equipment) 1,929,995 1,929,995
----------
42,872,660
----------
GERMANY - 3.38%
16,350 16,350 Adidas Salomon A.G. (Footwear) 2,711,178 2,711,178
4,000 4,000 Allianz A.G. (Insurance-Multi-Line) 1,230,701 1,230,701
17,000 17,000 Bayerische Vereinsbank A.G. (Banks-Major Regional) 1,293,406 1,293,406
29,600 29,600 Continental A.G. (Auto Parts & Equipment) 841,425 841,425
36,000 36,000 Dresdner Bank A.G. (Banks-Major Regional) 1,948,386 1,948,386
7,500 7,500 Henkel KGaA (Chemicals-Diversified) 585,252 585,252
2,150 2,150 Mannesmann A.G. (Machinery-Diversified) 1,706,482 1,706,482
600 600 Porsche A.G. (Automobiles) 1,501,589 1,501,589
4,600 4,600 SAP A.G. (Computers-Software & Services) 2,179,366 2,179,366
4,600 4,600 SAP A.G. (Computers-Software & Services) 2,294,744 2,294,744
18,000 18,000 VEBA A.G. (Manufactuing-Diversified) 1,189,900 1,189,900
6,000 6,000 Volkswagen A.G. (Automobiles) 4,778,998 4,778,998
----------
22,261,427
----------
HONG KONG - 1.56%
1,294,000 1,294,000 Cosco Pacific Ltd. (Financial-Diversified) 877,033 877,033
1,183,204 1,183,204 Hong Kong & China Gas Co. Ltd. (Natural Gas) 1,611,516 1,611,516
51,496 63,400 114,896 HSBC Holdings PLC (Banks - Major Regional) 1,469,320 1,808,856 3,278,176
338,000 338,000 Hutchison Whampoa Ltd. (Retail-Food Chains) 2,090,137 2,090,137
151,800 151,800 New World Infrastructure Ltd.
(Services-Commercial & Consumer) 326,293 326,293
898,000 898,000 Ng Fung Hong Ltd. (Foods) 811,516 811,516
370,000 370,000 Shanghai Industrial Holdings Ltd.
(Manufacturing-Diversified) 1,268,285 1,268,285
----------
10,262,956
----------
HUNGARY - 0.43%
15,800 11,000 26,800 Gedeon Richter (Health Care-Drugs-Major
Pharmaceuticals) (a) 1,686,650 1,171,500 2,858,150
----------
INDIA - 0.23%
80,900 80,900 State Bank of India Ltd. (Banks-Money Center) 1,541,145 1,541,145
----------
INDONESIA - 0.17%
71,100 71,100 Gulf Indonesia Resources Ltd. (Oil-International
Integrated) (a) 1,093,162 1,093,162
----------
</TABLE>
<PAGE> 473
<TABLE>
<CAPTION>
AIM AIM AIM AIM PRO
WORLDWIDE GLOBAL PRO WORLDWIDE GLOBAL FORMA
GROWTH GROWTH FORMA GROWTH GROWTH MARKET
FUND FUND COMBINING FUND FUND VALUE
SHARES
<S> <C> <C> <C> <C> <C> <C>
IRELAND - 0.70%
180,000 180,000 Allied Irish Banks PLC (Banks-Regional) 2,508,449 2,508,449
75,000 75,000 Bank of Ireland (Banks-Major Regional) 1,531,592 1,531,592
9,000 9,000 Elan Corp. PLC-ADR (Health Care-Drugs-Generic & Other) (a) 559,125 559,125
----------
4,599,166
----------
ISRAEL - 0.10%
252,920 252,920 Bank Hapoalim Ltd. (Banks-Money Center) 679,297 679,297
----------
ITALY - 2.99%
92,200 92,200 Assicurazioni Generali (Insurance/Multi-Line) 2,761,498 2,761,498
465,000 465,000 Credito Italiano S.p.A. (Banks-Major Regional) 2,434,008 2,434,008
290,000 290,000 Ente Nazionale Idrocarburi S.p.A. (Oil &
Gas-Refining & Marketing) 1,943,320 1,943,320
138,000 138,000 Istituto Mobiliare Italiano S.p.A. (Banks-Major Regional) 2,247,997 2,247,997
862,187 862,187 Pirelli S.p.A. (Electrical Equipment) 2,847,916 2,847,916
460,000 460,000 Telecom Italia Mobile S.p.A. (Telecommunications -
Cellular/Wireless) 2,635,323 2,635,323
252,900 388,888 641,788 Telecom Italia S.p.A. (Telephone) 1,905,998 2,929,805 4,835,803
----------
19,705,865
----------
JAPAN - 5.03%
23,023 23,023 Advantest Corp. (Electronics-Instrumentation) 1,547,735 1,547,735
55,400 55,400 Amway Japan Ltd. (Retail-General Merchandise) 770,433 770,433
95,000 95,000 Asahi Breweries Ltd. (Beverages-Alcoholic) 1,244,313 1,244,313
101,000 101,000 Bridgestone Corp. (Auto Parts & Equipment) 2,303,950 2,303,950
50,000 48,000 98,000 Canon, Inc. (Office Equipment & Supplies) 1,182,828 1,134,829 2,317,657
30,000 30,000 Fuji Photo Film Co.(Leisure Time-Products) 1,067,301 1,067,301
224,000 224,000 Hitachi Cable, Ltd. (Metal Fabricators) 1,115,009 1,115,009
50,000 50,000 Honda Motor Co., Ltd. (Automobiles) 1,812,826 1,812,826
75,000 75,000 Ibiden Co., Ltd. (Electronics-Component Distributors) 1,184,002 1,184,002
103,000 103,000 Kokusai Securities Co., Ltd. (Inverstment Banking/Brokerage) 889,018 889,018
23,800 23,800 Mabochi Motor Co., Ltd. (Electrical Equipment) 1,377,885 1,377,885
193,000 193,000 Minebea Company Ltd. (Electronics-Component Distributors) 2,157,565 2,157,565
46,000 46,000 Murata Manufacturing Co., Ltd. (Electronics- Component
Distributors) 1,348,138 1,348,138
9,900 9,900 Nichiei Co., Ltd. (Banks-Money Center) 770,690 770,690
2,500 2,500 Nippon Telegraph & Telephone Corp. (Telephone) 2,190,497 2,190,497
2,050 2,050 Nippon Television Network Corp (Broadcasting-Television,
Radio & Cable) 605,446 605,446
470 470 NTT Data Corp. (Computer Software/Services) 2,030,667 2,030,667
14,000 14,000 Rohm Co. (Electronics-Component Distributors) 1,579,877 1,579,877
6,800 6,800 SMC Corp. (Machinery-Diversified) 564,997 564,997
30,000 30,000 Sony Corp. (Electronics-Component Distributors) 2,494,901 2,494,901
45,000 45,000 Takeda Chemical Industries (Health Care/Drugs-Generic
& Other) 1,285,618 1,285,618
31,000 31,000 TDK Corp. (Electrical Equipment) 2,449,279 2,449,279
----------
33,107,804
----------
KOREA - 0.06%
62,002 62,002 Kookmin Bank (Banks-Major Regional) 392,447 392,447
----------
MEXICO - 2.41%
117,499 117,499 Cifra SA de C.V. - Series V (Retail-General Merchandise) 205,140 205,140
1,009,000 1,009,000 Cifra S.A. de C.V.- Series C (Retail-General Merchandise) 1,716,435 1,716,435
145,800 145,800 Coca-Cola Femsa S.A.-ADR (Beverages-Non-Alcoholic) 2,478,600 2,478,600
265,450 265,450 Fomento Economico Mexicano, S.A. de C.V.-
Class B(Beverages-Alcoholic) 1,963,864 1,963,864
681,200 681,200 Grupo Industrial Maseca S.A. de CV-Class B (Foods) 491,128 491,128
67,700 67,700 Grupo Televisa S.A.-GDR (Entertainment) (a) 2,775,700 2,775,700
483,400 483,400 Kimberly-Clark de Mexico, S.A. de C.V.-Class A
(Paper & Forest Products) 2,371,869 2,371,869
86,300 86,300 Panamerican Beverages, Inc.-Class A (Beverages-Non-Alcoholic) 3,441,212 3,441,212
24,200 24,200 TV Azteca, S.A. de C.V.-ADR (Broadcasting-Television,
Radio & Cable) 450,725 450,725
----------
15,894,673
----------
NETHERLANDS - 3.33%
8,790 8,790 Akzo Nobel N.V. (Chemicals) 1,788,815 1,788,815
61,700 61,700 CMG PLC (Computers-Software & Services) 2,761,091 2,761,091
41,000 41,000 Getronics N.V. (Computers-Software & Services) 1,814,464 1,814,464
16,600 16,600 Gucci Group (Retail-Specialty Apparel) 772,937 772,937
39,100 39,100 ING Groep N.V. (Banks-Money Center) 2,542,003 2,542,003
56,959 30,600 87,559 Koninklijke Ahold N.V. (Retail-Food Chains) 1,776,796 954,309 2,731,105
26,000 26,000 Koninklijke Numico N.V. (Foods) 868,769 868,769
29,000 29,000 Philips Electronics N.V. (Household Furniture & Appliances) 2,555,319 2,555,319
25,000 25,000 Randstad Holdings N.V. (Services-Commercial & Consumer) 1,227,662 1,227,662
38,000 38,000 Vendex International N.V. (Retail-General Merchandise) 2,437,899 2,437,899
75,500 75,500 Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit
(Publishing) 2,444,285 2,444,285
----------
21,944,349
----------
NEW ZEALAND - 0.40%
68,000 68,000 Telecom Corp. of New Zealand - ADR (Telephone) 2,605,250 2,605,250
----------
NORWAY - 0.43%
24,620 18,800 43,420 Petroleum Geo-Services A.S.A. (Oil-International
Integrated) (a) 1,598,208 1,220,296 2,818,504
----------
PHILIPPINES - 0.14%
16,460 16,460 Philippine Long Distance Telephone Co. (Telephone) 440,709 440,709
17,800 17,800 Philippine Long Distance Telephone Co.-ADR (Telephone) 480,600 480,600
----------
921,309
----------
PORTUGAL - 1.23%
82,000 82,000 Banco Comercial Portugues, S.A. (Banks-Major Regional) 2,875,261 2,875,261
24,200 24,200 Electric de Portugal, S.A.-ADR (Electric Companies) (a) 1,258,400 1,258,400
42,000 42,000 Portugal Telecom S.A. (Telephone) 2,257,340 2,257,340
9,661 9,661 Telecel-Comunicacoes Pessoais S.A. (Telephone) 1,734,093 1,734,093
----------
8,125,094
----------
SINGAPORE - 0.20%
152,000 150,000 302,000 Overseas Union Bank Ltd. (Banks-Major Regional) 720,835 568,541 1,289,376
----------
SPAIN - 1.67%
73,500 73,500 Banco Bilbao Vizcaya, S.A. (Banks-Major Regional) (a) 3,783,585 3,783,585
13,000 13,000 Banco Popular Espanol S.A. (Banks-Major Regional) 1,066,973 1,066,973
104,200 104,200 Endesa S.A. (Electric Companies) 2,531,451 2,531,451
</TABLE>
<PAGE> 474
<TABLE>
<CAPTION>
AIM AIM AIM AIM PRO
WORLDWIDE GLOBAL PRO WORLDWIDE GLOBAL FORMA
GROWTH GROWTH FORMA GROWTH GROWTH MARKET
FUND FUND COMBINING FUND FUND VALUE
SHARES
<S> <C> <C> <C> <C> <C> <C>
60,000 60,000 Iberdrola S.A. (Electric Companies) 965,200 965,200
62,000 62,000 Telefonica de Espana (Telephone) 2,589,101 2,589,101
62,000 62,000 Telefonica de Espana (Telephone) - Rights, expiring
05/30/98 (a) 48,851 48,851
----------
10,985,161
----------
SWEDEN - 1.50%
59,720 46,000 105,720 Forenings Sparbanken A.B.-Class A (Banks-Major Regional) 1,867,938 1,437,871 3,305,809
24,400 24,400 Hennes & Mauritz A.B.-Class B (Retail-Specialty-Apparel) 1,270,111 1,270,111
59,720 59,720 Mandamus A.B. (Real Estate Investment Trust) 54,031 54,031
325,006 325,006 Nordbanken Holding A.B. (Banks-Regional) 2,394,383 2,394,383
30,000 30,000 Svenska Handelsbanken - Class A (Banks-Major Regional) 1,360,113 1,360,113
51,200 51,200 Volvo A.B. - Class B (Automobiles) 1,495,567 1,495,567
----------
9,880,014
----------
SWITZERLAND - 2.72%
1,650 1,650 Clariant A.G. (Chemicals-Specialty) 1,775,671 1,775,671
14,500 14,500 Credit Suisse Group (Banks-Major Regional) 3,188,513 3,188,513
2,400 2,400 Holderbank Financiere Glarus A.G.-Class B
(Construction-Cement & Aggregates) 2,539,615 2,539,615
680 680 Nestle S.A. (Foods) 1,318,585 1,318,585
2,200 2,200 Rieter Holdings Ltd. (Machinery-Diversified) 1,320,850 1,320,850
189 189 Roche Holdings Ltd. (Health Care-Diversified) 1,915,958 1,915,958
6,500 6,500 Schweizerischer Bankverein (Banks-Major Regional) 2,256,614 2,256,614
3,000 3,000 Swiss Bank Corp. (Banks-Money Center) 1,042,070 1,042,070
658 658 UBS A.G. (Banks-Major Regional) 1,059,889 1,059,889
2,500 2,500 Zurich Versicherungs-Gesellschaft (Insurance-Multi-Line) 1,522,623 1,522,623
----------
17,940,388
----------
TAIWAN - 0.22%
58,500 58,500 Taiwan Semiconductor Manufacturing Co.-ADR
(Electronics-Semiconductors) (a) 1,436,906 1,436,906
----------
UNITED KINGDOM - 11.94%
117,000 117,000 Abbey National PLC (Savings & Loan Companies) 2,197,174 2,197,174
215,700 215,700 Airtours PLC (Services-Commercial & Consumer) 1,889,471 1,889,471
71,000 71,000 Bodycote International PLC (Chemicals-Specialty) 1,422,595 1,422,595
64,000 64,000 British Aerospace PLC (Aerospace/Defense) 2,138,659 2,138,659
62,000 62,000 British Petroleum Co. PLC (Oil & Gas-Refining & Marketing) 979,399 979,399
226,000 226,000 Cable & Wireless PLC (Telecommunications-Cellular\Wireless) 2,589,197 2,589,197
59,200 59,200 Compass Group PLC (Services-Commercial & Consumer) 1,024,774 1,024,774
164,160 164,160 Diageo PLC (Beverages-Alcoholic) 1,954,547 1,954,547
118,000 102,000 220,000 EMAP PLC (Publishing) 2,405,385 2,076,141 4,481,526
333,000 333,000 EMI Group PLC (Leisure Time-Products) 3,382,901 3,382,901
316,500 316,500 General Electric Co. PLC (Manufacturing-Diversified) 2,620,263 2,620,263
39,000 39,000 GKN PLC (Manufacturing-Diversified) 1,126,479 1,126,479
61,400 61,400 Granada Group PLC (Leisure Time - Products) 1,057,723 1,057,723
178,000 178,000 Hays PLC (Services-Commercial & Consumer) 3,020,217 3,020,217
33,600 33,600 Imperial Chemical Industries PLC - ADR (Chemicals) 2,442,300 2,442,300
165,000 165,000 Kingfisher PLC (Retail-Department Stores) 2,996,953 2,996,953
382,000 382,000 Ladbroke Group PLC (Leisure Time-Products) 2,100,367 2,100,367
139,000 96,000 235,000 Lloyds TSB Group PLC (Banks-Major Regional) 2,081,513 1,437,815 3,519,328
45,000 45,000 Misys PLC (Services-Commercial & Consumer) 2,163,797 2,163,797
55,400 55,400 Nycomed Amersham PLC (Health Care-Diversified) 1,843,579 1,843,579
777,000 777,000 Old Mutual South Africa Trust PLC (REIT) 1,871,037 1,871,037
70,000 70,000 Pearson PLC (Specialty Printing) (a) 1,096,993 1,096,993
132,579 132,579 Provident Financial PLC (Consumer Finance) 2,215,166 2,215,166
100,789 100,789 Railtrack Group P.L.C. (Shipping) 1,841,623 1,841,623
240,000 240,000 Rentokil Initial PLC (Services-Commercial & Consumer) 1,546,394 1,546,394
155,133 155,133 Reuters Group PLC (Broadcasting-Television, Radio & Cable) 1,681,040 1,681,040
235,000 230,000 465,000 Royal & Sun Alliance Insurance Group PLC (Insurance-Multi-Line) 2,625,084 2,569,629 5,194,713
56,000 56,000 Schroders PLC (Banks-Regional) 2,746,622 2,746,622
265,000 265,000 Shell Transport & Trading Co., PLC (Oil-Internation Integrated) 1,971,989 1,971,989
75,000 75,000 Siebe PLC (Electronics-Component/Distributors) 1,675,845 1,675,845
150,000 150,000 Smiths Industries PLC (Machinery - Diversified) 2,158,779 2,158,779
224,000 224,000 Unilever PLC (Foods) 2,386,457 2,386,457
182,000 300,000 482,000 Vodafone Group PLC (Telecommunications-Cellular/Wireless) 1,993,478 3,286,463 5,279,941
316,000 316,000 WPP Group PLC (Services-Advertising/Marketing) 2,005,695 2,005,695
----------
78,623,543
--------------------------------------
TOTAL FOREIGN STOCKS & OTHER EQUITY INTERESTS 85,012,030 293,844,111 378,856,141
--------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 0.11%
FINANCIAL (DIVERSIFIED) - 0.11%
--------------------------------------
7,000 7,000 MGIC Investment Corp.-$3.12 Conv. Pfd. 0 735,000 735,000
--------------------------------------
PRINCIPAL AMOUNT(B) U.S. DOLLAR DENOMINATED FOREIGN BONDS & NOTES - 0.12%
HONG KONG - 0.12%
New World Infrastructure Ldt. (Services-Commercial &
Consumer), Conv. Bonds, 5.00%,
200,000 200,000 07/15/01(c) (Acquired from 4/10/97 to 4/11/97; Cost $234,938) 201,000 201,000
580,000 580,000 Conv. Bonds, 5.00%, 07/15/01 582,900 582,900
--------------------------------------
TOTAL U.S. DOLLAR DENOMINATED FOREIGN BONDS & NOTES 0 783,900 783,900
--------------------------------------
NON-U.S. DOLLAR DENOMINATED FOREIGN BONDS & NOTES-0.19%
FRANCE - 0.19%
--------------------------------------
FRF 2,835,000 2,835,000 AXA-UAP (Insurance-Multi-Line), Conv. Sr.
Deb., 4.50%, 01/01/99 0 1,251,536 1,251,536
--------------------------------------
REPURCHASE AGREEMENTS (D) - 4.89%
28,000,000 28,000,000 Dean Witter Reynolds, Inc. 5.55%, 05/01/98 (e) 28,000,000 28,000,000
179,511 179,511 Lehman Brothers Inc. 5.30%, 05/01/98 (f) 179,511 179,511
4,038,000 4,038,000 State Street Bank & Co., 5.44%, 05/01/98 (g) 4,038,000 4,038,000
--------------------------------------
TOTAL REPURCHASE AGREEMENTS 4,038,000 28,179,511 32,217,511
--------------------------------------
TOTAL INVESTMENTS - 98.10% 146,806,105 499,352,429 646,158,534
OTHER ASSETS LESS LIABILITIES - 1.90% 7,586,707 4,903,416 12,490,123
--------------------------------------
NET ASSETS - 100.00% $154,392,812 $504,255,845 $658,648,657
======================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Conv.- Convertible
Deb. - Debentures
FRF - French France
GDR - Global Depositary Receipt
Pfd - Preferred
Sr. - Senior
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Principal in U.S. Dollars unless otherwise indicated.
(c) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined
in accordance with procedures established by the Board of Directors.
The aggregate market value of this security at 4/30/98 represented
0.04% of the Fund's net assets.
(d) Collateral on repurchase agreements, including the Fund's pro-rata
interest in joint repurchase agreements, is taken into possesion 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,
private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 04/30/98 with a maturing value
of $300,046,250. Collateralized by $307,111,000 U.S. Government
obligations, 0% to 9.40% due 06/10/98 to 09/26/19 with an aggregate
market value at 04/30/98 of $306,000,308.
(f) Joint repurchase agreement entered into 04/30/98 with a maturing value
of $450,066,250. Collateralized by $522,302,000 U.S. Government
obligations, 0% to 7.45% due 08/14/98 to 10/08/27 with an aggregate
market value at 04/30/98 of $459,005,491.
(g) Repurchase agreement entered into 04/30/98 with a maturing value of
$4,038,610. Collateralized by $4,070,000 U.S. Government obligations,
6.125% due 08/31/98 with an aggregate market value at 04/30/98 of
$4,120,875.
See Accompanying notes to Pro Forma Combining Financial Statements.
<PAGE> 475
AIM Global Growth Fund
AIM Worldwide Growth Fund
Pro Forma Combining Statements of Assets and Liabilities
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
AIM Worldwide AIM Global Pro forma
Assets: Growth Fund Growth Fund combining
-------------------------------------------------------------
<S> <C> <C> <C>
Investments, at market value $ 146,806,105 $ 499,352,429 $ 646,158,534
(cost $118,552,830 - AIM Worldwide Growth Fund)
(cost $371,065,639- AIM Global Growth Fund)
Foreign currencies, at market value 1,705,000 3,510,328 5,215,328
(cost $1,724,989 - AIM Worldwide Growth Fund)
(cost $3,494,978- AIM Global Growth Fund)
Receivables for:
Investments sold 6,340,574 5,232,008 11,572,582
Capital stock/fund shares sold 2,282 2,252,580 2,254,862
Dividends and interest 592,699 1,119,844 1,712,543
Forward contracts 541,011 -- 541,011
Investments for deferred compensation plan -- 13,186 13,186
Other assets -- 25,785 25,785
----------------- ----------------- -----------------
Total Assets 155,987,671 511,506,160 667,493,831
----------------- ----------------- -----------------
Liabilities:
Payables for:
Investments purchased 868,379 4,599,003 5,467,382
Capital stock/fund shares reacquired 207,937 1,727,767 1,935,704
Deferred compensation -- 13,186 13,186
Accrued investment management/advisory fees 125,334 347,387 472,721
Accrued fund accounting/administrative services fees 2,140 11,735 13,875
Accrued trustees'/directors' fees 4,915 2,243 7,158
Accrued distribution fees 69,280 319,085 388,365
Accrued transfer agent fees 97,705 77,260 174,965
Accrued operating expenses 219,169 152,649 371,818
----------------- ----------------- -----------------
Total liabilities 1,594,859 7,250,315 8,845,174
----------------- ----------------- -----------------
Net assets applicable to shares outstanding $ 154,392,812 $ 504,255,845 $ 658,648,657
================= ================= =================
Net Assets:
Class A $ 106,378,211 $ 217,916,181 $ 327,198,427
Advisor Class $ 2,904,035 -- --
Class B $ 45,110,566 $ 281,432,014 $ 326,542,580
Class C -- $ 4,907,650 $ 4,907,650
Shares Outstanding:
Class A 6,535,847 11,304,102 16,973,610
Advisor Class 176,674 -- --
Class B 2,904,988 14,878,249 17,262,734
Class C -- 259,527 259,527
Class A:
Net asset value and redemption price per share: $ 16.28 $ 19.28 $ 19.28
Offering price per share:
(Net asset value of $16.28/95.25%)-AIM Worldwide Growth Fund $ 17.09
(Net asset value of $19.28/95.25%)-AIM Global Growth Fund $ 20.24 $ 20.24
Advisor Class:
Net asset value, offering and redemption price per share: $ 16.44 -- --
Class B:
Net asset value and offering price per share: $ 15.53 $ 18.92 $ 18.92
Class C:
Net asset value and offering price per share: -- $ 18.91 $ 18.91
</TABLE>
See accompanying notes to Pro Forma Combining Financial Statements.
<PAGE> 476
AIM Global Growth Fund
AIM Worldwide Growth Fund
Pro Forma Combining Statement of Operations
For the six months ended April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
AIM Worldwide AIM Global Pro forma
Growth Fund Growth Fund Adjustments combining
----------------------------------------------------------------
Investment income:
<S> <C> <C> <C> <C>
Dividend income $ 1,305,634 $ 2,002,141 $ 3,307,775
(net of foreign withholding tax of $105,891
- AIM Worldwide Growth Fund)
(net of foreign withholding tax of $168,783
- AIM Global Growth Fund)
Interest 364,836 719,736 1,084,572
------------- ------------- -------------
Total investment income 1,670,470 2,721,877 4,392,347
------------- ------------- -------------
Expenses:
Investment management/Advisory fees 737,797 1,844,970 (94,997) 2,487,770
Trustees'/Directors' fees and expenses 6,276 5,250 (2,167) 9,359
Distribution fees - Class A 180,670 472,471 83,499 736,640
Distribution fees - Class B 227,773 1,213,414 -- 1,441,187
Distribution fees - Class C -- 12,198 -- 12,198
Fund accounting/Administrative services fees 19,981 40,519 (16,100) 44,400
Transfer agent fees 222,960 501,412 -- 724,372
Custodian 40,265 176,160 -- 216,425
Other 69,548 171,458 -- 241,006
------------- ------------- ---------- -------------
Total expenses 1,505,270 4,437,852 (29,765) 5,913,357
------------- ------------- ---------- -------------
Less: Expense reductions (22,270) (3,145) -- (25,415)
------------- ------------- ---------- -------------
Net Expenses 1,483,000 4,434,707 (29,786) 5,887,942
------------- ------------- ---------- -------------
Net investment income (loss) 187,470 (1,712,830) 29,765 (1,495,595)
------------- ------------- ---------- -------------
Realized and unrealized gain (loss) on investment
securities, foreign currencies
and option contracts:
Net realized gain (loss) from:
Investment securities 8,487,625 9,732,168 18,219,793
Foreign currencies 480,632 (402,967) 77,665
Futures contracts -- 727,924 727,924
Option contracts -- (27,489) (27,489)
------------- ------------- -------------
8,968,257 10,029,636 18,997,893
------------- ------------- -------------
Net unrealized appreciation (depreciation) of:
Investment securities 13,664,803 68,191,263 81,856,066
Foreign currencies 613,691 61,692 675,383
Futures contracts -- (51,000) (51,000)
14,278,494 68,201,955 82,480,449
------------- ------------- ---------- -------------
Net gain on investment securities, foreign currencies,
futures and option contra 23,246,751 78,231,591 101,478,342
------------- ------------- ---------- -------------
Net increase in net assets resulting from operations $ 23,434,221 $ 76,518,761 $ 29,765 $ 99,982,747
============= ============= ========== =============
</TABLE>
See accompanying notes to Pro Forma Combining Financial Statements.
<PAGE> 477
AIM Global Growth Fund
AIM Worldwide Growth Fund
Notes to Pro Forma Combining Financial Statements
April 30, 1998
(Unaudited)
Note 1 - Basis of Pro Forma Presentation
The pro forma financial statements and the accompanying pro forma schedule of
investments give effect to the proposed Agreement and Plan of Reorganization
between AIM Worldwide Growth Fund and AIM International Funds, Inc. and the
consummation of the transactions contemplated therein to be accounted for as a
tax-free reorganization of investment companies. The Agreement and Plan of
Reorganization would be accomplished by an exchange of shares of AIM Global
Growth Fund for the net assets of AIM Worldwide Growth Fund and the distribution
of AIM Global Growth Fund shares to AIM Worldwide Growth Fund shareholders. If
the Agreement and Plan of Reorganization were to have taken place at April 30,
1998, AIM Worldwide Growth Fund Class A and Advisor Class shareholders would
have received 5,669,508 shares of AIM Global Growth Fund - Class A shares and
AIM Worldwide Growth Fund Class B shareholders would have received 2,384,485
shares of AIM Global Growth Fund - Class B shares.
Note 2 - Pro Forma Adjustments
Pro forma adjustments have been made to reflect the contractual expenses of the
combined entities.
<PAGE> 478
AIM Global Growth Fund
AIM Worldwide Growth Fund
Pro Forma Combining Statement of Operations
For the Year Ended October 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
AIM Worldwide AIM Global Pro forma
Growth Fund Growth Fund Adjustments combining
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment income:
Dividend income $ 2,785,570 $ 4,455,134 $ 7,240,704
(net of foreign withholding tax of $280,966 -
AIM Worldwide Growth Fund)
(net of foreign withholding tax of $505,201 -
AIM Global Growth Fund)
Interest 646,791 506,016 1,152,807
------------ ------------ ------------ ------------
Total investment income 3,432,361 4,961,150 8,393,511
------------ ------------ ------------ ------------
Expenses:
Investment management/Advisory fees 1,677,196 2,895,282 (215,025) 4,357,453
Trustees'/Directors' fees and expenses 13,584 10,557 (5,434) 18,707
Distribution fees - Class A 416,898 778,588 189,174 1,384,660
Distribution fees - Class B 508,056 1,847,507 -- 2,355,563
Distribution fees - Class C -- 1,532 -- 1,532
Fund accounting/Administrative services fees 43,006 87,673 (41,879) 88,800
Transfer agent fees 438,594 814,468 -- 1,253,062
Custodian 195,758 284,017 -- 479,775
Other 233,265 263,588 -- 496,853
------------ ------------ ------------ ------------
Total expenses 3,526,357 6,983,212 (73,164) 10,436,405
------------ ------------ ------------ ------------
Less: Expense reductions (205,323) (8,327) -- (213,650)
------------ ------------ ------------ ------------
Net expenses 3,321,034 6,974,885 (73,164) 10,222,755
------------ ------------ ------------ ------------
Net investment income (loss) 111,327 (2,013,735) 73,164 (1,829,244)
------------ ------------ ------------ ------------
Realized and unrealized gain (loss) on investment securities,
foreign currencies
and option contracts:
Net realized gain (loss) from:
Investment securities 30,114,834 12,314,226 42,429,060
Foreign currencies 2,689,271 (418,972) 2,270,299
------------ ------------ ------------
32,804,105 11,895,254 44,699,359
------------ ------------ ------------
Net unrealized appreciation (depreciation) of:
Investment securities (9,854,284) 37,009,027 27,154,743
Foreign currencies (638,909) 12,676 (626,233)
Futures contracts (75) 51,000 50,925
------------ ------------ ------------
(10,493,268) 37,072,703 -- 26,579,435
------------ ------------ ------------
Net gain on investment securities, foreign currencies
and futures contracts 22,310,837 48,967,957 -- 71,278,794
------------ ------------ ------------
Net increase in net assets resulting from operations $ 22,422,164 $ 46,954,222 $ 73,164 $ 69,449,550
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to Pro Forma Combining Financial Statements.
<PAGE> 479
PART C. OTHER INFORMATION
Item 15. Indemnification
Pursuant to the Maryland General Corporation Law and the Registrant's
Charter and By-Laws, the Registrant may indemnify any person who was or
is a director, officer, employee or agent of the Registrant to the
maximum extent permitted by the Maryland General Corporation Law. The
specific terms of such indemnification are reflected in the
Registrant's Charter and By-Laws, which are incorporated herein as part
of this Registration Statement. No indemnification will be provided by
the Registrant to any director or officer of the Registrant for any
liability to Registrant or shareholders to which such director or
officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of duty.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered hereby, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy and will be
governed by the final adjudication of such issue. Insurance coverage is
provided under a joint Mutual Fund and Investment Advisory Professional
Directors and Officers Liability Policy, issued by ICI Mutual Insurance
Company, with a $25,000,000 limit of liability.
Item 16. Exhibits.
1 (a) Articles of Incorporation of Registrant were filed as an
Exhibit to Registrant's Registration Statement on
December 19, 1991.
(b) Articles of Amendment, dated May 21, 1992, were filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1
on February 23, 1993.
(c) Articles of Amendment, dated May 21, 1992, were filed as
an Exhibit to Registrant's Post-Effective Amendment No. 1
on February 23, 1993.
(d) Articles Supplementary, dated June 29, 1994, to Articles
of Incorporation of Registrant were filed as an Exhibit
to Registrant's Post-Effective Amendment No. 5 on August
17, 1994.
(e) Articles Supplementary, dated August 4, 1994, to Articles
of Incorporation of Registrant were filed as an Exhibit
to Registrant's Post-Effective Amendment No. 5 on August
17, 1994.
<PAGE> 480
Item 16. Exhibits.
(f) Articles of Amendment, dated November 14, 1994, were
filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996.
(g) Articles of Restatement, dated November 14, 1994, were
filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996, and are hereby
incorporated by reference.
(h) Articles Supplementary to Articles of incorporation of
Registrant, dated June 12, 1997, were filed
electronically as an Exhibit to Post-Effective Amendment
No. 12 on August 4, 1997, and are hereby incorporated by
reference.
(i) Articles of Amendment to Articles of Incorporation of
Registrant, dated October 14, 1997, were filed
electronically as an Exhibit to Post-Effective Amendment
No. 13 on October 17, 1997, and are hereby incorporated
by reference.
2 (a) By-Laws of the Registrant were filed as an Exhibit to
Registrant's Registration Statement on December 19, 1991,
and were filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996.
(b) First Amendment, dated March 14, 1995, to By-Laws of
Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996.
(c) Amended and Restated By-Laws, dated effective December
11, 1996, were filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on February 24, 1997, and
are hereby incorporated by reference.
3 Voting Trust Agreements - None.
4 A copy of the form of Agreement and Plan of
Reorganization between the Registrant and AIM Growth
Series is attached as Appendix 1 to the Prospectus
contained in this Registration Statement.
5 (a) Specimen Certificate for AIM International Equity Fund
was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 1 on February 23, 1993.
(b) Specimen Certificates for Class A shares and Class B
shares of AIM Global Aggressive Growth Fund, AIM Global
Growth Fund, AIM Global Income Fund and AIM International
Equity Fund were filed as Exhibits to Registrant's
Post-Effective Amendment No. 7 on February 23, 1995, and
were filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996, and are hereby
incorporated by reference.
6 (a) (1) Investment Advisory Agreement, dated as of
November 8, 1991, between Registrant and A I M
Advisors, Inc. was filed as an Exhibit to
Registrant's Registration Statement on December
19, 1991.
(2) Investment Advisory Agreement, dated as of
October 18, 1993, between Registrant on behalf
of its AIM International Equity Fund and A I M
Advisors, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on
February 24, 1994, and was filed electronically
as an Exhibit to Post-Effective Amendment No. 9
on February 28, 1996.
2
<PAGE> 481
Item 16. Exhibits.
(3) Master Investment Advisory Agreement, dated as
of July 1, 1994, between A I M Advisors, Inc.
and Registrant on behalf of its AIM Global
Aggressive Growth Fund, AIM Global Growth Fund
and AIM Global Income Fund was filed as an
Exhibit to Registrant's Post-Effective Amendment
No. 6 on September 2, 1994, and was filed
electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996.
(4) Master Investment Advisory Agreement, dated
February 28, 1997, between A I M Advisors, Inc.
and Registrant was filed electronically as an
Exhibit to Post-Effective Amendment No. 11 on
May 16, 1997, and is hereby incorporated by
reference.
(5) Amendment No. 1, dated as of November 1, 1997,
to Master Investment Advisory Agreement, dated
February 28, 1997, between A I M Advisors, Inc.
and Registrant was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on
October 17, 1997, and is hereby incorporated by
reference.
(b) (1) Master Sub-Advisory Agreement, dated as of
November 1, 1997, between A I M Advisors, Inc.
and INVESCO Global Asset Management Limited was
filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on October 17,
1997, and is hereby incorporated by reference.
(2) Sub-Sub-Advisory Agreement, dated as of November
1, 1997, between INVESCO Global Asset Management
Limited and INVESCO Asset Management Limited was
filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on October 17,
1997, and is hereby incorporated by reference.
(3) Sub-Sub-Advisory Agreement, dated as of November
1, 1997, between INVESCO Global Asset Management
Limited and INVESCO Asia Limited was filed
electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, 1997, and is
hereby incorporated by reference.
7 (a) (1) Distribution Agreement, dated December 11, 1991,
between Registrant and A I M Distributors, Inc.
was filed as an Exhibit to Registrant's
Registration Statement on December 19, 1991.
(2) Distribution Agreement, dated October 18, 1993,
between Registrant and A I M Distributors, Inc.
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 3 on February 24,
1994.
(3) Master Distribution Agreement, dated September
10, 1994, between Registrant (on behalf of the
portfolios' Class A shares) and A I M
Distributors, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 7 on
February 23, 1995, and was filed electronically
as an Exhibit to Post-Effective Amendment No. 9
on February 28, 1996.
(4) Master Distribution Agreement, dated September
10, 1994, between the Registrant (on behalf of
the portfolios' Class B shares) and A I M
Distributors, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 7 on
February 23, 1995.
3
<PAGE> 482
Item 16. Exhibits.
(5) Amended and Restated Master Distribution
Agreement, dated May 2, 1995, between the
Registrant (on behalf of the portfolios' Class B
shares) and A I M Distributors, Inc. was
electronically filed as an Exhibit to
Post-Effective Amendment No. 8 on December 1,
1995.
(6) Master Distribution Agreement, dated February
28, 1997, between Registrant (on behalf of the
portfolios' Class A shares) and A I M
Distributors, Inc. was filed electronically as
an Exhibit to Post-Effective Amendment No. 11 on
May 16, 1997.
(7) (i) Master Distribution Agreement, dated February
28, 1997, between Registrant (on behalf of the
portfolios' Class B shares) and A I M
Distributors, Inc. was filed electronically as
an Exhibit to Post-Effective Amendment No. 11 on
May 16, 1997.
(7) (ii)Amendment No. 1, dated November 1, 1997, to
Master Distribution Agreement between Registrant
(on behalf of the portfolios' Class B shares)
and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, 1997, and is
hereby incorporated by reference.
(8) (i) Amended and Restated Master Distribution
Agreement, dated as of August 4, 1997, between
Registrant (on behalf of the portfolios' Class A
and Class C shares) and A I M Distributors, Inc.
was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on October 17,
1997, and is hereby incorporated by reference.
(8) (ii)Amendment No. 1, dated November 1, 1997, to
Amended and Restated Master Distribution
Agreement, dated as of August 4, 1997, (on
behalf of the portfolios' Class A and Class C
shares) was filed electronically as an Exhibit
to Post-Effective Amendment No. 13 on
October 17, 1997, and is hereby incorporated by
reference.
(b) Form of Selected Dealer Agreement between A I M
Distributors, Inc. and selected dealers was filed
electronically as an Exhibit to Post-Effective Amendment
No. 14 on February 20, 1998, and is hereby incorporated
by reference.
(c) Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks was filed electronically as
an Exhibit to Post-Effective Amendment No. 14 on
February 20, 1998, and is hereby incorporated by
reference.
8 (a) Retirement Plan for Registrant's Non-Affiliated
Directors was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 4 on June 29, 1994.
(b) Retirement Plan for Registrant's Non-Affiliated Directors
effective as of March 8, 1994, as restated September 18,
1995, was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996 and
is hereby incorporated by reference.
(c) Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 4 on June 29,
1994.
(d) Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors as approved December 5, 1995,
was filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996, and is hereby
incorporated by reference.
(e) Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Director's as approved March 12, 1997, is
filed herewith electronically.
4
<PAGE> 483
Item 16. Exhibits.
9 (a) Custodian Agreement between Registrant and State Street
Bank and Trust Company, dated as of November 8, 1991, was
filed as an Exhibit to Registrant's Registration
Statement on December 19, 1991, and was filed
electronically as an Exhibit to Post-Effective Amendment
No. 9 on February 28, 1996, and is hereby incorporated by
reference.
(b) Amendment, dated July 1, 1994, to Custodian Agreement
between Registrant and State Street Bank and Trust
Company dated November 8, 1991, was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 6 on
September 2, 1994, and was filed electronically as an
Exhibit to Post-Effective Amendment No. 9 on February 28,
1996, and is hereby incorporated by reference.
(c) Amendment No. 2, dated September 19, 1995, to the
Custodian Contract, dated November 8, 1991, was filed
electronically as an Exhibit to Post-Effective Amendment
No. 9 on February 28, 1996, and is hereby incorporated by
reference.
(d) Amendment No. 3, dated November 1, 1997, to the Custodian
Contract, dated November 8, 1991, between Registrant and
State Street Bank and Trust Company was filed
electronically as an Exhibit to Post-Effective Amendment
No. 13 on October 17, 1997, and is hereby incorporated by
reference.
(e) Subcustodian Agreement, dated September 9, 1994, among
Texas Commerce Bank National Association, State Street
Bank and Trust Company, A I M Fund Services, Inc. and
Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 9, on February 28, 1996, and
is hereby incorporated by reference.
10 (a) (1) Registrant's Distribution Plan was filed as an
Exhibit to Registrant's Post-Effective Amendment
No. 1 on February 23, 1993.
(2) Distribution Plan, and related forms of
agreements, on behalf of the Registrant's AIM
International Equity Fund, dated September 27,
1993, were filed as an Exhibit to Registrant's
Post-Effective Amendment No. 3 on February 24,
1994.
(3) Master Distribution Plan, and related forms of
agreements, for Registrant's Class A shares were
filed as Exhibits to Registrant's Post-Effective
Amendment No. 7 on February 23, 1995.
(4) Master Distribution Plan, and related forms of
agreements, for Registrant's Class B shares were
filed as Exhibits to Registrant's Post-Effective
Amendment No. 7 on February 23, 1995.
(5) Amended Master Distribution Plan, dated
September 10, 1994, for Registrant's Class A
shares was electronically filed as an Exhibit to
Post-Effective Amendment No. 8 on December 1,
1995.
(6) Amended Master Distribution Plan, dated
September 10, 1994, for Registrant's Class B
shares was electronically filed as an Exhibit to
Post-Effective Amendment No. 8 on December 1,
1995.
(7) Amended and Restated Master Distribution Plan,
dated as of September 10, 1994, as amended as of
September 10, 1994, and as amended and restated
as of May 2, 1995, for Registrant's Class B
shares was electronically filed as an Exhibit to
Post-Effective Amendment No. 8 on December 1,
1995,
5
<PAGE> 484
Item 16. Exhibits.
(8) Amended and Restated Master Distribution Plan,
dated as of September 10, 1994, as amended as of
September 10, 1994, and amended and restated as
of June 30, 1997, for Registrant's Class A
shares was filed electronically as an Exhibit to
Post-Effective Amendment No. 12 on August 4,
1997.
(9) (i) Second Amended and Restated Master
Distribution Plan, dated as of September
10, 1994, as amended September 10, 1994,
and as amended and restated as of May 2,
1995, and amended and restated as of June
30, 1997, for Registrant's Class B shares
was filed electronically as an Exhibit to
Post-Effective Amendment No. 12 on August
4, 1997, and is hereby incorporated by
reference.
(9) (ii) Amendment No. 1, dated November 1, 1997,
to Second Amended and Restated Master
Distribution Plan for Registrant's Class B
shares was filed electronically as an
Exhibit to Post-Effective Amendment No. 13
on October 17, 1997, and is hereby
incorporated by reference.
(10) (i) Second Amended and Restated Master
Distribution Plan, dated as of September
10, 1994, as amended as of September 10,
1994, as amended and restated as of June
30, 1997, and as amended and restated as
of August 4, 1997, for Registrant's Class
A and Class C shares was filed
electronically as an Exhibit to
Post-Effective Amendment No. 13 on October
17, 1997, and is hereby incorporated by
reference.
(10) (ii) Amendment No. 1, dated November 1, 1997,
to Second Amended and Restated Master
Distribution Plan for Registrants Class A
and Class C shares was filed
electronically as an Exhibit to
Post-Effective Amendment No. 13 on October
17, 1997, and is hereby incorporated by
reference.
(b) Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed electronically as an Exhibit to Post-Effective
Amendment No. 14 on February 20, 1998, and is hereby
incorporated by reference.
(c) Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed electronically as an Exhibit to Post-Effective
Amendment No. 14 on February 20, 1998, and is hereby
incorporated by reference.
(d) (1) Form of Agency Pricing Agreement (for Class A
Shares) to be used in connection with
Registrant's Master Distribution Plan was filed
electronically as an Exhibit to Post- Effective
Amendment No. 14 on February 20, 1998, and is
hereby incorporated by reference.
(2) Form of Service Agreement for Certain Retirement
Plans (for the Institutional Classes) to by used
in connection with Registrant's Master
Distribution Plan was filed electronically as an
Exhibit to Post-Effective Amendment No. 9 on
February 28, 1996.
(e) Forms of Service Agreement for Brokers for Bank Trust
Departments and for Bank Trust Departments to be used in
connection with Registrant's Master Distribution Plan
were filed electronically as an Exhibit to Post-Effective
Amendment No. 14 on February 20, 1998, and is hereby
incorporated by reference.
6
<PAGE> 485
Item 16. Exhibits.
(f) Form of Variable Group Annuity Contractholder Service
Agreement to be used in connection with Registrant's
Master Distribution Plan was filed electronically as an
Exhibit to Post-Effective Amendment No. __ on ______,
1998, and is hereby incorporated by reference.
(g) Rule 18f-3 Amended and Restated Multiple Class Plan
(effective July 1, 1997) was filed electronically as an
Exhibit to Post-Effective Amendment No. 12 on August 12,
1997.
(h) Rule 18f-3 Second Amended and Restated Multiple Class
Plan (effective September 1, 1997) was filed
electronically as an Exhibit to Post-Effective Amendment
No. 13 on October 17, 1997, and is hereby incorporated by
reference.
11 Opinion and consent of Ballard Spahr Andrews & Ingersoll,
LLP, as to the legality of the securities being
registered is filed herewith electronically.
12 Opinion and consent of Ballard Spahr Andrews & Ingersoll,
LLP, supporting the tax matters and consequences to
shareholders discussed in the prospectus is to be filed
on or about February 12, 1999 in a Post-Effective
Amendment.
13 (a) (1) Transfer Agency Agreement between Registrant and
The Shareholder Services Group, Inc., dated May
15, 1992, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 1 on
February 23, 1993.
(2) Amendment, dated May 15, 1992, to Transfer
Agency Agreement between Registrant and The
Shareholder Services Group, Inc., dated May 15,
1992, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 1 on February 23,
1993.
(3) Form of Amendment No. 2 to Transfer Agency
Agreement between Registrant and The Shareholder
Services Group, Inc., dated May 15, 1992, was
filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on September 2,
1994.
(4) Amendment No. 3, dated July 1, 1994, to Transfer
Agency Agreement between Registrant and The
Shareholder Services Group, Inc., dated May 15,
1992, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on September 2,
1994.
(5) (i) Transfer Agency and Service Agreement,
dated as of November 1, 1994, between the
Registrant and A I M Fund Services, Inc.
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 7 on February
23, 1995, and was filed electronically as
an Exhibit to Post-Effective Amendment No.
9 on February 28, 1996, and is hereby
incorporated by reference.
(5) (ii) Amendment No. 1, dated August 4, 1997, to
the Transfer Agency and Service Agreement,
dated as of November 1, 1994, between the
Registrant and A I M Fund Services, Inc.,
was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on October
17, 1997, and is hereby incorporated by
reference.
(6) (i) Remote Access and Related Services
Agreement, dated as December 23, 1994,
between the Registrant and The Shareholder
Services Group, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 7
on February 23, 1995, and was filed
electronically as an Exhibit to
Post-Effective Amendment No. 9 on February
28, 1996, and is hereby incorporated by
reference.
7
<PAGE> 486
Item 16. Exhibits.
(6) (ii) Amendment No. 1, dated October 4, 1995, to
the Remote Access and Related Services
Agreement, dated December 23, 1994,
between the Registrant and First Data
Investor Services Group, Inc. (formerly
The Shareholder Services Group, Inc.) was
filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February
28, 1996, and is hereby incorporated by
reference.
(6) (iii) Addendum No. 2, dated October 12, 1995, to
the Remote Access and Related Services
Agreement, dated December 23, 1994,
between Registrant and First Data Investor
Services Group, Inc. (formerly The
Shareholder Services Group, Inc.) was
filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February
28, 1996, and is hereby incorporated by
reference.
(6) (iv) Amendment No. 3, dated February 1, 1997,
to the Remote Access and Related Services
Agreement, dated December 23, 1994,
between Registrant and First Data Investor
Services Group, Inc. (formerly The
Shareholder Services Group, Inc.) was
filed electronically as an Exhibit to
Post-Effective Amendment No. 12 on August
4, 1997, and is hereby incorporated by
reference.
(6) (v) Exhibit 1, effective as of August 4, 1997,
to the Remote Access and Related Services
Agreement, dated December 23, 1994,
between the Registrant and First Data
Investor Services Group, Inc. was filed
electronically as an Exhibit to
PostEffective Amendment No. 14 on
February 20, 1998, and is hereby
incorporated by reference.
(6) (vi) Preferred Registration Technology Escrow
Agreement, dated September 10, 1997,
between Registrant and First Data Investor
Services Group, Inc., was filed
electronically as an Exhibit to
Post-Effective Amendment No. 14 on
February 20, 1998, and is hereby
incorporated by reference.
(b) (1) Administrative Services Agreement, dated
December 10, 1991, between the Registrant and A
I M Advisors, Inc. was filed as an Exhibit to
Registrant's Registration Statement on December
19, 1991.
(2) Administrative Services Agreement, dated as of
October 18, 1993, between A I M Advisors, Inc.
and Registrant, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on
February 24, 1994, and was filed electronically
as an Exhibit to Post-Effective Amendment No. 9
on February 28, 1996.
(3) Master Administrative Services Agreement, dated
as of July 1, 1994, between A I M Advisors, Inc.
and Registrant on behalf of its AIM Global
Aggressive Growth Fund, AIM Global Growth Fund
and AIM Global Income Fund was filed as an
Exhibit to Registrant's Post-Effective Amendment
No. 6 on September 2, 1994, and was filed
electronically as an Exhibit to Post-Effective
Amendment No. 9, on February 28, 1996.
(4) (i) Administrative services Agreement, dated
as of October 18, 1993, between A I M
Advisors, Inc. on behalf of Registrant's
portfolios, and A I M Fund Services, Inc.,
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 3 on February
24, 1994.
8
<PAGE> 487
Item 16. Exhibits.
(4) (ii) Amendment No. 1, dated May 11, 1994, to
Administrative Services Agreement, dated
October 18, 1993, between A I M Advisors,
Inc., on behalf of Registrant's
portfolios, and A I M Fund Services, Inc.
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 4 on June 29,
1994.
(4) (iii) Amendment No. 2, dated July 1, 1994, to
Administrative Services Agreement, dated
October 18, 1993, between A I M Advisors,
Inc., on behalf of Registrant's portfolios
and classes, and A I M Fund Services, Inc.
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on
September 2, 1994.
(4) (iv) Amendment No. 3, dated September 16, 1994,
to the Administrative Services Agreement,
dated October 18, 1993, between A I M
Advisors, Inc., on behalf of Registrant's
portfolios and classes, and A I M Fund
Services, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment no.
7 on February 23, 1995.
(5) (i) Administrative Services Agreement, dated
as of February 28, 1997, between A I M
Advisors, Inc. and Registrant was filed as
an Exhibit to Post-Effective Amendment No.
11 on May 16, 1997, and is hereby
incorporated by reference.
(5) (ii) Amendment No. 1, dated November 1, 1997,
to Master Administrative Services
Agreement, dated February 28, 1997,
between A I M Advisors, Inc. and
Registrant was filed electronically as an
Exhibit to Post-Effective Amendment No. 13
on October 17, 1997, and is hereby
incorporated by reference.
(c) (1) Accounting Services Agreement, dated as of
November 5, 1991, between the Registrant and
State Street Bank and Trust Company was filed as
an Exhibit to Registrant's Pre-Effective
Amendment No. 2 on April 2, 1992, and was filed
electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996.
(2) Amendment No. 1, dated July 1, 1994, to
Accounting Services Agreement, dated as of
November 5, 1991, between the Registrant and
State Street Bank and Trust Company was filed as
an Exhibit to Registrant's Post-Effective
Amendment No. 6 on September 2, 1994, and was
filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28,
1996.
(d) (1) Shareholder Sub-Accounting Services Agreement
among the Registrant, First Data Investor
Services Group (formerly The Shareholder
Services Group, Inc.), Financial Data Services,
Inc. and Merrill Lynch, Pierce, Fenner & Smith,
Inc., was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 1 on February 23,
1993, and was filed electronically as an Exhibit
to Post-Effective Amendment No. 9 on February
28, 1996, and is hereby incorporated by
reference.
(2) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated
February 1, 1993, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 1 on
February 23, 1993, and was filed electronically
as an Exhibit to Post-Effective Amendment No. 10
on February 24, 1997, and is hereby incorporated
by reference.
(3) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated as of
November 1, 1997, among the Registrant, First
Data Investor Services Group, Inc., Financial
Data Services, Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated was filed
electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, and is hereby
incorporated by reference.
9
<PAGE> 488
Item 16. Exhibits.
14 (a) Consent of KPMG Peat Marwick LLP is filed herewith
electronically.
(b) Consent of Price Waterhouse LLP is filed herewith
electronically.
15 Financial Statements - None.
16 None.
17 (a) Form of Proxy.
(b) Prospectus of AIM International Growth Fund.
(c) Prospectus of AIM Worldwide Growth Fund.
Item 17. Undertakings
The Registrant undertakes to file with the SEC a copy of the tax
opinion delivered by its counsel in connection with the reorganization
of AIM International Growth Fund and AIM Worldwide Growth Fund by means
of a post-effective amendment to this Registration Statement promptly
after completion of the reorganization.
10
<PAGE> 489
SIGNATURES
Pursuant to the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant has duly caused this Registration Statement on Form N-14
to be signed on its behalf by the undersigned thereto duly authorized, in the
City of Houston, State of Texas, on the 13 day of November, 1998.
AIM INTERNATIONAL FUNDS, INC.
Registrant
By: /s/ Robert H. Graham
--------------------------------------
Robert H. Graham
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form N-14 has been signed below by the following persons on the
13 day of November, 1998 in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Charles T. Bauer Chairman & Director November 13, 1998
- -------------------------
Charles T. Bauer
/s/ Robert H. Graham Director & President November 13, 1998
- -------------------------
Robert H. Graham
/s/ Bruce L. Crockett Director November 13, 1998
- -------------------------
Bruce L. Crockett
/s/ Owen Daly II Director November 13, 1998
- -------------------------
Owen Daly II
/s/ Prema Mathai-Davis Director November 13, 1998
- -------------------------
Prema Mathai-Davis
/s/ Edward K. Dunn, Jr. Director November 13, 1998
- -------------------------
Edward K. Dunn, Jr.
/s/ Jack Fields Director November 13, 1998
- -------------------------
Jack Fields
/s/ Carl Frishling Director November 13, 1998
- -------------------------
Carl Frishling
/s/ Lewis F. Pennock Director November 13, 1998
- -------------------------
Lewis F. Pennock
/s/ Ian W. Robinson Director November 13, 1998
- -------------------------
Ian W. Robinson
/s/ Louis Sklar Director November 13, 1998
- -------------------------
Louis Sklar
/s/ John J. Arthur Senior Vice President & November 13, 1998
- ------------------------- Treasurer (Principal Financial Officer)
John J. Arthur
</TABLE>
11
<PAGE> 490
EXHIBIT INDEX
Exhibit No. Description
- ----------- ------------
11 Opinion of Counsel and Consent of Ballard Spahr Andrews
& Ingersoll, LLP as to securities registered
14(a) Consent of KPMG Peat Marwick
14(b) Consent of PricewaterhouseCoopers LLP
17(a) Form of Proxy
17(b) Prospectus of AIM International Growth Fund
17(c) Prospectus of AIM Worldwide Growth Fund
<PAGE> 1
EXHIBIT 11
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
1735 MARKET STREET, 51ST FLOOR
PHILADELPHIA, PENNSYLVANIA 19103-7599
(215) 665-8500
November 13, 1998
AIM International Funds, Inc.
11 Greenway Plaza
Suite 100
Houston, Texas 77046
Re: Shares of Stock
AIM International Funds, Inc.
Gentlemen:
We have acted as counsel to AIM International Funds, Inc., a Maryland
corporation (the "Company"), in connection with that certain Agreement and Plan
of Reorganization between the Company, acting on behalf of AIM International
Equity Fund and AIM Global Growth Fund (the "Acquiring Funds"), each an
investment portfolio of the Company, and AIM Growth Series, a Delaware business
trust ("AGS"), acting on behalf of AIM International Growth Fund and AIM
Worldwide Growth Fund (the "Acquired Funds"), each an investment portfolio of
AGS (the "Agreement"), and the consummation of the transactions contemplated
therein.
The Agreement provides for the combination of AIM International Growth
Fund with AIM International Equity Fund and the combination of AIM Worldwide
Growth Fund with AIM Global Growth Fund (the "Reorganizations"). Pursuant to the
Agreement, all of the assets of an Acquired Fund will be transferred to the
Acquiring Fund with which it will combine, the Acquiring Fund will assume all of
the liabilities of the Acquired Fund and the Company will issue Class A shares
of the Acquiring Fund to the Acquired Fund's Class A and Advisor Class
shareholders, and Class B shares of the Acquiring Fund to the Acquired Fund's
Class B shareholders. The value of each Acquired Fund shareholder's account with
the Acquiring Fund immediately after the Reorganization will be the same as the
value of such shareholder's account with the Acquired Fund immediately prior to
the Reorganization.
1
<PAGE> 2
AIM International Funds, Inc.
November 13, 1998
Page 2
The opinion expressed below is based on the assumption that a
Registration Statement on Form N-14 with respect to the Class A and Class B
shares of the Acquiring Funds to be issued pursuant to the Agreement (the
"Acquiring Fund Shares") will have been filed by the Company with the Securities
and Exchange Commission and will have become effective before the
Reorganizations occur.
Based on the foregoing, we are of the opinion that the Acquiring Fund
Shares, when issued by the Company directly to the shareholders of the Acquired
Funds in accordance with the terms and conditions of the Agreement, will be
legally issued, fully paid and nonassessable.
We express no opinion concerning the laws of any jurisdiction other
than the federal law of the United States of America and the law of the State
of Maryland.
We consent to the filing of this opinion as Exhibit 11 to the Company's
Registration Statement on Form N-14 and to the references to this firm in such
Registration Statement.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
2
<PAGE> 1
EXHIBIT 14(a)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders of
AIM International Funds, Inc.:
We consent to the use of our reports on AIM International Equity Fund and AIM
Global Growth Fund (series portfolios of AIM International Funds, Inc.) dated
December 5, 1997 included or incorporated herein by reference.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
November 12, 1998
<PAGE> 1
EXHIBIT 14(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of AIM Growth Series:
RE: AIM International Growth Fund (formerly GT Global International
Growth Fund)
AIM Worldwide Growth Fund (formerly GT Global Worldwide Growth
Fund)
We hereby consent to the inclusion of our report dated February 17, 1998
on our audits of the financial statements and financial highlights of the above
referenced funds as of December 31, 1997 in the Registration Statement on Form
N-14 under the Securities Act of 1933, as amended, of AIM International Funds,
Inc.
/S/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 12, 1998
<PAGE> 1
EXHIBIT 17(a)
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS. THE DIRECTORS
RECOMMEND VOTING FOR THE PROPOSAL. TO VOTE, FILL IN BOX COMPLETELY.
VOTE ONLY FOR THE PROPOSAL AFFECTING THE FUND WHOSE SHARES YOU OWN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. A. To approve an Agreement and Plan of Reorganization providing for
the combination of AIM International Growth Fund with AIM
International Equity Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. B. To approve an Agreement and Plan of Reorganization providing for the
combination of AIM Worldwide Growth Fund with AIM Global Growth Fund.
2. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
<PAGE> 2
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
................................................................................
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
AIM GROWTH SERIES
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS OF
AIM INTERNATIONAL GROWTH FUND
AND
AIM WORLDWIDE GROWTH FUND
FEBRUARY 10, 1999
The undersigned hereby appoints Charles T. Bauer and Gary T. Crum, and each of
them separately, proxies with the power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders of AIM International Growth Fund and AIM Worldwide
Growth Fund, each a portfolio of AIM Growth Series, to be held on February 10,
1999 at 3:00 p.m. Central time, and at any adjournment thereof, all of the
shares of AIM International Growth Fund or AIM Worldwide Growth Fund which the
undersigned would be entitled to vote if personally present. IF THIS PROXY IS
SIGNED AND RETURNED WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED FOR THE
APPROVAL OF THE PROPOSAL.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. All joint
owners should sign. When signing as
executor, administrator, attorney,
trustee or guardian or as custodian for
a minor, please give full title as such,
if a corporation, please sign in full
corporate name and indicate the signer's
office. If a partner, sign in the
partnership name.
----------------------------------------
Signature
----------------------------------------
Signature (if held jointly)
Dated
----------------------------------
2
<PAGE> 1
EXHIBIT 17(b)
CLASS A AND CLASS B SHARES OF
AIM INTERNATIONAL GROWTH FUND
SUPPLEMENT TO PROSPECTUS
DATED SEPTEMBER 8, 1998
The Board of Trustees of AIM Growth Series unanimously approved, on
September 23, 1998, an Agreement and Plan of Reorganization ("Plan") pursuant
to which AIM International Growth Fund ("International Growth Fund"), a series
of AIM Growth Series, would transfer substantially all of its assets to AIM
International Equity Fund ("International Equity Fund"), a series of AIM
International Funds, Inc. As a result of the transaction, shareholders of
International Growth Fund would receive shares of International Equity Fund in
exchange for their shares of International Growth Fund, and International
Growth Fund would cease operations. Like International Growth Fund,
International Equity Fund seeks long-term growth of capital. International
Equity Fund seeks to achieve its objective by investing in a diversified
portfolio of international equity securities, the issuers of which are
considered by the Fund's investment adviser to have strong earnings momentum.
The Plan requires the approval of International Growth Fund
shareholders and will be submitted to the shareholders for their consideration
at a meeting to be held in February 1999. If the Plan is approved by
shareholders of International Growth Fund and certain conditions required by
the Plan are satisfied, the transaction is expected to become effective before
the end of February 1999.
September 28, 1998
<PAGE> 2
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM INTERNATIONAL GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM INTERNATIONAL GROWTH FUND (the
"Fund"), which is one of several series investment portfolios comprising AIM
Growth Series (the "Trust"), an open-end, series, management investment company.
The Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled in its Primary
Investment Area (as defined herein).
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or by calling (800)
347-4246. The SEC maintains a Web site at http://www.sec.gov that contains the
Statement of Additional Information, material incorporated by reference, and
other information about the Fund. Additional information about the Fund may also
be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 7
Investment Program................... 7
Risk Factors......................... 10
Management........................... 12
Organization of the Trust............ 14
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
How to Purchase Shares............... A-1
Terms of Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-9
Exchange Privilege................... A-12
How to Redeem Shares................. A-14
Determination of Net Asset Value..... A-19
Dividends, Distributions and Tax
Matters........................... A-19
General Information.................. A-23
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
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THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined herein).
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class Shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES -- Shares are offered at net asset value plus any applicable
initial sales charge.
CLASS B SHARES -- Shares are offered at net asset value without an initial
sales charge, and are subject to a maximum contingent deferred sales charge of
5% on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held, and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more beneficial than Class
B shares to the investor who qualifies for reduced initial sales charges, as
described below. Therefore, AIM Distributors will reject any order for purchase
of more than $250,000 for Class B shares.
2
<PAGE> 4
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds"). Class
A and Class B shares of the Fund may be exchanged for shares of other funds in
The AIM Family of Funds in the manner and subject to the policies and charges
set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases."
Class B shareholders of the Fund may redeem all or a portion of their shares
at net asset value on any business day, less a contingent deferred sales charge
for redemptions made within six years from the date such shares were purchased.
Class B shares redeemed after six years from the date such shares were purchased
will not be subject to any contingent deferred sales charge. See "How to Redeem
Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities.
The Fund invests primarily in foreign securities. Investments in foreign
securities involve risks relating to political and economic developments abroad
and the differences between the regulations to which U.S. and foreign issuers
are subject. Individual foreign economies also may differ favorably or
unfavorably from the U.S. economy. Changes in foreign currency exchange rates
also may affect the Fund's net asset value, earnings and gains and losses
realized on sales of securities.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 5
THE FUND
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TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.98% 0.98%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses............................................ 0.49% 0.49%
---- ----
Total Fund Operating Expenses..................... 1.82% 2.47%
==== ====
</TABLE>
(1)This table is intended to assist investors in understanding the various costs
and expenses associated with investing in the Fund. Long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers, Inc.
rules regarding investment companies.
(2)Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See "Terms
and Conditions of Purchase of the AIM Funds -- Reductions in Initial Sales
Charges."
(3)Expenses are based on the Fund's fiscal year ended December 31, 1997. AIM has
voluntarily agreed to limit the Fund's, expenses effective January 1, 1998
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 2.00% and 2.65% of the average daily net
assets of the Fund's Class A and Class B shares, respectively through May 31,
2000. "Other expenses" include custody, transfer agency, legal, audit and
other operating expenses. See "Management" herein and the Statement of
Additional Information for more information.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Funds, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1).................................. $73 $110 $149 $258
Class B shares
Assuming a complete redemption at end of
period(2)..................................... $77 $110 $156 $267
Assuming no redemption........................... $25 $ 78 $133 $267
</TABLE>
(1)Assumes payment of maximum sales charge by the investor.
(2)Assumes deduction of the applicable contingent deferred sales charge.
(3)For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 6
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FINANCIAL HIGHLIGHTS
The table below provides condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information. The financial statements and notes for
the fiscal year ended December 31, 1997, have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report thereon is
also included in the Statement of Additional Information. The unaudited
financial statements and notes, for the semi-annual period ended June 30, 1998,
are also included in the Statement of Additional Information. Information
presented below for the fiscal years ended December 31, 1988 to 1991 was audited
by other auditors that served as the Fund's independent accountants for those
periods.
AIM INTERNATIONAL GROWTH FUND
(FORMERLY GT GLOBAL INTERNATIONAL GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 ---------------------------------------------------------------
CLASS A+ (UNAUDITED)* 1997* 1996* 1995 1994 1993* 1992
-------- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21 $ 8.74
-------- -------- -------- -------- -------- -------- --------
Net investment income (loss)................ 0.04 0.03 (0.01) 0.03 (0.04) 0.03 0.11
Net realized and unrealized gain (loss) on
investments................................ 0.81 0.69 0.84 0.32 (0.82) 2.78 (0.62)
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value
resulting from investment operations....... 0.85 0.72 0.83 0.35 (0.86) 2.81 (0.51)
-------- -------- -------- -------- -------- -------- --------
Distributions:
Net investment income...................... -- (0.03) -- -- (0.04) -- (0.02)
Net realized gain on investments........... -- (1.94) (0.99) (0.24) (0.95) -- --
In excess of net realized gain on
investments.............................. -- -- -- (0.20) -- -- --
-------- -------- -------- -------- -------- -------- --------
Total distributions................... -- (1.97) (0.99) (0.44) (0.99) -- (0.02)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period.............. $ 8.52 $ 7.67 $ 8.92 $ 9.08 $ 9.17 $ 11.02 $ 8.21
======== ======== ======== ======== ======== ======== ========
Total investment return(a)(c)............... 11.08% 8.51% 9.28% 3.88% (7.78)% 34.23% (5.83)%
Ratios and supplemental data:
Net assets, end of period (in 000's)........ $143,958 $148,143 $196,601 $308,816 $430,701 $523,397 $421,693
Ratio of operating net investment income
(loss) to average net assets:
With expense reductions(b)................. 0.89% 0.35% (0.14)% 0.24% (0.04)% 0.3% 1.2%
Without expense reductions(b).............. 0.88% 0.22% (0.25)% 0.16% (0.09)% N/A N/A
Ratio of operating expenses to average net
assets:
With expense reductions(b)................. 1.90% 1.69% 1.80% 1.70% 1.70% 1.8% 1.9%
Without expense reductions(b).............. 1.91% 1.82% 1.91% 1.78% 1.75% --%(d) --%(d)
Portfolio turnover rate++(b)................ 51% 72% 74% 75% 96% 90% 89%
Average commission rate per share paid on
portfolio transactions++................... N/A $ 0.0269 $ 0.0267 N/A N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
CLASS A+ 1991 1990 1989** 1988**
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........ $ 7.82 $ 9.25 $ 6.77 $ 5.71
-------- -------- -------- -------
Net investment income (loss)................ 0.14 0.10 0.01 (0.01)
Net realized and unrealized gain (loss) on
investments................................ 0.89 (1.42) 2.60 1.12
-------- -------- -------- -------
Net increase (decrease) in net asset value
resulting from investment operations....... 1.03 (1.32) 2.61 1.11
-------- -------- -------- -------
Distributions:
Net investment income...................... (0.11) (0.11) -- --
Net realized gain on investments........... -- -- (0.13) (0.05)
In excess of net realized gain on
investments.............................. -- -- -- --
-------- -------- -------- -------
Total distributions................... (0.11) (0.11) (0.13) (0.05)
-------- -------- -------- -------
Net asset value, end of period.............. $ 8.74 $ 7.82 $ 9.25 $ 6.77
======== ======== ======== =======
Total investment return(a)(c)............... 13.2% (14.3)% 38.6% 19.4%
Ratios and supplemental data:
Net assets, end of period (in 000's)........ $463,851 $343,949 $136,975 $29,792
Ratio of operating net investment income
(loss) to average net assets:
With expense reductions(b)................. 1.5% 1.4% 0.1% (0.2)%
Without expense reductions(b).............. N/A N/A N/A N/A
Ratio of operating expenses to average net
assets:
With expense reductions(b)................. 1.9% 1.9% 1.9% 2.1%
Without expense reductions(b).............. --%(d) --%(d) --%(d) --%(d)
Portfolio turnover rate++(b)................ 83% 58% 82% 115%
Average commission rate per share paid on
portfolio transactions++................... N/A N/A N/A N/A
</TABLE>
- ---------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Portfolio turnover rate average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
** The per share data reflects a 3 for 1 stock split effective August 14,
1989.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
5
<PAGE> 7
<TABLE>
<CAPTION>
SIX MONTH
ENDED APRIL 1,
JUNE 30, YEAR ENDED DECEMBER 31, 1993 TO
1998 ------------------------------------- DECEMBER 31,
(UNAUDITED)* 1997* 1996* 1995 1994 1993*
------------ ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B+
Per Share Operating Performance:
Net asset value, beginning of period....................... $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98 $ 8.74
------- ------- ------- ------- ------- -------
Net investment income (loss)............................... 0.01 (0.03) (0.07) (0.04) (0.10) (0.01)
Net realized and unrealized gain (loss) on investments..... 0.79 0.65 0.83 0.32 (0.82) 2.25
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value resulting from
investment operations.................................... 0.80 0.62 0.76 0.28 (0.92) 2.24
------- ------- ------- ------- ------- -------
Distributions:
Net investment income.................................... -- -- -- -- (0.04) --
Net realized gain on investments......................... -- (1.94) (0.99) (0.24) (0.95) --
In excess of net realized gain on investments............ -- -- -- (0.20) -- --
------- ------- ------- ------- ------- -------
Total distributions................................ -- (1.94) (0.99) (0.44) (0.99) --
------- ------- ------- ------- ------- -------
Net asset value, end of period............................. $ 8.16 $ 7.36 $ 8.68 $ 8.91 $ 9.07 $ 10.98
======= ======= ======= ======= ======= =======
Total investment return(a)(c).............................. 10.72% 7.71% 8.67% 3.15% (8.36)% 25.63%
Ratios and supplemental data:
Net assets, end of period (in 000's)....................... $49,567 $56,023 $64,102 $69,654 $71,794 $30,745
Ratio of net investment income (loss) to average net
assets:
With expense reductions(b)............................... 0.24% (0.30)% (0.79)% (0.41)% (0.69)% (0.4)%
Without expense reductions(b)............................ 0.23% (0.43)% (0.90)% (0.49)% (0.74)% N/A
Ratio of operating expenses to average net assets:
With expense reductions(b)............................... 2.55% 2.34% 2.45% 2.35% 2.35% 2.4%
Without expense reductions(b)............................ 2.56% 2.47% 2.56% 2.43% 2.40% --%(d)
Portfolio turnover rate++(b)............................... 51% 72% 74% 75% 96% 90%
Average commission rate per share paid on portfolio
transactions++........................................... N/A $0.0269 $0.0267 N/A N/A N/A
</TABLE>
- ---------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not reflect the maximum sales charge on
purchases of Class A shares and the contingent deferred sales charge
imposed on certain redemptions of Class B shares.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
YEAR ENDED END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
---------- -------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998........................ $ -- $ 36,211 25,043,954 $ 0.001
December 31, 1997............. $ -- $283,148 26,055,589 $0.0109
December 31, 1996............. $129,000 $131,860 32,830,494 $0.0040
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
6
<PAGE> 8
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PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the Fund's shares. If
any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Fund. Further information regarding the Fund's
performance is contained in the Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return. Standardized total return
for Class A shares reflects the deduction of the Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B shares
reflects the deduction of the maximum applicable contingent deferred sales
charge on a redemption of shares held for the period.
The Fund's total return shows its overall change in value, including changes
in share price and assuming all the Fund's dividends and capital gain
distributions are reinvested. A cumulative total return reflects the Fund's
performance over a stated period of time. An average annual total return
reflects the hypothetical compounded annual rate of return that would have
produced the same cumulative total return if the Fund's performance had been
constant over the entire period. BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT
VARIATIONS IN THE FUND'S RETURN, INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS
ARE NOT THE SAME AS ACTUAL YEAR-BY-YEAR RESULTS. To illustrate the components of
overall performance, the Fund may separate its cumulative and average annual
returns into income results and capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of the Fund. Such practices will
have the effect of increasing the Fund's total return. The performance of the
Fund will vary from time to time and past results are not necessarily
representative of future results. The Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. The Fund
seeks its objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of issuers domiciled in its Primary
Investment Area, as described below. Equity securities in which the Fund may
invest include common stocks, preferred stocks, convertible debt securities and
warrants to acquire such securities. The Fund's Primary Investment Area includes
the following countries: Argentina, Australia, Austria, Belgium, Brazil, Canada,
Chile, Colombia, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary,
India, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico,
the Netherlands, New Zealand, Norway, Pakistan, Peru, the Philippines, Portugal,
Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan,
Thailand, Turkey, the United Kingdom and Venezuela but not the United States.
There can be no assurance that the Fund will achieve its investment objective.
Because the development of the world's economies and stock markets is rapidly
evolving, from time to time the Board of Trustees may add or delete countries
from the Fund's Primary Investment Area.
INVESTMENT POLICIES. The Fund is intended for investors seeking to complement
their U.S. equity investments with a professionally managed non-U.S. portfolio.
The Fund may invest up to 35% of its total assets in the equity securities of
issuers domiciled outside of its Primary Investment Area. Such investments may
include: (a) securities of issuers in countries that are not located in the
Primary Investment Area but are linked by tradition, economic markets, cultural
similarities or geography to the countries in such Primary Investment Area; and
(b) securities of issuers located elsewhere in the world that have operations in
the Primary Investment Area or that stand to benefit from political and economic
events in the Primary Investment Area.
Under normal circumstances, the assets of the Fund are invested in the equity
securities of issuers domiciled in at least three different countries.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The issuers of such
debt securities may or may not be domiciled in the Primary Investment Area of
the Fund. The Fund will limit its purchases of debt securities to investment
grade obligations. "Investment grade" debt refers to those securities rated
within one of the four highest ratings categories by Moody's Investors Service,
Inc. ("Moody's") or by Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. ("S&P"), or, if not similarly rated by any other nationally
recognized statistical rating organization ("NRSRO"), deemed by the Sub-advisor
to be of equivalent quality. Debt rated Baa by Moody's, which is the lowest
category of investment grade debt, is considered by Moody's to have speculative
characteristics. See the Statement of Additional Information for a description
of Moody's and S&P ratings.
7
<PAGE> 9
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to take advantage of these economic and political factors. The Sub-advisor
intends to invest in such markets only after balancing the potential for growth
of selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
are so-called developing countries, and their economies and markets are less
developed and more prone to uncertainty, instability and risk than those of the
other markets in which the Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has its principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units such as euros) and may invest
in high quality foreign or domestic money market instruments. For a description
of money market instruments, see "Temporary Defensive Strategies" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll'
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions of the Fund's
shares. The Fund may borrow up to 33 1/3% of its total assets. However, no
additional investments will be made if the Fund's borrowings exceed 5% of its
total assets. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.
8
<PAGE> 10
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll'
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which the Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund limits its loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made. While a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to at least
the value of the borrowed securities, plus any accrued interest or such other
collateral as permitted by the Fund's investment program and regulatory
agencies, and as approved by the Board. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in recovery of the securities and
possible loss of rights in the collateral should the borrower fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment risk normally associated with the
Fund's portfolio. These instruments are often referred to as "derivatives,"
which may be defined as financial instruments whose performance is derived, at
least in part, from the performance of another asset (such as a security,
currency or an index of securities). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Contract" herein and "Options, Futures and Currency
Strategies" in the Statement of Additional Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts "ADRs" or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depositary Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless spe-
9
<PAGE> 11
cifically noted, the Fund's investment policies described in this Prospectus and
in the Statement of Additional Information are not fundamental policies and may
be changed by vote of the Trust's Board of Trustees, without shareholder
approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
- --------------------------------------------------------------------------------
RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests primarily in foreign securities. Investing
in foreign securities entails certain risks. The securities of non-U.S. issuers
generally will not be registered with, nor will the issuers thereof be subject
to, the reporting requirements of the SEC. Accordingly, there may be less
publicly available information about foreign securities and issuers than is
available about domestic securities and issuers. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those applicable to domestic companies.
Securities of some foreign companies are less liquid and their prices may be
more volatile than securities of comparable domestic companies. In addition,
certain costs attributable to foreign investing, such as custody charges, are
higher than those attributable to domestic investing. The Fund's interest and
dividends from foreign issuers may be subject to non-U.S. withholding taxes,
thereby reducing its net investment income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect the Fund's investments in those countries. Moreover,
individual foreign economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of inflation,
rate of savings and capital reinvestment, resource self-sufficiency and balance
of payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and because it may hold foreign
currencies, it will be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will influence the value of the
Fund's shares, and also may affect the value of dividends and interest earned by
the Fund and gains and losses realized by the Fund. Currencies generally are
evaluated on the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate forecasts, balance of
payments status and economic policies) as well as technical and political data.
The exchange rates between the U.S. dollar and other currencies are determined
by supply and demand in the currency exchange markets, the international balance
of payments, governmental intervention, speculation and other economic and
political conditions. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the currency would
adversely affect the value of the security expressed in U.S. dollars.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EMU"). The EMU 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 that is a
member of the European Union and satisfies the criteria for participation in the
EMU, may elect to participate in the EMU and may supplement its existing
currency with the euro 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.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund, should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political
and economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
10
<PAGE> 12
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other protectionist measures imposed or negotiated by the
countries with which they trade. These economies also have been and may continue
to be affected adversely by economic conditions in the countries in which they
trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States, particularly with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to forego attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e). During the period commencing from the Fund's identification of
such conditions until the date of SEC action, the portfolio securities of the
Fund in the affected markets will be valued at fair value as determined in good
faith by or under the direction of the Trust's Board of Trustees.
PACIFIC REGION COUNTRIES. The Fund may invest significantly in equity
securities of issuers located in Pacific region countries. Certain of the risks
associated with international investments are heightened for investments in
Pacific region countries. For example, some of the currencies of Pacific region
countries have experienced steady devaluations relative to the U.S. dollar, and
major adjustments have been made periodically in certain such currencies.
Moreover, recent currency devaluations in some Pacific region countries have
resulted in high interest rate levels and sharp reductions in economic activity
and have diminished prospects for short-term growth in corporate earnings.
Certain countries, such as India, face serious exchange constraints.
Jurisdictional disputes also exist between South Korea and North Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, the
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. Investments in Hong Kong may be subject to
expropriation, nationalization or confiscation, in which case the Fund could
lose its entire investment in Hong Kong, if any. In addition, the reversion of
Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a
risk of possible loss of investor confidence in Hong Kong's currency, stock
market and economy.
OPTIONS, FUTURES AND FORWARD CURRENCY CONTRACTS. Although the Fund is
authorized to enter into options, futures and forward currency transactions, the
Fund might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
11
<PAGE> 13
- --------------------------------------------------------------------------------
MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and the transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the Fund.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of 0.975% on the first $500 million, 0.95% on the next $500 million, 0.925%
on the next $500 million and 0.90% on amounts thereafter. Out of the aggregate
fees payable by the Fund, AIM pays the Sub-advisor sub-advisory and sub-
administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund are
higher than those paid by most mutual funds. The Fund pays all expenses not
assumed by AIM, the Sub-advisor, AIM Distributors or other agents. Effective
January 1, 1998, AIM has undertaken to limit the Fund's expenses (exclusive of
brokerage commissions, taxes, interest and extraordinary expenses) to the
maximum annual rate of 2.00% and 2.65% of the average daily net assets of the
Fund's Class A and Class B shares, respectively.
AIM also serves as the Fund's pricing and accounting agent. For these
services, AIM receives a fee based on the aggregate net assets of the funds
which comprise the following investment companies: AIM Growth Series, AIM
Investment Funds, AIM Investment Portfolios, AIM Series Trust, G.T. Global
Variable Investment Series and G.T. Global Variable Investment Trust. The fee is
calculated at the rate of 0.03% of the first $5 billion of assets, and 0.02% of
the assets in excess of $5 billion. An amount is allocated to and paid by each
such fund based on its relative average daily net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement, dated as of May 29, 1998 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its subsidiaries, manages or
advises approximately 90 investment company portfolios encompassing a broad
range of investment objectives. The Sub-advisor, 50 California Street, 27th
Floor, San Francisco, California 94111, and 1166 Avenue of the Americas, New
York, New York 10036, serves as the Sub-advisor to the Fund pursuant to an
investment sub-advisory and sub-administration agreement dated as of May 29,
1998. Prior to May 29, 1998, the Sub-advisor was known as Chancellor LGT Asset
Management, Inc. On May 29, 1998, Liechtenstein Global Trust AG ("LGT"), the
former indirect parent organization of the Sub-advisor, consummated a purchase
agreement with AMVESCAP PLC pursuant to which AMVESCAP PLC acquired LGT's Asset
Management Division, which included the Sub-advisor and certain other
affiliates. As a result of this transaction, the Sub-advisor is now an indirect
wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the Sub-advisor and
its worldwide asset management affiliates provided investment management and/or
administrative services to institutional, corporate and individual clients
around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Fund, the Sub-advisor employs a team
approach, taking advantage of its investment resources around the world.
12
<PAGE> 14
The investment professionals primarily responsible for the portfolio
management of the Fund are follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
----------- -------------------- -------------------
<S> <C> <C>
Roger Yates Portfolio Manager Global Chief Investment Officer and Portfolio
London since 1996 Manager for the Sub- advisor and INVESCO GT Asset
Management PLC (London) ("GT Asset Management"),
an affiliate of the Sub-advisor, since October
1997. International Chief Investment Officer and
Portfolio Manager for the Sub-advisor and GT Asset
Management from September 1996 to October 1997.
Chief Investment Officer and Portfolio Manager for
Europe and the United Kingdom for the Sub-advisor
and GT Asset Management from 1994 to September
1996. Investment Manager for Morgan Grenfell Asset
Management from 1988 to 1994.
Michael Lindsell Portfolio Manager Head of Investment Strategy for Global Equities
London since 1992 and Portfolio Manager for the Sub-advisor and GT
Asset Management since 1996. Chief Investment
Officer for Japan and Portfolio Manager for
INVESCO GT Asset Management Asia Ltd. (Hong Kong),
an affiliate of the Sub-advisor and for the
Sub-advisor from 1992 to 1996. Director of Warburg
Asset Management (Tokyo) prior thereto.
</TABLE>
In placing orders for the Fund's portfolio securities transactions, the
Sub-advisor seeks to obtain the best net results. Consistent with its obligation
to obtain the best net results, the Sub-advisor may consider a broker/dealer's
sale of shares of the AIM Funds as a factor in considering through whom
portfolio transactions will be effected. Brokerage transactions for the Fund may
be executed through affiliates of AIM or the Sub-advisor. High portfolio
turnover (over 100%) involves correspondingly greater brokerage commissions and
other transaction costs that the Fund will bear directly and could result in the
realization of net capital gains that would be taxable when distributed to
shareholders. See "Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement on
behalf of Class A shares of the Fund, and has entered into a Master Distribution
Agreement on behalf of Class B shares of the Fund (individually referred to as a
"Distribution Agreement" or collectively as the "Distribution Agreements") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
AIM, to act as the distributor of Class A and Class B shares of the Fund.
Certain Trustees and officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute shares of the Fund directly and through institutions with whom AIM
Distributors has entered into selected dealer agreements. Under the Distribution
Agreement for the Class B shares, AIM Distributors sells Class B shares of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
institutions through whom Class B shares are sold a sales commission under
schedules established by AIM Distributors. The Distribution Agreement for the
Class B shares provides that AIM Distributors (or its assignee or transferee)
will receive 0.75% (of the total 1.00% payable under the distribution plan
applicable to Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors and its predecessor. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors and its
predecessor; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments by the Fund of asset based sales charges and service fees to AIM
Distributors. Termination of the Class B shares master distribution plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Company has adopted a Master
Distribution Plan applicable to Class A shares of the Fund (the "Class A Plan")
pursuant to Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for
the purpose of financing any activity that is intended to result in the sale of
Class A shares of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected insti-
13
<PAGE> 15
tutions are calculated at the annual rate of 0.25% of the average daily net
asset value of those Fund shares that are held in such institution's customers'
accounts which were purchased on or after a prescribed date set forth in the
Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee.
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's 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 would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of "G.T.
Global Growth Series," a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
14
<PAGE> 16
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
15
<PAGE> 17
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
- --------------------------------------------------------------------------------
INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP EQUITY FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for
non-resident aliens) or Form W-9 (certifying exempt status) accompanying the
registration information will be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
A-1
<PAGE> 18
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
- --------------------------------------------------------------------------------
TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
A-2
<PAGE> 19
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
- ---------------
(1) AIM Small Cap Opportunities Fund will not accept any single purchase in
excess of $250,000.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
A-3
<PAGE> 20
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to
A-4
<PAGE> 21
a contingent deferred sales charge, for all AIM Funds other than Class A shares
of each of AIM LIMITED MATURITY TREASURY FUND and AIM TAX-FREE INTERMEDIATE FUND
as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next
$1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases. See
"Contingent Deferred Sales Charge Program for Large Purchases." AIM Distributors
may make payments to dealers and institutions who are dealers of record for
purchases of $1 million or more of Class A shares (or shares which normally
involve payment of initial sales charges), and which are sold at net asset value
and are not subject to a contingent deferred sales charge, in an amount up to
0.10% of such purchases of Class A shares of AIM LIMITED MATURITY TREASURY FUND,
and in an amount up to 0.25% of such purchases of Class A shares of AIM TAX-FREE
INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
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CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A shares of the AIM Funds that
are otherwise subject to an initial sales charge, provided that such purchases
are made by a "purchaser" as hereinafter defined. Purchases of Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
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<PAGE> 23
The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for (i) Class A
shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gain distributions
will not be applied to the LOI. At any time during the 13-month period after
meeting the original obligation, a purchaser may revise his intended investment
amount upward by submitting a written and signed request. Such a revision will
not change the original expiration date. By signing an LOI, a purchaser is not
making a binding commitment to purchase additional shares, but if purchases made
within the 13-month period do not total the amount specified, the investor will
pay the increased amount of sales charge as described below. Purchases made
within 90 days before signing an LOI will be applied toward completion of the
LOI. The LOI effective date will be the date of the first purchase with the
90-day period. The Transfer Agent will process necessary adjustments upon the
expiration or completion date of the LOI. Purchases made more than 90 days
before signing an LOI will be applied toward completion of the LOI based on the
value of the shares purchased calculated at the public offering price on the
effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
A-7
<PAGE> 24
If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
A-8
<PAGE> 25
Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph as follows:
1% of the first $2 million of such purchases, plus 0.80% of the next $1 million
of such purchases, plus 0.50% of the next $17 million of such purchases, plus
0.25% of amounts in excess of $20 million of such purchases and up to 0.10% of
the net asset value of any Class A shares of AIM LIMITED MATURITY TREASURY FUND
sold at net asset value to an employee benefit plan in accordance with this
paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
A-9
<PAGE> 26
exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
A-10
<PAGE> 27
nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
A-11
<PAGE> 28
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
----------- -----------------
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A --------------
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
A-12
<PAGE> 29
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
A-13
<PAGE> 30
ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
A-14
<PAGE> 31
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
A-15
<PAGE> 32
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
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<PAGE> 33
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
A-17
<PAGE> 34
exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
A-18
<PAGE> 35
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE
INTERMEDIATE FUND value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which
reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
A-19
<PAGE> 36
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund or AIM Cash Reserve Shares
because of higher distribution fees paid by Class B and Class C shares.
Dividends on all shares may also be affected by other class-specific expenses.
A-20
<PAGE> 37
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
A-21
<PAGE> 38
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 39
- --------------------------------------------------------------------------------
GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-23
<PAGE> 40
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Give Social Security GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 41
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 42
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
ITG-PRO-1
<PAGE> 1
EXHIBIT 17(c)
CLASS A AND CLASS B SHARES OF
AIM WORLDWIDE GROWTH FUND
SUPPLEMENT TO PROSPECTUS
DATED SEPTEMBER 8, 1998
The Board of Trustees of AIM Growth Series unanimously approved, on
September 23, 1998, an Agreement and Plan of Reorganization ("Plan") pursuant
to which AIM Worldwide Growth Fund ("Worldwide Growth Fund"), a series of AIM
Growth Series, would transfer substantially all of its assets to AIM Global
Growth Fund ("Global Growth Fund"), a series of AIM International Funds, Inc.
As a result of the transaction, shareholders of Worldwide Growth Fund would
receive shares of Global Growth Fund in exchange for their shares of Worldwide
Growth Fund, and Worldwide Growth Fund would cease operations. Like Worldwide
Growth Fund, Global Growth Fund seeks long-term growth of capital. Global
Growth Fund seeks to achieve its objective by investing in a diversified
portfolio of global (i.e., U.S. and foreign) equity securities, the issuers of
which are considered by the Fund's investment adviser to have strong earnings
momentum.
The Plan requires the approval of Worldwide Growth Fund shareholders
and will be submitted to the shareholders for their consideration at a meeting
to be held in February 1999. If the Plan is approved by shareholders of
Worldwide Growth Fund and certain conditions required by the Plan are
satisfied, the transaction is expected to become effective before the end of
February 1999.
September 28, 1998
<PAGE> 2
[APPLICATION
INSIDE]
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
CLASS A AND CLASS B SHARES OF
AIM WORLDWIDE GROWTH FUND
(A SERIES PORTFOLIO OF AIM GROWTH SERIES)
PROSPECTUS
SEPTEMBER 8, 1998
This Prospectus contains information about AIM WORLDWIDE GROWTH FUND (the
"Fund"), which is one of several series investment portfolios comprising AIM
Growth Series (the "Trust"), an open-end, series, management investment company.
The Fund is a diversified portfolio which seeks long-term growth of capital by
investing primarily in equity securities of issuers domiciled anywhere in the
world.
This Prospectus sets forth concisely the information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. A Statement of Additional Information, dated
September 8, 1998, has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. The Statement of Additional
Information is available without charge upon written request to the Trust at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173 or by calling 1-
800-347-4246. The SEC maintains a Web site at http://www.sec.gov that contains
the Statement of Additional Information, material incorporated by reference, and
other information regarding the Fund. Additional information about the Fund may
also be obtained from http://www.aimfunds.com.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 3
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY................................ 2
THE FUND............................... 4
Table of Fees and Expenses........... 4
Financial Highlights................. 5
Performance.......................... 7
Investment Program................... 7
Risk Factors......................... 10
Management........................... 12
Organization of the Trust............ 14
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTOR'S GUIDE TO THE AIM FAMILY OF
FUNDS--Registered Trademark--........ A-1
Introduction to The AIM Family of
Funds............................. A-1
How to Purchase Shares............... A-1
Terms and Conditions of Purchase of
the AIM Funds..................... A-2
Special Plans........................ A-9
Exchange Privilege................... A-12
How to Redeem Shares................. A-14
Determination of Net Asset Value..... A-19
Dividends, Distributions and Tax
Matters........................... A-19
General Information.................. A-23
APPLICATION INSTRUCTIONS............... B-1
</TABLE>
SUMMARY
- --------------------------------------------------------------------------------
THE FUND
The Fund is a diversified series of the Trust.
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital.
PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
issuers domiciled in its Primary Investment Area (as defined herein).
INVESTMENT MANAGERS. The Fund is managed by A I M Advisors, Inc. ("AIM") and
is sub-advised and sub-administered by INVESCO (NY), Inc. (the "Sub-advisor").
AIM and the Sub-advisor and their worldwide asset management affiliates provide
investment management and/or administrative services to institutional, corporate
and individual clients around the world. AIM and the Sub-advisor are both
indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
AIM was organized in 1976 and, together with its subsidiaries, currently advises
approximately 90 investment company portfolios.
PURCHASING SHARES. Investors may select Class A or Class B shares of the Fund
which are offered by this Prospectus at an offering price that reflects
differing sales charges and expense levels. See "Terms and Conditions of
Purchase of the AIM Funds -- Sales Charges and Dealer Concessions." Pursuant to
a separate prospectus, the Fund also offers Advisor Class shares, which
represent interests in the Fund. The Advisor Class has different distribution
arrangements.
CLASS A SHARES. -- Shares are offered at net asset value plus any applicable
sales charge.
CLASS B SHARES. -- Shares are offered at net asset value without an initial
sales charge, and are subject to a maximum contingent deferred sales charge of
5% on certain redemptions made within six years from the date such shares were
purchased. Class B shares automatically convert to Class A shares of the Fund
eight years following the end of the calendar month in which a purchase was
made. Class B shares are subject to higher expenses than Class A shares.
Initial investments in any class of shares must be at least $500 and
additional investments must be at least $50. The minimum initial investment is
modified for investments through tax-qualified retirement plans and accounts
initially established with an Automatic Investment Plan. The distributor of the
Fund's shares is A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739,
Houston, TX 77210-4739. See "How to Purchase Shares" and "Special Plans."
SUITABILITY FOR INVESTORS. An investor in Class A or Class B shares of the
Fund should consider the method of purchasing shares that is most beneficial
given the amount of the purchase, the length of time the shares are expected to
be held, and other circumstances. Investors should consider whether, during the
anticipated life of their investment in the Fund, the accumulated distribution
fees and any applicable contingent deferred sales charges on Class B shares
prior to conversion would be less than the initial sales charge and accumulated
distribution fees on Class A shares purchased at the same time, and to what
extent such differential would be offset by the higher return on Class A shares.
To assist investors in making this determination, the table under the caption
"Table of Fees and Expenses" sets forth examples of the charges applicable to
each class of shares. Class A shares will normally be more benefi-
2
<PAGE> 4
cial than Class B shares to the investor who qualifies for reduced initial sales
charges, as described below. Therefore, AIM Distributors will reject any order
for purchase of more than $250,000 for Class B shares.
EXCHANGE PRIVILEGE. The Fund is among those mutual funds distributed by AIM
Distributors (collectively, "The AIM Family of Funds" or the "AIM Funds"). Class
A and Class B shares of the Fund may be exchanged for shares of other funds in
The AIM Family of Funds in the manner and subject to the policies and charges
set forth herein. See "Exchange Privilege."
REDEEMING SHARES. Class A shareholders of the Fund may redeem all or a portion
of their shares at net asset value on any business day, generally without
charge. A contingent deferred sales charge of 1% may apply to certain
redemptions where a purchase of more than $1 million is made at net asset value.
See "How to Redeem Shares -- Contingent Deferred Sales Charge Program for Large
Purchases." Class B shareholders of the Fund may redeem all or a portion of
their shares at net asset value on any business day, less a contingent deferred
sales charge for redemptions made within six years from the date such shares
were purchased. Class B shares redeemed after six years from the date such
shares were purchased will not be subject to any contingent deferred sales
charge. See "How to Redeem Shares -- Multiple Distribution System."
DISTRIBUTIONS. The Fund currently declares and pays dividends from net
investment income, if any, on an annual basis. The Fund generally makes
distributions of realized capital gains, if any, on an annual basis. Dividends
and distributions of the Fund may be reinvested at net asset value without
payment of a sales charge in the Fund's shares or may be invested in shares of
the other funds in The AIM Family of Funds. See "Dividends, Distributions and
Tax Matters" and "Special Plans."
RISK FACTORS. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. The Fund may invest a significant portion of
its assets in foreign securities. Investments in foreign securities involve
risks relating to political and economic developments abroad and the differences
between the regulations to which U.S. and foreign issuers are subject.
Individual foreign economies also may differ favorably or unfavorably from the
U.S. economy. Changes in foreign currency exchange rates also may affect the
Fund's net asset value, earnings and gains and losses realized on sales of
securities.
The Fund may engage in certain foreign currency, options and futures
transactions to attempt to hedge against the overall level of investment or
currency risk associated with its present or planned investments. Such
transactions involve certain risks and transaction costs. See "Investment
Program" and "Risk Factors."
THE AIM FAMILY OF FUNDS, THE AIM FAMILY OF FUNDS AND DESIGN (I.E., THE AIM
LOGO), AIM AND DESIGN, AIM, AIM LINK, AIM INSTITUTIONAL FUNDS, AIMFUNDS.COM, LA
FAMILIA AIM DE FONDOS AND LA FAMILIA AIM DE FONDOS AND DESIGN ARE REGISTERED
SERVICE MARKS AND INVEST WITH DISCIPLINE AND AIM BANK CONNECTION ARE SERVICE
MARKS OF A I M MANAGEMENT GROUP INC.
3
<PAGE> 5
THE FUND
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
The expenses and maximum transaction costs associated with investing in the
Class A and Class B shares of the Fund are reflected in the following table(1):
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
Shareholder Transaction Costs(2):
Maximum sales charge on purchases (as a % of offering
price)................................................. 5.50% None
Sales charges on reinvested distributions to
shareholders........................................... None None
Maximum deferred sales charge (as a % of net asset value
at time of purchase or sale, whichever is less)........ None 5.00%
Redemption charges........................................ None None
Exchange fees............................................. None None
Annual Fund Operating Expenses(3): (as a % of average net
assets)
Investment management and administration fees............. 0.98% 0.98%
12b-1 distribution and service fees....................... 0.35% 1.00%
Other expenses............................................ 0.49% 0.49%
---- ----
Total Fund Operating Expenses..................... 1.82% 2.47%
==== ====
</TABLE>
(1) This table is intended to assist investors in understanding the various
costs and expenses associated with investing in the Fund. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc. rules regarding investment companies.
(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase. The charge generally
declines by 1% annually thereafter, reaching zero after six years. See
"Terms and Conditions of Purchase of the AIM Funds -- Reductions in Initial
Sales Charges."
(3) Expenses are based on the Fund's fiscal year ended December 31, 1997. "Other
expenses" include custody, transfer agency, legal, audit and other operating
expenses. See "Management" herein and the Statement of Additional
Information for more information. AIM has voluntarily agreed to limit the
Fund's expenses effective January 1, 1998 (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rates
of 2.00% and 2.65% of the average daily net assets of the Fund's Class A and
Class B shares respectively through May 31, 2000.
HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES. An investor would have directly or
indirectly paid the following expenses at the end of the periods shown on a
$1,000 investment in the Fund, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 Years(3)
------ ------- ------- -----------
<S> <C> <C> <C> <C>
Class A shares(1)................................. $73 $110 $149 $258
Class B shares
Assuming a complete redemption at end of
period(2).................................... $77 $110 $156 $267
Assuming no redemption.......................... $25 $ 78 $133 $267
</TABLE>
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes deduction of the applicable contingent deferred sales charge.
(3) For Class B shares, this number reflects the conversion to Class A shares
eight years following the end of the calendar month in which a purchase was
made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES.
THE FUND'S ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT EXPENSES, MAY
BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN THE
HYPOTHETICAL EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE
SEC APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF
AND DOES NOT REPRESENT THE FUND'S PROJECTED OR ACTUAL PERFORMANCE.
4
<PAGE> 6
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The tables below provide condensed financial information concerning income and
capital changes for one Class A and Class B share of the Fund. This information
is supplemented by the financial statements and accompanying notes appearing in
the Statement of Additional Information. The financial statements and notes for
the fiscal year ended December 31, 1997 have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose reports thereon
appear in the Statement of Additional Information. Information presented below
for the periods ended December 31, 1991 and prior thereto was audited by other
auditors, which served as the Fund's independent certified public accountants
for those periods.
AIM WORLDWIDE GROWTH FUND
(FORMERLY GT GLOBAL WORLDWIDE GROWTH FUND)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1998 --------------------------------------------------------------------------
(UNAUDITED)* 1997 1996* 1995* 1994 1993* 1992 1991
-------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A+
Per Share Operating
Performance:
Net asset value,
beginning of period... $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07 $ 11.83
------- -------- -------- -------- -------- -------- -------- --------
Net investment income
(loss)................ 0.02 0.05 0.03 -- -- 0.04 0.07 0.10
Net realized and
unrealized gain (loss)
on investments........ 1.66 1.55 1.79 1.74 (1.16) 3.92 0.39 2.29
------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in net asset value
resulting from
investment
operations............ 1.68 1.60 1.82 1.74 (1.16) 3.96 0.46 2.39
------- -------- -------- -------- -------- -------- -------- --------
Distributions:
Net investment income... -- (0.02) -- -- -- -- -- (0.15)
Net realized gain on
investments........... -- (4.03) (1.93) (0.45) (0.78) (0.96) (0.06) --
------- -------- -------- -------- -------- -------- -------- --------
Total
distributions...... -- (4.05) (1.93) (0.45) (0.78) (0.96) (0.06) (0.15)
------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period.................. $ 15.94 $ 14.26 $ 16.71 $ 16.82 $ 15.53 $ 17.47 $ 14.47 $ 14.07
======= ======== ======== ======== ======== ======== ======== ========
Total investment
return(a)(c)....... 11.78% 10.00% 10.92% 11.23% (6.65)% 27.6% 3.3% 20.3%
Ratios and supplemental
data:
Net assets, end of
period (in 000's)..... $95,789 $103,769 $125,556 $145,982 $182,467 $193,997 $141,310 $126,868
Ratio of net investment
income (loss) to average
net assets:
With expense
reductions(b)......... 0.28% 0.32% 0.14% (0.06)% (0.01)% 0.9% 0.5% 0.8%
Without expense
reductions(b)......... 0.28% 0.23% 0.06% (0.12)% (0.04)% N/A N/A N/A
Ratio of operating
expenses to average net
assets:
With expense
reductions(b)......... 1.87% 1.73% 1.72% 1.87% 1.81% 1.9% 2.1% 2.0%
Without expense
reductions(b)......... 1.87% 1.82% 1.80% 1.93% 1.84% --%(d) --%(d) --%(d)
Portfolio turnover
rate(b)++............... 34% 92% 80% 113% 86% 92% 95% 122%
Average commission rate
per share paid on
portfolio
transactions++.......... N/A $ 0.0288 $ 0.0263 N/A N/A N/A N/A N/A
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1990 1989 1988
-------- ------- -------
<S> <C> <C> <C>
CLASS A+
Per Share Operating
Performance:
Net asset value,
beginning of period... $ 13.63 $ 10.18 $ 8.84
-------- ------- -------
Net investment income
(loss)................ 0.11 (0.01) 0.02
Net realized and
unrealized gain (loss)
on investments........ (1.82) 3.82 1.42
-------- ------- -------
Net increase (decrease)
in net asset value
resulting from
investment
operations............ (1.71) 3.81 1.44
-------- ------- -------
Distributions:
Net investment income... (0.09) -- --
Net realized gain on
investments........... -- (0.36) (0.10)
-------- ------- -------
Total
distributions...... (0.09) (0.36) (0.10)
-------- ------- -------
Net asset value, end of
period.................. $ 11.83 $ 13.63 $ 10.18
======== ======= =======
Total investment
return(a)(c)....... (12.5)% 37.6% 16.3%
Ratios and supplemental
data:
Net assets, end of
period (in 000's)..... $ 85,894 $38,263 $11,673
Ratio of net investment
income (loss) to average
net assets:
With expense
reductions(b)......... 0.7% (0.1)% 0.2%
Without expense
reductions(b)......... N/A N/A N/A
Ratio of operating
expenses to average net
assets:
With expense
reductions(b)......... 2.1% 2.0% 2.0%
Without expense
reductions(b)......... --%(d) --% --%
Portfolio turnover
rate(b)++............... 107% 91% 181%
Average commission rate
per share paid on
portfolio
transactions++.......... N/A N/A N/A
</TABLE>
- ---------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Portfolio turnover rate average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
5
<PAGE> 7
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 1,
JUNE 30, YEAR ENDED DECEMBER 31, 1993 TO
1998 ------------------------------------- DECEMBER 31,
(UNAUDITED)* 1997 1996* 1995* 1994 1993*
------------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B+
Per Share Operating Performance:
Net asset value, beginning of period................ $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39 $ 15.67
------- ------- ------- ------- ------- -------
Net investment income (loss)........................ (0.03) (0.05) (0.09) (0.12) (0.11) (0.04)
Net realized and unrealized gain (loss) on
investments....................................... 1.58 1.49 1.75 1.73 (1.16) 2.72
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value resulting
from investment operations........................ 1.55 1.44 1.66 1.61 (1.27) 2.68
------- ------- ------- ------- ------- -------
Distributions:
Net investment income............................. -- -- -- -- -- --
Net realized gain on investments.................. -- (4.03) (1.93) (0.45) (0.78) (0.96)
------- ------- ------- ------- ------- -------
Total distributions......................... -- (4.03) (1.93) (0.45) (0.78) (0.96)
------- ------- ------- ------- ------- -------
Net asset value, end of period...................... $ 15.19 $ 13.64 $ 16.23 $ 16.50 $ 15.34 $ 17.39
======= ======= ======= ======= ======= =======
Total investment return(a)(c)....................... 11.45% 9.22% 10.16% 10.52% (7.32)% 17.3%
Ratios and supplemental data:
Net assets, end of period (in 000's)................ $41,963 $45,010 $52,089 $56,095 $52,567 $20,592
Ratio of net investment income (loss) to average net
assets:
With expense reductions(b)........................ (0.37)% (0.33)% (0.51)% (0.71)% (0.66)% (0.4)%
Without expense reductions(b)..................... (0.37)% (0.42)% (0.59)% (0.77)% (0.69)% N/A
Ratio of operating expenses to average net assets:
With expense reductions(b)........................ 2.52% 2.38% 2.37% 2.52% 2.46% 2.5%
Without expense reductions(b)..................... 2.52% 2.47% 2.45% 2.58% 2.49% --%(d)
Portfolio turnover rate(b)++........................ 34% 92% 80% 113% 86% 92%
Average commission rate per share paid on portfolio
transactions++.................................... N/A $0.0288 $0.0263 N/A N/A N/A
</TABLE>
- ---------------
+ Commencing April 1, 1993, the Fund began offering Class B shares.
++ Portfolio turnover rate and average commission rate are calculated on the
basis of the Fund as a whole without distinguishing between the classes of
shares issued.
* The selected per share data were calculated based upon average shares
outstanding during the period.
(a) Not annualized.
(b) Annualized for periods less than one year.
(c) Total investment return does not include sales charges.
(d) Calculation of "Ratio of expenses to average net assets" was made without
considering the effect of expense reduction, if any.
N/A Not Applicable.
---------------
<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AVERAGE AMOUNT OF
OUTSTANDING AT OUTSTANDING OUTSTANDING DEBT PER SHARE
END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
-------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Six months ended June 30,
1998........................ $-- $35,277 9,850,011 $ 0.004
Year ended December 31,
1997........................ $-- $21,918 9,622,077 $0.0023
</TABLE>
Average amount of debt outstanding during the period is computed on a daily
basis.
6
<PAGE> 8
- --------------------------------------------------------------------------------
PERFORMANCE
All advertisements of the Fund will disclose the maximum sales charge
(including deferred sales charges) imposed on purchases of the Fund's shares. If
any advertised performance data does not reflect the maximum sales charge (if
any), such advertisement will disclose that the sales charge has not been
deducted in computing the performance data, and that, if reflected, the maximum
sales charge would reduce the performance quoted. See the Statement of
Additional Information for further details concerning performance comparisons
used in advertisements by the Funds. Further information regarding the Fund's
performance is contained in that Fund's annual report to shareholders, which is
available upon request and without charge.
The Fund's total return is calculated in accordance with a standardized
formula for computation of annualized total return. Standardized total return
for Class A shares reflects the deduction of a Fund's maximum front-end sales
charge at the time of purchase. Standardized total return for Class B shares
reflects the deduction of the maximum applicable contingent deferred sales
charge on a redemption of shares held for the period.
A Fund's total return shows its overall change in value, including changes in
share price and assuming all the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
compounded annual rate of return that would have produced the same cumulative
total return if the Fund's performance had been constant over the entire period.
BECAUSE AVERAGE ANNUAL RETURNS TEND TO EVEN OUT VARIATIONS IN THE FUND'S RETURN,
INVESTORS SHOULD RECOGNIZE THAT SUCH RETURNS ARE NOT THE SAME AS ACTUAL YEAR-
BY-YEAR RESULTS. To illustrate the components of overall performance, a Fund may
separate its cumulative and average annual returns into income results and
capital gains or losses.
From time to time and in its discretion, AIM may waive all or a portion of its
advisory fees and/or assume certain expenses of any Fund. Such practices will
have the effect of increasing that Fund's total return. The performance of each
Fund will vary from time to time and past results are not necessarily
representative of future results. A Fund's performance is a function of its
portfolio management in selecting the type and quality of portfolio securities
and is affected by operating expenses of the Fund as well as by general market
conditions.
- --------------------------------------------------------------------------------
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE. The Fund seeks long-term growth of capital. It seeks its
objective by investing, under normal circumstances, at least 65% of its total
assets in equity securities of issuers domiciled in its Primary Investment Area,
as described below. Equity securities in which the Fund may invest include
common stocks, preferred stocks, convertible debt securities and warrants to
acquire such securities. The Fund's Primary Investment Area includes the
following countries: Argentina, Australia, Austria, Belgium, Brazil, Canada,
Chile, Columbia, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary,
India, Indonesia, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, Mexico,
the Netherlands, New Zealand, Norway, Pakistan, Peru, the Philippines, Portugal,
Singapore, Spain, South Africa, South Korea, Sweden, Switzerland, Taiwan,
Thailand, Turkey, United Kingdom, United States and Venezuela. There can be no
assurance that the Fund will achieve its investment objectives.
INVESTMENT POLICIES. Because the development of the world's economies and
stock markets is rapidly evolving, from time to time the Board of Trustees may
add or delete countries from the Fund's Primary Investment Area.
The Fund is designed for those investors desiring to delegate equity
investment decisions, including allocation of assets among the world's different
markets, currency strategies and individual stock selection, to the
Sub-advisor's professional team of investment specialists.
Under normal circumstances, the assets of the Fund are invested in the equity
securities of issuers domiciled in at least three different countries, and 20%
to 60% of the Fund's assets normally are invested in the equity securities of
U.S. issuers.
The Fund may invest up to 35% of its total assets in debt securities,
including U.S. and foreign government securities and corporate debt securities,
Samurai and Yankee bonds, Eurobonds and Depository Receipts. The Fund will limit
its purchases of debt securities to investment grade obligations. "Investment
grade" debt refers to those securities rated within one of the four highest
ratings categories by Moody's Investors Service, Inc. ("Moody's") or by Standard
& Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"), or, if not
similarly rated by any other nationally recognized statistical rating
organization ("NRSRO"), deemed by the Sub-advisor to be of equivalent quality.
Debt rated Baa by Moody's, which is the lowest category of investment grade
debt, is considered by Moody's to have speculative characteristics. See the
Statement of Additional Information for a description of Moody's and S&P
ratings.
CERTAIN INVESTMENT STRATEGIES AND POLICIES. In pursuit of its objectives and
policies, the Fund may employ one or more of the following strategies in order
to enhance investment results:
SELECTION OF INVESTMENTS AND ASSET ALLOCATION. In managing the Fund, the
Sub-advisor seeks to identify those countries and industries where economic and
political factors, including currency movements, are likely to produce
above-average growth rates. The Sub-advisor further attempts to identify those
companies in such countries and industries that are best positioned and managed
to
7
<PAGE> 9
take advantage of these economic and political factors. The Sub-advisor intends
to invest in such markets only after balancing the potential for growth of
selected companies in each market relative to the risks of investing in each
such country. Among the factors to be considered are that several of the markets
are so-called developing countries, and their economies and markets are less
developed and more prone to uncertainty, instability and risk than those of the
other markets in which the Fund invests.
For purposes of this Prospectus, an issuer typically is considered as
domiciled in a particular country if it is (a) organized under the laws of, or
has its principal office in, a particular country or (b) normally derives 50% or
more of its total revenues from business in that country, provided that, in the
Sub-advisor's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. However,
these are not absolute requirements, and certain companies incorporated in a
particular country and considered by the Sub-advisor to be located in that
country may have substantial foreign operations or subsidiaries and/or export
sales exceeding in size the assets or sales in that country.
The Sub-advisor allocates investments among fixed income securities of
particular issuers on the basis of its views as to the best values then
currently available in the marketplace. Such values are a function of yield,
maturity, issue classification and quality characteristics, coupled with
expectations regarding the economy, movements in the general level and term of
interest rates, currency values, political developments, and variations in the
supply of funds available for investment in the world bond market relative to
the demands placed upon it. If market interest rates decline, fixed income
securities generally appreciate in value and vice versa. Fixed income securities
denominated in currencies other than the U.S. dollar or in multinational
currency units are evaluated on the strength of the particular currency against
the U.S. dollar as well as on the current and expected levels of interest rates
in the country or countries. In addition to the foregoing, the Fund may seek to
take advantage of differences in relative values of fixed income securities
among various countries.
TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Sub-advisor may employ a temporary defensive investment strategy if
it determines such a strategy to be warranted due to market, economic or
political conditions. During such time the Fund may invest less than 65% of its
total assets in the types of securities covered by its primary investment
policy. Under a defensive strategy, the Fund may invest up to 100% of its total
assets in cash (U.S. dollars, foreign currencies or multinational currency units
such as euros) and/or high quality debt securities or money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, most or all investments of the Fund may be made in
the United States and denominated in U.S. dollars. To the extent the Fund adopts
a temporary defensive position, it will not be invested so as to achieve
directly its investment objective.
In addition, pending investment of proceeds from new sales of Fund shares or
to meet its ordinary daily cash needs, the Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units such as euros) and may invest
in high quality foreign or domestic money market instruments. For a description
of money market instruments, see "Temporary Defensive Strategies" in the
"Investment Objectives and Policies" section of the Statement of Additional
Information.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. With respect to certain countries,
investments may only be made through investment in other investment companies,
some of which may be investment vehicles or companies that are advised by the
Sub-advisor or its affiliates ("Affiliated Funds"), that in turn are authorized
to invest in the securities of such countries. The Fund may invest up to 10% of
its total assets in other investment companies. As a shareholder in an
investment company, the Fund would bear its ratable share of that investment
company's expenses, including its advisory and administration fees. At the same
time, the Fund would continue to pay its own management fees and other expenses.
AIM and the Sub-advisor will waive their advisory fees to the extent that the
Fund invests in an Affiliated Fund.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Sub-advisor believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities to participate in
privatizations may be limited by local law, or the terms on which the Fund may
be permitted to participate may be less advantageous than those for local
investors. There can be no assurance that foreign governments will continue to
sell companies currently owned or controlled by them or that privatization
programs will be successful.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND ROLL TRANSACTIONS. The Fund may
borrow from banks or may borrow through reverse repurchase agreements and "roll"
transactions in connection with meeting requests for the redemption of the
Fund's shares. The Fund also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. The Fund may
borrow up to 33 1/3% of its total assets. However, no additional investments
will be made if the Fund's borrowings exceed 5% of its total assets. Any
borrowing by the Fund may cause greater fluctuation in the value of its shares
than would be the case if the Fund did not borrow.
A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed upon price which includes an interest component. A "roll"
borrowing transaction involves the Fund's sale of securities together with its
commitment (for which that Fund may receive a fee) to purchase similar, but not
identical, securities at a future date.
SECURITIES LENDING. The Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. Securities lending allows
the Fund to retain ownership of the securities loaned and, at the same time,
enhance the Fund's total return. The Fund
8
<PAGE> 10
limits its loans of portfolio securities to an aggregate of 30% of the value of
its total assets, measured at the time any such loan is made. While a loan is
outstanding, the borrower must maintain with the Fund's custodian collateral
consisting of cash, U.S. government securities or certain irrevocable letters of
credit equal to at least the value of the borrowed securities, plus any accrued
interest or such other collateral as permitted by the Fund's investment program
and regulatory agencies, and as approved by the Board. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delay in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.
WHEN ISSUED OR FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which generally is expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities that have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If
the Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time the Fund enters into a
transaction on a when-issued or forward commitment basis, it will segregate cash
or liquid securities equal to the value of the when-issued or forward commitment
securities with its custodian and will mark to market daily such assets. There
is a risk that the securities may not be delivered and that the Fund may incur a
loss.
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. The Fund may use forward
currency contracts, futures contracts, options on securities, options on
indices, options on currencies and options on futures contracts to attempt to
hedge against the overall level of investment risk normally associated with the
Fund's portfolio. These instruments are often referred to as "derivatives,"
which may be defined as financial instruments whose performance is derived, at
least in part, from the performance of another asset (such as a security,
currency or an index of securities). The Fund may enter into such instruments up
to the full value of its portfolio assets. See "Risk Factors -- Options, Futures
and Forward Currency Transactions" herein and the Statement of Additional
Information.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts on
currencies to hedge against movements in exchange rates.
In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Sub-advisor intends to include in the
Fund's portfolio. The Fund also may buy and sell put and call options on stock
indexes to hedge against overall fluctuations in the securities markets or
market sectors generally or in a specific market sector.
Further, the Fund may sell stock index futures contracts and may purchase put
options or write call options on such futures contracts to protect against a
general stock market or market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase stock index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general stock market or market sector advance and thereby attempt to lessen the
cost of future securities acquisitions. The Fund may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio against
changes in the general level of interest rates.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in securities of foreign
issuers in the form of American Depositary Receipts ("ADRs") or other similar
securities convertible into securities of foreign issuers. These securities may
not necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company evidencing ownership of the underlying securities.
Generally, ADRs in registered form are designed for use in U.S. securities
markets. See "Investment Objectives and Policies -- Depository Receipts" in the
Statement of Additional Information.
OTHER INFORMATION. The investment objective of the Fund may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
A "majority of the Fund's outstanding voting securities" means the lesser of (i)
67% of the Fund's shares represented at a meeting at which more than 50% of the
Fund's outstanding shares are represented, or (ii) more than 50% of the Fund's
outstanding shares. In addition, the Fund has adopted certain investment
limitations that also may not be changed without shareholder approval. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the Fund's investment
policies described in this Prospectus and in the Statement of Additional
Information are not fundamental policies and may be changed by vote of the
Trust's Board of Trustees, without shareholder approval.
If a percentage restriction on investment or utilization of assets in an
investment policy or restriction is adhered to at the time an investment is
made, a later change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not be
considered a violation of the Fund's investment policies or restrictions.
9
<PAGE> 11
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RISK FACTORS
GENERAL. There is no assurance that the Fund will achieve its investment
objective. The Fund's net asset value will fluctuate, reflecting fluctuations in
the market value of its securities. Equity securities, particularly common
stocks, generally represent the most junior position in an issuer's capital
structure and entitle holders to an interest in the assets of an issuer, if any,
remaining after all more senior claims have been satisfied. In addition, the
value of debt securities held by the Fund will fluctuate with changes in the
perceived creditworthiness of the issuers of such securities and interest rates.
FOREIGN INVESTING. The Fund invests a significant portion of its assets in
foreign securities. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor will
the issuers thereof be subject to, the reporting requirements of the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. Securities of some foreign companies are less
liquid and their prices may be more volatile than securities of comparable
domestic companies. In addition, certain costs attributable to foreign
investing, such as custody charges, are higher than those attributable to
domestic investing. The Fund's interest and dividends from foreign issuers may
be subject to non-U.S. withholding taxes, thereby reducing its net investment
income.
With respect to some foreign countries, there is the increased possibility of
expropriation or confiscatory taxation, limitations on the repatriation of
assets of the Fund, political or social instability, or diplomatic developments
that could affect their investments in those countries. Moreover, individual
foreign economies may differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions.
Because the Fund may invest substantially in securities denominated in
currencies other than the U.S. dollar, and may hold foreign currencies, it will
be affected favorably or unfavorably by exchange control regulations or changes
in the exchange rates between such currencies and the U.S. dollar. Changes in
currency exchange rates will influence the value of the Fund's shares, and also
may affect the value of dividends and interest earned by the Fund and gains and
losses realized by the Fund. Currencies generally are evaluated on the basis of
fundamental economic criteria (e.g., relative inflation and interest rate levels
and trends, growth rate forecasts, balance of payments status and economic
policies) as well as technical and political data. The exchange rates between
the U.S. dollar and other currencies are determined by supply and demand in the
currency exchange markets, the international balance of payments, governmental
intervention, speculation and other economic and political conditions. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in U.S. dollars.
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "EMU"). The EMU 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 that is a
member of the European Union and satisfies the criteria for participation in the
EMU 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.
INVESTING IN EMERGING MARKETS. Because of the special risks associated with
investing in emerging markets, an investment in the Fund should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed foreign markets around the world.
Investing in emerging markets involves risks relating to potential political
and economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Fund could lose its entire investment in that market.
Many emerging market countries have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
Economies in emerging markets generally are dependent heavily upon
international trade and, accordingly, have been and may continue to be affected
adversely by trade barriers, exchange controls, managed adjustments in relative
currency values and other
10
<PAGE> 12
protectionist measures imposed or negotiated by the countries with which they
trade. These economies also have been and may continue to be affected adversely
by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States, particularly with respect to emerging markets. Such markets
have different settlement and clearance procedures. In certain markets there
have been times when settlements have been unable to keep pace with the volume
of securities transactions, making it difficult to conduct such transactions.
The inability of the Fund to make intended securities purchases due to
settlement problems could cause the Fund to forego attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser.
In addition, many of the currencies in emerging market countries have
experienced steady devaluations relative to the U.S. dollar and major
devaluations have historically occurred in certain countries.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Fund's portfolio securities in such
markets may not be readily available. Section 22(e) of the 1940 Act permits a
registered investment company to suspend redemption of its shares for any period
during which an emergency exists, as determined by the SEC. Accordingly, when
the Fund believes that appropriate circumstances warrant, it will promptly apply
to the SEC for a determination that an emergency exists within the meaning of
Section 22(e). During the period commencing from the Fund's identification of
such conditions until the date of SEC action, the portfolio securities of the
Fund in the affected markets will be valued at fair value as determined in good
faith by or under the direction of the Trust's Board of Trustees.
PACIFIC REGION COUNTRIES. The Fund may invest significantly in this region.
Certain of the risks associated with international investments are heightened
for investments in Pacific region countries. For example, some of the currencies
of Pacific region countries have experienced steady devaluations relative to the
U.S. dollar, and major adjustments have been made periodically in certain such
currencies. Moreover, recent currency devaluations in some Pacific region
countries have resulted in high interest rate levels and sharp reductions in
economic activity and have diminished prospects for short-term growth in
corporate earnings. Certain countries, such as India, face serious exchange
constraints. Jurisdictional disputes also exist between South Korea and North
Korea.
In addition, Hong Kong reverted to Chinese administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, the
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. Investments in Hong Kong may be subject to
expropriation, nationalization or confiscation, in which case the Pacific Fund
could lose its entire investment in Hong Kong. In addition, the reversion of
Hong Kong also presents a risk that the Hong Kong dollar will be devalued and a
risk of possible loss of investor confidence in Hong Kong's currency, stock
market and economy.]
OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. Although the Fund is
authorized to enter into options, futures and forward currency transactions it
might not enter into any such transactions. Options, futures and foreign
currency transactions involve certain risks, which include: (1) dependence on
the Sub-advisor's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the appropriate
market sector and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts or options
thereon or to use forward currency contracts are different from those needed to
select the securities in which the Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures contract
or option thereon at any particular time; (5) the possible loss of principal
under certain conditions; and (6) the possible inability of the Fund to purchase
or sell a portfolio security at a time when it would otherwise be favorable for
it to do so, or the possible need for the Fund to sell a security at a
disadvantageous time, due to the need for the Fund to maintain "cover" or to set
aside securities in connection with hedging transactions.
ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid securities often
sell at a price lower than similar securities that are liquid.
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<PAGE> 13
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MANAGEMENT
The Trust's Board of Trustees has overall responsibility for the operation of
the Fund. The Board of Trustees has approved all significant agreements between
the Trust and persons or companies furnishing services to the Fund, including
the investment management and administration agreement with AIM, the investment
sub-advisory and sub-administration agreement between AIM and the Sub-advisor,
the agreements with AIM Distributors regarding distribution of the Fund's
shares, the custody agreement and transfer agency agreement. The day-to-day
operations of the Fund are delegated to the officers of the Trust, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Trust's Board. See "Trustees and Executive Officers" in the
Statement of Additional Information for information on the Trustees of the
Trust.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by AIM and the
Sub-advisor as the investment managers of the Fund include, but are not limited
to, determining the composition of the portfolio of the Fund and placing orders
to buy, sell or hold particular securities. In addition, AIM and the Sub-advisor
provide the following administrative services to the Fund: furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operations.
The Fund pays AIM investment management and administration fees, computed
daily and paid monthly, based on its average daily net assets, at the annualized
rate of .975% on the first $500 million, .95% on the next $500 million, .925% on
the next $500 million and .90% on amounts thereafter. Out of the aggregate fees
payable by the Fund, AIM pays the Sub-advisor sub-advisory and
sub-administration fees equal to 40% of the aggregate fees AIM receives from the
Fund. The investment management and administration fees paid by the Fund and the
Portfolio are higher than those paid by most mutual funds. The Fund pays all
expenses not assumed by AIM, the Sub-advisor, AIM Distributors or other agents.
Effective January 1, 1998, AIM has undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary expenses)
to the maximum annual rate of 2.00% and 2.65% of the average daily net assets of
the Fund's Class A and Class B shares, respectively.
AIM also serves as the Fund's pricing and accounting agent. For these
services, AIM receives a fee based on the aggregate net assets of the funds
which comprise the following investment companies: AIM Growth Series, AIM
Investment Funds, AIM Investment Portfolios, AIM Series Trust, G.T. Global
Variable Investment Series and G.T. Global Variable Investment Trust. The fee is
calculated at the rate of 0.03% of the first $5 billion of assets, and 0.02% of
the assets in excess of $5 billion. An amount is allocated to and paid by each
such fund based on its relative average daily net assets.
AIM, 11 Greenway Plaza, Suite 100, Houston, Texas 77046, serves as the
investment manager to the Fund pursuant to a master investment management and
administration agreement (the "Advisory Agreement"). AIM was organized in 1976
and, together with its subsidiaries, manages or advises approximately 90
investment company portfolios encompassing a broad range of investment
objectives. The Sub-advisor, 50 California Street, 27th Floor, San Francisco,
California 94111, and 1166 Avenue of the Americas, New York, New York 10036,
serves as the sub-advisor to the Fund pursuant to an investment sub-advisory and
sub-administration agreement. Prior to May 29, 1998, the Sub-advisor was known
as Chancellor LGT Asset Management, Inc. On May 29, 1998, Liechtenstein Global
Trust AG ("LGT"), the former indirect parent organization of the Sub-advisor,
consummated a purchase agreement with AMVESCAP PLC pursuant to which AMVESCAP
PLC acquired LGT's Asset Management Division, which included the Sub-advisor and
certain other affiliates. As a result of this transaction, the Sub-advisor is
now an indirect wholly owned subsidiary of AMVESCAP PLC. Prior to the sale, the
Sub-advisor and its worldwide asset management affiliates provided investment
management and/or administrative services to institutional, corporate and
individual clients around the world since 1969.
AIM and the Sub-advisor and their worldwide asset management affiliates
provide investment management and/or administrative services to institutional,
corporate and individual clients around the world. AIM and the Sub-advisor are
both indirect wholly owned subsidiaries of AMVESCAP PLC. AMVESCAP PLC and its
subsidiaries are an independent investment management group that has a
significant presence in the institutional and retail segment of the investment
management industry in North America and Europe, and a growing presence in Asia.
In addition to the investment resources of their Houston, San Francisco and
New York offices, AIM and the Sub-advisor draw upon the expertise, personnel,
data and systems of other offices in Atlanta, Boston, Dallas, Denver,
Louisville, Miami, Portland (Oregon), Frankfurt, Hong-Kong, London, Singapore,
Sydney, Tokyo and Toronto. In managing the Fund, the Sub-adviser employs a team
approach, taking advantage of its investment resources around the world.
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<PAGE> 14
The investment professionals primarily responsible for the portfolio
management of the Fund are as follows:
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST FIVE YEARS
----------- -------------------- -------------------
<S> <C> <C>
Roger Yates London Portfolio Manager since 1996 Global Chief Investment Officer and Portfolio Manager for
the Sub-advisor and INVESCO GT Asset Management PLC
(London) ("GT Asset Management"), an affiliate of the
Sub-advisor, since October 1997. International Chief
Investment Officer and Portfolio Manager for the Sub-
advisor and GT Asset Management from September 1996 to
October 1997. Chief Investment Officer and Portfolio
Manager for Europe and the United Kingdom for the
Sub-advisor and GT Asset Management from 1994 to
September 1996. Investment Manager for Morgan Grenfell
Asset Management from 1988 to 1994.
Michael Lindsell Portfolio Manager since 1997 Head of Investment Strategy for Global Equities and
London Portfolio Manager for the Sub-advisor and GT Asset
Management since 1996. Chief Investment Officer for Japan
and Portfolio Manager for INVESCO GT Asset Management
Asia Ltd. (Hong Kong), an affiliate of the Sub-advisor,
and the Sub-advisor from 1992 to 1996.
Richard K. Collins Portfolio Manager since 1997 Senior Equity Portfolio Manager and Managing Director for
New York the Sub-advisor since April 1993. Employed by Chancellor
Capital Management, Inc., a predecessor of the
Sub-advisor, from 1982 to October 1996. Chartered
Financial Analyst and member of the Association of
Investment Management Research (AIMR) and the New York
Society of Securities Analysts.
</TABLE>
In placing orders for the Fund's portfolio transactions, the Sub-advisor seeks
to obtain the best net results. Consistent with its obligation to obtain the
best net results, the Sub-advisor may consider a broker/dealer's sale of shares
of the AIM Funds as a factor in considering through whom portfolio transactions
will be effected. Brokerage transactions for the Fund may be executed through
affiliates of AIM or the Sub-advisor. High portfolio turnover (over 100%)
involves correspondingly greater brokerage commissions and other transaction
costs that the Fund will bear directly and could result in the realization of
net capital gains that would be taxable when distributed to shareholders. See
"Dividends, Distributions and Tax Matters."
DISTRIBUTOR. The Trust has entered into a Master Distribution Agreement on
behalf of Class A shares of the Fund, and has entered into a Master Distribution
Agreement on behalf of Class B shares of the Fund (individually referred to as a
"Distribution Agreement" or collectively as the "Distribution Agreements") with
AIM Distributors, a registered broker-dealer and a wholly owned subsidiary of
AIM, to act as the distributor of Class A and Class B shares of the Fund.
Certain Trustees and officers of the Trust are affiliated with AIM Distributors.
The Distribution Agreements provide AIM Distributors with the exclusive right
to distribute shares of the Fund directly and through institutions with whom AIM
Distributors has entered into selected dealer agreements. Under the Distribution
Agreement for the Class B shares, AIM Distributors sells Class B shares of the
Fund at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
institutions through whom Class B shares are sold a sales commission under
schedules established by AIM Distributors. The Distribution Agreement for the
Class B shares provides that AIM Distributors (or its assignee or transferee)
will receive 0.75% (of the total 1.00% payable under the distribution plan
applicable to Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors and its predecessor. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based sales charges in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors and its
predecessor; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the plan) would terminate all
payments by the Fund of asset based sales charges and service fees to AIM
Distributors. Termination of the Class B shares distribution plan or
Distribution Agreement does not affect the obligation of Class B shareholders to
pay contingent deferred sales charges.
DISTRIBUTION PLANS. Class A Plan. The Trust has adopted a Master Distribution
Plan applicable to Class A shares of the Fund (the "Class A Plan") pursuant to
Rule 12b-1 under the 1940 Act, to compensate AIM Distributors for the purpose of
financing any activity that is intended to result in the sale of Class A shares
of the Fund.
Under the Class A Plan, the Trust may compensate AIM Distributors an aggregate
amount of 0.35% of the average daily net assets of Class A shares of the Fund on
an annualized basis.
The Class A Plan is designed to compensate AIM Distributors, on a quarterly
basis, for certain promotional and other sales-related costs, and to implement a
dealer incentive program which provides for periodic payments to selected
dealers who furnish continuing personal shareholder services to their customers
who purchase and own Class A shares of the Fund. Payments can also be directed
by
13
<PAGE> 15
AIM Distributors to selected institutions who have entered into service
agreements with respect to Class A shares of the Fund and who provide continuing
personal services to their customers who own Class A shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net asset value of those Fund shares that are held
in such institution's customers' accounts which were purchased on or after a
prescribed date set forth in the Plan.
Of the aggregate amount payable under the Class A Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of the Fund, in amounts
of up to 0.25% of the average net assets of the Fund attributable to the
customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A Plan. The Class A Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Trust with respect to the Fund. The Class A
Plan does not obligate the Fund to reimburse AIM Distributors for the actual
expenses AIM Distributors may incur in fulfilling its obligations under the
Class A Plan on behalf of the Fund. Thus, under the Class A Plan, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If AIM Distributors' expenses are less than the fee it receives, AIM
Distributors will retain the full amount of the fee.
Class B Plan. The Trust has also adopted a master distribution plan applicable
to Class B shares of the Fund (the "Class B Plan"). Under the Class B Plan, the
Fund pays distribution expenses at an annual rate of 1.00% of the average daily
net assets attributable to the Fund's Class B shares. Of such amount the Fund
pays a service fee of 0.25% of the average daily net assets attributable to the
Fund's 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 would
constitute an asset-based sales charge. Amounts paid in accordance with the
Class B Plan with respect to the Fund may be used to finance any activity
primarily intended to result in the sale of Class B shares of the Fund.
Both Plans. Activities that may be financed under the Class A Plan and the
Class B Plan (collectively, the "Plans") include, but are not limited to:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders, overhead, preparation and distribution of
advertising material and sales literature, expense of organizing and conducting
sales seminars, supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements, and the cost of administering the Plans. These amounts
payable by the Fund under the Plans need not be directly related to the expenses
actually incurred by AIM Distributors on behalf of the Fund. Thus, even if AIM
Distributors' actual expenses exceed the fee payable to AIM Distributors
thereunder at any given time, the Trust will not be obligated to pay more than
that fee, and if AIM Distributors' expenses are less than the fee it receives,
AIM Distributors will retain the full amount of the fee. Payments pursuant to
the Plans are subject to any applicable limitations imposed by rules of the
National Association of Securities Dealers, Inc.
Each of the Plans may be terminated at any time by a vote of the majority of
those Trustees who are not "interested persons" of the Trust or by a vote of the
holders of the majority of the outstanding shares of the applicable class.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Fund pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund in
making such payments. The Fund will obtain a representation from such financial
institutions that they will either be licensed as dealers as required under
applicable state law, or that they will not engage in activities which would
constitute acting as a "dealer" as defined under applicable state law. Financial
intermediaries and any other person entitled to receive compensation for selling
Fund shares may receive different compensation for selling shares of one class
over another.
For additional information concerning the operation of the Plans see the
Statement of Additional Information.
- --------------------------------------------------------------------------------
ORGANIZATION OF THE TRUST
The Trust was organized as a Delaware business trust on May 7, 1998. On May
29, 1998, the Trust acquired the assets of and assumed the liabilities of G.T.
Global Growth Series, a Massachusetts business trust. The Fund constitutes one
of the eight separate and distinct series or portfolios of the Trust.
From time to time the Trust may establish additional funds, each corresponding
to a distinct investment portfolio and a distinct series of the Trust's shares
of beneficial interest. Shares of each fund are entitled to one vote per share
(with proportional voting for fractional shares) and are freely transferable.
Shareholders have no preemptive rights. Other than the automatic conversion of
Class B shares to Class A shares, there are no conversion rights.
On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of the Fund's investment
management arrangements. In addition, shares of a particular class of the Fund
may vote on matters affecting only that class. The shares of the Fund and of the
Trust's other series will be voted in the aggregate on other matters, such as
the election of Trustees and ratification of the selection of the Trust's
independent accountants.
14
<PAGE> 16
Normally there will be no annual meeting of shareholders in any year, except
as required under the 1940 Act. Shares of the Fund and the Trust's other series
do not have cumulative voting rights, which means that the holders of a majority
of the shares voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed at any meeting of the shareholders of the Trust by a vote
of the shareholders owning at least two-thirds of the outstanding shares. Any
Trustee may call a special meeting of shareholders for any purpose. Furthermore,
Trustees shall promptly call a meeting of shareholders solely for the purpose of
removing one or more Trustees when requested in writing to do so by shareholders
holding 10% of the Trust's outstanding shares.
Pursuant to the Trust's Agreement and Declaration of Trust, the Trust may
issue an unlimited number of shares for the Fund. Each share of the Fund
represents an interest in the Fund only, has a par value of $0.01 per share,
represents an equal proportionate interest in the Fund with other shares of the
Fund and is entitled to such dividends and distributions out of the income
earned and gain realized on the assets belonging to the Fund as may be declared
by the Board of Trustees. Each share of the Fund is equal as to earnings, assets
and voting privileges to each other share in the Fund, except that each normally
has exclusive voting rights with respect to its distribution plan and bears the
expenses, if any, related to the distribution of its shares. Shares of the Fund,
when issued, are fully paid and nonassessable.
LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800 acts as counsel to the Trust and the
Fund.
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<PAGE> 17
THE TOLL-FREE NUMBER FOR ACCESS TO ROUTINE ACCOUNT INFORMATION AND TO
SHAREHOLDER ASSISTANCE IS
(800) 959-4246 (7:30 A.M. TO 6:00 P.M. CENTRAL TIME).
INVESTOR'S GUIDE
TO THE AIM FAMILY OF FUNDS--Registered Trademark--
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INTRODUCTION TO THE AIM FAMILY OF FUNDS
THE AIM FAMILY OF FUNDS consists of the following mutual funds:
<TABLE>
<S> <C>
AIM ADVISOR FLEX FUND AIM GLOBAL INFRASTRUCTURE FUND
AIM ADVISOR INTERNATIONAL VALUE FUND AIM GLOBAL RESOURCES FUND
AIM ADVISOR LARGE CAP VALUE FUND AIM GLOBAL TELECOMMUNICATIONS FUND
AIM ADVISOR MULTIFLEX FUND AIM GLOBAL TRENDS FUND
AIM ADVISOR REAL ESTATE FUND AIM GLOBAL UTILITIES FUND
AIM AGGRESSIVE GROWTH FUND AIM HIGH INCOME MUNICIPAL FUND
AIM ASIAN GROWTH FUND AIM HIGH YIELD FUND
AIM BALANCED FUND AIM INCOME FUND
AIM BASIC VALUE FUND AIM INTERMEDIATE GOVERNMENT FUND
AIM BLUE CHIP FUND AIM INTERNATIONAL EQUITY FUND
AIM CAPITAL DEVELOPMENT FUND AIM INTERNATIONAL GROWTH FUND
AIM CHARTER FUND AIM JAPAN GROWTH FUND
AIM CONSTELLATION FUND AIM LATIN AMERICAN GROWTH FUND
AIM DEVELOPING MARKETS FUND AIM LIMITED MATURITY TREASURY FUND
AIM DOLLAR FUND(*) AIM MID CAP EQUITY FUND
AIM EMERGING MARKETS FUND AIM MONEY MARKET FUND(*)
AIM EMERGING MARKETS DEBT FUND AIM MUNICIPAL BOND FUND
AIM EUROPEAN DEVELOPMENT FUND AIM NEW PACIFIC GROWTH FUND
AIM EUROPE GROWTH FUND AIM SELECT GROWTH FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND AIM SMALL CAP GROWTH FUND
AIM GLOBAL CONSUMER PRODUCTS AND AIM SMALL CAP OPPORTUNITIES FUND
SERVICES FUND AIM STRATEGIC INCOME FUND
AIM GLOBAL FINANCIAL SERVICES FUND AIM TAX-EXEMPT BOND FUND OF CONNECTICUT
AIM GLOBAL GOVERNMENT INCOME FUND AIM TAX-EXEMPT CASH FUND(*)
AIM GLOBAL GROWTH FUND AIM TAX-FREE INTERMEDIATE FUND
AIM GLOBAL GROWTH & INCOME FUND AIM VALUE FUND
AIM GLOBAL HEALTH CARE FUND AIM WEINGARTEN FUND
AIM GLOBAL INCOME FUND AIM WORLDWIDE GROWTH FUND
</TABLE>
(*) Class A shares of AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND are offered to investors at net
asset value, without payment of a sales charge, as described below. Other
funds, including the Class A, Class B and Class C shares of AIM MONEY MARKET
FUND, are sold with an initial sales charge or subject to a contingent
deferred sales charge upon redemption, as described below.
IT IS IMPORTANT FOR SHAREHOLDERS CONSIDERING AN EXCHANGE TO CAREFULLY REVIEW
THE PROSPECTUS OF THE FUND WHOSE SHARES WILL BE ACQUIRED IN AN EXCHANGE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL SHARES OF ANY FUND OTHER THAN
THE FUND(S) NAMED ON THE COVER PAGE OF THIS PROSPECTUS.
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HOW TO PURCHASE SHARES
HOW TO OPEN AN ACCOUNT. In order to purchase shares of any of The AIM Family
of Funds ("AIM Funds"), an investor must submit a fully completed new Account
Application form directly to A I M Fund Services, Inc. ("AFS" or the "Transfer
Agent") or through any dealer authorized by A I M Distributors, Inc. ("AIM
Distributors") to sell shares of the AIM Funds.
Accounts submitted without a correct, certified taxpayer identification number
or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for
non-resident aliens) or Form W-9 (certifying exempt status) accompanying the
registration information will be subject to backup withholding. See the Account
Application for applicable IRS penalties. The minimum initial investment is
$500, except for accounts initially established through an Automatic Investment
Plan, which requires a special authorization form (see "Special Plans") and for
certain retirement accounts. The minimum initial investment for accounts
established with an Automatic Investment Plan is $50. The minimum initial
investment for an Individual Retirement Arrangement ("IRA") or Roth IRA is $250.
There are no minimum initial investment requirements applicable to
money-purchase/profit-sharing plans, 401(k) plans, Simplified Employee Pension
("SEP") accounts, Savings Incentive Match Plans for Employee IRA ("SIMPLE IRA")
accounts, 403(b) plans or 457 (state deferred compensation) plans (except that
the minimum initial investment for salary deferrals for such plans is $25 per
fund investment), or for investment of dividends and distributions of any of the
AIM Funds into any existing AIM
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<PAGE> 18
Funds account. Notwithstanding the foregoing, the minimum initial investment
applicable to AIM Small Cap Opportunities Fund is $10,000.
AFS' mailing address is:
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
For additional information or assistance, investors should call the Client
Services Department of AFS at:
(800) 959-4246
Shares of any AIM Funds not named on the cover of this Prospectus, as well as
Advisor Class shares of certain AIM Funds, are offered pursuant to separate
prospectuses. Copies of other prospectuses may be obtained by calling (800)
347-4246.
INITIAL AND SUBSEQUENT PURCHASES BY WIRE: To insure prompt credit to his
account, an investor or his dealer should call AFS' Client Services Department
at (800) 959-4246 prior to sending a wire to receive a reference number for the
wire. The following wire instructions should be used:
<TABLE>
<S> <C>
Beneficiary Bank ABA/Routing #: 113000609
Beneficiary Account Number: 00100366807
Beneficiary Account Name: A I M Fund Services, Inc.
RFB: Fund name, Reference Number (16 character limit)
OBI: Shareholder Name, Shareholder Account Number
(70 character limit)
</TABLE>
HOW TO PURCHASE ADDITIONAL SHARES. Additional shares may be purchased directly
through AIM Distributors or through any dealer who has entered into an agreement
with AIM Distributors. The minimum investment for subsequent purchases is $50.
The minimum employee salary deferral investment for participants in
money-purchase/profit sharing plans, 401(k), IRA/SEP, 403(b) or 457 plans is
$25. Notwithstanding the foregoing, the minimum subsequent purchases of shares
of AIM Small Cap Opportunities Fund is $1,000. There are no such minimum
investment requirements for investment of dividends and distributions of any of
the AIM Funds into any other existing AIM Funds account.
BY MAIL: Investors must indicate their account number and the name of the Fund
being purchased. The remittance slip from a confirmation statement should be
used for this purpose, and sent to AFS.
BY AIM BANK CONNECTION(SM): To purchase additional shares by electronic funds
transfer, please contact the Client Services Department of AFS for details.
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TERMS AND CONDITIONS OF PURCHASE OF THE AIM FUNDS
Shares of the AIM Funds, including Class A shares (the "Class A shares") of
AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE
CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, AIM ADVISOR REAL ESTATE FUND, AIM
AGGRESSIVE GROWTH FUND, AIM ASIAN GROWTH FUND, AIM BALANCED FUND, AIM BASIC
VALUE FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM
EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT
FUND, AIM EUROPE GROWTH FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL
INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS
FUND, AIM GLOBAL TRENDS FUND, AIM GLOBAL UTILITIES FUND, AIM HIGH INCOME
MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM INTERNATIONAL EQUITY FUND, AIM INTERNATIONAL GROWTH FUND,
AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM MID CAP EQUITY FUND, AIM MONEY MARKET FUND, AIM MUNICIPAL
BOND FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT GROWTH FUND, AIM SMALL CAP
GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM STRATEGIC INCOME FUND,AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND, AIM TAX-FREE
INTERMEDIATE FUND, AIM VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH
FUND, collectively (other than AIM AGGRESSIVE GROWTH FUND, AIM LIMITED MATURITY
TREASURY FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND
and AIM TAX-FREE INTERMEDIATE FUND), the "Multiple Class Funds," may be
purchased at their respective net asset value plus a sales charge as indicated
below, except that Class A shares of AIM DOLLAR FUND and AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without a
sales charge and Class B shares (the "Class B shares") and Class C shares (the
"Class C shares") of the Multiple Class Funds which offer such classes are sold
at net asset value subject to a contingent deferred sales charge payable upon
certain redemptions. Class B shares of AIM DOLLAR FUND, however, may be acquired
only by an exchange of shares of another AIM Fund. These contingent deferred
sales charges are described under the caption "How to Redeem Shares -- Multiple
Distribution System." Securities dealers and other persons entitled to receive
compensation for selling or servicing shares of a Multiple Class Fund may
receive different compensation for selling or servicing one particular class of
shares over
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<PAGE> 19
another class in the same Multiple Class Fund. Factors an investor should
consider prior to purchasing Class A, Class B or Class C shares (or, if
applicable, AIM Cash Reserve Shares) of a Multiple Class Fund are described
below under "Special Information Relating to Multiple Class Funds." For
information on purchasing any of the AIM Funds and to receive a prospectus,
please call (800) 347-4246. As described below, the sales charge otherwise
applicable to a purchase of shares of a fund may be reduced if certain
conditions are met. In order to take advantage of a reduced sales charge, the
prospective investor or his dealer must advise AIM Distributors that the
conditions for obtaining a reduced sales charge have been met. Net asset value
is determined in the manner described under the caption "Determination of Net
Asset Value."
The following Multiple Class Funds sometimes are referred to herein as the
"AIM/GT Funds": AIM AMERICA VALUE FUND, AIM DEVELOPING MARKETS FUND, AIM DOLLAR
FUND, AIM EMERGING MARKETS FUND, AIM EMERGING MARKETS DEBT FUND, AIM EUROPE
GROWTH FUND, AIM GLOBAL CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL
FINANCIAL SERVICES FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH &
INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM
GLOBAL RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS
FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN AMERICAN
GROWTH FUND, AIM MID CAP GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM SMALL CAP
EQUITY FUND, AIM STRATEGIC INCOME FUND and AIM WORLDWIDE GROWTH FUND.
The following tables show the sales charge and dealer concession at various
investment levels for the AIM Funds.
SALES CHARGES AND DEALER CONCESSIONS
GROUP I. Certain AIM Funds are currently sold with a sales charge ranging from
5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These
AIM Funds include Class A shares of each of AIM ADVISOR FLEX FUND, AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR
MULTIFLEX FUND, AIM AGGRESSIVE GROWTH FUND, AIM BASIC VALUE FUND, AIM ASIAN
GROWTH FUND, AIM BLUE CHIP FUND, AIM CAPITAL DEVELOPMENT FUND, AIM CHARTER FUND,
AIM CONSTELLATION FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH FUND,
AIM GLOBAL UTILITIES FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM MID CAP
EQUITY FUND, AIM MONEY MARKET FUND, AIM NEW PACIFIC GROWTH FUND, AIM SELECT
GROWTH FUND, AIM SMALL CAP GROWTH FUND, AIM SMALL CAP OPPORTUNITIES FUND, AIM
VALUE FUND, AIM WEINGARTEN FUND and AIM WORLDWIDE GROWTH FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION(1) PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
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(1) AIM Small Cap Opportunities Fund will not accept any single purchase in
excess of $250,000.
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
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<PAGE> 20
GROUP II. Certain AIM Funds are currently sold with a sales charge ranging
from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000.
These AIM Funds are: the Class A shares of each of AIM ADVISOR REAL ESTATE FUND,
AIM BALANCED FUND, AIM DEVELOPING MARKETS FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL
CONSUMER PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM
GLOBAL GOVERNMENT INCOME FUND, AIM GLOBAL GROWTH FUND, AIM GLOBAL HEALTH CARE
FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL
RESOURCES FUND, AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL TRENDS FUND, AIM
HIGH INCOME MUNICIPAL FUND, AIM HIGH YIELD FUND, AIM INCOME FUND, AIM
INTERMEDIATE GOVERNMENT FUND, AIM LATIN AMERICAN GROWTH FUND, AIM MUNICIPAL BOND
FUND, AIM STRATEGIC INCOME FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions. See "All Groups of AIM Funds." PURCHASES OF $1,000,000 OR MORE ARE
AT NET ASSET VALUE, SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE OF 1% IF
SHARES ARE REDEEMED PRIOR TO 18 MONTHS FROM THE DATE SUCH SHARES WERE PURCHASED,
AS DESCRIBED UNDER THE CAPTION "HOW TO REDEEM SHARES -- CONTINGENT DEFERRED
SALES CHARGE PROGRAM FOR LARGE PURCHASES."
GROUP III. Certain AIM Funds are currently sold with a sales charge ranging
from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000.
These AIM Funds are the Class A shares of each of AIM LIMITED MATURITY TREASURY
FUND and AIM TAX-FREE INTERMEDIATE FUND.
<TABLE>
<CAPTION>
DEALER
CONCESSION
INVESTOR'S SALES CHARGE ----------
-------------------------- AS A
AS A AS A PERCENTAGE
PERCENTAGE PERCENTAGE OF THE
OF THE PUBLIC OF THE NET PUBLIC
AMOUNT OF INVESTMENT IN OFFERING AMOUNT OFFERING
SINGLE TRANSACTION PRICE INVESTED PRICE
----------------------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more; however, AIM
Distributors may pay a dealer concession and/or advance a service fee on such
transactions.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire
initial sales charge to dealers for all sales with respect to which orders are
placed with AIM Distributors during a particular period. Dealers to whom
substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of shares. At the option of the dealer, such incentives may take the form of
payment for travel expenses, including lodging, incurred in connection with
trips taken by qualifying registered representatives and their families to
places within or outside the United States. The total amount of such additional
bonus payments or other consideration shall not exceed 0.25% of the public
offering price of the shares sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of the applicable AIM Fund's
shares or the amount that any particular AIM Fund will receive as proceeds from
such sales. Dealers may not use sales of the AIM Funds' shares to qualify for
any incentives to the extent that such incentives may be prohibited by the laws
of any state.
AIM Distributors may make payments to dealers and institutions who are dealers
of record for purchases of $1 million of more of Class A shares (or shares which
normally involve payment of initial sales charges), which are sold at net asset
value and are subject to
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<PAGE> 21
a contingent deferred sales charge, for all AIM Funds other than Class A shares
of each of AIM LIMITED MATURITY TREASURY FUND and AIM TAX-FREE INTERMEDIATE FUND
as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next
$1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases. See
"Contingent Deferred Sales Charge Program for Large Purchases." AIM Distributors
may make payments to dealers and institutions who are dealers of record for
purchases of $1 million or more of Class A shares (or shares which normally
involve payment of initial sales charges), and which are sold at net asset value
and are not subject to a contingent deferred sales charge, in an amount up to
0.10% of such purchases of Class A shares of AIM LIMITED MATURITY TREASURY FUND,
and in an amount up to 0.25% of such purchases of Class A shares of AIM TAX-FREE
INTERMEDIATE FUND.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class B shares of the AIM Funds at the time of such sales. Payments with
respect to Class B shares will equal 4.00% of the purchase price of the Class B
shares sold by the dealer or institution, and will consist of a sales commission
equal to 3.75% of the purchase price of the Class B shares sold plus an advance
of the first year service fee of 0.25% with respect to such shares. The portion
of the payments to AIM Distributors under the Class B Plan which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of such sales commissions plus financing costs.
AIM Distributors may pay sales commissions to dealers and institutions who
sell Class C shares of the AIM Funds at the time of such sales. Payments with
respect to Class C shares will equal 1.00% of the purchase price of the Class C
shares sold by the dealer or institution, and will consist of a sales commission
of 0.75% of the purchase price of the Class C shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. AIM Distributors
will retain all payments received by it relating to Class C shares for the first
year after they are purchased. The portion of the payments to AIM Distributors
under the Class A and C Plan attributable to Class C shares which constitutes an
asset-based sales charge (0.75%) is intended in part to permit AIM Distributors
to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first full year, AIM Distributors will make such
payments quarterly to dealers and institutions based on the average net asset
value of Class C shares which are attributable to shareholders for whom the
dealers and institutions are designated as dealers of record. These commissions
on Class C shares are not paid on sales to investors exempt from the CDSC,
including Class C shareholders of record on April 30, 1995 who purchase
additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
TIMING OF PURCHASE ORDERS. Orders for the purchase of shares of an AIM Fund
(other than AIM MONEY MARKET FUND, as described below) received prior to the
close of regular trading on the New York Stock Exchange ("NYSE"), which is
generally 4:00 p.m. Eastern Time (and which is hereinafter referred to as "NYSE
Close"), on any business day of an AIM Fund will be confirmed at the price next
determined. Orders received after NYSE Close will be confirmed at the price
determined on the next business day of the AIM Fund. Certain financial
institutions (or their designees) may be authorized to accept purchase orders on
behalf of the AIM Funds. Orders received by authorized institutions (or their
designees) before NYSE Close will be deemed to have been received by an AIM Fund
on such day and will be effected that day, provided that such orders are
transmitted to the Transfer Agent prior to the time set for receipt of such
orders. It is the responsibility of the dealer/financial institution to ensure
that all orders are transmitted on a timely basis to the Transfer Agent. Any
loss resulting from the dealer/financial institution's failure to submit an
order within the prescribed time frame will be borne by that dealer/financial
institution. Please see "How to Purchase Shares -- Purchases by Wire" for
information on obtaining a reference number for wire orders, which will
facilitate the handling of such orders and ensure prompt credit to an investor's
account. A "business day" of an AIM Fund is any day on which the NYSE is open
for business. It is expected that the NYSE will be closed during the next twelve
months on Saturdays and Sundays and on the days on which New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day are observed by the NYSE.
An investor who uses a check to purchase shares will be credited with the full
number of shares purchased at the time of receipt of the purchase order, as
previously described. However, in the event of a redemption or exchange of such
shares, the investor may be required to wait up to ten business days before the
redemption proceeds are sent. This delay is necessary in order to ensure that
the check has cleared. If the check does not clear, or if any investment order
must be cancelled due to nonpayment, the investor will be responsible for any
resulting loss to an AIM Fund or to AIM Distributors.
SPECIAL INFORMATION RELATING TO MULTIPLE CLASS FUNDS. The Multiple Class Funds
currently offer two or more classes of shares through separate distribution
systems (the "Multiple Distribution System"). Although each class of shares of a
particular Multiple Class Fund represents an interest in the same portfolio of
investments, each class is subject to a different distribution structure and, as
a result, differing expenses. This Multiple Distribution System allows investors
to select the class that is best suited to the investor's needs and objectives.
In considering the options afforded by the Multiple Distribution System,
investors should consider both the applicable initial sales charge or contingent
deferred sales charge, as well as the ongoing expenses borne by each class of
shares and other relevant factors, such as whether his or her investment goals
are long-term or short-term.
CLASS A SHARES generally are sold subject to the initial sales charges
described above and are subject to the other fees and expenses described
herein. Class A shares of AIM MONEY MARKET FUND are designed to meet the
needs of an investor who wishes to establish a dollar cost averaging
program, pursuant to which Class A shares an investor owns may be exchanged
at net asset value for Class A shares of another Multiple Class Fund or
shares of another AIM Fund which is not a Multiple Class Fund, subject to
the terms and conditions described under the caption "Exchange
Privilege -- Terms and Conditions of Exchanges."
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<PAGE> 22
CLASS B SHARES are sold without an initial sales charge. Thus, the entire
purchase price of Class B shares is immediately invested in Class B shares.
Class B shares are subject, however, to Rule 12b-1 Plan payments of 1.00%
per annum on the average daily net assets of a Multiple Class Fund
attributable to Class B shares. See the discussion under the caption
"Management -- Distribution Plans." In addition, Class B shares redeemed
within six years from the date such shares were purchased are subject to a
contingent deferred sales charge ranging from 5% for redemptions made
within the first year to 1% for redemptions made within the sixth year. No
contingent deferred sales charge will be imposed if Class B shares are
redeemed after six years from the date such shares were purchased.
Redemptions of Class B shares and associated charges are further described
under the caption "How to Redeem Shares -- Multiple Distribution System."
Class B shares will automatically convert into Class A shares of the same
Multiple Class Fund (together with a pro rata portion of all Class B shares
acquired through the reinvestment of dividends and other distributions)
eight years from the end of the calendar month in which the purchase of
Class B shares was made. Class B shares of AIM GLOBAL TRENDS FUND that were
outstanding on May 29, 1998 and which are continuously held by the
shareholder, automatically convert to Class A shares of AIM GLOBAL TRENDS
FUND seven years from the end of the calendar month in which the purchase
of such Class B shares was made. If a shareholder exchanges Class B shares
of AIM GLOBAL TRENDS FUND that were outstanding on, and continuously held
since, May 29, 1998 for Class B shares of any other AIM Fund, such Class B
shares will be subject to the eight year conversion feature applicable to
Class B shares of all other AIM Funds. Following such conversion of their
Class B shares, investors will be relieved of the higher Rule 12b-1 Plan
payments associated with Class B shares. See "Management -- Distribution
Plans."
AIM Cash Reserve Shares of AIM MONEY MARKET FUND are sold without an
initial sales charge and are not subject to a contingent deferred sales
charge; however, they are subject to the other fees and expenses described
in the prospectus for AIM MONEY MARKET FUND.
TIMING OF PURCHASE, EXCHANGE AND REDEMPTION ORDERS (AIM MONEY MARKET FUND
ONLY). Orders for purchases, exchanges and redemptions of shares of AIM MONEY
MARKET FUND received prior to 12:00 noon Eastern Time or NYSE Close on any
business day of the Fund will be confirmed at the price next determined. Net
asset value is normally determined at 12:00 noon Eastern Time and NYSE Close on
each business day of AIM MONEY MARKET FUND.
SPECIAL INFORMATION RELATING TO AIM MONEY MARKET FUND, AIM TAX-EXEMPT CASH
FUND and AIM DOLLAR FUND (THE "MONEY MARKET FUNDS"). Because each Money Market
Fund uses the amortized cost method of valuing the securities it holds and
rounds its per share net asset value to the nearest whole cent, it is
anticipated that the net asset value of the shares of such funds will remain
constant at $1.00 per share. However, there is no assurance that each Money
Market Fund can maintain a $1.00 net asset value per share. In order to earn
dividends with respect to AIM MONEY MARKET FUND on the same day that a purchase
is made, purchase payments in the form of federal funds must be received by the
Transfer Agent before 12:00 noon Eastern Time on that day. Purchases made by
payments in any other form, or payments in the form of federal funds received
after such time but prior to NYSE Close, will begin to earn dividends on the
next business day following the date of purchase. The Money Market Funds
generally will not issue share certificates but will record investor holdings in
noncertificate form and regularly advise the shareholder of his ownership
position.
SHARE CERTIFICATES. Share certificates for all AIM Funds will be issued upon
written request by a shareholder to AIM Distributors or the Transfer Agent.
Otherwise, such shares will be held on the shareholder's behalf by the
applicable AIM Fund(s) and be recorded on the books of such fund(s). See
"Exchange Privilege -- Exchanges by Telephone" and "How to Redeem
Shares -- Redemptions by Telephone" for restrictions applicable to shares issued
in certificate form. Please note that certificates will not be issued for shares
held in prototype retirement plans.
MINIMUM ACCOUNT BALANCE. If (1) an account opened in a fund has been in effect
for at least one year and the shareholder has not made an additional purchase in
that account within the preceding six calendar months and (2) the value of such
account drops below $500 for three consecutive months as a result of redemptions
or exchanges, the fund has the right to redeem the account, after giving the
shareholder 60 days' prior written notice, unless the shareholder makes
additional investments within the notice period to bring the account value up to
$500. If a fund determines that a shareholder has provided incorrect information
in opening an account with a fund or in the course of conducting subsequent
transactions with the fund related to such account, the fund may, in its
discretion, redeem the account and distribute the proceeds of such redemption to
the shareholder.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of Class A shares of the AIM Funds that
are otherwise subject to an initial sales charge, provided that such purchases
are made by a "purchaser" as hereinafter defined. Purchases of Class A shares of
AIM TAX-EXEMPT CASH FUND and AIM DOLLAR FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class B and Class C shares of the Multiple Class Funds
will not be taken into account in determining whether a purchase qualifies for a
reduction in initial sales charges.
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The term "purchaser" means:
- an individual and his or her spouse and children, including any trust
established exclusively for the benefit of any such person; or a pension,
profit-sharing, or other benefit plan established exclusively for the
benefit of any such person, such as an IRA, Roth IRA, a single-participant
money-purchase/profit-sharing plan or an individual participant in a 403(b)
plan (unless such 403(b) plan qualifies as the purchaser as defined below);
- a 403(b) plan, the employer/sponsor of which is an organization described
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"), provided that:
a. the employer/sponsor must submit contributions for all participating
employees in a single contribution transmittal (i.e., the funds will
not accept contributions submitted with respect to individual
participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by submitting
an application on behalf of each new participant with the
contribution transmittal;
- a trustee or fiduciary purchasing for a single trust, estate or single
fiduciary account (including a pension, profit-sharing or other employee
benefit trust created pursuant to a plan qualified under Section 401 of the
Code) and 457 plans, although more than one beneficiary or participant is
involved;
- a Simplified Employee Pension ("SEP"), Salary Reduction and other Elective
Simplified Employee Pension account ("SARSEP"), or Savings Incentive Match
Plans for Employees IRA ("SIMPLE IRA") where the employer has notified AIM
Distributors in writing that all of its related employee SEP, SARSEP or
SIMPLE IRA accounts should be linked;
- any other organized group of persons, whether incorporated or not, provided
the organization has been in existence for at least six months and has some
purpose other than the purchase at a discount of redeemable securities of a
registered investment company; or
- the discretionary advised accounts of A I M Advisors, Inc. ("AIM") or A I M
Capital Management, Inc. ("AIM Capital").
Investors or dealers seeking to qualify orders for a reduced initial sales
charge must identify such orders and, if necessary, support their qualification
for the reduced charge. AIM Distributors reserves the right to determine whether
any purchaser is entitled, by virtue of the foregoing definition, to the reduced
sales charge. No person or entity may distribute shares of the AIM Funds without
payment of the applicable sales charge other than to persons or entities who
qualify for a reduction in the sales charge provided herein.
(1) LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced
initial sales charges by completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is
also available to holders of the Connecticut General Guaranteed Account,
established for tax qualified group annuities, for contracts purchased on or
before June 30, 1992. The LOI confirms such purchaser's intention as to the
total investment to be made in shares of the AIM Funds (except for (i) Class A
shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH FUND, and AIM Cash Reserve Shares
of AIM MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple
Class Funds) within the following 13 consecutive months. By marking the LOI
section on the account application and by signing the account application, the
purchaser indicates that he understands and agrees to the terms of the LOI and
is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales charge made
during the 13-month period will be made at the public offering price applicable
to a single transaction of the total dollar amount indicated by the LOI, as
described under "Sales Charges and Dealer Concessions." It is the purchaser's
responsibility at the time of purchase to specify the account numbers that
should be considered in determining the appropriate sales charge. The offering
price may be further reduced as described under "Rights of Accumulation" if the
Transfer Agent is advised of all other accounts at the time of the investment.
Shares acquired through reinvestment of dividends and capital gain distributions
will not be applied to the LOI. At any time during the 13-month period after
meeting the original obligation, a purchaser may revise his intended investment
amount upward by submitting a written and signed request. Such a revision will
not change the original expiration date. By signing an LOI, a purchaser is not
making a binding commitment to purchase additional shares, but if purchases made
within the 13-month period do not total the amount specified, the investor will
pay the increased amount of sales charge as described below. Purchases made
within 90 days before signing an LOI will be applied toward completion of the
LOI. The LOI effective date will be the date of the first purchase with the
90-day period. The Transfer Agent will process necessary adjustments upon the
expiration or completion date of the LOI. Purchases made more than 90 days
before signing an LOI will be applied toward completion of the LOI based on the
value of the shares purchased calculated at the public offering price on the
effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the initial
purchase (or subsequent purchases if necessary) the Transfer Agent will escrow
in the form of shares an appropriate dollar amount (computed to the nearest full
share). All dividends and any capital gain distributions on the escrowed shares
will be credited to the purchaser. All shares purchased, including those
escrowed, will be registered in the purchaser's name. If the total investment
specified under this LOI is completed within the 13-month period, the escrowed
shares will be promptly released. If the intended investment is not completed,
the purchaser will pay the Transfer Agent the difference between the sales
charge on the specified amount and the amount actually purchased. If the
purchaser does not pay such difference within 20 days of the expiration date, he
irrevocably constitutes and appoints the Transfer Agent as his attorney to
surrender for redemption any or all shares, to make up such difference within 60
days of the expiration date.
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If at any time before completing the LOI Program, the purchaser wishes to
cancel the agreement, he must give written notice to AIM Distributors. If at any
time before completing the LOI Program the purchaser requests the Transfer Agent
to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
Any investor who purchased shares of the AIM/GT Funds pursuant to a LOI
entered into prior to June 1, 1998 may continue to make such purchases under the
terms of such LOI. See "How to Purchase and Redeem Shares" in the Statement of
Additional Information.
(2) RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also
qualify for reduced initial sales charges based upon such purchaser's existing
investment in shares of any of the AIM Funds (except for (i) Class A shares of
AIM DOLLAR FUND, AIM TAX-EXEMPT CASH FUND and AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and (ii) Class B and Class C shares of the Multiple Class
Funds) at the time of the proposed purchase. Rights of accumulation are also
available to holders of the Connecticut General Guaranteed Account, established
for tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM DOLLAR FUND, AIM TAX-EXEMPT CASH
FUND and AIM Cash Reserve Shares of AIM MONEY MARKET FUND and (ii) Class B and
Class C shares of the Multiple Class Funds) owned by such purchaser, calculated
at their then current public offering price. If a purchaser so qualifies for a
reduced sales charge, the reduced sales charge applies to the total amount of
money then being invested by such purchaser and not just to the portion that
exceeds the breakpoint above which a reduced sales charge applies. For example,
if a purchaser already owns qualifying shares of any AIM Fund with a value of
$20,000 and wishes to invest an additional $20,000 in a fund with a maximum
initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will
apply to the full $20,000 purchase and not just to the $15,000 in excess of the
$25,000 breakpoint. To qualify for obtaining the discount applicable to a
particular purchase, the purchaser or his dealer must furnish AFS with a list of
the account numbers and the names in which such accounts of the purchaser are
registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at
net asset value (without payment of an initial sales charge) may be made in
connection with: (a) the reinvestment of dividends and other distributions from
a fund (see "Dividends, Distributions and Tax Matters"); (b) exchanges of shares
of certain other funds (see "Exchange Privilege"); (c) use of the reinstatement
privilege (see "How to Redeem Shares"); or (d) a merger, consolidation or
acquisition of assets of a fund.
Shareholders of record of Class A shares of AIM WEINGARTEN FUND and AIM
CONSTELLATION FUND on September 8, 1986, and shareholders of record of Class A
shares of AIM CHARTER FUND on November 17, 1986, may purchase additional Class A
shares of the particular AIM Fund(s) whose shares they owned on such date, at
net asset value (without payment of a sales charge) for as long as they
continuously own Class A shares of such AIM Fund(s) having a market value of at
least $500. In addition, discretionary advised clients of any investment
advisors whose clients held Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND on September 8, 1986, or who held Class A shares of AIM
CHARTER FUND on November 17, 1986, and have held such Class A shares at all
times subsequent to such date, may purchase Class A shares of the applicable AIM
Fund(s) at the net asset value of such shares.
The following persons may purchase Class A shares of the AIM Funds through AIM
Distributors without payment of an initial sales charge: (a) A I M Management
Group Inc. ("AIM Management") and its affiliated companies; (b) any current or
retired officer, director, trustee or employee, or any member of the immediate
family (including spouse, children, parents and parents of spouse) of any such
person, of AIM Management or its affiliates or of certain mutual funds which are
advised or managed by AIM; or any trust established exclusively for the benefit
of such persons; (c) any employee benefit plan established for employees of AIM
Management or its affiliates; (d) any current or retired officer, director,
trustee or employee, or any member of the immediate family (including spouse,
children, parents and parents of spouse) of any such person, or of CIGNA
Corporation or of any of its affiliated companies, or of First Data Investor
Services Group (formerly The Shareholder Services Group, Inc.); (e) any
investment company sponsored by CIGNA Investments, Inc. or any of its affiliated
companies for the benefit of its directors' deferred compensation plans; (f)
discretionary advised clients of AIM or AIM Capital; (g) registered
representatives and employees of dealers who have entered into agreements with
AIM Distributors (or financial institutions that have arrangements with such
dealers with respect to the sale of shares of the AIM Funds) and any member of
the immediate family (including spouse, children, parents and parents of spouse)
of any such person, provided that purchases at net asset value are permitted by
the policies of such person's employer; (h) certain broker-dealers, investment
advisers or bank trust departments that provide asset allocation, similar
specialized investment services or investment company transaction services for
their customers, that charge a minimum annual fee for such services, and that
have entered into an agreement with AIM Distributors with respect to their use
of the AIM Funds in connection with such services; (i) any employee or any
member of the immediate family (including spouse, children, parents and parents
of spouse) of any employee, of Triformis Inc.; (j) shareholders of the AIM/GT
Funds as of April 30, 1987 who since that date continually have owned shares of
one or more of the AIM/GT Funds; and (k) certain former AMA Investment Advisers'
shareholders who became shareholders of the AIM Global Health Care Fund in
October 1989, and who have continuously held shares in the AIM/GT Funds since
that time.
In addition, shares of any AIM Fund (except AIM Small Cap Opportunities Fund)
may be purchased at net asset value, without payment of a sales charge, by
pension, profit-sharing or other employee benefit plans created pursuant to a
plan qualified under Section 401 of the Code or plans under Section 457 of the
Code, or employee benefit plans created pursuant to Section 403(b) of the
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<PAGE> 25
Code and sponsored by nonprofit organizations defined under Section 501(c)(3) of
the Code. Such plans will qualify for purchases at net asset value provided that
(1) the total amount invested in the plan is at least $1,000,000, (2) the
sponsor signs a $1,000,000 LOI, (3) such shares are purchased by an
employer-sponsored plan with at least 100 eligible employees, or (4) all of the
plan's transactions are executed through a single financial institution or
service organization who has entered into an agreement with AIM Distributors
with respect to their use of the AIM Funds in connection with such accounts.
Section 403(b) plans sponsored by public educational institutions will not be
eligible for net asset value purchases based on the aggregate investment made by
the plan or the number of eligible employees. Participants in such plans will be
eligible for reduced sales charges based solely on the aggregate value of their
individual investments in the applicable AIM Fund. PLEASE NOTE THAT TAX-EXEMPT
FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR SUCH PLANS. AIM Distributors may pay
investment dealers or other financial service firms for share purchases of the
Load Funds (as defined under the caption "Exchange Privilege") sold at net asset
value to an employee benefit plan in accordance with this paragraph as follows:
1% of the first $2 million of such purchases, plus 0.80% of the next $1 million
of such purchases, plus 0.50% of the next $17 million of such purchases, plus
0.25% of amounts in excess of $20 million of such purchases and up to 0.10% of
the net asset value of any Class A shares of AIM LIMITED MATURITY TREASURY FUND
sold at net asset value to an employee benefit plan in accordance with this
paragraph.
Class A shares of AIM WEINGARTEN FUND and AIM CONSTELLATION FUND may be
deposited at net asset value, without payment of a sales charge, in G/SET series
unit investment trusts, whose portfolios consist exclusively of Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND and stripped United States
Treasury issued notes or bonds bearing no current interest ("Treasury
Obligations"). Class A shares of such funds may also be purchased at net asset
value by other unit investment trusts approved by the Board of Directors of AIM
Equity Funds, Inc. Unit holders of such trusts may elect to invest cash
distributions from such trusts in Class A shares of AIM WEINGARTEN FUND or AIM
CONSTELLATION FUND at net asset value, including: (a) distributions of any
dividend income or other income received by such trusts; (b) distributions of
any net capital gains received in respect of Class A shares of AIM WEINGARTEN
FUND or AIM CONSTELLATION FUND and proceeds of the sales of Class A shares of
AIM WEINGARTEN FUND or AIM CONSTELLATION FUND used to redeem units of such
trusts; and (c) proceeds from the maturity of the Treasury Obligations at the
termination dates of such trusts. Prior to the termination dates of such trusts,
a unit holder may invest the proceeds from the redemption or repurchase of his
units in Class A shares of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND at net
asset value, provided: (a) that the investment in Class A shares of AIM
WEINGARTEN FUND or AIM CONSTELLATION FUND is effected within 30 days of such
redemption or repurchase; and (b) that the unit holder or his dealer provides
AIM Distributors with a letter which: (i) identifies the name, address and
telephone number of the dealer who sold to the unit holder the units to be
redeemed or repurchased; and (ii) states that the investment in Class A shares
of AIM WEINGARTEN FUND or AIM CONSTELLATION FUND is being funded exclusively by
the proceeds from the redemption or repurchase of units of such trusts.
FOR ANY FUND NAMED ON THE COVER PAGE OF THIS PROSPECTUS, AIM DISTRIBUTORS AND
ITS AGENTS RESERVE THE RIGHT AT ANY TIME (1) TO WITHDRAW ALL OR ANY PART OF THE
OFFERING MADE BY THIS PROSPECTUS; (2) TO REJECT ANY PURCHASE OR EXCHANGE ORDER
OR TO CANCEL ANY PURCHASE DUE TO NONPAYMENT OF THE PURCHASE PRICE; (3) TO
INCREASE, WAIVE OR LOWER THE MINIMUM INVESTMENT REQUIREMENTS; OR (4) TO MODIFY
ANY OF THE TERMS OR CONDITIONS OF PURCHASE OF SHARES OF SUCH FUND. For any fund
named on the cover page, AIM Distributors and its agents will use their best
efforts to provide notice of any such actions through correspondence with
broker-dealers and existing shareholders, supplements to the AIM Funds'
prospectuses, or other appropriate means, and will provide sixty (60) days'
notice in the case of termination or material modification to the exchange
privilege discussed under the caption "Exchange Privilege."
- --------------------------------------------------------------------------------
SPECIAL PLANS
Except as noted below, each AIM Fund provides the special plans described
below for the convenience of its shareholders. Once established, there is no
obligation to continue to invest through a plan, and a shareholder may terminate
a plan at any time.
Special plan applications and further information, including details of any
fees which are charged to a shareholder investing through a plan, may be
obtained by written request, directed to AFS at the address provided under "How
to Purchase Shares," or by calling the Client Services Department of AFS at
(800) 959-4246. IT IS RECOMMENDED THAT A SHAREHOLDER CONSIDERING ANY OF THE
PLANS DESCRIBED HEREIN CONSULT A TAX ADVISOR BEFORE COMMENCING PARTICIPATION IN
SUCH A PLAN.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, a shareholder
who owns shares which are not subject to a contingent deferred sales charge, can
arrange for monthly, quarterly or annual amounts (but not less than $50) to be
drawn against the balance of his account in the designated AIM Fund.
Shareholders who own shares subject to a contingent deferred sales charge, can
only arrange for monthly or quarterly withdrawals under a Systematic Withdrawal
Plan. Payment of this amount can be made on any day of the month the shareholder
specifies, except the thirtieth or thirty-first day of each month in which a
payment is to be made. A minimum account balance of $5,000 is required to
establish a Systematic Withdrawal Plan, but there is no requirement thereafter
to maintain any minimum investment. With respect to shares subject to a
contingent deferred sales charge (all classes) no contingent deferred sales
charge will be imposed on withdrawals made under a Systematic Withdrawal Plan,
provided that the amounts withdrawn under such a plan do not exceed on an annual
basis 12% of the account value at the time the shareholder elects to participate
in the Systematic Withdrawal Plan. Systematic Withdrawal Plans with respect to
shares subject to a contingent deferred sales charge that
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exceed on an annual basis 12% of such account will be subject to a contingent
deferred sales charge on the amounts exceeding 12% of the account value at the
time the shareholder elects to participate in the Systematic Withdrawal Plan.
Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer
Agent and all dividends and distributions are reinvested to shares of the
applicable AIM Fund by the Transfer Agent. To provide funds for payments made
under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full
and fractional shares at their net asset value in effect at the time of each
such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events. Since
such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C shares of the Multiple Class Funds, and AIM Cash
Reserve Shares of AIM MONEY MARKET FUND), it is disadvantageous to effect such
purchases while a Systematic Withdrawal Plan is in effect.
The Systematic Withdrawal Plan may be terminated at any time upon 10 days'
prior notice to AFS. Each AIM Fund bears its share of the cost of operating the
Systematic Withdrawal Plan. Each AIM Fund reserves the right to initiate a fee
for each withdrawal (not to exceed its cost), but there is no present intent to
do so.
AUTOMATIC INVESTMENT PLAN. Shareholders who wish to make regular systematic
investments may establish an Automatic Investment Plan. Under this plan
withdrawal is made on the shareholder's bank account in the amount specified by
the shareholder (minimum $50 per investment, per account) and on a day or
date(s) specified by the shareholder. The proceeds are invested in shares of the
designated AIM Fund at the applicable offering price determined on the date of
the withdrawal. An Automatic Investment Plan may be discontinued upon 10 days'
prior notice to the Transfer Agent or AIM Distributors.
AUTOMATIC DIVIDEND INVESTMENT PLAN. Shareholders may elect to have all
dividends and distributions declared by an AIM Fund paid in cash or invested at
net asset value, without payment of an initial sales charge, either in shares of
the same AIM Fund or invested in shares of another AIM Fund. For each of the
Multiple Class Funds, dividends and distributions attributable to Class A shares
may be reinvested in Class A shares of the same fund, in Class A shares of
another Multiple Class Fund or in shares of another AIM Fund which is not a
Multiple Class Fund; dividends and distributions attributable to Class B shares
may be reinvested in Class B shares of the same fund or in Class B shares of
another Multiple Class Fund; dividends and distributions attributable to Class C
shares may be reinvested in Class C shares of the same fund or in Class C shares
of another Multiple Class Fund; and dividends and distributions attributable to
AIM Cash Reserve Shares of AIM MONEY MARKET FUND may be reinvested in additional
shares of such fund, in Class A shares of another Multiple Class Fund or in
shares of another AIM Fund which is not a Multiple Class Fund. See "Dividends,
Distributions and Tax Matters -- Dividends and Distributions" for a description
of payment dates for these options. In order to qualify to have dividends and
distributions of one AIM Fund invested in shares of another AIM Fund, the
following conditions must be satisfied: (a) the shareholder must have an account
balance in the dividend paying fund of at least $5,000; (b) the account must be
held in the name of the shareholder (i.e., the account may not be held in
nominee name); and (c) the shareholder must have requested and completed an
authorization relating to the reinvestment of dividends into another AIM Fund.
An authorization may be given on the account application or on an authorization
form available from AIM Distributors. An AIM Fund will waive the $5,000 minimum
account value requirement if the shareholder has an account in the fund selected
to receive the dividends and distributions with a value of at least $500.
DOLLAR COST AVERAGING. Shareholders may elect to have a specified amount
automatically exchanged, either monthly or quarterly (on or about the 10th or
25th day of the applicable month), from one of their accounts into one or more
AIM Funds, subject to the terms and conditions described under the caption
"Exchange Privilege -- Terms and Conditions of Exchanges." The account from
which exchanges are to be made must have a value of at least $5,000 when a
shareholder elects to begin this program, and the exchange minimum is $50 per
transaction. All of the accounts that are part of this program must have
identical registrations. The net asset value of shares purchased under this
program may vary, and may be more or less advantageous than if shares were not
exchanged automatically. There is no charge for entering the Dollar Cost
Averaging program. Sale charges may apply, as described under the caption
"Exchange Privilege."
PROTOTYPE RETIREMENT PLANS. The AIM Funds (except for AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-FREE INTERMEDIATE FUND, AIM
TAX-EXEMPT CASH FUND and AIM TAX-EXEMPT BOND FUND OF CONNECTICUT) have made the
following prototype retirement plans available to corporations, individuals and
employees of non-profit organizations and public schools: combination
money-purchase/profit-sharing plans; 403(b) plans; IRA plans; Roth IRA plans;
SARSEP plans; SEP plans; and SIMPLE IRA plans (collectively, "retirement
accounts"). Information concerning these plans, including the custodian's fees
and the forms necessary to adopt such plans, can be obtained by calling or
writing the AIM Funds or AIM Distributors. Shares of the AIM Funds are also
available for investment through existing 401(k) plans (for both individuals and
employers) adopted under the Code. The plan custodian currently imposes an
annual $10 maintenance fee with respect to each retirement account for which it
serves as the custodian. This fee is generally charged in December. Each AIM
Fund and/or the custodian reserve the right to change this maintenance fee and
to initiate an establishment fee (not to exceed its cost).
PORTFOLIO REBALANCING PROGRAM. The Portfolio Rebalancing Program ("Program")
permits eligible shareholders with a minimum account balance of $5,000 to
establish and maintain an allocation across a range of AIM Funds. The Program
automatically rebalances holdings of AIM Funds to the established allocation on
a periodic basis. Under the Program, a shareholder may predesig-
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nate, on a percentage basis, how the total value of his or her holdings in a
minimum of two, and a maximum of ten, AIM Funds ("Personal Portfolio") is to be
rebalanced on a quarterly, semiannual, or annual basis.
Rebalancing under the Program will be effected through the exchange of shares
of one or more AIM Funds in the shareholder's Personal Portfolio for shares of
the same class(es) of one or more other AIM Funds in the shareholder's Personal
Portfolio. See "Exchange Privilege." If shares of the AIM Fund(s) in a
shareholder's Personal Portfolio have appreciated during a rebalancing period,
the Program will result in shares of AIM Fund(s) that have appreciated most
during the period being exchanged for shares of AIM Fund(s) that have
appreciated least. SUCH EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A
SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR FEDERAL INCOME
TAX PURPOSES. See "Dividends, Distributions and Tax Matters -- Dividends and
Distributions." Participation in the Program does not assure that a shareholder
will profit from purchases under the Program nor does it prevent or lessen
losses in a declining market.
The Program will automatically rebalance the shareholder's Personal Portfolio
on the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular AIM Fund would be 2% or less.
In predesignating percentages, shareholders must use whole percentages and
totals must equal 100%. Shareholders participating in the Program may not
request issuance of physical certificates representing an AIM Fund's shares. The
AIM Funds and AIM Distributors reserve the right to modify, suspend, or
terminate the Program at any time on sixty (60) days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which AIM Funds
or what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, LOI, and
Automatic Investment Plan. Certain dealers/financial institutions may charge a
fee for establishing accounts relating to the Program. Investors should contact
their dealers/financial institutions or AIM Distributors for more information.
A-11
<PAGE> 28
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
TERMS AND CONDITIONS OF EXCHANGES. Shareholders of the AIM Funds may
participate in an exchange privilege as described below. The exchange privilege
is also available to holders of the Connecticut General Guaranteed Account,
established for tax-qualified group annuities, for contracts purchased on or
before June 30, 1992. AIM Distributors acts as distributor for the AIM Funds
which represent a range of different investment objectives and policies. As set
forth under the caption "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions," shares of certain of the AIM
Funds, including the Class A shares of the Multiple Class Funds, listed below
and referred to herein as the "Load Funds," are sold at a public offering price
that includes a maximum sales charge of 5.50% or 4.75% of the public offering
price of such shares; Class A shares (or shares which normally involve the
payment of initial sales charges) of certain of the AIM Funds, listed below and
referred to herein as the "Lower Load Funds," are sold at a public offering
price that includes a maximum sales charge of 1.00% of the public offering price
of such shares; and Class A shares or shares of certain other funds, listed
below and referred to herein as the "No Load Funds," are sold at net asset
value, without payment of a sales charge.
<TABLE>
<S> <C> <C>
LOAD FUNDS: LOWER LOAD FUNDS:
----------- -----------------
AIM ADVISOR FLEX FUND -- AIM GLOBAL INCOME AIM LIMITED MATURITY TREASURY FUND
CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR INTERNATIONAL AIM GLOBAL INFRASTRUCTURE AIM TAX-FREE INTERMEDIATE FUND
VALUE FUND -- CLASS A FUND -- CLASS A -- CLASS A
AIM ADVISOR LARGE CAP AIM GLOBAL RESOURCES NO LOAD FUNDS:
VALUE FUND -- CLASS A FUND -- CLASS A --------------
AIM ADVISOR MULTIFLEX AIM GLOBAL TELECOMMUNICATIONS AIM MONEY MARKET FUND
FUND -- CLASS A FUND -- CLASS A -- AIM CASH RESERVE SHARES
AIM ADVISOR REAL ESTATE AIM GLOBAL TRENDS AIM TAX-EXEMPT CASH FUND -- CLASS A
FUND -- CLASS A FUND -- CLASS A AIM DOLLAR FUND -- CLASS A
AIM AGGRESSIVE GROWTH AIM GLOBAL UTILITIES
FUND -- CLASS A FUND -- CLASS A
AIM ASIAN GROWTH AIM HIGH INCOME MUNICIPAL
FUND -- CLASS A FUND -- CLASS A
AIM BALANCED FUND -- CLASS A AIM HIGH YIELD FUND -- CLASS A
AIM BASIC VALUE AIM INCOME FUND -- CLASS A
FUND -- CLASS A AIM INTERMEDIATE GOVERNMENT
AIM BLUE CHIP FUND -- CLASS A FUND -- CLASS A
AIM CAPITAL DEVELOPMENT AIM INTERNATIONAL EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM CHARTER FUND -- CLASS A AIM INTERNATIONAL GROWTH
AIM CONSTELLATION FUND -- CLASS A
FUND -- CLASS A AIM JAPAN GROWTH FUND -- CLASS A
AIM DEVELOPING MARKETS AIM LATIN AMERICAN GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS AIM MID CAP EQUITY
FUND -- CLASS A FUND -- CLASS A
AIM EMERGING MARKETS DEBT AIM MONEY MARKET
FUND -- CLASS A FUND -- CLASS A
AIM EUROPE GROWTH AIM MUNICIPAL BOND
FUND -- CLASS A FUND -- CLASS A
AIM EUROPEAN DEVELOPMENT AIM NEW PACIFIC GROWTH
FUND -- CLASS A FUND -- CLASS A
AIM GLOBAL AGGRESSIVE GROWTH AIM SELECT GROWTH FUND -- CLASS A
FUND -- CLASS A AIM SMALL CAP GROWTH
AIM GLOBAL CONSUMER PRODUCTS FUND -- CLASS A
AND SERVICES FUND -- CLASS A AIM SMALL CAP OPPORTUNITIES
AIM GLOBAL FINANCIAL SERVICES FUND -- CLASS A
FUND -- CLASS A AIM STRATEGIC INCOME
AIM GLOBAL GOVERNMENT INCOME FUND -- CLASS A
FUND -- CLASS A AIM TAX-EXEMPT BOND FUND
AIM GLOBAL GROWTH OF CONNECTICUT -- CLASS A
FUND -- CLASS A AIM VALUE FUND -- CLASS A
AIM GLOBAL GROWTH & AIM WEINGARTEN FUND -- CLASS A
INCOME FUND -- CLASS A AIM WORLDWIDE GROWTH
AIM GLOBAL HEALTH CARE FUND -- CLASS A
FUND -- CLASS A
</TABLE>
A-12
<PAGE> 29
Shares of any AIM Fund may be exchanged for shares of any other AIM Fund on
the terms described on the chart below, except that (i) Load Fund share
purchases of $1,000,000 or more which are subject to a contingent deferred sales
charge may not be exchanged for Lower Load Funds or for AIM TAX-EXEMPT CASH FUND
(AND CLASS A SHARES OF AIM DOLLAR FUND); (II) LOWER LOAD FUND SHARE PURCHASES OF
$1,000,000 OR MORE AND AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND, AIM
TAX-EXEMPT CASH FUND AND AIM DOLLAR FUND PURCHASES MAY BE EXCHANGED FOR LOAD
FUND SHARES IN AMOUNTS OF $1,000,000 OR MORE WHICH WILL THEN BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE; HOWEVER, FOR PURPOSES OF CALCULATING THE
CONTINGENT DEFERRED SALES CHARGES ON THE LOAD FUND SHARES ACQUIRED, THE 18-MONTH
PERIOD SHALL BE COMPUTED FROM THE DATE OF SUCH EXCHANGE; (iii) Class A shares
may be exchanged for Class A shares; (iv) Class B shares may be exchanged only
for Class B shares; (v) Class C shares may only be exchanged for Class C shares;
and (vi) AIM Cash Reserve Shares of AIM MONEY MARKET FUND may not be exchanged
for Class A, Class B or Class C shares of AIM MONEY MARKET FUND. Class C shares
of AIM Small Cap Opportunities Fund are currently not available.
DEPENDING UPON THE FUND FROM WHICH AND INTO WHICH AN EXCHANGE IS BEING MADE,
SHARES BEING ACQUIRED IN AN EXCHANGE MAY BE ACQUIRED AT THEIR OFFERING PRICE OR
AT THEIR NET ASSET VALUE (WITHOUT PAYMENT OF A SALES CHARGE) AS SET FORTH IN THE
TABLE BELOW FOR SHARES INITIALLY PURCHASED PRIOR TO MAY 1, 1994:
<TABLE>
<CAPTION>
MULTIPLE CLASS FUNDS:
LOWER LOAD NO LOAD ------------------------------
FROM: TO: LOAD FUNDS FUNDS FUNDS CLASS B CLASS C
----- -------------- ---------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund or any Fund or any Lower Load
Lower Load Fund. Fund; otherwise,
Offering Price.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
FOR SHARES INITIALLY PURCHASED ON OR AFTER MAY 1, 1994, THE FOREGOING TABLE IS REVISED AS FOLLOWS:
Load Funds....... Net Asset Value Net Asset Value Net Asset Value Not Applicable Not Applicable
Lower Load Funds.. Net Asset Value if shares were Net Asset Value Net Asset Value Not Applicable Not Applicable
acquired upon exchange of any
Load Fund. Otherwise, difference
in sales charge will apply.
No Load Funds.... Offering Price if No Load shares Net Asset Value if No Net Asset Value Not Applicable Not Applicable
were directly purchased. Net Load shares were
Asset Value if No Load shares acquired upon exchange
were acquired upon exchange of of shares of any Load
shares of any Load Fund. Fund or any Lower Load
Difference in sales charge will Fund; otherwise,
apply if No Load shares were Offering Price.
acquired upon exchange of Lower
Load Fund shares.
Multiple Class
Funds:
Class B........ Not Applicable Not Applicable Not Applicable Net Asset Value Not Applicable
Class C........ Not Applicable Not Applicable Not Applicable Not Applicable Net Asset Value
</TABLE>
An exchange is permitted only in the following circumstances: (a) if the funds
offer more than one class of shares, the exchange must be between the same class
of shares (e.g., Class A, Class B and Class C shares of a Multiple Class Fund
cannot be exchanged for each other) except that AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may be exchanged for Class A shares of another Multiple Class
Fund; (b) the dollar amount of the exchange must be at least equal to the
minimum investment applicable to the shares of the fund acquired through such
exchange; (c) the shares of the fund acquired through exchange must be qualified
for sale in the state in which the shareholder resides; (d) the exchange must be
made between accounts having identical registrations and addresses; (e) the full
amount of the purchase price for the shares being exchanged must have already
been received by the fund; (f) the account from which shares have been exchanged
must be coded as having a certified taxpayer identification number on file or,
in the alternative, an appropriate IRS Form W-8 (certificate of foreign status)
or Form W-9 (certifying exempt status) must have been received by the fund; (g)
newly acquired shares (through either an initial or subsequent investment) are
held in an account for at least ten busi-
A-13
<PAGE> 30
ness days, and all other shares are held in an account for at least one day,
prior to the exchange; and (h) certificates representing shares must be returned
before shares can be exchanged. There is no fee for exchanges among the AIM
Funds.
THE CURRENT PROSPECTUS OF EACH OF THE AIM FUNDS AND CURRENT INFORMATION
CONCERNING THE OPERATION OF THE EXCHANGE PRIVILEGE ARE AVAILABLE THROUGH AIM
DISTRIBUTORS OR THROUGH ANY DEALER WHO HAS EXECUTED AN APPLICABLE AGREEMENT WITH
AIM DISTRIBUTORS. BEFORE EXCHANGING SHARES, INVESTORS SHOULD REVIEW THE
PROSPECTUSES OF THE FUNDS WHOSE SHARES WILL BE ACQUIRED THROUGH EXCHANGE.
EXCHANGES OF SHARES ARE CONSIDERED TO BE SALES FOR FEDERAL AND STATE INCOME TAX
PURPOSES AND MAY RESULT IN A TAXABLE GAIN OR LOSS TO A SHAREHOLDER.
THE EXCHANGE PRIVILEGE IS NOT AN OPTION OR RIGHT TO PURCHASE SHARES BUT IS
PERMITTED UNDER THE RESPECTIVE POLICIES OF THE PARTICIPATING FUNDS, AND MAY BE
MODIFIED OR DISCONTINUED BY ANY OF SUCH FUNDS OR BY AIM DISTRIBUTORS AT ANY
TIME, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, WITHOUT NOTICE.
Shares of any AIM Fund (other than AIM MONEY MARKET FUND) to be exchanged are
redeemed at their net asset value as determined at NYSE Close on the day that an
exchange request in proper form (described below) is received. Exchange requests
received after NYSE Close will result in the redemption of shares at their net
asset value at NYSE Close on the next business day. See "Terms and Conditions of
Purchase of the AIM Funds -- Timing of Purchase, Exchange and Redemption Orders
(AIM MONEY MARKET FUND only)" for information regarding the timing of exchange
orders for AIM MONEY MARKET FUND. Normally, shares of an AIM Fund to be acquired
by exchange are purchased at their net asset value or applicable offering price,
as the case may be, determined on the date that such request is received, but
under unusual market conditions such purchases may be delayed for up to five
business days if it is determined that a fund would be materially disadvantaged
by an immediate transfer of the proceeds of the exchange. If a shareholder is
exchanging into a fund paying daily dividends (See "Dividends, Distributions and
Tax Matters -- Dividends and Distributions," below), and the release of the
exchange proceeds is delayed for the foregoing five-day period, such shareholder
will not begin to accrue dividends until the sixth business day after the
exchange. Shares purchased by check may not be exchanged until it is determined
that the check has cleared, which may take up to ten business days from the date
that the check is received. See "Terms and Conditions of Purchase of the AIM
Funds -- Timing of Purchase Orders."
In the event of unusual market conditions, AIM Distributors reserves the right
to reject any exchange request, if, in the judgment of AIM Distributors, the
number of requests or the total value of the shares that are the subject of the
exchange places a material burden on a fund. For example, the number of
exchanges by investment managers making market timing exchanges may be limited.
EXCHANGES BY MAIL. Investors exchanging their shares by mail should send a
written request to AFS. The request should contain the account registration and
account number, the dollar amount or number of shares to be exchanged, and the
names of the funds from which and into which the exchange is to be made. The
request should comply with all of the requirements for redemption by mail,
except those required for redemption of IRAs. See "How to Redeem Shares."
EXCHANGES BY TELEPHONE. Shareholders or their agents may request an exchange
by telephone. If a shareholder does not wish to allow telephone exchanges by any
person in his account, he should decline that option on the account application.
AIM Distributors has made arrangements with certain dealers and investment
advisory firms to accept telephone instructions to exchange shares between any
of the AIM Funds. AIM Distributors reserves the right to impose conditions on
dealers or investment advisors who make telephone exchanges of shares of the
funds, including the condition that any such dealer or investment advisor enter
into an agreement (which contains additional conditions with respect to
exchanges of shares) with AIM Distributors. To exchange shares by telephone, a
shareholder, dealer or investment advisor who has satisfied the foregoing
conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach
AFS by telephone, he may also request exchanges by telegraph or use overnight
courier services to expedite exchanges by mail, which will be effective on the
business day received by the Transfer Agent as long as such request is received
prior to NYSE Close. The Transfer Agent and AIM Distributors will not be liable
for any loss, expense or cost arising out of any telephone exchange request that
they reasonably believe to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions if they do not follow
reasonable procedures for verification of telephone transactions. Such
reasonable procedures may include recordings of telephone transactions
(maintained for six months), requests for confirmation of the shareholder's
Social Security Number and current address, and mailings of confirmations
promptly after the transaction.
EXCHANGES OF CLASS B AND CLASS C SHARES. A contingent deferred sales charge
will not be imposed in connection with exchanges among Class B or Class C
shares. For purposes of determining a shareholder's holding period of Class B or
Class C shares in the calculation of the applicable contingent deferred sales
charge, the period of time during which Class B or Class C shares were held
prior to an exchange will be added to the holding period of the applicable Class
B or Class C shares acquired in an exchange.
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer/financial institution who has entered into an agreement with
AIM Distributors. In addition to the obligation of the fund(s) named on the
cover page to redeem shares, AIM Distributors also repurchases shares. Although
a contingent deferred sales charge may be applicable to certain redemptions as
described below, there is no redemption fee imposed when shares are redeemed or
repurchased; however, dealers may charge service fees for handling repurchase
transactions.
A-14
<PAGE> 31
MULTIPLE DISTRIBUTION SYSTEM. Class B Shares. Class B shares purchased under
the Multiple Distribution System may be redeemed on any business day of a
Multiple Class Fund at the net asset value per share next determined following
receipt of the redemption order, as described under the caption "Timing and
Pricing of Redemption Orders," less the applicable contingent deferred sales
charge shown in the table below. No deferred sales charge will be imposed (i) on
redemptions of Class B shares following six years from the date such shares were
purchased, (ii) on Class B shares acquired through reinvestments of dividends
and distributions attributable to Class B shares or (iii) on amounts that
represent capital appreciation in the shareholder's account above the purchase
price of the Class B shares.
<TABLE>
<CAPTION>
YEARS CONTINGENT DEFERRED
SINCE SALES CHARGE AS
PURCHASE % OF DOLLAR AMOUNT
MADE SUBJECT TO CHARGE
-------- -------------------
<S> <C>
First...................................................... 5%
Second..................................................... 4%
Third...................................................... 3%
Fourth..................................................... 3%
Fifth...................................................... 2%
Sixth...................................................... 1%
Seventh and Following...................................... None
</TABLE>
In determining whether a contingent deferred sales charge is applicable, it
will be assumed that a redemption is made first, of any shares held in the
shareholder's account that are not subject to such charge; second, of shares
derived from reinvestment of dividends and other distributions; third, of shares
held for more than six years from the date such shares were purchased; and
fourth, of shares held less than six years from the date such shares were
purchased. The applicable sales charge will be applied against the lesser of the
current market value of shares redeemed or their original cost.
Class B shares that are acquired during a tender offer by AIM Floating Rate
Fund ("Floating Rate Fund") pursuant to an exchange will be subject, in lieu of
the contingent deferred sales charge described above, to a contingent deferred
sales charge equivalent to the early withdrawal charge on the shares of the
Floating Rate Fund. For purposes of computing such early withdrawal charge, the
holding period of Class B shares being redeemed will include the holding period
of the Floating Rate Fund shares prior to exchange.
Class C Shares. Class C shares purchased under the Multiple Distribution
System may be redeemed on any business day of a Multiple Class Fund at the net
asset value per share next determined following receipt of the redemption order,
as described under the caption "Timing and Pricing of Redemption Orders," less a
1% contingent deferred sales charge. No deferred sales charge will be imposed
(i) on redemptions of Class C shares following one year from the date such
shares were purchased; (ii) on Class C shares acquired through reinvestment of
dividends and distributions attributable to Class C shares; (iii) on amounts
that represent capital appreciation in the shareholder's account above the
purchase price of the Class C shares; (iv) on redemptions of additional
purchases of shares of AIM ADVISOR FLEX FUND, AIM ADVISOR INTERNATIONAL VALUE
FUND, AIM ADVISOR LARGE CAP VALUE FUND, AIM ADVISOR MULTIFLEX FUND, and AIM
ADVISOR REAL ESTATE FUND, by shareholders of record on April 30, 1995 of these
funds (shareholders whose broker/dealers maintain a single omnibus account with
the Transfer Agent on behalf of those shareholders, perform sub-accounting
functions with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995 from shareholders whose accounts
were opened after that date will be subject to a CDSC on all purchases made
after March 1, 1996).
Waivers. Contingent deferred sales charges on Class B and Class C shares will
be waived on redemptions (1) following the death or post-purchase disability, as
defined in Section 72(m)(7) of the Code, of a shareholder or a settlor of a
living trust (provided AIM Distributors is notified of such death or
post-purchase disability at the time of the redemption request and is provided
with satisfactory evidence of such death or post-purchase disability), (2) in
connection with certain distributions from IRAs, custodial accounts maintained
pursuant to Code Section 403(b), deferred compensation plans qualified under
Code Section 457 and plans qualified under Code Section 401 (collectively,
"Retirement Plans"), (3) pursuant to a Systematic Withdrawal Plan, provided that
amounts withdrawn under such plan do not exceed on an annual basis 12% of the
value of the shareholder's investment in Class B or Class C shares at the time
the shareholder elects to participate in the Systematic Withdrawal Plan, (4)
effected pursuant to the right of a Multiple Class Fund to liquidate a
shareholder's account if the aggregate net asset value of shares held in the
account is less than the designated minimum account size described in the
prospectus of such Multiple Class Fund, (5) effected by AIM of its investment in
Class B or Class C shares and (6) of Class C shares where such investor's dealer
of record, due to the nature of the investor's account, notifies AIM
Distributors prior to the time of investment that the dealer waives the payment
otherwise payable to the dealer described in the last paragraph under the
caption "Terms and Conditions of Purchase of the AIM Funds -- All Groups of AIM
Funds."
Waiver category (1) above applies only to redemptions of Class B or Class C
shares held at the time of death or initial determination of post-purchase
disability.
Waiver category (2) above applies only to redemptions resulting from:
(i) required minimum distributions to plan participants or
beneficiaries who are age 70 1/2 or older, and only with respect to that
portion of such distributions which does not exceed 12% annually of the
participant's or beneficiary's account value in a particular AIM Fund;
A-15
<PAGE> 32
(ii) in-kind transfers of assets where the participant or beneficiary
notifies AIM Distributors of such transfer no later than the time such
transfer occurs;
(iii) tax-free rollovers or transfers of assets to another Retirement
Plan invested in Class B or Class C shares of one or more Multiple Class
Funds;
(iv) tax-free returns of excess contributions or returns of excess
deferral amounts; and
(v) distributions upon the death or disability (as defined in the
Code) of the participant or beneficiary.
CONTINGENT DEFERRED SALES CHARGE PROGRAM FOR LARGE PURCHASES. Except for
purchases of Class B and Class C shares of a Multiple Class Fund and purchases
of shares of the No Load Funds and Lower Load Funds, A CONTINGENT DEFERRED SALES
CHARGE OF 1% APPLIES TO PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN
18 MONTHS OF THE DATE OF PURCHASE. For a description of the AIM Funds
participating in the program, see "Terms and Conditions of Purchase of the AIM
Funds -- Sales Charges and Dealer Concessions." This charge will be 1% of the
lesser of the value of the shares redeemed (excluding reinvested dividends and
capital gains distributions) or the total original cost of such shares. In
determining whether a contingent deferred sales charge is payable, and the
amount of any such charge, shares not subject to the contingent deferred sales
charge are redeemed first (including shares purchased by reinvested dividends
and capital gains distributions and amounts representing increases from capital
appreciation), and then other shares are redeemed in the order of purchase. No
such charge will be imposed upon exchanges unless the shares acquired by
exchange are redeemed within 18 months of the date the shares were originally
purchased. For purposes of computing this 18-MONTH PERIOD, (i) shares of any
Load Fund or AIM Cash Reserve shares of AIM MONEY MARKET FUND or Class A shares
of AIM DOLLAR FUND which were acquired through an exchange of shares which
previously were subject to the 1% contingent deferred sales charge will be
credited with the period of time such exchanged shares were held, and (ii)
shares of any Load Fund which are subject to the 1% contingent deferred sales
charge and which were acquired through an exchange of shares of a Lower Load or
a No Load Fund which previously were not subject to the 1% contingent deferred
sales charge will not be credited with the period of time such exchanged shares
were held. The charge will be waived in the following circumstances: (l)
redemptions of shares by employee benefit plans ("Plans") qualified under
Sections 401 or 457 of the Code, or Plans created under Section 403(b) of the
Code and sponsored by nonprofit organizations as defined under Section 501(c)(3)
of the Code, where shares are being redeemed in connection with employee
terminations or withdrawals, and (a) the total amount invested in a Plan is at
least $1,000,000, (b) the sponsor of a Plan signs a letter of intent to invest
at least $1,000,000 in one or more of the AIM Funds, or (c) the shares being
redeemed were purchased by an employer-sponsored Plan with at least 100 eligible
employees; provided, however, that Plans created under Section 403(b) of the
Code which are sponsored by public educational institutions shall qualify under
(a), (b) or (c) above on the basis of the value of each Plan participant's
aggregate investment in the AIM Funds, and not on the aggregate investment made
by the Plan or on the number of eligible employees; (2) redemptions of shares
following the death or post-purchase disability, as defined in Section 72(m)(7)
of the Code, of a shareholder or a settlor of a living trust; (3) redemptions of
shares purchased at net asset value by private foundations or endowment funds
where the initial amount invested was at least $1,000,000; (4) redemptions of
shares purchased by an investor in amounts of $1,000,000 or more where such
investor's dealer of record, due to the nature of the investor's account,
notifies AIM Distributors prior to the time of investment that the dealer waives
the payments otherwise payable to the dealer as described in the third paragraph
under the caption "Terms and Conditions of Purchase of the AIM Funds -- All
Groups of AIM Funds;" and (5) pursuant to a Systematic Withdrawal Plan, provided
that amounts withdrawn under such plan do not exceed on an annual basis 12% of
the value of the shareholder's investment in Class A shares at the time the
shareholder elects to participate in the Systematic Withdrawal Plan.
Shareholders who purchased $500,000 or more of Class A shares of the AIM/GT
Funds prior to June 1, 1998 are entitled to certain waivers of the contingent
deferred sales charge on those shares as described in the Statement of
Additional Information under "How to Purchase and Redeem Shares."
REDEMPTIONS BY MAIL. Redemption requests must be in writing and sent to the
Transfer Agent. Upon receipt of a redemption request in proper form, payment
will be made as soon as practicable, but in any event will normally be made
within seven days after receipt. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders."
Requests for redemption must include: (a) original signatures of each
registered owner exactly as the shares are registered; (b) the Fund and the
account number of shares to be redeemed; (c) share certificates, either properly
endorsed or accompanied by a duly executed stock power, for the shares to be
redeemed if such certificates have been issued and the shares are not in the
custody of the Transfer Agent; (d) signature guarantees, as described below; and
(e) any additional documents that may be required for redemption by
corporations, partnership, trusts or other entities. The burden is on the
shareholder to inquire as to whether any additional documentation is required.
Any request not in proper form may be rejected and in such case must be renewed
in writing.
In addition to these requirements, shareholders who have invested in a fund to
establish as IRA, should include the following information along with a written
request for either partial or full liquidation of fund shares; (a) a statement
as to whether or not the shareholder has attained age 59 1/2, and (b) a
statement as to whether or not the shareholder elects to have federal income tax
withheld from the proceeds of the liquidation.
A-16
<PAGE> 33
REDEMPTIONS BY TELEPHONE. Shareholders may request a redemption by telephone.
If a shareholder does not wish to allow telephone redemptions by any person in
this account, he should decline that option on the account application. The
telephone redemption feature can be used only if: (a) the redemption proceeds
are to be mailed to the address of record or transferred electronically or wired
to the pre-authorized bank account; (b) there has been no change of address of
record on the account within the preceding 30 days; (c) the shares to be
redeemed are not in certificate form; (d) the person requesting the redemption
can provide proper identification information, and (e) the proceeds of the
redemption do not exceed $50,000. Accounts in AIM Distributors' prototype
retirement plans (such as IRA and IRA/SEP) or 403(b) plans are not eligible for
the telephone redemption option. AIM Distributors has made arrangements with
certain dealers and investment advisors to accept telephone instructions for the
redemption of shares. AIM Distributors reserves the right to impose conditions
on these dealers and investment advisors, including the condition that they
enter into agreements (which contain additional conditions with respect to the
redemption of shares) with AIM Distributors. The Transfer Agent and AIM
Distributors will not be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the authorization set
forth in the appropriate form if they reasonably believe such request to be
genuine, but may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's taxpayer identification number and current
address, and mailings of confirmations promptly after the transaction.
EXPEDITED REDEMPTIONS (AIM Cash Reserve shares of AIM MONEY MARKET FUND
ONLY). If a redemption order is received prior to 11:30 a.m. Eastern Time, the
redemption will be effective on that day and AIM MONEY MARKET FUND will endeavor
to transmit payment on that same business day. If the redemption order is
received after 11:30 a.m. and prior to NYSE Close, the redemption will be made
at the next determined net asset value and payment will generally be transmitted
on the next business day.
REDEMPTIONS BY CHECK (AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM
MONEY MARKET FUND and Class A shares of AIM DOLLAR FUND). After completing the
appropriate authorization form, shareholders may use checks to effect
redemptions from AIM TAX-EXEMPT CASH FUND, AIM Cash Reserve Shares of AIM MONEY
MARKET FUND and Class A shares of AIM DOLLAR FUND. This privilege does not apply
to retirement accounts or qualified plans. Checks may be drawn in any amount of
$250 or more. Checks drawn against insufficient shares in the account, against
shares held less than ten business days, or in amounts of less than the
applicable minimum will be returned to the payee. The payee of the check may
cash or deposit it in the same way as an ordinary bank check. When a check is
presented on the Transfer Agent for payment, the Transfer Agent will cause a
sufficient number of shares of such fund to be redeemed to cover the amount of
the check. Shareholders are entitled to dividends on the shares redeemed through
the day on which the check is presented to the Transfer Agent for payment.
TIMING AND PRICING OF REDEMPTION ORDERS. Shares of the various AIM Funds
(other than AIM MONEY MARKET FUND) are redeemed at their net asset value next
computed after a request for redemption in proper form (including signature
guarantees and other required documentation for written redemptions) is received
by the Transfer Agent or certain financial institutions (or their designees) who
are authorized to accept redemption orders on behalf of the AIM Funds, provided
that such orders are transmitted to the Transfer Agent prior to the time set for
receipt of such orders, except that shares that are subject to a contingent
deferred sales charge, may be subject to the imposition of deferred sales
charges that will be deducted from the redemption proceeds. See "Multiple
Distribution System" and "Contingent Deferred Sales Charge Program for Large
Purchases." Orders for the redemption of shares received in proper form prior to
NYSE Close on any business day of an AIM Fund will be confirmed at the price
determined as of the close of that day. Orders received after NYSE Close will be
confirmed at the price determined on the next business day of an AIM Fund.
Redemptions of shares of AIM MONEY MARKET FUND received prior to 12:00 noon or
NYSE Close on any business day of the Fund will be confirmed at the price next
determined. It is the responsibility of the dealer/financial institution to
ensure that all orders are transmitted on a timely basis. Any resulting loss
from the dealer/financial institution's failure to submit a request for
redemption within the prescribed time frame will be borne by that
dealer/financial institution. Telephone redemption requests must be made by NYSE
Close on any business day of an AIM Fund and will be confirmed at the price
determined as of the close of that day. No AIM Fund will accept requests which
specify a particular date for redemption or which specify any special
conditions.
Payment of the proceeds of redeemed shares is normally made within seven days
following the redemption date. However, in the event of a redemption of shares
purchased by check, the investor may be required to wait up to ten business days
before the redemption proceeds are sent. See "Terms and Conditions of Purchase
of the AIM Funds -- Timing of Purchase Orders." A charge for special handling
(such as wiring of funds or expedited delivery services) may be made by the
Transfer Agent. The right of redemption may not be suspended or the date of
payment upon redemption postponed except under unusual circumstances such as
when trading on the NYSE is restricted or suspended. Payment of the proceeds of
redemptions relating to shares for which checks sent in payment have not yet
cleared will be delayed until it is determined that the check has cleared, which
may take up to ten business days from the date that the check is received.
SIGNATURE GUARANTEES. A signature guarantee is designed to protect the
investor, the AIM Funds, AIM Distributors, and their agents by verifying the
signature of each investor seeking to redeem, transfer, or exchange shares of an
AIM Fund. Examples of when signature guarantees are required are: (1)
redemptions by mail in excess of $50,000; (2) redemptions by mail if the
proceeds are to be paid to someone other than the name(s) in which the account
is registered; (3) written redemptions requesting proceeds to be sent to other
than the bank of record for the account; (4) redemptions requesting proceeds to
be sent to a new address or an address that has been changed within the past 30
days; (5) requests to transfer the registration of shares to another owner, (6)
telephone
A-17
<PAGE> 34
exchange and telephone redemption authorization forms; (7) changes in previously
designated wiring or electronic funds transfer instructions, and (8) written
redemptions or exchanges of shares previously reported as lost, whether or not
the redemption amount is under $50,000 or the proceeds are to be sent to the
address of record. These requirements may be waived or modified upon notice to
shareholders.
Acceptable guarantors include banks, broker-dealers, credit unions, national
securities exchanges, savings associations and any other organization, provided
that such institution or organization qualifies as an "eligible guarantor
institution" as that term in defined in rules adopted by the Securities and
Exchange Commission (the "SEC"), and further provided that such guarantor
institution is listed in one of the reference guides contained in the Transfer
Agent's current Signature Guarantee Standards and Procedures, such as certain
domestic banks, credit unions, securities dealers, or securities exchanges. The
Transfer Agent will also accept signatures with either: (1) a signature
guaranteed with a medallion stamp of the STAMP Program, or (2) a signature
guaranteed with a medallion stamp of the NYSE Medallion Signature Program,
provided that in either event, the amount of the transaction involved does not
exceed the surety coverage amount indicated on the medallion. For information
regarding whether a particular institution or organization qualifies as an
"eligible guarantor institution," an investor should contact the Client Services
Department of AFS.
REINSTATEMENT PRIVILEGE (CLASS A SHARES ONLY). Within ninety (90) days of a
redemption, a shareholder may invest all or part of the redemption proceeds in
Class A shares of any AIM Fund at the net asset value next computed after
receipt by the Transfer Agent of the funds to be reinvested; provided, however,
if the redemption was made from Class A shares of either AIM LIMITED MATURITY
TREASURY FUND or AIM TAX-FREE INTERMEDIATE FUND, the reinvested proceeds will be
subject to the difference in sales charge between the shares redeemed and the
shares the proceeds are reinvested in. The shareholder must ask the Transfer
Agent for such privilege at the time of reinvestment. A realized gain on the
redemption is taxable, and reinvestment will not alter the taxes due on any
capital gains, except under the circumstances described below. If there has been
a loss on the redemption and shares of the same fund are repurchased, all of the
loss may not be tax deductible, depending on the timing and amount reinvested.
Under the Code, if the redemption proceeds of fund shares on which a sales
charge was paid are reinvested in shares of the same fund, or exchanged for
shares of another AIM Fund, at a reduced sales charge within 90 days of the
payment of the sales charge, the shareholder's basis in the fund shares redeemed
may not include the amount of the sales charge paid, thereby reducing the loss
or increasing the gain recognized from the redemption; however, the
shareholder's basis in the fund shares purchased will include the sales charge.
Each AIM Fund may amend, suspend or cease offering the privilege at any time as
to shares redeemed after the date of such amendment, suspension or cessation.
This privilege may only be exercised once each year by a shareholder with
respect to each AIM Fund.
Shareholders who are assessed a contingent deferred sales charge in connection
with the redemption of Class A shares and who subsequently reinvest a portion or
all of the value of the redeemed shares in Class A shares of any AIM Fund within
ninety (90) days after such redemption may do so at net asset value if such
privilege is claimed at the time of reinvestment. Such reinvested proceeds will
not be subject to either a front-end sales charge at the time of reinvestment or
an additional contingent deferred sales charge upon subsequent redemption. In
order to exercise this reinvestment privilege, the shareholder must notify the
Transfer Agent of his or her intent to do so at the time of reinvestment. This
reinvestment privilege does not apply to Class B or Class C shares.
A-18
<PAGE> 35
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share (or share price) of each AIM Fund is determined
as of 4:00 p.m. Eastern Time (12:00 noon Eastern Time and NYSE Close with
respect to AIM MONEY MARKET FUND) on each "business day" of a fund as previously
defined. In the event the NYSE closes early (i.e. before 4:00 p.m. Eastern Time)
on a particular day, the net asset value of an AIM Fund's share will be
determined as of the close of the NYSE on such day. For purposes of defining net
asset value per share, futures and options contracts generally will be valued 15
minutes after the close of trading of the NYSE. The net asset value per share is
calculated by subtracting a class' liabilities from its assets and dividing the
result by the total number of class shares outstanding. The determination of net
asset value per share is made in accordance with generally accepted accounting
principles. Among other items, liabilities include accrued expenses and
dividends payable, and total assets include portfolio securities valued at their
market value, as well as income accrued but not yet received. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the fund's officers and
in accordance with methods which are specifically authorized by its governing
Board of Directors or Trustees. Short-term obligations with maturities of 60
days or less, and the securities held by the Money Market Funds, are valued at
amortized cost as reflecting fair value. AIM HIGH INCOME MUNICIPAL FUND, AIM
MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND FUND OF CONNECTICUT and AIM TAX-FREE
INTERMEDIATE FUND value variable rate securities that have an unconditional
demand or put feature exercisable within seven days or less at par, which
reflects the market value of such securities.
Generally, trading in foreign securities, corporate bonds, U.S. Government
securities and money market instruments is substantially completed each day at
various times prior to the close of the NYSE. The values of such securities used
in computing the net asset value of an AIM Fund's shares are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the NYSE. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which the
values of the securities are determined and the close of the NYSE which will not
be reflected in the computation of an AIM 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 or Trustees of the
applicable AIM Fund. Securities listed primarily on foreign exchanges may trade
on days when the NYSE is closed (such as a Saturday). As a result, the net asset
value of a fund may be significantly affected by such trading on days when
shareholders cannot purchase or redeem shares of that fund.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Each AIM Fund generally pays dividends and distributions as set forth below:
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM ADVISOR FLEX FUND..................... declared and paid quarterly quarterly annually
AIM ADVISOR INTERNATIONAL VALUE FUND...... declared and paid annually annually annually
AIM ADVISOR LARGE CAP VALUE FUND.......... declared and paid quarterly quarterly annually
AIM ADVISOR MULTIFLEX FUND................ declared and paid quarterly quarterly annually
AIM ADVISOR REAL ESTATE FUND.............. declared and paid quarterly quarterly annually
AIM AGGRESSIVE GROWTH FUND................ declared and paid annually annually annually
AIM ASIAN GROWTH FUND..................... declared and paid annually annually annually
AIM BALANCED FUND......................... declared and paid quarterly annually annually
AIM BASIC VALUE FUND...................... declared and paid annually annually annually
AIM BLUE CHIP FUND........................ declared and paid annually annually annually
AIM CAPITAL DEVELOPMENT FUND.............. declared and paid annually annually annually
AIM CHARTER FUND.......................... declared and paid quarterly annually annually
AIM CONSTELLATION FUND.................... declared and paid annually annually annually
AIM DEVELOPING MARKETS FUND............... declared and paid annually annually annually
AIM DOLLAR FUND........................... declared daily; paid monthly annually annually
AIM EMERGING MARKETS FUND................. declared and paid annually annually annually
AIM EMERGING MARKETS DEBT FUND............ declared and paid monthly annually annually
AIM EUROPE GROWTH FUND.................... declared and paid annually annually annually
AIM EUROPEAN DEVELOPMENT FUND............. declared and paid annually annually annually
AIM GLOBAL AGGRESSIVE GROWTH FUND......... declared and paid annually annually annually
AIM GLOBAL CONSUMER PRODUCTS AND SERVICES
FUND.................................... declared and paid annually annually annually
AIM GLOBAL FINANCIAL SERVICES FUND........ declared and paid annually annually annually
</TABLE>
A-19
<PAGE> 36
<TABLE>
<CAPTION>
DISTRIBUTIONS DISTRIBUTIONS
OF NET OF NET
DIVIDENDS FROM REALIZED REALIZED
NET INVESTMENT SHORT-TERM LONG-TERM
FUND INCOME CAPITAL GAINS CAPITAL GAINS
---- -------------- ------------- -------------
<S> <C> <C> <C>
AIM GLOBAL GOVERNMENT INCOME FUND......... declared and paid monthly annually annually
AIM GLOBAL GROWTH FUND.................... declared and paid annually annually annually
AIM GLOBAL GROWTH & INCOME FUND........... declared and paid quarterly annually annually
AIM GLOBAL HEALTH CARE FUND............... declared and paid annually annually annually
AIM GLOBAL INCOME FUND.................... declared daily; paid monthly annually annually
AIM GLOBAL INFRASTRUCTURE FUND............ declared and paid annually annually annually
AIM GLOBAL RESOURCES FUND................. declared and paid annually annually annually
AIM GLOBAL TELECOMMUNICATIONS FUND........ declared and paid annually annually annually
AIM GLOBAL TRENDS FUND.................... declared and paid annually annually annually
AIM GLOBAL UTILITIES FUND................. declared daily; paid monthly annually annually
AIM HIGH INCOME MUNICIPAL FUND............ declared daily; paid monthly annually annually
AIM HIGH YIELD FUND....................... declared daily; paid monthly annually annually
AIM INCOME FUND........................... declared daily; paid monthly annually annually
AIM INTERMEDIATE GOVERNMENT FUND.......... declared daily; paid monthly annually annually
AIM INTERNATIONAL EQUITY FUND............. declared and paid annually annually annually
AIM INTERNATIONAL GROWTH FUND............. declared and paid annually annually annually
AIM JAPAN GROWTH FUND..................... declared and paid annually annually annually
AIM LATIN AMERICAN GROWTH FUND............ declared and paid annually annually annually
AIM LIMITED MATURITY TREASURY FUND........ declared daily; paid monthly annually annually
AIM MID CAP EQUITY FUND................... declared and paid annually annually annually
AIM MONEY MARKET FUND..................... declared daily; paid monthly at least annually annually
AIM MUNICIPAL BOND FUND................... declared daily; paid monthly annually annually
AIM NEW PACIFIC GROWTH FUND............... declared and paid annually annually annually
AIM SELECT GROWTH FUND.................... declared and paid annually annually annually
AIM SMALL CAP GROWTH FUND................. declared and paid annually annually annually
AIM SMALL CAP OPPORTUNITIES FUND.......... declared and paid annually annually annually
AIM STRATEGIC INCOME FUND................. declared and paid monthly annually annually
AIM TAX-EXEMPT BOND FUND OF CONNECTICUT... declared daily; paid monthly annually annually
AIM TAX-EXEMPT CASH FUND.................. declared daily; paid monthly at least annually annually
AIM TAX-FREE INTERMEDIATE FUND............ declared daily; paid monthly annually annually
AIM VALUE FUND............................ declared and paid annually annually annually
AIM WEINGARTEN FUND....................... declared and paid annually annually annually
AIM WORLDWIDE GROWTH FUND................. declared and paid annually annually annually
</TABLE>
In determining the amount of capital gains, if any, available for
distribution, net capital gains are offset against available net capital losses,
if any, carried forward from previous fiscal periods. Each AIM Fund may make
additional distributions, if necessary, to avoid a non-deductible 4% federal
excise tax on certain undistributed income and capital gain (the "Excise Tax").
All dividends and distributions of an AIM Fund are automatically reinvested on
the payment date in full and fractional shares of such fund, unless the
shareholder has made an alternate election as to the method of payment.
Dividends and distributions attributable to a class are reinvested in additional
shares of such class, absent an election by a shareholder to receive cash or to
have such dividends and distributions reinvested in like shares of another
Multiple Class Fund, to the extent permitted. For funds that do not declare a
dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the ex-dividend date. For funds that declare
a dividend daily, such dividends and distributions will be reinvested at the net
asset value per share determined on the payable date. Shareholders may elect, by
written notice to the Transfer Agent, to receive such distributions, or the
dividend portion thereof, in cash, or to invest such dividends and distributions
in shares of another fund in the AIM Funds; provided that (i) dividends and
distributions attributable to Class B shares may only be reinvested in Class B
shares, (ii) dividends and distributions attributable to Class C shares may only
be reinvested in Class C shares, (iii) dividends and distributions attributable
to Class A shares may not be reinvested in Class B or Class C shares, and (iv)
dividends and distributions attributable to the AIM Cash Reserve Shares of AIM
MONEY MARKET FUND may not be reinvested in the Class A shares of that Fund or in
any Class B or Class C shares. Investors who have not previously selected such a
reinvestment option on the account application form may contact the Transfer
Agent at any time to obtain a form to authorize such reinvestments in another
AIM Fund. Such reinvestments into the AIM Funds are not subject to sales
charges, and shares so purchased are automatically credited to the account of
the shareholder.
Dividends on Class B and Class C shares of an AIM Fund are expected to be
lower than dividends for Class A shares of that fund or AIM Cash Reserve Shares
because of higher distribution fees paid by Class B and Class C shares.
Dividends on all shares may also be affected by other class-specific expenses.
A-20
<PAGE> 37
Changes in the form of dividend and distribution payments may be made by the
shareholder at any time by notice to the Transfer Agent and are effective as to
any subsequent payment if such notice is received by the Transfer Agent prior to
the record date of such payment. Any dividend and distribution election remains
in effect until the Transfer Agent receives a revised written election by the
shareholder.
Any dividend or distribution paid by a fund which does not declare dividends
daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes, as
discussed below.
TAX MATTERS
Each AIM Fund has qualified and intends to continue to qualify for treatment
as a regulated investment company under Subchapter M of the Code. As long as a
fund qualifies for this tax treatment, it is not subject to federal income tax
on net investment income, net capital gains and net gains from foreign currency
transactions, if any, that are distributed to its shareholders. Each fund, for
all federal tax purposes (including determining taxable income, distribution
requirements and other requirements of Subchapter M), is treated as a separate
corporation. Therefore, no fund may offset its gains against another fund's
losses, and each fund must individually comply with all of the provisions of the
Code that are applicable to its operations.
TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS -- GENERAL. Because each AIM Fund
intends to distribute to its shareholders substantially all of its net
investment income, net realized capital gains and net gains from foreign
currency transactions, if any, it is not expected that any such fund will be
required to pay any federal income tax on amounts that it has distributed. Each
AIM Fund also intends to meet the distribution requirements of the Code to avoid
imposition of the Excise Tax. Nevertheless, shareholders normally are subject to
federal income tax, and any applicable state and local income taxes, on the
dividends and distributions received by them from a fund whether in the form of
cash or additional fund shares, except for "exempt-interest dividends" paid by
AIM HIGH INCOME MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM TAX-EXEMPT BOND
FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE INTERMEDIATE FUND
(the "Tax-Exempt Funds"), which are exempt from federal income tax. With respect
to tax-exempt shareholders, dividends and distributions from the AIM Funds are
not subject to federal income taxation to the extent permitted under the
applicable tax exemption.
Dividends from an AIM Fund's net investment income, net short-term capital
gain and net gains from certain foreign currency transactions are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term capital gains,
regardless of the length of time the shareholder held his shares. Under the
Taxpayer Relief Act of 1997, different maximum tax rates apply to a
non-corporate taxpayer's net capital gain depending on the taxpayer's holding
period and marginal rate of federal income tax -- generally, 28% for gain
recognized on capital assets held for more than one year but not more than 18
months and 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months. An AIM Fund may
divide each net capital gain distribution into a 28% rate gain distribution and
a 20% rate gain distribution (in accordance with its holding periods for the
securities it sold that generated the distributed gain), in which event its
shareholders must treat those portions accordingly; thus, the relevant holding
period is determined by how long the fund has held the securities on which the
gain was realized, not by how long a shareholder has held fund shares. Recent
legislation provides that a maximum tax rate of 20% (10% for taxpayers in the
15% marginal tax bracket) will apply to gain recognized after December 31, 1997
on capital assets held for more than one year.
Dividends paid by a fund (but not other distributions) may qualify for the
federal 70% dividends received deduction for corporate shareholders to the
extent of the qualifying dividends received by the fund on domestic common or
preferred stock. It is not likely that dividends received from AIM ADVISOR
INTERNATIONAL VALUE FUND, AIM ADVISOR REAL ESTATE FUND, AIM ASIAN GROWTH FUND,
AIM DEVELOPING MARKETS FUND, AIM DOLLAR FUND, AIM EMERGING MARKETS FUND, AIM
EMERGING MARKETS DEBT FUND, AIM EUROPEAN DEVELOPMENT FUND, AIM EUROPE GROWTH
FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH FUND, AIM GLOBAL INCOME FUND, AIM GLOBAL TRENDS FUND, AIM HIGH
YIELD FUND, AIM INCOME FUND, AIM INTERMEDIATE GOVERNMENT FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MONEY MARKET FUND,
AIM NEW PACIFIC GROWTH FUND, AIM STRATEGIC INCOME FUND or any of the Tax-Exempt
Funds will qualify for this dividends received deduction.
Shortly after the end of each year, shareholders will receive information
regarding the amount and federal income tax treatment of all dividends and
distributions paid during the year. The information regarding capital gain
distributions will designate the portions thereof subject to the different
maximum rates of tax applicable to non-corporate taxpayers' net capital gain
indicated above. Certain dividends and distributions declared in October,
November or December of a calendar year are taxable to shareholders as though
received on December 31 of that year if paid to them during January of the
following calendar year. No gain or loss will be recognized by shareholders upon
the automatic conversion of Class B shares of a Multiple Class Fund into Class A
shares of such fund.
For each redemption of a fund's shares by a non-exempt shareholder, the fund
or the securities dealer effecting the transaction is required to file an
information return with the IRS.
A-21
<PAGE> 38
TO AVOID BEING SUBJECT TO FEDERAL INCOME TAX WITHHOLDING AT THE RATE OF 31% ON
TAXABLE DIVIDENDS, DISTRIBUTIONS AND REDEMPTION PAYMENTS, INDIVIDUALS AND
CERTAIN OTHER NON-CORPORATE SHAREHOLDERS OF A FUND MUST FURNISH THE FUND WITH
THEIR TAXPAYER IDENTIFICATION NUMBER AND CERTIFY UNDER PENALTIES OF PERJURY THAT
THE NUMBER PROVIDED IS CORRECT AND THAT THEY ARE NOT SUBJECT TO BACKUP
WITHHOLDING FOR ANY REASON.
Under the Code, nonresident alien individuals, foreign partnerships and
foreign corporations may be subject to federal income tax withholding at a 30%
rate on ordinary income dividends. Under applicable treaty law, residents of
treaty countries may qualify for a reduced rate of withholding or a withholding
exemption.
DIVIDENDS AND DISTRIBUTIONS MAY BE SUBJECT TO TREATMENT UNDER FOREIGN, STATE
OR LOCAL TAX LAWS THAT DIFFERS FROM THE FEDERAL INCOME TAX CONSEQUENCES
DISCUSSED HEREIN. ADDITIONAL INFORMATION ABOUT TAXES IS SET FORTH IN THE
STATEMENTS OF ADDITIONAL INFORMATION. INVESTORS SHOULD CONSULT THEIR TAX
ADVISORS BEFORE INVESTING.
TAX-EXEMPT FUNDS -- SPECIAL TAX INFORMATION. Shareholders will not be required
to include the "exempt-interest" portion of dividends paid by the Tax-Exempt
Funds in their gross income for federal income tax purposes. However,
shareholders will be required to report the receipt of exempt-interest dividends
and other tax-exempt interest on their federal income tax returns. Moreover,
exempt-interest dividends from the Tax-Exempt Funds may be subject to state
income taxes, may affect the amount of social security and railroad retirement
benefits subject to federal income tax, may affect the deductibility of interest
on certain indebtedness of a shareholder, and may have other collateral federal
income tax consequences. In addition, the Tax-Exempt Funds may invest in
Municipal Securities the interest on which will constitute an item of tax
preference and which therefore could give rise to a federal alternative minimum
tax liability for certain shareholders; each Tax-Exempt Fund may invest up to
20% of its net assets in such securities and other taxable securities. For
additional information concerning the alternative minimum tax and certain
collateral tax consequences of the receipt of exempt-interest dividends, see the
Statements of Additional Information applicable to the Tax-Exempt Funds.
The Tax-Exempt Funds may pay dividends to shareholders that are taxable, but
will endeavor to avoid investments that would result in taxable dividends. The
percentage of dividends that constitutes exempt-interest dividends, and the
percentage thereof (if any) that constitutes items of tax preference, will be
determined annually. These percentages may differ from the actual percentages
for any particular day.
To the extent that dividends are derived from taxable investments or net
realized short-term capital gains, they will constitute ordinary income for
federal income tax purposes, whether received in cash or additional fund shares.
Distributions of net capital gain will be taxable as long-term capital gains,
whether received in cash or additional fund shares and regardless of the length
of time a shareholder may have held his shares.
From time to time, proposals have been introduced before Congress that would
have the effect of reducing or eliminating the federal tax exemption on
Municipal Securities. If such a proposal were enacted, the ability of the
Tax-Exempt Funds to pay exempt-interest dividends might be adversely affected.
AIM BASIC VALUE FUND, AIM DOLLAR FUND, AIM GLOBAL GOVERNMENT INCOME FUND, AIM
GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HIGH INCOME FUND, AIM INTERMEDIATE
GOVERNMENT FUND, AIM LIMITED MATURITY TREASURY FUND, AIM MID CAP EQUITY FUND,
AIM SMALL CAP GROWTH FUND, AIM STRATEGIC INCOME FUND -- SPECIAL TAX INFORMATION.
Certain states exempt from income taxes dividends paid by mutual funds
attributable to interest on U.S. Treasury and certain other U.S. government
obligations. Investors should consult with their own tax advisors concerning the
availability of such exemption.
AIM ADVISOR INTERNATIONAL VALUE FUND, AIM ASIAN GROWTH FUND, AIM DEVELOPING
MARKETS FUND, AIM EMERGING MARKETS FUND, AIM EUROPE GROWTH FUND, AIM EUROPEAN
DEVELOPMENT FUND, AIM GLOBAL AGGRESSIVE GROWTH FUND, AIM GLOBAL CONSUMER
PRODUCTS AND SERVICES FUND, AIM GLOBAL FINANCIAL SERVICES FUND, AIM GLOBAL
GROWTH FUND, AIM GLOBAL GROWTH & INCOME FUND, AIM GLOBAL HEALTH CARE FUND, AIM
GLOBAL INCOME FUND, AIM GLOBAL INFRASTRUCTURE FUND, AIM GLOBAL RESOURCES FUND,
AIM GLOBAL TELECOMMUNICATIONS FUND, AIM GLOBAL UTILITIES FUND, AIM INTERNATIONAL
EQUITY FUND, AIM INTERNATIONAL GROWTH FUND, AIM JAPAN GROWTH FUND, AIM LATIN
AMERICAN GROWTH FUND, AIM NEW PACIFIC GROWTH FUND, AIM WORLDWIDE GROWTH
FUND -- SPECIAL TAX INFORMATION. For taxable years in which it is eligible to do
so, each of these funds may elect to pass through to its shareholders credits
for foreign taxes paid. If a fund makes such an election, a shareholder who
receives a distribution (1) will be required to include in gross income his
proportionate share of foreign taxes allocable to the distribution and (2) may
claim a credit or deduction for such share for his taxable year in which the
distribution is received, subject to the general limitations imposed on the
allowance of foreign tax credits and deductions. Shareholders should also note
that certain gains or losses attributable to fluctuations in exchange rates or
foreign currency forward contracts may increase or decrease the amount of income
of the fund available for distribution to shareholders and should note that if,
for any fund, such losses exceed other income during a taxable year, the fund
would not be able to pay ordinary income dividends for that year.
A-22
<PAGE> 39
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GENERAL INFORMATION
CUSTODIAN AND TRANSFER AGENT. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, serves as custodian for the
portfolio securities and cash of the AIM Funds other than AIM HIGH INCOME
MUNICIPAL FUND, AIM MUNICIPAL BOND FUND, AIM LIMITED MATURITY TREASURY FUND, AIM
TAX-EXEMPT BOND FUND OF CONNECTICUT, AIM TAX-EXEMPT CASH FUND and AIM TAX-FREE
INTERMEDIATE FUND, for which The Bank of New York, 90 Washington Street, 11th
Floor, New York, New York 10286, serves as custodian. Chase Bank of Texas, N.A.,
P.O. Box 2558, Houston, Texas 77252-8084, serves as Sub-Custodian for retail
purchases of the AIM Funds.
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739, a wholly
owned subsidiary of AIM, serves as each AIM Fund's transfer agent and dividend
payment agent.
SHAREHOLDER INQUIRIES. Shareholder inquiries concerning their accounts should
be directed to an A I M Fund Services, Inc. Client Services Representative by
calling (800) 959-4246. The Transfer Agent may impose certain copying charges
for requests for copies of shareholder account statements and other historical
account information older than the current year and the immediately preceding
year.
YEAR 2000 COMPLIANCE PROJECT. In providing services to the AIM Funds, AIM
Management and its subsidiaries rely on both internal software systems as well
as external software systems provided by third parties. Many software systems in
use today are unable to distinguish the year 2000 from the year 1900. This
defect if not cured will likely adversely affect the services that AIM
Management, its subsidiaries and other service providers to the AIM Funds
provide the AIM Funds and their shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and Phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be viewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that the AIM Funds will not otherwise be adversely affected by the year 2000
issue.
OTHER INFORMATION. This Prospectus sets forth basic information that investors
should know about the fund(s) named on the cover page prior to investing.
Recipients of this Prospectus will be provided with a copy of the annual report
of the fund(s) to which this Prospectus relates, upon request and without
charge. If several members of a household own shares of the same fund, only one
annual or semi-annual report will be mailed to that address. To receive
additional copies, please call (800) 347-4246, or write to A I M Distributors,
Inc., P.O. Box 4739, Houston, Texas 77210-4739. A Statement of Additional
Information has been filed with the SEC and is available upon request and
without charge, by writing or calling AIM Distributors. The SEC maintains a Web
site at http://www.sec.gov that contains the Statement of Additional
Information, material incorporated by reference, and other information regarding
the Fund. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted from this Prospectus, may be obtained from the SEC by
paying the charges prescribed under its rules and regulations.
A-23
<PAGE> 40
APPLICATION INSTRUCTIONS
SOCIAL SECURITY OR TAXPAYER ID NUMBER. Investors should make sure that the
social security number or taxpayer identification number (TIN) which appears in
Section 1 of the Application complies with the following guidelines:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Give Social Security GIVE TAXPAYER I.D.
ACCOUNT TYPE NUMBER OF: ACCOUNT TYPE NUMBER OF:
<S> <C> <C> <C>
Individual Individual Trust, Estate, Pension Trust, Estate, Pension
Plan Trust Plan Trust and not
personal TIN of fiduciary
Joint Individual First individual listed in the
"Account Registration" portion
of the Application
Unif. Gifts to Minor Corporation, Partnership, Corporation, Partnership,
Minors/Unif. Other Organization Other Organization
Transfers to Minors
Legal Guardian Ward, Minor or
Incompetent
Sole Proprietor Owner of Business Broker/Nominee Broker/Nominee
</TABLE>
- --------------------------------------------------------------------------------
Applications without a certified TIN will not be accepted unless the applicant
is a nonresident alien, foreign corporation or foreign partnership and has
attached a completed IRS Form W-8.
BACKUP WITHHOLDING. Each AIM Fund, and other payers, must, according to IRS
regulations, withhold 31% of redemption payments and reportable dividends
(whether paid or accrued) in the case of any shareholder who fails to provide
the Fund with a TIN and a certification that he is not subject to backup
withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or
(3) the investor is notified by the IRS that the investor is subject to backup
withholding because the investor failed to report all of the interest and
dividends on such investor's tax return (for reportable interest and
dividends only), or
(4) the investor fails to certify to the Fund that the investor is not subject
to backup withholding under (3) above (for reportable interest and
dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983,
or broker accounts considered inactive during 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies.
Certain payees and payments are exempt from backup withholding and information
reporting and such entities should check the box "Exempt from Backup
Withholding" on the Application. A complete listing of such exempt entities
appears in the Instructions for the Requester of Form W-9 (which can be obtained
from the IRS) and includes, among others, the following:
- - a corporation
- - an organization exempt from tax under Section 501(a), an individual retirement
plan (IRA), or a custodial account under Section 403(b)(7)
- - the United States or any of its agencies or instrumentalities
- - a state, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities
- - a foreign government or any of its political subdivisions, agencies or
instrumentalities
- - an international organization or any of its agencies or instrumentalities
- - a foreign central bank of issue
- - a dealer in securities or commodities required to register in the U.S. or a
possession of the U.S.
- - a futures commission merchant registered with the Commodity Futures Trading
Commission
- - a real estate investment trust
- - an entity registered at all times during the tax year under the Investment
Company Act of 1940
- - a common trust fund operated by a bank under Section 584(a)
- - a financial institution
- - a middleman known in the investment community as a nominee or listed in the
most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List
- - a trust exempt from tax under Section 664 or described in Section 4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES -- Investors who do not supply the AIM Funds with a correct TIN
will be subject to a $50 penalty imposed by the IRS unless such failure is due
to reasonable cause and not willful neglect. If an investor falsifies
information on this form or makes any other false statement resulting in no
backup withholding on an account which should be subject to backup withholding,
such investor may be subject to a $500 penalty imposed by the IRS and to certain
criminal penalties including fines and/or imprisonment.
MCF-07/98
B-1
<PAGE> 41
NONRESIDENT ALIENS -- Nonresident alien individuals and foreign entities are
not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
appropriate withholding as described in the Prospectus under "Dividends,
Distributions and Tax Matters."
SPECIAL INFORMATION REGARDING TELEPHONE EXCHANGE PRIVILEGE. By signing the new
Account Application form, an investor appoints the Transfer Agent as his true
and lawful attorney-in-fact to surrender for redemption any and all unissued
shares held by the Transfer Agent in the designated account(s), or in any other
account with any of the AIM Funds, present or future, which has the identical
registration as the designated account(s), with full power of substitution in
the premises. The Transfer Agent and AIM Distributors are thereby authorized and
directed to accept and act upon any telephone redemptions of shares held in any
of the account(s) listed, from any person who requests the redemption proceeds
to be applied to purchase shares in any one or more of the AIM Funds, provided
that such fund is available for sale and provided that the registration and
mailing address of the shares to be purchased are identical to the registration
of the shares being redeemed. An investor acknowledges by signing the form that
he understands and agrees that the Transfer Agent and AIM Distributors may not
be liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction. The Transfer Agent
reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone exchange privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any exchanges must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "Exchange Privilege -- Exchanges
by Mail").
SPECIAL INFORMATION REGARDING TELEPHONE REDEMPTION PRIVILEGE. By signing the
new Account Application form, an investor appoints the Transfer Agent as his
true and lawful attorney-in-fact to surrender for redemption any and all
unissued shares held by the Transfer Agent in the designated account(s), present
or future, with full power of substitution in the premises. The Transfer Agent
and AIM Distributors are thereby authorized and directed to accept and act upon
any telephone redemptions of shares held in any of the account(s) listed, from
any person who requests the redemption. An investor acknowledges by signing the
form that he understands and agrees that the Transfer Agent and AIM Distributors
may not be liable for any loss, expense or cost arising out of any telephone
redemption requests effected in accordance with the authorization set forth in
these instructions if they reasonably believe such request to be genuine, but
may in certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to cease to act as attorney-in-fact subject to this
appointment, and AIM Distributors reserves the right to modify or terminate the
telephone redemption privilege at any time without notice. An investor may elect
not to have this privilege by marking the appropriate box on the application.
Then any redemptions must be effected in writing by the investor (see the
applicable Fund's prospectus under the caption "How to Redeem
Shares -- Redemptions by Mail").
MCF-07/98
B-2
<PAGE> 42
[AIM LOGO APPEARS HERE] THE AIM FAMILY OF FUNDS--Registered Trademark--
Investment Manager
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Sub-Advisor
INVESCO (NY), Inc.
50 California Street, 27th Floor
San Francisco, CA 94111
Principal Underwriter
A I M Distributors, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Transfer Agent
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Independent Accountants
PricewaterhouseCoopers LLP
One Post Office Square
Boston, MA 02109
For more complete information about any other fund in The AIM Family of
Funds--Registered Trademark--, including charges and expenses, please call (800)
347-4246 or write to A I M Distributors, Inc. and request a free prospectus.
Please read the prospectus carefully before you invest or send money.
WWG-PRO-1
