<PAGE> 1
SEMIANNUAL REPORT/APRIL 30, 1999
AIM EUROPEAN DEVELOPMENT FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
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[COVER IMAGE]
HOMMAGE A BLERIOT, NO. 2, FRAGMENT ART WORK
BY ROBERT DELAUNAY
LOUIS BLERIOT, A FRENCH ENGINEER AND INVENTOR, WAS THE
FIRST PERSON TO FLY ACROSS THE ENGLISH CHANNEL FROM
FRANCE, TRANSPORTED BY A 28-HORSEPOWER MONOPLANE OF HIS
OWN DESIGN. NEARLY 100 YEARS LATER, THE SAME SPIRIT OF
ENTREPRENEURSHIP AND COURAGE THAT LAUNCHED BLERIOT'S
FLIGHT HAS ENLIVENED EUROPE'S MARKETS.
----------------------------------
AIM European Development Fund is for shareholders who seek long-term growth of
capital. The Fund invests in a diversified portfolio of equity securities of
companies located in Europe with strong earnings momentum.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM European Development Fund's performance figures are historical and
reflect reinvestment of all distributions and changes in net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class
C share performance reflects the applicable contingent deferred sales
charge (CDSC) for the period involved. The CDSC on Class B shares declines
from 5% beginning at the time of purchase to 0% at the beginning of the
seventh year. The CDSC on Class C shares is 1% for the first year after
purchase. The performance of the Fund's Class B shares will differ from
that of Class A shares due to differences in sales charge structure and
expenses.
o The Fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o International investing presents certain risks not associated with
investing solely in the United States. These include risks relating to
fluctuations in the value of the U.S. dollar relative to the values of
other currencies, the custody arrangements made for the Fund's foreign
holdings, differences in accounting, political risks and the lesser
degree of public information required to be provided by non-U.S.
companies.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The EAFE--Registered Trademark-- (Europe, Australasia, and the Far East)
Index is a group of unmanaged foreign securities. The index is compiled by
Morgan Stanley Capital International.
o The unmanaged Lipper European Funds Index represents an average of the
performance of the 30 largest European-region mutual funds. It is compiled
by Lipper Inc., an independent mutual funds performance monitor. Results
shown reflect reinvestment of dividends.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends. They do not include
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THERE
IS A RISK THAT YOU COULD LOSE SOME
OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund
AIM EUROPEAN DEVELOPMENT FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
With only several months remaining in 1999, the question on
[PHOTO OF many of your minds may be, "How will the year 2000 computer
Charles T. issue affect AIM and my investments?" We would like you to
Bauer, feel comfortable.
Chairman of During March and April, AIM participated in an
the Board of industrywide test that gave us a chance to see how our
THE FUND technology systems might be affected by the changeover to
APPEARS HERE] the year 2000 (Y2K). Everything went as well as we had
hoped; in general, the industry sailed through the testing
process with flying colors. The financial industry has been
seen as a leader in planning for year 2000 concerns. Thus,
it was no surprise to most participants that the test was an
overwhelming success.
The general purpose of the process was to test
electronic interfaces among financial industry members in the
United States and to follow transactions through a typical
trading cycle--from order entry to the settlement process. Investment banks,
broker-dealers, custodian banks and mutual fund companies all worked together to
make this possible. Approximately 400 firms were involved in the testing; AIM
was one of 70 asset managers.
TEST RESULTS EXCELLENT
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been addressing
the year 2000 issue for several years. During 1998, we made substantial
progress on our preparations. We are now in the final phases of the project,
continually testing internal applications and our interfaces with outside
parties. On the investment side, our portfolio management staff is evaluating
the Y2K preparedness of the companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if there are
unexpected problems. Our plans will give AIM employees guidelines to follow for
a wide variety of situations.
For a more comprehensive discussion of our Y2K efforts and for periodic
updates, please visit our Web site, www.aimfunds.com.
We are pleased to send you this report covering your fund's performance over
the last six months. If you have any questions or comments, please contact our
Client Services department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through our
AIM Investor Line at 800-246-5463 or at our Web site.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--. We appreciate your business.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
A I M Advisors, Inc.
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS
LETTER IS DEEMED AIM'S YEAR 2000 READINESS DISCLOSURE.
-----------------------------
THE FINANCIAL INDUSTRY
HAS BEEN SEEN AS A
LEADER IN PLANNING FOR
YEAR 2000 CONCERNS.
-----------------------------
AIM EUROPEAN DEVELOPMENT FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
FUND FEELS EFFECTS OF EUROPE'S
CYCLICAL RALLY
HOW DID AIM EUROPEAN DEVELOPMENT FUND PERFORM DURING THE REPORTING PERIOD?
After a strong performance in 1998, the Fund felt the effects of a rally in
economically sensitive stocks. For the six-month reporting period ended April
30, 1999, the Fund posted a modest return of 7.74% for Class A shares, 7.38% for
Class B shares and 7.30% for Class C shares. These returns are at net asset
value, without a sales charge.
Cumulative total return since inception on November 3, 1997 to the end of
the reporting period, excluding sales charges, was 25.16% for Class A shares,
24.29% for Class B shares, and 24.29% for Class C shares. The Fund outperformed
its peer group-the Lipper European Fund Index-which brought in a return of
19.12%.
WHAT AFFECTED THE FUND'S PERFORMANCE OVER THE REPORTING PERIOD?
European cyclical stocks were the major movers in the market during the end of
the reporting period. For example, from the first of the year to the end of the
reporting period, the metal & mining index was up around 28%, the steel index
over 35% and the auto-parts index up more than 22%. These sectors have performed
extremely well this year as many investors in Europe targeted undervalued
stocks. At the same time, traditional growth industries such as pharmaceuticals,
consumer products and food chains, in which we have the most exposure, did not
reap the benefits of investor interest.
If you look at sector performance in Europe, it has been a fairly difficult
period to be an earnings-momentum investor because the best sectors have clearly
been in value stocks. This has been a market where value investors have done
really well. However, since we haven't seen any dramatic deceleration in growth,
we have not moved into these sectors in any significant way, but continue to
hold a large number of growth stocks.
WHAT SHAPED MARKET CONDITIONS DURING THE REPORTING PERIOD?
The introduction of the euro as a new common currency for 11 European countries
was successful. The currency started out strong against the U.S. dollar, but
weakened when it became clear the U.S. economy was growing much faster than the
European economy.
Fears of slowing economic growth prompted the European Central Bank to cut
its main refinancing rate from 3% to 2.5% in early April. The 50- basis-point
interest-rate cut was an attempt to stimulate economic growth and boost industry
confidence in Europe.
Despite fears of slowing growth, it is worth noting that growth in member
countries of Europe's Economic and Monetary Union has actually been above the
long-term trend of around 1.9% per annum. In addition, consumer confidence
remains high, and particular sectors in the peripheral countries have been
growing very strongly.
HOW HAS THE TREND TOWARD CORPORATE RESTRUCTURING INFLUENCED THE MARKETS?
The trend towards corporate restructuring is directly attributable to increased
interest from U.S. and European investors in the European equity markets. Until
recently, the management of many publicly traded companies in Europe did not
focus on increasing investor returns. However, increased pressure from
shareholders is forcing a number of companies to commit to internal
restructuring to increase efficiency and productivity.
Merger and acquisition activity continues to be a dominant trend in Europe.
Most recently, a number of hostile takeover bids have gained public attention.
An excellent example is Olivetti's bid for Telecom Italia, a former state-owned
-------------------------------------
WE CONTINUE TO FIND WHAT WE BELIEVE
TO BE VERY POSITIVE GROWTH OPPORTUNITIES
IN EUROPE, FOCUSING ON COMPANIES
WITH STRONG MANAGEMENT, SOUND CORPORATE
STRATEGY AND A SOLID COMMITMENT
TO SHAREHOLDER VALUE.
-------------------------------------
PORTFOLIO COMPOSITION
As of April 30, 1999, based on total net assets
<TABLE>
<CAPTION>
===========================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Nokia Oyj A.B. - Class A (Finland) 2.32% 1. Services (Commercial & Consumer) 9.69%
2. Jot Automation Group Oyj (Finland) 2.06 2. Computer Software/Services 8.92
3. Telefonica S.A. (Spain) 1.40 3. Banks - Major Regional 7.61
4. Carrefour Supermarche (France) 1.35 4. Telecommunications - Cellular 5.82
5. Koninklijke Ahold NV (Netherlands) 1.32 5. Broadcasting 4.89
6. Zurich Allied AG (Switzerland) 1.29 6. Retail - Food Chains 4.87
7. Esat Telecom Group PLC (Ireland) 1.29 7. Insurance - Multi-Line 4.06
8. Class Editori SPA (Italy) 1.29 8. Telephone 3.54
9. British Sky Broadcasting (United Kingdom) 1.27 9. Communications Equipment 2.95
10. Axa - UAP (France) 1.27 10. Manufacturing - Specialized 2.63
The Fund's portfolio is subject to change, and there is no assurance the Fund
will continue to hold any particular security.
===========================================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
AIM EUROPEAN DEVELOPMENT FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
utility and the sixth-largest telephone company in the world. Although company
shareholders will not always benefit directly from these actions, merger and
acquisition activity is very good because it puts more pressure on management to
perform and provide attractive returns to shareholders.
HOW HAS THE INTRODUCTION OF THE EURO AFFECTED THE MARKETS?
The arrival of the euro was very successful for the first couple of weeks of
1999, until the U.S. dollar strengthened. The reason for the softer euro was the
realization that the European economy was actually growing at a much slower rate
than expected.
Also, the euro is causing equity markets to become broader and more liquid,
since European companies are finding it easier to attract capital across
borders. Europe's fixed-income markets have also seen dramatic change. With a
universal currency across 11 countries, currency risk for euro-denominated debt
securities has been eliminated, allowing investors to focus more on credit risk.
The arrival of the euro has made price comparison of goods, services and
labor across Europe much easier. Because of this "price transparency," European
companies have been forced to become more competitive as prices are generally
converging at the lower level.
ADVANTAGES OF THE EURO
o STRUCTURALLY LOWER INTEREST RATES
o DEEPER EQUITY AND FIXED-INCOME MARKETS
o CONTINUED DEREGULATION
o INCREASED COMPETITION ACROSS BORDERS
COULD YOU DISCUSS A FEW OF YOUR TOP HOLDINGS?
We favor companies with dominant positions, and pricing power, in industries
that are growing worldwide. Finnish cellular-telephone leader Nokia, which has
40% of the U.S. market share for cellular- phone handsets, is one of these
long-term growth stories.
We have also identified a number of smaller, highly entrepreneurial
situations in niche markets. Frequently these markets are in service industries
in particular countries that are growing as a result of liberalization. An
example is Teldafax, a German telecommunication services company. Teldafax, one
of Deutsche Telekom AG's lowest-priced competitors, provides telephone, data
transmission and fax services to business and private users in Germany.
WHAT IS YOUR OUTLOOK FOR THE EUROPEAN MARKETS?
We are very optimistic about the future growth of the European markets. It's
increasingly clear that companies across Europe are doing the kinds of things
U.S. firms did in the 1980s to enhance returns. They're selling off unproductive
businesses, cutting their work forces and buying back shares. Other positives
include lower interest rates, the advent of the euro currency, more open borders
and continuing deregulation and privatization.
The progressive future for the European equity markets continues to improve
as more and more European households actively participate in equity markets
through mutual funds and individual equity holdings. The European "Baby Boom"
demographically supports the potential for large inflows into European equity
markets for years to come (see next page). We continue to find what we believe
to be very positive growth opportunities in Europe, focusing on companies with
strong management, sound corporate strategy and a solid commitment to
shareholder value.
================================================================================
GEOGRAPHIC ALLOCATION
[PIE CHART]
Other 2.04%
Portugal 2.43%
Belgium 2.43%
Ireland 3.54%
Sweden 4.39%
Spain 5.71%
Finland 5.95%
Switzerland 5.99%
Italy 6.47%
Netherlands 8.57%
Other Non-UK Europe 3.69%
France 20.0%
UK 17.20%
Germany 11.59%
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/99, including sales charges
CLASS A SHARES
Inception (11/3/97) 20.50%
1 year -3.44*
CLASS B SHARES
Inception (11/3/97) 21.86%
1 year -3.46**
CLASS C SHARES
Inception (11/3/97) 24.29%
1 year 0.54**
*2.22%, excluding sales charges
**1.54%, excluding CDSC
Past performance is no guarantee of comparable future results.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
See important fund and index disclosures inside front cover.
AIM EUROPEAN DEVELOPMENT FUND
3
<PAGE> 6
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
EUROPEAN "BABY BOOM"
POPULATION SUMMARY AS OF 6/15/98
Population in thousands
<TABLE>
<CAPTION>
UNITED STATES GERMANY
BABY BOOM BAR GRAPH BABY BOOM BAR GRAPH
<S> <C> <C> <C>
0 TO 4 19117 0 TO 4 3796
5 TO 9 20024 5 TO 9 4471
10 TO 14 19371 10 TO 14 4544
15 TO 19 19442 15 TO 19 4512
20 TO 24 17553 20 TO 24 4338
25 TO 29 18637 25 TO 29 5815
30 TO 34 20247 30 TO 34 7299
35 TO 39 22620 35 TO 39 6987
40 TO 44 21828 40 TO 44 6056
45 TO 49 18818 45 TO 49 5620
50 TO 54 15708 50 TO 54 4605
55 TO 59 12401 55 TO 59 5860
60 TO 64 10267 60 TO 64 5126
65 TO 69 9572 65 TO 69 3987
70 TO 74 8793 70 TO 74 3416
75 TO 79 7204 75 TO 79 2650
80 TO 84 4720 80 TO 84 1402
OVER 85 3996 OVER 85 1593
</TABLE>
Source: U.S. Bureau of the Census, Internal Database.
In the United States, "baby boomers" are people roughly between the ages of 35
and 53. In Germany, baby boomers are roughly between the ages of 25 and 45.
Just as American baby boomers have spurred growth in the U.S. equity markets,
European baby boomers have the potential to have the same effect on European
equity markets. European equities are becoming an increasingly important
portion of household investments.
AIM EUROPEAN DEVELOPMENT FUND
4
<PAGE> 7
SEMIANNUAL REPORT / FOR CONSIDERATION
WHY STAYING FULLY INVESTED
HAS BEEN THE WISEST COURSE
When the stock market turns volatile, many investors feel the impulse to pull
their money out of mutual funds. The question then becomes when to get back in.
Trying to guess the answer could be very costly.
No one, not even expert market watchers, can consistently predict what the
market will do next. That's why AIM funds stay fully invested even in a down
market, and we encourage investors to do the same.
For long-term investing, the stock market historically has offered the
highest returns. For example, the Standard & Poor's Composite Index of 500
Stocks (S&P 500) has reported an annualized total return of 13.66% for the 50
years ending March 31, 1999. Those were five decades of wars, recessions and
political upheaval.
If you pull your money out whenever markets decline, you could miss some of
the market's best days. In August 1998, investors withdrew $11 billion from U.S.
mutual funds. Chances are, many of those investors did not put their money back
into the market in time for the October rally. In fact, October 1998 turned out
to be the strongest month for the Dow Jones Industrial Average in 11 years.
For international investors, here's another way to look at market timing: If
you had invested a hypothetical $10,000 in the Europe, Australasia, and Far
East Index tracked by Morgan Stanley Capital International on March 31, 1979,
your money would have grown to $117,775 by March 31, 1999. That's an average
annual total return of 13.12%. But suppose that during that 20-year period,
there were times when you decided to get out of the market. If you missed the
market's two best months, your return would have fallen to 11.57%, and your
investment would be worth $89,351. If you had missed the market's five best
months, your return would have dropped to 9.74%, and your investment would be
worth $64,144.
The more you try to time the market, the greater your chances of missing its
biggest single-day gains. Keep focused on your financial goals, and remember
that time, not timing, is key to successful investing. Now may be a good time
to visit your financial advisor to talk about your portfolio. Remember:
o think long-term
o diversify your investments
o avoid market timing
o maintain realistic expectations
PENALTY FOR MISSING THE MARKET
MSCI EAFE INDEX
Average annual total returns, 20 years ended 3/31/99
[LINE GRAPH]
Fully Invested 13.12%
240 Months
Miss the 2 11.57%
Best Months
Miss the 5 9.74%
Best Months
Miss the 7 8.61%
Best Months
Miss the 9 7.52%
Best Months
Miss the 14 5.07%
Best Months
The EAFE--Registered Trademark--(Europe, Australasia, and the Far East) Index is
a group of unmanaged foreign securities. The index is compiled by Morgan Stanley
Capital International. Source: Lipper Analytical Services, Inc.
AIM EUROPEAN DEVELOPMENT FUND
5
<PAGE> 8
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN COMMON STOCKS & OTHER EQUITY
INTERESTS-97.96%
BELGIUM-2.43%
Delhaize-Le Lion, S.A. (Retail-Food
& Drug)(a) 15,900 $ 1,390,969
- -------------------------------------------------------------
Mobistar S.A.
(Telecommunications-Cellular/
Wireless)(a) 27,500 1,545,733
- -------------------------------------------------------------
Real Software-Strip Pfd.
(Computers-Software & Services) 650 0
- -------------------------------------------------------------
Real Software-Pfd.
(Computers-Software & Services) 8,450 1,186,511
- -------------------------------------------------------------
4,123,213
- -------------------------------------------------------------
CROATIA-0.34%
Pliva DD (Health Care-Drugs-Major
Pharmaceutical) (acquired
11/14/97-06/04/98; cost
$631,540)(b) 36,000 570,600
- -------------------------------------------------------------
DENMARK-0.89%
De Sammensluttede Vognmaend A/S
(Truckers) 9,400 760,263
- -------------------------------------------------------------
EDB Gruppen A/S (Services-Commercial
& Consumer) 15,500 760,106
- -------------------------------------------------------------
1,520,369
- -------------------------------------------------------------
ESTONIA-0.19%
EESTI Telekom-GDR
(Telecommunications-
Cellular/Wireless) (acquired
02/11/99; cost $276,750)(a)(b) 15,000 317,250
- -------------------------------------------------------------
FINLAND-5.95%
JOT Automation Group Oyj
(Manufacturing- Specialized)(a) 106,100 3,497,519
- -------------------------------------------------------------
Nokia Oyj A.B.-Class A
(Communications Equipment) 51,180 3,944,715
- -------------------------------------------------------------
Sonera Group Oyj
(Telecommunications-Cellular/
Wireless) 57,850 1,149,083
- -------------------------------------------------------------
Tieto Corp.-Class B
(Computers-Software & Services) 38,500 1,533,529
- -------------------------------------------------------------
10,124,846
- -------------------------------------------------------------
FRANCE-20.00%
Accor S.A. (Lodging-Hotels) 4,200 1,107,159
- -------------------------------------------------------------
Altran Technologies, S.A.
(Services-Commercial & Consumer) 7,300 1,735,383
- -------------------------------------------------------------
AXA S.A. (Insurance-Multi-Line) 16,750 2,162,599
- -------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 22,000 1,823,500
- -------------------------------------------------------------
Cap Gemini Sogeti S.A.
(Computer-Software & Services) 8,000 1,223,062
- -------------------------------------------------------------
Carrefour Supermarche S.A.
(Retail-Food Chains) 2,900 2,297,996
- -------------------------------------------------------------
Compagnie Generale des Eaux
(Manufacturing-Diversified) 3,900 911,052
- -------------------------------------------------------------
Danone (Foods) 4,040 1,079,921
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Elf Aquitaine S.A. (Oil &
Gas-Refining & Marketing) 13,700 $ 2,127,786
- -------------------------------------------------------------
Galeries Lafayette
(Retail-Department Stores) 960 1,105,574
- -------------------------------------------------------------
GFI Informatique (Computers-Software
& Services)(a) 12,200 1,558,390
- -------------------------------------------------------------
Havas Advertising S.A.
(Services-Advertising/ Marketing) 9,900 2,008,290
- -------------------------------------------------------------
M6 Metropole Television
(Broadcasting-Television, Radio &
Cable)(a) 11,000 2,079,185
- -------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 6,800 1,127,973
- -------------------------------------------------------------
Promodes (Retail-Food Chains) 2,100 1,331,253
- -------------------------------------------------------------
Rexal S.A. (Distributors-Food &
Health) 4,110 340,880
- -------------------------------------------------------------
Rhone-Poulenc-Class A
(Chemicals-Diversified) 32,900 1,564,222
- -------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 5,260 941,433
- -------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting-Television, Radio &
Cable) 7,900 1,544,148
- -------------------------------------------------------------
Sopra S.A. (Services-Commercial &
Consumer) 23,050 1,333,353
- -------------------------------------------------------------
Suez Lyonnaise des Eaux
(Manufacturing-Diversified) 5,500 935,575
- -------------------------------------------------------------
Total S.A.-Class B (Oil &
Gas-Refining & Marketing) 13,500 1,848,540
- -------------------------------------------------------------
Transiciel S.A. (Computers-Software
& Services)(a) 6,600 752,412
- -------------------------------------------------------------
Unilog S.A. (Services-Commercial &
Consumer) 2,220 1,071,912
- -------------------------------------------------------------
34,011,598
- -------------------------------------------------------------
GERMANY-11.59%
Consors Discount Broker A.G.
(Investment- Banking/Brokerage)(a) 10,500 998,440
- -------------------------------------------------------------
DaimlerChrysler A.G. (Automobiles) 20,500 2,024,059
- -------------------------------------------------------------
EM.TV & Merchandising A.G.
(Broadcasting- Television, Radio,
& Cable)(a) 1,300 1,229,296
- -------------------------------------------------------------
Fresenius A.G.-Pfd.
(Machinery-Diversified) 10,400 1,813,040
- -------------------------------------------------------------
Ixos Software A.G.
(Computers-Software & Services)(a) 4,200 856,439
- -------------------------------------------------------------
Kamps A.G. (Retail-Food Chains) 36,000 1,236,163
- -------------------------------------------------------------
Mannesmann A.G.
(Machinery-Diversified) 14,500 1,908,869
- -------------------------------------------------------------
Marschollek, Lautenschlaeger &
Partner A.G.
(Insurance-Life/Health) 1,210 677,566
- -------------------------------------------------------------
Pfeiffer Vacuum Technology A.G.-ADR
(Machinery-Diversified)(a) 1 38
- -------------------------------------------------------------
Plenum A.G. Technology und Systeme
(Computers-Software & Services)(a) 11,200 1,324,153
- -------------------------------------------------------------
Porsche A.G. (Automobiles) 425 1,050,739
- -------------------------------------------------------------
PrimaCom A.G.
(Broadcasting-Television, Radio, &
Cable)(a) 30,000 1,299,556
- -------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GERMANY-(CONTINUED)
SER Systems A.G. (Computers-Software
& Services) 2,060 $ 759,596
- -------------------------------------------------------------
Sixt A.G. (Financial-Diversified) 19,500 1,411,287
- -------------------------------------------------------------
Teldafax (Telecommunications-Long
Distance)(a) 29,800 1,212,180
- -------------------------------------------------------------
Teles AG (Electrical Equipment)(a) 8,800 1,904,157
- -------------------------------------------------------------
19,705,578
- -------------------------------------------------------------
GREECE-0.55%
Panafon Hellenic Telecom S.A.-GDR
(Telecommunications-Cellular/Wireless)
(acquired 11/20/98-04/23/99; cost
$765,458)(a)(b) 35,600 943,400
- -------------------------------------------------------------
HUNGARY-0.57%
Magyar Tavkozlesi ADR
(Telecommunications- Long
Distance) 34,500 970,312
- -------------------------------------------------------------
IRELAND-3.54%
Allied Irish Banks PLC
(Banks-Regional) 105,000 1,690,719
- -------------------------------------------------------------
Bank of Ireland (Banks-Major
Regional) 53,000 1,059,730
- -------------------------------------------------------------
CRH PLC (Construction-Cement &
Aggregates) 55,000 1,079,371
- -------------------------------------------------------------
Esat Telecom Group PLC-ADR
(Telecommunications-Long
Distance)(a) 44,800 2,189,600
- -------------------------------------------------------------
6,019,420
- -------------------------------------------------------------
ITALY-6.47%
Assicurazioni Generali
(Insurance-Multi-Line) 38,300 1,491,167
- -------------------------------------------------------------
Autogrill S.p.A. (Restaurants) 170,500 1,563,631
- -------------------------------------------------------------
Banca Commerciale Italiana
(Banks-Major Regional) 137,000 1,127,582
- -------------------------------------------------------------
Banca Popolare di Brescia
(Banks-Regional)(a) 32,000 1,100,502
- -------------------------------------------------------------
Class Editori (Publishing)(a) 225,000 2,187,058
- -------------------------------------------------------------
Credito Italiano S.p.A. (Banks-Major
Regional) 212,000 1,075,145
- -------------------------------------------------------------
Olivetti S.p.A.
(Telecommunications-Cellular/
Wireless)(a) 305,000 1,063,418
- -------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 130,900 1,392,705
- -------------------------------------------------------------
11,001,208
- -------------------------------------------------------------
NETHERLANDS-8.57%
Athlon Groep N.V. (Retail-General
Merchandise) 62,200 1,721,796
- -------------------------------------------------------------
Cap Gemini N.V. (Services-Computer
Systems) 22,000 1,144,772
- -------------------------------------------------------------
Equant N.V.
(Computers-Peripherals)(a) 10,500 952,955
- -------------------------------------------------------------
Getronics N.V. (Computers-Software &
Services) 18,600 763,474
- -------------------------------------------------------------
Koninklijke Ahold N.V. (Retail-Food
Chains) 60,300 2,239,405
- -------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 20,400 767,309
- -------------------------------------------------------------
Ordina Beheer N.V.-W.I.
(Services-Commercial &
Consumer)(a) 88,000 2,110,564
- -------------------------------------------------------------
Philips Electronics N.V. (Household
Furniture & Appliances) 11,000 947,197
- -------------------------------------------------------------
Unit 4 (Computers-Software &
Services)(a) 55,000 1,156,394
- -------------------------------------------------------------
Verenigde Nederlandse
Uitgeversbedrijven Verenigd Bezit
(Publishing) 31,000 1,254,442
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Wolters Kluwer N.V.
(Specialty-Printing) 34,800 $ 1,514,839
- -------------------------------------------------------------
14,573,147
- -------------------------------------------------------------
NORWAY-1.15%
Merkantildata A.S.A.
(Services-Commercial & Consumer) 98,600 984,674
- -------------------------------------------------------------
Tomra Systems A.S.A. (Manufacturing-
Specialized) 24,500 972,409
- -------------------------------------------------------------
1,957,083
- -------------------------------------------------------------
PORTUGAL-2.43%
Banco Comercial Portugues, S.A.
(Banks-Major Regional) 39,010 1,100,055
- -------------------------------------------------------------
Ibersol SGPS S.A. (Retail-Food
Chains) 14,800 1,178,869
- -------------------------------------------------------------
Jeronimo Martins & Filho, S.A.
(Retail-General Merchandise) 30,500 1,003,802
- -------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.
(Telecommunications-Cellular/Wireless) 6,350 848,700
- -------------------------------------------------------------
4,131,426
- -------------------------------------------------------------
SPAIN-5.71%
Banco Popular Espanol S.A.
(Banks-Major Regional)(a) 12,400 877,782
- -------------------------------------------------------------
Baron de Ley, S.A.
(Beverages-Alcoholic)(a) 51,000 1,756,620
- -------------------------------------------------------------
Corp. Financiera Reunida, S.A.
(Investment Management)(a) 156,200 1,836,819
- -------------------------------------------------------------
Cortefiel S.A. (Retail-Department
Stores) 43,000 1,181,223
- -------------------------------------------------------------
Telefonica S.A. (Telephone) 50,900 2,385,072
- -------------------------------------------------------------
Telefonica S.A. (Telephone), Bonus
Rights expiring 05/20/99 50,900 47,325
- -------------------------------------------------------------
TelePizza, S.A. (Restaurants)(a) 65,000 412,054
- -------------------------------------------------------------
Union Electrica Fenosa, S.A.
(Electric Companies) 91,500 1,217,130
- -------------------------------------------------------------
9,714,025
- -------------------------------------------------------------
SWEDEN-4.39%
Assa Abloy A.B.-Class B (Metal
Fabricators) 18,000 785,113
- -------------------------------------------------------------
Electrolux A.B. (Household Furniture
& Appliances) 40,500 820,849
- -------------------------------------------------------------
Europolitan Holdings A.B.
(Telecommunications- Cellular &
Wireless) 10,200 866,825
- -------------------------------------------------------------
Hennes & Mauritz A.B.-Class B
(Retail-Specialty-Apparel) 14,000 1,206,353
- -------------------------------------------------------------
Modul 1 Data A.B. (Services-Computer
Systems) 189,000 1,131,267
- -------------------------------------------------------------
Svenska Handelsbanken-Class A
(Banks-Major Regional) 35,500 1,329,620
- -------------------------------------------------------------
WM-Data A.B.-Class B
(Computers-Software & Services) 35,850 1,317,234
- -------------------------------------------------------------
7,457,261
- -------------------------------------------------------------
SWITZERLAND-5.99%
ABB A.G. (Engineering &
Construction) 1,300 1,895,851
- -------------------------------------------------------------
Adecco S.A. (Services-Commercial &
Consumer) 2,100 1,058,465
- -------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND-(CONTINUED)
Also Holding (Insurance-Multi/Line) 1,960 $ 1,066,265
- -------------------------------------------------------------
Julius Baer Holding A.G.
(Banks-Major Regional)(a) 400 1,301,698
- -------------------------------------------------------------
Kudelski S.A. (Electronics-Component
Distributors)(a) 310 1,208,953
- -------------------------------------------------------------
Phonak Holding A.G.
(Consumer-Jewelry, Novelties &
Gifts) 390 472,898
- -------------------------------------------------------------
UBS A.G. (Banks-Major Regional) 2,900 984,597
- -------------------------------------------------------------
Zurich Allied A.G.
(Insurance-Multi-Line)(a) 3,410 2,197,044
- -------------------------------------------------------------
10,185,771
- -------------------------------------------------------------
UNITED KINGDOM-17.20%
AMEC PLC (Construction-Cement &
Aggregates) 250,000 1,081,784
- -------------------------------------------------------------
Barclays PLC (Banks-Major Regional) 42,000 1,333,658
- -------------------------------------------------------------
British Energy PLC (Electric
Companies) 134,000 1,139,194
- -------------------------------------------------------------
British Sky Broadcasting Group PLC
(Broadcasting-Television, Radio &
Cable) 245,000 2,163,647
- -------------------------------------------------------------
British Telecommunications PLC
(Communications Equipment) 64,000 1,074,802
- -------------------------------------------------------------
Cable & Wireless Communications PLC
(Telecommunications-Cellular/
Wireless)(a) 110,000 1,254,547
- -------------------------------------------------------------
Cattles PLC (Consumer Finance) 145,000 1,778,508
- -------------------------------------------------------------
Eidos PLC (Computer
Software/Services)(a) 43,500 1,636,688
- -------------------------------------------------------------
F.I. Group PLC (Services-Computer
Systems) 175,000 957,117
- -------------------------------------------------------------
Filtronic PLC (Electronics-Component
Distributors)(a) 63,000 869,513
- -------------------------------------------------------------
Granada Group PLC (Leisure
Time-Products) 88,000 1,879,874
- -------------------------------------------------------------
Hays PLC (Services-Commercial &
Consumer) 186,000 2,067,469
- -------------------------------------------------------------
Logica PLC (Computer
Software/Services) 53,500 516,361
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
London Bridge Software Holdings PLC
(Computers-Software & Services)(a) 35,000 $ 957,117
- -------------------------------------------------------------
Matalan PLC (Retail-Discounters)(a) 122,000 1,515,044
- -------------------------------------------------------------
Misys PLC (Services-Commercial &
Consumer) 115,700 1,085,981
- -------------------------------------------------------------
Nestor Healthcare Group PLC
(Services-Commercial & Consumer) 177,000 1,147,430
- -------------------------------------------------------------
Orange PLC (Telecommunications)(a) 83,000 1,129,527
- -------------------------------------------------------------
Parity PLC (Services-Commercial &
Consumer) 135,800 1,507,290
- -------------------------------------------------------------
Royalblue Group PLC
(Computers-Software & Services)(a) 66,000 493,679
- -------------------------------------------------------------
Select Appointments Holdings PLC
(Services-Commercial & Consumer) 75,000 955,508
- -------------------------------------------------------------
Seton Scholl Healthcare PLC (Health
Care-Diversified)(a) 83,550 1,034,869
- -------------------------------------------------------------
Unilever PLC (Foods) 67,700 600,051
- -------------------------------------------------------------
Vodafone Group PLC
(Telecommunications-Cellular/Wireless) 58,000 1,068,271
- -------------------------------------------------------------
29,247,929
- -------------------------------------------------------------
Total Foreign Common Stocks &
Other Equity Interests, (cost
$154,920,792) 166,574,436
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENT-0.34%(C)
West LB Securities America, Inc.,
4.88%, 05/03/99 (cost $576,960)(d) $576,960 576,960
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.30% 167,151,396
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.70% 2,888,564
- --------------------------------------------------------------
NET ASSETS-100.00% $170,039,960
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
Pfd. - Preferred
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 this security has been determined in accordance
with procedures established by the Board of Directors. The aggregate market
value of these securities at 04/30/99 was $1,831,250 which represented 1.08%
of the Fund's net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(d) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$250,101,667. Collateralized by $249,045,000 U.S. Government obligations,
4.00% to 8.75% due 08/31/00 to 11/15/08 with an aggregate market value at
04/30/99 of $255,023,179.
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$155,497,752) $167,151,396
- -----------------------------------------------------------
Foreign currencies, at value (cost
$1,525,828) 1,519,342
- -----------------------------------------------------------
Receivables for:
Investments sold 5,758,656
- -----------------------------------------------------------
Capital stock sold 673,152
- -----------------------------------------------------------
Dividends and interest 235,529
- -----------------------------------------------------------
Investment for deferred compensation plan 3,863
- -----------------------------------------------------------
Other assets 73,928
- -----------------------------------------------------------
Total assets 175,415,866
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 4,135,306
- -----------------------------------------------------------
Capital stock reacquired 885,680
- -----------------------------------------------------------
Deferred compensation 3,863
- -----------------------------------------------------------
Accrued advisory fees 135,678
- -----------------------------------------------------------
Accrued administrative services fees 6,935
- -----------------------------------------------------------
Accrued directors' fees 3,309
- -----------------------------------------------------------
Accrued distribution fees 98,610
- -----------------------------------------------------------
Accrued transfer agent fees 58,484
- -----------------------------------------------------------
Accrued operating expenses 48,041
- -----------------------------------------------------------
Total liabilities 5,375,906
- -----------------------------------------------------------
Net assets applicable to shares outstanding $170,039,960
- -----------------------------------------------------------
NET ASSETS:
Class A $ 94,421,043
===========================================================
Class B $ 63,459,323
===========================================================
Class C $ 12,159,594
===========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 6,768,521
===========================================================
Class B:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 4,592,092
===========================================================
Class C:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 879,689
===========================================================
Class A:
Net asset value and redemption price per
share $ 13.95
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $13.95
divided by 94.50%) $ 14.76
===========================================================
Class B:
Net asset value and offering price per
share $ 13.82
===========================================================
Class C:
Net asset value and offering price per
share $ 13.82
===========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $98,716 foreign withholding
tax) $ 539,508
- ------------------------------------------------------------
Interest 276,456
- ------------------------------------------------------------
Total investment income 815,964
- ------------------------------------------------------------
EXPENSES:
Advisory fees 814,601
- ------------------------------------------------------------
Administrative services fees 43,160
- ------------------------------------------------------------
Custodian fees 106,246
- ------------------------------------------------------------
Directors' fees 5,321
- ------------------------------------------------------------
Distribution fees-Class A 169,206
- ------------------------------------------------------------
Distribution fees-Class B 312,999
- ------------------------------------------------------------
Distribution fees-Class C 61,031
- ------------------------------------------------------------
Transfer agent fees-Class A 134,861
- ------------------------------------------------------------
Transfer agent fees-Class B 116,132
- ------------------------------------------------------------
Transfer agent fees-Class C 22,644
- ------------------------------------------------------------
Other 95,285
- ------------------------------------------------------------
Total expenses 1,881,486
- ------------------------------------------------------------
Less: Expenses paid indirectly (1,729)
- ------------------------------------------------------------
Net expenses 1,879,757
- ------------------------------------------------------------
Net investment income (loss) (1,063,793)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (6,788,372)
- ------------------------------------------------------------
Foreign currencies (61,729)
- ------------------------------------------------------------
(6,850,101)
- ------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 16,719,434
- ------------------------------------------------------------
Foreign currencies (5,812)
- ------------------------------------------------------------
16,713,622
- ------------------------------------------------------------
Net gain (loss) from investment securities
and foreign currencies 9,863,521
- ------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 8,799,728
============================================================
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF CHANGES IN NET ASSETS
For six months ended April 30, 1999 and the period November 3, 1997 (date
operations commenced)
through October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1999 1998
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,063,793) $ (481,507)
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (6,850,101) (6,005,211)
- ---------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities and foreign currencies 16,713,622 (5,080,217)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 8,799,728 (11,566,935)
- ---------------------------------------------------------------------------------------------
Distribution from investment income -- Class A (80,241) --
- ---------------------------------------------------------------------------------------------
Share transactions-net:
Class A 12,813,098 82,027,769
- ---------------------------------------------------------------------------------------------
Class B 10,268,841 55,436,905
- ---------------------------------------------------------------------------------------------
Class C 1,792,183 10,548,612
- ---------------------------------------------------------------------------------------------
Net increase in net assets 33,593,609 136,446,351
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 136,446,351 --
- ---------------------------------------------------------------------------------------------
End of period $170,039,960 $136,446,351
=============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $172,868,803 $147,994,681
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (1,124,581) 19,453
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (13,337,667) (6,487,566)
- ---------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies 11,633,405 (5,080,217)
- ---------------------------------------------------------------------------------------------
$170,039,960 $136,446,351
=============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM European Development 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. The Fund commenced operations on November 3, 1997. 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 on a particular
day, at the closing bid price on that day. 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 the last sales price on the valuation date or absent a last sales
price, at the closing bid price. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors,
such as yield, type of issue, coupon rate and maturity date. Securities for
which market 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
10
<PAGE> 13
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. The
Fund does not separately account for that portion of the results of
operations resulting from changes in foreign exchange rates on investments
and the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
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 and are paid annually.
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 $5,858,927 (which may be carried forward to offset future
taxable gains, if any) which expires, if not previously utilized, in the
year 2006.
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 $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. Under the terms of a
sub-advisory agreement between AIM and INVESCO Global Asset Management Limited
("IGAM"), AIM pays IGAM a fee at an annual rate of 0.20% of the first $500
million of the Fund's average daily net assets and 0.175% of the Fund's average
daily net assets over $500 million.
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, 1999, AIM
was reimbursed $43,160 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,
1999, AFS was paid $165,180 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 Class C Plan, pays AIM Distributors compensation at
the annual rate of 0.35% 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 of 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. During the six months ended
April 30, 1999, the Class A, Class B, and Class C shares paid AIM Distributors
$169,206, $312,999 and $61,031, respectively, as compensation under the Plans.
AIM Distributors received commissions of $105,935 from sales of the Class A
shares of the Fund during the six months ended April 30, 1999. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of Class A shares. During the six months ended April 30,
1999, AIM Distributors received commissions of $25,062 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, 1999, the Fund incurred legal fees of
$1,419 for services rendered by the law firm of Kramer, Levin, Naftalis &
Frankel LLP as counsel to the Company's directors. A member of that firm is a
director of the Company.
11
<PAGE> 14
NOTE 3-INDIRECT EXPENSES
During the six months ended April 30, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $1,083 and $646, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $1,729 during the six months ended April 30, 1999.
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) $1,000,000,000 or (ii) 10% of total assets. The Fund and other
funds advised by AIM which are parties to the line of credit may borrow on a
first come, first served basis. During the six months ended April 30, 1999, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.05% 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 six months ended April 30, 1999 was
$100,003,305 and $64,191,754, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of April 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment
securities $ 18,116,956
- ---------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment
securities (6,463,312)
- ---------------------------------------------------------------------------
Net unrealized appreciation of investment securities $ 11,653,644
===========================================================================
</TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 7-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the six months ended
April 30, 1999 and the period November 3, 1997 (date operations commenced)
through October 31, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 OCTOBER 31, 1998
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 6,040,830 $ 85,818,013 11,368,616 $156,555,432
- -------------------------------------------------------------------------------
Class B 2,481,112 34,957,073 4,734,982 66,433,513
- -------------------------------------------------------------------------------
Class C 1,719,231 23,830,972 1,685,991 25,251,599
- -------------------------------------------------------------------------------
Issued as
reinvestment
of dividends:
Class A 5,673 76,751 -- --
- -------------------------------------------------------------------------------
Reacquired:
Class A (5,194,068) (73,081,666) (5,452,530) (74,527,663)
- -------------------------------------------------------------------------------
Class B (1,782,549) (24,688,232) (841,453) (10,996,608)
- -------------------------------------------------------------------------------
Class C (1,587,809) (22,038,789) (937,724) (12,702,987)
- -------------------------------------------------------------------------------
1,682,420 $ 24,874,122 10,557,882 $148,013,286
===============================================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A, Class B and
Class C capital stock outstanding during the six months ended April 30, 1999 and
the period November 3, 1997 (date operations commenced) through October 31,
1998.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------------- ------------------------- -----------------------
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1999 1998 1999 1998 1999 1998
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.96 $ 10.00 $ 12.87 $ 10.00 $ 12.88 $ 10.00
- ------------------------------------------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.07) (0.08)(a) (0.11) (0.18)(a) (0.11) (0.18)(a)
- ------------------------------------------- ------- ------- ------- ------- ------- -------
Net gains on securities (both realized and
unrealized) 1.07 3.04 1.06 3.05 1.05 3.06
- ------------------------------------------- ------- ------- ------- ------- ------- -------
Total from investment operations 1.00 2.96 .95 2.87 0.94 2.88
- ------------------------------------------- ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.01) -- -- -- --
- ------------------------------------------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 13.95 $ 12.96 $ 13.82 $ 12.87 $ 13.82 $ 12.88
=========================================== ======= ======= ======= ======= ======= =======
Total return(b) 7.74% 29.60% 7.38% 28.70% 7.30% 28.80%
=========================================== ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $94,421 $76,686 $63,459 $50,121 $12,160 $ 9,639
=========================================== ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets 1.87%(c) 1.98%(d) 2.61%(c) 2.72%(d) 2.61%(c) 2.72%(d)
=========================================== ======= ======= ======= ======= ======= =======
Ratio of net investment income (loss) to
average net assets (0.92)%(c) (0.58)%(e) (1.66)%(c) (1.32)%(e) (1.66)%(c) (1.32)%(e)
=========================================== ======= ======= ======= ======= ======= =======
Portfolio turnover rate 41% 93% 41% 93% 41% 93%
=========================================== ======= ======= ======= ======= ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are annualized and based on average net assets of $97,490,168,
$63,118,590 and $12,307,345, for Class A, Class B and Class C shares,
respectively.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.15% (annualized), 2.89% (annualized) and 2.89% (annualized) for Class A,
Class B and Class C, respectively, for 1998.
(e) 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 (0.75)% (annualized), (1.49)% (annualized) and (1.49)%
(annualized) for Class A, Class B and Class C, respectively, for 1998.
12
<PAGE> 15
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II SUB-ADVISOR
Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer INVESCO Global Asset Management Limited
Cedar House
Edward K. Dunn Jr. Robert G. Alley 41 Cedar Ave.
Chairman, Mercantile Mortgage Corp.; Vice President Hamilton, HM12 Bermuda
Formerly Vice Chairman and President,
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox TRANSFER AGENT
President, Mercantile Bankshares Vice President
A I M Fund Services, Inc.
Jack Fields Edgar M. Larsen P.O. Box 4739
Chief Executive Officer Vice President Houston, TX 77210-4739
Texana Global, Inc.;
Formerly Member Mary J. Benson CUSTODIAN
of the U.S. House of Representatives Assistant Vice President and
Assistant Treasurer State Street Bank and Trust Company
Carl Frischling 225 Franklin Street
Partner Sheri Morris Boston MA 02110
Kramer, Levin, Naftalis & Frankel LLP Assistant Vice President and
Assistant Treasurer COUNSEL TO THE FUND
Robert H. Graham
President and Chief Executive Officer Renee A. Friedli Ballard Spahr
A I M Management Group Inc. Assistant Secretary Andrews & Ingersoll, LLP
1735 Market Street
Prema Mathai-Davis P. Michelle Grace Philadelphia, PA 19103
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary
Commissioner, New York City Dept. for the COUNSEL TO THE DIRECTORS
Aging; and member of the Board of Directors, Jeffrey H. Kupor
Metropolitan Transportation Authority of Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
New York State 919 Third Avenue
Nancy L. Martin New York, NY 10022
Lewis F. Pennock Assistant Secretary
Attorney DISTRIBUTOR
Ofelia M. Mayo
Louis S. Sklar Assistant Secretary A I M Distributors, Inc.
Executive Vice President 11 Greenway Plaza
Hines Interests Lisa A. Moss Suite 100
Limited Partnership Assistant Secretary Houston, TX 77046
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
<PAGE> 16
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual-fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately
AIM Capital Development Fund $112 billion in assets for more than 6.3
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS million shareholders, including
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund individual investors, corporate clients
AIM Large Cap Growth Fund AIM Asian Growth Fund and financial institutions, as of March
AIM Mid Cap Equity Fund(2),(A) AIM Developing Markets Fund(2) 31, 1999.
AIM Select Growth Fund(3) AIM Europe Growth Fund(2) The AIM Family of Funds--Registered
AIM Small Cap Growth Fund(2),(B) AIM European Development Fund Trademark-- is distributed nationwide,
AIM Small Cap Opportunities Fund AIM International Equity Fund and AIM today is the 10th-largest
AIM Value Fund AIM Japan Growth Fund(2) mutual-fund complex in the United States
AIM Weingarten Fund AIM Latin American Growth Fund(2) in assets under management, according to
AIM New Pacific Growth Fund(2) Strategic Insight, an independent
GROWTH & INCOME FUNDS mutual-fund monitor.
AIM Advisor Flex Fund GLOBAL GROWTH FUNDS
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund
AIM Advisor Real Estate Fund AIM Global Growth Fund
AIM Balanced Fund
AIM Basic Value Fund(2),(C) GLOBAL GROWTH & INCOME FUNDS
AIM Charter Fund AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund
INCOME FUNDS
AIM Floating Rate Fund(2) GLOBAL INCOME FUNDS
AIM High Yield Fund AIM Emerging Markets Debt Fund(2),(D)
AIM High Yield Fund II AIM Global Government Income Fund(2)
AIM Income Fund AIM Global Income Fund
AIM Intermediate Government Fund AIM Strategic Income Fund(2)
AIM Limited Maturity Treasury Fund
THEME FUNDS
TAX-FREE INCOME FUNDS AIM Global Consumer Products and Services Fund(2)
AIM High Income Municipal Fund AIM Global Financial Services Fund(2)
AIM Municipal Bond Fund AIM Global Health Care Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Infrastructure Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Resources Fund(2)
AIM Global Telecommunications and Technology Fund(2),(E)
AIM Global Trends Fund(2),(F)
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998.
(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. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E) On June 1, 1999, AIM Global
Telecommunications Fund was renamed AIM Global Telecommunications and Technology
Fund. (F) On September 8, 1998, AIM New Dimension Fund was renamed AIM Global
Trends Fund. For more complete information about any AIM Fund(s), including
sales charges and expenses, ask your financial consultant or securities dealer
for a free prospectus(es). Please read the prospectus(es) carefully before you
invest or send money.
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE
--Registered Trademark--
