<PAGE> 1
ANNUAL REPORT / OCTOBER 31, 1998
AIM GLOBAL GROWTH FUND
[COVER IMAGE]
INVEST WITH DISCIPLINE--Registered Trademark--
[AIM LOGO APPEARS HERE]
<PAGE> 2
----------------------------------------------------------------
IRISES BY VINCENT VAN GOGH
VAN GOGH'S PAINTING OF INDIGO IRISES IS ONE OF HIS MASTERPIECES,
IFC
ARTWORK PARTLY BECAUSE THE FLOWER HAS SUCH UNIVERSAL APPEAL. NAMED
FOR THE GREEK GODDESS OF THE RAINBOW, IRISES GROW ALL OVER
THE GLOBE. LIKE THE APPRECIATION OF BEAUTIFUL ART
AND FLOWERS, INVESTING HAS CAUGHT THE IMAGINATION AND INTEREST
OF PEOPLE THROUGHOUT THE WORLD.
----------------------------------------------------------------
AIM Global Growth Fund is 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 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 at net asset value
without a sales charge.
o During the fiscal year ended 10/31/98 the Fund's Class A, B, and C shares
each paid distributions of $0.431 per share.
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 differences in sales charge structure and Fund
expenses.
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 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 MSCI World Index is a group of unmanaged global securities tracked by
Morgan Stanley Capital International.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (S&P 500) is
widely regarded by investors as representative of the stock market in
general.
o The unmanaged Lipper Global Fund Index represents an average of the
performance of global funds tracked by Lipper Analytical Services, Inc., an
independent mutual funds performance monitor. Results shown reflect
reinvestment of dividends.
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 StanleyCapital 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.
AIM GLOBAL GROWTH FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
Throughout the fiscal year covered by this report, markets
[PHOTO OF worldwide vacillated between optimism that the woes in Asia
Charles T. would be contained and worry that they would become a major
Bauer, economic drag on the U.S. and the rest of the world. As a
Chairman of result, markets worldwide were especially volatile.
the Board of We understand how unnerving this year's level of
THE FUND volatility can be. Many of you undoubtedly were tempted
APPEARS HERE] simply to exit the markets completely. Our reaction, of
course, is that you should not. The abrupt reversals of
sentiment during this fiscal year reinforce our conviction
that markets are unpredictable in the short term. Since even
the best money managers cannot know when to enter and exit a
market, we think the wisest strategy is to stay fully
invested despite volatility and short-term disappointment.
MARKET RECAP
Even in a year as unsettling as this one, August was particularly difficult. A
variety of events converged to produce harsh market conditions around the globe:
the seemingly intractable downturn in Japan, Russia's default on much of its
foreign debt, and fear that Latin America could be engulfed by the world's
difficulties. Even European stocks, which had been world market leaders, were
shaken. In a global display of lost confidence, investors flocked to securities
perceived as safe and liquid. Even blue-chip stocks went out of favor.
Fortunately, the U.S. Federal Reserve Board (the Fed) intervened. For most
of the fiscal year, the Fed had focused on the potential for inflation in the
U.S. economy. Shortly before the fiscal year ended, it shifted direction,
lowering interest rates twice to pump liquidity and confidence into the markets
and demonstrate that it would intervene to forestall a recession. Numerous
interest rate cuts in other countries followed. (After the fiscal year closed,
as this report was being written, the Fed lowered rates a third time.)
Investors responded favorably. The fiscal year closed with international
equities rallying and bonds losing some of their momentum. In just the two weeks
between the Fed's second interest rate move on October 15 and the October 31
close of the fiscal year, the EAFE Index gained 5.04% and the MSCI World Index
rose 4.93%. The U.S. participated strongly in the rally, with the S&P 500 up
4.93% during the same two-week period.
However difficult this fiscal year has been, the fundamental principles of
investing remain unchanged:
O broad portfolio diversification;
O realistic expectations, recognizing that the potential for downturns is
always present; and
O as always, long-term thinking.
Your financial consultant is your best resource for helping you construct a
diversified portfolio and weather turbulent markets.
YOUR FUND MANAGERS' COMMENTS
We are pleased to send you this report on your Fund's fiscal year. On the pages
that follow, your Fund's management team offers more detailed discussion of how
markets behaved, how they managed the portfolio, and what they foresee for your
Fund and the markets where it invests. We hope you find their discussion
informative. 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 on our Web site, www.aimfunds.com. We often
post market updates on our Web site.
We thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
-------------------------
THE ABRUPT REVERSALS
OF SENTIMENT DURING THIS
FISCAL YEAR REINFORCE OUR
CONVICTION THAT MARKETS
ARE UNPREDICTABLE IN
THE SHORT TERM.
-------------------------
AIM GLOBAL GROWTH FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND TURNS TO EUROPEAN, U.S. STOCKS IN TURBULENT MARKET
GLOBAL AND DOMESTIC MARKETS WERE VOLATILE FOR MUCH OF THE REPORTING PERIOD. HOW
DID AIM GLOBAL GROWTH FUND PERFORM?
AIM Global Growth Fund posted solid performance during a difficult year. Class A
shares reported an annual total return of 10.43% for the fiscal year ending
October 31, 1998. Class B and Class C shares both posted a 9.78% total annual
return. The Fund outperformed its peer group represented by the Lipper Global
Fund Index, which reported a 5.76% annual total return. Net assets grew from
$404 million to $513 million over the fiscal year.
HOW DID THE MARKETS PERFORM DURING THE REPORTING PERIOD?
The bull market in the United States and Europe roared in the first part of the
fiscal year, then screeched to an abrupt halt in the summer. Major indexes that
reached all-time highs in July plummeted by nearly 20% in August, signaling an
instant bear market. A number of events converged to create the sharp downturn:
Currency devaluations occurred in Thailand, Malaysia, Indonesia, and Korea. A
lingering recession gripped Japan. Crippled by overwhelming debt, Russia
suspended repayment of much of its foreign debt and suffered deep currency
devaluations in the ruble. Fears of a global credit crunch then spread to Latin
America, as investors worried that Brazil could not sustain its exchange rate in
light of the country's increasing debt.
By the end of the fiscal year, stock markets stabilized, reassured by
falling interest rates. In a move felt around the world, the U.S. Federal
Reserve Board lowered the short-term target federal funds rate from 5.50% to
5.00% in two steps, on September 29, 1998, and again on October 15, 1998. In
late October, the Group of Seven countries -- the United States, Japan, Germany,
France, Britain, Italy, and Canada -- agreed with a plan to allow the
International Monetary Fund to provide loans to financially troubled countries
before foreign investors pull out.
HOW HAVE YOU MANAGED THE FUND IN THIS ENVIRONMENT?
The Fund's largest country allocations reflected the strength of the U.S. and
European economies, with 35% of its total net assets in the United States and
36% in Europe. Top European allocations included the United Kingdom, 9.70%;
France, 8.27%; and Italy, 4.17%.
We drastically cut back our investments in Japan from 9.96% a year ago to
2.88% as of October 31, 1998. Few Japanese companies produced the earnings
growth we require. Outside Japan, our only Asian holdings at the end of the
fiscal year were in Hong Kong. Our exposure in Latin America was limited to
Brazilian telephone and oil companies.
While the Fund emphasized European and U.S. stocks, it remained well
diversified, ending the fiscal year with 201 holdings in 25 countries.
WHY DOES THE FUND FAVOR EUROPE?
The Fund has been very bullish on European stocks for several reasons. The first
is price: European equities are trading at much lower valuations compared to
U.S. stocks. In addition, we're positioning the Fund to benefit from structural
changes as the European Economic and Monetary Union (EMU) takes shape over the
next two years. Huge opportunities exist as governments turn over state-run
companies to private hands.
We believe stable interest rates and subdued inflation will continue to
attract global investors. We expect inflation to decrease further as countries
in the EMU gravitate toward a single currency, the euro. In addition, stock
markets in Europe are broadening, giving investors an unprecedented range of
choice.
Our top European holdings include Novartis of Switzerland, the second
largest pharmaceutical company next to Merck. Besides prescription drugs,
Novartis also owns Gerber, the world's leading baby food maker. Another top
European holding is Karstadt, Germany's largest department store group.
HOW WILL THE NEW CURRENCY IN EUROPE AFFECT THE FUND?
Europe will launch the euro starting in January 1999. At first, only 11
countries will adopt it: Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal, and Spain. The changeover will
take place gradually. New coins and paper currency will not be introduced until
January 2002.
The euro is expected to bring greater unity to the European business world.
Price comparison of goods, services, and labor across Europe will be much
easier. Because of this "price transparency," European companies may be forced
to become more competitive. Furthermore, the equity markets are likely to become
broader and more liquid, since European
----------------------------------
THE FUND FOCUSED ON U.S. COMPANIES
THAT ARE GLOBAL LEADERS.
----------------------------------
See important Fund and index disclosures inside front cover.
AIM GLOBAL GROWTH FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
companies may find it easier to attract capital across borders.
The introduction of a new currency can present unique risks and
uncertainties for investors. Please see your Fund prospectus for more
information about these risk factors.
WHAT MADE THE U.S. MARKET ATTRACTIVE?
In the U.S., the economic climate was favorable. The economy grew at a healthy
pace, and inflation and interest rates were low. Nearly full employment, rising
wages, and falling mortgage rates gave consumers more disposable income. In
addition, the federal government enjoyed its first budget surplus in decades.
The Fund focused on U.S. companies that are global leaders. These large
multinational firms may be more resilient during times of economic turmoil
because of their sheer size and the geographic diversity of their customer base.
Our top holdings included long-distance company MCI WorldCom, formed in
September 1998 from the merger of MCI Communications and WorldCom. U.S.
technology holdings include some of the most successful companies in the
business such as software developer BMC Software and computer hardware giant
IBM.
WHAT SECTORS DID THE FUND TARGET?
The Fund's largest sectors were computer software and services, 5.56%; major
regional banks, 5.20%; and telephone companies, 3.96%.
Technology firms are benefiting from the need to reprogram older computers
to recognize the year 2000 and are expected to profit from the conversion of
European currencies to the euro beginning in 1999.
Major regional banks have produced excellent earnings growth, especially in
Europe. Holdings in this sector included Credito Italiano in Italy and Banco
Comercial Portugues in Portugal. Meanwhile, we sold stocks of commodity and raw
materials companies, such as steel and chemical manufacturers, because of
worldwide pricing inflexibility.
WHAT IS YOUR OUTLOOK FOR THE GLOBAL MARKETS IN GENERAL?
Recent political changes in Europe have introduced a few uncertainties, but
overall, we're very confident in the region. France is especially attractive,
and we expect continued strong earnings there.
Many analysts believe Asia will hit bottom in 1999, indicating that growth
and investor confidence may return some time next year. Plans for a Japanese
bank bailout offer hope. While Japan may be the next great recovery story, we
will take a wait-and-see approach.
Latin America may continue to be quite volatile. We will continue to take a
defensive position until its economic environment shows significant improvement.
PORTFOLIO COMPOSITION
As of 10/31/98, based on total net assets
<TABLE>
<CAPTION>
================================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. MCI WorldCom, Inc. (U.S.) 2.68% 1. Computers (Software & Services) 5.56% 1. United States 35.08%
2. International Business 1.39 2. Banks (Major Regional) 5.20 2. United Kingdom 9.70
Machines Corp. (U.S.) 3. Telephone 3.96 3. France 8.27
3. Novartis A.G. (Switzerland) 1.09 4. Manufacturing (Diversified) 3.42 4. Italy 4.17
4. BMC Software, Inc. (U.S.) 1.08 5. Services (Commercial & Consumer) 3.36 5. Netherlands 3.99
5. EMC Corp. (U.S.) 1.07 6. Retail (Food Chains) 3.32 6. Germany 3.53
6. Nokia Oyj A.B. - Class A (Finland) 1.04 7. Health Care (Diversified) 3.16 7. Canada 3.34
7. Karstadt A.G. (Germany) 1.03 8. Financial (Diversified) 3.10 8. Switzerland 2.96
8. Bristol-Myers Squibb Co. (U.S) 0.98 9. Telecommunications 3.05 9. Japan 2.88
9. Ceridian Corp. (U.S.) 0.97 (Cellular/Wireless) 10. Spain 1.91
10. SunAmerica, Inc. (U.S.) 0.89 10. Computers (Hardware) 2.91
================================================================================================================================
</TABLE>
Please keep in mind the Fund's portfolio is subject to change and there is no
assurance the Fund will continue to hold any particular security.
See important Fund and index disclosures inside front cover.
AIM GLOBAL GROWTH FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL GROWTH FUND VS. BENCHMARK INDEX
9/15/94-10/31/98
==========================================================================
Class A Class B MSCI Index
- --------------------------------------------------------------------------
In thousands
9/15/94 $9,525.00 $10,000.00 $10,000.00
10/31/94 $9,743.00 10,220.00 9,982.00
1/31/95 $9,061.00 9,490.00 9,449.00
4/30/95 $10,090.00 10,550.00 10,346.00
7/31/95 $11,576.00 12,110.00 10,900.00
10/31/95 $11,738.00 12,260.00 10,744.00
1/31/96 $12,310.00 12,840.00 11,596.00
4/30/96 $13,241.00 13,797.00 12,085.00
7/31/96 $12,843.00 13,359.00 11,673.00
10/31/96 $13,764.00 14,295.00 12,299.00
1/31/97 $14,792.00 15,343.00 12,879.00
4/30/97 $14,627.00 15,150.00 13,131.00
7/31/97 $17,322.00 17,917.00 15,252.00
10/31/97 $16,139.00 16,676.00 14,161.00
1/31/98 $16,709.00 17,233.00 14,936.00
4/30/98 $19,175.00 19,760.00 16,723.00
7/31/98 $19,682.00 20,251.00 16,820.00
10/31/98 $17,822.00 18,108.00 16,574.00
Past performance cannot guarantee comparable future results.
==========================================================================
==========================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/98, including sales charges
CLASS A SHARES
Inception (9/15/94) 15.03%
3 years 13.10
1 year 5.18*
CLASS B SHARES
Inception (9/15/94) 15.48%
3 years 13.53
1 Year 4.78**
CLASS C SHARES
Inception (8/4/97) 2.79%
1 year 8.78**
*10.43% excluding sales charges
**9.78 excluding sales charges
==========================================================================
Source: Towers Data Systems HYPO--Registered Trademark--.
Your Fund's total return includes sales charges, expenses, and management
fees. For Fund performance calculations and descriptions of indexes cited on
this page, please refer to the inside front cover. The performance of Class C
shares will differ from that of Class A and Class B shares due to differing
fees and expenses.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
ABOUT THIS CHART
The chart above 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 9/15/94-10/31/98. It is important to understand the difference
between your Fund and an index. An index measures performance of a hypothetical
portfolio. A market index such as the Morgan Stanley Capital International
(MSCI) World Index is not managed, incurring no sales charges, expenses, or
fees. (Please note that the MSCI World Index performance figures in the chart
are for the period 9/30/94-10/31/98.) If you could buy all the securities that
make up a market index, you would incur expenses that would affect the return on
your investment. Use of an index is intended to give you a general idea of how
your Fund performed compared to a benchmark.
AIM GLOBAL GROWTH FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 1998
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-35.08%
BIOTECHNOLOGY-0.49%
Amgen, Inc.(a) 32,000 $ 2,514,000
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.59%
Comcast Corp.-Class A 61,000 3,011,875
- --------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.38%
Monsanto Co. 47,500 1,929,687
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.50%
Lucent Technologies, Inc. 32,000 2,566,000
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-2.77%
Compaq Computer Corp. 100,000 3,162,500
- --------------------------------------------------------------
Dell Computer Corp.(a) 60,000 3,937,500
- --------------------------------------------------------------
International Business Machines
Corp. 48,000 7,125,000
- --------------------------------------------------------------
14,225,000
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-1.04%
Ascend Communications, Inc.(a) 51,000 2,460,750
- --------------------------------------------------------------
Cisco Systems, Inc.(a) 45,000 2,835,000
- --------------------------------------------------------------
5,295,750
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.07%
EMC Corp.(a) 85,000 5,471,875
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-3.40%
America Online, Inc.(a) 27,000 3,430,688
- --------------------------------------------------------------
BMC Software, Inc.(a) 115,000 5,527,187
- --------------------------------------------------------------
Computer Sciences Corp.(a) 43,000 2,268,250
- --------------------------------------------------------------
Compuware Corp.(a) 42,000 2,275,875
- --------------------------------------------------------------
Microsoft Corp.(a) 37,000 3,917,375
- --------------------------------------------------------------
17,419,375
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.23%
AmeriSource Health Corp.-Class A(a) 41,500 2,176,156
- --------------------------------------------------------------
Cardinal Health, Inc. 20,250 1,914,891
- --------------------------------------------------------------
McKesson Corp. 29,000 2,233,000
- --------------------------------------------------------------
6,324,047
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.51%
General Electric Co. 30,200 2,642,500
- --------------------------------------------------------------
ENTERTAINMENT-0.18%
Viacom, Inc.-Class B(a) 15,800 946,025
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.82%
American Express Co. 24,500 2,165,188
- --------------------------------------------------------------
Citigroup, Inc. 40,000 1,882,500
- --------------------------------------------------------------
Fannie Mae 27,200 1,926,100
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCIAL (DIVERSIFIED)-(CONTINUED)
Freddie Mac 39,000 $ 2,242,500
- --------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 25,900 1,677,025
- --------------------------------------------------------------
SunAmerica, Inc. 65,000 4,582,500
- --------------------------------------------------------------
14,475,813
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-2.02%
Abbott Laboratories 64,000 3,004,000
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 45,600 5,041,650
- --------------------------------------------------------------
Warner-Lambert Co. 33,000 2,586,375
- --------------------------------------------------------------
10,632,025
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.39%
Watson Pharmaceuticals, Inc.(a) 35,800 1,991,375
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-2.47%
Lilly (Eli) & Co. 31,500 2,549,531
- --------------------------------------------------------------
Merck & Co., Inc. 33,500 4,530,875
- --------------------------------------------------------------
Pfizer, Inc. 24,200 2,596,962
- --------------------------------------------------------------
Schering-Plough Corp. 28,000 2,880,500
- --------------------------------------------------------------
12,557,868
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.47%
Becton, Dickinson & Co. 74,000 3,117,250
- --------------------------------------------------------------
Biomet, Inc. 51,700 1,754,569
- --------------------------------------------------------------
Guidant Corp. 35,000 2,677,500
- --------------------------------------------------------------
7,549,319
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.51%
American International Group, Inc. 31,000 2,642,750
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.35%
Merrill Lynch & Co., Inc. 30,000 1,777,500
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-0.25%
T. Rowe Price Associates, Inc. 35,600 1,266,025
- --------------------------------------------------------------
LODGING-HOTELS-0.64%
Carnival Corp. 100,000 3,237,500
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.64%
Tyco International Ltd. 53,000 3,282,688
- --------------------------------------------------------------
NATURAL GAS-0.46%
Enron Corp. 45,000 2,373,750
- --------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-0.50%
Texaco, Inc. 43,500 2,580,094
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (BUILDING SUPPLIES)-0.86%
Home Depot, Inc. (The) 62,000 $ 2,697,000
- --------------------------------------------------------------
Lowe's Companies, Inc. 51,000 1,718,062
- --------------------------------------------------------------
4,415,062
- --------------------------------------------------------------
RETAIL (DRUG STORES)-0.36%
CVS Corp. 42,000 1,918,875
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.08%
Kroger Co.(a) 60,000 3,330,000
- --------------------------------------------------------------
Safeway, Inc.(a) 46,000 2,199,375
- --------------------------------------------------------------
5,529,375
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.61%
Wal-Mart Stores, Inc. 45,000 3,105,000
- --------------------------------------------------------------
RETAIL (SPECIALTY)-1.01%
Office Depot, Inc.(a) 105,000 2,625,000
- --------------------------------------------------------------
Staples, Inc.(a) 78,500 2,561,062
- --------------------------------------------------------------
5,186,062
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.30%
Gap, Inc. (The) 25,000 1,503,125
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.54%
Outdoor Systems, Inc.(a) 125,000 2,757,813
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.47%
IMS Health, Inc. 36,500 2,427,250
- --------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.72%
SunGard Data Systems, Inc.(a) 110,000 3,712,500
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.27%
Ceridian Corp.(a) 87,000 4,991,625
- --------------------------------------------------------------
Fiserv, Inc.(a) 32,400 1,506,600
- --------------------------------------------------------------
6,498,225
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.50%
AirTouch Communications, Inc.(a) 45,000 2,520,000
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-2.68%
MCI WorldCom, Inc.(a) 248,780 13,745,095
- --------------------------------------------------------------
Total Domestic Common Stock
(Cost $142,884,069) 180,031,223
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-53.27%
ARGENTINA-0.98%
Telefonica de Argentina S.A.-ADR
(Telephone) 57,400 1,897,788
- --------------------------------------------------------------
YPF Sociedad Anonima-ADR
(Oil-International Integrated) 108,300 3,133,931
- --------------------------------------------------------------
5,031,719
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
AUSTRALIA-0.40%
AMP Ltd. (Insurance-Life/Health)(a) 174,000 $ 2,069,839
- --------------------------------------------------------------
BELGIUM-1.83%
Barco N.V. (Manufacturing-Diversified) 5,700 1,520,111
- --------------------------------------------------------------
Colruyt N.V. (Retail-Food Chains) 2,700 2,258,563
- --------------------------------------------------------------
Delhaize-Le Lion, S.A.
(Retail-Food & Drug) 30,000 2,564,403
- --------------------------------------------------------------
UCB S.A. (Manufacturing-Diversified) 520 3,037,646
- --------------------------------------------------------------
9,380,723
- --------------------------------------------------------------
BRAZIL-1.17%
Companhia Energetica de Minas
Gerais (Electric Companies) 37,937 737,873
- --------------------------------------------------------------
Petroleo Brasileiro S.A.-Petrobras-Pfd.
(Oil & Gas-Exploration & Production) 5,416 681,024
- --------------------------------------------------------------
Telecomunicacoes Brasileiras
S.A.-ADR (Telephone) 31,900 2,422,406
- --------------------------------------------------------------
Telecomunicacoes de Sao Paulo
S.A.-TELESP-Pfd. (Telephone) 8,600 1,441,985
- --------------------------------------------------------------
Telerj Celular S.A. (Telecommunications-
Cellular/Wireless)(a) 8,689 269,528
- --------------------------------------------------------------
Telesp Celular S.A. (Telecommunications-
Cellular/Wireless)(a) 8,600 425,386
- --------------------------------------------------------------
5,978,202
- --------------------------------------------------------------
CANADA-3.34%
ATI Technologies, Inc.
(Computers-Hardware)(a) 90,200 730,956
- --------------------------------------------------------------
Bank of Montreal (Banks-Major Regional) 30,300 1,239,501
- --------------------------------------------------------------
BCE Inc. (Telephone) 33,300 1,129,070
- --------------------------------------------------------------
Bombardier Inc. (Aerospace/Defense) 96,000 1,135,818
- --------------------------------------------------------------
Canadian National Railway Co. (Railroads) 8,800 443,850
- --------------------------------------------------------------
Imasco Ltd.
(Manufacturing-Diversified) 163,500 3,073,906
- --------------------------------------------------------------
Mitel Corp. (Communications
Equipment)(a) 45,900 370,473
- --------------------------------------------------------------
Northern Telecom Ltd.-ADR
(Communications Equipment) 13,146 562,813
- --------------------------------------------------------------
Royal Bank of Canada (Banks-Major
Regional) 46,000 2,120,324
- --------------------------------------------------------------
Suncor Energy, Inc.
(Oil-International Integrated) 56,000 1,778,930
- --------------------------------------------------------------
Teleglobe, Inc. (Communications
Equipment) 108,000 2,954,684
- --------------------------------------------------------------
Toronto-Dominion Bank (Banks-Regional) 54,500 1,621,750
- --------------------------------------------------------------
17,162,075
- --------------------------------------------------------------
CROATIA-0.22%
Pliva DD GDR (Health Care-Drugs-Major
Pharmaceutical) (Acquired
05/13/98-05/20/98; Cost $1,243,362)(b) 4,000 1,087,800
- --------------------------------------------------------------
FINLAND-1.04%
Nokia Oyj A.B.-Class A
(Communications Equipment) 58,600 5,344,739
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-8.03%
Accor S.A. (Lodging-Hotels) 11,200 $ 2,353,458
- --------------------------------------------------------------
Altran Technologies, S.A.
(Services-Commercial & Consumer) 11,500 2,250,842
- --------------------------------------------------------------
AXA S.A. (Insurance-Multi-Line) 34,650 3,918,145
- --------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 13,000 823,721
- --------------------------------------------------------------
Cap Gemini Sogeti S.A.
(Computers-Software & Services) 27,000 4,059,456
- --------------------------------------------------------------
Danone (Foods) 5,400 1,428,345
- --------------------------------------------------------------
Elf Aquitaine S.A. (Oil &
Gas-Refining & Marketing) 17,500 2,026,127
- --------------------------------------------------------------
Essilor International S.A.
(Manufacturing-Specialized) 3,500 1,417,974
- --------------------------------------------------------------
Legrand S.A. (Housewares) 5,300 1,351,315
- --------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 14,500 2,428,111
- --------------------------------------------------------------
Promodes (Retail-Food Chains) 4,800 3,024,146
- --------------------------------------------------------------
PSA Peugeot Citreon (Automobiles) 7,000 1,168,410
- --------------------------------------------------------------
Renault S.A. (Automobiles) 40,000 1,710,571
- --------------------------------------------------------------
Rexal S.A. (Distributors-Food &
Health) 14,900 1,368,277
- --------------------------------------------------------------
Rhone-Poulenc-Class A
(Chemicals-Diversified) 55,600 2,542,881
- --------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 4,000 529,377
- --------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting-Television, Radio
& Cable) 14,800 2,446,369
- --------------------------------------------------------------
Suez Lyonnaise des Eaux
(Manufacturing-Diversified) 17,750 3,180,087
- --------------------------------------------------------------
Total S.A.-Class B (Oil &
Gas-Refining & Marketing) 13,100 1,511,983
- --------------------------------------------------------------
Valeo S.A. (Auto Parts & Equipment) 19,400 1,680,213
- --------------------------------------------------------------
41,219,808
- --------------------------------------------------------------
GERMANY-3.53%
Allianz A.G. (Insurance-Multi-Line) 6,600 2,264,999
- --------------------------------------------------------------
Bayerische Vereinsbank A.G.
(Banks-Major Regional) 17,000 1,350,674
- --------------------------------------------------------------
BHF-Bank A.G. (Banks-Major
Regional) 30,800 1,186,333
- --------------------------------------------------------------
Continental A.G. (Auto Parts &
Equipment) 36,350 966,346
- --------------------------------------------------------------
Daimler-Benz A.G. (Automobiles) 25,000 1,970,313
- --------------------------------------------------------------
Dresdner Bank A.G. (Banks-Major
Regional) 36,000 1,402,936
- --------------------------------------------------------------
Henkel KGaA (Chemicals-Diversified) 30,600 2,616,096
- --------------------------------------------------------------
Karstadt A.G. (Retail-Department
Stores) 10,400 5,309,649
- --------------------------------------------------------------
Porsche A.G. (Automobiles) 600 1,062,171
- --------------------------------------------------------------
18,129,517
- --------------------------------------------------------------
HONG KONG-0.75%
Cosco Pacific Ltd.
(Financial-Diversified) 1,294,000 634,928
- --------------------------------------------------------------
Hutchison Whampoa Ltd.
(Retail-Food Chains) 338,000 2,422,235
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HONG KONG-(CONTINUED)
Ng Fung Hong Ltd. (Foods) 898,000 $ 794,280
- --------------------------------------------------------------
3,851,443
- --------------------------------------------------------------
INDONESIA-0.33%
Gulf Indonesia Resources Ltd.
(Oil-International Integrated)(a) 170,700 1,685,663
- --------------------------------------------------------------
IRELAND-1.08%
Allied Irish Banks PLC
(Banks-Regional) 180,000 2,583,905
- --------------------------------------------------------------
Bank of Ireland (Banks-Major
Regional) 75,000 1,377,781
- --------------------------------------------------------------
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 22,700 1,590,419
- --------------------------------------------------------------
5,552,105
- --------------------------------------------------------------
ITALY-4.17%
Assicurazioni Generali
(Insurance-Multi-Line) 92,200 3,288,579
- --------------------------------------------------------------
Banca Commerciale Italiana
(Banks-Major Regional)(a) 238,800 1,476,536
- --------------------------------------------------------------
Banca di Roma (Banks-Major
Regional)(a) 1,499,000 2,614,556
- --------------------------------------------------------------
Credito Italiano S.p.A.
(Banks-Major Regional) 595,000 3,204,573
- --------------------------------------------------------------
Ente Nazionale Idrocarburi S.p.A.
(Oil & Gas-Refining & Marketing) 290,000 1,729,554
- --------------------------------------------------------------
Istituto Mobiliare Italiano S.p.A.
(Banks-Major Regional) 186,000 2,858,359
- --------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telephone) 460,000 2,673,223
- --------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 488,888 3,535,633
- --------------------------------------------------------------
21,381,013
- --------------------------------------------------------------
JAPAN-2.88%
Bridgestone Corp. (Auto Parts &
Equipment) 144,000 3,174,287
- --------------------------------------------------------------
Fuji Photo Film Co.
(Photography/Imaging) 40,000 1,467,858
- --------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telephone) 2,500 1,959,436
- --------------------------------------------------------------
NTT Data Corp. (Computers-Software
& Services) 590 2,499,742
- --------------------------------------------------------------
Okuma Corp. (Machine Tools) 29,000 149,536
- --------------------------------------------------------------
Rohm Co. (Electronics-Component
Distributors) 31,000 2,744,070
- --------------------------------------------------------------
SMC Corp. (Machinery-Diversified) 19,000 1,435,287
- --------------------------------------------------------------
Sony Corp. (Electronics-Component
Distributors) 21,400 1,360,949
- --------------------------------------------------------------
14,791,165
- --------------------------------------------------------------
MEXICO-1.59%
Coca-Cola Femsa S.A.-ADR
(Beverages-Non-Alcoholic) 123,700 2,041,050
- --------------------------------------------------------------
Formento Economico Mexicano, S.A.
de C.V. (Beverages-Alcoholic) 96,190 2,506,952
- --------------------------------------------------------------
Grupo Financiero Banamex Accival,
S.A. de C.V.
(Financial-Diversified)(a) 746,000 782,698
- --------------------------------------------------------------
Grupo Modelo S.A. de C.V.-Series C
(Beverages-Alcoholic) 384,000 809,581
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO-(CONTINUED)
Grupo Televisa S.A.-GDR
(Entertainment)(a) 74,400 $ 2,018,100
- --------------------------------------------------------------
8,158,381
- --------------------------------------------------------------
NETHERLANDS-3.99%
De Boer Unigro (Retail-Food & Drug)(a) 26,600 669,344
- --------------------------------------------------------------
Getronics N.V. (Computers-Software
& Services) 41,000 1,701,199
- --------------------------------------------------------------
Heineken N.V. (Beverages-Alcoholic) 53,000 2,823,375
- --------------------------------------------------------------
IHC Caland N.V.
(Manufacturing-Specialized) 14,000 633,365
- --------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food Chains) 83,000 2,759,557
- --------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 32,400 1,274,976
- --------------------------------------------------------------
Randstad Holdings N.V.
(Services-Commercial & Consumer) 25,000 1,338,473
- --------------------------------------------------------------
Vedior N.V.
(Services-Employment)(a) 37,498 955,619
- --------------------------------------------------------------
Vendex N.V. (Retail-General
Merchandise) 38,000 966,378
- --------------------------------------------------------------
Verenigde Nederlandse Uitgeversbedrijven
Verenigd Bezit (Publishing) 110,800 3,832,145
- --------------------------------------------------------------
Wolters Kluwer N.V. (Specialty
Printing) 18,000 3,488,596
- --------------------------------------------------------------
20,443,027
- --------------------------------------------------------------
NORWAY-0.18%
Merkantildata ASA
(Services-Commercial & Consumer) 92,000 925,377
- --------------------------------------------------------------
PHILIPPINES-0.27%
Philippine Long Distance Telephone
Co. (Telephone) 42,260 1,014,450
- --------------------------------------------------------------
Philippine Long Distance Telephone
Co.-ADR (Telephone) 17,800 433,875
- --------------------------------------------------------------
1,448,325
- --------------------------------------------------------------
PORTUGAL-1.75%
Banco Comercial Portugues, S.A.
(Banks-Major Regional) 100,500 3,147,430
- --------------------------------------------------------------
Electricidade de Portugal, S.A.
(Electric Companies) 50,000 1,257,360
- --------------------------------------------------------------
Electricidade de Portugal,
S.A.-ADR (Electric Companies) 24,200 1,210,000
- --------------------------------------------------------------
Portugal Telecom S.A. (Telephone) 21,000 995,349
- --------------------------------------------------------------
Telecel-Comunicacaoes Pessoais, S.A.
(Telecommunications-Cellular/Wireless) 13,000 2,395,784
- --------------------------------------------------------------
9,005,923
- --------------------------------------------------------------
SPAIN-1.91%
Corp. Financiera Reunida, S.A.
(Investment Management)(a) 103,000 1,236,205
- --------------------------------------------------------------
Endesa S.A. (Electric Companies) 104,200 2,627,015
- --------------------------------------------------------------
Iberdrola S.A. (Electric Companies) 195,000 3,150,522
- --------------------------------------------------------------
Telefonica de Espana (Telephone) 62,000 2,800,369
- --------------------------------------------------------------
9,814,111
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWEDEN-0.92%
Hennes & Mauritz A.B.-Class B
(Retail-Specialty-Apparel) 45,400 $ 3,201,693
- --------------------------------------------------------------
WM-Data A.B. (Computers-Software &
Services) 42,000 1,529,427
- --------------------------------------------------------------
4,731,120
- --------------------------------------------------------------
SWITZERLAND-2.96%
Adecco S.A. (Services-Commercial &
Consumer) 5,500 2,192,530
- --------------------------------------------------------------
Julius Baer Holding A.G.
(Banks-Major Regional) 470 1,439,909
- --------------------------------------------------------------
Nestle S.A. (Foods) 1,200 2,551,307
- --------------------------------------------------------------
Novartis A.G. (Health Care-Diversified) 3,100 5,583,936
- --------------------------------------------------------------
UBS A.G. (Banks-Major Regional)(a) 6,999 1,919,481
- --------------------------------------------------------------
Zurich Allied A.G. (Insurance-Multi-Line) 2,500 1,518,900
- --------------------------------------------------------------
15,206,063
- --------------------------------------------------------------
TAIWAN-0.25%
Taiwan Semiconductor Manufacturing
Co. Ltd.-ADR
(Electronics-Semiconductors)(a) 84,825 1,267,073
- --------------------------------------------------------------
UNITED KINGDOM-9.70%
Airtours PLC (Services-Commercial
& Consumer) 215,700 1,208,959
- --------------------------------------------------------------
Bodycote International PLC
(Chemicals-Specialty) 71,000 1,015,643
- --------------------------------------------------------------
British Aerospace PLC
(Aerospace/Defense) 256,000 1,903,831
- --------------------------------------------------------------
British Petroleum Co. PLC (Oil &
Gas-Refining & Marketing) 137,000 2,010,189
- --------------------------------------------------------------
Cable & Wireless PLC
(Telecommunications-
Cellular/Wireless) 226,000 2,533,378
- --------------------------------------------------------------
Compass Group PLC
(Services-Commercial & Consumer) 118,400 1,198,460
- --------------------------------------------------------------
EMAP PLC (Publishing) 102,000 1,740,673
- --------------------------------------------------------------
General Electric Co. PLC
(Manufacturing-Diversified) 316,500 2,528,505
- --------------------------------------------------------------
GKN PLC (Manufacturing-Diversified) 78,000 947,432
- --------------------------------------------------------------
Hays PLC (Services-Commercial &
Consumer) 178,000 2,622,202
- --------------------------------------------------------------
Kingfisher PLC (Retail-Department
Stores) 330,000 2,895,851
- --------------------------------------------------------------
Ladbroke Group PLC (Leisure
Time-Products) 382,000 1,398,068
- --------------------------------------------------------------
Logica PLC (Computers Software &
Services) 40,000 1,350,176
- --------------------------------------------------------------
Misys PLC (Services-Commercial &
Consumer) 225,000 1,577,296
- --------------------------------------------------------------
Orange PLC (Telecommunications
Cellular/Wireless)(a) 377,500 3,508,470
- --------------------------------------------------------------
Pearson PLC (Specialty Printing) 250,000 4,358,374
- --------------------------------------------------------------
Provident Financial PLC (Consumer
Finance) 174,578 2,619,984
- --------------------------------------------------------------
Railtrack Group PLC (Shipping) 121,789 3,270,392
- --------------------------------------------------------------
Rentokil Initial PLC
(Services-Commercial & Consumer) 240,000 1,501,757
- --------------------------------------------------------------
Somerfield PLC (Retail-Food Chains) 160,000 1,027,940
- --------------------------------------------------------------
Stagecoach Holdings PLC (Shipping) 185,000 718,086
- --------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Unilever PLC (Foods) 224,000 $ 2,248,620
- --------------------------------------------------------------
Vodafone Group PLC (Telecommunications-
Cellular/Wireless) 300,000 4,015,392
- --------------------------------------------------------------
WPP Group PLC
(Services-Advertising/Marketing) 316,000 1,570,219
- --------------------------------------------------------------
49,769,897
- --------------------------------------------------------------
Total Foreign Stocks & Other Interests
(Cost $231,110,475) 273,435,108
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED
FOREIGN BONDS & NOTES-0.24%
FRANCE-0.24%
AXA-UAP (Insurance-Multi-Line),
Conv. Sr. Deb., 4.50%,
01/01/99(c) (Cost $732,700) FRF $ 2,835,000 1,266,707
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY BILLS(d)-2.84%
3.998%, 12/24/98 (Cost
$14,580,152) $14,680,000(e) $14,580,152
- --------------------------------------------------------------
REPURCHASE AGREEMENT(f)-7.84%
Chase Securities Inc., 5.55%;
11/02/98(g) (Cost $40,234,373) 40,234,373 40,234,373
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.27% 509,547,563
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.73% 3,724,605
- --------------------------------------------------------------
NET ASSETS-100.00% $513,272,168
==============================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debenture
FRF - French Franc
GDR - Global Depositary Receipt
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 provisions of Rule144A 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 market value at
10/31/98 represented 0.21% of the Fund's net assets.
(c) Foreign denominated security. Par value and coupon are denominated in
currency of country 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 future 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 is at least 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.
(g) Joint repurchase agreement entered into 10/30/98 with a maturing value of
$200,092,500. Collateralized by $254,478,951 U.S. obligations, 5.00% to
16.00% due 05/20/02 to 10/15/28 with an aggregate market value at 10/31/98
of $204,000,718.
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$429,541,768) $509,547,563
- -------------------------------------------------------
Foreign currencies, at value (cost
$2,908,750) 2,867,324
- -------------------------------------------------------
Receivables for:
Investments sold 5,283,599
- -------------------------------------------------------
Capital stock sold 902,877
- -------------------------------------------------------
Dividends and interest 669,236
- -------------------------------------------------------
Variation margin 121,800
- -------------------------------------------------------
Investment for deferred compensation plan 16,751
- -------------------------------------------------------
Other assets 32,592
- -------------------------------------------------------
Total assets 519,441,742
- -------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,266,486
- -------------------------------------------------------
Capital stock reacquired 2,943,063
- -------------------------------------------------------
Deferred compensation 16,751
- -------------------------------------------------------
Accrued advisory fees 342,852
- -------------------------------------------------------
Accrued administrative services fees 6,794
- -------------------------------------------------------
Accrued directors' fees 950
- -------------------------------------------------------
Accrued distribution fees 381,884
- -------------------------------------------------------
Accrued transfer agent fees 102,404
- -------------------------------------------------------
Accrued operating expenses 108,390
- -------------------------------------------------------
Total liabilities 6,169,574
- -------------------------------------------------------
Net assets applicable to shares
outstanding $513,272,168
=======================================================
NET ASSETS:
Class A $219,050,319
=======================================================
Class B $282,456,392
=======================================================
Class C $ 11,765,457
=======================================================
CAPITAL STOCK, $0.001 PAR VALUE PER
SHARE:
Class A:
Authorized 200,000,000
- -------------------------------------------------------
Outstanding 12,232,346
=======================================================
Class B:
Authorized 200,000,000
- -------------------------------------------------------
Outstanding 16,123,542
=======================================================
Class C:
Authorized 200,000,000
- -------------------------------------------------------
Outstanding 671,426
=======================================================
Class A:
Net asset value and redemption price
per share $ 17.91
- -------------------------------------------------------
Offering price per share:
(Net asset value $17.91 divided
by 95.25%) $ 18.80
=======================================================
Class B:
Net asset value and offering price per
share $ 17.52
=======================================================
Class C:
Net asset value and offering price per
share $ 17.52
=======================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $543,674 foreign
withholding tax) $ 4,922,111
- --------------------------------------------------------
Interest 1,881,399
- --------------------------------------------------------
Total investment income 6,803,510
- --------------------------------------------------------
EXPENSES:
Advisory fees 4,042,472
- --------------------------------------------------------
Administrative services fees 80,267
- --------------------------------------------------------
Custodian fees 343,515
- --------------------------------------------------------
Directors' fees 9,946
- --------------------------------------------------------
Distribution fees -- Class A 1,029,313
- --------------------------------------------------------
Distribution fees -- Class B 2,638,894
- --------------------------------------------------------
Distribution fees -- Class C 58,329
- --------------------------------------------------------
Transfer agent fees -- Class A 432,449
- --------------------------------------------------------
Transfer agent fees -- Class B 714,330
- --------------------------------------------------------
Transfer agent fees -- Class C 19,415
- --------------------------------------------------------
Other 251,098
- --------------------------------------------------------
Total expenses 9,620,028
- --------------------------------------------------------
Less:
Expenses paid indirectly (6,702)
- --------------------------------------------------------
Net expenses 9,613,326
- --------------------------------------------------------
Net investment income (loss) (2,809,816)
========================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 17,151,393
- --------------------------------------------------------
Foreign currencies 1,067,864
- --------------------------------------------------------
Futures contracts 727,924
- --------------------------------------------------------
Option contracts purchased (27,489)
- --------------------------------------------------------
18,919,692
- --------------------------------------------------------
Net unrealized appreciation of:
Investment securities 19,910,267
- --------------------------------------------------------
Foreign currencies 77,911
- --------------------------------------------------------
Futures contracts 746,175
- --------------------------------------------------------
20,734,353
- --------------------------------------------------------
Net gain from investment securities,
foreign currencies, futures and
option contracts 39,654,045
- --------------------------------------------------------
Net increase in net assets resulting from
operations $36,844,229
========================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED OCTOBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (2,809,816) $ (2,013,735)
- -------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 18,919,692 11,895,254
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 20,734,353 37,072,703
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 36,844,229 46,954,222
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (4,566,706) -
- -------------------------------------------------------------------------------------------
Class B (5,964,749) -
- -------------------------------------------------------------------------------------------
Class C (47,034) -
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 27,194,800 41,376,928
- -------------------------------------------------------------------------------------------
Class B 44,408,521 77,933,131
- -------------------------------------------------------------------------------------------
Class C 11,162,365 1,157,289
- -------------------------------------------------------------------------------------------
Net increase in net assets 109,031,426 167,421,570
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 404,240,742 236,819,172
- -------------------------------------------------------------------------------------------
End of period $513,272,168 $ 404,240,742
===========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $416,466,146 $ 334,919,809
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (1,238,947) (14,582)
- -------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 17,216,533 9,241,432
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 80,828,436 60,094,083
- -------------------------------------------------------------------------------------------
$513,272,168 $ 404,240,742
===========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
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
11
<PAGE> 14
between the closing 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 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 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 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. On October 31, 1998,
undistributed net investment income was increased by $1,585,451,
undistributed net realized gains decreased by $366,102 and paid-in capital
decreased by $1,219,349 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. 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
"marked-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
12
<PAGE> 15
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 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 year ended October 31, 1998, AIM was
reimbursed $80,267 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, 1998, AFS was paid
$679,390 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 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 year ended
October 31, 1998, the Class A, Class B and Class C shares, paid AIM Distributors
$1,029,313, $2,638,894 and $58,329, respectively as compensation under the
Plans.
AIM Distributors received commissions of $208,115 from the sales of the Class
A shares of the Fund during the year ended October 31, 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 year ended October 31,
1998, AIM Distributors received commissions of $29,133 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, 1998, the Fund incurred legal fees of $4,344
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 year ended October 31, 1998, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$4,953 and $1,749, respectively, under expense offset arrangements. The effect
of the above arrangements resulted in a reduction of the Fund's total expenses
of $6,702 during the year ended October 31, 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) $1,000,000,000 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
13
<PAGE> 16
under the line of credit is payable on maturity or prepayment date. Prior to an
amendment of the line of credit on May 1, 1998, the Fund was limited to
borrowing up to the lesser of (i) $500,000,000 or (ii) the limits set by its
prospectus for borrowings. During the year ended October 31, 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.
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, 1998 was
$465,660,107 and $423,173,713, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of October 31, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 95,730,649
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (17,977,343)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 77,753,306
=========================================================
</TABLE>
Cost of investments for tax purposes is $431,794,257.
NOTE 7-FUTURES CONTRACTS
On October 31, 1998, $840,000 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>
UNREALIZED
NO. OF APPRECIATION
CONTRACTS CONTRACTS MONTH/COMMITMENT (DEPRECIATION)
- ------------- --------- ----------------- --------------
<S> <C> <C> <C>
S&P 500 Index 56 December 98/Buy $ 797,175
</TABLE>
NOTE 8-OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 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 - $ -
========================================================
</TABLE>
NOTE 9-CAPITAL STOCK
Changes in the Fund's capital stock outstanding during the years ended October
31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 14,601,141 $ 264,657,310 6,399,974 $103,567,757
- ------------------------------------------------------------------------------
Class B 4,603,864 82,487,081 6,303,261 98,414,198
- ------------------------------------------------------------------------------
Class C* 731,595 13,444,846 67,094 1,157,289
- ------------------------------------------------------------------------------
Issued as reinvestment of
distributions:
Class A 265,883 4,315,756 - -
- ------------------------------------------------------------------------------
Class B 348,564 5,562,820 - -
- ------------------------------------------------------------------------------
Class C* 2,787 44,837 - -
- ------------------------------------------------------------------------------
Reacquired:
Class A (13,382,242) (241,778,266) (3,750,438) (62,190,829)
- ------------------------------------------------------------------------------
Class B (2,513,498) (43,641,380) (1,291,769) (20,481,067)
- ------------------------------------------------------------------------------
Class C* (130,050) (2,327,318) - -
- ------------------------------------------------------------------------------
4,528,044 $ 82,765,686 7,728,122 $120,467,348
==============================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
14
<PAGE> 17
NOTE 10-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 four-year period ended
October 31, 1998 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 year ended October 31, 1998 and the period August 4, 1997 (date sales
commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
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) (0.05) (0.04) (0.01) (0.02) -
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Net gains on securities (both realized and unrealized) 1.74 2.49 2.11 2.11 0.23
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Total from investment operations 1.69 2.45 2.10 2.09 0.23
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Less distributions:
Dividends from net investment income - - - (0.004) -
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Distributions from net realized gains (0.43) - (0.22) - -
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Total distributions (0.43) - (0.22) (0.004) -
- ------------------------------------------------------------ -------- -------- --------- -------- --------
Net asset value, end of period $ 17.91 $ 16.65 $ 14.20 $ 12.32 $ 10.23
============================================================ ======== ======== ========= ======== ========
Total return(a) 10.43% 17.25% 17.26% 20.48% 2.30%
============================================================ ======== ======== ========= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $219,050 $178,917 $ 114,971 $ 23,754 $ 3,093
============================================================ ======== ======== ========= ======== ========
Ratio of expenses to average net assets(b) 1.70%(c) 1.76% 1.93% 2.12% 1.95%(d)
============================================================ ======== ======== ========= ======== ========
Ratio of net investment income (loss) to average net
assets(e) (0.27)%(c) (0.30)% (0.13)% (0.28)% 0.10%(d)
============================================================ ======== ======== ========= ======== ========
Portfolio turnover rate 97% 96% 82% 79% 6%
============================================================ ======== ======== ========= ======== ========
</TABLE>
(a) Does not deduct sales charges and is 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 based on average net assets of $205,862,638.
(d) Annualized.
(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 (0.14)%, (1.14)% and (3.63)% (annualized) for
1996-1994.
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------
1998 1997 1996 1995
--------------- ---------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.39 $ 14.05 $ 12.26 $ 10.22
- -------------------------------------------------- --------------- ---------- --------------- ---------------
Income from investment operations:
Net investment income (loss) (0.15)(a) (0.11) (0.05) (0.04)
- -------------------------------------------------- --------------- ---------- --------------- ---------------
Net gains (losses) on securities (both realized
and unrealized) 1.71 2.45 2.06 2.08
- -------------------------------------------------- --------------- ---------- --------------- ---------------
Total from investment operations 1.56 2.34 2.01 2.04
- -------------------------------------------------- --------------- ---------- --------------- ---------------
Less distributions:
Distributions from net realized gains (0.43) - (0.22) -
- -------------------------------------------------- --------------- ---------- --------------- ---------------
Total distributions (0.43) - (0.22) -
- -------------------------------------------------- --------------- ---------- --------------- ---------------
Net asset value, end of period $ 17.52 $ 16.39 $ 14.05 $ 12.26
================================================== =============== ========== =============== ===============
Total return(b) 9.78% 16.65% 16.60% 19.96%
================================================== =============== ========== =============== ===============
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 282,456 $ 224,225 $ 121,848 $ 17,157
================================================== =============== ========== =============== ===============
Ratio of expenses to average net assets 2.26%(c) 2.29% 2.48%(d) 2.64%(d)
================================================== =============== ========== =============== ===============
Ratio of net investment income (loss) to average
net assets (0.83)%(c) 0.83)% (0.69)%(f) (0.79)%(f)
================================================== =============== ========== =============== ===============
Portfolio turnover rate 97% 96% 82% 79%
================================================== =============== ========== =============== ===============
<CAPTION>
CLASS B CLASS C
----------- ----------------------
1994 1998 1997
----------- ----------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.00 $ 16.39 $ 17.39
- -------------------------------------------------- ----------- ----------- -------
Income from investment operations:
Net investment income (loss) - (0.15)(a) (0.03)
- -------------------------------------------------- ----------- ----------- -------
Net gains (losses) on securities (both realized
and unrealized) 0.22 1.71 (0.97)
- -------------------------------------------------- ----------- ----------- -------
Total from investment operations 0.22 1.56 (1.00)
- -------------------------------------------------- ----------- ----------- -------
Less distributions:
Distributions from net realized gains - (0.43) -
- -------------------------------------------------- ----------- ----------- -------
Total distributions - (0.43) -
- -------------------------------------------------- ----------- ----------- -------
Net asset value, end of period $ 10.22 $ 17.52 $ 16.39
================================================== =========== =========== =======
Total return(b) 2.20% 9.78% (5.75)%
================================================== =========== =========== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,277 $ 11,765 $ 1,100
================================================== =========== =========== =======
Ratio of expenses to average net assets 2.51%(d)(e) 2.26%(c) 2.29%(e)
================================================== =========== =========== =======
Ratio of net investment income (loss) to average
net assets (0.47)%(e)(f) (0.83)%(c) (0.83)%(e)
================================================== =========== =========== =======
Portfolio turnover rate 6% 97% 96%
================================================== =========== =========== =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $263,889,352 and $5,832,914 for
Class B and Class C, 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
2.49%, 3.38% and 6.20% (annualized) for 1996-1994.
(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
1996-1994.
15
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM Global Growth Fund (a portfolio of AIM
International Funds, Inc.), including the schedule of
investments, as of October 31, 1998, 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
four-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, 1998, 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, 1998, the results of its
operations for the year then ended, the changes in its
net assets for the two-year period then ended and the
financial highlights for the four-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 4, 1998
16
<PAGE> 19
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. Friedli 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
Prema Mathai-Davis
Chief Executive Officer, YWCA of the U.S.A.; Nancy L. Martin DISTRIBUTOR
Commissioner, New York City Dept. for the Assistant Secretary
Aging; and member of the Board of Directors, A I M Distributors, Inc.
Metropolitan Transportation Authority of Ofelia M. Mayo 11 Greenway Plaza
New York State Assistant Secretary Suite 100
Houston, TX 77046
Lewis F. Pennock Lisa A. Moss
Attorney Assistant Secretary AUDITORS
Ian W. Robinson Kathleen J. Pflueger KPMG Peat Marwick LLP
Consultant; Formerly Executive Assistant Secretary 700 Louisiana
Vice President and Houston, TX 77002
Chief Financial Officer Samuel D. Sirko
Bell Atlantic Management Assistant Secretary
Services, Inc.
Stephen I. Winer
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Mary J. Benson
Limited Partnership Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Global Growth Fund paid ordinary dividends in the amount of $0.146 per share
to shareholders of Class A, Class B and Class C shares during the Fund's tax
year ended October 31, 1998. Of these amounts, 25.55% is eligible for the
dividends received deduction for corporations. The Fund also distributed
long-term capital gains of $0.458 during the Fund's tax year ended October 31,
1998.
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS INTERNATIONAL GROWTH FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Advisor International Value Fund leadership in the mutual fund industry
AIM Blue Chip Fund AIM Asian Growth Fund since 1976 and managed approximately $91
AIM Capital Development Fund AIM Developing Markets Fund(2) billion in assets for more than 5.5
AIM Constellation Fund AIM Emerging Markets Fund(2) million shareholders, including
AIM Mid Cap Equity Fund(2),(A) AIM Europe Growth Fund(2) individual investors, corporate clients,
AIM Select Growth Fund(3) AIM European Development Fund and Financial institutions, as of
AIM Small Cap Growth Fund(2),(B) AIM International Equity Fund September 30, 1998.
AIM Small Cap Opportunities Fund AIM International Growth Fund(2) The AIM Family of Funds--Registered
AIM Value Fund AIM Japan Growth Fund(2) Trademark-- is distributed nationwide, and
AIM Weingarten Fund AIM Latin American Growth Fund(2) AIM today is the 11th-largest mutual fund
AIM New Pacific Growth Fund(2) complex in the U.S. in assets under
GROWTH & INCOME FUNDS management, according to Strategic
AIM Advisor Flex Fund GLOBAL GROWTH FUNDS Insight, an independent mutual fund
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund monitor.
AIM Advisor MultiFlex Fund AIM Global Growth Fund
AIM Advisor Real Estate Fund AIM Worldwide Growth Fund(2)
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 Fund(2)
MONEY MARKET FUNDS AIM Global Trends Fund(2),(E)
AIM Dollar Fund(2)
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
</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 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.
