<PAGE> 1
As filed with the Securities and Exchange Commission on March 22, 2000.
Securities Act Registration No. __________
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-effective Amendment No. ____ Post-effective Amendment No. ____
(Check appropriate box or boxes)
AIM INTERNATIONAL FUNDS, INC.
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza
Suite 100
Houston, TX 77046-1173
-----------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number: (713)626-1919
Name and Address of Agent for Service: Copy to:
CAROL F. RELIHAN, ESQUIRE THOMAS H. DUNCAN, ESQUIRE
A I M Advisors, Inc. Ballard Spahr
11 Greenway Plaza Andrews & Ingersoll, LLP
Suite 100 1225 17th Street
Houston, TX 77046-1173 Suite 2300
Denver, CO 80202
Approximate Date of Proposed Public Offering: As soon as practicable
after the Registration Statement becomes effective under the Securities Act of
1933.
It is proposed that this filing will become effective on April 21, 2000
pursuant to Rule 488.
The titles of the securities being registered are AIM GLOBAL INCOME
FUND Class A shares, Class B shares and Class C shares and AIM GLOBAL GROWTH
FUND Class A shares, Class B shares and Class C shares. No filing fee is due in
reliance on Section 24(f) of the Securities Act of 1933.
<PAGE> 2
AIM GLOBAL GOVERNMENT INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
Portfolios of
AIM Investment Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
April 20, 2000
Dear Shareholder:
Enclosed is a combined proxy statement and prospectus seeking your
approval of a proposed combination of AIM Global Government Income Fund with AIM
Global Income Fund and a proposed combination of AIM Global Growth & Income Fund
with AIM Global Growth Fund. AIM Global Government Income Fund and AIM Global
Growth & Income Fund (the "Acquired Funds") are investment portfolios of AIM
Investment Funds, a Delaware business trust. AIM Global Income Fund and AIM
Global Growth Fund (the "Acquiring Funds") are investment portfolios of AIM
International Funds, Inc., a Maryland corporation.
The investment objective and policies of each Acquired Fund are similar
to the investment objective and policies of the Acquiring Fund with which it
will combine. A I M Advisors, Inc. serves as the investment adviser to the
Acquired Funds and the Acquiring Funds. As discussed in the accompanying
document, the Acquiring Funds have outperformed the Acquired Funds and have
generally lower operating expense ratios than the Acquired Funds. The
accompanying document describes the proposed transactions and compares the
investment policies, operating expenses and performance histories of the
Acquired Funds and Acquiring Funds.
Shareholders of AIM Global Government Income Fund and AIM Global Growth
& Income Fund are being asked to approve an Agreement and Plan of Reorganization
by and among AIM Investment Funds, AIM International Funds, Inc., and A I M
Advisors, Inc., that will govern the reorganization of the Acquired Funds into
the Acquiring Funds. After careful consideration, the Board of Trustees of AIM
Investment Funds has unanimously approved the proposals and recommends that you
read the enclosed materials carefully and then vote FOR the proposals.
Your vote is important. Please take a moment now to sign and return
your proxy cards in the enclosed postage paid return envelope. If we do not hear
from you after a reasonable amount of time, you may receive a telephone call
from our proxy solicitor, Shareholder Communications Corporation, reminding you
to vote your shares. You may also vote your shares on the Internet at the funds'
website at http://www.aimfunds.com by following instructions that appear on the
enclosed proxy insert.
Sincerely,
Robert H. Graham
Chairman
<PAGE> 3
AIM GLOBAL GOVERNMENT INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
PORTFOLIOS OF
AIM INVESTMENT FUNDS
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 31, 2000
TO THE SHAREHOLDERS OF AIM GLOBAL GOVERNMENT INCOME FUND AND AIM GLOBAL
GROWTH & INCOME FUND:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of AIM
Global Government Income Fund and AIM Global Growth & Income Fund (the "Acquired
Funds"), investment portfolios of AIM Investment Funds ("AIM Investment"), will
be held at 11 Greenway Plaza, Suite 100, Houston, TX 77046-1173 on May 31, 2000,
at [3:00 p.m.], local time, for the following purposes:
1. To approve an Agreement and Plan of Reorganization (the
"Agreement") by and among AIM Investment, acting on behalf of the
Acquired Funds, AIM International Funds, Inc. ("AIM
International"), acting on behalf of AIM Global Income Fund and
AIM Global Growth Fund (the "Acquiring Funds"), and A I M
Advisors, Inc. The Agreement provides for the combination of AIM
Global Government Income Fund with AIM Global Income Fund and the
combination of AIM Global Growth & Income Fund with AIM Global
Growth Fund (the "Reorganizations"). Pursuant to the Agreement,
all of the assets of an Acquired Fund will be transferred to the
Acquiring Fund with which it will combine, the Acquiring Fund
will assume all of the liabilities of the Acquired Fund, and AIM
International will issue Class A shares of the Acquiring Fund to
the Acquired Fund's Class A shareholders, Class B shares of the
Acquiring Fund to the Acquired Fund's Class B shareholders and
Class C shares of the Acquiring Fund to the Acquired Fund's Class
C shareholders. The value of each Acquired Fund shareholder's
account with the Acquiring Fund immediately after the
Reorganization will be the same as the value of such shareholders
account with the Acquired Fund immediately prior to the
Reorganization. The Reorganizations have been structured as
tax-free transactions. No initial sales charge will be imposed in
connection with the Reorganizations.
2. To transact any other business, not currently contemplated, that
may properly come before the Special Meeting, in the discretion
of the proxies or their substitutes.
Shareholders of record as of the close of business on April 3,
2000, are entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE THE ACCOMPANYING PROXY, WHICH IS BEING SOLICITED BY THE
MANAGEMENT OF AIM INVESTMENT. YOU MAY ALSO VOTE YOUR SHARES THROUGH A WEB SITE
ESTABLISHED FOR THAT PURPOSE BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY
INSERT. YOUR VOTE IS IMPORTANT FOR THE PURPOSE OF ENSURING A QUORUM AT THE
SPECIAL MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY
THE SUBSEQUENT EXECUTION AND SUBMISSION OF A REVISED PROXY, BY GIVING WRITTEN
NOTICE OF REVOCATION TO AIM INVESTMENT AT ANY TIME BEFORE THE PROXY IS EXERCISED
OR BY VOTING IN PERSON AT THE SPECIAL MEETING.
Samuel D. Sirko
Vice President and Secretary
April 20, 2000
<PAGE> 4
AIM GLOBAL GOVERNMENT INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
PORTFOLIOS OF
AIM INVESTMENT FUNDS
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
TOLL FREE: (800) 454-0327
AIM GLOBAL INCOME FUND
AIM GLOBAL GROWTH FUND
PORTFOLIOS OF
AIM INTERNATIONAL FUNDS, INC.
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
TOLL FREE: (800) 454-0327
COMBINED PROXY STATEMENT AND PROSPECTUS
Dated: April 20, 2000
This document is being furnished in connection with a special meeting
of Shareholders of AIM GLOBAL GOVERNMENT INCOME FUND ("GLOBAL GOVERNMENT
INCOME") and AIM GLOBAL GROWTH & INCOME FUND ("GLOBAL GROWTH & INCOME" and
collectively with GLOBAL GOVERNMENT INCOME, the "Acquired Funds"), investment
portfolios of AIM Investment Funds ("AIM Investment"), a Delaware business
trust, to be held on May 31, 2000 (the "Special Meeting"). At the Special
Meeting, the shareholders of the Acquired Funds are being asked to consider and
approve an Agreement and Plan of Reorganization (the "Agreement") by and among
AIM Investment, acting on behalf of the Acquired Funds, AIM International Funds,
Inc. ("AIM International"), a Maryland corporation, acting on behalf of AIM
GLOBAL INCOME FUND ("GLOBAL INCOME") and AIM GLOBAL GROWTH FUND ("GLOBAL GROWTH"
and collectively with GLOBAL INCOME, the "Acquiring Funds"), and A I M Advisors,
Inc. ("AIM Advisors"). The Agreement provides for the combination of GLOBAL
GOVERNMENT INCOME with GLOBAL INCOME, and the combination of GLOBAL GROWTH &
INCOME with GLOBAL GROWTH (the "Reorganizations"). The Board of Trustees of AIM
Investment has unanimously approved the Agreement and Reorganizations as being
in the best interests of the shareholders of each of the Acquired Funds.
Pursuant to the Agreement, all of the assets of an Acquired Fund will
be transferred to the Acquiring Fund with which it will combine, the Acquiring
Fund will assume all of the liabilities of the Acquired Fund, and AIM
International will issue Class A shares of the Acquiring Fund to the Acquired
Fund's Class A shareholders, Class B shares of the Acquiring Fund to the
Acquired Fund's Class B shareholders and Class C shares of the Acquiring Fund to
the Acquired Fund's Class C shareholders. The value of each Acquired Fund
shareholder's account with the Acquiring Fund immediately after the
Reorganization will be the same as the value of such shareholder's account with
the Acquired Fund immediately prior to the Reorganization. The Reorganizations
have been
<PAGE> 5
structured as tax-free transactions. No initial sales charge will be imposed in
connection with the Reorganizations.
The Acquiring Funds are series portfolios of AIM International, an
open-end, series management investment company. The investment objective(s) and
policies of each Acquiring Fund are similar to those of the Acquired Fund with
which it will combine.
GLOBAL INCOME seeks to provide high current income, with a secondary
objective of protection of principal and growth of capital. GLOBAL GOVERNMENT
INCOME seeks to provide high current income and, secondarily, growth of capital
and protection of principal.
GLOBAL GROWTH seeks to provide long-term growth of capital. GLOBAL
GROWTH & INCOME seeks long-term growth of capital together with current income.
See "Comparison of Investment Objectives and Policies."
This Combined Proxy Statement and Prospectus ("Proxy
Statement/Prospectus") sets forth the information that a shareholder of the
Acquired Funds should know before voting on the Agreement. It should be read and
retained for future reference.
The current Prospectuses of the Acquired Funds, each dated February 28,
2000 as supplemented March 22, 2000, (the "Acquired Funds Prospectuses"),
together with the related Statement of Additional Information, also dated
February 28, 2000, are on file with the Securities and Exchange Commission (the
"SEC") and are incorporated herein by reference. The Prospectuses of the
Acquiring Funds dated February 28, 2000, (the "Acquiring Funds Prospectuses"),
and the related Statement of Additional Information also dated February 28,
2000, have been filed with the SEC and are incorporated herein by reference. A
copy of the Prospectus of GLOBAL INCOME is attached as Appendix II, and a copy
of the Prospectus of GLOBAL GROWTH is attached as Appendix III, to this Proxy
Statement/Prospectus. Such documents are available without charge by writing to
A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739 or by
calling (800) 347-4246. The SEC maintains a Web site at http://www.sec.gov that
contains the prospectuses and statements of additional information described
above, material incorporated by reference, and other information about AIM
Investment and AIM International. Additional information about the Acquired
Funds and the Acquiring Funds may also be obtained on the Web at http://www.AIM
Internationalunds.com.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INTRODUCTION...............................................................................................1
SYNOPSIS 3
The Reorganizations...............................................................................3
Background and Reasons for the Reorganizations....................................................3
Comparison of the Acquiring Funds and the Acquired Funds..........................................4
RISK FACTORS..............................................................................................10
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES..........................................................12
Investment Objectives and Policies of Global Income and Global Government Income.................12
Investment Objectives and Policies of Global Growth and Global Growth & Income...................14
Portfolio Management.............................................................................15
Management Discussion and Analysis of Performance................................................16
FINANCIAL HIGHLIGHTS......................................................................................16
Global Income....................................................................................16
Global Growth....................................................................................20
ADDITIONAL INFORMATION ABOUT THE AGREEMENT................................................................24
Terms of the Reorganizations.....................................................................24
The Reorganizations..............................................................................24
Board Considerations.............................................................................25
Other Terms......................................................................................28
Federal Tax Consequences.........................................................................29
Accounting Treatment.............................................................................31
RIGHTS OF SHAREHOLDERS....................................................................................31
Rights of Shareholders Under Maryland Law and Delaware Law if Redomestication is Not
Approved..................................................................................32
Rights of Shareholders under Declarations of Trust of AIM Investment and AIMF if
Redomestication is Approved...............................................................36
OWNERSHIP OF THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS SHARES............................................37
Significant Holders..............................................................................37
Ownership of Officers and Directors/Trustees.....................................................38
CAPITALIZATION............................................................................................38
LEGAL MATTERS.............................................................................................40
INFORMATION FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.............................................40
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUNDS AND THE ACQUIRED
FUNDS............................................................................................41
</TABLE>
i
<PAGE> 7
<TABLE>
<S> <C>
APPENDIX I ....................................................................Agreement and Plan of Reorganization
APPENDIX II.............................................................................Prospectus of Global Income
APPENDIX III............................................................................Prospectus of Global Growth
APPENDIX IV .....................................................Global Income Discussion & Analysis of Performance
APPENDIX V.......................................................Global Growth Discussion & Analysis of Performance
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the
AIM logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, AIM
Internationalunds.com, Invest with Discipline, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design and Invierta con Disciplina are registered
service marks, and AIM Bank Connection, AIM Funds, AIM Funds and Design, AIM
Internet Connect and AIM Investor are service marks, of A I M Management Group
Inc.
ii
<PAGE> 8
INTRODUCTION
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees of AIM Investment from the
shareholders of the Acquired Funds for use at the Special Meeting of
Shareholders to be held at 11 Greenway Plaza, Suite 100, Houston, TX 77046-1173
on May 31, 2000, at 3:00 p.m., local time (such meetings and any adjournments
thereof are referred to as the "Special Meeting").
All properly executed and unrevoked proxies received in time for the
Special Meeting will be voted in accordance with the instructions contained
therein. If no instructions are given, shares represented by proxies will be
voted FOR the proposal to approve the Agreement and in accordance with
management's recommendation on other matters. The presence in person or by proxy
of one-third of the outstanding shares of beneficial interest of a class of
shares of an Acquired Fund at the Special Meeting will constitute a quorum
("Quorum") with respect to that class of shares. Approval of the Agreement by an
Acquired Fund requires the affirmative vote of a majority of the shares cast by
shareholders of each class of shares of that Acquired Fund. The Agreement may be
approved by one of the Acquired Funds and the Reorganization of that Acquired
Fund may be completed even though the Agreement is not approved by shareholders
of the other Acquired Fund. Abstentions and broker non-votes will be counted as
shares present at the Special Meeting for quorum purposes, but will not be
considered votes cast at the Special Meeting. Broker non-votes arise from a
proxy returned by a broker holding shares for a customer which indicates that
the broker has not been authorized by the customer to vote on a proposal. Any
person giving a proxy has the power to revoke it at any time prior to its
exercise by executing a superseding proxy or by submitting a notice of
revocation to the Secretary of AIM Investment. In addition, although mere
attendance at the Special Meeting will not revoke a proxy, a shareholder present
at the Special Meeting may withdraw his proxy and vote in person. Shareholders
may also transact any other business not currently contemplated that may
properly come before the Special Meeting in the discretion of the proxies or
their substitutes.
Shareholders of record as of the close of business on April 3, 2000
(the "Record Date"), are entitled to vote at the Special Meeting. On the Record
Date, there were __________ Class A shares, _____ Class B shares and _____ Class
C shares of GLOBAL GOVERNMENT INCOME outstanding, and ____ Class A shares, _____
Class B shares and _____ Class C shares of GLOBAL GROWTH & INCOME outstanding.
Each share is entitled to one vote for each full share held, and a fractional
vote for a fractional share held.
AIM Investment has engaged the services of Shareholder Communications
Corporation ("SCC") to assist it in the solicitation of proxies for the Special
Meeting. AIM Investment expects to solicit proxies principally by mail, but AIM
Investment or SCC may also solicit proxies by telephone, facsimile or personal
interview. AIM Investment's officers will not receive any additional or special
compensation for any such solicitation. The cost of shareholder solicitation is
anticipated to be approximately $______ for each of the Acquired Funds. Each of
the Acquired Funds and the Acquiring Funds will bear its costs and expenses
incurred in connection with the Reorganizations.
1
<PAGE> 9
AIM Investment intends to mail this Proxy Statement/Prospectus and the
accompanying proxy on or about April 20, 2000.
2
<PAGE> 10
SYNOPSIS
THE REORGANIZATIONS
The Reorganizations will result in the combination of GLOBAL GOVERNMENT
INCOME with GLOBAL INCOME and the combination of GLOBAL GROWTH & INCOME with
GLOBAL GROWTH. The Acquired Funds are portfolios of AIM Investment, a Delaware
business trust. The Acquiring Funds are portfolios of AIM International, a
Maryland corporation.
If shareholders of an Acquired Fund approve the Agreement and other
closing conditions are satisfied, all of the assets of that Acquired Fund will
be transferred to the Acquiring Fund with which it will combine, the Acquiring
Fund will assume all of the liabilities of the Acquired Fund, and AIM
International will issue Class A shares of the Acquiring Fund to the Acquired
Fund's Class A shareholders, Class B shares of the Acquiring Fund to the
Acquired Fund's Class B shareholders and Class C shares of the Acquiring Fund to
the Acquired Fund's Class C shareholders. The shares of an Acquiring Fund issued
in a Reorganization will have an aggregate net asset value equal to the value of
the Acquired Fund's net assets transferred to the Acquiring Fund. Shareholders
will not pay any initial sales charge for shares of the Acquiring Funds received
in connection with the Reorganizations. The value of each shareholder's account
with an Acquiring Fund immediately after a Reorganization will be the same as
the value of such shareholder's account with the Acquired Fund immediately prior
to the Reorganization. A copy of the Agreement is attached as Appendix I to this
Proxy Statement/ Prospectus. See "Additional Information About the Agreement"
below.
The Acquired Funds will receive an opinion of Ballard Spahr Andrews &
Ingersoll, LLP, to the effect that the Reorganizations will constitute tax-free
reorganizations for Federal income tax purposes. Thus, shareholders will not
have to pay Federal income taxes as a result of the Reorganizations. See
"Additional Information About the Agreement - Federal Tax Consequences" below.
BACKGROUND AND REASONS FOR THE REORGANIZATIONS
The Board of Trustees of AIM Investment, including the independent
trustees, has determined that the Reorganizations are in the best interests of
Acquired Funds and their shareholders and that the interests of the shareholders
of each Acquired Fund will not be diluted as a result of the Reorganizations.
In making their determination, the Board of Trustees noted that each
Acquiring Fund has a similar investment objective and follows similar policies
to achieve its objective as the Acquired Fund with which it will combine, and
that the assets of the combined funds should provide AIM Advisors with a more
stable base for investment management.
The Board noted that the Acquiring Funds have outperformed the Acquired
Funds, providing a better total return to shareholders. The Board also noted
that after the Reorganizations the operating expense ratios of each Acquiring
Fund are expected to be lower than the operating expense ratios of the Acquired
Fund with which it will combine. Although past performance does not
3
<PAGE> 11
guarantee future results, the combination of better performance and lower
expenses should make the Acquiring Funds better investments for Acquired Fund
shareholders.
COMPARISON OF THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS
Investment Objective and Policies
The investment objective(s) and policies of each Acquiring Fund are
similar to the investment objective(s) and policies of the Acquired Fund with
which it will combine.
GLOBAL INCOME seeks to provide high current income, with a secondary
objective of protection of principal and growth of capital. GLOBAL GOVERNMENT
INCOME seeks to provide high current income and, secondarily, growth of capital
and protection of principal.
GLOBAL GROWTH seeks to provide long-term growth of capital. GLOBAL
GROWTH & INCOME seeks to provide long-term growth of capital together with
current income. If the combination of Global Growth and Global Growth & Income
is approved, shareholders of Global Growth & Income will no longer hold an
investment that seeks current income as a part of its objective. See "Comparison
of Investment Objectives and Policies" below.
Investment Advisory Services
AIM Advisors serves as investment adviser, and INVESCO Asset Management
Limited (NY), Inc. ("IAML") serves as sub-adviser, to the Acquired Funds. AIM
Advisors also serves as investment adviser to the Acquiring Funds. IAML,
however, does not act as sub-adviser for the Acquiring Funds, and the
Reorganizations will end IAML's role in the management of the Acquired Funds'
assets.
Performance
Average annual total returns for the periods indicated for each of the Acquiring
Funds and the Acquired Funds, including sales charges are shown below. Past
performance cannot guarantee comparable future results.
4
<PAGE> 12
<TABLE>
<CAPTION>
AIM Global Income Fund AIM Global Government Income Fund
Class A Class B Class C Class A Class B Class C
Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
1 Year Ended December 31, 1999 (8.18)% (8.73)% (5.04)% (12.16)% (12.76)% n/a
3 Years Ended December 31, 1999 1.18% 1.42% n/a 0.59% 0.69% n/a
5 Years Ended December 31, 1999 6.40% 6.59% n/a 4.54% 4.52% n/a
Since Inception 6.11% 6.39% 1.60% 5.65% 4.25% (5.40)%
<CAPTION>
AIM Global Growth Fund AIM Global Growth & Income Fund
--------------------------------- -------------------------------------
Class A Class B Class C Class A Class B Class C
Shares Shares Shares Shares Shares Shares
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1 Year Ended December 31, 1999 44.99% 46.36% 50.34% (5.41)% (4.88%) n/a
3 Years Ended December 31, 1999 26.29% 27.05% n/a 10.43% 11.04% n/a
5 Years Ended December 31, 1999 25.72% 26.12% n/a 12.67% 12.98% n/a
Since Inception 23.59% 23.99% 26.76% 11.66% 12.22% 2.50%
</TABLE>
Expenses
A comparison of annual operating expenses as a percentage of net assets
("Expense Ratio") based on the fiscal year ended October 31, 1999 for the Class
A, Class B and Class C shares of the Acquired Funds and for the Class A, Class B
and Class C shares of the Acquiring Funds are shown below. Pro forma estimated
Expense Ratios of the Acquiring Funds giving effect to the Reorganizations are
also provided.
<TABLE>
<CAPTION>
AIM GLOBAL GOVERNMENT INCOME FUND AND AIM GLOBAL INCOME FUND
AIM GLOBAL GOVERNMENT AIM GLOBAL INCOME FUND
INCOME FUND AIM GLOBAL INCOME FUND PRO FORMA ESTIMATE
----------- ---------------------- ------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales load imposed
on purchase of shares (as a
percentage of offering price) 4.75% none none 4.75% None none 4.75% none none
Deferred Sales Load (as a
percentage of original
purchase price or
redemption proceeds, as
applicable) none 5.00% 1.00% none 5.00% none 1.00% 5.00% 1.00%
ANNUAL OPERATING EXPENSES
(AS A % OF NET ASSETS)
Management fees... 0.73% 0.73% 0.73% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70%
Distribution and/or Service
(12b-1) Fees...... 0.35% 1.00% 1.00% 0.50% 1.00% 1.00% 0.50% 1.00% 1.00%
</TABLE>
5
<PAGE> 13
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Other expenses.... 0.41% 0.41% 0.41% 0.47% 0.47% 0.47% 0.37% 0.37% 0.37%
Interest expenses. 0.04% 0.04% 0.04% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
---- ---- ---- ---- ---- ---- ---- ---- -----
Total other expenses 0.45% 0.45% 0.45% 0.47% 0.47% 0.47% 0.37% 0.37% 0.37%
Total annual fund operating
expenses 1.53% 2.18% 2.18% 1.67% 2.17% 2.17% 1.57% 2.07% 2.07%
---- ---- ---- ---- ---- ---- ---- ---- -----
Fee waiver (1).... 0.00% 0.00% 0.00% (0.42)% (0.42)% (0.42)% (0.32)% (0.32)% (0.32)%
Net Expenses...... 1.53% 2.18% 2.18% 1.25% 1.75% 1.75% 1.25% 1.75% 1.75%
==== ==== ==== ==== ==== ==== ==== ==== =====
</TABLE>
(1) AIM Advisors and its affiliates have contractually committed to waive
fees and reimburse expenses on the Global Income Class A, Class B and
Class C shares to the extent necessary to limit the total fund
operating expenses (excluding interest, taxes, dividend expense on
short sales and extraordinary items) of Class A shares to 1.25%, until
June 30, 2001.
6
<PAGE> 14
AIM GLOBAL GROWTH & INCOME FUND AND AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
AIM GLOBAL GROWTH AIM GLOBAL GROWTH FUND
& INCOME FUND AIM GLOBAL GROWTH FUND PRO FORMA ESTIMATED
------------- ---------------------- -------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
Shares Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales load imposed
on purchase of shares (as 5.50% none none 4.75% None none 4.75% none none
a percentage of offering
price)
Deferred Sales Load (as a
percentage of original
purchase price or none 5.00% 1.00 None 5.00% 1.00% None 5.00% 1.00%
redemption proceeds, as
applicable)
ANNUAL OPERATING EXPENSES
(AS A % OF NET ASSETS))
Management fees...... 0.97% 0.97% 0.97% 0.85% 0.85% 0.85% 0.83% 0.83% 0.83%
Distribution and/or
service (12b-1) fees. 0.35% 1.00% 1.00% 0.50% 1.00% 1.00% 0.50% 1.00% 1.00%
Other expenses....... 0.33% 0.33% 0.33% 0.32% 0.38% 0.38% 0.32% 0.38% 0.38%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total fund operating
Expenses ............ 1.65% 2.30% 2.30% 1.67% 2.23% 2.23% 1.65% 2.21% 2.21%
---- ---- ---- ---- ---- ---- ---- ---- ----
Fee waiver (1)..............
0.00% 0.00% 0.00% 0.00% 0.00% 0.00% (0.05)% (0.05)% (0.05)%
Net Expenses...............
1.65% 2.30% 2.30% 1.67% 2.23% 2.23% 1.60% 2.16% 2.16%
</TABLE>
(1) AIM Advisors and its affiliates have contractually committed to waive
fees and reimburse expenses on the Global Growth Class A, Class B and
Class C shares to the extent necessary to limit the total fund
operating expenses (excluding interest, taxes, brokerage commissions
and extraordinary items) of Class A shares to 1.60% until June 30,
2001.
7
<PAGE> 15
Hypothetical Example of Effect of Expenses
An investor would have directly or indirectly paid the following
expenses on a $10,000 investment under the existing and estimated fees and
expenses stated above, assuming a 5% annual return.
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(3)
---- ----- ----- --------
<S> <C> <C> <C> <C>
GLOBAL GROWTH & INCOME
Class A shares (1)....................... $709 $1,042 $1,398 $2,397
Class B shares:
Assuming complete redemption at end
of period (2)...................... $733 $1,018 $1,430 $2,473
Assuming no redemption................ $233 $ 718 $1,230 $2,473
Class C shares..........................
Assuming complete redemption at end
of period (2)...................... $333 $718 $1,230 $2,636
Assuming no redemption................ $233 $718 $1,230 $2,636
GLOBAL GROWTH
Class A shares........................... $637 $976 $1,339 $2,357
Class B shares:
Assuming complete redemption at end
of period (1)(2).................. $726 $997 $1,395 $2,424
Assuming no redemption (2)............ $226 $697 $1,195 $2,424
Class C shares...........................
Assuming complete redemption at end
of period (1)(2).................. $326 $697 $1,195 $2,565
Assuming no redemption (2)............ $226 $697 $1,195 $2,565
COMBINED FUND
Class A shares........................... $635 $971 $1,329 $2,337
Class B shares:
Assuming complete redemption at end
of period (l)(2)................... $724 $991 $1,385 $2,403
Assuming no redemption (2)............ $324 $691 $1,185 $2,403
Class C shares...........................
Assuming complete redemption at end
of period (l)(2)................... $224 $691 $1,185 $2,544
Assuming no redemption (2)............ $224 $691 $1,185 $2,544
</TABLE>
- ------------
(1) Assumes payment of maximum sales charge by the investor.
(2) Assumes payment of the applicable CDSC.
(3) For Class B shares, this number reflects the conversion to Class A
shares eight years following the end of the calendar month in which the
purchase was made.
8
<PAGE> 16
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS(3)
---- ----- ----- --------
<S> <C> <C> <C> <C>
GLOBAL GOVERNMENT INCOME
Class A shares (1)....................... $623 $935 $1,270 $2,212
Class B shares:
Assuming complete redemption at end
of period (2)...................... $721 $982 $1,370 $2,349
Assuming no redemption................ $221 $682 $1,170 $2,349
Class C shares..........................
Assuming complete redemption at end
of period (2)...................... $321 $682 $1,170 $2,513
Assuming no redemption................ $221 $682 $1,170 $2,513
GLOBAL INCOME
Class A shares........................... $637 $976 $1,339 $2,357
Class B shares:
Assuming complete redemption at end
of period (1)(2).................. $720 $979 $1,364 $2,377
Assuming no redemption (2)............ $220 $679 $1,164 $2,377
Class C shares...........................
Assuming complete redemption at end
of period (1)(2).................. $320 $679 $1,164 $2,503
Assuming no redemption (2)............ $220 $679 $1,164 $2,503
COMBINED FUND
Class A shares........................... $627 $947 $1,290 $2,254
Class B shares:
Assuming complete redemption at end
of period (l)(2)................... $710 $949 $1,314 $2,272
Assuming no redemption (2)............ $210 $649 $1,114 $2,272
Class C shares...........................
Assuming complete redemption at end
of period (l)(2)................... $310 $649 $1,114 $2,400
Assuming no redemption (2)............ $210 $649 $1,114 $2,400
</TABLE>
- ------------
(4) Assumes payment of maximum sales charge by the investor.
(5) Assumes payment of the applicable CDSC.
(6) For Class B shares, this number reflects the conversion to Class A
shares eight years following the end of the calendar month in which
the purchase was made.
THE "HYPOTHETICAL EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE
EXPENSES. THE FUNDS' ACTUAL EXPENSES, AND AN INVESTOR'S DIRECT AND INDIRECT
EXPENSES, MAY BE MORE OR LESS THAN THOSE SHOWN. THE TABLE AND THE ASSUMPTION IN
THE EXAMPLE OF A 5% ANNUAL RETURN ARE REQUIRED BY REGULATIONS OF THE SEC
APPLICABLE TO ALL MUTUAL FUNDS. THE 5% ANNUAL RETURN IS NOT A PREDICTION OF AND
DOES NOT REPRESENT THE FUNDS' PROJECTED OR ACTUAL PERFORMANCE.
The actual expenses attributable to each class of a fund's shares will
depend upon, among other things, the level of average net assets and the extent
to which a fund incurs variable expenses, such as transfer agency costs.
Sales Charges
No sales charges are applicable to shares of the Acquiring Funds
received in connection with the Reorganizations.
9
<PAGE> 17
The Acquiring Funds Class A shares, which will be issued to the
Acquired Funds Class A shareholders pursuant to the Agreement, are sold at net
asset value plus an initial sales charge of 4.75%. The Acquiring Funds Class B
Shares are offered at net asset value, without an initial sales charge, and are
subject to a maximum contingent deferred sales charge of 5% on certain
redemptions made within six years from the date such shares were purchased. The
Acquiring Funds Class C shares are offered at net asset value, without an
initial sales charge, and are subject to a maximum contingent deterred sales
charge of 1% on certain redemptions made within one year from the date such
shares were purchased.
The Acquiring Funds pay a fee in the amount of 0.50% of average daily
net assets attributable to their Class A shares to A I M Distributors, Inc.
("AIM Distributors") for distribution services. The Acquiring Funds pay AIM
Distributors fees at an annual rate of 1.00% of the average daily net assets
attributable to their Class B and Class C shares for distribution services.
The Class A shares of GLOBAL GOVERNMENT INCOME are sold at net asset
value plus an initial sales charge of 4.75%. The Class A shares of GLOBAL GROWTH
& INCOME are sold at net asset value plus an initial sales charge of 5.50%. The
Acquired Funds Class B shares are offered at net asset value without an initial
sales charge and are subject to a maximum contingent deferred sales charge of 5%
on certain redemptions made within six years from the date such shares were
purchased. The Acquired Funds Class C shares are offered at net asset value
without an initial sales charge and are subject to a maximum contingent deferred
sales charge of 1% on certain redemptions made within one year from the date
such shares were purchased.
The Acquired Funds pay a fee in the amount of 0.35% of average daily
net assets of the Class A shares to AIM Distributors for distribution services.
The Acquired Funds pay AIM Distributors fees at an annual rate of 1.00% of the
average daily net assets attributable to their Class B and Class C shares for
distribution services.
Distribution; Purchase, Exchange and Redemption
Shares of the Acquiring Funds and the Acquired Funds are distributed by
AIM Distributors. Purchase and redemption procedures are the same for the
Acquiring Funds and the Acquired Funds. Shares of the Acquiring Funds and the
Acquired Funds may be exchanged for shares of other funds within The AIM Family
of Funds--Registered Trademark-- of the same class.
RISK FACTORS
The Acquiring Funds and the Acquired Funds are subject to substantially
similar investment risks. The principal investment risks for the Acquiring Funds
are described below.
GLOBAL INCOME is a non-diversified fund that invests primarily in
government and non-convertible corporate debt securities, both foreign and
domestic. The Fund may also invest in equity securities of foreign and domestic
issuers and in lower-quality debt securities, i.e., "junk bonds." The value of
an investment in Global Income will go up and down with the prices of the
securities in
10
<PAGE> 18
which it invests. Interest rate increases can cause the price of a debt security
to decrease, and the longer a debt security's duration, the more sensitive it is
to this risk. Junk bonds are less sensitive to this risk than are higher quality
bonds.
Compared to higher-quality debt securities, junk bonds involve greater
risk of default or price changes due to changes in the credit quality of the
issuer, because they are generally unsecured and may be subordinated to other
creditor's claims. The value of junk bonds often fluctuates in response to
company, political or economic developments and can decline significantly over
short periods of time or during periods of general or regional economic
difficulty. During those times, the bonds could be difficult to value or to sell
at a fair price. Credit ratings on junk bonds do not necessarily reflect their
actual market risk.
Also, because GLOBAL INCOME is non-diversified, the fund may invest in
fewer issuers than if it was a diversified fund. The value of the Fund's shares
may vary more widely, and the fund may be subject to greater investment and
credit risk, than if the fund invested more broadly.
GLOBAL GROWTH invests primarily in equity securities of domestic and
foreign issuers. The prices of equity securities change in response to many
factors, including the historical and prospective earnings of the issuer, the
value of its assets, general economic conditions, interest rates, investor
perceptions and market liquidity.
GLOBAL INCOME and GLOBAL GROWTH invest in securities of foreign
issuers, which generally involves greater risks than investing in securities of
domestic issuers. The prices of foreign securities may be further affected by
other factors, including:
o Currency exchange rates - The dollar value of the fund's
foreign investments will be affected by changes in the
exchange rates between the dollar and the currencies in which
those investments are traded.
o Political and economic conditions - The value of the fund's
foreign investments may be adversely affected by political and
social instability in their home countries and by changes in
economic or taxation policies in those countries.
o Regulations - Foreign companies generally are subject to less
stringent regulations, including financial and accounting
controls, than are U.S. companies. As a result, there
generally is less publicly available information about foreign
companies than about U.S. companies.
o Markets - The securities markets of other countries are
smaller than U.S. securities markets. As a result, many
foreign securities may be less liquid and more volatile than
U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies
11
<PAGE> 19
against the U.S. dollar, thereby causing the value of investments in companies
located in those countries to decline. Additionally transaction costs are often
higher in developing countries, and there may be delays in settlement
procedures.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES AND POLICIES OF GLOBAL INCOME AND GLOBAL GOVERNMENT INCOME
Investment Objectives
The investment objective of GLOBAL INCOME is to provide high current
income, with a secondary objective of protection of principal and growth of
capital.
GLOBAL GOVERNMENT INCOME seeks to provide high current income and,
secondarily, growth of capital and protection of principal.
Investment Policies of Global Income
GLOBAL INCOME seeks to meet its investment objectives by investing at
least 65% of its total assets in government and non-convertible corporate debt
securities, both foreign and domestic, including securities issued by
supranational organizations, such as the World Bank. The Fund emphasizes
investment in securities issued by governments and companies in developed
countries such as the United States, the countries of Western Europe, Canada,
Japan, Australia and New Zealand. The Fund may also invest up to 20% of its
total assets in securities of issuers located in developing countries, i.e.,
those that are in the initial stages of their industrial cycles. The Fund will
normally invest in the securities of companies located in at least four
different countries, including the United States, and will normally maintain at
least 20% of its total assets in securities of U.S. issuers. The Fund may invest
up to 10% of its total assets in common stocks, preferred stocks and similar
equity securities of foreign and domestic issuers and up to 10% of its total
assets in convertible debt securities of foreign and domestic issuers. The Fund
may also invest up to 35% of its total assets in lower-quality debt securities,
i.e, "junk bonds."
GLOBAL INCOME is non-diversified. With respect to 50% of its assets, it
is permitted to invest more than 5% of its assets in the securities of any one
issuer. However, the Fund will invest no more than 5% of its total assets in the
securities of any one corporate issuer, and will invest no more than 25% of its
total assets in securities of any one foreign government or supranational
organization.
GLOBAL INCOME'S portfolio managers focus on debt securities throughout
the world that they believe have favorable prospects for current income or
growth of capital. The portfolio managers consider whether to sell a particular
security when any one of those factors materially changes.
12
<PAGE> 20
Investment Policies of Global Government Income
GLOBAL GOVERNMENT INCOME seeks to meet its investment objectives by
investing at least 65% of its total assets in debt securities (including
mortgage-backed securities) issued or guaranteed by U.S. and foreign governments
or by their agencies, authorities, and instrumentalities, as well as by
supranational entities, such as the World Bank. The Fund primarily invests in
high-quality government debt securities that are rated in the top two ratings
categories by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
("S&P") or deemed by the portfolio managers to be of comparable quality. The
Fund may invest in lower-quality debt securities, i.e., "junk bonds."
GLOBAL GOVERNMENT INCOME may invest up to 35% of its total assets in
(1) foreign government securities that are rated within the third and fourth
highest ratings categories by Moody's or S&P or deemed by the fund's portfolio
managers to be of comparable quality; (2) corporate debt obligations of U.S. or
foreign issuers rated at least investment grade (rated within the four highest
ratings categories by Moody's or S & P); (3) privately issued mortgage-backed
and asset-backed securities that are rated at least investment grade, or deemed
by the portfolio managers to be of comparable quality; and (4) common stocks,
preferred stocks and warrants, provided that the Fund will invest no more than
20% of its total assets in such securities.
GLOBAL GOVERNMENT INCOME will normally invest in securities issued by
at least three different countries, including the United States, and may invest
a significant portion of its assets in the securities of U.S. issuers. However,
the Fund will invest no more than 40% of its total assets in securities of any
one country, other than the U.S. The Fund will only invest in a foreign currency
or in securities denominated in a foreign currency if the portfolio managers
consider the currency to be fully exchangeable into U.S. dollars or a
multinational currency unit.
GLOBAL GOVERNMENT INCOME'S portfolio managers allocate assets among
securities of countries and in currency denominations where the combination of
fixed-income market returns, the price appreciation of fixed-income securities
and currency exchange rate movements will present opportunities for meeting the
Fund's investment objectives. The principal determinants of the emphasis given
to various country, geographic, and industry sectors within the fund are
fundamental economic strength, credit quality, and currency and interest rate
trends. Further, the portfolio managers select particular issuers based on
additional economic criteria such as yield, maturity, issue classification, and
quality characteristics. Currency investments are based on economic factors
(such as relative inflation, interest rate levels and trends, growth rate
forecasts, balance of payments status, and economic policies) and on political
and technical data. The portfolio managers consider whether to sell a particular
security when any of those factors materially changes.
GLOBAL GOVERNMENT INCOME is a non-diversified portfolio. With respect
to 50% of its assets, it is permitted to invest more than 5% of its assets in
the securities of any one issuer.
13
<PAGE> 21
INVESTMENT OBJECTIVES AND POLICIES OF GLOBAL GROWTH AND GLOBAL GROWTH & INCOME
Investment Objectives
The investment objective of GLOBAL GROWTH is to provide long-term
growth of capital.
GLOBAL GROWTH & INCOME seeks long-term growth of capital together with
current income.
Investment Policies of Global Growth
GLOBAL GROWTH seeks to meet its investment objective by investing,
normally, at least 65% of its total assets in marketable equity securities of
domestic and foreign issuers. The Fund will normally invest in the securities of
medium- and large-sized growth companies located in at least four countries,
including the United States, and will usually maintain at least 20% of its total
assets in U.S. dollar denominated securities. The Fund emphasizes investment in
companies in developed countries such as the United States, the countries of
Western Europe and certain countries in the Pacific Basin. The Fund may also
invest in companies located in developing countries, i.e., those that are in the
initial stages of their industrial cycles. The Fund may invest up to 20% of its
total assets in securities exchangeable for or convertible into marketable
equity securities of foreign and domestic issuers.
GLOBAL GROWTH may also invest up to 35% of its total assets in
high-grade short-term securities and in debt securities, including U.S.
Government obligations, investment-grade corporate bonds or taxable municipal
securities.
GLOBAL GROWTH portfolio managers focus on companies that have
experienced above-average long-term growth in earnings and have excellent
prospects for future growth. In selecting countries in which the Fund will
invest, the Fund's portfolio managers also consider such factors as the prospect
for relative economic growth among countries or regions, economic or political
conditions, currency exchange fluctuations, tax considerations and the liquidity
of a particular security. The Fund's portfolio managers consider whether to sell
a particular security when any of these factors materially changes.
Investment Policies of Global Growth & Income
GLOBAL GROWTH & INCOME seeks to meet its investment objective by
investing, normally, at least 65% of its total assets in a combination of
blue-chip equity securities and high-quality government bonds of U.S. and
foreign issuers. "Blue chip" equity securities are those which (1) offered,
during the issuer's most recent fiscal year, an above average dividend yield
relative to the latest reported dividend yield on the Morgan Stanley Capital
International World Index; and (2) are issued by a company with total equity
market capitalization of at least $1 billion. High-quality government bonds are
rated within one of the two highest ratings categories by Moody's or S&P, or are
deemed by the portfolio managers to be of comparable quality.
14
<PAGE> 22
GLOBAL GROWTH & INCOME may invest up to 35% of its total assets in
other equity securities and government and corporate debt securities that are
investment grade, i.e., rated within one of the four highest ratings categories
by Moody's or S&P, or are deemed by the portfolio managers to be of comparable
quality. The Fund may purchase debt obligations issued or guaranteed by the U.S.
or foreign governments, including foreign states, provinces or municipalities,
or their agencies, authorities or instrumentalities and debt obligations of
supranational organizations, such as the World Bank. The Fund will normally
invest in securities of issuers in at least three countries, including the
United States, and the Fund may invest a significant portion of its assets in
the securities of U.S. issuers. However, the Fund may invest no more than 40% of
its assets in securities of issuers in any one country, other than the U.S. The
Fund may invest up to 100% of its total assets in either equity or debt
securities in response to general economic changes and market conditions around
the world.
GLOBAL GROWTH & INCOME'S portfolio managers allocate assets among
securities of countries and in currency denominations where opportunities for
meeting the Fund's investment objective are expected to be the most attractive.
The portfolio managers select fixed-income securities based on economic criteria
such as yield, maturity, issue classification, and quality characteristics. The
portfolio managers select equity securities that they believe are undervalued
relative to the issuer's current or projected earnings and that they believe
have above-average prospects for future growth. Currency investments are based
on economic factors and on political and technical data. The portfolio managers
consider whether to sell a particular security when any of those factors
materially changes.
GLOBAL GROWTH & INCOME is non-diversified. With respect to 50% of its
assets, it is permitted to invest more than 5% of its assets in the securities
of any one issuer.
PORTFOLIO MANAGEMENT
Robert G. Alley, Jan H. Friedli and Carolyn L. Gibbs, all of whom are
officers of AIM Capital Management, Inc. ("AIM Capital") a wholly owned
subsidiary of AIM Advisors, are primarily responsible for the day-to-day
management of GLOBAL INCOME. Mr. Alley has been responsible for GLOBAL INCOME
since its inception in 1994. He has been associated with AIM Advisors and/or its
affiliates since 1992. Mr. Friedli has been responsible for GLOBAL INCOME since
1999. He has been associated with AIM Advisors and/or its affiliates since 1999.
From 1997 to 1999, he was global fixed-income portfolio manager for
Nicholas-Applegate Capital Management. From 1994 to 1997, he was an
international fixed-income trader and analyst for Strong Capital Management. Ms.
Gibbs has been responsible for GLOBAL INCOME since 1995. She has been associated
with AIM Advisors and/or its affiliates since 1992.
Monika H. Degan, A. Dale Griffin, III, Benjamin A. Hock, Jr., Jason T.
Holzer, Class G. Olsson, Jonathan C. Schoolor and Barret K. Sides, all of whom
are officers of AIM Capital, are primarily responsible for day-to-day management
of GLOBAL GROWTH. Ms. Degan has been responsible for GLOBAL GROWTH since 1999
and has been associated with AIM Advisors and/or its affiliates since 1995. From
1991 to 1995 she was senior Financial Analyst for Shell Oil Co. Pension Trust.
Mr. Griffin has been responsible for GLOBAL GROWTH since its inception in 1994
and has been
15
<PAGE> 23
associated with AIM Advisors and/or its affiliates since 1989. Mr. Hock has been
responsible for GLOBAL GROWTH since 1999 and has been associated with AIM
Advisors and/or its affiliates since 1999. From 1994 to 1999, he was, among
other officers, head of equity research at John Hancock Advisors, Inc. Mr.
Holzer has been responsible for GLOBAL GROWTH since 2000 and has been associated
with AIM Advisors and/or its affiliates since 1996. From 1994 to 1996, Mr.
Holzer was an associate with JMB Realty. Mr. Olsson has been responsible for
GLOBAL GROWTH since 1999 and has been associated with AIM Advisors and/or its
affiliates since 1994. Mr. Schooler has been responsible for GLOBAL GROWTH since
its inception in 1994 and has been associated with AIM Advisors and/or its
affiliates since 1986. Mr. Sides has been responsible for GLOBAL GROWTH since
1999 and has been associated with AIM Advisors and/or its affiliates since 1990.
MANAGEMENT DISCUSSION AND ANALYSIS OF PERFORMANCE
A discussion of the performance of GLOBAL INCOME for the fiscal year
ended October 31, 1999, is set forth in Appendix IV to this Proxy
Statement/Prospectus and a discussion of the performance of GLOBAL GROWTH for
the fiscal year ended October 31, 1999, is set forth in Appendix V to this Proxy
Statement/Prospectus.
FINANCIAL HIGHLIGHTS
GLOBAL INCOME
Shown below are financial highlights for a Class A share and Class B
share of GLOBAL INCOME outstanding during each of the years in the five-year
period ended October 31, 1999, and for a Class C share of GLOBAL INCOME
outstanding during each of the years in the two-year period ended October 31,
1999 and the period August 4, 1997 (date sales commenced) through October 31,
1997. This information has been audited by AIM International's independent
accountants, whose unqualified report on the financial statements of GLOBAL
INCOME are included in its annual report to shareholders for the fiscal year
ended October 31, 1999. GLOBAL INCOME'S annual report to shareholders dated
October 31, 1999, is available without charge upon request made to AIM
International at the address or telephone number appearing on the cover page of
this Proxy Statement/Prospectus.
16
<PAGE> 24
AIM GLOBAL INCOME FUND CLASS A SHARES
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.60 $ 10.93 $ 10.85 $ 10.74 $ 10.02
--------- --------- -------- -------- ----------
Income from investment operations:
Net investment income 0.67 0.71 0.72 0.79(a) 0.79
--------- --------- -------- -------- ----------
Net gains (losses) on securities (both realized and
unrealized) (0.86) (0.27) 0.21 0.25 0.75
--------- --------- -------- -------- ----------
Total from investment operations (0.19) 0.44 0.93 1.04 1.54
--------- --------- -------- -------- ----------
Less distributions:
Dividends from investment income (0.61) (0.61) (0.72) (0.81) (0.82)
--------- --------- -------- -------- ----------
Distributions from net realized gains -- (0.07) (0.13) (0.12)
--------- --------- -------- -------- ----------
Return of capital (0.08) (0.09) -- -- --
--------- --------- -------- -------- ----------
Total distributions (0.69) (0.77) (0.85) (0.93) (0.82)
--------- --------- -------- -------- ----------
Net asset value, end of period $ 9.72 $ 10.60 $ 10.93 $ 10.85 $ 10.74
Total return(b) (1.94)% 3.95% 9.05% 10.22% 16.07%
--------- --------- -------- -------- ----------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 51,077 $ 58,115 $ 30.924 $ 21,926 $ 10,004
--------- --------- -------- -------- ----------
Ratio of expenses to average net assets(c) 1.25%(d) 1.23% 1.25% 1.25% 1.25%
--------- --------- -------- -------- ----------
Ratio of net investment income to average net assets(e) 6.54%(d) 6.38% 6.54% 7.27% 7.38%
--------- --------- -------- -------- ----------
Portfolio turnover rate 93% 47% 61% 83% 128%
--------- --------- -------- -------- ----------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less
than one year.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses
to average net assets prior to fee waivers and/or expenses
reimbursements were 1.67%, 1.73%, 1.86%, 2.02% and 3.03% for the
periods 1999-1995.
(d) Ratios are based on average net assets of $60,052,093.
(e) After fee waivers and/or expense reimbursements. The ratios of net
investment income to average net assets prior to fee waivers and/or
expense reimbursements were 6.12%, 5.89%, 5.93%, 6.51% and 5.59% for
the periods 1999-1995.
17
<PAGE> 25
AIM GLOBAL INCOME FUND CLASS B SHARES
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.59 $ 10.92 $ 10.84 $ 10.73 $ 10.01
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income 0.62 0.65 0.67 0.74(a) 0.74
--------- --------- --------- --------- ---------
Net gains (losses) on securities (both realized and
unrealized) (0.85) (0.27) 0.21 0.24 0.75
--------- --------- --------- --------- ---------
Total from investment operations (0.23) 0.38 0.88 0.98 1.49
--------- --------- --------- --------- ---------
Less distributions:
Dividends from investment income (0.56) (0.55) (0.67) (0.75) (0.77)
--------- --------- --------- --------- ---------
Distributions from net realized gains -- (0.07) (0.13) (0.12) --
--------- --------- --------- --------- ---------
Return of capital (0.08) (0.09) -- -- --
--------- --------- --------- --------- ---------
Total distributions (0.64) (0.71) (0.80) (0.87) (0.77)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 9.72 $ 10.59 $ 10.92 $ 10.84 $ 10.73
--------- --------- --------- --------- ---------
Total return(b) (2.37)% 3.38% 8.48% 9.66% 15.56%
--------- --------- --------- --------- ---------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 34,423 $ 36,525 $ 25,121 $ 16,787 $ 4,207
--------- --------- --------- --------- ---------
Ratio of expenses to average net assets(c) 1.75%(d) 1.75% 1.76% 1.75% 1.73%
--------- --------- --------- --------- ---------
Ratio of net investment income to average net assets(e) 6.04%(d) 5.87% 6.03% 6.77% 6.88%
--------- --------- --------- --------- ---------
Portfolio turnover rate 93% 47% 61% 83% 128%
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. The ratios of
expenses to average net assets prior to fee waivers and/or expenses
reimbursements were 2.17%, 2.25%, 2.37%, 2.53% and 3.57% for
1999-1995.
(d) Ratios are based on average net assets of $38,526,539.
(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 5.62%, 5.37%, 5.42%, 6.00% and
5.05% for 1999-1995 for Class B.
18
<PAGE> 26
AIM GLOBAL INCOME FUND CLASS C SHARES
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.59 $10.92 $ 10.76
------- ------ -------
Income from investment operations:
Net investment income 0.62 0.66 0.15(a)
------- ------ -------
Net gains (losses) on securities (both realized and
unrealized) (0.86) (0.28) 0.17
------- ------ -------
Total from investment operations (0.24) 0.38 0.32
------- ------ -------
Less distributions:
Dividends from investment income (0.56) (0.55) (0.13)
------- ------ -------
Distributions from net realized gains --- (0.07) (0.03)
------- ------ -------
Return of capital (0.08) (0.09) ---
------- ------ -------
Total distributions (0.64) (0.71) (0.16)
------- ------ -------
Net asset value, end of period $ 9.71 $10.59 $ 10.92
------- ------ -------
Total return(b) (2.47)% 3.39% 2.99%
------- ------ -------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 1,884 $1,785 $ 242
------- ------ -------
Ratio of expenses to average net assets(c) 1.75%(d) 1.73% 1.76%(e)
------- ------ -------
Ratio of net investment income to average net assets(f) 6.04%(d) 5.88% 6.03%(e)
------- ------ -------
Portfolio turnover rate 93% 47% 61%
------- ------ -------
</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) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements
were 2.17%, 2.22%, and 2.37% (annualized) for 1999-1997.
(d) Ratios are based on average net assets of $1,924,739.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net
investment income to average net assets prior to fee waivers and/or
expense reimbursements were 5.62%, 5.40% and 5.42% (annualized) for
1999-1997.
19
<PAGE> 27
GLOBAL GROWTH
Shown below are financial highlights for a Class A share and a Class B
share of GLOBAL GROWTH outstanding during each of the years in the five-year
period ended October 31, 1999, and for a Class C share of GLOBAL GROWTH
outstanding during each of the years in the two-year period ended October 31,
1999 and the period August 4, 1997 (date sales commenced) through October 31,
1997. This information has been audited by AIM International's independent
accountants, whose unqualified report on the financial statements of GLOBAL
GROWTH are included in its annual report to shareholders for the fiscal year
ended October 31, 1999. GLOBAL GROWTH'S annual report to shareholders dated
October 31, 1999, is available without charge upon request made to AIM
International at the address or telephone number appearing on the cover page of
this Proxy Statement/Prospectus.
20
<PAGE> 28
AIM GLOBAL GROWTH FUND CLASS A SHARES
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.91 $ 16.65 $ 14.20 $ 12.32 $ 10.23
--------- -------- ------- -------- --------
Income from investment operations:
Net investment income (loss) (0.10) (0.05) (0.04) (0.01) (0.02)
--------- -------- ------- -------- --------
Net gains on securities (both realized and
unrealized) 6.12 1.74 2.49 2.11 2.11
--------- -------- ------- -------- --------
Total from investment operations 6.02 1.69 2.45 2.10 2.09
--------- -------- ------- -------- --------
Less distributions:
Dividends from investment income -- -- -- -- (0.004)
--------- -------- ------- -------- --------
Distributions from net realized gains (0.50) (0.43) -- (0.22) --
--------- -------- ------- -------- --------
Total distributions (0.50) (0.43) -- (0.22) (0.004)
--------- -------- ------- -------- --------
Net asset value, end of period $ 23.43 $ 17.91 $ 16.65 $ 14.20 $ 12.32
--------- -------- ------- -------- --------
Total return(a) 34.43% 10.43% 17.25% 17.26% 20.48%
--------- -------- ------- -------- --------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 388,549 $219,050 $178,917 $114,971 $ 23,754
--------- -------- ------- -------- --------
Ratio of expenses to average net assets(b) 1.67%(c) 1.70% 1.76% 1.93% 2.12%
--------- -------- ------- -------- --------
Ratio of net investment income (loss) to average net assets(d) (0.57)%(c) (0.27)% (0.30)% (0.13) (0.28)%
--------- -------- ------- -------- --------
Portfolio turnover rate 93% 97% 96% 82% 79%
--------- -------- ------- -------- --------
</TABLE>
(a) Does not deduct sales charges.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expenses reimbursements
were 1.94% and 2.98% for 1996-1995.
(c) Ratios are based on average net assets of $317,044,851.
(d) 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)% and (1.14)% for 1996-1995.
21
<PAGE> 29
AIM GLOBAL GROWTH FUND CLASS B SHARES
<TABLE>
<CAPTION>
1999(a) 1998(a) 1997 1996 1995
--------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.52 $ 16.39 $ 14.05 $ 12.26 $ 10.22
--------- --------- --------- ---------- --------
Income from investment operations:
Net investment income (loss) (0.23) (0.15) (0.11) (0.05) (0.04)
--------- --------- --------- ---------- --------
Net gains (losses) on securities (both realized
and unrealized) 5.99 1.71 2.45 2.06 2.08
--------- --------- --------- ---------- --------
Total from investment operations 5.76 1.56 2.34 2.01 2.04
--------- --------- --------- ---------- --------
Less distributions:
Distributions from net realized gains (0.50) (0.43) -- (0.22) --
--------- --------- --------- ---------- --------
Net asset value, end of period $ 22.78 $ 17.52 $ 16.39 $ 14.05 $ 12.26
--------- --------- --------- ---------- --------
Total return(b) 33.69% 9.78% 16.65% 16.60% 19.96%
--------- --------- --------- ---------- --------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 425,345 $ 282,456 $ 224,225 $ 121,848 $ 17,157
--------- --------- --------- ---------- --------
Ratio of expenses to average net assets 2.23%(c) 2.26% 2.29% 2.48%(d) 2.64%(d)
--------- --------- --------- ---------- --------
Ratio of net Investment Income (loss) to average net assets (1.13)%(c) (0.83)% (0.83)% (0.69)%(e) (0.79)%(e)
--------- --------- --------- ---------- --------
Portfolio turnover rate 93% 97% 96% 82% 79%
--------- --------- --------- ---------- --------
</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 $356,402,709.
(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% and 3.38% for 1996-1995.
(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 (0.69)% and (1.54)% for 1996-1995.
22
<PAGE> 30
AIM GLOBAL GROWTH FUND CLASS C SHARES
<TABLE>
<CAPTION>
1999(a) 1998(a) 1997
--------- --------- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $ 17.52 $ 16.39 $ 17.39
--------- --------- ---------
Income from investment operations:
Net investment income (loss) (0.23) (0.15) (0.03)
--------- --------- ---------
Net gains (losses) on securities (both realized and unrealized) 6.00 1.71 (0.97)
--------- --------- ---------
Total from investment operations 5.77 1.56 (1.00)
--------- --------- ---------
Less distributions:
Distributions from net realized gains (0.50) (0.43) --
--------- --------- ---------
Net asset value, end of period $ 22.79 $ 17.52 $ 16.39
--------- --------- ---------
Total return(b) 33.69% 9.78% (5.75)%
--------- --------- ---------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 31,356 $ 11,765 $ 1,100
--------- --------- ---------
Ratio of expenses to average net assets 2.23%(c) 2.26% 2.29%(d)
--------- --------- ---------
Ratio of net investment income (loss) to average net assets (1.13)%(c) (0.83)% (0.83)%(d)
--------- --------- ---------
Portfolio turnover rate 93% 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 $20,512,721.
(d) Annualized.
23
<PAGE> 31
ADDITIONAL INFORMATION ABOUT THE AGREEMENT
TERMS OF THE REORGANIZATIONS
The terms and conditions under which the Reorganizations may be
consummated are set forth in the Agreement. Significant provisions of the
Agreement are summarized below; however, this summary is qualified in its
entirety by reference to the Agreement, a copy of which is attached as Appendix
I to this Proxy Statement/Prospectus.
THE REORGANIZATIONS
Each Acquiring Fund will acquire all of the assets of the Acquired Fund
with which it will combine in exchange for shares of the Acquiring Fund and the
assumption by the Acquiring Fund of the liabilities of the Acquired Fund.
Consummation of each Reorganization (the "Closing") is expected to occur on June
12, 2000, at 8:00 a.m. Eastern Time (the "Effective Time") on the basis of
values calculated as of the close of regular trading on the NYSE on June 9,
2000.
At the Effective Time, all of the assets of GLOBAL GOVERNMENT INCOME
shall be delivered to the Custodian for the account of GLOBAL INCOME in exchange
for the assumption by GLOBAL INCOME of all of the liabilities of any kind of
GLOBAL GOVERNMENT INCOME and delivery by AIM International directly to (i) the
GLOBAL GOVERNMENT INCOME Class A shareholders of a number of GLOBAL INCOME Class
A shares (including, if applicable, fractional shares rounded to the nearest
thousandth), to (ii) the GLOBAL GOVERNMENT INCOME Class B shareholders of a
number of GLOBAL INCOME Class B shares (including, if applicable, fractional
shares rounded to the nearest thousandth), and to (iii) the GLOBAL GOVERNMENT
INCOME Class C shareholders of a number of GLOBAL INCOME Class C shares
(including, if applicable, fractional shares rounded to the nearest thousandth)
having an aggregate net asset value equal to the net value of the assets of
GLOBAL GOVERNMENT INCOME so transferred.
At the Effective Time, all of the assets of GLOBAL GROWTH & INCOME
shall be delivered to the Custodian for the account of GLOBAL GROWTH in exchange
for the assumption by GLOBAL GROWTH of all of the liabilities of any kind of
GLOBAL GROWTH & INCOME and delivery by AIM International directly to (i) the
GLOBAL GROWTH & INCOME Class A shareholders of a number of GLOBAL GROWTH Class A
shares (including, if applicable, fractional shares rounded to the nearest
thousandth), to (ii) the GLOBAL GROWTH & INCOME Class B shareholders of a number
of GLOBAL GROWTH Class B shares (including, if applicable, fractional shares
rounded to the nearest thousandth), and to (iii) the GLOBAL GROWTH & INCOME
Class C shareholders of a number of GLOBAL GROWTH Class C shares (including, if
applicable, fractional shares rounded to the nearest thousandth) having an
aggregate net asset value equal to the net value of the assets of GLOBAL GROWTH
& INCOME so transferred, assigned and delivered.
Consummation of the Reorganization of GLOBAL GOVERNMENT INCOME is not
conditioned upon consummation of the Reorganization of GLOBAL GROWTH & INCOME,
and consummation of the Reorganization of GLOBAL GROWTH & INCOME is not
conditioned upon consummation of the Reorganization of GLOBAL GOVERNMENT INCOME.
24
<PAGE> 32
BOARD CONSIDERATIONS
The Board of Trustees of AIM Investment has determined that the
Reorganizations of the Acquired Funds are in the best interests of the
shareholders of each of the Acquired Funds, and recommended approval of the
Agreement by the shareholders of the Acquired Funds at the Special Meeting. A
summary of the information that was presented to, and considered by, the Board
of Trustees in making their determination is provided below.
At a meeting held on March 14, 2000, AIM Advisors proposed that the
Board of Trustees approve the Reorganizations. The Trustees received from AIM
Advisors written materials that contained information concerning the Acquired
Funds and the Acquiring Funds, including comparative total return and fee and
expense information, a comparison of the investment objectives of the Acquired
Funds and the Acquiring Funds and pro forma expense ratios of the Acquiring
Funds. AIM Advisors also provided the Board of Trustees with written materials
concerning the structure of the proposed Reorganization and the Federal tax
consequences of the Reorganizations.
In considering the Reorganizations, the Board of Trustees noted that
GLOBAL GOVERNMENT INCOME and GLOBAL INCOME have similar investment objectives
and policies, as do GLOBAL GROWTH & INCOME and GLOBAL GROWTH.
GLOBAL GOVERNMENT INCOME and GLOBAL INCOME both seek to provide high
current income with protection of principal and growth of income as secondary
considerations. GLOBAL GOVERNMENT INCOME seeks to achieve its objective by
investing primarily in debt securities issued or guaranteed by U.S. and foreign
governments or their agencies, authorities and instrumentalities. GLOBAL INCOME
invests in a wider range of debt securities that includes securities of
corporate issuers. Both funds invest primarily in investment grade securities,
but are permitted to hold lower quality or "junk bonds."
GLOBAL GROWTH seeks to provide long-term growth of capital while GLOBAL
GROWTH & INCOME seeks to provide long-term growth of capital together with
current income. If the reorganization is approved, current income will no longer
be a consideration in connection with the investment of the assets of GLOBAL
GROWTH & INCOME. GLOBAL GROWTH & INCOME invests primarily in equity securities
issued by "Blue Chip" companies that pay above - average dividends. GLOBAL
GROWTH'S portfolio managers focus on companies that have experienced
above-average long-term growth in earnings and have excellent prospects for
future growth.
The Board of Trustees also considered the performance of the Acquired
Funds in relation to the performance of the Acquiring Funds. As of December 31,
1999, the Morningstar ratings and Lipper Inc. rankings for GLOBAL INCOME and
GLOBAL GOVERNMENT INCOME were as follows:
25
<PAGE> 33
MORNINGSTAR RATING(1)
<TABLE>
<CAPTION>
Overall 1 Year 3 Year 5 Year 10 Year
------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Global Income 3 2 2 3 n/a
Global Government Income 1 1 2 1 1
</TABLE>
LIPPER RANK (Percentile)(2)
<TABLE>
<CAPTION>
1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------
<S> <C> <C> <C> <C>
Global Income 44% 35% 24% n/a
Global Government Income 84% 50% 68% 90%
</TABLE>
As of December, 1999, the Morningstar ratings and Lipper Analytical
Services rankings for GLOBAL GROWTH and GLOBAL GROWTH & INCOME were as follows:
MORNINGSTAR RATING(1)
<TABLE>
<CAPTION>
Overall 1 Year 3 Year 5 Year 10 Year
------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
Global Growth 5 5 4 5 n/a
Global Growth & Income 3 4 3 3 n/a
</TABLE>
LIPPER RANK (Percentile)(2)
<TABLE>
<CAPTION>
1 Year 3 Year 5 Year 10 Year
------ ------ ------ -------
<S> <C> <C> <C> <C>
Global Growth 20% 19% 12% n/a
Global Growth & Income 100% 84% 83% n/a
</TABLE>
- -----------
1 Under the Morningstar rating system, the top 10% of funds in a category
receive 5 stars, the next 22.5% receive 4 stars, the middle 35% receive
3 stars, the next 22.5% receive 2 stars and the bottom 10% receive a
single star.
2 Under the Lipper ranking system, the lower the percentile rank, the
better the performance.
26
<PAGE> 34
The Board also considered the expenses paid by the Acquired Funds and
the Acquiring Funds. The current total operating expenses of the Acquiring Funds
under their contractual arrangements, expressed as a percentage of average daily
net assets (the "expense ratios"), are slightly higher than the expense ratios
for the Class A shares of the Acquired Funds and slightly lower than the expense
ratios for the Class B and Class C shares of the Acquired Funds. However, the
combined assets of each Acquiring Fund and the respective Acquired Fund will
create economies of scale so that after the Reorganizations the expense ratios
of the Acquiring Funds will be the same or lower than those of the Acquired
Funds. The Board also noted that AIM Advisors and its affiliates have
contractually committed to waive fees and reimburse expenses for the Acquiring
Funds to the extent necessary to limit the total operating expenses of the
GLOBAL INCOME Class A shares to 1.25% and the GLOBAL GROWTH Class A shares to
1.60% until June 30, 2001.
AIM Advisors noted that GLOBAL INCOME'S better performance and lower
expense ratios following the Reorganizations should make it a better investment
for shareholders than GLOBAL GOVERNMENT INCOME and that GLOBAL GROWTH'S better
performance and expected lower expense ratios should make it a better investment
for shareholders than GLOBAL GROWTH & INCOME.
The combined assets of the Acquired Funds and the Acquiring Funds
should provide a more stable base for management because daily purchases and
redemptions of shares should have a less significant impact on the size of the
combined fund. This may afford AIM Advisors a wider range of choices among
permitted investments than are currently available to the two funds separately.
The Reorganizations may result in reduced revenues for AIM Advisors,
since AIM Advisors receives slightly higher management fees on assets presently
held by the Acquired Funds. However, AIM Advisors could also benefit in the
future if the assets of the combined fund grow faster than the assets of the
individual funds would have grown in the absence of the Reorganization AIM
Advisors noted that the expenses incurred by the Acquired Funds in connection
with the Reorganizations would be offset by lower management fees and total
expenses after the Reorganizations.
In addition, the Board of Trustees noted that no initial sales or other
charges would be imposed on any of the shares of the Acquiring Funds issued to
the shareholders of the Acquired Funds in connection with the Reorganizations.
Finally, the Board of Trustees reviewed the principal terms of the Agreement.
The Board of Trustees noted that the Acquired Funds would be provided with an
opinion of counsel that the Reorganizations would be tax-free as to each
Acquired Fund and its shareholders.
Based on the foregoing, and their evaluation of the information
presented to them, the Board of Trustees determined that the Reorganizations
will not dilute the interests of the shareholders of either of the Acquired
Funds and are in the best interest of the shareholders of each of the Acquired
Funds in view of the better performance and generally lower or comparable
operating expenses of the Acquiring Funds with which they will be combined.
Therefore, the Board of Trustees recommended the approval of the Reorganizations
by the shareholders of each Acquired Fund.
27
<PAGE> 35
OTHER TERMS
The Agreement may be amended without shareholder approval by mutual
agreement of AIM Investment and AIM International. If any amendment is made to
the Agreement which effects a material change to the Agreement and the
Reorganizations, such change will be submitted to the affected shareholders for
their approval.
Each of AIM Investment and AIM International has made representations
and warranties in the Agreement that are customary in matters such as the
Reorganizations. The obligations of AIM Investment and AIM International
pursuant to the Agreement with respect to a particular Acquired Fund or
Acquiring Fund are subject to various conditions, including the following:
o the assets of the Acquired Fund to be acquired by the
Acquiring Fund with which it will be combined shall constitute
at least 90% of the fair market value of the net assets and at
least 70% of the fair market value of the gross assets held by
each of the Acquired Funds immediately prior to the
Reorganizations;
o AIM International's Registration Statement on Form N-14 under
the Securities Act of 1933 (the "1933 Act") shall have been
filed with the SEC and such Registration Statement shall have
become effective, and no stop-order suspending the
effectiveness of the Registration Statement shall have been
issued, and no proceeding for that purpose shall have been
initiated or threatened by the SEC (and not withdrawn or
terminated);
o the shareholders of the Acquired Fund shall have approved
the Agreement; and
o AIM Investment and AIM International shall have received an
opinion from Ballard Spahr Andrews & Ingersoll, LLP, that the
Reorganizations will not result in the recognition of gain or
loss for Federal income tax purposes for the Acquired Fund,
the Acquiring Fund or their shareholders.
The Acquired Fund and the Acquiring Funds have each agreed to bear
their own expenses in connection with the Reorganizations.
The Board of Trustees of AIM Investment may waive without shareholder
approval any default by AIM International or any failure by AIM International to
satisfy any of the conditions to AIM Investments obligations as long as such a
waiver will not have a material adverse effect on the benefits intended under
the Agreement for the shareholders of the Acquired Funds. The Agreement may be
terminated and the Reorganizations may be abandoned by either AIM Investment or
AIM International at any time by mutual agreement of AIM Investment and AIM
International, or by either party in the event that the Acquired Funds
shareholders do not approve the Agreement or if the Closing does not occur on or
before December 31, 2000.
28
<PAGE> 36
FEDERAL TAX CONSEQUENCES
The following is a general summary of the material Federal income tax
consequences of the Reorganizations and is based upon the current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the existing
Treasury regulations thereunder, current administrative rulings of the Internal
Revenue Service ("IRS") and judicial decisions, all of which are subject to
change. The principal Federal income tax consequences that are expected to
result from the Reorganizations, under currently applicable law, are as follows:
o the Reorganizations will each qualify as a "reorganization"
within the meaning of Section 368(a) of the Code;
o no gain or loss will be recognized by an Acquired Fund upon
the transfer of its assets to an Acquiring Fund;
o no gain or loss will be recognized by any shareholder of an
Acquired Fund upon the exchange of shares of an Acquired Fund
solely for shares of an Acquiring Fund;
o the tax basis of the shares of an Acquiring Fund to be
received by a shareholder of an Acquired Fund will be the same
as the tax basis of the shares of the Acquired Fund
surrendered in exchange therefor;
o the holding period of the shares of an Acquiring Fund to be
received by a shareholder of an Acquired Fund will include the
holding period for which such shareholder held the shares of
the Acquired Fund exchanged therefor, provided that such
shares of the Acquired Fund are capital assets in the hands of
such shareholder as of the Closing;
o no gain or loss will be recognized by an Acquiring Fund on the
receipt of assets of an Acquired Fund in exchange for shares
of the Acquiring Fund and the Acquiring Fund's assumption of
the Acquired Fund's liabilities;
o the tax basis of the assets of each Acquired Fund in the hands
of an Acquiring Fund will be the same as the tax basis of such
assets in the hands of the Acquired Fund immediately prior to
the Reorganization; and
o the holding period of the assets of an Acquired Fund to be
received by each Acquiring Fund will include the holding
period of such assets in the hands of the Acquired Fund
immediately prior to the Reorganization.
As a condition to Closing, Ballard Spahr Andrews & Ingersoll, LLP will
render a favorable opinion to AIM Investment and AIM International as to the
foregoing Federal income tax consequences of the Reorganizations, which opinion
will be conditioned upon the accuracy, as of the date of Closing, of certain
representations of AIM Investment and AIM International upon which Ballard Spahr
Andrews & Ingersoll, LLP will rely in rendering its opinion, which
representations
29
<PAGE> 37
include, but are not limited to, the following (taking into account for purposes
thereof any events that are part of the plan of reorganization):
o there is no plan or intention by the shareholders of the
Acquired Funds to redeem a number of shares of the Acquiring
Funds received in the Reorganizations that would reduce an
Acquired Fund shareholders' ownership of Acquiring Fund shares
to a number of shares having a value, as of the Closing Date,
of less than 50% of the value of all of the formerly
outstanding shares of the respective Acquired Fund as of the
Closing Date;
o following the Reorganizations, each Acquiring Fund will
continue the historic business of the respective Acquired Fund
(for this purpose "historic business" shall mean the business
most recently conducted by each Acquired Fund which was not
entered into in connection with the Reorganizations) or use a
significant portion of such Acquired Fund's historic business
assets in its business;
o at the direction of the Acquired Funds, the Acquiring Funds
will issue directly to each Acquired Fund's shareholders pro
rata the shares of the Acquiring Fund that each respective
Acquired Fund constructively receives in the Reorganization
and each Acquired Fund will distribute its other properties
(if any) to its shareholders on, or as promptly as practicable
after, the Closing;
o the Acquiring Funds have no plan or intention to reacquire any
of their shares issued in the Reorganizations, except to the
extent that the Acquiring Funds are required by the Investment
Company Act of 1940 (the "1940 Act") to redeem any of their
shares presented for redemption;
o the Acquiring Funds do not plan or intend to sell or otherwise
dispose of any of the assets of the Acquired Funds acquired in
the Reorganizations, except for dispositions made in the
ordinary course of their business or dispositions necessary to
maintain their status as a "regulated investment company"
("RIC") under the Code;
o the Acquiring Funds, the Acquired Funds and the shareholders
of the Acquired Funds will pay their respective expenses, if
any, incurred in connection with the Reorganizations;
o each Acquiring Fund will acquire at least 90 percent of the
fair market value of the net assets, and at least 70% of the
fair market value of the gross assets, held by each
respective Acquired Fund immediately before the
Reorganizations, including for this purpose any amounts used
by each Acquired Fund to pay its reorganization expenses and
all redemptions and distributions made by the Acquired Fund
immediately before the Reorganizations (other than
redemptions pursuant to a demand of a shareholder in the
ordinary course of the Acquired Fund's business as an
open-end diversified management investment company under the
1940 Act and regular, normal dividends not in excess of the
requirements of Section 852 of the Code); and
30
<PAGE> 38
o the Acquiring Funds and the Acquired Funds have each elected
to be taxed as a RIC under Section 851 of the Code and will
each have qualified for the special Federal tax treatment
afforded RICs under the Code for all taxable periods
(including the last short taxable period of the Acquired Funds
ending on the Closing and the taxable year of the Acquiring
Funds that includes the Closing).
THE FOREGOING DESCRIPTION OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
REORGANIZATIONS IS MADE WITHOUT REGARD TO THE PARTICULAR FACTS AND CIRCUMSTANCES
OF ANY SHAREHOLDER OF THE ACQUIRED FUNDS. THE ACQUIRED FUNDS SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM
OF THE REORGANIZATIONS, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.
ACCOUNTING TREATMENT
The Reorganizations will be accounted for on a tax-free combined basis.
Accordingly, the book cost basis to the Acquiring Funds of the assets of the
Acquired Funds will be the same as the book cost basis of such assets to the
Acquired Funds.
RIGHTS OF SHAREHOLDERS
Currently, the Board of Directors of AIM International is soliciting
proxies from its shareholders to vote on various proposals, including approving
change in its domicile (the "Redomestication") pursuant to an Agreement and Plan
of Reorganization, under which AIM International, which is currently a Maryland
corporation, will reorganize as a Delaware business trust and change its name to
AIM International Mutual Funds (AIMF). These proposals are expected to be
approved by AIM International shareholders at a special meeting of shareholders
to be held on May 3, 2000. If the Redomestication is not approved, AIM
International will continue as a Maryland corporation. The following discussion
provides information with respect to the differences in the rights of
shareholders under Maryland law and Delaware law in the event that the
Redomestication is not approved, and information regarding the differences
between the rights of shareholders under the Agreement and Declaration of Trust
of AIM Investment and the Agreement and Declaration of Trust of AIMF assuming
the Redomestication is approved.
RIGHTS OF SHAREHOLDERS UNDER MARYLAND LAW AND DELAWARE LAW IF REDOMESTICATION IS
NOT APPROVED
General
Currently, AIM International is a Maryland corporation and AIM
Investment is a Delaware business trust. There is much that is similar between
the two forms of organization. For example, the responsibilities, powers and
fiduciary duties of the trustees of the AIM Investment are substantially the
same as those of the directors of AIM International.
31
<PAGE> 39
There are, however, certain differences between the two forms of
organization. The operations of AIM International, as a Maryland corporation,
are governed by its Articles of Incorporation, and amendments and supplements
thereto, and applicable Maryland law. The operations of AIM Investment, as a
Delaware business trust, are governed by its Agreement and Declaration of Trust,
as amended (the "Declaration of Trust") and Delaware law.
Liability of Shareholders
The Delaware Business Trust Act provides that shareholders of a
Delaware business trust shall be entitled to the same limitations of liability
extended to shareholders of private for-profit corporations. There is, however,
a remote possibility that, under certain circumstances, shareholders of a
Delaware business trust might be held personally liable for the trust's
obligations to the extent the courts of another state that does not recognize
such limited liability were to apply the laws of such state to a controversy
involving such obligations. The AIM Investment Declaration of Trust provides
that shareholders of the Acquired Funds shall not be subject to any personal
liability for acts or obligations of the Acquired Funds and that every written
agreement, obligation or other undertaking made or issued by the Acquired Funds
shall contain a provision to the effect that shareholders are not personally
liable thereunder. In addition, the Declaration of Trust provides for
indemnification out of the Acquired Funds' property for any shareholder held
personally liable solely by reason of his or her being or having been a
shareholder. Therefore, the risk of any shareholder incurring financial loss
beyond his investment due to shareholder liability is limited to circumstances
in which the Acquired Funds themselves are unable to meet their obligations and
the express disclaimer of shareholder liabilities is determined not to be
effective. Given the nature of the assets and operations of the Acquired Funds,
the possibility of the Acquired Funds being unable to meet their obligations is
considered remote, and even if a claim were brought against the Funds and a
court determined that shareholders were personally liable, it would likely not
impose a material obligation on a shareholder.
Shareholders of a Maryland corporation generally do not have personal
liability for the corporation's obligations, except that a shareholder may be
liable to the extent that he receives any distribution which exceeds the amount
which he could properly receive under Maryland law or where such liability is
necessary to prevent fraud.
Election of Directors/Trustees; Terms
The shareholders of AIM Investment have elected the trustees of AIM
Investment. Such trustees serve for the life of AIM Investment, subject to the
earlier death, incapacitation, resignation, retirement or removal (see below).
Shareholders may elect successors to such trustees only at annual or special
meetings of shareholders.
The shareholders of AIM International have elected the directors of AIM
International. Each director serves until a successor is elected, subject to
earlier death, incapacitation, resignation, retirement or removal (see below).
Shareholders may elect successors to such directors only at annual or special
meetings of shareholders.
32
<PAGE> 40
Removal of Trustees/Directors
A trustee of AIM Investment may be removed at any time by vote of at
least two-thirds of the trustees or by vote of two-thirds of the outstanding
shares of AIM Investment. The Declaration of Trust provides that vacancies may
be filled by appointment by the remaining trustees.
A director of AIM International may be removed by the affirmative vote
of a majority of the Board of Directors, a committee of the Board of Directors
appointed for such purpose, or the holders of a majority of the outstanding
shares of AIM International.
Meetings of Shareholders
AIM Investment is not required to hold annual meetings of shareholders
unless required by the 1940 Act and does not intend to do so. The By-Laws of AIM
Investment provide that a majority of the Trustees may call special meetings of
shareholders and the Trustees shall call a special meeting of the shareholders
upon written request of the holders of not less than 10% of the Acquired Funds'
shares. Special meetings may be called for the purpose of electing trustees or
for any other action requiring shareholder approval, or for any matter deemed by
the trustees to be necessary or desirable.
AIM International is not required to hold annual meetings of
shareholders and does not intend to do so unless required by the 1940 Act. AIM
International's Bylaws provide that a special meeting of shareholders may be
called by the President, Secretary, a majority of the Board of Directors or
holders of shares entitled to cast at least 10% of the votes entitled to be cast
at the special meeting. Requests for special meetings must, among other things,
state the purpose of such meeting and the matters to be voted upon. No special
meeting may be called to consider any matter previously voted upon at a special
meeting called by the shareholders during the preceding twelve months, unless
requested by a majority of all shares entitled to vote at such meeting.
Liability of Directors/Trustees and Officers; Indemnification
Delaware law provides that trustees of a business trust shall not be
liable to the business trust or its shareholders for acting in good faith
reliance on the provisions of its governing instrument and that the trustee's
liabilities may be expanded or restricted by such instrument. Under the AIM
Investment Declaration of Trust, the trustees and officers of AIM Investment are
not liable for any act or omission or any conduct whatsoever in their capacity
as trustees, except for liability to the trust or shareholders due to willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of trustee. Delaware law allows a business
trust to indemnify and hold harmless any trustee or other person against any and
all claims and demands. The AIM Investment Declaration of Trust require the
indemnification of its trustees and officers to the fullest extent permitted by
Delaware law, except with respect to any matter in which it has been determined
that such director or officer acted with willful misfeasance, bad faith, gross
negligence or reckless disregard of his or her duties.
33
<PAGE> 41
Maryland law permits a corporation to eliminate liability of its
directors and officers to the corporation or its stockholders, except for
liability arising from receipt of an improper benefit or profit and from active
and deliberate dishonesty. AIM International's Articles of Incorporation
eliminate director and officer liability to the fullest extent permitted under
Maryland law. Under Maryland law, indemnification of a corporation's directors
and officers is mandatory if a director or officer has been successful on the
merits or otherwise in the defense of certain proceedings. Maryland law permits
indemnification for other matters unless it is established that the act or
omission giving rise to the proceeding was committed in bad faith, a result of
active and deliberate dishonesty, or one in which a director or officer actually
received an improper benefit.
Termination
AIM Investment or any series or class of shares of beneficial interest
in AIM Investment may be terminated by (1) a majority shareholder vote of AIM
Investment or the affected series or class, respectively, or (2) if there are
fewer than 100 shareholders of record of AIM Investment or of such terminating
series or class, the trustees pursuant to written notice to the shares of AIM
Investment or the affected series or class.
Maryland law provides that AIM International may be dissolved by the
vote of a majority of the Board of Directors and two-thirds of the shares
entitled to vote on the dissolution.
Voting Rights of Shareholders
The AIM Investment Declaration of Trust grants shareholders power to
vote only with respect to the following: (i) election of trustees; (ii) removal
of trustees, (iii) approval of investment advisory contracts, as required by the
1940 Act; (iv) termination of AIM Investment or a series of class of its shares
of beneficial interest, (v) amendment of the Declaration of Trust, (vi) sale of
all or substantially all of the assets of AIM Investment or one of its
investment portfolios, (vii) merger or consolidation of AIM Investment or any of
its investment portfolios, with certain exceptions, and (viii) approval of such
additional matters as may be required by law or as the trustees, in their sole
discretion, shall determine.
Shareholders of a Maryland corporation such as AIM International are
entitled to vote on, among other things, those matters which effect fundamental
changes in the corporate structure (such as a merger, consolidation or sale of
substantially all of the assets of the corporation) as provided by Maryland
corporation law.
Dissenters' Rights
Neither Delaware law nor the Declaration of Trust confers upon AIM
Investment shareholders appraisal or dissenters' rights.
34
<PAGE> 42
Under Maryland law, AIM International's shareholders may not demand the
fair value of their shares from the successor company in a transaction involving
the transfer of the Acquiring Funds' assets, and are bound by the terms of the
transaction.
Amendments to Organization Documents
Consistent with Delaware law, the Board of Trustees of AIM Investment
may, without shareholder approval, amend the Declaration of Trust at any time,
except that no amendment may be made which repeals the limitations of personal
liability of any shareholder, which reduces the amount payable in respect of the
shares of AIM Investment upon liquidation of AIM Investment or which diminishes
or eliminates any voting rights pertaining to the shares of AIM Investment,
without approval of the majority of the shares of AIM Investment. The trustees
shall have the power to alter, amend or repeal the Bylaws of AIM Investment or
adopt new Bylaws at any time.
Consistent with Maryland law, AIM International reserves the right to
amend, alter, change or repeal any provision contained in their Articles of
Incorporation in the manner now or hereafter prescribed by statute, including
any amendment that alters the contract rights, as expressly set forth in the
Articles of Incorporation, of any outstanding stock, and all rights conferred on
shareholders are granted subject to this reservation. The Board of Directors of
AIM International may approve amendments to the Articles of Incorporation to
classify or reclassify unissued shares of a class of stock without shareholder
approval. Other amendments to the AIM International Articles of Incorporation
may be adopted if approved by a vote of a majority of the shares at any meeting
at which a quorum is present. The AIM International Bylaws provide that the
Bylaws may be amended at any regular meeting or special meeting of the
stockholders provided that notice of such amendment is contained in the notice
of the special meeting. Except as to any particular Bylaw which is specified as
not subject to amendment by the Board of Directors, the Bylaws may be also
amended by the affirmative vote of a majority of the Board of Directors at any
regular or special meetings of the Board.
RIGHTS OF SHAREHOLDERS UNDER DECLARATIONS OF TRUST OF AIM INVESTMENT AND AIMF IF
THE REDOMESTICATION IS APPROVED
Generally, there will be no material differences between the rights of
shareholders under the Agreement and Declaration of Trust of AIM Investment and
the rights of shareholders under the proposed Agreement and Declaration of Trust
of AIMF. However, under the Agreement and Declaration of Trust of AIMF, Class B
shares, other than those purchased through reinvestment dividends and
distributions will be subject to automatic conversion to Class A shares eight
years after the date of purchase.
Class B shares purchased through the reinvestment of dividends and
distributions paid in respect of Class B shares will be considered held in a
separate sub-account, and will automatically convert to Class A shares in the
same proportion as any Class B shares (other than those in the sub-account)
convert to Class A shares unless the Acquiring Funds implement any amendment to
its Plan of Distribution adopted pursuant to Rule 12b-1 under the 1940 Act. In
that case, if the Trustees determine that the amendment would materially
increase the charges that may be borne by the Class
35
<PAGE> 43
A shareholders under the 12b-1 plan, the Class B shares will stop converting to
the Class A shares unless the Class B shares, voting separately, approve the
amendment.
OWNERSHIP OF THE ACQUIRING FUNDS AND THE ACQUIRED FUNDS SHARES
SIGNIFICANT HOLDERS
Listed below is the name, address and percent ownership of each person
who as of April 3, 2000, to the knowledge of AIM Investment, owned beneficially
5% or more of any class of the outstanding shares of the Acquired Funds:
AIM GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
PERCENT
CLASS OF NUMBER OF SHARES BENEFICIAL
NAME AND ADDRESS SHARES OWNED OWNERSHIP
- ---------------- -------- ---------------- ----------
<S> <C> <C> <C>
</TABLE>
AIM GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION>
PERCENT
CLASS OF NUMBER OF SHARES BENEFICIAL
NAME AND ADDRESS SHARES OWNED OWNERSHIP
- ---------------- -------- ---------------- ----------
<S> <C> <C> <C>
</TABLE>
Listed below is the name, address and percent ownership of each person
who as of [APRIL 3, 2000] to the knowledge of AIM International, owned
beneficially 5% or more of the outstanding shares of the Acquiring Funds:
36
<PAGE> 44
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
NUMBER OF PERCENT
CLASS OF SHARES BENEFICIAL
NAME AND ADDRESS SHARES OWNED OWNERSHIP
- ---------------- -------- --------- ----------
<S> <C> <C> <C>
</TABLE>
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
NUMBER OF PERCENT
CLASS OF SHARES BENEFICIAL
NAME AND ADDRESS SHARES OWNED OWNERSHIP
- ---------------- -------- --------- ----------
<S> <C> <C> <C>
</TABLE>
OWNERSHIP OF OFFICERS AND DIRECTORS/TRUSTEES
To the best of the knowledge of AIM International, the beneficial
ownership of shares of the Acquiring Funds by officers and directors of AIM
International as a group constituted less than 1% of the outstanding shares of
each such fund as of April 3, 2000. To the best of the knowledge of AIM
Investment, the beneficial ownership of shares of the Acquired Funds by officers
or trustees of AIM Investment as a group constituted less than 1% of the
outstanding shares of such fund as of [APRIL 3, 2000].
CAPITALIZATION
The following table sets forth as of October 31, 1999, (i) the
capitalization of the Acquiring Funds Class A shares, Class B Shares and Class C
shares, (ii) the capitalization of the Acquired Funds Class A shares, Class B
shares and Class C shares, and (iii) the pro forma capitalization of the
Acquiring Funds Class A shares, Class B shares and Class C shares as adjusted to
give effect to the transactions contemplated by the Agreement.
37
<PAGE> 45
AIM GLOBAL INCOME FUND AND AIM GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
AIM GLOBAL AIM GLOBAL
GOVERNMENT GOVERNMENT PRO FORMA AIM GLOBAL
AIM GLOBAL INCOME FUND INCOME FUND INCOME FUND INCOME FUND CLASS A
CLASS A SHARES CLASS A SHARES ADVISOR CLASS(1) SHARES AS ADJUSTED
---------------------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Net Assets $51,076,640 $85,669,094 $206,144 $136,951,876
Shares Outstanding 5,255,715 10,462,287 25,070 14,092,362
Net Asset Value Per
Share $ 9.72 $ 8.19 $ 8.22 $ 9.72
</TABLE>
<TABLE>
<CAPTION>
AIM GLOBAL
AIM GLOBAL GOVERNMENT INCOME PRO FORMA AIM GLOBAL
INCOME FUND FUND INCOME FUND CLASS B
CLASS B SHARES CLASS B SHARES SHARES AS ADJUSTED
-------------- ----------------- --------------------
<S> <C> <C> <C>
Net Assets $34,422,767 $55,849,297 $90,272,064
Shares Outstanding 3,543,063 6,821,145 9,290,509
Net Asset Value Per Share $ 9.72 $ 8.19 $ 9.72
</TABLE>
<TABLE>
<CAPTION>
AIM GLOBAL
AIM GLOBAL GOVERNMENT INCOME PRO FORMA AIM GLOBAL
INCOME FUND FUND INCOME FUND CLASS C
CLASS C SHARES CLASS C SHARES SHARES AS ADJUSTED
-------------- ----------------- --------------------
<S> <C> <C> <C>
Net Assets $1,883,505 $242,724 $2,126,229
Shares Outstanding 193,937 29,660 218,923
Net Asset Value Per Share $ 9.71 $ 8.18 $ 9.71
</TABLE>
AIM GLOBAL GROWTH FUND AND AIM GLOBAL GROWTH & INCOME FUND
<TABLE>
<CAPTION> AIM GLOBAL AIM GLOBAL
GROWTH & INCOME GROWTH & PRO FORMA AIM GLOBAL
AIM GLOBAL GROWTH FUND FUND INCOME FUND GROWTH FUND CLASS A
CLASS A SHARES CLASS A SHARES ADVISOR CLASS(1) SHARES AS ADJUSTED
---------------------- --------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Net Assets $388,549,182 $254,060,449 $5,404,917 $648,014,548
Shares Outstanding 16,580,603 32,565,310 693,765 27,652,470
Net Asset Value Per
Share $ 23.43 $ 7.80 $ 7.79 $ 23.43
</TABLE>
38
<PAGE> 46
<TABLE>
<CAPTION>
AIM AIM
GLOBAL GROWTH GLOBAL GROWTH & PRO FORMA AIM GLOBAL
FUND INCOME FUND GROWTH FUND CLASS B
CLASS B SHARES CLASS B SHARES SHARES AS ADJUSTED
-------------- --------------- --------------------
<S> <C> <C> <C>
Net Assets $425,345,431 $376,180,588 $801,526,019
Shares Outstanding 18,669,410 48,228,206 35,183,019
Net Asset Value Per Share $ 7.80 $ 22.78
$ 22.78
</TABLE>
<TABLE>
<CAPTION>
AIM AIM
GLOBAL GROWTH GLOBAL GROWTH & PRO FORMA AIM GLOBAL
FUND INCOMEFUND GROWTH FUND CLASS C
CLASS C SHARES CLASS C SHARES SHARES AS ADJUSTED
-------------- --------------- --------------------
<S> <C> <C> <C>
Net Assets $31,356,460 $1,344,034 $32,700,494
Shares Outstanding 1,375,854 172,358 1,434,844
Net Asset Value Per Share $ 22.79 $ 7.80 $ 22.79
</TABLE>
- --------------
(1) Effective February 11, 2000, GLOBAL GOVERNMENT INCOME and GLOBAL GROWTH
& INCOME discontinued sales of Advisor Class shares and converted them
into Class A shares.
LEGAL MATTERS
Certain legal matters concerning AIM International and its
participation in the Reorganizations, the issuance of shares of the Acquiring
Funds in connection with the Reorganizations and the tax consequences of the
Reorganizations will be passed upon by Ballard Spahr Andrews & Ingersoll, LLP,
1735 Market Street, 51st Floor, Philadelphia, PA 19103-7599. Certain legal
matters concerning AIM Investment and its participation in the Reorganizations
will be passed upon by Kirkpatrick & Lockhart, LLP 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800.
INFORMATION FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
This Proxy Statement/Prospectus and the related Statement of Additional
Information do not contain all the information set forth in the registration
statements and the exhibits relating thereto and annual reports which AIM
Investment and AIM International have filed with the SEC pursuant to the
requirements of the 1933 Act and the 1940 Act, to which reference is hereby
made. The SEC file number for AIM Investment's registration statement containing
the Prospectus and Statement of Additional Information relating to the Acquired
Funds is Registration No. 2-57526. Such Prospectus and Statement of Additional
Information are incorporated herein by reference. The SEC file number for AIM
International's registration statement containing the Prospectus and Statement
of Additional Information relating to the Acquiring Funds is Registration No.
811-6463. Such Prospectus and Statement of Additional Information are
incorporated herein by reference.
39
<PAGE> 47
AIM International and AIM Investment are subject to the informational
requirements of the 1940 Act and in accordance therewith file reports and other
information with the SEC. Reports, proxy statements, registration statements and
other information filed by AIM Investment and AIM International (including the
Registration Statement of AIM International relating to the Acquiring Funds on
Form N-14 of which this Proxy Statement/Prospectus is a part and which is hereby
incorporated by reference) may be inspected without charge and copied at the
public reference facilities maintained by the SEC at Room 1014, Judiciary Plaza,
450 Fifth Street, NW, Washington, DC 20549, and at the following regional
offices of the SEC: 7 World Trade Center, New York, New York 10048; and 500 West
Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such material may
also be obtained from the Public Reference Section of the SEC at 450 Fifth
Street, NW, Washington, DC 20549, at the prescribed rates. The SEC maintains a
Web site at http://www.sec.gov that contains information regarding AIM
International, AIM Investment and other registrants that file electronically
with the SEC.
ADDITIONAL INFORMATION ABOUT THE ACQUIRING FUNDS AND
THE ACQUIRED FUNDS
Currently, the Board of Directors of AIM International. is soliciting
proxies from its shareholders to vote on various proposals, including changing
the Acquiring Funds' fundamental investment restrictions and changing the
Acquiring Funds' fundamental investment objectives so that they are
non-fundamental. These proposals are expected to be approved by AIM
International. shareholders at a special meeting of shareholders to held on May
3, 2000, and this Proxy Statement/Prospectus has been prepared assuming such
approval. If these proposals are not approved, AIM International will provide
you with additional information.
For more information with respect to AIM International and the
Acquiring Funds concerning the following topics, please refer to the Acquiring
Funds Prospectuses as indicated: (i) see "Investment Objectives and Strategies"
and "Fund Management" for further information regarding AIM International and
the Acquiring Funds; (ii) see "Investment Objectives and Strategies," "Fund
Management," and "Other Information" for further information regarding
management of the Acquiring Funds; (iii) see "Fund Management" and "Other
Information" for further information regarding the shares of the Acquiring
Funds; (iv) see "Fund Management," "Other Information," and "Shareholder
Information" for further information regarding the purchase, redemption and
repurchase of shares of the Acquiring Funds.
For more information with respect to AIM Investment and the Acquired
Funds concerning the following topics, please refer to the Acquired Funds
Prospectuses as indicated: (i) see "Investment Objectives and Strategies" and
"Fund Management" for further information regarding AIM Investment and the
Acquired Funds; (ii) see discussion in "Investment Objectives and Strategies,"
"Fund Management," and "Other Information" for further information regarding
management of the Acquired Funds; (iii) see "Fund management" and "Other
Information" for further information regarding the shares of the Acquired Funds;
(iv) see "Fund Management," "Other Information," and "Shareholder Information"
for further information regarding the purchase, redemption and repurchase of the
Acquired Funds.
40
<PAGE> 48
Appendix I
AGREEMENT
and
PLAN OF REORGANIZATION
for
AIM GLOBAL GOVERNMENT INCOME FUND
and
AIM GLOBAL GROWTH & INCOME FUND,
separate portfolios of
AIM INVESTMENT FUNDS
March 22, 2000
<PAGE> 49
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 DEFINITIONS .................................................................................1
Section 1.1 Definitions.................................................................1
ARTICLE 2 TRANSFER OF ASSETS...........................................................................4
Section 2.1 Reorganizations.............................................................4
Section 2.2 Computation of Net Asset Value..............................................5
Section 2.3 Valuation...................................................................5
Section 2.4 Delivery....................................................................6
Section 2.5 Termination of Series.......................................................6
Section 2.6 Issuance of Acquiring Fund Shares...........................................6
Section 2.7 Investment Securities.......................................................7
Section 2.8 Liabilities.................................................................7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF AIM INVESTMENT.............................................7
Section 3.1 Organization; Authority.....................................................7
Section 3.2 Registration and Regulation of AIM Investment...............................7
Section 3.3 Financial Statements........................................................7
Section 3.4 No Material Adverse Changes; Contingent Liabilities.........................8
Section 3.5 Acquired Fund Shares; Liabilities; Business Operations......................8
Section 3.6 Accountants.................................................................9
Section 3.7 Binding Obligation..........................................................8
Section 3.8 No Breaches or Defaults.....................................................9
Section 3.9 Authorizations or Consents..................................................9
Section 3.10 Permits.....................................................................9
Section 3.11 No Actions, Suits or Proceedings............................................9
Section 3.12 Contracts..................................................................10
Section 3.13 Properties and Assets......................................................10
Section 3.14 Taxes......................................................................10
Section 3.15 Benefit and Employment Obligations.........................................11
Section 3.16 Brokers....................................................................11
Section 3.17 Voting Requirements........................................................11
Section 3.18 State Takeover Statutes....................................................11
Section 3.19 Books and Records..........................................................11
Section 3.20 Prospectus and Statement of Additional Information.........................11
Section 3.21 No Distribution............................................................11
Section 3.22 Liabilities of the Acquired Funds..........................................11
Section 3.23 Value of Shares............................................................12
Section 3.24 Shareholder Expenses.......................................................12
Section 3.25 Intercompany Indebtedness..................................................12
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AIM INTERNATIONAL.........................................12
Section 4.1 Organization; Authority....................................................12
Section 4.2 Registration and Regulation of AIM International...........................12
Section 4.3 Financial Statements.......................................................12
</TABLE>
i
<PAGE> 50
<TABLE>
<S> <C>
Section 4.4 No Material Adverse Changes; Contingent Liabilities........................13
Section 4.5 Registration of Acquiring Fund Class A Shares and Acquiring Fund
Class B Shares and Acquiring Fund Class C Shares...........................13
Section 4.6 Accountants................................................................14
Section 4.7 Binding Obligation.........................................................14
Section 4.8 No Breaches or Defaults....................................................14
Section 4.9 Authorizations or Consents.................................................14
Section 4.10 Permits....................................................................14
Section 4.11 No Actions, Suits or Proceedings...........................................15
Section 4.12 Taxes......................................................................15
Section 4.13 Brokers....................................................................15
Section 4.14 Representations Concerning the Reorganization..............................16
Section 4.15 Prospectus and Statement of Additional Information.........................16
Section 4.16 Value of Shares............................................................16
Section 4.17 Intercompany Indebtedness; Consideration...................................17
ARTICLE 5 COVENANTS...................................................................................17
Section 5.1 Conduct of Business........................................................17
Section 5.2 Announcements..............................................................18
Section 5.3 Expenses...................................................................18
Section 5.4 Further Assurances.........................................................18
Section 5.5 Notice of Events...........................................................18
Section 5.6 Access to Information......................................................19
Section 5.7 Consents, Approvals and Filings............................................19
Section 5.8 Submission of Agreement to Shareholders....................................19
ARTICLE 6 CONDITIONS PRECEDENT TO THE REORGANIZATION..................................................19
Section 6.1 Conditions Precedent of AIM International..................................19
Section 6.2 Mutual Conditions..........................................................20
Section 6.3 Conditions Precedent of AIM Investment.....................................21
Section 6.4 Transactions Independent...................................................22
ARTICLE 7 TERMINATION OF AGREEMENT....................................................................22
Section 7.1 Termination................................................................22
Section 7.2 Survival After Termination.................................................22
ARTICLE 8 MISCELLANEOUS...............................................................................23
Section 8.1 Survival of Representations and Warranties.................................23
Section 8.2 Governing Law..............................................................23
Section 8.3 Binding Effect, Persons Benefitting, No Assignment.........................23
Section 8.4 Obligations of AIM International and AIM Investment........................23
Section 8.5 Amendments.................................................................23
Section 8.6 Enforcement................................................................24
Section 8.7 Interpretation.............................................................24
</TABLE>
ii
<PAGE> 51
<TABLE>
<S> <C>
Section 8.8 Counterparts...............................................................24
Section 8.9 Entire Agreement; Schedules................................................24
Section 8.10 Notices....................................................................24
Section 8.11 Representations by AIM Advisors............................................25
Schedule 6.1(d) Opinion of Counsel to AIM Investment
Schedule 6.2(g) Tax Opinions
Schedule 6.3(d) Opinion of Counsel to AIM International
</TABLE>
iii
<PAGE> 52
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of March 22, 2000 (this
"Agreement"), by and among AIM Investment Funds, a Delaware business trust ("AIM
Investment"), acting on behalf of AIM Global Government Income Fund and AIM
Global Growth & Income Fund, each a separate series of AIM Investment (the
"Acquired Funds"), AIM International Funds, Inc., a Maryland corporation ("AIM
International"), acting on behalf of AIM Global Income Fund and AIM Global
Growth Fund, each a separate series of AIM International (the "Acquiring
Funds"), and A I M Advisors, Inc. ("AIM Advisors"), a Delaware corporation.
WITNESSETH
WHEREAS, AIM Investment is an investment company registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
(as defined below) that offers separate series of its shares representing
interests in its investment portfolios, including AIM Global Government Income
Fund and AIM Global Growth & Income Fund, for sale to the public; and
WHEREAS, AIM International is an investment company registered with the
SEC under the Investment Company Act that offers separate series of its shares
representing interests in its investment portfolios, including AIM Global Income
Fund and AIM Global Growth Fund for sale to the public; and
WHEREAS, AIM Advisors provides investment advisory services to both AIM
Investment and AIM International; and
WHEREAS, each Acquired Fund desires to provide for its reorganization
through the transfer of all of its assets to the Acquiring Fund with which it
will combine in exchange for the assumption by the Acquiring Fund of all of the
liabilities of such Acquired Fund and the issuance by AIM International of
shares of such Acquiring Fund in the manner set forth in this Agreement; and
WHEREAS, this Agreement is intended to be and is adopted by the parties
hereto as a Plan of Reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and the
agreements and undertakings contained in this Agreement, AIM Investment, AIM
International and AIM Advisors agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. For all purposes in this Agreement, the
following terms shall have the respective meanings set forth in this Section 1.1
(such definitions to be equally applicable to both the singular and plural forms
of the terms herein defined):
"Acquired Fund" means AIM Global Government Income Fund and AIM Global
Growth & Income Fund, each a separate series of AIM Investment.
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"Acquired Fund Financial Statements" shall have the meaning set forth
in Section 3.3 of this Agreement.
"Acquired Fund Shareholders" means the holders of record as of the
Effective Time of the issued and outstanding shares of beneficial interest in an
Acquired Fund.
"Acquired Fund Shareholders Meeting" means a meeting of the
shareholders of an Acquired Fund convened in accordance with applicable law and
the Agreement and Declaration of Trust of AIM Investment to consider and vote
upon the approval of this Agreement and the Reorganization of such Acquired Fund
contemplated by this Agreement.
"Acquired Fund Shares" means the issued and outstanding shares of
beneficial interest in an Acquired Fund.
"Acquiring Fund" means AIM Global Income Fund and AIM Global Growth
Fund, each a separate series of AIM International.
"Acquiring Fund Class A Shares" means Class A Shares of the capital
stock of an Acquiring Fund issued by AIM International.
"Acquiring Fund Class B Shares" means Class B Shares of the capital
stock of an Acquiring Fund issued by AIM International.
"Acquiring Fund Class C Shares" means Class C Shares of the capital
stock of Acquiring Fund issued by AIM International.
"Acquiring Fund Financial Statements" shall have the meaning set forth
in Section 4.3 of this Agreement.
"Acquiring Fund Shares" means shares of the capital stock of AIM
International issued pursuant to Section 2.6 of this Agreement.
"Advisers Act" means the Investment Advisers Act of 1940, as amended,
and all rules and regulations of the SEC adopted pursuant thereto.
"Affiliated Person" means an affiliated person as defined in Section
2(a)(3) of the Investment Company Act.
"Agreement" means this Agreement and Plan of Reorganization, together
with all schedules and exhibits attached hereto and all amendments hereto and
thereof.
"AIM Investment" means AIM Investment Funds, a Delaware business trust.
"AIM Investment Registration Statement" means the registration
statement on Form N-1A of AIM Investment, as amended, 1940 Act Registration No.
811-05426.
"AIM International" means AIM International Funds, Inc., a Maryland
corporation.
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"AIM International Registration Statement" means the registration
statement on Form N-1A of AIM International, as amended, 1940 Act Registration
No. 811-6463.
"Benefit Plan" means any material "employee benefit plan" (as defined
in Section 3(3) of ERISA) and any material bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, vacation, retirement, profit sharing, welfare plans or other plan,
arrangement or understanding maintained or contributed to by AIM Investments on
behalf of an Acquired Fund, or otherwise providing benefits to any current or
former employee, officer or trustee of AIM Investments.
"Closing" means the transfer of the assets of an Acquired Fund to the
Acquiring Fund with which it will combine, the assumption of all of such
Acquired Fund's liabilities by the Acquiring Fund and the issuance of the
Acquiring Fund Shares directly to the Acquired Fund Shareholders as described in
Section 2.1 of this Agreement.
"Closing Date" means June 12, 2000 or such other date as the parties
may mutually determine.
"Code" means the Internal Revenue Code of 1986, as amended, and all
rules and regulations adopted pursuant thereto.
"Custodian" means State Street Bank and Trust Company acting in its
capacity as custodian for the assets of the Acquiring Funds and the Acquired
Funds.
"Effective Time" means 8:00 a.m. Eastern Time on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules or regulations adopted pursuant thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and all rules and regulations adopted pursuant thereto.
"Governmental Authority" means any foreign, United States or state
government, government agency, department, board, commission (including the SEC)
or instrumentality, and any court, tribunal or arbitrator of competent
jurisdiction, and any governmental or non-governmental self-regulatory
organization, agency or authority (including the National Association of
Securities Dealers, Inc., the Commodity Futures Trading Commission, the National
Futures Association, the Investment Management Regulatory Organization Limited
and the Office of Fair Trading).
"Investment Company Act" means the Investment Company Act of 1940, as
amended, and all rules and regulations adopted pursuant thereto.
"Lien" means any pledge, lien, security interest, charge, claim or
encumbrance of any kind.
"Material Adverse Effect" means an effect that would cause a change in
the condition (financial or otherwise), properties, assets or prospects of an
entity having an adverse monetary effect in an amount equal to or greater than
$50,000.
"Person" means an individual or a corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
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"Reorganization" means the acquisition of the assets of an Acquired
Fund by the Acquiring Fund with which it will combine in consideration of the
assumption by such Acquiring Fund of all of the liabilities of the Acquired Fund
and the issuance by AIM International of Acquiring Fund Shares directly to
Acquired Fund Shareholders as described in this Agreement, and the termination
of such Acquired Fund's status as designated series of shares of AIM Investment.
"Required Shareholder Vote" shall have the meaning set forth in Section
3.17 of this Agreement.
"Return" means any return, report or form or any attachment thereto
required to be filed with any taxing authority.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations adopted pursuant thereto.
"Tax" means any tax or similar governmental charge, impost or levy
(including income taxes (including alternative minimum tax and estimated tax),
franchise taxes, transfer taxes or fees, sales taxes, use taxes, gross receipts
taxes, value added taxes, employment taxes, excise taxes, ad valorem taxes,
property taxes, withholding taxes, payroll taxes, minimum taxes, or windfall
profit taxes), together with any related penalties, fines, additions to tax or
interest, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof.
"Valuation Date" shall have the meaning set forth in Section 2.3 of
this Agreement.
ARTICLE 2
TRANSFER OF ASSETS
Section 2.1 Reorganizations.
(a) Reorganization of AIM Global Government Income Fund. At the
Effective Time, all of the assets of AIM Global Government Income Fund shall be
delivered to the Custodian for the account of AIM Global Income Fund in exchange
for the assumption by AIM Global Income Fund of all of the liabilities of any
kind of AIM Global Government Income Fund and delivery by AIM International
directly to (i) the holders of record as of the Effective Time of the issued and
outstanding Class A shares of AIM Global Government Income Fund of a number of
AIM Global Income Fund Class A shares (including, if applicable, fractional
shares rounded to the nearest thousandth), to (ii) the holders of record as of
the Effective Time of the issued and outstanding Class B shares of AIM Global
Government Income Fund of a number of AIM Global Income Fund Class B shares
(including, if applicable, fractional shares rounded to the nearest thousandth),
and to (iii) the holders of record as of the Effective Time of the issued and
outstanding Class C shares of AIM Global Government Income Fund of a number of
AIM Global Income Fund Class C shares (including, if applicable, fractional
shares rounded to the nearest thousandth), having an aggregate net asset value
equal to the net value of the assets of AIM Global Government Income Fund so
transferred, assigned and delivered, all determined and adjusted as provided in
Section 2.2 below. Upon delivery of such assets, AIM Global Income Fund will
receive good and marketable title to such assets free and clear of all Liens
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(b) Reorganization of AIM Global Growth & Income Fund. At the Effective
Time, all of the assets of AIM Global Growth & Income Fund shall be delivered to
the Custodian for the account of AIM Global Growth Fund in exchange for the
assumption by AIM Global Growth Fund of all of the liabilities of any kind of
AIM Global Growth & Income Fund and delivery by AIM International directly to
(i) the holders of record as of the Effective Time of the issued and outstanding
Advisor Class and Class A shares of AIM Global Growth & Income Fund of a number
of AIM Global Growth Fund Class A shares (including, if applicable, fractional
shares rounded to the nearest thousandth), to (ii) the holders of record as of
the Effective Time of the issued and outstanding Class B shares of AIM Global
Growth & Income Fund of a number of AIM Global Growth Fund Class B shares
(including, if applicable, fractional shares rounded to the nearest thousandth),
and to (iii) the holders of record as of the Effective Time of the issued and
outstanding Class C shares of AIM Global Growth Fund of a number of AIM Global
Growth Fund Class C shares (including, if applicable, fractional shares rounded
to the nearest thousandth), having an aggregate net asset value equal to the net
value of the assets of AIM Global Growth & Income Fund so transferred, assigned
and delivered, all determined and adjusted as provided in Section 2.2 below.
Upon delivery of such assets, AIM Global Growth Fund will receive good and
marketable title to such assets free and clear of all Liens.
Section 2.2 Computation of Net Asset Value.
(a) The net asset value of the Acquiring Fund Shares, and the net value
of the assets of an Acquired Fund, shall, in each case, be determined as of the
close of regular trading on the NYSE on the Valuation Date.
(b) The net asset value of the Acquiring Fund Shares shall be computed
in accordance with the policies and procedures of the Acquiring Fund as
described in the AIM International Registration Statement.
(c) The net value of the assets of an Acquired Fund to be transferred
to an Acquiring Fund pursuant to this Agreement shall be computed in accordance
with the policies and procedures of the Acquired Fund as described in the AIM
Investment Registration Statement.
(d) All computations of value regarding the net assets of an Acquired
Fund and the net asset value of the Acquiring Fund Shares to be issued pursuant
to this Agreement shall be made by agreement of AIM Investment and AIM
International. The parties agree to use commercially reasonable efforts to
resolve any material pricing differences between the prices of portfolio
securities determined in accordance with their respective pricing policies and
procedures.
Section 2.3 Valuation Date. The assets of an Acquired Fund and the net
asset value per share of the Acquiring Fund Shares shall be valued as of the
close of regular trading on the NYSE on the business day next preceding the
Valuation Date (the "Valuation Date"). The share transfer books of the Acquired
Funds will be permanently closed as of the close of business on the Valuation
Date and only requests for the redemption of shares of the Acquired Funds
received in proper form prior to the close of regular trading on the NYSE on the
Valuation Date shall be accepted by the Acquired Funds. Redemption requests
thereafter received by an Acquired Fund shall be deemed to be redemption
requests for Acquiring Fund Class A Shares, Acquiring Fund Class B Shares or
Acquiring Fund Class C Shares, as applicable (assuming that the transactions
contemplated by this Agreement have been consummated), to be distributed to the
Acquired Fund Shareholders under this Agreement.
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Section 2.4 Delivery.
(a) Assets held by an Acquired Fund shall be delivered by AIM
Investment to the Custodian on the Closing Date. No later than three (3)
business days preceding the Closing Date, AIM Investment shall instruct the
Custodian to transfer such assets to the account of the respective Acquiring
Fund. The assets so delivered shall be duly endorsed in proper form for transfer
in such condition as to constitute a good delivery thereof, in accordance with
the custom of brokers, and shall be accompanied by all necessary state stock
transfer stamps, if any, or a check for the appropriate purchase price thereof.
Cash held by an Acquired Fund shall be delivered on the Closing Date and shall
be in the form of currency or wire transfer in Federal funds, payable to the
order of the account of the respective Acquiring Fund at the Custodian.
(b) If, on the Closing Date, an Acquired Fund is unable to make
delivery in the manner contemplated by Section 2.4(a) of securities held by the
Acquired Fund for the reason that any of such securities purchased prior to the
Closing Date have not yet been delivered to the Acquired Fund or its broker,
then AIM International shall waive the delivery requirements of Section 2.4(a)
with respect to said undelivered securities if the Acquired Fund has delivered
to the Custodian by or on the Closing Date, and with respect to said undelivered
securities, executed copies of an agreement of assignment and escrow and due
bills executed on behalf of said broker or brokers, together with such other
documents as may be required by AIM International or the Custodian, including
brokers' confirmation slips.
Section 2.5 Termination of Series. As soon as reasonably practicable
after the Closing Date, the status of each Acquired Fund as a designated series
of shares of AIM Investment shall be terminated; provided, however, that the
termination of the status of an Acquired Fund as a series of shares of AIM
Investment shall not be required if the Reorganization of such Acquired Fund
shall not have been consummated.
Section 2.6 Issuance of Acquiring Fund Shares. At the Effective Time,
each Acquired Fund Shareholder of record as of the close of regular trading on
the NYSE on the Valuation Date holding such Acquired Fund Class A shares shall
be issued that number of full and fractional Class A shares of the Acquiring
Fund with which it will combine having a net asset value equal to the net asset
value of such Acquired Fund Class A shares held by such Acquired Fund
Shareholder on the Valuation Date, each Acquired Fund Shareholder of record as
of the Valuation Date holding such Acquired Fund Class B shares shall be issued
that number of full and fractional Class B shares of the Acquiring Fund with
which it will combine having a net asset value equal to the net asset value of
such Acquired Fund Class B shares held by such Acquired Fund Shareholder on the
Valuation Date, and each Acquired Fund Shareholder of record as of the Valuation
Date holding such Acquired Fund Class C shares shall be issued that number of
full and fractional Class C shares of the Acquiring Fund with which it will
combine having a net asset value equal to the net asset value of such Acquired
Fund Class C shares held by such Acquired Fund Shareholder on the Valuation
Date. All issued and outstanding shares of beneficial interest in each Acquired
Fund shall thereupon be canceled on the books of AIM Investment. AIM Investment
shall provide instructions to the transfer agent of AIM International with
respect to the Acquiring Fund Class A Shares, Acquiring Fund Class B Shares and
Acquiring Fund Class C Shares to be issued to Acquired Fund Shareholders. AIM
International shall have no obligation to inquire as to the validity, propriety
or correctness of any such instruction, but shall, in each case, assume that
such instruction is valid, proper and correct. AIM International shall record on
its books the ownership of Acquiring Fund Class A, Acquiring Fund Class B and
Acquiring Fund Class C Shares by Acquired Fund Shareholders and shall forward a
confirmation of such ownership to the Acquired Fund Shareholders. No redemption
or repurchase of such shares credited to former Acquired Fund Shareholders in
respect of the Acquired Fund shares represented by unsurrendered shares
certificates shall be permitted until such certificates have been surrendered to
AIM International for cancellation, or if such certificates are lost or
misplaced, until lost certificate affidavits have been executed and delivered to
AIM International.
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Section 2.7 Investment Securities. On or prior to the
Valuation Date, AIM Investment shall deliver a list setting forth the securities
each Acquired Fund then owns together with the respective Federal income tax
bases thereof. AIM Investment shall provide to AIM International on or before
the Valuation Date, detailed tax basis accounting records for each security to
be transferred to it pursuant to this Agreement. Such records shall be prepared
in accordance with the requirements for specific identification tax lot
accounting and clearly reflect the bases used for determination of gain and loss
realized on the sale of any security transferred to an Acquiring Fund hereunder.
Such records shall be made available by AIM Investment prior to the Valuation
Date for inspection by the Treasurer (or his or her designee) or the auditors of
AIM International upon reasonable request.
Section 2.8 Liabilities. Each Acquired Fund shall use reasonable best
efforts to discharge all of their known liabilities, so far as may be possible,
prior to the Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF AIM INVESTMENT
AIM Investment, on behalf of the Acquired Funds, represents and
warrants to AIM International that:
Section 3.1 Organization; Authority. AIM Investment is duly organized,
validly existing and in good standing under the Delaware Business Trust Act,
with all requisite trust power and authority to enter into this Agreement and
perform its obligations hereunder.
Section 3.2 Registration and Regulation of AIM Investment. AIM
Investment is duly registered with the SEC as an investment company under the
Investment Company Act and all Acquired Fund Shares which have been or are being
offered for sale have been duly registered under the Securities Act and have
been duly registered, qualified or are exempt from registration or qualification
under the securities laws of each state or other jurisdiction in which such
shares have been or are being offered for sale, and no action has been taken by
AIM Investment to revoke or rescind any such registration or qualification. Each
Acquired Fund is in compliance in all material respects with all applicable
laws, rules and regulations, including, without limitation, the Investment
Company Act, the Securities Act, the Exchange Act and all applicable state
securities laws. Each Acquired Fund is in compliance in all material respects
with the investment policies and restrictions applicable to it set forth in the
AIM Investment Registration Statement currently in effect. The value of the net
assets of each Acquired Fund is determined using portfolio valuation methods
that comply in all material respects with the requirements of the Investment
Company Act and the policies of such Acquired Fund and all purchases and
redemptions of Acquired Fund Shares have been effected at the net asset value
per share calculated in such manner.
Section 3.3 Financial Statements. The books of account and related
records of each Acquired Fund fairly reflect in reasonable detail its assets,
liabilities and transactions in accordance with generally accepted accounting
principles applied on a consistent basis. The audited financial statements for
the fiscal year ended October 31, 1999, of each Acquired Fund previously
delivered to AIM International (the "Acquired Fund Financial Statements")
present fairly in all material respects the financial position of such Acquired
Fund as at the dates indicated and the results of operations and changes in net
assets for the periods then ended in accordance with generally accepted
accounting principles applied on a consistent basis for the periods then ended.
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Section 3.4 No Material Adverse Changes; Contingent Liabilities. Since
October 31, 1999 no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of an Acquired
Fund or the status of an Acquired Fund as a regulated investment company under
the Code, other than changes resulting from any change in general conditions in
the financial or securities markets or the performance of any investments made
by an Acquired Fund or occurring in the ordinary course of business of the
Acquired Fund or AIM Investment. There are no contingent liabilities of an
Acquired Fund not disclosed in the Acquired Fund Financial Statements which are
required to be disclosed in accordance with generally accepted accounting
principles.
Section 3.5 Acquired Fund Shares; Liabilities; Business Operations.
(a) The Acquired Fund Shares have been duly authorized and validly
issued and are fully paid and non-assessable.
(b) During the five-year period ending on the date of the
Reorganization, neither an Acquired Fund nor any person related to an Acquired
Fund (as defined in section 1.368-1(e)(3) of the Treasury Regulations without
regard to section 1.368-1(e)(3)(i)(A)) will have directly or through any
transaction, agreement, or arrangement with any other person, (i) acquired
shares of the Acquired Fund for consideration other than shares of the Acquired
Fund, except for shares redeemed in the ordinary course of the Acquired Fund's
business as an open-end investment company as required by the Investment Company
Act, or (ii) made distributions with respect to shares of the Acquired Fund,
except for (a) distributions necessary to satisfy the requirements of sections
852 and 4982 of the Code for qualification as a regulated investment company and
avoidance of excise tax liability and (b) additional distributions, to the
extent such additional distributions do not exceed 50 percent of the value
(without giving effect to such distributions) of the proprietary interest in the
Acquired Fund on the Effective Date.
(c) At the time of its Reorganization, an Acquired Fund shall not have
outstanding any warrants, options, convertible securities or any other type of
right pursuant to which any Person could acquire Acquired Fund Shares, except
for the right of investors to acquire such Acquired Fund Shares at net asset
value in the normal course of its business as a series of an open-end management
investment company operating under the Investment Company Act.
(d) From the date it commenced operations and ending on the Closing
Date, each Acquired Fund will have conducted its historic business within the
meaning of Section 1.368-1(d)(2) of the Income Tax Regulations under the Code in
a substantially unchanged manner. In anticipation of its Reorganization, an
Acquired Fund will not dispose of assets that, in the aggregate, will result in
less than fifty percent (50%) of its historic business assets (within the
meaning of Section 1.368-1(d) of those regulations) being transferred to the
Acquiring Fund.
(e) AIM Investment does not have, and has not had during the six (6)
months prior to the date of this Agreement, any employees, and shall not hire
any employees from and after the date of this Agreement through the Closing
Date.
Section 3.6 Accountants. PricewaterhouseCoopers LLP, which has reported
upon the Acquired Fund Financial Statements for the period ended October 31,
1999, are independent public accountants as required by the Securities Act and
the Exchange Act.
Section 3.7 Binding Obligation. This Agreement has been duly
authorized, executed and delivered by AIM Investment on behalf of each Acquired
Fund and, assuming this Agreement has been
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duly executed and delivered by AIM International and approved by Acquired Fund
Shareholders, constitutes the legal, valid and binding obligation of AIM
Investment enforceable against AIM Investment in accordance with its terms from
and with respect to the revenues and assets of the respective Acquired Fund,
except as the enforceability hereof may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting creditors' rights
generally, or by general equity principles (whether applied in a court of law or
a court of equity and including limitations on the availability of specific
performance or other equitable remedies).
Section 3.8 No Breaches or Defaults . The execution and delivery of
this Agreement by AIM Investment on behalf of the Acquired Funds and performance
by AIM Investment of its obligations hereunder has been duly authorized by all
necessary trust action on the part of AIM Investment, other than Acquired Fund
Shareholders approval, and (i) do not, and on the Closing Date will not, result
in any violation of the Agreement and Declaration of Trust or by-laws of AIM
Investment and (ii) do not, and on the Closing Date will not, result in a breach
of any of the terms or provisions of, or constitute (with or without the giving
of notice or the lapse of time or both) a default under, or give rise to a right
of termination, cancellation or acceleration of any obligation or to the loss of
a material benefit under, or result in the creation or imposition of any Lien
upon any property or assets of an Acquired Fund (except for such breaches or
defaults or Liens that would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect) under (A) any indenture, mortgage
or loan agreement or any other material agreement or instrument to which AIM
Investment is a party or by which it may be bound and which relates to the
assets of an Acquired Fund or to which any property of an Acquired Fund may be
subject; (B) any Permit (as defined below); or (C) any existing applicable law,
rule, regulation, judgment, order or decree of any Governmental Authority having
jurisdiction over AIM Investment or any property of an Acquired Fund. AIM
Investment is not under the jurisdiction of a court in a proceeding under Title
11 of the United States Code or similar case within the meaning of Section
368(a)(3)(A) of the Code.
Section 3.9 Authorizations or Consents. Other than those which shall
have been obtained or made on or prior to the Closing Date and those that must
be made after the Closing Date to comply with Section 2.5 of this Agreement, no
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority will be required to be obtained or made by AIM
Investment in connection with the due execution and delivery by AIM Investment
of this Agreement and the consummation by AIM Investment of the transactions
contemplated hereby.
Section 3.10 Permits. AIM Investment has in full force and effect all
approvals, consents, authorizations, certificates, filings, franchises,
licenses, notices, permits and rights of Governmental Authorities (collectively,
"Permits") necessary for it to conduct its business as presently conducted as it
relates to the Acquired Funds, and there has occurred no default under any
Permit, except for the absence of Permits and for defaults under Permits the
absence or default of which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. To the knowledge of
AIM Investment there are no proceedings relating to the suspension, revocation
or modification of any Permit, except for such that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Section 3.11 No Actions, Suits or Proceedings.
(a) There is no pending action, litigation or proceeding, nor, to the
knowledge of AIM Investment, has any litigation been overtly threatened in
writing or, if probable of assertion, orally, against AIM Investment before any
Governmental Authority which questions the validity or legality of this
Agreement or of the actions contemplated hereby or which seeks to prevent the
consummation of the transactions contemplated hereby, including the
Reorganization.
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(b) There are no judicial, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the knowledge of AIM
Investment, threatened in writing or, if probable of assertion, orally, against
AIM Investment affecting any property, asset, interest or right of an Acquired
Fund, that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to such Acquired Fund. There
are not in existence on the date hereof any plea agreements, judgments,
injunctions, consents, decrees, exceptions or orders that were entered by, filed
with or issued by Governmental Authority relating to AIM Investment's conduct of
the business of an Acquired Fund affecting in any significant respect the
conduct of such business. AIM Investment is not, and has not been to the
knowledge of AIM Investment, the target of any investigation by the SEC or any
state securities administrator with respect to its conduct of the business of an
Acquired Fund.
Section 3.12 Contracts. AIM Investment is not in default under any
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party and which involves or affects the assets of an
Acquired Fund, by which the assets, business, or operations of an Acquired Fund
may be bound or affected, or under which it or the assets, business or
operations of an Acquired Fund receives benefits, and which default could
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, and, to the knowledge of AIM Investment there has not occurred
any event that, with the lapse of time or the giving of notice or both, would
constitute such a default.
Section 3.13 Properties and Assets. Each Acquired Fund has good and
marketable title to all properties and assets reflected in the Acquired Fund
Financial Statements as owned by it, free and clear of all Liens, except as
described in the Acquired Fund Financial Statements.
Section 3.14 Taxes.
(a) Each Acquired Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code and is a separate corporation
within the meaning of Section 851(g)(1) of the Code. Each Acquired Fund has
qualified as a regulated investment company for each taxable year since
inception that has ended prior to the Closing Date and will have satisfied the
requirements of Part I of Subchapter M of the Code to maintain such
qualification for the period beginning on the first day of its current taxable
year and ending on the Closing Date. Each Acquired Fund has no earnings and
profits accumulated in any taxable year in which the provisions of Subchapter M
of the Code did not apply to it. In order to (i) insure continued qualification
of each Acquired Fund as a "regulated investment company" for tax purposes and
(ii) eliminate any tax liability of an Acquired Fund arising by reason of
undistributed investment company taxable income or net capital gain, AIM
Investment will declare on or prior to the Valuation Date to the shareholders of
each Acquired Fund a dividend or dividends that, together with all previous such
dividends, shall have the effect of distributing (A) all of such Acquired Fund's
investment company taxable income (determined without regard to any deductions
for dividends paid) for the taxable year ended October 31, 1999 and for the
short taxable year beginning on November 1, 1999 and ending on the Closing Date
and (B) all of such Acquired Fund's net capital gain recognized in its taxable
year ended October 31, 1999 and in such short taxable year (after reduction for
any capital loss carryover).
(b) Each Acquired Fund has timely filed all Returns required to be
filed by it and all Taxes with respect thereto have been paid, except where the
failure so to file or so to pay, would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. Adequate provision has
been made in the Acquired Fund Financial Statements for all Taxes in respect of
all periods ended on or before the date of such financial statements, except
where the failure to make such provisions would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No
deficiencies for any Taxes have been proposed, assessed or asserted in writing
by any taxing authority against either Acquired Fund, and
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no deficiency has been proposed, assessed or asserted, in writing, where such
deficiency would reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect. No waivers of the time to assess any such Taxes
are outstanding nor are any written requests for such waivers pending and no
Returns of either Acquired Fund are currently being or have been audited with
respect to income taxes or other Taxes by any Federal, state, local or foreign
Tax authority.
(c) To the best knowledge of AIM Investment, the fiscal year of each
Acquired Fund has not been changed for tax purposes since the date on which it
commenced operations.
Section 3.15 Benefit and Employment Obligations. On or prior to the
Closing Date, an Acquired Fund will have no obligation to provide any
post-retirement or post-employment benefit to any Person, including but not
limited to under any Benefit Plan, and have no obligation to provide unfunded
deferred compensation or other unfunded or self-funded benefits to any Person.
Section 3.16 Brokers. No broker, finder or similar intermediary has
acted for or on behalf of AIM Investment in connection with this Agreement or
the transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection therewith based on any agreement, arrangement or
understanding with AIM Investment or any action taken by it.
Section 3.17 Voting Requirements. The vote of a majority of each class
of shares of an Acquired Fund cast at a meeting at which a quorum is present
(the "Required Shareholder Vote") is the only vote of the holders of any class
or series of shares of beneficial interest in an Acquired Fund necessary to
approve this Agreement and the Reorganization of such Acquired Fund contemplated
by this Agreement.
Section 3.18 State Takeover Statutes. No state takeover statute or
similar statute or regulation applies or purports to apply to the
Reorganizations, this Agreement or any of the transactions contemplated by this
Agreement.
Section 3.19 Books and Records. The books and records of AIM Investment
relating to each Acquired Fund, reflecting, among other things, the purchase and
sale of Acquired Fund Shares, the number of issued and outstanding shares owned
by each Acquired Fund Shareholder and the state or other jurisdiction in which
such shares were offered and sold, are complete and accurate in all material
respects.
Section 3.20 Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for each Acquired
Fund as of the date on which they were issued did not contain, and as
supplemented by any supplement thereto dated prior to or on the Closing Date do
not contain, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
Section 3.21 No Distribution. The Acquiring Fund Shares are not being
acquired for the purpose of any distribution thereof, other than in accordance
with the terms of this Agreement.
Section 3.22 Liabilities of the Acquired Funds. The liabilities of each
Acquired Fund that are to be assumed by an Acquiring Fund in connection with a
Reorganization, or to which the assets of the Acquired Fund to be transferred in
the Reorganizations are subject, were incurred by such Acquired Fund in the
ordinary course of its business. The fair market value of the assets of each
Acquired Fund to be transferred to an Acquiring Fund in a Reorganization will
equal or exceed the sum of the liabilities to be assumed by such Acquiring Fund
plus the amount of liabilities, if any, to which such transferred assets will
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be subject. The total adjusted basis of the assets transferred to AIM Global
Income Fund will equal or exceed the sum of the liabilities to be assumed by AIM
Global Income Fund plus the amount of liabilities to which the transferred
assets are subject.
Section 3.23 Value of Shares. The fair market value of the Acquiring
Fund Class A Shares received by Acquired Fund Shareholders in each
Reorganization will be approximately equal to the fair market value of the
Acquired Fund Class A shares constructively surrendered in exchange therefor,
the fair market value of the Acquiring Fund Class B Shares received by Acquired
Fund Shareholders in each Reorganization will be approximately equal to the fair
market value of the Acquired Fund Class B shares constructively surrendered in
exchange therefor, and the fair market value of the Acquiring Fund Class C
Shares received by Acquired Fund Shareholders in each Reorganization will be
approximately equal to the fair market value of the Acquired Fund Class C shares
constructively surrendered in exchange therefor.
Section 3.24 Shareholder Expenses. The Acquired Fund Shareholders will
pay their own expenses, if any, incurred in connection with the Reorganizations.
Section 3.25 Intercompany Indebtedness. There is no intercompany
indebtedness between AIM Investment and AIM International that was issued or
acquired, or will be settled, at a discount.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AIM INTERNATIONAL
AIM International, on behalf of the Acquiring Funds, represents and
warrants to AIM Investment as follows:
Section 4.1 Organization; Authority. AIM International is duly
organized, validly existing and in good standing under the Maryland General
Corporation Law, with all requisite trust power and authority to enter into this
Agreement and perform its obligations hereunder.
Section 4.2 Registration and Regulation of AIM International. AIM
International is duly registered with the SEC as an investment company under the
Investment Company Act. Each Acquiring Fund is in compliance in all material
respects with all applicable laws, rules and regulations, including, without
limitation, the Investment Company Act, the Securities Act, the Exchange Act and
all applicable state securities laws. Each Acquiring Fund is in compliance in
all material respects with the applicable investment policies and restrictions
set forth in the AIM International Registration Statement. The value of the net
assets of each Acquiring Fund is determined using portfolio valuation methods
that comply in all material respects with the requirements of the Investment
Company Act and the policies of such Acquiring Fund and all purchases and
redemptions of Acquiring Fund Shares have been effected at the net asset value
per share calculated in such manner.
Section 4.3 Financial Statements. The books of account and related
records of each Acquiring Fund fairly reflect in reasonable detail its assets,
liabilities and transactions in accordance with generally accepted accounting
principles applied on a consistent basis. The audited financial statements for
the fiscal year ended October 31, 1999, of each Acquiring Fund previously
delivered to AIM Investment (the "Acquiring Fund Financial Statements") present
fairly in all material respects the financial position of such Acquiring Fund as
at the dates indicated and the results of operations and changes in net assets
for the periods
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then ended in accordance with generally accepted accounting principles applied
on a consistent basis for the periods then ended.
Section 4.4 No Material Adverse Changes; Contingent Liabilities. Since
October 31, 1999, no material adverse change has occurred in the financial
condition, results of operations, business, assets or liabilities of an
Acquiring Fund or the status of an Acquiring Fund as a regulated investment
company under the Code, other than changes resulting from any change in general
conditions in the financial or securities markets or the performance of any
investments made by an Acquiring Fund or occurring in the ordinary course of
business of the Acquiring Fund or AIM International. There are no contingent
liabilities of an Acquiring Fund not disclosed in the Acquiring Fund Financial
Statements which are required to be disclosed in accordance with generally
accepted accounting principles.
Section 4.5 Registration of Acquiring Fund Class A Shares and Acquiring
Fund Class B Shares and Acquiring Fund Class C Shares.
(a) The capital stock of AIM International is divided into six
portfolios, including the Acquiring Funds. Each Acquiring Fund currently has
three classes of shares, Class A shares, Class B shares and Class C shares.
Under its Charter, AIM International is authorized to issue forty million
(40,000,000) Class A shares, forty million (40,000,000) Class B shares and forty
million (40,000,000) Class C shares of each Acquiring Fund.
(b) The Acquiring Fund Shares to be issued pursuant to Section 2.6
shall on the Closing Date be duly registered under the Securities Act by a
Registration Statement on Form N-14 of AIM International then in effect.
(c) The Acquiring Fund Shares to be issued pursuant to Section 2.6 are
duly authorized and on the Closing Date will be validly issued and fully paid
and non-assessable and will conform to the description thereof contained in the
Registration Statement on Form N-14 then in effect. At the time of its
Reorganization, AIM Global Income Fund shall not have outstanding any warrants,
options, convertible securities or any other type of right pursuant to which any
Person could acquire AIM Global Income Fund Class A, Class B or Class C shares
that, if exercised or converted would affect the AIM Global Government Income
Fund Shareholders' acquisition or retention of control of AIM Global Income Fund
as defined in Section 368(a)(2)(H)(i) of the Code, except for the right of
investors to acquire AIM Global Income Fund Class A, Class B, or C shares at net
asset value in the normal course of its business as a series of an open-end
management investment company operating under the Investment Company Act.
(d) The combined proxy statement/prospectus (the "Combined Proxy
Statement/Prospectus") which forms a part of AIM International's Registration
Statement on Form N-14 shall be furnished to the Acquired Fund Shareholders
entitled to vote at the Acquired Fund Shareholders Meeting. The Combined Proxy
Statement/Prospectus and related Statement of Additional Information of the
Acquiring Funds, when they become effective, shall conform to the applicable
requirements of the Securities Act and the Investment Company Act and shall not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not materially
misleading, provided, however, that no representation or warranty is made with
respect to written information provided by AIM Investment for inclusion in the
Combined Proxy Statement/Prospectus.
(e) The shares of an Acquiring Fund which have been or are being
offered for sale (other than Acquiring Fund Shares to be issued in connection
with the Reorganizations) have been duly registered under the Securities Act by
the AIM International Registration Statement and have been duly
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registered, qualified or are exempt from registration or qualification under the
securities laws of each state or other jurisdiction in which such shares have
been or are being offered for sale, and no action has been taken by AIM
International to revoke or rescind any such registration or qualification.
Section 4.6 Accountants. KPMG LLP, which has reported upon the
Acquiring Fund Financial Statements for the period ended October 31, 1999, are
independent public accountants as required by the Securities Act and the
Exchange Act.
Section 4.7 Binding Obligation. This Agreement has been duly
authorized, executed and delivered by AIM International on behalf of each
Acquiring Fund and, assuming this Agreement has been duly executed and delivered
by AIM Investment, constitutes the legal, valid and binding obligation of AIM
International, enforceable against AIM International in accordance with its
terms from and with respect to the revenues and assets of the respective
Acquiring Fund, except as the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization or similar laws relating to or affecting
creditors' rights generally, or by general equity principles (whether applied in
a court or law or a court of equity and including limitations on the
availability of specific performance or other equitable remedies).
Section 4.8 No Breaches or Defaults. The execution and delivery of this
Agreement by AIM International on behalf of the Acquiring Funds and performance
by AIM International of its obligations hereunder have been duly authorized by
all necessary corporate action on the part of AIM International and (i) do not,
and on the Closing Date will not, result in any violation of the Charter or
by-laws of AIM International and (ii) do not, and on the Closing Date will not,
result in a breach of any of the terms or provisions of, or constitute (with or
without the giving of notice or the lapse of time or both) a default under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to the loss of a material benefit under, or result in the creation
or imposition of any Lien upon any property or assets of an Acquiring Fund
(except for such breaches or defaults or Liens that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect)
under (A) any indenture, mortgage or loan agreement or any other material
agreement or instrument to which AIM International is a party or by which it may
be bound and which relates to the assets of an Acquiring Fund or to which any
properties of an Acquiring Fund may be subject; (B) any Permit; or (C) any
existing applicable law, rule, regulation, judgment, order or decree of any
Governmental Authority having jurisdiction over AIM International or any
property of an Acquiring Funds. AIM International is not under the jurisdiction
of a court in a proceeding under Title 11 of the United States Code or similar
case within the meaning of Section 368(a)(3)(A) of the Code.
Section 4.9 Authorizations or Consents. Other than those which shall
have been obtained or made on or prior to the Closing Date, no authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority will be required to be obtained or made by AIM International in
connection with the due execution and delivery by AIM International of this
Agreement and the consummation by AIM International of the transactions
contemplated hereby.
Section 4.10 Permits. AIM International has in full force and effect
all Permits necessary for it to conduct its business as presently conducted as
it relates to the Acquiring Funds, and there has occurred no default under any
Permit, except for the absence of Permits and for defaults under Permits the
absence or default of which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. To the knowledge of
AIM International there are no proceedings relating to the suspension,
revocation or modification of any Permit, except for such that would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
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Section 4.11 No Actions, Suits or Proceedings.
(a) There is no pending action, suit or proceeding, nor, to the
knowledge of AIM International, has any litigation been overtly threatened in
writing or, if probable of assertion, orally, against AIM International before
any Governmental Authority which questions the validity or legality of this
Agreement or of the transactions contemplated hereby, or which seeks to prevent
the consummation of the transactions contemplated hereby, including the
Reorganization.
(b) There are no judicial, administrative or arbitration actions,
suits, or proceedings instituted or pending or, to the knowledge of AIM
International, threatened in writing or, if probable of assertion, orally,
against AIM International, affecting any property, asset, interest or right of
an Acquiring Fund, that could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect with respect to such Acquiring Fund.
There are not in existence on the date hereof any plea agreements, judgments,
injunctions, consents, decrees, exceptions or orders that were entered by, filed
with or issued by Governmental Authority relating to AIM International's conduct
of the business of an Acquiring Fund affecting in any significant respect the
conduct of such business. AIM International is not, and has not been, to the
knowledge of AIM International, the target of any investigation by the SEC or
any state securities administrator with respect to its conduct of the business
of an Acquiring Fund.
Section 4.12 Taxes.
(a) Each Acquiring Fund has elected to be treated as a regulated
investment company under Subchapter M of the Code and is a separate corporation
within the meaning of Section 851(g)(1) of the Code. Each Acquiring Fund has
qualified as a regulated investment company for each taxable year since
inception that has ended prior to the Closing Date and will satisfy the
requirements of Part I of Subchapter M of the Code to maintain such
qualification for its current taxable year. Each Acquiring Fund has no earnings
or profits accumulated in any taxable year in which the provisions of Subchapter
M of the Code did not apply to it.
(b) Each Acquiring Fund has timely filed all Returns required to be
filed by it and all Taxes with respect thereto have been paid, except where the
failure so to file or so to pay, would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect. Adequate provision has
been made in the Acquiring Fund Financial Statements for all Taxes in respect of
all periods ending on or before the date of such financial statements, except
where the failure to make such provisions would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No
deficiencies for any Taxes have been proposed, assessed or asserted in writing
by any taxing authority against either Acquiring Fund, and no deficiency has
been proposed, assessed or asserted, in writing, where such deficiency would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. No waivers of the time to assess any such Taxes are outstanding
nor are any written requests for such waivers pending and no Return of either
Acquiring Fund is currently being or has been audited with respect to income
taxes or other Taxes by any Federal, state, local or foreign Tax authority.
(c) The fiscal year of each Acquiring Fund has not been changed for tax
purposes since the date on which it commenced operations.
Section 4.13 Brokers. No broker, finder or similar intermediary has
acted for or on behalf of AIM International in connection with this Agreement or
the transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
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commission in connection therewith based on any agreement, arrangement or
understanding with AIM International or any action taken by it.
Section 4.14 Representations Concerning the Reorganization.
(a) AIM Global Growth Fund does not own directly or indirectly, nor has
it owned at any time during the five-year period ending on the Closing Date, any
shares of AIM Growth & Income Fund.
(b) AIM International has no plan or intention to reacquire any of the
Acquiring Fund Shares issued in the Reorganization, except to the extent that
each Acquiring Fund is required by the Investment Company Act to redeem any of
its shares presented for redemption at net asset value in the ordinary course of
its business as an open-end, management investment company.
(c) Each Acquiring Fund has no plan or intention to sell or otherwise
dispose of any of the assets of the Acquired Fund acquired in the
Reorganization, other than in the ordinary course of its business and to the
extent necessary to maintain its status as a "regulated investment company"
under the Code.
(d) Following the Reorganization, each Acquiring Fund will continue an
"historic business" (within the meaning of Section 1.368-1(d) of the Income Tax
Regulations under the Code) of the Acquired Fund from which such Acquiring Fund
acquired assets in the Reorganization or use a significant portion of such
Acquired Fund's historic business assets in a business.
(e) Following the Reorganization, the AIM Global Government Income Fund
Shareholders will be in control of AIM Global Income Fund within the meaning of
Section 368(a)(2)(H)(i) of the Code.
(f) Prior to or in the Reorganization, neither an Acquiring Fund nor
any person related to an Acquiring Fund (for purposes of this paragraph as
defined in section 1.368-1(e)(3) of the Treasury Regulations) will have acquired
directly or through any transaction, agreement or arrangement with any other
person, shares of its corresponding Acquired Fund with consideration other than
shares of an Acquiring Fund. There is no plan or intention by an Acquiring Fund
or any person related to an Acquiring Fund to acquire or redeem any of the
shares of the Acquiring Fund issued in the Reorganization either directly or
through any transaction, agreement, or arrangement with any other person, other
than redemptions in the ordinary course of an Acquiring Fund's business as an
open-end investment company as required by the Investment Company Act.
Section 4.15 Prospectus and Statement of Additional Information. The
current prospectus and statement of additional information for each Acquiring
Fund as of the date on which they were issued did not contain, and as
supplemented by any supplement thereto dated prior to or on the Closing Date do
not contain, any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
Section 4.16 Value of Shares. The fair market value of the Acquiring
Fund Class A Shares received by Acquired Fund Shareholders in each
Reorganization will be approximately equal to the fair market value of the
Acquired Fund Class A shares constructively surrendered in exchange therefor,
the fair market value of the Acquiring Fund Class B Shares received by the
Acquired Fund Shareholders in each Reorganization will be approximately equal to
the fair market value of the Acquired Fund Class B shares constructively
surrendered therefor, and the fair market value of the Acquiring Fund Class C
Shares received
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by Acquired Fund Shareholders in each Reorganization will be approximately equal
to the fair market value of the Acquired Fund Class C shares constructively
surrendered therefor.
Section 4.17 Intercompany Indebtedness; Consideration. There is no
intercompany indebtedness between AIM Investment and AIM International that was
issued or acquired, or will be settled, at a discount. No consideration other
than the Acquiring Fund Shares (and each Acquiring Fund's assumption of an
Acquired Fund's liabilities, including for this purpose all liabilities to which
the assets of each respective Acquired Fund are subject) will be issued in
exchange for the assets of an Acquired Fund acquired by an Acquiring Fund in
connection with a Reorganization. The fair market value of the assets of each
Acquired Fund transferred to an Acquiring Fund in a Reorganization will equal or
exceed the sum of the liabilities assumed by such Acquiring Fund, plus the
amount of liabilities, if any, to which such transferred assets are subject.
ARTICLE 5
COVENANTS
Section 5.1 Conduct of Business.
(a) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated pursuant
to Article 7), AIM Investment shall conduct the business of each Acquired Fund
only in the ordinary course and substantially in accordance with past practices,
and shall use its reasonable best efforts to preserve intact its business
organization and material assets and maintain the rights, franchises and
business and customer relations necessary to conduct the business of each
Acquired Fund in the ordinary course in all material respects. Without limiting
the generality of the foregoing, AIM Investment shall not do any of the
following with respect to an Acquired Fund without the prior written consent of
AIM International, which consent shall not be unreasonably withheld:
(i) split, combine or reclassify any of its shares of
beneficial interest or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for its shares of
beneficial interest;
(ii) amend its Agreement and Declaration of Trust or by-laws;
(iii) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization or series or division thereof
or any assets that are material, individually or in the aggregate, to an
Acquired Fund taken as a whole, except purchases of assets in the ordinary
course of business consistent with past practice;
(iv) sell, lease or otherwise dispose of any of its material
properties or assets, or mortgage or otherwise encumber or subject to any
Lien any of its material properties or assets, other than in the ordinary
course of business;
(v) incur any indebtedness for borrowed money or guarantee any
indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of an Acquired
Fund, guarantee any debt securities of another Person, enter into any
"keep well" or other agreement to maintain any financial statement
condition of another Person, or enter into any arrangement having the
economic effect of any of the foregoing;
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(vi) settle or compromise any material income tax liability or
make any material tax election;
(vii) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course of business;
(viii) change its method of accounting, except as required by
changes in generally accepted accounting principles as concurred in by its
independent auditors, or change its fiscal year;
(ix) make or agree to make any material severance,
termination, indemnification or similar payments except pursuant to
existing agreements; or
(x) adopt any Benefit Plan.
(b) From the date of this Agreement up to and including the Closing
Date (or, if earlier, the date upon which this Agreement is terminated pursuant
to Article 7), AIM International shall conduct the business of each Acquiring
Fund only in the ordinary course and substantially in accordance with past
practices, and shall use its reasonable best efforts to preserve intact its
business organization and material assets and maintain the rights, franchises
and business relations necessary to conduct the business operations of the
Acquiring Funds in the ordinary course in all material respects.
Section 5.2 Announcements. AIM Investment and AIM International shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement and the transactions
contemplated by this Agreement, and neither AIM Investment nor AIM International
shall issue any such press release or make any public statement without the
prior written approval of the other party to this Agreement, such approval not
to be unreasonably withheld, except as may be required by law.
Section 5.3 Expenses. Each Acquired Fund and each Acquiring Fund shall
each respectively bear the expenses it incurs in connection with this Agreement
and a Reorganization and other transactions contemplated hereby.
Section 5.4 Further Assurances. Each of the parties hereto shall
execute such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior to the Closing Date, use
its reasonable best efforts to fulfill or obtain the fulfillment of the
conditions precedent to the consummation of the Reorganizations, including the
execution and delivery of any documents, certificates, instruments or other
papers that are reasonably required for the consummation of the Reorganizations.
Section 5.5 Notice of Events. AIM International shall give prompt
notice to AIM Investment, and AIM Investment shall give prompt notice to AIM
International, of (a) the occurrence or non-occurrence of any event which to the
knowledge of AIM International or to the knowledge of AIM Investment, the
occurrence or non-occurrence of which would be likely to result in any of the
conditions specified in (i) in the case of AIM Investment, Sections 6.1 and 6.2
or (ii) in the case of AIM International, Sections 6.2 and 6.3, not being
satisfied so as to permit the consummation of the Reorganizations and (b) any
material failure on its part, or on the part of the other party hereto of which
it has knowledge, to comply with or satisfy any covenant,
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condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.5
shall not limit or otherwise affect the remedies available hereunder to any
party.
Section 5.6 Access to Information.
(a) AIM Investment will, during regular business hours and on
reasonable prior notice, allow AIM International and its authorized
representatives reasonable access to the books and records of AIM Investment
pertaining to the assets of the Acquired Funds and to officers of AIM Investment
knowledgeable thereof; provided, however, that any such access shall not
significantly interfere with the business or operations of AIM Investment.
(b) AIM International will, during regular business hours and on
reasonable prior notice, allow AIM Investment and its authorized representatives
reasonable access to the books and records of AIM International pertaining to
the assets of the Acquiring Funds and to officers of AIM International
knowledgeable thereof; provided, however, that any such access shall not
significantly interfere with the business or operations of AIM International.
Section 5.7 Consents, Approvals and Filings. Each of AIM Investment and
AIM International shall make all necessary filings, as soon as reasonably
practicable, including, without limitation, those required under the Securities
Act, the Exchange Act, the Investment Company Act and the Advisers Act, in order
to facilitate prompt consummation of the Reorganizations and the other
transactions contemplated by this Agreement. In addition, each of AIM Investment
and AIM International shall use its reasonable best efforts, and shall cooperate
fully with each other (i) to comply as promptly as reasonably practicable with
all requirements of Governmental Authorities applicable to the Reorganizations
and the other transactions contemplated herein and (ii) to obtain as promptly as
reasonably practicable all necessary permits, orders or other consents of
Governmental Authorities and consents of all third parties necessary for the
consummation of the Reorganizations and the other transactions contemplated
herein. Each of AIM Investment and AIM International shall use reasonable
efforts to provide such information and communications to Governmental
Authorities as such Governmental Authorities may request.
Section 5.8 Submission of Agreement to Shareholders. AIM Investment
shall take all action necessary in accordance with applicable law and its
Agreement and Declaration of Trust and by-laws to convene each Acquired Fund
Shareholders Meeting. AIM Investment shall, through its Board of Trustees,
recommend to the Acquired Fund Shareholders approval of this Agreement and the
transactions contemplated by this Agreement. AIM Investment shall use its
reasonable best efforts to hold each Acquired Fund Shareholders Meeting as soon
as practicable after the date hereof.
ARTICLE 6
CONDITIONS PRECEDENT TO THE REORGANIZATION
Section 6.1 Conditions Precedent of AIM International. The obligation
of AIM International to consummate a Reorganization is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions, any one or more of which may be waived in writing by AIM
International.
(a) The representations and warranties of AIM Investment on behalf of
the Acquired Fund participating in the Reorganization set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date with the same effect as though all
such representations and warranties had been made as of the Closing Date.
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(b) AIM Investment shall have complied with and satisfied in all
material respects all agreements and conditions relating to the Acquired Fund
participating in the Reorganization set forth herein on its part to be performed
or satisfied at or prior to the Closing Date.
(c) AIM International shall have received at the Closing Date (i) a
certificate, dated as of the Closing Date, from an officer of AIM Investment, in
such individual's capacity as an officer of AIM Investment and not as an
individual, to the effect that the conditions specified in Section 6.1(a) and
(b) have been satisfied and (ii) a certificate, dated as of the Closing Date,
from the Secretary or Assistant Secretary of AIM Investment certifying as to the
accuracy and completeness of the attached Agreement and Declaration of Trust and
by-laws of AIM Investment, and resolutions, consents and authorizations of or
regarding AIM Investment with respect to the execution and delivery of this
Agreement and the transactions contemplated hereby.
(d) AIM International shall have received the signed opinion of
Kirkpatrick & Lockhart LLP, counsel to AIM Investment, or other counsel
reasonably acceptable to AIM International, in form and substance reasonably
acceptable to counsel for AIM International, as to the matters set forth in
Schedule 6.1(d).
(e) The dividend or dividends described in the last sentence of Section
3.14(a) shall have been declared.
Section 6.2 Mutual Conditions. The obligations of AIM Investment and
AIM International to consummate a Reorganization are subject to the
satisfaction, at or prior to the Closing Date, of all of the following further
conditions, any one or more may be waived in writing by AIM Investment and AIM
International, but only if and to the extent that such waiver is mutual.
(a) All filings required to be made prior to the Closing Date with, and
all consents, approvals, permits and authorizations required to be obtained on
or prior to the Closing Date from Governmental Authorities in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein by AIM Investment and AIM International shall
have been made or obtained, as the case may be; provided, however, that such
consents, approvals, permits and authorizations may be subject to conditions
that would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect.
(b) This Agreement, the Reorganization of AIM Global Government Income
Fund and related matters shall have been approved and adopted at the Acquired
Fund Shareholders Meeting by the shareholders of AIM Global Government Income
Fund on the record date by the Required Shareholder Vote, and this Agreement,
the Reorganization of AIM Global Growth & Income Fund and related matters shall
have been approved and adopted at the Acquired Fund Shareholders Meeting by the
shareholders of AIM Global Growth & Income Fund on the record date by the
Required Shareholder Vote.
(c) The assets of each Acquired Fund to be acquired by the respective
Acquiring Fund shall constitute at least 90% of the fair market value of the net
assets and at least 70% of the fair market value of the gross assets held by
such Acquired Fund immediately prior to the Reorganization. For purposes of this
Section 6.2(c), assets used by an Acquired Fund to pay the expenses it incurs in
connection with this Agreement and the Reorganization and to effect all
shareholder redemptions and distributions (other than regular, normal dividends
and regular, normal redemptions pursuant to the Investment Company Act, and not
in excess of the requirements of Section 852 of the Code, occurring in the
ordinary course of such Acquired
20
<PAGE> 72
Fund's business as a series of an open-end management investment company) after
the date of this Agreement shall be included as assets of such Acquired Fund
held immediately prior to the Reorganization.
(d) No temporary restraining order, preliminary or permanent injunction
or other order issued by any Governmental Authority preventing the consummation
of the Reorganization on the Closing Date shall be in effect; provided, however,
that the party or parties invoking this condition shall use reasonable efforts
to have any such order or injunction vacated.
(e) The Registration Statement on Form N-14 filed by AIM International
with respect to the Acquiring Fund Shares to be issued to Acquired Fund
Shareholders in connection with the Reorganization shall have become effective
under the Securities Act and no stop order suspending the effectiveness thereof
shall have been issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the Securities Act.
(f) AIM Investment and AIM International shall have received on or
before the Closing Date an opinion of Ballard Spahr Andrews & Ingersoll, LLP in
form and substance reasonably acceptable to AIM Investment and AIM
International, as to the matters set forth on Schedule 6.2(f).
(g) The dividend or dividends described in the last sentence of Section
3.14(a) shall have been declared.
Section 6.3 Conditions Precedent of AIM Investment. The obligation of
AIM Investment to consummate a Reorganization is subject to the satisfaction, at
or prior to the Closing Date, of all of the following conditions, any one or
more of which may be waived in writing by AIM Investment.
(a) The representations and warranties of AIM International on behalf
of the Acquiring Fund participating in the Reorganization set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date with the same effect as though all
such representations and warranties had been made as of the Closing Date.
(b) AIM International shall have complied with and satisfied in all
material respects all agreements and conditions relating to the Acquiring Fund
participating in the Reorganization set forth herein on its part to be performed
or satisfied at or prior to the Closing Date.
(c) AIM Investment shall have received on the Closing Date (i) a
certificate, dated as of the Closing Date, from an officer of AIM International,
in such individual's capacity as an officer of AIM International and not as an
individual, to the effect that the conditions specified in Sections 6.3(a) and
(b) have been satisfied and (ii) a certificate, dated as of the Closing Date,
from the Secretary or Assistant Secretary of AIM International certifying as to
the accuracy and completeness of the attached Charter and by-laws, as amended,
of AIM International and resolutions, consents and authorizations of or
regarding AIM International with respect to the execution and delivery of this
Agreement and the transactions contemplated hereby.
(d) AIM Investment shall have received the signed opinion of Ballard
Spahr Andrews & Ingersoll, LLP, counsel to AIM International, or other counsel
reasonably acceptable to AIM Investment, in form and substance reasonably
acceptable to counsel for AIM International, as to the matters set forth on
Schedule 6.3(d).
21
<PAGE> 73
Section 6.4 Transactions Independent. AIM International and AIM
Investment agree that consummation of the Reorganization of AIM Global
Government Income Fund is not conditioned upon consummation of the
Reorganization of AIM Global Growth & Income Fund, and that consummation of the
Reorganization of AIM Global Growth & Income Fund is not conditioned upon
consummation of the Reorganization of AIM Global Government Income Fund.
Accordingly, the occurrence or non-occurrence of an event that would result in
any of the conditions precedent to the Reorganization of AIM International Fund
not being satisfied will not absolve the parties of their obligation under this
Agreement to consummate the Reorganization of AIM Global Growth & Income Fund
(assuming that all of the conditions precedent to such Reorganization had been
satisfied), and the occurrence or non-occurrence of an event that would result
in any of the conditions precedent to the Reorganization of AIM Global Growth &
Income Fund not being satisfied will not absolve the parties of their obligation
under this Agreement to consummate the Reorganization of AIM Global Government
Income Fund (assuming that all of the conditions precedent to such
Reorganization have been satisfied).
ARTICLE 7
TERMINATION OF AGREEMENT
Section 7.1 Termination.
(a) This Agreement may be terminated in whole or with respect to a
Reorganization described herein on or prior to the Closing Date as follows:
(i) by mutual written consent of AIM Investment and AIM
International; or
(ii) at the election of AIM Investment or AIM International:
(A) if the Closing Date shall not be on or before
September 1, 2000, or such later date as the parties hereto
may agree upon, unless the failure to consummate the
Reorganization is the result of a willful and material breach
of this Agreement by the party seeking to terminate this
Agreement;
(B) if, upon a vote at an Acquired Fund Shareholders
Meeting or any adjournment thereof, the Required Shareholder
Vote shall not have been obtained as contemplated by Section
5.8; or
(C) if any Governmental Authority shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the
Reorganization and such order, decree, ruling or other action
shall have become final and nonappealable.
(b) The termination of this Agreement shall be effectuated by the
delivery by the terminating party to the other party of a written notice of such
termination. If the circumstances described in Section 7.1(a) above are
applicable to only one Acquired Fund, this Agreement may be terminated only as
to the effected Acquired Fund.
Section 7.2 Survival After Termination. If this Agreement is terminated
in accordance with Section 7.1 hereof and the Reorganization of an Acquired Fund
is not consummated, this Agreement shall
22
<PAGE> 74
become void and of no further force and effect with respect to such
Reorganization and the respective Acquired Fund, except for the provisions of
Section 5.3.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Survival of Representations and Warranties. The
representations, warranties and covenants in this Agreement or in any
certificate or instrument delivered pursuant to this Agreement shall survive the
consummation of the transactions contemplated hereunder for a period of one (1)
year following the Closing Date.
Section 8.2 Governing Law. This Agreement shall be construed and
interpreted according to the laws of the State of Delaware applicable to
contracts made and to be performed wholly within such state.
Section 8.3 Binding Effect, Persons Benefitting, No Assignment. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and the respective successors and assigns of the parties and such Persons.
Nothing in this Agreement is intended or shall be construed to confer upon any
entity or Person other than the parties hereto and their respective successors
and permitted assigns any right, remedy or claim under or by reason of this
Agreement or any part hereof. Without the prior written consent of the parties
hereto, this Agreement may not be assigned by any of the parties hereto;
provided, however, that AIM International may assign its rights and obligations
under this Agreement to AIM International Mutual Funds, a Delaware business
trust, as successor to AIM International under that certain Agreement and Plan
of Reorganization dated December 7, 1999, without the prior consent of AIM
Investments.
Section 8.4 Obligations of AIM International and AIM Investment.
(a) AIM Investment and AIM International hereby acknowledge and agree
that the Acquiring Funds are separate investment portfolios of AIM
International, that AIM International is executing this Agreement on behalf of
each of the Acquiring Funds, and that any amounts payable by AIM International
under or in connection with this Agreement shall be payable solely from the
revenues and assets of the respective Acquiring Fund. AIM Investment further
acknowledges and agrees that this Agreement has been executed by a duly
authorized officer of AIM International in his or her capacity as an officer of
AIM International intending to bind AIM International as provided herein, and
that no officer, director or shareholder of AIM International shall be
personally liable for the liabilities or obligations of AIM International
incurred hereunder.
(b) AIM Investment and AIM International hereby acknowledge and agree
that the Acquired Funds are separate investment portfolios of AIM Investment,
that AIM Investment is executing this Agreement on behalf of each of the
Acquired Funds and that any amounts payable by AIM Investment under or in
connection with this Agreement shall be payable solely from the revenues and
assets of the respective Acquired Fund. AIM International further acknowledges
and agrees that this Agreement has been executed by a duly authorized officer of
AIM Investment in his or her capacity as an officer of AIM Investment intending
to bind AIM Investment as provided herein, and that no officer, trustee or
shareholder of AIM Investment shall be personally liable for the liabilities of
AIM Investment incurred hereunder.
Section 8.5 Amendments. This Agreement may not be amended, altered or
modified except by a written instrument executed by AIM Investment and AIM
International.
23
<PAGE> 75
Section 8.6 Enforcement. The parties agree irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, in addition to any other remedy to which they are
entitled at law or in equity.
Section 8.7 Interpretation. When a reference is made in this Agreement
to a Section or Schedule, such reference shall be to a Section of, or a Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". Each
representation and warranty contained in Article 3 or 4 that relates to a
general category of a subject matter shall be deemed superseded by a specific
representation and warranty relating to a subcategory thereof to the extent of
such specific representation or warranty.
Section 8.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and each of which shall
constitute one and the same instrument.
Section 8.9 Entire Agreement; Schedules. This Agreement, including the
Schedules, certificates and lists referred to herein, and any documents executed
by the parties simultaneously herewith or pursuant thereto, constitute the
entire understanding and agreement of the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, written or oral, between the parties with respect to such
subject matter.
Section 8.10 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand or by overnight courier, two days after being
sent by registered mail, return receipt requested, or when sent by telecopier
(with receipt confirmed), provided, in the case of a telecopied notice, a copy
is also sent by registered mail, return receipt requested, or by courier,
addressed as follows (or to such other address as a party may designate by
notice to the other):
(a) If to AIM Investment:
AIM Investment Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attn: Carol F. Relihan, Esq.
Fax: (713) 993-9185
with a copy to:
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
Attn: Arthur J. Brown, Esq.
Fax: (202) 778-9100
24
<PAGE> 76
(b) If to AIM International:
AIM International Funds, Inc.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Attn: Carol F. Relihan, Esq.
Fax: (713) 993-9185
with a copy to:
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Attn: William H. Rheiner, Esq.
Fax: (215) 864-8999
Section 8.11 Representations by AIM Advisors. In its capacity as
investment adviser to AIM Investment, AIM Advisors represents to AIM
International that to the best of its knowledge the representations and
warranties of AIM Investment and the Acquired Funds contained in this Agreement
are true and correct as of the date of this Agreement. In its capacity as
investment adviser to AIM International, AIM Advisors represents to AIM
Investment that to the best of its knowledge the representations and warranties
of AIM International and the Acquiring Funds contained in this Agreement are
true and correct as of the date of this Agreement. For purposes of this Section
8.11, the best knowledge standard shall be deemed to mean that the officers of
AIM Advisors who have substantive responsibility for the provision of investment
advisory services to AIM Investment and AIM International do not have actual
knowledge to the contrary after due inquiry.
25
<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
AIM INVESTMENT FUNDS, acting on behalf of
AIM Global Government Income Fund and AIM
Global Growth & Income Fund
By: /s/ ROBERT H. GRAHAM
----------------------------------------
AIM INTERNATIONAL FUNDS, INC., acting on
behalf of AIM Global Income Fund and AIM
Global Growth Fund
By: /s/ ROBERT H. GRAHAM
----------------------------------------
A I M Advisors, Inc.
By: /s/ ROBERT H. GRAHAM
----------------------------------------
26
<PAGE> 78
Schedule 6.1(d)
Opinion of Counsel to AIM Investment
1. AIM Investment is duly organized and validly existing as a business
trust under the Delaware Business Trust Act.
2. AIM Investment is an open-end, management investment company registered
under the Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by AIM
Investment have been duly authorized and approved by all requisite
trust action on the part of AIM Investment. The Agreement has been duly
executed and delivered by AIM Investment and constitutes the valid and
binding obligation of AIM Investment.
4. The Acquired Fund Shares outstanding on the date hereof have been duly
authorized and validly issued, are fully paid and are non-assessable.
5. To the best of our knowledge, AIM Investment is not required to submit
any notice, report or other filing with or obtain any authorization,
consent or approval from any governmental authority or self regulatory
organization prior to the consummation of the transactions contemplated
by the Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer
who is the current primary contact for AIM Investment or who has devoted
substantive attention on behalf of AIM Investment during the preceding twelve
months and who is still currently employed by or is currently a member of this
firm, no litigation or governmental proceeding is pending or threatened in
writing against the Acquired Fund (i) with respect to the Agreement or (ii)
which involves in excess of $500,000 in damages.
27
<PAGE> 79
Schedule 6.2(g)
Tax Opinions
(i) The transfer of the assets of each Acquired Fund to each respective
Acquiring Fund in exchange for the Acquiring Fund Shares distributed directly to
the Acquired Fund Shareholders, as provided in the Agreement, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code and that each
Acquired Fund and each Acquiring Fund will be "a party to a reorganization"
within the meaning of Section 368(b) of the Code.
(ii) In accordance with Section 361(a) and Section 361(c)(1) of the
Code, no gain or loss will be recognized by an Acquired Fund on the transfer of
its assets to the respective Acquiring Fund solely in exchange for Acquiring
Fund Class A Shares, Acquiring Fund Class B Shares and Acquiring Fund Class C
Shares or on the distribution of Acquiring Fund Class A Shares, Acquiring Fund
Class B Shares and Acquiring Fund Class C Shares to the Acquired Fund
Shareholders.
(iii) In accordance with Section 1032 of the Code, no gain or loss will
be recognized by each Acquiring Fund upon the receipt of assets of each
respective Acquired Fund in exchange for Acquiring Fund Class A Shares,
Acquiring Fund Class B Shares and Acquiring Fund Class C Shares issued directly
to the Acquired Fund Shareholders.
(iv) In accordance with Section 354(a)(1) of the Code, no gain or loss
will be recognized by Acquired Fund Shareholders on the receipt of Acquiring
Fund Class A Shares, Acquiring Fund Class B Shares and Acquiring Fund Class C
Shares in exchange for Acquired Fund Shares of each respective Acquired Fund.
(v) In accordance with Section 362(b) of the Code, the basis to each
Acquiring Fund of the assets of each respective Acquired Fund transferred to it
will be the same as the basis of such assets in the hands of such Acquired Fund
immediately prior to the Reorganization.
(vi) In accordance with Section 358(a) of the Code, an Acquired Fund
Shareholder's basis for Acquiring Fund Class A Shares, Acquiring Fund Class B
Shares and Acquiring Fund Class C Shares received by such Acquired Fund
Shareholder will be the same as his basis for Acquired Fund Shares of each
respective Acquired Fund exchanged therefor.
(vii) In accordance with Section 1223(1) of the Code, an Acquired Fund
Shareholder's holding period for Acquiring Fund Class A Shares, Acquired Fund
Class B Shares and Acquiring Fund Class C Shares will be determined by including
such Acquired Fund Shareholder's holding period for the Acquired Fund Shares of
each respective Acquired Fund exchanged therefor, provided that Acquired Fund
Shareholder held such Acquired Fund Shares as a capital asset.
(viii) In accordance with Section 1223(2) of the Code, the holding
period with respect to the assets of each Acquired Fund transferred to each
respective Acquiring Fund in the Reorganizations will include the holding period
for such assets in the hands of such Acquired Fund.
28
<PAGE> 80
Schedule 6.3(d)
Opinion of Counsel to AIM International
1. AIM International is a corporation validly existing and in good
standing under the Maryland General Corporation Law.
2. AIM International is an open-end, management investment company
registered under the Investment Company Act of 1940.
3. The execution, delivery and performance of the Agreement by AIM
International have been duly authorized and approved by all requisite
trust action on the part of AIM International. The Agreement has been
duly executed and delivered by AIM International and constitutes the
valid and binding obligation of AIM International.
4. The Acquiring Fund Shares outstanding on the date hereof have been duly
authorized and validly issued, are fully paid and are non-assessable.
5. To the best of our knowledge, AIM International is not required to
submit any notice, report or other filing with or obtain any
authorization, consent or approval from any governmental authority or
self regulatory organization prior to the consummation of the
transactions contemplated by the Agreement.
We confirm to you that to our knowledge after inquiry of each lawyer
who is the current primary contact for AIM International or who has devoted
substantive attention on behalf of AIM International during the preceding twelve
months and who is still currently employed by or is currently a member of this
firm, no litigation or governmental proceeding is pending or threatened in
writing against an Acquiring Fund (i) with respect to the Agreement or (ii)
which involves in excess of $500,000 in damages.
29
<PAGE> 81
APPENDIX II
AIM GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
AIM Global Income Fund seeks to provide high current income, with a
secondary objective of protection of principal and growth of capital.
AIM--Registered Trademark--
PROSPECTUS
FEBRUARY 28, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
The Board of Directors voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 82
----------------------
AIM GLOBAL INCOME FUND
----------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 3
Performance Table 3
FEE TABLE AND EXPENSE EXAMPLE 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 4
Expense Example 4
FUND MANAGEMENT 5
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 5
Advisor Compensation 5
Portfolio Managers 5
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
Submission of Matters to Shareholders 5
FINANCIAL HIGHLIGHTS 7
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 83
----------------------
AIM GLOBAL INCOME FUND
----------------------
INVESTMENT OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's primary investment objective is high current income. Its secondary
objective is protection of principal and growth of capital.
The fund seeks to meet these objectives by investing at least 65% of its total
assets in government and non-convertible corporate debt securities, both foreign
and domestic, including securities issued by supranational organizations, such
as the World Bank. The fund emphasizes investment in securities issued by
governments and companies in developed countries such as the United States, the
countries of Western Europe, Canada, Japan, Australia and New Zealand. The fund
may also invest up to 20% of its total assets in securities of issuers located
in developing countries, i.e., those that are in the initial stages of their
industrial cycles. The fund will normally invest in the securities of companies
located in at least four different countries, including the United States, and
will normally maintain at least 20% of its total assets in securities of U.S.
issuers. The fund may invest up to 10% of its total assets in common stocks,
preferred stocks and similar equity securities of foreign and domestic issuers
and up to 10% of its total assets in convertible debt securities of foreign and
domestic issuers. The fund may also invest up to 35% of its total assets in
lower-quality debt securities, i.e., "junk bonds."
The fund is non-diversified. With respect to 50% of its assets, it is
permitted to invest more than 5% of its assets in the securities of any one
issuer. However, the fund will invest no more than 5% of its total assets in the
securities of any one corporate issuer, and will invest no more than 25% of its
total assets in securities of any one foreign government or supranational
organization.
The portfolio managers focus on debt securities throughout the world that they
believe have favorable prospects for current income or growth of capital. The
portfolio managers consider whether to sell a particular security when any of
those factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objectives.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Interest rate increases can cause the
price of a debt security to decrease; the longer a debt security's duration, the
more sensitive it is to this risk. Junk bonds are less sensitive to this risk
than are higher-quality bonds. The issuer of a security may default or otherwise
be unable to honor a financial obligation.
Compared to higher-quality debt securities, junk bonds involve greater risk of
default or price changes due to changes in the credit quality of the issuer
because they are generally unsecured and may be subordinated to other creditors'
claims. The value of junk bonds often fluctuates in response to company,
political or economic developments and can decline significantly over short
periods of time or during periods of general or regional economic difficulty.
During those times, the bonds could be difficult to value or to sell at a fair
price. Credit ratings on junk bonds do not necessarily reflect their actual
market risk.
Because it is non-diversified, the fund may invest in fewer issuers than if it
was a diversified fund. The value of the fund's shares may vary more widely, and
the fund may be subject to greater investment and credit risk, than if the fund
invested more broadly.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are
1
<PAGE> 84
----------------------
AIM GLOBAL INCOME FUND
----------------------
often higher in developing countries and there may be delays in
settlement procedures.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2
<PAGE> 85
----------------------
AIM GLOBAL INCOME FUND
----------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1995.................................. 19.39%
1996.................................. 10.30%
1997.................................. 7.68%
1998.................................. 4.76%
1999.................................. -3.62%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
6.26% (quarter ended March 31, 1995) and the lowest quarterly return was -2.40%
(quarter ended June 30, 1999).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (8.18)% 6.40% 6.11% 09/15/94
Class B (8.73) 6.59 6.39 09/15/94
Class C (5.04) -- 1.60 08/04/97
Salomon Bros. World Gov't Bond Market
Index(1) (4.27) 6.42 6.24(2) 08/31/94(2)
- -------------------------------------------------------------------------------------
</TABLE>
(1) The Salomon Brothers World Government Bond Market Index includes all
fixed-rate bonds with a remaining maturity of one year or longer and with
amounts outstanding of at least the equivalent of US $25 million. The index
measures the performance of the domestic government bond markets in fourteen
countries combined.
(2) The average annual total return given is since the date closest to the
inception date of the classes with the longest performance history.
3
<PAGE> 86
----------------------
AIM GLOBAL INCOME FUND
----------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever is less) None(1) 5.00% 1.00%
- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.70% 0.70% 0.70%
Distribution and/or
Service (12b-1) Fees 0.50 1.00 1.00
Other Expenses 0.47 0.47 0.47
Total Annual Fund
Operating Expenses 1.67 2.17 2.17
Fee Waivers(2) 0.42 0.42 0.42
Net Expenses 1.25 1.75 1.75
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
(2) The investment advisor has contractually agreed to limit Total Annual Fund
operating expenses of Class A, Class B and Class C to 1.25%, 1.75% and
1.75%, respectively.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $637 $976 $1,339 $2,357
Class B 720 979 1,364 2,377
Class C 320 679 1,164 2,503
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $637 $976 $1,339 $2,357
Class B 220 679 1,164 2,377
Class C 220 679 1,164 2,503
- ----------------------------------------------
</TABLE>
4
<PAGE> 87
----------------------
AIM GLOBAL INCOME FUND
----------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 1999, the advisor received compensation
of 0.28% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Robert G. Alley, Senior Portfolio Manager, who has been responsible for the
fund since its inception in 1994 and has been associated with the advisor
and/or its affiliates since 1992.
- - Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1999. From 1997 to 1999, he was global fixed-income portfolio manager for
Nicholas-Applegate Capital Management. From 1994 to 1997, he was international
fixed-income trader and analyst for Strong Capital Management.
- - Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the
fund since 1995 and has been associated with the advisor and/or its affiliates
since 1992.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Global Income Fund are subject to the maximum
4.75% initial sales charge as listed under the heading "CATEGORY II Initial
Sales Charges" in the "Shareholder Information--Choosing a Share Class" section
of this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions will consist primarily of ordinary
income.
DIVIDENDS
The fund generally declares dividends daily and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Directors of AIM
International Funds, Inc. (the company), on behalf of the fund, voted to request
shareholders to approve the following items that will affect the fund:
- - An Agreement and Plan of Reorganization which provides for the reorganization
of the company, which is currently a Maryland corporation, as a Delaware
business trust;
- - A new advisory agreement between the company and A I M Advisors, Inc. (AIM).
The principal changes to the advisory agreement are (i) the deletion of
references to the provision of administrative services and certain expense
limitations that are no longer applicable, and (ii) the clarification of
provisions relating to delegations of responsibilities and the non-exclusive
nature of AIM's services. The revised advisory agreement does not change the
fees paid by the fund (except that the agreement permits the fund to pay a fee
to AIM in connection with any new securities lending program implemented in
the future);
5
<PAGE> 88
----------------------
AIM GLOBAL INCOME FUND
----------------------
OTHER INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective so that it is non-fundamental. The
investment objective of the fund would be changed by deleting references to
the types of securities that the fund will purchase to achieve its objective
of long-term growth of capital. If the investment objective of the fund
becomes non-fundamental, it can be changed in the future by the Board of
Directors of the company without further approval by shareholders.
The Board of Directors of the company has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 are entitled to
vote at the meeting. Proposals that are approved are expected to become
effective on or about May 22, 2000.
6
<PAGE> 89
----------------------
AIM GLOBAL INCOME FUND
----------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.60 $ 10.93 $ 10.85 $ 10.74 $ 10.02
Income from investment operations:
Net investment income 0.67 0.71 0.72 0.79(a) 0.79
Net gains (losses) on securities (both
realized and unrealized) (0.86) (0.27) 0.21 0.25 0.75
Total from investment operations (0.19) 0.44 0.93 1.04 1.54
Less distributions:
Dividends from investment income (0.61) (0.61) (0.72) (0.81) (0.82)
Distributions from net realized gains -- (0.07) (0.13) (0.12) --
Return of capital (0.08) (0.09) -- -- --
Total distributions (0.69) (0.77) (0.85) (0.93) (0.82)
Net asset value, end of period $ 9.72 $ 10.60 $ 10.93 $ 10.85 $ 10.73
Total return(b) (1.94)% 3.95% 9.05% 10.22% 16.07%
- -------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $51,077 $58,115 $30,924 $21,926 $10,004
Ratio of expenses to average net assets(c) 1.25%(d) 1.23% 1.25% 1.25% 1.25%
Ratio of net investment income to average net
assets(e) 6.54%(d) 6.38% 6.54% 7.27% 7.38%
Portfolio turnover rate 93% 47% 61% 83% 128%
- -------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.67%, 1.73%, 1.86%, 2.02% and 3.03% for the periods 1999-1995.
(d) Ratios are based on average net assets of $60,052,093.
(e) After fee waivers and/or expense reimbursements. The ratios of net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 6.12%, 5.89%, 5.93%, 6.51% and 5.59% for the periods
1999-1995.
7
<PAGE> 90
----------------------
AIM GLOBAL INCOME FUND
----------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------
YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.59 $ 10.92 $ 10.84 $ 10.73 $10.01
Income from investment operations:
Net investment income 0.62 0.65 0.67 0.74(a) 0.74
Net gains (losses) on securities (both
realized and unrealized) (0.85) (0.27) 0.21 0.24 0.75
Total from investment operations (0.23) 0.38 0.88 0.98 1.49
Less distributions:
Dividends from investment income (0.56) (0.55) (0.67) (0.75) (0.77)
Distributions from net realized gains -- (0.07) (0.13) (0.12) --
Return of capital (0.08) (0.09) -- -- --
Total distributions (0.64) (0.71) (0.80) (0.87) (0.77)
Net asset value, end of period $ 9.72 $ 10.59 $ 10.92 $ 10.84 $10.73
Total return(b) (2.37)% 3.38% 8.48% 9.66% 15.56%
- ------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $34,423 $36,525 $25,121 $16,787 $4,207
Ratio of expenses to average net assets(c) 1.75%(d) 1.75% 1.76% 1.75% 1.73%
Ratio of net investment income to average net
assets(e) 6.04%(d) 5.87% 6.03% 6.77% 6.88%
Portfolio turnover rate 93% 47% 61% 83% 128%
- ------------------------------------------------------------------------------------------------
</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) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.17%, 2.25%, 2.37%, 2.53% and 3.57% for 1999-1995.
(d) Ratios are based on average net assets of $38,526,539.
(e) After fee waivers and/or expense reimbursements. The ratios of net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 5.62%, 5.37%, 5.42%, 6.00% and 5.05% for 1999-1995.
8
<PAGE> 91
----------------------
AIM GLOBAL INCOME FUND
----------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
----------------------------------------
FOR THE PERIOD
YEAR ENDED AUGUST 4,
OCTOBER 31, THROUGH
---------------------- OCTOBER 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.59 $10.92 $10.76
Income from investment operations:
Net investment income 0.62 0.66 0.15(a)
Net gains (losses) on securities (both realized and
unrealized) (0.86) (0.28) 0.17
Total from investment operations (0.24) 0.38 0.32
Less distributions:
Dividends from investment income (0.56) (0.55) (0.13)
Distributions from net realized gains -- (0.07) (0.03)
Return of capital (0.08) (0.09) --
Total distributions (0.64) (0.71) (0.16)
Net asset value, end of period $ 9.71 $10.59 $10.92
Total return(b) (2.47)% 3.39% 2.99%
- ------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $1,884 $1,785 $ 242
Ratio of expenses to average net assets(c) 1.75%(d) 1.73% 1.76%(e)
Ratio of net investment income to average net assets(f) 6.04%(d) 5.88% 6.03%(e)
Portfolio turnover rate 93% 47% 61%
- ------------------------------------------------------------------------------------------------------
</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) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.17%, 2.22% and 2.37% (annualized) for 1999-1997.
(d) Ratios are based on average net assets of $1,924,739.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. The ratios of net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 5.62%, 5.40% and 5.42% (annualized) for 1999-1997.
9
<PAGE> 92
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--02/00
<PAGE> 93
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--02/00 A-2
<PAGE> 94
-------------
THE AIM FUNDS
-------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--02/00
<PAGE> 95
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored
retirement plan assesses an annual maintenance fee of $10. Contact your
financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--02/00 A-4
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THE AIM FUNDS
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HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- --------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--02/00
<PAGE> 97
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REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited
MCF--02/00 A-6
<PAGE> 98
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THE AIM FUNDS
-------------
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if
you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- --------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
- --------------------------------------------------------------------------------
A-7 MCF--02/00
<PAGE> 99
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THE AIM FUNDS
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PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the customary trading session of the NYSE on each day the NYSE is open for
business. AIM Money Market Fund also determines its net asset value as of 12:00
noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THIS
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--02/00 A- 8
<PAGE> 100
----------------------
AIM GLOBAL INCOME FUND
----------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- -----------------------------------
AIM Global Income Fund
SEC 1940 Act file number: 811-6463
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GLI-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 101
APPENDIX III
AIM GLOBAL GROWTH FUND
--------------------------------------------------------------------
AIM Global Growth Fund seeks to provide long-term growth of capital.
AIM --Registered Trademark--
PROSPECTUS
FEBRUARY 28, 2000
This prospectus contains important
information about the Class A, B and
C shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
The Board of Directors voted to
request shareholder approval of
certain items. For further
information on these items, see
Submission of Matters to
Shareholders in this prospectus.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 102
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AIM GLOBAL GROWTH FUND
----------------------
Table of Contents
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<TABLE>
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INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
Submission of Matters to Shareholders 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 103
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AIM GLOBAL GROWTH FUND
----------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital.
The fund seeks to meet this objective by investing, normally, at least 65% of
its total assets in marketable equity securities of domestic and foreign
issuers. The fund will normally invest in the securities of medium- and
large-sized growth companies located in at least four countries, including the
United States, and will usually maintain at least 20% of its total assets in
U.S. dollar denominated securities. The fund emphasizes investment in companies
in developed countries such as the United States, the countries of Western
Europe and certain countries in the Pacific Basin. The fund may also invest in
companies located in developing countries, i.e., those that are in the initial
stages of their industrial cycles. The fund may invest up to 20% of its total
assets in securities exchangeable for or convertible into marketable equity
securities of foreign and domestic issuers.
The fund may also invest up to 35% of its total assets in high-grade
short-term securities and in debt securities, including U.S. Government
obligations, investment-grade corporate bonds or taxable municipal securities.
The portfolio managers focus on companies that have experienced above-average
long-term growth in earnings and have excellent prospects for future growth. In
selecting countries in which the fund will invest, the fund's portfolio managers
also consider such factors as the prospect for relative economic growth among
countries or regions, economic or political conditions, currency exchange
fluctuations, tax considerations and the liquidity of a particular security. The
fund's portfolio managers consider whether to sell a particular security when
any of these factors materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund. The value of your investment in the fund will go up and down with the
prices of the securities in which the fund invests. The prices of equity
securities change in response to many factors including the historical and
prospective earnings of the issuer, the value of its assets, general economic
conditions, interest rates, investor perceptions and market liquidity.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
located in developing countries more than those in countries with mature
economies. For example, many developing countries have, in the past, experienced
high rates of inflation or sharply devalued their currencies against the U.S.
dollar, thereby causing the value of investments in companies located in those
countries to decline. Transaction costs are often higher in developing countries
and there may be delays in settlement procedures.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 104
----------------------
AIM GLOBAL GROWTH FUND
----------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
ANNUAL
YEAR ENDED TOTAL
DECEMBER 31 RETURNS
- ----------- -------
<S> <C>
1995 .................................. 30.09%
1996 .................................. 19.87%
1997 .................................. 13.85%
1998 .................................. 22.08%
1999 .................................. 52.20%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
38.05% (quarter ended December 31, 1999) and the lowest quarterly return was
- -12.38% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS INCEPTION DATE
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 44.99% 25.72% 23.59% 09/15/94
Class B 46.36 26.12 23.99 09/15/94
Class C 50.34 -- 26.76 08/04/97
MSCI AC World Index(1) 27.31 18.90 16.78 08/31/94(2)
- ------------------------------------------------------------------------
</TABLE>
1 The Morgan Stanley Capital International All Country World Index measures the
performance of securities listed on the major world stock exchanges of 47
markets, including both developed and emerging markets.
2 The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 105
----------------------
AIM GLOBAL GROWTH FUND
----------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- ---------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- ---------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- ---------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.85% 0.85% 0.85%
Distribution and/or
Service (12b-1) Fees 0.50 1.00 1.00
Other Expenses 0.32 0.38 0.38
Total Annual Fund
Operating Expenses 1.67 2.23 2.23
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $637 $ 976 $1,339 $2,357
Class B 726 997 1,395 2,424
Class C 326 697 1,195 2,565
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $637 $976 $1,339 $2,357
Class B 226 697 1,195 2,424
Class C 226 697 1,195 2,565
- ----------------------------------------------
</TABLE>
3
<PAGE> 106
----------------------
AIM GLOBAL GROWTH FUND
----------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 120
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 1999, the advisor received compensation
of 0.85% of average daily net assets.
PORTFOLIO MANAGERS
The advisor uses a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio, all of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Monika H. Degan, Senior Portfolio Manager, who has been responsible for the
fund since 1999 and has been associated with the advisor and/or its affiliates
since 1995. From 1991 to 1995, she was Senior Financial Analyst for Shell Oil
Co. Pension Trust.
- - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for
the fund since its inception in 1994 and has been associated with the advisor
and/or its affiliates since 1989.
- - Benjamin A. Hock, Jr., Portfolio Manager, who has been responsible for the
fund since 1999 and has been associated with the advisor and/or its affiliates
since 1999. From 1994 to 1999, he was, among other offices, head of equity
research at John Hancock Advisers, Inc.
- - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund
since 2000 and has been associated with the advisor and/or its affiliates
since 1996. From 1994 to 1996, he was an associate with JMB Realty.
- - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the
fund since 1999 and has been associated with the advisor and/or its affiliates
since 1994.
- - Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for
the fund since its inception in 1994 and has been associated with the advisor
and/or its affiliates since 1986.
- - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1990.
4
<PAGE> 107
----------------------
AIM GLOBAL GROWTH FUND
----------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Global Growth Fund are subject to the maximum
4.75% initial sales charge as listed under the heading "CATEGORY II Initial
Sales Charges" in the "Shareholder Information--Choosing a Share Class" section
of this prospectus. Purchases of Class B and Class C shares are subject to the
contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Directors of AIM
International Funds, Inc. (the company), on behalf of the fund, voted to request
shareholders to approve the following items that will affect the fund:
- - An Agreement and Plan of Reorganization which provides for the reorganization
of the company, which is currently a Maryland corporation, as a Delaware
business trust;
- - A new advisory agreement between the company and A I M Advisors, Inc. (AIM).
The principal changes to the advisory agreement are (i) the deletion of
references to the provision of administrative services and certain expense
limitations that are no longer applicable, and (ii) the clarification of
provisions relating to delegations of responsibilities and the non-exclusive
nature of AIM's services. The revised advisory agreement does not change the
fees paid by the fund (except that the agreement permits the fund to pay a fee
to AIM in connection with any new securities lending program implemented in
the future);
- - Changing the fund's fundamental investment restrictions. The proposed
revisions to the fund's fundamental investment restrictions are described in
the fund's statement of additional information; and
- - Changing the fund's investment objective so that it is non-fundamental. If the
investment objective of the fund becomes non-fundamental, it can be changed in
the future by the Board of Directors of the company without further approval
by shareholders.
The Board of Directors of the company has called a meeting of the fund's
shareholders to be held on or about May 3, 2000 to vote on these and other
proposals. Only shareholders of record as of February 18, 2000 are entitled to
vote at the meeting. Proposals that are approved are expected to become
effective on or about May 22, 2000.
5
<PAGE> 108
----------------------
AIM GLOBAL GROWTH FUND
----------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.91 $ 16.65 $ 14.20 $ 12.32 $ 10.23
Income from investment operations:
Net investment income (loss) (0.10) (0.05) (0.04) (0.01) (0.02)
Net gains on securities (both realized and
unrealized) 6.12 1.74 2.49 2.11 2.11
Total from investment operations 6.02 1.69 2.45 2.10 2.09
Less distributions:
Dividends from net investment income -- -- -- -- (0.004)
Distributions from net realized gains (0.50) (0.43) -- (0.22) --
Total distributions (0.50) (0.43) -- (0.22) (0.004)
Net asset value, end of period $ 23.43 $ 17.91 $ 16.65 $ 14.20 $ 12.32
Total return(a) 34.43% 10.43% 17.25% 17.26% 20.48%
- -------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $388,549 $219,050 $178,917 $114,971 $23,754
Ratio of expenses to average net assets(b) 1.67%(c) 1.70% 1.76% 1.93% 2.12%
Ratio of net investment income (loss) to average
net assets(d) (0.57)%(c) (0.27)% (0.30)% (0.13)% (0.28)%
Portfolio turnover rate 93% 97% 96% 82% 79%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Does not deduct sales charges.
(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% and 2.98% for 1996-1995.
(c) Ratios are based on average net assets of $317,044,851.
(d) 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)% and (1.14)% for 1996-1995.
6
<PAGE> 109
----------------------
AIM GLOBAL GROWTH FUND
----------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
YEAR ENDED OCTOBER 31,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.52 $ 16.39 $ 14.05 $ 12.26 $ 10.22
Income from investment operations:
Net investment income (loss) (0.23)(a) (0.15)(a) (0.11) (0.05) (0.04)
Net gains (losses) on securities (both
realized and unrealized) 5.99 1.71 2.45 2.06 2.08
Total from investment operations 5.76 1.56 2.34 2.01 2.04
Less distributions:
Distributions from net realized gains (0.50) (0.43) -- (0.22) --
Total distributions (0.50) (0.43) -- (0.22) --
Net asset value, end of period $ 22.78 $ 17.52 $ 16.39 $ 14.05 $ 12.26
Total return(b) 33.69% 9.78% 16.65% 16.60% 19.96%
- ---------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $425,345 $282,456 $224,225 $121,848 $17,157
Ratio of expenses to average net assets 2.23%(c) 2.26% 2.29% 2.48%(d) 2.64%(d)
Ratio of net investment income (loss) to average
net assets (1.13)%(c) (0.83)% (0.83)% (0.69)%(e) (0.79)%(e)
Portfolio turnover rate 93% 97% 96% 82% 79%
- ---------------------------------------------------------------------------------------------------------------
</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 $356,402,709.
(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% and 3.38% for 1996-1995.
(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 (0.69)% and (1.54)% for 1996-1995.
7
<PAGE> 110
----------------------
AIM GLOBAL GROWTH FUND
----------------------
FINANCIAL HIGHLIGHTS (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
- -------------------------------------------------------------------------------------------------------
FOR THE PERIOD
AUGUST 4,
YEAR ENDED OCTOBER 31, THROUGH
----------------------- OCTOBER 31,
1999 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 17.52 $ 16.39 $17.39
Income from investment operations:
Net investment income (loss) (0.23)(a) (0.15)(a) (0.03)
Net gains (losses) on securities (both realized and
unrealized) 6.00 1.71 (0.97)
Total from investment operations 5.77 1.56 (1.00)
Less distributions:
Distributions from net realized gains (0.50) (0.43) --
Total distributions (0.50) (0.43) --
Net asset value, end of period $ 22.79 $ 17.52 $16.39
Total return(b) 33.69% 9.78% (5.75)%
- -------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $31,356 $11,765 $1,100
Ratio of expenses to average net assets 2.23%(c) 2.26% 2.29%(d)
Ratio of net investment income (loss) to average net assets (1.13)%(c) (0.83)% (0.83)%(d)
Portfolio turnover rate 93% 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 $20,512,721.
(d) Annualized.
8
<PAGE> 111
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--02/00
<PAGE> 112
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--02/00 A-2
<PAGE> 113
-------------
THE AIM FUNDS
-------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--02/00
<PAGE> 114
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THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored
retirement plan assesses an annual maintenance fee of $10. Contact your
financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--02/00 A-4
<PAGE> 115
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THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- --------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--02/00
<PAGE> 116
-------------
THE AIM FUNDS
-------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited
MCF--02/00 A-6
<PAGE> 117
-------------
THE AIM FUNDS
-------------
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if
you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- --------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
- --------------------------------------------------------------------------------
A-7 MCF--02/00
<PAGE> 118
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THE AIM FUNDS
-------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the customary trading session of the NYSE on each day the NYSE is open for
business. AIM Money Market Fund also determines its net asset value as of 12:00
noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THIS
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--02/00 A- 8
<PAGE> 119
----------------------
AIM GLOBAL GROWTH FUND
----------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
----------------------------------
AIM Global Growth Fund
SEC 1940 Act file number: 811-6463
----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GLG-PRO-1 INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 120
APPENDIX IV
ANNUAL REPORT / MANAGERS' OVERVIEW
DESPITE CHALLENGING MARKET,
FUND PROVIDES SOLID INCOME
THE MARKET ENVIRONMENT WAS DIFFICULT FOR BOND INVESTORS. HOW DID AIM GLOBAL
INCOME FUND PERFORM?
Although bond performance was dreary due to rising interest
rates, the fund continued to provide attractive monthly income. As of October
31, 1999, the fund's 30-day distribution rates at net asset value were 7.04%,
6.48% and 6.49% for Class A, B and C shares, respectively. The fund's 30-day SEC
yield at maximum offering price was 6.68% for Class A shares and 6.53% for both
Class B and Class C shares.
The rising interest-rate environment negatively affected most bond-market
sectors, and this trend detracted from the fund's total returns for the fiscal
year. Excluding sales charges, total returns were -1.94%, -2.37%, and -2.47% for
Class A, B and C shares, respectively. Over the same period, the total return of
the Salomon Brothers World Government Bond Index was -2.46%.
HOW DID FOREIGN BONDS FARE?
Although the U.S. dollar weakened against the Japanese yen, it remained strong
against other major currencies, including the euro. The strength of the dollar
against most other currencies hurt returns for U.S. investors in foreign bonds.
We continued to mitigate the effect of a strong dollar by selectively hedging
currency.
Even without taking currency factors into consideration, the performance of
foreign bonds (except for emerging markets debt) was lackluster as evidenced by
the performance of the Salomon Brothers World Government Bond Index for the
fiscal year.
Two of the better-performing bond markets were Canada and the United
Kingdom, and the fund benefited from its significant exposure to these markets.
In the United Kingdom, the bond market got a boost from low inflation and a Bank
of England that acted diligently to keep it in check. Bonds in the Euroland
regions performed poorly in the face of a strengthening economy before showing
signs of recovering toward the end of the fiscal year as economic conditions
moderated.
WHAT WERE KEY TRENDS IN THE DOMESTIC INVESTMENT-GRADE BOND MARKET?
As of the end of the fiscal year, 1999 had been the worst year for bonds in
the United States since 1994 and the second worst year on record. Investors were
concerned that continued strong economic growth would prompt the Federal Reserve
Board (the Fed) to raise interest rates to keep inflation at bay, and this had
an unsettling effect on the bond market. Ultimately, in two separate moves, the
Fed raised the key federal funds rate from 4.75% to 5.25%.
The bond market was also rattled by record supply, the potential impact of
the Y2K problem--the need to reprogram older computers to recognize the year
2000--and the decline in value of the U.S. dollar against the Japanese yen. An
overabundance of new issues hurt the performance of investment-grade corporate
bonds. Companies rushed to issue new bonds before Y2K concerns became more
pronounced toward the end of 1999. This overabundance of supply was generally
met by weak demand, stemming from concerns that rising interest rates might
undermine corporate profits and affect the ability of companies to meet their
debt obligations. However, there was some increase in demand for
investment-grade corporate bonds toward the end of the fiscal year as their
yields rose to attractive levels.
The weakness in the bond market was reflected in the yield of the benchmark
30-year U.S. Treasury bond, which rose from 5.15% at the beginning of the fiscal
year to 6.16% at its conclusion. In October, bond yields neared their highs for
the year. The yield differentials between Treasuries and lower-rated bonds, wide
at the beginning of the fiscal year, narrowed somewhat as the reporting period
progressed. However, by the end of the fiscal year, yield spreads again
approached their widest levels of the reporting period, as nearly every bond
sector displayed weakness amid continuing concerns about inflation.
HOW DID HIGH-YIELD BONDS PERFORM?
After beginning the fiscal year in the doldrums, high-yield bonds rallied midway
through the reporting period, and for a time were market leaders. However, the
performance of high-yield bonds plummeted amid concerns about interest rates,
inflation and a growing default
-------------------------------------
TWO OF THE BETTER-PERFORMING
BOND MARKETS WERE CANADA AND
THE UNITED KINGDOM, AND THE
FUND BENEFITED FROM ITS SIGNIFICANT
EXPOSURE TO THESE MARKETS.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM GLOBAL INCOME FUND
2
<PAGE> 121
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 10/31/99, based on total net assets
<TABLE>
<CAPTION>
================================================================================
TOP FIVE BOND HOLDINGS Coupon Maturity % of
Portfolio
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1. CSC Holdings, Inc., Sr. Unsec. Deb. 7.625% 07/2018 1.70%
2. Delta Air Lines, Inc., Deb. 10.375 12/2022 1.38
3. Time Warner Inc., Deb. 9.125 01/2013 1.29
4. Stadshypotek A.B. Series 1562, Notes 3.50 09/2004 1.24
5. Dresdner Finance B.V. 3.532 07/2003 1.20
Series 11 Floating Rate Gtd. Notes
Please keep in mind that the fund's portfolio is subject to change, and there is
no assurance that the fund will continue to hold any particular security.
================================================================================
</TABLE>
================================================================================
PIE CHART
- --------------------------------------------------------------------------------
[S] [C]
Other 7.58%
Investment-grade bonds 26.75%
Foreign bonds 42.40%
High-yield bonds 23.27%
================================================================================
rate. Toward the end of the fiscal year, the default rate for the issuers of
high-yield bonds rose to approximately 4%, its highest level since 1991. An
overabundance of supply and concerns about liquidity also hurt the high-yield
market.
HOW WAS THE FUND STRUCTURED AT THE END OF THE FISCAL YEAR?
As of October 31, the fund had 191 holdings, with total assets divided as
follows: foreign bonds, 42.40%; domestic investment-grade bonds, 26.75%,
high-yield bonds, 23.27%; and other assets, 7.58%. The weighted average maturity
of the portfolio was 10.60 years and its duration was 5.898 years. The fund had
an average portfolio quality rating of BBB as measured by Standard & Poor's
Corporation (S&P) and Moody's Investor Service (Moody's), two widely known
credit rating agencies. These historical ratings are based on an analysis of the
credit quality of the individual securities in the fund's portfolio. The average
coupon was 8.13%.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
We believe bonds will continue to be an attractive source of income. Globally,
the economy is improving. In Europe, inflation is low, and the economy is
showing signs of recovery. Mergers and restructurings are proceeding at a brisk
pace, which should enhance corporate profitability and the attractiveness of
European corporate bonds. We expect the European Economic and Monetary Union to
continue to stimulate the development of the corporate- and high-yield bond
markets in Europe, potentially increasing the fund's investment options.
Additionally, Asia appears to be well on its way to recovery from the economic
crisis that had global ramifications in 1997-1998.
The global acceleration in economic growth could lead to higher interest
rates to keep inflation in check, which could affect total returns for bonds.
In the United States, we also expect bond performance to improve in 2000.
Inflation and interest rates remain relatively low. Moreover, there are
indications that, for the short term at least, the Fed may be finished adjusting
monetary policy. On November 16, after the close of the reporting period, the
central bank raised the federal funds rate to 5.5% and adopted a neutral bias
toward additional rate hikes.
Furthermore, the U.S. economy continues to grow at a healthy pace and
corporate profits are solid. This could spark investor interest in
investment-grade corporate bonds, which offered attractive yields at the close
of the fiscal year. It also could benefit high-yield bonds, whose issuers are
generally better able to meet their debt obligations when corporate earnings are
strong.
Regardless, we will adhere to our strategy of investing in foreign, domestic
investment-grade and high-yield bonds. Normally, these bonds tend to react
differently to various economic and market conditions. Over the long term, we
believe this investment approach can enhance returns, reduce risk and provide
for an attractive level of income.
See important fund and index disclosures inside front cover.
AIM GLOBAL INCOME FUND
3
<PAGE> 122
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL INCOME FUND VS. BENCHMARK INDEXES
2/3/89-10/31/99
in thousands
================================================================================
Salomon
AIM Global AIM Global Brothers World Lehman World
Income Fund, Income Fund, Government Government
Class B shares, Class A shares, Bond Index Bond Index
- --------------------------------------------------------------------------------
9/30/94 9524 10000 10072 9859
10/31/94 9613 10079 10234 9851.11
10/31/95 11158 11647 11790 11366.9
10/31/96 12298 12772 12422 11947.6
10/31/97 13411 13855 12746 12980.8
10/31/98 13940 14323 14346 14446.6
10/31/99 13670 13889 13993 14270.1
Past performance cannot guarantee comparable future results.
Source: Lipper, Inc.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. THE
RESULTS OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
ABOUT THIS CHART
The chart compares your fund to benchmark indexes. It is intended to give you a
general idea of how your fund performed compared to the bond market over the
period 9/15/94-10/31/99. (Please note that index performance is from
8/31/94-10/31/99). It is important to understand the difference between your
fund and an index. Your fund's total return is shown with a sales charge and
includes fund expenses and management fees. An index measures the performance of
a hypothetical portfolio. Market indexes are not managed, incurring no sales
charges, expenses or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect your investment's
return.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
================================================================================
CLASS A SHARES
Inception (9/15/94) 6.29%
5 Years 6.26
1 Year -6.61*
*-1.94% excluding sales charges
CLASS B SHARES
Inception (9/15/94) 6.61%
5 Years 6.47
1 Year -6.96*
*-2.37% excluding sales charges
CLASS C SHARES
Inception (8/4/97) 1.70%
1 Year -3.38*
*-2.47% excluding sales charges
================================================================================
The performance of Class C shares will differ from that of Class A and Class B
shares due to differing fees and expenses. For fund performance calculations and
descriptions of the indexes cited on this page, please refer to the inside front
cover.
AIM GLOBAL INCOME FUND
4
<PAGE> 123
APPENDIX V
ANNUAL REPORT / MANAGERS' OVERVIEW
FOCUS ON GLOBAL LEADERS SPURS PERFORMANCE
HOW DID AIM GLOBAL GROWTH FUND PERFORM DURING THE REPORTING PERIOD?
The fund produced outstanding returns during the fiscal year ended October 31,
1999. Class A shares reported a total annual return of 34.43%, Class B shares
33.69% and Class C shares 33.69%. These figures are at net asset value and do
not include sales charges. The fund outperformed the MSCI All Country World
Index, which produced a total annual return of 26.41% during the same time
frame. Net assets in the fund grew from $513 million to $845 million over the
fiscal year. Approximately $110 million in net assets came from the fund's
merger with AIM Worldwide Growth Fund in January 1999.
WHAT WERE MARKET CONDITIONS LIKE OVER THE FISCAL YEAR?
Investor concern over interest rates made the U.S. markets very volatile near
the end of the reporting period. In June and August, the Federal Reserve Board
(the Fed) raised rates in two quarter-point moves. At its October meeting, the
Fed chose to leave rates unchanged but adopted a "tightening bias," indicating
that it might be inclined to raise rates in the near future. The Fed raised
rates after the fiscal year closed.
In overseas markets, Japan dominated throughout the fiscal year. Investors
flocked to Japanese securities amid prospects of a brighter economy. Japan
posted two consecutive quarters of economic growth, signaling an end to its
extended recession. Market activity drove the value of the yen to powerful
heights.
The major trend in Europe has been the feverish pace of merger activity. In
fact, toward the end of the reporting period, European merger activity topped
that of the United States for the first time. Ten European deals were announced
in the third quarter with values of more than $10 billion each.
THIS TIME LAST YEAR, EMERGING MARKETS WERE IN TURMOIL. HAVE THINGS IMPROVED?
Yes, there has been a definite recovery. In Asia, a number of countries have
restructured their banking systems and stabilized their currencies, including
Singapore, Indonesia and South Korea. Lower inflation and declining interest
rates have propelled economic growth in those regions. In addition, exports
have increased, and foreign investment has returned.
In Latin America, the Mexican market dominated the region. Declining
interest rates and a stronger peso bolstered its economy, along with the
continued strength of its largest trading partner, the United States.
HOW DID YOU MANAGE THE FUND IN THIS ENVIRONMENT?
The fund remained invested in global leaders. Our investment strategy focuses
on earnings momentum--we look for stocks with proven earnings records and
prospects for future growth. We also choose our investments stock-by-stock
instead of country-by-country. This strategy allowed us to choose from among
the best-performing stocks worldwide.
We reduced our holdings slightly over the year from 201 to 167 stocks and
remained well-diversified among 22 countries. The United States remained our
largest concentration, making up 37.74% of the fund's net assets. At the end of
the fiscal year, European stocks were 24% of the fund's assets, including 7.00%
in the United Kingdom, 6.33% in France, 2.47% in the Netherlands and 1.78% in
Switzerland.
Bar Charts
GROWTH OF NET ASSETS
As of 10/31/99
===============================================================================
10/31/98 $513 MILLION
10/31/99 $845 MILLION
===============================================================================
AIM GLOBAL GROWTH FUND
VS. BENCHMARK INDEX
As of 10/31/99
===============================================================================
One-year returns, excluding sales charges
CLASS A SHARES 34.43%
CLASS B SHARES 33.69%
CLASS C SHARES 33.69%
MSCI ALL COUNTRY WORLD INDEX 26.41%
===============================================================================
See important fund and index disclosures inside front cover.
AIM GLOBAL GROWTH FUND
2
<PAGE> 124
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 10/31/99, based on total net assets
<TABLE>
<CAPTION>
===========================================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Nortel Networks Corp. (Canada) 1.60% 1. Computers (Software & Services) 6.93% 1. United States 37.74%
2. Carrefour Supermarche S.A. (France) 1.53 2. Telephone 6.39 2. Japan 17.16
3. Nokia Oyj (Finland) 1.34 3. Communications Equipment 6.04 3. United Kingdom 7.00
4. NTT Mobile Communications 1.34 4. Electronics 5.29 4. France 6.33
Network, Inc. (Japan) (Component Distributors)
5. Orange PLC (United Kingdom) 1.33 5. Broadcasting 4.32 5. Canada 3.08
(Television, Radio & Cable)
6. Matsushita Communication 1.25 6. Health Care (Diversified) 3.43 6. Netherlands 2.47
Industrial Co., Ltd. (Japan)
7. Trend Micro Inc. (Japan) 1.24 7. Electronics (Semiconductors) 3.37 7. Mexico 2.42
8. Sony Corp. (Japan) 1.17 8. Retail (General Merchandise) 3.14 8. Australia 2.04
9. VERITAS Software Corp. (U.S) 1.16 9. Retail (Food Chains) 2.98 9. Hong Kong 1.95
10. Mannesmann A.G. (Germany) 1.14 10. Insurance (Multi-Line) 2.60 10. Switzerland 1.78
The fund's portfolio is subject to change, and there is no assurance that the fund will continue to hold any
particular security.
===========================================================================================================================
</TABLE>
We dramatically increased the fund's Japanese holdings from 2.88% to 17.16%
over the reporting period. The fund focused on Japanese companies with a global
reach, including those in the technology, telecommunications and electronics
industries.
WHAT STOCKS DID YOU LIKE?
At the end of the fiscal year, our largest holding was Nortel, a Canadian
telecommunications equipment maker. The company has shown tremendous growth
this year, taking on competitors Lucent and Cisco.
Several of our top European holdings are involved in multi-billion-dollar
mergers. Carrefour, Europe's No. 1 retailer, merged with another French
retailer, Promodes Group, earlier this year. With 8,800 stores in 26 countries
and revenue of $65 billion, Carrefour poses a major challenge to Wal-Mart's
expansion plans for Europe, Latin America and Asia. Orange, a mobile
communications provider in the United Kingdom, France and Germany, has agreed to
merge with German conglomerate Mannesmann. After the close of the reporting
period, U.K.-based Vodafone AirTouch made a hostile bid for Mannesmann. If it is
successful, Vodafone has indicated it may undo Mannesmann's pending merger with
Orange. This activity demonstrates how competitive the European cellular market
has become.
WHAT JAPANESE STOCKS DID YOU FAVOR?
Our top Japanese holdings include NTT Mobile, Matsushita and Sony. Also known
as NTT DoCoMo (DoCoMo means "anywhere"), NTT Mobile is Japan's leading wireless
phone company. With about 27 million subscribers, the company has about 57% of
the Japanese market. We expect NTT Mobile's value to continue to rise with the
growth of wireless devices in Japan.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
We believe we have reached a period of synchronized global expansion. The
United States drove the markets for the past two years, but with the increased
strength of Europe and Asia, we believe growth in the future will be more
balanced.
We're encouraged by signs of economic growth in Japan, but much-needed
corporate restructuring has yet to occur on a wide scale. Although investor
confidence in Japan has returned, we remain cautious. We will continue to rely
on a strict analysis of company fundamentals before deciding to buy Japanese
securities.
In Europe, we expect positive economic growth, stronger corporate earnings
and higher consumer demand. In fact, if European growth continues on its
current path, Europe stands poised to surpass the United States in economic
growth next year.
-------------------------------------
WE BELIEVE WE HAVE REACHED A PERIOD
OF SYNCHRONIZED GLOBAL EXPANSION.
THE UNITED STATES DROVE THE MARKETS
FOR THE PAST TWO YEARS, BUT WITH
THE INCREASED STRENGTH OF EUROPE AND
ASIA, WE BELIEVE GROWTH IN THE FUTURE
WILL BE MORE BALANCED.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM GLOBAL GROWTH FUND
3
<PAGE> 125
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
ABOUT THIS CHART
The chart compares your fund's Class A and Class B shares to benchmark indexes.
It is intended to give you an idea of how your fund performed compared to these
benchmarks over the period 9/15/94-10/31/99. (Please note that the performance
results for the indexes are for the period 9/30/94-10/31/99.) Fund performance
shown in the chart includes expenses and management fees. Class A share
performance reflects the deduction of the maximum sales charge; Class B share
performance reflects deduction of the applicable contingent deferred sales
charge. It is important to understand the difference between your fund and an
index. An index measures performance of a hypothetical portfolio. A market
index is not managed, incurring no sales charges, expenses or fees. 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.
Since the last reporting period, AIM Global Growth Fund has elected to use
the MSCI All Country World Index as its benchmark instead of the MSCI World
Index. The new index more closely resembles the securities in which the fund
invests. The fund will no longer measure its performance against the MSCI World
Index. Because this is the first reporting period since we have adopted the new
index, SEC guidelines require that we compare the fund's performance to both
the old and the new index.
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL GROWTH FUND VS. BENCHMARK INDEXES
9/15/94-10/31/99
Mountain Chart
<TABLE>
<CAPTION>
================================================================================================
AIM GLOBAL GROWTH AIM GLOBAL GROWTH MSCI WORLD MSCI ALL
FUND, CLASS B SHARES FUND, CLASS A SHARES INDEX COUNTRY WORLD INDEX
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9/94 $9,830 $9,362 $10,000 $9,794
10/94 10,220 9,743 10,010 10,235
10/95 12,260 11,738 10,959 10,964
10/96 14,295 13,764 12,745 12,675
10/97 16,676 16,139 14,883 14,670
10/98 18,308 17,822 17,153 16,542
10/99 24,377 23,958 22,010 20,911
Past performance cannot guarantee comparable future results.
Source: Lipper, Inc.
================================================================================================
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
===============================================================================
CLASS A SHARES
Inception (9/15/94) 18.58%
5 years 18.56
1 year 28.06*
* 34.43% excluding sales charges
CLASS B SHARES
Inception (9/15/94) 18.98%
5 years 18.89
1 year 28.70*
* 33.70% excluding sales charges
CLASS C SHARES
Inception (8/4/97) 15.58%
1 year 32.69*
* 33.69% excluding sales charges
===============================================================================
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class C shares will differ from Class A and B
shares due to differing fees and expenses. For fund performance calculations
and descriptions of indexes cited on this page, please refer to the inside
front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AIM GLOBAL GROWTH FUND
4
<PAGE> 126
AIM GLOBAL INCOME FUND
AIM GLOBAL GROWTH FUND
PORTFOLIOS OF
AIM INTERNATIONAL FUNDS, INC.
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
Toll Free: (800) 347-4246
AIM GLOBAL GOVERNMENT INCOME FUND
AIM GLOBAL GROWTH & INCOME FUND
PORTFOLIOS OF
AIM INVESTMENT FUNDS
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
Toll Free: (800) 347-4246
STATEMENT OF ADDITIONAL INFORMATION
(May 31, 2000 Special Meeting of Shareholders of AIM Global Government Income
Fund and AIM Global Growth & Income Fund)
This Statement of Additional Information is not a prospectus but should
be read in conjunction with the Combined Proxy Statement and Prospectus dated
April __, 2000 of AIM International Funds, Inc. (the "Company") for use in
connection with the Special Meeting of Shareholders of AIM Global Government
Income Fund and AIM Global Growth & Income Fund (the "Acquired Funds") to be
held on May 31, 2000. Copies of the Combined Proxy Statement and Prospectus may
be obtained at no charge by writing the Company at the address shown above or by
calling 1-800-347-4246. Unless otherwise indicated, capitalized terms used
herein and not otherwise defined have the same meanings as are given to them in
the Combined Proxy Statement and Prospectus.
A Statement of Additional Information for the Company dated February
28, 2000, has been filed with the Securities and Exchange Commission and is
attached hereto as Appendix I which is incorporated herein by this reference.
The date of this Statement of Additional Information is April __, 2000.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE COMPANY.......................................................................................................S-2
DESCRIPTION OF PERMITTED INVESTMENTS..............................................................................S-2
DIRECTORS AND OFFICERS OF THE COMPANY.............................................................................S-2
ADVISORY AND MANAGEMENT RELATED SERVICES AGREEMENTS AND PLANS OF DISTRIBUTION.....................................S-2
PORTFOLIO TRANSACTIONS............................................................................................S-2
DESCRIPTION OF SHARES.............................................................................................S-2
DETERMINATION OF NET ASSET VALUE..................................................................................S-2
TAXES.............................................................................................................S-2
PERFORMANCE DATA..................................................................................................S-2
FINANCIAL INFORMATION.............................................................................................S-3
</TABLE>
Appendix I - AIM International Funds, Inc. Statement of Additional
Information
Appendix II - Annual Report of AIM Global Government Income Fund
Appendix III - Annual Report of AIM Global Growth & Income Fund
Appendix IV - Pro Forma Financial Statements
<PAGE> 127
THE COMPANY
This Statement of Additional Information relates to AIM International Funds,
Inc. (the "Company") and two of its investment portfolios, AIM Global Income
Fund and AIM Global Growth Fund (the "Acquiring Funds"). The Company is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"). AIM Global Income Fund and AIM
Global Growth Fund are separate series of shares of capital stock of the
Company.
DESCRIPTION OF PERMITTED INVESTMENTS
For a discussion of the fundamental and nonfundamental investment policies of
the Acquiring Funds adopted by the Company's Board of Directors, see heading
"Investment Restrictions" in the Company's Statement of Additional Information
attached hereto as Appendix I.
DIRECTORS AND OFFICERS OF THE COMPANY
For a disclosure of the names and a brief occupational biography of each of the
Company's officers and directors identifying those who are interested persons of
the Company as well as stating their aggregate remuneration, see heading
"Management - Directors and Officers" in the Company's Statement of Additional
Information attached hereto as Appendix I.
ADVISORY AND MANAGEMENT RELATED SERVICES AGREEMENTS AND PLANS OF DISTRIBUTION
For a discussion of the Company's advisory and management related services
agreements and plans of distribution, see headings "Management - Investment
Advisory, Sub-Advisory and Administrative Services Agreements," "The
Distribution Plans," and "The Distributor" in the Company's Statement of
Additional Information attached hereto as Appendix I.
PORTFOLIO TRANSACTIONS
For a discussion of the Company's brokerage policy, see heading "Portfolio
Transactions and Brokerage" in the Company's Statement of Additional Information
attached hereto as Appendix I.
DESCRIPTION OF SHARES
For a discussion of the Company's authorized securities and the characteristics
of the Company's shares of capital stock, see heading "General Information about
the Company" in the Company's Statement of Additional Information attached
hereto as Appendix I.
DETERMINATION OF NET ASSET VALUE
For a discussion of the Company's valuation and pricing procedures and a
description of its purchase and redemption procedures, see heading "Net Asset
Value Determination" in the Company's Statement of Additional Information
attached hereto as Appendix I.
TAXES
For a discussion of any tax information relating to ownership of the Company's
shares, see heading "Dividends, Distributions and Tax Matters" in the Company's
Statement of Additional information attached hereto as Appendix I.
PERFORMANCE DATA
For a description and quotation of certain performance data used by the Company,
see heading "Performance" in the Company's Statement of Additional Information
attached hereto as Appendix I.
S-2
<PAGE> 128
FINANCIAL INFORMATION
The audited financial statements of AIM GLOBAL INCOME FUND and AIM GLOBAL GROWTH
FUND and the report thereon by KPMG LLP, are set forth under the heading
"Financial Statements" in the Company's Statement of Additional Information
attached hereto as Appendix I.
The audited financial statements of AIM GLOBAL GOVERNMENT INCOME FUND and the
report thereon by PricewaterhouseCoopers LLP, are set forth in the Annual Report
of AIM Global Government Income Fund, dated October 31, 1999, which is
incorporated herein by reference and attached hereto as Appendix II. The audited
financial statements of AIM GLOBAL GROWTH & INCOME FUND, and the report thereon
by PricewaterhouseCoopers LLP, are set forth in the Annual Report of AIM Global
Growth & Income Fund, dated October 31, 1999, which is incorporated herein by
reference and attached hereto as Appendix III.
Pro forma financial statements for AIM Global Income Fund and AIM Global Growth
Fund, giving effect to the Reorganizations, are attached hereto as Appendix IV.
S-3
<PAGE> 129
APPENDIX I
STATEMENT OF
ADDITIONAL INFORMATION
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
AIM GLOBAL AGGRESSIVE GROWTH FUND
AIM GLOBAL GROWTH FUND
AIM GLOBAL INCOME FUND
AIM INTERNATIONAL EQUITY FUND
(SERIES PORTFOLIOS OF AIM INTERNATIONAL FUNDS, INC.)
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
---------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS
AND IT SHOULD BE READ IN CONJUNCTION WITH
A PROSPECTUS OF THE ABOVE-NAMED FUNDS,
A COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE
FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC.,
P.O. BOX 4739, HOUSTON, TX 77210-4739
OR BY CALLING (800) 347-4246
---------------------------------
STATEMENT OF ADDITIONAL INFORMATION DATED FEBRUARY 28, 2000,
RELATING TO THE AIM ASIAN GROWTH FUND PROSPECTUS DATED FEBRUARY 28, 2000,
THE AIM EUROPEAN DEVELOPMENT FUND PROSPECTUS DATED FEBRUARY 28, 2000,
THE AIM GLOBAL AGGRESSIVE GROWTH FUND PROSPECTUS DATED FEBRUARY 28, 2000,
THE AIM GLOBAL GROWTH FUND PROSPECTUS DATED FEBRUARY 28, 2000,
THE AIM GLOBAL INCOME FUND PROSPECTUS DATED FEBRUARY 28, 2000,
AND THE AIM INTERNATIONAL EQUITY FUND PROSPECTUS DATED FEBRUARY 28, 2000
<PAGE> 130
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION.................................................................1
Submission of Matters to Shareholders...............................1
GENERAL INFORMATION ABOUT THE COMPANY........................................3
The Company and its Shares..........................................3
PERFORMANCE..................................................................4
Total Return Calculations...........................................5
Yield Quotations....................................................6
Historical Portfolio Results........................................6
PORTFOLIO TRANSACTIONS AND BROKERAGE.........................................9
General Brokerage Policy............................................9
Allocation of Portfolio Transactions...............................10
Allocation of IPO Securities Transactions..........................11
Section 28(e) Standards............................................11
Transactions with Regular Brokers..................................12
Brokerage Commissions Paid.........................................13
INVESTMENT STRATEGIES AND RISKS.............................................14
All Funds (except Income Fund).....................................14
Asian Fund.........................................................14
European Fund......................................................15
Aggressive Growth Fund and Growth Fund.............................17
Income Fund........................................................18
Equity Fund........................................................21
Real Estate Investment Trusts ("REITs")............................22
Repurchase Agreements and Reverse Repurchase Agreements............22
Lending of Portfolio Securities....................................23
Borrowings.........................................................23
Securities Issued on a When-Issued or Delayed Delivery Basis.......24
Short Sales........................................................24
Illiquid Securities................................................24
Rule 144A Securities...............................................24
Foreign Securities.................................................25
Portfolio Turnover.................................................28
Foreign Exchange Transactions......................................28
Equity-Linked Derivatives..........................................28
Investment in Other Investment Companies...........................29
Temporary Defensive Investments....................................29
OPTIONS, FUTURES AND CURRENCY STRATEGIES....................................29
Introduction.......................................................29
General Risks of Options, Futures and Currency Strategies..........29
Cover..............................................................30
Writing Call Options...............................................31
Writing Put Options................................................31
Purchasing Put Options.............................................31
Purchasing Call Options............................................32
Over-The-Counter Options...........................................32
Index Options......................................................33
Limitations on Options.............................................33
</TABLE>
i
<PAGE> 131
<TABLE>
<S> <C>
Interest Rate, Currency and Stock Index Futures Contracts..........33
Options on Futures Contracts.......................................34
Forward Contracts..................................................34
Limitations on Use of Futures, Options on Futures and Certain
Options on Currencies..............................................35
INVESTMENT RESTRICTIONS.....................................................35
Aggressive Growth Fund, Growth Fund, and Income Fund...............35
Equity Fund........................................................37
Asian Fund and European Fund.......................................39
MANAGEMENT..................................................................40
Directors and Officers.............................................40
Remuneration of Directors..........................................44
AIM Funds Retirement Plan for Eligible Directors/Trustees..........46
Deferred Compensation Agreements...................................46
Investment Advisory, Sub-Advisory and Administrative Services
Agreements.........................................................47
THE DISTRIBUTION PLANS......................................................51
The Class A and C Plan.............................................51
The Class B Plan...................................................52
Both Plans.........................................................52
THE DISTRIBUTOR.............................................................56
SALES CHARGES AND DEALER CONCESSIONS........................................58
REDUCTIONS IN INITIAL SALES CHARGES.........................................61
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS.................................64
HOW TO PURCHASE AND REDEEM SHARES...........................................66
Backup Withholding.................................................67
NET ASSET VALUE DETERMINATION...............................................69
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS....................................70
Reinvestment of Dividends and Distributions........................70
Tax Matters........................................................70
Qualification as a Regulated Investment Company....................70
Fund Distributions.................................................71
Investment in Foreign Financial Instruments........................71
Hedging Transactions...............................................72
PFIC Investments...................................................72
Redemption or Exchange of Shares...................................73
Foreign Income Taxes...............................................74
Backup Withholding.................................................74
Reinstatement Privilege............................................74
Foreign Shareholders...............................................75
Miscellaneous Considerations; Effect of Future Legislation.........75
SHAREHOLDER INFORMATION.....................................................75
</TABLE>
ii
<PAGE> 132
<TABLE>
<S> <C>
MISCELLANEOUS INFORMATION...................................................78
Changes for Certain Account Information............................78
Audit Reports......................................................78
Legal Matters......................................................79
Custodian and Transfer Agent.......................................79
Principal Holders of Securities....................................79
Other Information..................................................83
APPENDIX A..................................................................A-1
APPENDIX B..................................................................B-1
APPENDIX C..................................................................C-1
FINANCIAL STATEMENTS........................................................FS
</TABLE>
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<PAGE> 133
INTRODUCTION
AIM International Funds, Inc. (the "Company") is a series mutual fund. The
rules and regulations of the Securities and Exchange Commission (the "SEC")
require all mutual funds to furnish prospective investors certain information
concerning the activities of the fund being considered for investment. This
information is included in the AIM Asian Growth Fund Prospectus dated February
28, 2000, the AIM European Development Fund Prospectus dated February 28, 2000,
the AIM Global Aggressive Growth Fund Prospectus dated February 28, 2000, the
AIM Global Growth Fund Prospectus dated February 28, 2000, the AIM Global Income
Fund Prospectus dated February 28, 2000, and the AIM International Equity Fund
Prospectus dated February 28, 2000 (individually, a "Prospectus" and
collectively, the "Prospectuses"). Copies of each Prospectus and additional
copies of this Statement of Additional Information may be obtained without
charge by writing the principal distributor of the Funds' (hereinafter defined)
shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston,
Texas 77210-4739, or by calling (800) 347-4246. Investors must receive a
Prospectus before they invest in the Funds.
This Statement of Additional Information is intended to furnish prospective
investors with additional information concerning the Funds. Some of the
information required to be in this Statement of Additional Information is also
included in each Fund's current Prospectus, and in order to avoid repetition,
reference will be made herein to sections of the applicable Prospectus.
Additionally, each Prospectus and this Statement of Additional Information omit
certain information contained in the Company's Registration Statement filed with
the SEC. Copies of the Registration Statement, including items omitted from each
Prospectus and this Statement of Additional Information, may be obtained from
the SEC by paying the charges prescribed under its rules and regulations.
SUBMISSION OF MATTERS TO SHAREHOLDERS
At a meeting held on February 3, 2000, the Board of Directors of the
Company, on behalf of its series portfolios (the "Funds"), voted to request
shareholder approval to amend the Funds' fundamental investment restrictions.
The Board of Directors has called a meeting of the Funds' shareholders to be
held on or about May 3, 2000. Only shareholders of record as of February 18,
2000 are entitled to vote at the meeting. Proposals that are approved are
expected to become effective on or about May 22, 2000.
If shareholders approve the proposal to amend the Funds' fundamental
investment restrictions, each of Asian Fund, European Fund, Aggressive Growth
Fund, Growth Fund, Income Fund and Equity Fund will operate under the following
fundamental investment restrictions:
Each Fund is subject to the following investment restrictions, which may be
changed only by a vote of a majority of such Fund's outstanding shares, except
that Income Fund is not subject to restriction (a):
(a) the Fund is a "diversified company" as defined in the 1940 Act. The
Fund will not purchase the securities of any issuer if, as a result, the Fund
would fail to be a diversified company within the meaning of the 1940 Act, and
the rules and regulations promulgated thereunder, as such statute, rules and
regulations are amended from time to time or are interpreted from time to time
by the SEC staff (collectively, the 1940 Act laws and interpretations) or except
to the extent that the Fund may be permitted to do so by exemptive order or
similar relief (collectively, with the 1940 Act laws and interpretations, the
1940 Act laws, interpretations and exemptions). In complying with this
restriction, however, the Fund may purchase securities of other investment
companies to the extent permitted by the 1940 Act laws, interpretations and
exemptions.
(b) the Fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act laws, interpretations and exemptions.
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<PAGE> 134
(c) the Fund may not underwrite the securities of other issuers. This
restriction does not prevent the Fund from engaging in transactions involving
the acquisition, disposition or resale of its portfolio securities, regardless
of whether the Fund may be considered to be an underwriter under the Securities
Act of 1933.
(d) the Fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940 Act laws,
interpretations and exemptions) of its investments in the securities of issuers
primarily engaged in the same industry. This restriction does not limit the
Fund's investments in (i) obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities or (ii) tax-exempt obligations
issued by governments or political subdivisions of governments. In complying
with this restriction, the Fund will not consider a bank-issued guaranty or
financial guaranty insurance as a separate security.
(e) the Fund may not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments. This
restriction does not prevent the Fund from investing in issuers that invest,
deal, or otherwise engage in transactions in real estate or interests therein,
or investing in securities that are secured by real estate or interests therein.
(f) the Fund may not purchase physical commodities or sell physical
commodities unless acquired as a result of ownership of securities or other
instruments. This restriction does not prevent the Fund from engaging in
transactions involving futures contracts and options thereon or investing in
securities that are secured by physical commodities.
(g) the Fund may not make personal loans or loans of its assets to persons
who control or are under common control with the Fund, except to the extent
permitted by 1940 Act laws, interpretations and exemptions. This restriction
does not prevent the Fund from, among other things, purchasing debt obligations,
entering into repurchase agreements, loaning its assets to broker-dealers or
institutional investors, or investing in loans, including assignments and
participation interests.
(h) the Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and restrictions as the Fund.
The investment restrictions set forth above provide the Funds with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though the Funds have this flexibility, the Board of Directors
has adopted internal guidelines for each Fund relating to certain of these
restrictions which the adviser must follow in managing the Funds. Any changes to
these guidelines, which are set forth below, require the approval of the Board
of Directors.
1. In complying with the fundamental restriction regarding issuer
diversification, the Fund will not, with respect to 75% of its total
assets, purchase securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the Fund's total
assets would be invested in the securities of that issuer, or (ii) the Fund
would hold more than 10% of the outstanding voting securities of that
issuer. The Fund may (i) purchase securities of other investment companies
as permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets
in securities of other money market funds and lend money to other
investment companies and their series portfolios that have AIM as an
investment adviser, subject to the terms and conditions of any exemptive
orders issued by the SEC. (This restriction does not apply to Income Fund.)
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<PAGE> 135
2. In complying with the fundamental restriction regarding borrowing money
and issuing senior securities, the Fund may borrow money in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). The Fund may borrow from banks,
broker/dealers or other investment companies or their series portfolios
that have AIM or an affiliate of AIM as an investment advisor (an AIM
fund). The Fund may not borrow for leveraging, but may borrow for temporary
or emergency purposes, in anticipation of or in response to adverse market
conditions, or for cash management purposes. The Fund may not purchase
additional securities when any borrowings from banks exceed 5% of the
Fund's total assets.
3. In complying with the fundamental restriction regarding industry
concentration, the Fund may invest up to 25% of its total assets in the
securities of issuers whose principal business activities are in the same
industry.
4. In complying with the fundamental restriction with regard to making
loans, the Fund may lend up to 33 1/3% of its total assets and may lend
money to another AIM fund, on such terms and conditions as the SEC may
require in an exemptive order.
5. Notwithstanding the fundamental restriction with regard to investing all
assets in an open-end fund, the Fund may not invest all of its assets in
the securities of a single open-end management investment company with the
same fundamental investment objectives, policies and limitations as the
Fund.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from changes in values of assets will not
be considered a violation of the restriction.
GENERAL INFORMATION ABOUT THE COMPANY
THE COMPANY AND ITS SHARES
The Company was organized in 1991 as a Maryland corporation, and is
registered with the SEC as an open-end, series, management investment company.
The Company currently consists of six separate portfolios: AIM Asian Growth Fund
(the "Asian Fund"), AIM European Development Fund ( the "European Fund"), AIM
Global Aggressive Growth Fund (the "Aggressive Growth Fund"), AIM Global Growth
Fund (the "Growth Fund"), AIM Global Income Fund ( the "Income Fund") and AIM
International Equity Fund (the "Equity Fund") (individually, a "Fund" and
collectively, the "Funds"). Each portfolio of the Company offers Class A, Class
B and Class C shares.
As used in each Prospectus, the term "majority of the outstanding shares"
of the Company, of a particular Fund or of a class of a Fund means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Company, such Fund or such class present at a meeting of shareholders, if the
holders of more than 50% of the outstanding shares of the Company, such Fund or
such class are present or represented by proxy or (ii) more than 50% of the
outstanding shares of the Company, such Fund or such class.
Class A shares, Class B shares and Class C shares of each Fund represent
interests in the Fund's assets and have identical voting, dividend, liquidation
and other rights on the same terms and conditions, except that each class of
shares bears differing class-specific expenses (such as those associated with
the shareholder servicing of their shares) and is subject to differing sales
loads (which may affect performance), conversion features and exchange
privileges, and has exclusive voting rights on matters pertaining to that class'
distribution plan. Each share of a particular class is entitled to one vote, to
participate equally in dividends and distributions declared by the Company's
Board of Directors with respect to the class of such Fund and, upon liquidation
of the Fund, to participate proportionately in the
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<PAGE> 136
net assets of the Fund allocable to such class remaining after satisfaction of
outstanding liabilities of the Fund allocable to such class.
Except as specifically noted above, shareholders of each Fund are entitled
to one vote per share (with proportionate voting for fractional shares),
irrespective of the relative net asset value of the different classes of shares,
where applicable, of a Fund. However, on matters affecting one portfolio of the
Company or one class of shares, a separate vote of shareholders of that
portfolio or class is required. Shareholders of a portfolio or class are not
entitled to vote on any matter which does not affect that portfolio or class but
which requires a separate vote of another portfolio or class. An example of a
matter which would be voted on separately by shareholders of a portfolio is the
approval of an advisory agreement, and an example of a matter which would be
voted on separately by shareholders of a class of shares is approval of a
distribution plan. When issued, shares of the Fund are fully paid and
nonassessable, have no preemptive or subscription rights, and are fully
transferable. Other than the automatic conversation of Class B shares to Class A
shares, there are no conversion rights. Shares do not have cumulative voting
rights, which means that in situations in which shareholders elect directors,
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors of the Company, and the holders of less than 50% of
the shares voting for the election of directors will not be able to elect any
directors.
Under Maryland law and the Company's By-Laws, the Company need not hold an
annual meeting of shareholders to elect directors unless a meeting is required
under the Investment Company Act of 1940, as amended, (the "1940 Act").
Shareholders may remove directors from office, and a meeting of shareholders may
be called at the request of the holders of 10% or more of the Company's
outstanding shares.
PERFORMANCE
Each Fund's performance may be quoted in advertising in terms of yield
(Income Fund) or total return. All advertisements of the Funds will disclose the
maximum sales charge (including deferred sales charge) to which investments in
shares of the Funds may be subject. If any advertised performance data does not
reflect the maximum sales charge (if any), such advertisement will disclose that
the sales charge has not been deducted in computing the performance data, and
that, if reflected, the maximum sales charge would reduce the performance
quoted.
From time to time, A I M Advisors, Inc. ("AIM") or its affiliates may waive
all or a portion of their fees and/or assume certain expenses of any Fund.
Voluntary fee waivers or reductions or commitments to assume expenses may be
rescinded at any time without further notice to investors. During periods of
voluntary fee waivers or reductions or commitments to assume expenses, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions or reimbursement of expenses set
forth in the Fee Table in a Prospectus may not be terminated or amended to the
Funds' detriment during the period stated in the agreement between AIM and the
Fund. Fee waivers or reductions or commitments to reduce expenses will have the
effect of increasing a Fund's yield and total return.
The performance of each Fund will vary from time to time and past results
are not necessarily indicative of future results. A Fund's performance is a
function of its portfolio management in selecting the type and quality of
portfolio securities and is affected by operating expenses of the Fund and
market conditions. A shareholder's investment in a Fund is not insured or
guaranteed. These factors should be carefully considered by the investor before
making an investment in any Fund.
Some or all of the Funds may participate in the Initial Public Offering
("IPO") market, and a significant portion of those Funds' returns may be
attributable to their investment in IPOs, which can have a magnified impact if a
Fund's asset base is small. There is no guarantee that as the Funds' assets
grow, they will continue to experience substantially similar performance by
investing in IPOs.
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<PAGE> 137
Additional performance information is contained in a Fund's Annual Report
to Shareholders, which is available upon request without charge.
Total return and yield figures for the Funds are neither fixed nor
guaranteed, and no Fund's principal is insured. The Funds may provide
performance information in reports, sales literature and advertisements. The
Funds may also, from time to time, quote information about the Funds published
or aired by publications or other media entities which contain articles or
segments relating to investment results or other data about one or more of the
Funds. The following is a list of such publications or media entities:
<TABLE>
<S> <C> <C>
Advertising Age Financial World Nation's Business
Barron's Forbes New York Times
Best's Review Fortune Pension World
Broker World Hartford Courant Inc. Pensions & Investment
Business Week Institutional Investor Personal Investor
Changing Times Insurance Forum Philadelphia Inquirer
Christian Science Monitor Insurance Week USA Today
Consumer Reports Investor's Daily U.S. News & World Report
Economist Journal of the American Wall Street Journal
FACS of the Week Society of CLU & ChFC Washington Post
Financial Planning Kiplinger Letter CNN
Financial Product News Money CNBC
Financial Services Week Mutual Fund Forecaster PBS
</TABLE>
Each Fund may also compare its performance to performance data of similar
mutual funds as published by the following services:
<TABLE>
<S> <C>
Bank Rate Monitor Stanger
Donoghue's Weisenberger
Mutual Fund Values (Morningstar) Lipper, Inc.
</TABLE>
Although performance data may be useful to prospective investors when
comparing a Fund's performance with other funds and other potential investments,
investors should note that the methods of computing performance of other
potential investments are not necessarily comparable to the methods employed by
a Fund.
TOTAL RETURN CALCULATIONS
Standardized total return for Class A shares of a Fund reflects the
deduction of the maximum initial sales charge at the time of purchase.
Standardized total return for Class B shares of a Fund reflects the deduction of
the maximum applicable contingent deferred sales charge on a redemption of
shares held for the period. Standardized total return for Class C shares of a
Fund reflects the deduction of a 1% contingent deferred sales charge, if
applicable, on a redemption of shares held for the period. Total returns quoted
in advertising reflect all aspects of the applicable Fund's return, including
the effect of reinvesting dividends and capital gain distributions, the
deduction of charges and expenses and any change in such Fund's net asset value
per share over the period. Average annual total returns are calculated by
determining the growth or decline in value of a hypothetical investment in a
particular Fund over a stated period of time, and then calculating the annually
compounded percentage rate that would have produced the same result if the rate
of growth or decline in value had been constant over the period. While average
annual total returns are a convenient means of comparing investment
alternatives, investors should realize that a Fund's performance is not constant
over time, but changes from year to year, and that average annual total returns
do not represent the actual year-to-year performance of such
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<PAGE> 138
Fund. The stated period for quotations of average annual total return will be
for periods of one year and the life of a Fund (commencing as of the effective
date of its registration statement).
In addition to average annual total returns, each Fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total returns may
be quoted as a percentage or as a dollar amount, and may be calculated for a
single investment, a series of investments, and/or a series of redemptions, over
any time period. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship of these factors and their contributions to total
return. Total returns and other performance information may be quoted
numerically or in tables, graphs or similar illustrations. For Asian Fund,
European Fund and Equity Fund total returns may be quoted with or without taking
the Class A shares' 5.50% maximum sales charge, the Class B shares' 5% maximum
contingent deferred sales charge ("CDSC") or the Class C shares' 1% maximum CDSC
into account. For Aggressive Growth Fund, Growth Fund and Income Fund total
returns may be quoted with or without taking the Class A shares' 4.75% maximum
sales charge, the Class B shares' 5% maximum CDSC or the Class C shares' 1%
maximum CDSC into account. Excluding sales charges from a total return
calculation produces a higher total return figure.
YIELD QUOTATIONS
Yield is computed in accordance with the standardized formula described
below and can be expected to fluctuate from time to time and is not necessarily
indicative of future results. Accordingly, yield information may not provide a
basis for comparison with investments which pay a fixed rate of interest for a
stated period of time. Yield reflects investment income net of expenses over the
relevant period attributable to a share of Income Fund, expressed as an
annualized percentage of the maximum offering price per share of Income Fund.
Yield is a function of the type and quality of Income Fund's investments, the
Fund's maturity and the Fund's operating expense ratio. The standard formula for
calculating yield for the Income Fund, is as follows:
(6)
YIELD = 2[((a-b)/(c x d) + 1) -1]
Where a = dividends and interest earned during a stated 30-day period.
For purposes of this calculation, dividends are accrued
rather than recorded on the ex-dividend date. Interest
earned under this formula must generally be calculated based
on the yield to maturity of each obligation (or, if more
appropriate, based on yield to call date).
b = expenses accrued during period (net of reimbursement).
c = the average daily number of shares outstanding during the
period.
d = the maximum offering price per share on the last day of the
period.
The yields for the Class A, Class B and Class C shares of Income Fund for
the 30-day period ended October 31, 1999 were as follows:
<TABLE>
<CAPTION>
With Without
Waivers Waivers
------- -------
<S> <C> <C>
Class A........................... 6.68% 5.99%
Class B........................... 6.53% 5.80%
Class C........................... 6.53% 5.80%
</TABLE>
HISTORICAL PORTFOLIO RESULTS
Total returns for each of the named Funds, with respect to its Class A
shares, for the one-year and five-year (if applicable) periods and since
inception ended October 31, 1999 (which include the maximum sales charge and
reinvestment of all dividends and distributions), were as follows:
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<PAGE> 139
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
Periods ended October 31, 1999 Periods ended October 31, 1999
----------------------------------- ----------------------------------
One Five Since One Five Since
Class A Shares: Year Years Inception Year Years Inception
- --------------- -------- ----- --------- -------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund 31.75% 15.47% 15.55%** 31.75% 105.30% 109.80%**
Asian Fund 33.00% N/A 1.16%*** 33.00% N/A 2.33%***
European Fund 19.88% N/A 24.75%*** 19.88% N/A 55.34%***
Equity Fund 18.84% 11.35% 13.75%* 18.84% 71.14% 165.00%*
Growth Fund 28.06% 18.56% 18.58%** 28.06% 134.23% 139.58%**
Income Fund -6.61% 6.26% 6.29%** -6.61% 35.45% 36.70%**
</TABLE>
* The inception date for the Class A shares of Equity Fund was April 7,
1992.
** The inception date for the Class A shares of each of Aggressive Growth
Fund, Growth Fund and Income Fund was September 15, 1994.
*** The inception date for the Class A shares of Asian Fund and European Fund
was November 3, 1997.
Total returns for each of the named Funds, with respect to its Class B
shares, for the one-year and five-year (if applicable) periods and since
inception for the period ended October 31, 1999 (which include the maximum
contingent deferred sales charge and reinvestment of all dividends and
distributions) were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
Periods ended October 31, 1999 Periods ended October 31, 1999
--------------------------------- ---------------------------------
One Five Since One Five Since
Class B Shares: Year Years Inception Year Years Inception
- --------------- -------- ----- --------- -------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund 32.56% 15.76% 15.92%* 32.56% 107.86% 113.27%*
Asian Fund 34.76% N/A 1.31%** 34.76% N/A 2.63%**
European Fund 20.87% N/A 25.82%** 20.87% N/A 58.00%**
Equity Fund 19.72% 11.47% 11.41%* 19.72% 72.13% 74.03%*
Growth Fund 28.70% 18.89% 18.98%* 28.70% 137.50% 143.77%*
Income Fund -6.94% 6.47% 6.62%* -6.94% 36.82% 38.89%*
</TABLE>
* The inception date for the Class B shares of each of Aggressive Growth
Fund, Equity Fund, Growth Fund and Income Fund was September 15, 1994.
** The inception date for the Class B shares of each of Asian Fund and
European Fund was November 3, 1997.
Total returns for each of the named Funds, with respect to its Class C
shares for the one-year period and since inception ended October 31, 1999 (which
include the maximum contingent deferred sales charge and reinvestment of all
dividends and distributions) were as follows:
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<PAGE> 140
<TABLE>
<CAPTION>
Average Annual Total Return Cumulative Return
Periods ended October 31, 1999 Periods ended October 31, 1999
------------------------------- ------------------------------
One Since One Since
Class C Shares: Year Inception Year Inception
- --------------- -------- --------- -------- ---------
<S> <C> <C> <C> <C>
Aggressive Growth Fund 36.56% 6.89%* 36.56% 16.09%*
Asian Fund 38.86% 3.18%** 38.86% 6.43%**
European Fund 24.85% 27.45%** 24.85% 62.10%**
Equity Fund 23.76% 8.97%* 23.76% 21.22%*
Growth Fund 32.69% 15.58%* 32.69% 38.33%*
Income Fund -3.38% 1.70%* -3.38% 3.85%*
</TABLE>
* The inception date for the Class C shares of each of Aggressive Growth
Fund, Equity Fund, Growth Fund and Income Fund was August 4, 1997.
** The inception date for the Class C Shares of each of Asian Fund and
European Fund was November 3, 1997.
During the one-year period ended October 31, 1999, a hypothetical $1,000
investment in the Class A shares of Aggressive Growth Fund, Asian Fund, European
Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period
would have been worth $1,317.53, $1,330.04, $1,198.76, $1,188.44, $1,280.64 and
$933.86, respectively, assuming the maximum sales charge was paid and all
distributions were reinvested. For the period November 3, 1997 (inception date
for Asian Fund and European Fund) through October 31, 1999, and the five-year
period ended October 31, 1999, for Aggressive Growth Fund, Equity Fund, Growth
Fund and Income Fund, a hypothetical $1,000 investment in the Class A shares of
Aggressive Growth Fund, Asian Fund, European Fund, Equity Fund, Growth Fund and
Income Fund at the beginning of such period would have been worth $2,052.98,
$1,023.30, $1,553.41, $1,711.43, $2,342.27 and $1,354.46, respectively, assuming
the maximum sales charge was paid and all distributions were reinvested.
During the one-year period ended October 31, 1999, a hypothetical $1,000
investment in the Class B shares of Aggressive Growth Fund, Asian Fund, European
Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period
would have been worth $1,325.64, $1,347.56, $1,208.74, $1,197.16, $1,286.95 and
$930.42, respectively, assuming the maximum contingent deferred sales charge was
paid and all distributions were reinvested. For the period November 3, 1997
(inception date for Asian Fund and European Fund) through October 31, 1999, and
the five-year period ended October 31, 1999, for Aggressive Growth Fund, Equity
Fund, Growth Fund and Income Fund, a hypothetical $1,000 investment in the Class
B shares of Aggressive Growth Fund, Asian Fund, European Fund, Equity Fund,
Growth Fund and Income Fund at the beginning of such period would have been
worth $2,078.62, $1,026.33, $1,580.00, $1,721.26, $2,374.96 and $1,367.99,
respectively, assuming the maximum contingent deferred sales charge was paid and
all distributions were reinvested.
During the one-year period ended October 31, 1999, a hypothetical $1,000
investment in the Class C shares of Aggressive Growth Fund, Asian Fund, European
Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period
would have been worth $1,365.64, $1,388.60, $1,248.54, $1,237.62, $1,326.93 and
$966.15, respectively, assuming the maximum contingent deferred sales charge was
paid and all distributions were reinvested. For the period November 3, 1997
(inception date of Asian Fund and European Fund) through October 31, 1999, and
for the period August 4, 1997 (inception date for Aggressive Growth Fund, Equity
Fund, Growth Fund and Income Fund) through October 31, 1999, a hypothetical
$1,000 investment in the Class C shares of Aggressive Growth Fund, Asian Fund,
European Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such
period would have been worth $1,160.95, $1,064.33, $1,621.00, $1,212.25,
$1,383.33, and $1,038.49, respectively, assuming the maximum contingent deferred
sales charge was paid and all distributions were reinvested.
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<PAGE> 141
Each Fund's performance may be compared in advertising to the performance
of other mutual funds in general, or of particular types of mutual funds,
especially those with similar objectives. Such performance data may be prepared
by Lipper, Inc. and other independent services which monitor the performance of
mutual funds. The Funds may also advertise mutual fund performance rankings
which have been assigned to each respective Fund by such monitoring services.
Each Fund's performance may also be compared in advertising and other materials
to the performance of comparative benchmarks such as indices of stocks
comparable to those in which the Funds invest, as well as the following:
<TABLE>
<S> <C>
Standard & Poor's 500 Stock Index Dow Jones Industrial Average
Consumer Price Index Morgan Stanley Capital International Indices,
Bond Buyer Index including:
NASDAQ EAFE Index
COFI AC Asia Pacific Free Ex-Japan
First Boston High Yield Index Europe Index
The Financial Times - Actuaries World Indices AC World Index
(a wide range of comprehensive measures Salomon Bros World Gov't Bond Index
of stock price performance for the world's
major stock markets and regional areas)
</TABLE>
Each Fund may also compare its performance to rates on Certificates of
Deposit and other fixed rate investments such as the following:
10 year Treasuries
30 year Treasuries
90 Day Treasury Bills
Advertising for the Income Fund may from time to time include discussions
of general economic conditions and interest rates.
From time to time, each Fund's advertising may include discussions of
general domestic and international economic conditions and interest rates, and
may make reference to international economic sources such as The Bundesbank (the
German equivalent of the U.S. Federal Reserve Board). Each Fund's advertising
may also include references to the use of the Fund as part of an individual's
overall retirement investment program.
From time to time, each Fund's sales literature and/or advertisements may
discuss generic topics pertaining to the mutual fund industry. This includes,
but is not limited to, literature addressing general information about mutual
funds, variable annuities, dollar-cost averaging, stocks, bonds, money markets,
certificates of deposit, retirement, retirement plans, asset allocation,
tax-free investing, college planning and inflation. Also from time to time,
sales literature and/or advertisements for the Funds may disclose (i) the
largest holdings in the Funds' portfolios, (ii) certain selling group members
and/or (iii) certain institutional shareholders.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for the Funds, selects
broker-dealers, effects the Funds' investment transactions, allocates brokerage
fees in such transactions, and where applicable, negotiates commissions and
spreads on transactions. Since purchases and sales of portfolio securities by
the Funds are usually principal transactions, the Funds incur little or no
brokerage commission. AIM's primary consideration in effecting a security
transaction is to obtain the most favorable execution of the order, which
includes the best price on the security and a low commission rate (as
applicable). While AIM
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seeks reasonably competitive commission rates, the Funds may not pay the lowest
commission or spread available. See "Section 28(e) Standards" below.
In the event a Fund purchases securities traded over-the-counter, the Fund
deals directly with dealers who make markets in the securities involved, except
when better prices are available elsewhere. Fund transactions placed through
dealers who are primary market makers are effected at net prices without
commissions, but which include compensation in the form of a mark up or mark
down.
AIM may determine target levels of commission business with various brokers
on behalf of its clients (including the Funds) over a certain time period. The
target levels will be based upon the following factors, among others: (1) the
execution services provided by the broker; (2) the research services provided by
the broker; and (3) the broker's interest in mutual funds in general and in the
Funds and other mutual funds advised by AIM or A I M Capital Management, Inc.
(collectively, the "AIM Funds") in particular, including sales of the Funds and
of the other AIM Funds. In connection with (3) above, the Funds' trades may be
executed directly by dealers which sell shares of the AIM Funds or by other
broker-dealers with which such dealers have clearing arrangements. AIM will not
use a specific formula in connection with any of these considerations to
determine the target levels.
The Funds may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Funds, provided the conditions of an exemptive order received
by the Funds from the SEC are met. In addition, the Funds may purchase or sell a
security from or to another AIM Fund or account provided the Funds follow
procedures adopted by the Board of Directors/Trustees of the various AIM Funds,
including the Company. These inter-fund transactions do not generate brokerage
commissions but may result in custodial fees or taxes or other related expenses.
Under the 1940 Act, certain persons affiliated with the Company are
prohibited from dealing with the Company as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained from
the SEC. The 1940 Act also prohibits the Company from purchasing a security
being publicly underwritten by a syndicate of which certain persons affiliated
with the Company are members except in accordance with certain conditions. These
conditions may restrict the ability of the Funds to purchase municipal
securities being publicly underwritten by such syndicate, and the Funds may be
required to wait until the syndicate has been terminated before buying such
securities. At such time, the market price of the securities may be higher or
lower than the original offering price. A person affiliated with the Company
may, from time to time, serve as placement agent or financial advisor to an
issuer of Municipal Securities and be paid a fee by such issuer. The Funds may
purchase such Municipal Securities directly from the issuer, provided that the
purchase is reviewed by the Company's Board of Directors and a determination is
made that the placement fee or other remuneration paid by the issuer to a person
affiliated with the Company is fair and reasonable in relation to the fees
charged by others performing similar services.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some of
these accounts may have investment objectives similar to the Funds.
Occasionally, identical securities will be appropriate for investment by a Fund
and one or more of these investment accounts. However, the position of each
account in the same securities and the length of time that each account may hold
its investment in the same securities may vary. The timing and amount of
purchase by each account will also be determined by its cash position. If the
purchase or sale of securities is consistent with the investment policies of a
Fund and one or more of these accounts, and is considered at or about the same
time, AIM will fairly allocate transactions in such securities among such Fund
and these accounts. AIM may combine such transactions, in accordance with
applicable laws and regulations, to obtain the most favorable execution.
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Simultaneous transactions could, however, adversely affect the Funds' ability to
obtain or dispose of the full amount of a security which it seeks to purchase or
sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to the Funds. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.
ALLOCATION OF IPO SECURITIES TRANSACTIONS
From time to time, certain of the AIM Funds or accounts may become
interested in participating in security distributions that are available in an
IPO, and occasions may arise when purchases of such securities by one AIM Fund
or account may also be considered for purchase by one or more other AIM Funds or
accounts. In such cases, it shall be AIM's practice to specifically combine or
otherwise bunch indications of interest for IPO securities for all AIM Funds and
accounts participating in purchase transactions for that security, and to
allocate such transactions in accordance with the following procedures:
AIM will determine the eligibility of each AIM Fund and account that seeks
to participate in a particular IPO by reviewing a number of factors, including
suitability of the investment with the AIM Fund's or account's investment
objective, policies and strategies, the liquidity of the AIM Fund or account if
such investment is purchased, and whether the portfolio manager intends to hold
the security as a long-term investment. The allocation of limited supply
securities issued in IPOs will be made to eligible AIM Funds and accounts in a
manner designed to be fair and equitable for the eligible AIM Funds and
accounts, and so that there is equal allocation of IPOs over the longer term.
Where multiple funds or accounts are eligible, rotational participation may
occur, based on the extent to which an AIM Fund or account has participated in
previous IPOs as well as the size of the AIM Fund or account. Each eligible AIM
Fund and account with an asset level of less than $500 million will be placed in
one of three tiers, depending upon its asset level. The AIM Funds and accounts
in the tier containing funds with the smallest asset levels will participate
first, each receiving a 40 basis point allocation (rounded to the nearest share
round lot that approximates 40 basis points) (the "Allocation"), based on that
AIM Fund's or account's net assets. This process continues until all of the AIM
Funds and accounts in the three tiers receive their Allocations, or until the
shares are all allocated. Should securities remain after this process, eligible
AIM Funds and accounts will receive their Allocations on a straight pro rata
basis. For the tier of AIM Funds and accounts not receiving a full Allocation,
the Allocation may be made only to certain AIM Funds or accounts so that each
may receive close to or exactly 40 basis points.
When any AIM Fund and/or account with substantially identical investment
objectives and policies participate in syndicates, they will do so in amounts
that are substantially proportionate to each other. In these cases, the net
assets of the largest AIM Fund will be used to determine in which tier, as
described in the paragraph above, such group of AIM Funds or accounts will be
placed. If no AIM Fund is participating, then the net assets of the largest
account will be used to determine tier placement. The price per share of
securities purchased in such syndicate transactions will be the same for each
AIM Fund and account.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM,
under certain circumstances, lawfully may cause an account to pay a higher
commission than the lowest available. Under Section 28(e), AIM must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided viewed in terms of either
that particular transaction or [AIM's] overall responsibilities with respect to
the accounts as to which it exercises investment discretion." The services
provided by the broker also must lawfully and
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appropriately assist AIM in the performance of its investment decision-making
responsibilities. Accordingly, in recognition of research services provided to
them, Funds may pay a broker higher commissions than those available from
another broker.
Research services received from broker-dealers supplement AIM's own
research (and the research of its affiliates), and may include the following
types of information: statistical and background information on the U.S. and
foreign economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Company's directors with respect to
the performance, investment activities, and fees and expenses of other mutual
funds. Broker-dealers may communicate such information electronically, orally,
in written form or on computer software. Research services may also include the
providing of custody services, as well as the providing of equipment used to
communicate research information, the providing of specialized consultations
with AIM personnel with respect to computerized systems and data furnished to
AIM as a component of other research services, the arranging of meetings with
management of companies, and the providing of access to consultants who supply
research information.
The outside research assistance is useful to AIM since the broker-dealers
used by AIM tend to follow a broader universe of securities and other matters
than AIM's staff can follow. In addition, the research provides AIM with a
diverse perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or advised
by AIM or by its affiliates. Some broker-dealers may indicate that the provision
of research services is dependent upon the generation of certain specified
levels of commissions and underwriting concessions by AIM's clients, including
the Funds. However, the Funds are not under any obligation to deal with any
broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the
broker-dealer providing them. In other cases, the research services may be
obtainable from alternative sources in return for cash payments. AIM believes
that the research services are beneficial in supplementing AIM's research and
analysis and that they improve the quality of AIM's investment advice. The
advisory fees paid by the Funds are not reduced because AIM receives such
services. However, to the extent that AIM would have purchased research services
had they not been provided by broker-dealers, the expenses to AIM could be
considered to have been reduced accordingly.
TRANSACTIONS WITH REGULAR BROKERS
As of October 31, 1999, European Fund had common stock holdings in Deutsche
Bank Securities Inc. having a market value of $1,721,995. As of October 31,
1999, Growth Fund had common stock holdings in Deutsche Bank Securities Inc.
having a market value of $1,578,496. As of October 31, 1999, Equity Fund had
common stock holdings in Deutsche Bank Securities Inc. having a market value of
$29,776,171. Deutsche Bank Securities Inc. is a regular broker/dealer of the
Company, as defined in Rule 10b-1.
As of October 31, 1999, Growth Fund had common stock holdings in Morgan
Stanley, Dean Witter, Discovery & Co. having a market value of $4,853,750.
Morgan Stanley, Dean Witter, Discovery & Co. is a regular broker/dealer of the
Company, as defined in rule 10b-1.
As of October 31, 1999, Income Fund had common stock holdings in Dresdner
Finance B.V. having a market value of $1,047,839. Dresdner Finance B.V. is a
regular broker/dealer of the Company, as defined in Rule 10b-1.
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As of October 31, 1999, Income Fund had common stock holdings in Lehman
Brothers Inc. having a market value of $523,667. Lehman Brothers Inc. is a
regular broker/dealer of the Company, as defined in Rule 10b-1.
As of October 31, 1999, Income Fund had common stock holdings in Societe
Generale having a market value of $76,221. Societe Generale is a regular
broker/dealer of the Company, as defined in Rule 10b-1.
BROKERAGE COMMISSIONS PAID
For the fiscal years ended October 31, 1999, 1998 AND 1997, Aggressive
Growth Fund paid brokerage commissions of $4,648,141, $5,519,840 and $6,227,671,
respectively. For the fiscal year ended October 31, 1999, AIM allocated certain
of Aggressive Growth Fund's brokerage transactions to certain broker-dealers
that provided AIM with certain research, statistical and other information. Such
transactions amounted to $132,746,868 and the related brokerage commissions were
$193,563.
For the fiscal years ended October 31, 1999, 1998 and 1997, Equity Fund
paid brokerage commissions of $9,975,166, $8,743,049 and $6,002,915,
respectively. The increase in brokerage commissions from October 31, 1996
through October 31, 1998 was due to the increase in Equity Fund's net assets
during such period. For the fiscal year ended October 31, 1999, AIM allocated
certain of Equity Fund's brokerage transactions to certain broker-dealers that
provided AIM with certain research, statistical and other information. Such
transactions amounted to $93,942,068 and the related brokerage commissions were
$161,641.
For the fiscal years ended October 31, 1999, 1998 AND 1997, Growth Fund
paid brokerage commissions of $1,919,718, $1,482,482 AND $1,249,946,
respectively. The increase in brokerage commissions from October 31, 1996
through October 31, 1998 was due to the increase in Growth Fund's net assets
during such period. For the fiscal year ended October 31, 1999, AIM allocated
certain of Growth Fund's brokerage transactions to certain broker-dealers that
provided AIM with certain research, statistical and other information. Such
transactions amounted to $89,020,581 and the related brokerage commissions were
$116,369.
For the fiscal years ended October 31, 1999, 1998, and 1997, Income Fund
paid brokerage commissions of $813, $2,638 and $162, respectively. For the
fiscal year ended October 31, 1999, AIM allocated certain of Income Fund's
brokerage transactions to certain broker-dealers that provided AIM with certain
research, statistical and other information. Such transactions amounted to
$112,170 and the related brokerage commissions were $208.
For the fiscal year ended October 31, 1999, and the period November 3, 1997
to October 31, 1998, European Fund paid brokerage commissions of $915,158 and
$563,626, respectively. For the fiscal year ended October 31, 1999, AIM
allocated certain of European Fund's brokerage transactions to certain
broker-dealers that provided AIM with certain research, statistical and other
information. Such transactions amounted to $8,610,037 and the related brokerage
commissions were $15,829.
For the fiscal year ended October 31, 1999, and the period November 3,1997
to October 31, 1998, Asian Fund paid brokerage commissions of $327,148 and
$75,694, respectively. For the fiscal year ended October 31, 1999, AIM allocated
certain of Asian Fund's brokerage transactions to certain broker-dealers that
provided AIM with certain research, statistical and other information. Such
transactions amounted to $95,394 and the related brokerage commissions were
$270.
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INVESTMENT STRATEGIES AND RISKS
The following discussion of certain investment strategies and risks
supplements the discussion set forth in each Fund's Prospectus under the
headings "Investment Objective(s) and Strategies" and "Principal Risks of
Investing in the Fund."
The Funds' investment objective(s) are fundamental policies that cannot be
changed without shareholder approval. There can, of course, be no assurance that
any Fund will in fact achieve its objective(s). The Board of Directors of the
Company reserves the right to change any of the investment policies, strategies
or practices of any of the Funds, as described in this Statement of Additional
Information, without shareholder approval, except in those instances where
shareholder approval is expressly required.
ALL FUNDS (EXCEPT INCOME FUND)
In managing the Funds, AIM seeks to apply to each of the diversified
portfolios of equity securities the same investment strategy which it applies to
several of its other managed portfolios which have similar investment objectives
but which invest primarily in United States equities markets. Each of the Funds
will utilize to the extent practicable a fully managed investment policy
providing for the selection of securities which meet certain quantitative
standards determined by AIM. AIM reviews carefully the earnings history and
prospects for growth of each company considered for investment by each of the
Funds. It is anticipated that common stocks will be the principal form of
investment of the Funds. The portfolio of each of the Funds is primarily
comprised of securities of two basic categories of companies: (a) "core"
companies, which AIM considers to have experienced above-average and consistent
long-term growth in earnings and to have excellent prospects for outstanding
future growth, and (b) "earnings acceleration" companies which AIM believes are
currently enjoying a dramatic increase in earnings.
If a particular foreign company meets the quantitative standards determined
by AIM, its securities may be acquired by a Fund regardless of the location of
the company or their percentage of the Fund's investments in the company's
country or region. However, AIM will also consider other factors in making
investment decisions for these Funds including such factors as the prospects for
relative economic growth among countries or regions, economic and political
conditions, currency exchange fluctuations, tax considerations and the liquidity
of a particular security.
AIM recognizes that often there is less public information about foreign
companies than is available in reports supplied by domestic companies, that
foreign companies are not subject to uniform accounting and financial reporting
standards, and that there may be greater delays experienced by a Fund in
receiving financial information supplied by foreign companies than comparable
information supplied by domestic companies. In addition, the value of the Fund's
investments that are denominated in a foreign currency may be affected by
changes in currency exchange rates. For these and other reasons, AIM from time
to time may encounter greater difficulty applying its disciplined stock
selection strategy to an international equity investment portfolio than to a
portfolio of domestic equity securities.
ASIAN FUND
The investment objective of the Asian Fund is to provide long-term growth
of capital.
The Asian Fund seeks to achieve its investment objective by investing in a
diversified portfolio of equity securities, the issuers of which are located in
Asia, and which are considered by AIM to have strong earnings momentum or
demonstrate other potential for capital appreciation. Any income realized by the
Asian Fund will be incidental and will not be an important criterion in the
selection of portfolio securities.
Under normal market conditions the Asian Fund will invest at least 80%
(effective March 1, 2000, 65%) of its total assets in marketable equity
securities, including common stock, preferred stock, depositary receipts for
stock and other securities having the characteristics of stock (such as an
equity or
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ownership interest in a company) of Asian companies. The Asian Fund may satisfy
the foregoing requirement in part by investing in the securities of foreign
issuers which are in the form of American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs"), or other securities representing underlying
securities of Asian issuers. The Asian Fund may also satisfy such requirement by
investing up to 20% of its total assets in securities exchangeable for or
convertible into equity securities of Asian companies. The Asian Fund will not
invest in Japanese securities. Any change to such policy must be submitted by
AIM to the Company's Board of Directors prior to the effectiveness of such
change.
The Asian Fund considers an issuer of securities to be an Asian company if:
(i) it is organized under the laws of a country in Asia and has a principal
office in a country in Asia; (ii) it derives a significant portion (i.e., 50% or
more) of its total revenues from business in Asia; or (iii) its equity
securities are traded principally on a stock exchange in Asia or in an
over-the-counter market in Asia. The Asian Fund also considers shares of Asian
closed-end management investment companies, the assets of which are invested
primarily in Asian equity securities, to be securities of Asian companies.
There are no prescribed limits on geographic asset distribution within
Asia. Under normal market conditions, at least three countries will be
represented in the Asian Fund's portfolio of investments. The Asian Fund intends
to invest in securities of issuers in Asia as well as countries such as
Australia and New Zealand. The Asian Fund may invest, without limit, in
"developing" countries or "emerging markets." For a description of the risk
factors associated with investment in emerging markets. The Fund may invest up
to 20% of its total assets in securities of non-Asian companies.
A description of other investment strategies Asian Fund may pursue follows
after the section entitled " --Equity Fund."
The Asian Fund considers issuers of securities located in the following
countries to be Asian issuers:
<TABLE>
<S> <C> <C> <C>
Bangladesh Indonesia Philippines Thailand
China Korea Singapore Vietnam
Hong Kong Malaysia Sri Lanka
India Pakistan Taiwan
</TABLE>
In addition to Asian issuers, Asian Fund may invest up to 20% (effective
March 1, 2000, 35%) of its total assets in securities of non-Asian issuers. The
following is a list of some of the non-Asian countries in which Asian Fund may
invest from time to time:
<TABLE>
<S> <C>
Australia New Zealand
</TABLE>
EUROPEAN FUND
The investment objective of the European Fund is to provide long-term
growth of capital.
The European Fund seeks to achieve its investment objective by investing in
a diversified portfolio of European equity securities, the issuers of which are
considered by AIM to have strong earnings momentum or demonstrate other
potential for capital appreciation. Any income realized by the European Fund
will be incidental and will not be an important criterion in the selection of
portfolio securities.
Under normal market conditions the European Fund will invest at least 80%
of its total assets in marketable equity securities, including common stock,
preferred stock, depositary receipts for stock and other securities having the
characteristics of stock (such as an equity or ownership interest in a company)
of European companies. The European Fund may satisfy the foregoing requirement
in part by investing in the securities of European issuers which are in the form
of ADRs, EDRs, or other securities representing underlying securities of
European issuers. The European Fund may also satisfy such
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requirement by investing up to 20% of its total assets in securities
exchangeable for or convertible into equity securities of European issuers.
Investments in foreign securities may include securities issued by enterprises
that have undergone or are currently undergoing privatization.
The European Fund considers an issuer of securities to be a European
company if; (i) it is organized under the laws of a European country and has a
principal office in a European country; (ii) it derives a significant portion
(i.e., 50% or more) of its total revenues from business in Europe; or (iii) its
equity securities are traded principally on a stock exchange in Europe or in an
over-the-counter market in Europe. The European Fund also considers European
equity securities of closed-end management investment companies, the assets of
which are invested primarily in European equity securities, to be securities of
European companies.
There are no prescribed limits on geographic asset distribution within the
European community. Under normal market conditions, at least three European
countries will be represented in the European Fund's portfolio of investments.
The European Fund intends to invest in securities of issuers in Western Europe
(such as the United Kingdom, Germany and the Netherlands) as well as companies
of issuers in Eastern Europe (such as Croatia, the Czech Republic, Russia and
Turkey). Many of the countries in Eastern Europe are "developing" countries or
"emerging markets." The European Fund may invest up to 65% of its total assets
in securities of European issuers located in "developing" countries or "emerging
markets." The European Fund may invest up to 20% of its total assets in
securities of non-European companies.
A description of other investment strategies European Fund may pursue
follows after the section entitled "--Equity Fund."
European Fund considers issuers of securities located in the following
countries to be European issuers:
<TABLE>
<S> <C> <C> <C>
Austria Germany Netherlands Slovenia
Belgium Greece Norway Spain
Croatia Hungary Poland Sweden
Czech Republic Ireland Portugal Switzerland
Denmark Italy Romania Turkey
Finland Liechtenstein Russia Ukraine
France Luxembourg Slovakia United Kingdom
</TABLE>
In addition to European issuers, European Fund may invest up to 20% of its
total assets in securities of non-European issuers. The following is a list of
some of the non-European countries in which European Fund may invest from time
to time:
<TABLE>
<S> <C> <C> <C>
Bermuda Israel South Africa United States
Egypt
</TABLE>
The above lists may include foreign countries that have not yet been
approved by the Company's advisor. European Fund will only invest in foreign
countries that have been approved by the advisor.
The word "Development" in European Fund's name is designed to address the
general restructuring taking place in Europe as well as a more dramatic
political and economic restructuring taking place in regions such as Eastern
Europe. Also consistent with the name, the Fund has the ability to invest a
significant portion of its total assets in securities issued in emerging
markets.
PRIVATIZED ENTERPRISES. The governments of certain foreign countries have,
to varying degrees, embarked on privatization programs contemplating the sale of
all or part of their interests in state
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enterprises. European Fund's investments in the securities of privatized
enterprises include privately negotiated investments in a government- or
state-owned or controlled company or enterprise that has not yet conducted an
initial equity offering, investments in the initial offering of equity
securities of a state enterprise or former state enterprise and investments in
the securities of a state enterprise following its initial equity offering.
In certain jurisdictions, the ability of foreign entities, such as European
Fund, to participate in privatizations may be limited by local law, or the price
or terms on which European Fund may be able to participate may be less
advantageous than for local investors. Moreover, there can be no assurance that
governments that have embarked on privatization programs will continue to divest
their ownership of state enterprises, that proposed privatizations will be
successful or that governments will not re-nationalize enterprises that have
been privatized.
In the case of the enterprises in which European Fund may invest, large
blocks of the stock of those enterprises may be held by a small group of
stockholders, even after the initial equity offerings by those enterprises. The
sale of some portion or all of those blocks could have an adverse effect on the
price of the stock of any such enterprise.
Prior to making an initial equity offering, most state enterprises or
former state enterprises go through an internal reorganization or management
changes. Such reorganizations are made in an attempt to better enable these
enterprises to compete in the private sector. However, certain reorganizations
could result in a management team that does not function as well as the
enterprise's prior management and may have a negative effect on such enterprise.
In addition, the privatization of an enterprise by its government may occur over
a number of years, with the government continuing to hold a controlling position
in the enterprise even after the initial equity offering for the enterprise.
Prior to privatization, most of the state enterprises in which European
Fund may invest enjoy the protection of and receive preferential treatment from
the respective sovereigns that own or control them. After making an initial
equity offering these enterprises may no longer have such protection or receive
such preferential treatment and may become subject to market competition from
which they were previously protected. Some of these enterprises may not be able
to effectively operate in a competitive market and may suffer losses or
experience bankruptcy due to such competition.
AGGRESSIVE GROWTH FUND AND GROWTH FUND
Aggressive Growth Fund and Growth Fund have their own investment objective
and investment program as discussed herein.
The investment objective of Aggressive Growth Fund is to provide
above-average long-term growth of capital appreciation.
The Fund seeks to achieve its objective by investing in a portfolio of
global equity securities including securities of selected companies with
relatively small market capitalization.
The Aggressive Growth Fund will invest in companies throughout the world
which AIM believes possess exceptional growth potential that should enhance such
companies' prospects for future growth in earnings. As a result of this policy,
the market prices of many of the securities purchased and held by Aggressive
Growth Fund may fluctuate widely. Any income received from securities held by
the Fund will be incidental, and an investor should not consider a purchase of
shares of Aggressive Growth Fund as equivalent to a complete investment program.
Aggressive Growth Fund will emphasize investment in small to medium-sized
companies, but its strategy does not preclude investment in large, seasoned
companies which in AIM's judgment possess superior potential returns similar to
companies with formative growth profiles. The Fund will also invest in
established smaller companies (under $1 billion in market capitalization) which
in AIM's judgment offer exceptional value based upon substantially above average
earnings growth potential relative to market value. Investors should realize
that equity securities
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of small to medium-sized companies may involve greater risk than is associated
with investing in more established companies. Small to medium-sized companies
often have limited product and market diversification, fewer financial and
managerial resources or may be dependent on a few key managers. Also, because
smaller companies normally have fewer shares outstanding than larger companies
and trade less frequently, it may be more difficult for the Fund to buy and sell
shares without an unfavorable impact on prevailing market prices. Some of the
companies in which the Fund may invest may distribute, sell or produce products
which have recently been brought to market. Any of the foregoing may change
suddenly and have an immediate impact on the value of the Fund's investments.
Furthermore, whenever the securities markets have experienced rapid price
changes due to national economic trends, secondary growth securities have
historically been subject to exaggerated price changes.
The investment objective of Growth Fund is to provide long-term growth of
capital.
The Fund seeks to achieve its objective by investing in a portfolio of
global equity securities of selected companies that are considered by AIM to
have strong earnings momentum. Current income will not be an important criterion
of investment section, and any such income should be considered incidental.
Under normal market conditions, Aggressive Growth Fund and Growth Fund will
invest 65% of their respective total assets in marketable equity securities
(including common and preferred stock and other securities having the
characteristics of stock (such as an equity or ownership interest in a company))
of companies which are listed on a recognized securities exchange or traded in
an over-the-counter market. Each of these Funds may satisfy the foregoing
requirement in part by investing in the securities of issuers which are in the
form of ADRs, EDRs, or other securities representing underlying securities of
foreign issuers. Each of Aggressive Growth Fund and Growth Fund may invest up to
20% of its total assets in securities convertible into or exchangeable for
equity securities of foreign and domestic issuers which (except in the case of
ADRs, EDRs and other securities representing underlying securities of foreign
issuers) are listed on a recognized securities exchange or traded in an
over-the-counter market.
Under normal market conditions, the assets of each Fund will be invested in
the securities of companies located in at least four different countries,
including the United States. Aggressive Growth Fund and Growth Fund will each
emphasize investment in companies in developed countries such as the United
States, the countries of Western Europe and certain countries in the Pacific
Basin (such as Japan, Hong Kong and Australia). The Funds may also invest in the
securities of companies located in developing countries (such as Turkey, Poland
and Mexico) in various regions of the world. A "developing country" is a country
in the initial stages of this industrial cycle.
Investment in the equity markets of developing countries involves exposure
to securities exchanges that may have substantially less trading volume and
greater price volatility, economic structures that are less diverse and mature,
and political systems that may be less stable than the equity markets of
developed countries.
A description of other investment strategies Aggressive Growth Fund and
Growth Fund may pursue follows the section entitled "Investment Strategies and
Risks."
INCOME FUND
Income Fund's primary investment objective is to provide a high level of
current income. As a secondary objective the Fund seeks preservation of
principal and capital appreciation.
The Fund seeks to achieve its objectives by investing in a portfolio of
U.S. and foreign government and corporate debt securities. Income Fund intends
to invest in (i) foreign government securities, (ii) securities issued by
supranational organizations (such as the World Bank), (iii) foreign and domestic
corporate debt securities, including lower-rated or unrated U.S.
dollar-denominated high yield corporate debt securities, commonly known as "junk
bonds" and (iv) U.S. Government securities, including U.S. Government Agency
mortgage-backed securities.
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Income Fund is a non-diversified portfolio, which means that with respect
to 50% of its assets, it is permitted to invest more than 5% of its assets in
the securities of any one issuer. Income Fund will, however, invest no more than
5% of its total assets in the securities of any one corporate issuer, and will
invest no more than 25% of its total assets in securities of any one foreign
government or supranational issuer. Income Fund will generally invest in the
securities of issuers located in at least four countries, including the United
States.
Income Fund will invest in securities issued by governments and companies
throughout the world, but expects that it will invest primarily in securities of
issuers in industrialized countries with established securities markets, such as
Western European countries, Canada, Japan, Australia, New Zealand and the United
States. Income Fund may, however, invest up to 20% of its total assets in
securities of issuers in developing countries such as Turkey, Poland and Mexico.
Although Income Fund will invest at least 65% of its total assets in
non-convertible debt securities of foreign and domestic issuers, it may invest
up to 10% of its total assets in common stocks, preferred stocks and similar
equity securities of foreign and domestic issuers. Income Fund may also invest
up to 10% of its total assets in convertible debt securities of foreign and
domestic issuers.
Income Fund may invest less than 35% of its total assets in high yield debt
securities (i.e., "junk bonds"). Such securities, at the time of purchase, are
rated below investment grade or are determined by AIM to be non-investment grade
quality. For a description of the various rating categories of corporate debt
securities in which Income Fund may invest, see Appendix B. While generally
providing greater income and opportunity for gain, non-investment grade debt
securities may be subject to greater risks than higher-rated securities.
Economic downturns tend to disrupt the market for junk bonds and adversely
affect their values. Such economic downturns may be expected to result in
increased price volatility for junk bonds and of the value of shares of the
Fund, and increased issuer defaults on junk bonds.
In addition, many issuers of junk bonds are substantially leveraged, which
may impair their ability to meet their obligations. In some cases, junk bonds
are subordinated to the prior payment of senior indebtedness, which potentially
limits a Fund's ability to fully recover principal or to receive payments when
senior securities are subject to a default.
The credit rating of a debt security does not necessarily address its
market value risk, and ratings may from time to time change to reflect
developments regarding the issuer's financial condition. Junk bonds have
speculative characteristics which are likely to increase in number and
significance with each successive lower rating category. Credit ratings evaluate
the safety of principal and interest payments, not market value risk of high
yield bonds. Also, since credit rating agencies may fail to timely change the
credit ratings to reflect subsequent events, AIM continuously monitors the
issuers of high yield bonds in Income Fund's portfolio to determine if the
issuers will have sufficient cash flow and profits to meet required principal
and interest payments, and to attempt to assure the bonds' liquidity so that
Income Fund can meet redemption requests. The achievement of Income Fund's
investment objective may be more dependent on AIM's own credit analysis than
might be the case for a fund which invests in higher quality bonds. Income Fund
may retain a portfolio security whose ratings has been changed.
When the secondary market for junk bonds becomes more illiquid, or in the
absence of readily available market quotations for such securities, the relative
lack of reliable objective data makes it more difficult for the directors to
value a Fund's securities, and judgment plays a more important role in
determining such valuations. Increased illiquidity in the junk bond market also
may affect a Fund's ability to dispose of such securities at desirable prices.
In the event the Fund experiences an unexpected level of net redemptions,
the Fund could be forced to sell its junk bonds without regard to their
investment merits, thereby decreasing the asset base upon which the Fund's
expenses can be spread and possibly reducing the Fund's rate of return. Prices
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of junk bonds have been found to be less sensitive to fluctuations in interest
rates, and more sensitive to adverse economic changes and individual corporate
developments, than those of higher-rated debt securities.
Securities issued by the U.S. Treasury (notes, bonds and bills) are
supported by the full faith and credit of the United States government, while
certain securities issued or guaranteed by agencies or instrumentalities of the
U.S. Government may not be supported by the full faith and credit of the United
States. These agency securities include both obligations supported by the right
of the issuer to borrow from the U.S. Treasury (such as obligations of the
Federal Home Loan Bank) and obligations supported by the credit of the agency or
instrumentality (such as Federal National Mortgage Association bonds).
Similarly, obligations of foreign governments include obligations issued by
national, provincial, state or other governments that have taxing authority over
their local populations, or by agencies of such governments that may be
supported by the full faith and credit of the governmental entity, or solely by
the credit of such agency.
Supranational organizations include organizations formed and supported by
governmental entities to promote economic growth and development, or
international banking institutions, such as the International Bank of
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the Inter-American Development Bank.
Supranational organizations are generally formed and supported by the capital
contributions of governmental entities and, in their lending and other
activities, carry out the particular purposes designated by their member
governmental entities.
The value of the debt securities in which Income Fund invests will change
in response to interest rate changes and other factors. During periods of rising
interest rates, the values of outstanding long-term debt securities will
generally decline, and during periods of falling interest rates, the values of
such securities will generally rise. Such changes will affect the net asset
value per share of Income Fund. Longer-term fixed income securities tend to be
subject to greater fluctuations in price than shorter-term securities.
For a discussion of certain risks associated with investments in high yield
securities (i.e., "junk bonds"), foreign securities and non-diversified funds,
see "Principal Risks of Investing in the Fund" in the Fund's Prospectus. A
description of other investment strategies Income Fund may pursue follows after
the section below entitled "--Equity Fund."
DOLLAR ROLL TRANSACTIONS. In order to enhance portfolio returns and manage
prepayment risk, Income Fund may engage in dollar roll transactions with respect
to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar roll
transaction, a Fund sells a mortgage security held in the portfolio to a
financial institution such as a bank or broker-dealer, and simultaneously agrees
to repurchase a substantially similar security (same type, coupon and maturity)
from the institution at a later date at an agreed upon price. The mortgage
securities that are repurchased will bear the same interest rate as those sold,
but generally will be collateralized by different pools of mortgages with
different prepayment histories. During the period between the sale and
repurchase, the Fund will not be entitled to receive interest and principal
payments on the securities sold. Proceeds of the sale will be invested in
short-term instruments, and the income from these investments, together with any
additional fee income received on the sale, could generate income for the Fund
exceeding the yield on the sold security.
Dollar roll transactions involve the risk that the market value of the
securities retained by a Fund may decline below the price of the securities that
the Fund has sold but is obligated to repurchase under the agreement. In the
event the buyer of securities under a dollar roll transaction files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of
the securities may be restricted pending a determination by the other party, or
its trustee or receiver, whether to enforce the Fund's obligation to repurchase
the securities. See "Borrowings," below for the applicable limitation on dollar
roll transactions.
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U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES. Income Fund may invest
in U.S. Government Agency Mortgage Backed Securities. These securities are
obligations issued or guaranteed by the United States Government or by one of
its agencies or instrumentalities, including but not limited to the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA"), or the Federal Home Loan Mortgage Corporation ("FHLMC").
U.S. Government Agency Mortgage-Backed Certificates provide for the pass-through
to investors of their pro-rata share of monthly payments (including any
principal prepayments) made by the individual borrowers on the pooled mortgage
loans, net of any fees paid to the guarantor of such securities and the services
of the underlying mortgage loans. GNMA, FNMA, and FHLMC each guarantee timely
distributions of interest to certificate holders. GNMA and FNMA guarantee timely
distributions of scheduled principal. FHLMC has in the past guaranteed only the
ultimate collection of principal of the underlying mortgage loan; however, FHLMC
Gold Participation Certificates now guarantee timely payment of monthly
principal reductions. Although their close relationship with the U.S. Government
is believed to make them high-quality securities with minimal credit risks, the
U.S. Government is not obligated by law to support either FNMA or FHLMC.
However, historically there have not been any defaults of FNMA or FHLMC issues.
See Appendix C for a more complete description of these securities.
Mortgage-backed securities consist of interests in underlying mortgages
generally with maturities of up to thirty years. However, due to early
unscheduled payments of principal on the underlying mortgages, the securities
have a shorter average life and, therefore, less volatility than a comparable
thirty-year bond. The value of U.S. Government Agency Mortgage-Backed
Securities, like other traditional debt instruments, will tend to decline as
interest rates rise and increase as interest rates decline.
EQUITY FUND
The investment objective of the Equity Fund is to provide long-term growth
of capital by investing in a diversified portfolio of international equity
securities, the issuers of which are considered by AIM to have strong earnings
momentum. Any income realized by the Equity Fund will be incidental and will not
be an important criterion in the selection of portfolio securities.
Under normal market conditions the Equity Fund will invest at least 70% of
its total assets in marketable equity securities, including common stock,
preferred stock, depositary receipts for stock and other securities having the
characteristics of stock (such as an equity or ownership interest in a company)
of foreign companies which are listed on a recognized U.S. or foreign securities
exchange or traded in a U.S. OR foreign over-the-counter-market. The Equity Fund
may also satisfy the foregoing requirement in part by investing in the
securities of foreign issuers which are in the form of ADRs, EDRs, or other
securities representing underlying securities of foreign issuers. The Equity
Fund may also invest up to 20% of its total assets in securities exchangeable
for or convertible into equity securities of foreign companies which are listed
on a recognized U.S. or foreign securities exchange or traded in a U.S. or
foreign over-the-counter market.
Under normal market conditions, the Equity Fund intends to invest in the
securities of foreign companies located in at least four countries outside the
United States. The Equity Fund will emphasize investment in foreign companies in
the developed countries of Western Europe (such as Germany, France, Switzerland,
the Netherlands and the United Kingdom) and the Pacific Basin (such as Japan,
Hong Kong and Australia), and the Equity Fund may also invest in the securities
of companies located in developing countries (such as Turkey, Malaysia and
Mexico) in various regions of the world. A "developing country" is a country in
the initial stages of its industrial cycle.
Investment in the equity markets of developing countries involves exposure
to securities exchanges that may have substantially less trading volume and
greater price volatility, economic structures that are less diverse and mature,
and political systems that may be less stable than the equity markets of
developed countries. At the present time, AIM does not intend to invest more
than 20% of the Equity Fund's total assets in foreign companies in developing
countries.
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REAL ESTATE INVESTMENT TRUSTS ("REITS")
To the extent consistent with the Funds' investment objectives and
policies, the Funds may invest in equity and/or debt securities issued by REITs.
Such investments will not exceed 5% of the total assets of any of the Funds.
REITs are trusts which sell equity or debt securities to investors and use
the proceeds to invest in real estate or interests therein. A REIT may focus on
particular projects, such as apartment complexes, or geographic regions, such as
the Southeastern United States, or both.
To the extent that a Fund has the ability to invest in REITs, such Fund
could conceivably own real estate directly as a result of a default on the
securities it owns. A Fund, therefore, may be subject to certain risks
associated with the direct ownership of real estate including difficulties in
valuing and trading real estate, declines in the value of real estate,
environmental liability risks, risks related to general and local economic
condition, adverse change in the climate for real estate, increases in property
taxes and operating expense, changes in zoning laws, casualty or condemnation
losses, limitations on rents, changes in neighborhood values, the appeal of
properties to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected by
any changes in the value of the underlying property owned by the trusts, while
mortgage REITs may be affected by the quality of any credit extended. Equity and
mortgage REITs are dependent upon management skill, are not diversified, and are
therefore subject to the risk of financing single or a limited number of
projects. Such trusts are also subject to heavy cash flow dependency, defaults
by borrowers, self-liquidation, and the possibility of failing to maintain
exemption from the 1940 Act. Changes in interest rates may also affect the value
of debt securities held by a Fund. By investing in REITs indirectly through a
Fund, a shareholder will bear not only his/her proportionate share of the
expenses of the Fund, but also, indirectly, similar expenses of the REITs.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements and reverse repurchase
agreements. The Fund may enter into repurchase agreements with institutions
believed by the Company's Board of Directors to present minimal credit risk. A
repurchase agreement is an instrument under which a Fund acquires ownership of a
debt security and the seller (usually a broker or bank) agrees, at the time of
the sale, to repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the Fund's holding period. In the event of
bankruptcy or other default of a seller of a repurchase agreement, the Fund may
experience both delays in liquidating the underlying securities and losses,
including: (a) a possible decline in the value of the underlying security during
the period in which the Fund seeks to enforce its rights thereto; (b) a possible
reduced levels of income and lack of access to income during this period; and
(c) expenses of enforcing its rights. A repurchase agreement is collateralized
by the security acquired by the Fund and its value is marked to market daily in
order to minimize the Fund's risk. Repurchase agreements usually are for short
periods, such as one or two days, but may be entered into for longer periods of
time. Repurchase agreements are considered to be loans by the Funds under the
1940 Act. Repurchase agreements will be secured by U.S. Treasury securities,
U.S. Government agency securities (including, but not limited to those which
have been stripped of their interest payments and mortgage backed securities)
and commercial paper.
A reverse repurchase agreement involves the sale of securities held by a
Fund, with an agreement that the Fund will repurchase such securities at an
agreed-upon price, date, and interest payment. Each Fund may employ reverse
repurchase agreements (i) for temporary emergency purposes, such as to meet
unanticipated net redemptions so as to avoid liquidating other portfolio
securities during unfavorable market conditions; (ii) to cover short-term cash
requirements resulting from the timing of trade settlements; or (iii) to take
advantage of market situations where the interest income to be earned from the
investment of the proceeds of the transaction is greater than the interest
expense of
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the transaction. During the time a reverse repurchase agreement is outstanding,
the applicable Fund will segregate liquid assets having a value equal to the
repurchase price under such reverse repurchase agreement. Any investment gains
made by a Fund with monies borrowed through reverse repurchase agreements will
cause the net asset value of the Fund's shares to rise faster than would be the
case if the Fund had no such borrowings. On the other hand, if the investment
performance resulting from the investment of borrowings obtained through reverse
repurchase agreements fails to cover the cost of such borrowings to the Fund,
the net asset value of the Fund will decrease faster than would otherwise be the
case. Aggressive Growth Fund, Asian Fund, Growth Fund, European Fund and Income
Fund may enter into reverse repurchase agreements in amounts not exceeding
33-1/3% of the value of its total assets. Equity Fund may enter into reverse
repurchase agreements in amounts not exceeding 10% of the value of its total
assets. Reverse repurchase agreements involve the risk that the market value of
securities retained by the Fund in lieu of liquidation may decline below the
repurchase price of the securities sold by the Fund which it is obligated to
repurchase. This risk, if encountered, could cause a reduction in the net asset
value of the Fund's shares. Reverse repurchase agreements are considered to be
borrowings under the 1940 Act.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Funds may make secured
loans of portfolio securities amounting to not more than 33-1/3% of each Fund's
respective total assets. Securities loans are made to banks, brokers and other
financial institutions pursuant to agreements requiring that the loans be
continuously secured by collateral at least equal at all times to the value of
the securities lent marked to market on a daily basis. The collateral received
will consist of cash, U.S. Government securities, letters of credit or such
other collateral as may be permitted under the applicable Fund's investment
program. While the securities are being lent, the Fund will continue to receive
the equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a fee
from the borrower. The Funds have a right to call each of their respective loans
and obtain the securities on five business days' notice or, in connection with
securities trading on foreign markets, within such longer period of time which
coincides with the normal settlement period for purchases and sales of such
securities in such foreign markets. The Funds will not have the right to vote
securities while they are being lent, but each Fund will call a loan in
anticipation of any important vote. The risks in lending portfolio securities,
as with other extensions of secured credit, consist of possible delay in
receiving additional collateral or in the recovery of the securities or possible
loss of rights in the collateral should the borrower fail financially. Loans
will not be made unless, in the judgment of AIM, the consideration to be earned
from such loans would justify the risk.
BORROWINGS
Each Fund may borrow money to a limited extent from banks (including the
Funds' custodian bank) for temporary or emergency purposes subject to the
limitations under the 1940 Act. The current provisions of the 1940 Act restrict
borrowings (including reverse repurchase agreements and dollar roll
transactions) to an aggregate of 33-1/3% of the Fund's total assets at the time
of the transaction; however, Equity Fund's borrowings are limited to 10% of
total assets at the time of the transaction. In addition, the Funds, except for
Income Fund, do not intend to engage in leverage; therefore consistent with
current interpretations of the SEC, the Funds, except for Income Fund will not
purchase additional securities while borrowings from banks exceed 5% of each
Fund's total assets.
Reverse repurchase agreement transactions and dollar roll transactions are
considered borrowings under the 1940 Act. Any investment gains made by Income
Fund with the borrowed monies in excess of interest paid by Income Fund will
cause the net asset value of Income Fund's shares to rise faster than would
otherwise be the case. On the other hand, if the investment performance of the
additional securities purchased with the proceeds of such borrowings fails to
cover the interest paid by the money borrowed by Income Fund, the net asset
value of Income Fund will decrease faster than would otherwise be the case. This
speculative factor is known as "leveraging."
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SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
Each Fund may purchase securities on a "when-issued" basis, that is,
delivery of and payment of the securities is not fixed at the date of purchase,
but is set after the securities are issued (normally within forty-five days
after the date of the transaction). Each Fund also may purchase or sell
securities on a delayed delivery basis. The payment obligation and the interest
rate that will be received on the delayed delivery securities are fixed at the
time the buyer enters into the commitment. Each Fund will only make commitments
to purchase when-issued or delayed delivery securities with the intention of
actually acquiring such securities, but each Fund may sell these securities
before the settlement date if it is deemed advisable. If a Fund purchases a
when-issued security or enters into a delayed delivery agreement, the Fund's
custodian bank will segregate cash or liquid securities in an amount at least
equal to the when-issued commitment or delayed delivery agreement commitment.
SHORT SALES
Each Fund may from time to time make short sales "against the box." A short
sale is a transaction in which a party sells a security it does not own in
anticipation of a decline in the market value of that security. A Fund will not
make short sales of securities or maintain a short position unless at all times
when a short position is open, the Fund owns an equal amount of such securities
or securities convertible into or exchangeable, without payment of any further
consideration, for securities of the same issue as, and equal in amount to, the
securities sold short. This is a technique known as selling short "against the
box." Such short sales will be used by the Funds for the purpose of deferring
recognition of gain or loss for federal income tax purposes. In no event may
more than 10% of the value of a Fund's total assets be deposited or pledged as
collateral for such sales at any time.
ILLIQUID SECURITIES
Each Fund may invest up to 15% of its net assets in securities that are
illiquid, including restricted securities which are illiquid. Illiquid
securities include securities that cannot be disposed of promptly (within seven
days) in the normal course of business at a price at which they are valued.
Illiquid securities may include securities that are subject to restrictions on
resale because they have not been registered under the Securities Act of 1933.
Although securities which may be resold only to "qualified institutional
buyers" in accordance with the provisions of Rule 144A under the Securities Act
of 1933 are unregistered securities, each Fund may purchase Rule 144A securities
without regard to the 15% limitation described above provided that a
determination is made that such securities have a readily available trading
market.
RULE 144A SECURITIES
The Funds may purchase privately placed securities that are eligible for
purchase and sale pursuant to Rule 144A under the Securities Act of 1933 (the
"1933 Act"). This Rule permits certain qualified institutional buyers, such as
the Funds, to trade in securities that have not been registered under the 1933
Act. AIM, under the supervision of the Company's Board of Directors, will
consider whether securities purchased under Rule 144A are illiquid and thus
subject to each Fund's restriction of investing no more than 15% of its net
assets in illiquid securities. Determination of whether a Rule 144A security is
liquid or not is a question of fact. In making this determination AIM will
consider the trading markets for the specific security taking into account the
unregistered nature of a Rule 144A security. In addition, AIM could consider the
(i) frequency of trades and quotes, (ii) number of dealers and potential
purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the
security and of marketplace trades (for example, the time needed to dispose of
the security, the method of soliciting offers and the mechanics of transfer).
The liquidity of Rule 144A securities will also be monitored by AIM and, if as a
result of changed conditions, it is determined that a Rule 144A security is no
longer liquid, a Fund's holdings of illiquid securities will be reviewed to
determine what, if any, action is required to assure that the Fund does not
invest more than 15% of its net assets in illiquid securities. Investing in Rule
144A securities
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could have the effect of increasing the amount of the Fund's investments in
illiquid securities if qualified institutional buyers are unwilling to purchase
such securities.
FOREIGN SECURITIES
Each of the Funds may invest in foreign securities. ADRs, EDRs and other
securities representing underlying securities of foreign issuers are treated as
foreign securities. These securities may not necessarily be denominated in the
same currency as the securities into which they may be converted. ADRs are
receipts typically issued by a United States bank or trust company which
evidence ownership of underlying securities issued by a foreign corporation.
EDRs are receipts issued in Europe which evidence a similar ownership
arrangement. Generally, ADRs, in registered form, are designed for use in the
United States securities markets, and EDRs, in bearer form, are designed for use
in European securities markets. ADRs and EDRs may be listed on stock exchanges,
or traded in OTC markets in the United States or Europe, as the case may be.
ADRs, like other securities traded in the United States, will be subject to
negotiated commission rates.
To the extent a Fund invests in securities denominated in foreign
currencies, each Fund bears the risk of changes in the exchange rates between
U.S. currency and the foreign currency, as well as the availability and status
of foreign securities markets. These securities will be marketable equity
securities (including common and preferred stock, depositary receipts for stock
and fixed income or equity securities exchangeable for or convertible into
stock) of foreign companies which generally are listed on a recognized foreign
securities exchange or traded in a foreign over-the-counter market. Each of the
Funds may also invest in foreign securities listed on recognized U.S. securities
exchanges or traded in the U.S. over-the-counter market. Such foreign securities
may be issued by foreign companies located in developing countries in various
regions of the world. A "developing country" is a country in the initial stages
of its industrial cycle. As compared to investment in the securities markets of
developed countries, investment in the securities markets of developing
countries involves exposure to markets that may have substantially less trading
volume and greater price volatility, economic structures that are less diverse
and mature, and political systems that may be less stable.
Investments by a Fund in foreign securities, whether denominated in U.S.
currencies or foreign currencies, may entail all of the risks set forth below.
Investments by a Fund in ADRs, EDRs or similar securities also may entail some
or all of the risks as set forth below.
Currency Risk. The value of each Fund's foreign investments will be
affected by changes in currency exchange rates. The U.S. dollar value of a
foreign security decreases when the value of the U.S. dollar rises against the
foreign currency in which the security is denominated, and increases when the
value of the U.S. dollar falls against such currency.
On January 1, 1999, certain members of the European Economic and Monetary
Union ("EMU"), namely Austria, Belgium, Finland, France, Germany, Ireland,
Italy, Luxembourg, the Netherlands, Portugal, and Spain established a common
European currency known as the "euro and each member's local currency became a
denomination of the euro." It is anticipated that each participating
country will replace its local currency with the euro on July 1, 2002. Any
other European country that is a member of the European Union and satisfies the
criteria for participation in the EMU may elect to participate in the EMU and
may supplement its existing currency with the euro. The anticipated replacement
of existing currencies with the euro on July 1, 2002 could cause market
disruptions before or after July 1, 2002 and could adversely affect the value of
securities held by the Fund.
Political and Economic Risk. The economies of many of the countries in
which the Funds may invest are not as developed as the United States economy and
may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could also adversely affect the value of each
Fund's investments. Individual foreign economies may also differ favorably or
unfavorably from the United States economy in areas such as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency, and
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balance of payments position, which may likewise affect the Fund's investments.
Moreover, foreign legal systems may be affected by the prevailing political
climate and the Fund may not be able to obtain legal remedies or enforce
judgments in those courts.
Regulatory Risk. Foreign companies are not registered with the SEC and are
generally not subject to the regulatory controls imposed on United States
issuers and, as a consequence, there is generally less publicly available
information about foreign securities than is available about domestic
securities. Foreign companies are not subject to uniform accounting, auditing
and financial reporting standards, practices and requirements comparable to
those applicable to domestic companies. Income from foreign securities owned by
the Funds may be reduced by a withholding tax at the source, which tax would
reduce dividend income payable to the Funds' shareholders.
Market Risk. The securities markets in many of the countries in which the
Funds invest will have substantially less trading volume than the major United
States markets. As a result, the securities of some foreign companies may be
less liquid and experience more price volatility than comparable domestic
securities. Increased custodian costs as well as administrative costs (such as
the need to use foreign custodians) may be associated with the maintenance of
assets in foreign jurisdictions. There is generally less government regulation
and supervision of foreign stock exchanges, brokers and issuers which may make
it difficult to enforce contractual obligations. In addition, transaction costs
in foreign securities markets are likely to be higher, since brokerage
commission rates in foreign countries are likely to be higher than in the United
States. Further, the settlement period of securities transactions in foreign
markets may be longer than in domestic markets. These considerations generally
are more of a concern in developing countries. For example, the possibility of
revolution and the dependence on foreign economic assistance may be greater in
these countries than in developed countries. The management of the Funds seeks
to mitigate the risks associated with these considerations through
diversification and active professional management.
EMERGING MARKETS. General. A developing country or emerging market country
can be considered to be a country that is in the initial stages of its
industrialization cycle. Currently, emerging markets generally include every
country in the world other than the developed European countries (primarily in
Western Europe), the United States, Canada, Japan, Australia, New Zealand, Hong
Kong and Singapore. The characteristics of markets can change over time.
Currently, investing in many emerging markets may not be desirable or feasible
because of the lack of adequate custody arrangements for the Funds' assets,
overly burdensome repatriation and similar restrictions, the lack of organized
and liquid securities markets, unacceptable political risks or other reasons. As
desirable opportunities to invest in securities in emerging markets develop, the
Funds may expand and further broaden the group of emerging markets in which it
invests. In the past, markets of developing countries have been more volatile
than the markets of developed countries; however, such markets often have
provided higher rates of return to investors. AIM believes that these
characteristics can be expected to continue in the future.
Many of the risks described above relating to foreign securities generally
will be greater for emerging markets than for developed countries. Many emerging
markets have experienced substantial rates of inflation for many years.
Inflation and rapid fluctuations in inflation rates have had and may continue to
have very negative effects on the economies and securities markets for certain
developing markets. Economies in emerging markets generally are heavily
dependent upon international trade and accordingly, have been and may continue
to be affected adversely by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. These economies also have
been and may continue to be affected adversely by economic conditions in the
countries with which they trade.
Also, the securities markets of developing countries are substantially
smaller, less developed, less liquid and more volatile than the securities
markets of the United States and other more developed countries. Disclosure,
regulatory and accounting standards in many respects are less stringent than in
the United States and other developed markets. There also may be a lower level
of monitoring and
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regulation of developing markets and the activities of investors in such
markets, and enforcement of existing regulations has been extremely limited.
In addition, brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States; this is particularly true with respect to emerging markets.
Such markets have different settlement and clearance procedures. In certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Such settlement problems may cause emerging market securities to
be illiquid. The inability of the Funds to make intended securities purchases
due to settlement problems could cause the Funds to miss attractive investment
opportunities. Inability to dispose of a portfolio security caused by settlement
problems could result either in losses to the Funds due to subsequent declines
in value of the portfolio security or, if the Funds have entered into contract
to sell the security, could result in possible liability to the purchaser.
Certain emerging markets may lack clearing facilities equivalent to those in
developed countries. Accordingly, settlements can pose additional risks in such
markets and ultimately can expose the Funds to the risk of losses resulting from
the Funds' inability to recover from a counterparty.
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for the Funds' portfolio securities in such
markets may not be readily available. The Funds' portfolio securities in the
affected markets will be valued at fair value determined in good faith by or
under the direction of the Board of Directors.
Investment in certain emerging markets securities is restricted or
controlled to varying degrees. These restrictions or controls may at times limit
or preclude foreign investment in certain emerging market securities and
increase the costs and expenses of the Fund. Emerging markets may require
governmental approval for the repatriation of investment income, capital or the
proceeds of sales of securities by foreign investors. In addition, if a
deterioration occurs in an emerging market's balance of payments, the market
could impose temporary restrictions on foreign capital remittances.
Eastern European Markets. European Fund intends to invest in the securities
of issuers domiciled in Eastern European countries. Investment in the securities
of issuers in Eastern European markets involves certain additional risks not
involved in investment in securities of issuers in more developed markets, such
as (i) low or non-existent trading volume, resulting in a lack of liquidity and
increased volatility in prices for such securities, as compared to securities of
comparable issuers in more developed capital markets, (ii) uncertain national
policies and social, political and economic instability (including the
possibility that such countries could revert to a centralist planned
government), increasing the potential for expropriation of assets, confiscatory
taxation, high rates of inflation or unfavorable diplomatic developments, (iii)
possible fluctuations in exchange rates, differing legal systems and the
existence or possible imposition of exchange controls, custodial restrictions or
other foreign or U.S. governmental laws or restrictions applicable to such
investments, (iv) national policies which may limit European Fund's investment
opportunities such as restrictions on investment in issuers or industries deemed
sensitive to national interests, and (v) the lack of developed legal structures
governing private and foreign investments and private property.
Eastern European capital markets are emerging in a dynamic political and
economic environment brought about by the recent events there that have reshaped
political boundaries and traditional ideologies. In such a dynamic environment,
there can be no assurance that the Eastern Europe capital markets will continue
to present viable investment opportunities for European Fund. In the past,
Eastern European governments have expropriated substantial amounts of private
property, and most claims of the property owners have never been fully settled.
There is no assurance that such expropriations will not recur. In such an event,
it is possible that European Fund could lose the entire value of its investments
in the affected Eastern European markets.
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The currencies of Eastern European countries are not, at present, freely
convertible into other currencies. Also, certain Eastern European authorities
presently require that securities of certain Eastern European issuers be held by
custodians in Eastern Europe. At this time, it is possible that certain Eastern
European countries may not have available institutions qualified under the 1940
Act to hold European Fund assets. Therefore, European Fund may need to seek an
exemptive order from the SEC prior to investing in certain Eastern European
countries. There is no assurance that the SEC would issue such an order.
Reforms currently underway and anticipated throughout Eastern Europe are
directed at political and economic liberalization, with efforts to develop
increasingly market-oriented economies and to decentralize the economic and
political decision-making processes currently in the forefront. There can be no
assurance that these reforms will continue or, if continued, will achieve their
goals; in addition, there is the possibility that reforms may be reversed in the
future.
PORTFOLIO TURNOVER
Any particular security will be sold, and the proceeds reinvested, whenever
such action is deemed prudent from the viewpoint of the Fund's investment
objectives, regardless of the holding period of that security. A higher rate of
portfolio turnover may result in higher transaction costs, including brokerage
commissions. Also, to the extent that higher portfolio turnover results in a
higher rate of net realized capital gains to the Fund, the portion of the Fund's
distributions constituting taxable capital gains may increase. Portfolio
turnover is shown under "Financial Highlights" in the applicable Prospectus.
FOREIGN EXCHANGE TRANSACTIONS
Purchases and sales of foreign securities are usually made with foreign
currencies, and consequently the Funds may from time to time hold cash balances
in the form of foreign currencies, and multinational currency units. Such
foreign currencies and multinational currency units will usually be acquired on
a spot (i.e. cash) basis at the spot rate prevailing in foreign exchange markets
and will result in currency conversion costs to the Funds. The Funds attempt to
purchase and sell foreign currencies on as favorable a basis as practicable;
however, some price spread on foreign exchange transactions (to cover service
charges) may be incurred, particularly when the Funds change investments from
one country to another, or when U.S. dollars are used to purchase foreign
securities. Certain countries could adopt policies which would prevent the Funds
from transferring cash out of such countries, and the Funds may be affected
either favorably or unfavorably by fluctuations in relative exchange rates while
the Funds hold foreign currencies.
Each Fund has authority to deal in foreign exchange between currencies of
the different countries in which it will invest either for the settlement of
transactions or as a hedge against possible variations in the foreign exchange
rates between those currencies. This may be accomplished through direct
purchases or sales of foreign currency, purchases of futures contracts with
respect to foreign currency (and options thereon), and contractual agreements to
purchase or sell a specified currency at a specified future date (up to one
year) at a price set at the time of the contract. For hedging purposes, Asian
Fund, European Fund and Equity Fund may also purchase foreign currencies in the
form of bank deposits as well as other foreign money market instruments,
including, but not limited to, bankers' acceptances, certificates of deposit,
commercial paper, short-term government and corporate obligations and repurchase
agreements.
EQUITY-LINKED DERIVATIVES
Each of the funds other than Income Fund may invest in equity-linked
derivative products designed to replicate the composition and performance of
particular indices. Examples of such products include S&P Depositary Receipts
("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares
("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimised
Portfolios as Listed Securities ("OPALS"). Investments in equity-
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linked derivatives involve the same risks associated with a direct investment in
the types of securities included in the indices such products are designed to
track. There can be no assurance that the trading price of the equity-linked
derivatives will equal the underlying value of the basket of securities
purchased to replicate a particular index or that such basket will replicate the
index. Investments in equity-linked derivatives may constitute investment in
other investment companies. See "Investment in Other Investment Companies."
INVESTMENT IN OTHER INVESTMENT COMPANIES
Each of the Funds may invest in other investment companies, to the extent
permitted by the 1940 Act, and rules and regulations thereunder, and, if
applicable, exemptive orders granted by the SEC. The following restrictions
apply to investments in other investment companies other than Affiliated Money
Market Funds (defined below): (i) a Fund may not purchase more than 3% of the
total outstanding voting stock of another investment company; (ii) a Fund may
not invest more than 5% of its total assets in securities issued by another
investment company; and (iii) a Fund may not invest more than 10% of its total
assets in securities issued by other investment companies other than Affiliated
Money Market Funds. With respect to a Fund's purchase of shares of another
investment company, including Affiliated Money Market Funds, the Fund will
indirectly bear its proportionate share of the advisory fees and other operating
expenses of such investment company. The Funds have obtained an exemptive order
from the SEC allowing them to invest in money market funds that have AIM or an
affiliate of AIM as an investment adviser (the "Affiliated Money Market Funds"),
provided that investments in Affiliated Money Market Funds do not exceed 25% of
the total assets of such Fund. With respect to a Fund's purchase of shares of
the Affiliated Money Market Funds, the Fund will indirectly pay the advisory
fees and other operating expenses of the Affiliated Money Market Funds.
TEMPORARY DEFENSIVE INVESTMENTS
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, each of the Funds may
temporarily hold all or a portion of its assets in cash, money market
instruments, bonds, or other debt securities. Each of the Funds may also invest
up to 25% of its total assets in Affiliated Money Market Funds for these
purposes. For a description of the various rating categories of corporate bonds
and commercial paper in which the Funds may invest, see Appendix B to this
Statement of Additional Information.
OPTIONS, FUTURES AND CURRENCY STRATEGIES
INTRODUCTION
The Funds may each use forward contracts, futures contracts, options on
securities, options on indices, options on currencies, and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with each Fund's investments. These
instruments are often referred to as "derivatives," which may be defined as
financial instruments whose performance is derived, at least in part, from the
performance of another asset (such as security, currency or an index of
securities).
GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use by the Funds of options, futures contracts and forward currency
contracts involves special considerations and risks, as described below. Risks
pertaining to particular strategies are described in the sections that follow.
(1) Successful use of hedging transactions depends upon AIM's ability to
correctly predict the direction of changes in the value of the applicable
markets and securities, contracts and/or currencies.
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While AIM is experienced in the use of these instruments, there can be no
assurance that any particular hedging strategy will succeed.
(2) There might be imperfect correlation, or even no correlation, between
the price movements of an instrument (such as an option contract) and the price
movements of the investments being hedged. For example, if a "protective put" is
used to hedge a potential decline in a security and the security does decline in
price, the put option's increased value may not completely offset the loss in
the underlying security. Such a lack of correlation might occur due to factors
unrelated to the value of the investments being hedged, such as changing
interest rates, market liquidity, and speculative or other pressures on the
markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or
partially offsetting the negative effect of unfavorable price movements in the
investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments.
(4) There is no assurance that a liquid secondary market will exist for any
particular option, futures contract, forward contract or option thereon at any
particular time.
(5) As described below, a Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties. If a Fund were
unable to close out its positions in such instruments, it might be required to
continue to maintain such assets or accounts or make such payments until the
position expired or matured. The requirements might impair the Fund's ability to
sell a portfolio security or make an investment at a time when it would
otherwise be favorable to do so, or require that the Fund sell a portfolio
security at a disadvantageous time.
(6) There is no assurance that a Fund will use hedging transactions. For
example, if a Fund determines that the cost of hedging will exceed the potential
benefit to the Fund, the Fund will not enter into such transaction.
COVER
Transactions using forward contracts, futures contracts and options (other
than options purchased by a Fund) expose a Fund to an obligation to another
party. A Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, forward contracts or futures contracts or (2) cash, liquid assets
and/or short-term debt securities with a value sufficient at all times to cover
its potential obligations not covered as provided in (1) above. Each Fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash or liquid securities. To the extent that a
futures contract, forward contract or option is deemed to be illiquid, the
assets used to "cover" the Fund's obligation will also be treated as illiquid
for purposes of determining the Fund's maximum allowable investment in illiquid
securities.
Even though options purchased by the Funds do not expose the Funds to an
obligation to another party, but rather provide the Funds with a right to
exercise, the Funds intend to "cover" the cost of any such exercise. To the
extent that a purchased option is deemed illiquid, the Fund will treat the
market value of the option (i.e., the amount at risk to the Fund) as illiquid,
but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the corresponding
forward contract, futures contract or option is open, unless they are replaced
with other appropriate assets. If a large portion of a Fund's assets is used for
cover or otherwise set aside, it could affect portfolio management or the Fund's
ability to meet redemption requests or other current obligations.
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WRITING CALL OPTIONS
Each of the Funds may write (sell) covered call options on securities,
futures contracts, forward contracts, indices and currencies. As the writer of a
call option, a Fund would have the obligation to deliver the underlying
security, cash or currency (depending on the type of derivative) to the holder
(buyer) at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of a Fund continues, it may be assigned an exercise notice,
requiring it to deliver the underlying security, cash or currency against
payment of the exercise price. This obligation terminates upon the expiration of
the call option, or such earlier time at which a Fund effects a closing purchase
transaction by purchasing an option identical to that previously sold.
When writing a call option a Fund, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security,
contract or currency above the exercise price, and retains the risk of loss
should the price of the security, contract or currency decline. Unlike one who
owns securities, contracts or currencies not subject to an option, a Fund has no
control over when it may be required to sell the underlying securities,
contracts or currencies, since most options may be exercised at any time prior
to the option's expiration. If a call option that a Fund has written expires, it
will realize a gain in the amount of the premium; however, such gain may be
offset by a decline in the market value of the underlying security, contract or
currency during the option period. If the call option is exercised, a Fund will
realize a gain or loss from the sale of the underlying security, contract or
currency, which will be increased or offset by the premium received.
Writing call options can serve as a limited hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option.
Closing transactions may be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security, contract or currency
from being called or to permit the sale of the underlying security, contract or
currency. Furthermore, effecting a closing transaction will permit a Fund to
write another call option on the underlying security, contract or currency with
either a different exercise price or expiration date, or both.
WRITING PUT OPTIONS
Each of the Funds may write (sell) covered put options on securities,
futures contracts, forward contracts, indices and currencies. As the writer of a
put option, a Fund would have the obligation to buy the underlying security,
contract or currency (depending on the type of derivative) at the exercise price
at any time until (American style) or on (European style) the expiration date.
This obligation terminates upon the expiration of the put option, or such
earlier time at which a Fund effects a closing purchase transaction by
purchasing an option identical to that previously sold.
A Fund would write a put option at an exercise price that, reduced by the
premium received on the option, reflects the lower price it is willing to pay
for the underlying security, contract or currency. The risk in such a
transaction would be that the market price of the underlying security, contract
or currency would decline below the exercise price less the premium received.
PURCHASING PUT OPTIONS
Each of the Funds may purchase covered put options on securities, futures
contracts, forward contracts, indices and currencies. As the holder of a put
option, a Fund would have the right to sell the underlying security, contract or
currency at the exercise price at any time until (American style) or on
(European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such options, exercise such option or permit such
option to expire.
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A Fund may purchase a put option on an underlying security, contract or
currency ("protective put") owned by the Fund in order to protect against an
anticipated decline in the value of the security, contract or currency. Such
hedge protection is provided only during the life of the put option. The premium
paid for the put option and any transaction costs would reduce any profit
realized when the security, contract or currency is delivered upon exercise of
said option. Conversely, if the underlying security, contract or currency does
not decline in value, the option may expire worthless and the premium paid for
the protective put would be lost.
A Fund may also purchase put options on underlying securities, contracts or
currencies against which it has written other put options. For example, where a
Fund has written a put option on an underlying security, rather than entering a
closing transaction of the written option, it may purchase a put option with a
different exercise price and/or expiration date that would eliminate some or all
of the risk associated with the written put. Used in combinations, these
strategies are commonly referred to as "put spreads." Likewise, a Fund may write
call options on underlying securities, contracts or currencies against which it
has purchased protective put options. This strategy is commonly referred to as a
"collar."
PURCHASING CALL OPTIONS
Each of the Funds may purchase covered call options on securities, futures
contracts, forward contracts, indices and currencies. As the holder of a call
option, a Fund would have the right to purchase the underlying security,
contract or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such options, exercise such options or permit such
options to expire.
Call options may be purchased by a Fund for the purpose of acquiring the
underlying security, contract or currency for its portfolio. Utilized in this
fashion, the purchase of call options would enable a Fund to acquire the
security, contract or currency at the exercise price of the call option plus the
premium paid. So long as it holds such a call option, rather than the underlying
security or currency itself, the Fund is partially protected from any unexpected
decline in the market price of the underlying security, contract or currency
and, in such event, could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.
Each of the Funds may also purchase call options on underlying securities,
contracts or currencies against which it has written other call options. For
example, where a Fund has written a call option on an underlying security,
rather than entering a closing transaction of the written option, it may
purchase a call option with a different exercise price and/or expiration date
that would eliminate some or all of the risk associated with the written call.
Used in combinations, these strategies are commonly referred to as "call
spreads."
OVER-THE-COUNTER OPTIONS
Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (i.e., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation) and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. A Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time. Although a Fund will enter
into OTC options only with dealers that are expected to be capable of entering
into closing transactions with it, there is no assurance that the Fund will in
fact be able to close out an
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OTC option position at a favorable price prior to expiration. In the event of
insolvency of the dealer, a Fund might be unable to close out an OTC option
position at any time prior to its expiration.
The staff of the SEC considers purchased OTC options (i.e., the market
value of the option) to be illiquid securities. A Fund may also sell OTC options
and, in connection therewith, segregate assets or cover its obligations with
respect to OTC options written by it. The assets used as cover for OTC options
written by the Fund will be considered illiquid unless the OTC options are sold
to qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or
futures contracts except that all settlements are in cash and gain or loss
depends on changes in the index in question (and thus on price movements in the
securities market or a particular market sector generally) rather than on price
movements in individual securities or futures contracts. The amount of cash is
equal to the difference between the closing price of the index and the exercise
price of the call or put times a specified multiple (the "multiplier"), which
determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will not be
perfectly correlated with the value of the index.
LIMITATIONS ON OPTIONS
A Fund will not write options if, immediately after such sale, the
aggregate value of securities or obligations underlying the outstanding options
exceeds 20% of the Fund's total assets. A Fund will not purchase options if, at
any time of the investment, the aggregate premiums paid for the options will
exceed 5% of the Fund's total assets.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
Each of the Funds may enter into interest rate, currency or stock index
futures contracts (collectively, "Futures" or "Futures Contracts") as a hedge
against changes in prevailing levels of interest rates, currency exchange rates
or stock price levels, respectively, in order to establish more definitely the
effective return on securities or currencies held or intended to be acquired by
it. A Fund's hedging may include sales of Futures as an offset against the
effect of expected increases in interest rates, and decreases in currency
exchange rates and stock prices, and purchases of Futures as an offset against
the effect of expected declines in interest rates, and increases in currency
exchange rates or stock prices.
A Futures Contract is a two party agreement to buy or sell a specified
amount of a specified security or currency (or delivery of a cash settlement
price, in the case of an index future) for a specified price at a designated
date, time and place. A stock index future provides for the delivery, at a
designated date, time and place, of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading on the contract and the price agreed upon in the Futures Contract; no
physical delivery of stocks comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Future is outstanding.
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The Funds will only enter into Futures Contracts that are traded
(either domestically or internationally) on futures exchanges and are
standardized as to maturity date and underlying financial instrument. Futures
exchanges and trading thereon in the United States are regulated under the
Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC").
Foreign futures exchanges and trading thereon are not regulated by the CFTC and
are not subject to the same regulatory controls. For a further discussion of the
risks associated with investments in foreign securities, see "Foreign
Securities" in this Statement of Additional Information.
Closing out an open Future is effected by entering into an offsetting
Future for the same aggregate amount of the identical financial instrument or
currency and the same delivery date. There can be no assurance, however, that a
Fund will be able to enter into an offsetting transaction with respect to a
particular Future at a particular time. If a Fund is not able to enter into an
offsetting transaction, it will continue to be required to maintain the margin
deposits on the Future.
A Fund's Futures transactions will be entered into for hedging purposes
only; that is, Futures will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures will be purchased to
protect the Fund against an increase in the price of securities or currencies it
has committed to purchase or expects to purchase.
"Margin" with respect to Futures is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and maintain its open
positions in Futures. A margin deposit made when the Futures Contract is entered
("initial margin") is intended to ensure the Fund's performance under the
Futures Contract. The margin required for a particular Future is set by the
exchange on which the Future is traded and may be significantly modified from
time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which a Fund entered into the Futures Contract will
be made on a daily basis as the price of the underlying security, currency or
index fluctuates making the Futures more or less valuable, a process known as
marking-to-market.
If a Fund were unable to liquidate a Future or an option on a Futures
position due to the absence of a liquid secondary market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or
currencies except that options on Futures Contracts give the purchaser the
right, in return for the premium paid, to assume a position in a Futures
Contract (a long position if the option is a call and a short position if the
option is a put) at a specified exercise price at any time during the period of
the option. Upon exercise of the option, the delivery of the Futures position by
the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's Futures margin account.
FORWARD CONTRACTS
A forward contract is an obligation, usually arranged with a commercial
bank or other currency dealer, to purchase or sell a currency against another
currency at a future date and price as agreed upon by the parties. A Fund either
may accept or make delivery of the currency at the maturity of the forward
contract. A Fund may also, if its contra party agrees prior to maturity, enter
into a closing transaction involving the purchase or sale of an offsetting
contract. Forward contracts are traded over-the-counter,
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and not on organized commodities or securities exchanges. As a result, it may be
more difficult to value such contracts, and it may be difficult to enter into
closing transactions.
Each of the Funds may engage in forward currency transactions in
anticipation of, or to protect itself against, fluctuations in exchange rates. A
Fund may enter into forward contracts with respect to a specific purchase or
sale of a security, or with respect to its portfolio positions generally. When a
Fund purchases a security denominated in a foreign currency for settlement in
the near future, it may immediately purchase in the forward market the currency
needed to pay for and settle the purchase. By entering into a forward contract
with respect to the specific purchase or sale of a security denominated in a
foreign currency, the Fund can secure an exchange rate between the trade and
settlement dates for that purchase or sale transactions. This practice is
sometimes referred to as "transaction hedging." Position hedging is the purchase
or sale of foreign currency with respect to portfolio security positions
denominated or quoted in a foreign currency.
The cost to a Fund of engaging in forward contracts varies with factors
such as the currencies involved, the length of the contract period and the
market conditions then prevailing. Because forward contracts are usually entered
into on a principal basis, no fees or commissions are involved. The use of
forward contracts does not eliminate fluctuations in the prices of the
underlying securities a Fund owns or intends to acquire, but it does establish a
rate of exchange in advance. In addition, while forward contract sales limit the
risk of loss due to a decline in the value of the hedged currencies, they also
limit any potential gain that might result should the value of the currencies
increase.
LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on
Futures Contracts and options on foreign currencies traded on an CFTC-regulated
exchange, in each case other than for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the total assets of the Fund, after taking into account unrealized
profits and unrealized losses on any contracts it has entered into. This
guideline may be modified by the Board, without a shareholder vote. This
limitation does not limit the percentage of the Fund's assets at risk to 5%.
INVESTMENT RESTRICTIONS
AGGRESSIVE GROWTH FUND, GROWTH FUND, AND INCOME FUND
The following fundamental policies and investment restrictions have
been adopted by Aggressive Growth Fund, Growth Fund and Income Fund and, except
as noted, such policies cannot be changed without approval by the vote of a
majority of the outstanding voting securities of the applicable Fund, as defined
in the 1940 Act. See "Submission of Matters to Shareholders."
The Funds may not:
1. Purchase or sell real estate or interests in real estate
(except that this restriction does not preclude investments in
marketable securities of companies engaged in real estate
activities).
2. Purchase or sell commodities or commodity contracts, except
that the Funds may purchase and sell stock index and currency
options, stock index futures, interest rate futures, financial
futures and currency futures contracts and related options on
such futures.
3. Purchase any security on margin, except that the Funds may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of portfolio
35
<PAGE> 168
securities. The payment by the Fund of initial or variation
margin in connection with futures or related options
transactions shall not be considered the purchase of a security
on margin.
4. Make loans, although the Funds may (a) purchase money market
securities and enter into repurchase agreements, (b) acquire
bonds, debentures, notes and other debt securities,
governmental obligations and certificates of deposit, and (c)
lend portfolio securities.
5. Issue senior securities, except to the extent permitted by the
1940 Act, including permitted borrowings.
6. Underwrite securities of other persons, except to the extent
that a Fund may be deemed to be an underwriter within the
meaning of the 1933 Act in connection with the purchase and
sale of its portfolio securities in the ordinary course of
pursuing its investment program.
7. Purchase or sell interests in oil, gas or other mineral
exploration or development programs.
8. Purchase the securities of any issuer if, as a result, more
than 25% of the value of a Fund's total assets, taken at market
value, would be invested in the securities of issuers having
their principal business activities in the same industry. This
restriction does not apply to obligations issued or guaranteed
by the U.S. Government or by any of its agencies or
instrumentalities but will (unless and until SEC changes its
position) apply to foreign government obligations unless the
SEC permits their exclusion.
9. Purchase a security if, as a result, with respect to 75% of the
value of a Fund's total assets, taken at market value, more
than 5% of a Fund's total assets, taken at market value, would
be invested in the securities of any one issuer (including
repurchase agreements with any one entity), except securities
issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities and except that a Fund may
purchase securities of other investment companies to the extent
permitted by applicable law or exemptive order. This
restriction does not apply to the Income Fund.
10. Purchase a security if, as a result, with respect to 50% of the
value of the Fund's total assets taken at market value, more
than 5% of the value of the Fund's total assets, taken at
market value, would be invested in securities of any one
issuer, except securities issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities and
except that a Fund may purchase securities of other investment
companies to the extent permitted by applicable law or
exemptive order. This restriction applies only to the Income
Fund.
11. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by a
Fund, except that a Fund may purchase securities of other
investment companies to the extent permitted by applicable law
or exemptive order.
12. Borrow money, except that the Fund may borrow from banks
(including the Fund's custodian bank) and enter into reverse
repurchase agreements and dollar roll transactions (Income Fund
only). With respect to Aggressive Growth Fund and Growth Fund,
such permitted borrowings shall be used as a temporary
defensive measure for extraordinary or emergency purposes.
Permitted borrowings shall be in amounts not exceeding 33-1/3%
of a Fund's total assets, taken at market value, and each Fund
may pledge amounts of up to 20% of its total assets, taken at
market value, to secure such borrowings. Whenever bank
borrowings exceed 5% of the value of the total assets of
Aggressive Growth Fund or Growth Fund, such Fund will not make
any additional purchases of securities for investment purposes.
36
<PAGE> 169
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, the Funds will not:
13. Make investments for the purpose of exercising control or
management.
14. Lend portfolio securities in excess of 33-1/3% of total assets,
taken at market value; provided that loans of portfolio
securities shall be made in accordance with the guidelines set
forth under the heading "Lending of Portfolio Securities."
15. Invest in securities which are illiquid if more than 15% of a
Fund's net assets, taken at market value, would be invested in
such securities.
16. Effect short sales of securities, except that a Fund may make
short sales "against the box" to the extent that the value of
the securities sold short, in the aggregate, does not represent
more than 10% of the Fund's total assets, taken at market
value, at any given time.
Percentage restrictions apply as of the time of investment without
regard to later increases or decreases in the values of securities or total
assets.
EQUITY FUND
The following fundamental policies and investment restrictions have been
adopted by Equity Fund and, except as noted, such policies cannot be changed
without approval by the vote of a majority of the outstanding voting securities
of the Fund, as defined in the 1940 Act. See "Submission of Matters to
Shareholders."
The Fund may not:
1. Purchase or sell real estate or interests in real estate
(except that this restriction does not preclude investments in
marketable securities of companies engaged in real estate
activities).
2. Purchase or sell commodities or commodity contracts, except
that the Fund may purchase and sell stock index and currency
options, stock index futures, financial futures and currency
futures contracts and related options on such futures.
3. Purchase any security on margin, except that the Fund may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of portfolio securities. The
payment by the Fund of initial or variation margin in
connection with futures or related options transactions shall
not be considered the purchase of a security on margin.
4. Make loans, although the Fund may (a) purchase money market
securities and enter into repurchase agreements, (b) acquire
bonds, debentures, notes and other debt securities,
governmental obligations and certificates of deposit, and (c)
lend portfolio securities.
5. Borrow money, except that the Fund may borrow from banks
(including the Fund's custodian bank) and enter into reverse
repurchase agreements as a temporary defensive measure for
extraordinary or emergency purposes, and then only in amounts
not exceeding 10% of its total assets, taken at market value,
and may pledge amounts of up to 20% of its total assets, taken
at market value, to secure such borrowings. For purposes of
this restriction, collateral arrangements with respect to the
writing of options, futures contracts, options on futures
contracts, and collateral arrangements with respect to initial
37
<PAGE> 170
and variation margin are not deemed to be a pledge of assets,
and neither such arrangements nor the purchase and sale of
options, futures or related options shall be deemed to be the
issuance of a senior security. Whenever bank borrowings and the
value of the Fund's reverse repurchase agreements exceed 5% of
the value of the Fund's total assets, the Fund will not make
any additional purchases of securities for investment purposes.
6. Underwrite securities of other persons, except to the extent
that the Fund may be deemed to be an underwriter within the
meaning of the 1933 Act in connection with the purchase and
sale of its portfolio securities in the ordinary course of
pursuing its investment program.
7. Purchase or sell interests in oil, gas or other mineral
exploration or development programs.
8. Purchase the securities of any issuer if, as a result, more
than 25% of the value of the Fund's total assets, taken at
market value, would be invested in the securities of issuers
having their principal business activities in the same
industry. This restriction does not apply to obligations issued
or guaranteed by the U.S. Government or by any of its agencies
or instrumentalities but will apply to foreign government
obligations unless the SEC permits their exclusion.
9. Purchase a security if, as a result, with respect to 75% of the
value of the Fund's total assets, taken at market value, more
than 5% of the Fund's total assets, taken at market value,
would be invested in the securities of any one issuer
(including repurchase agreements with any one entity), except
securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities, and except that the Fund
may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order.
10. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by
the Fund, except that the Fund may purchase securities of other
investment companies to the extent permitted by applicable law
or exemptive order.
11. Issue senior securities, except as provided in restriction
number 5 above.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, the Fund will not:
12. Make investments for the purpose of exercising control or
management.
13. Lend its portfolio securities in excess of 33-1/3% of its total
assets, taken at market value; provided that loans of portfolio
securities shall be made in accordance with the guidelines set
forth under the heading "Lending of Portfolio Securities."
14. Invest in securities which are illiquid if more than 15% of the
Fund's net assets, taken at market value, would be invested in
such securities.
15. Effect short sales of securities, except that the Fund may make
short sales "against the box" to the extent that the value of
the securities sold short, in the aggregate, does not represent
more than 10% of the Fund's total assets, taken at market
value, at any given time.
Percentage restrictions apply as of the time of investment without
regard to later increases or decreases in the values of securities or total
assets.
38
<PAGE> 171
ASIAN FUND AND EUROPEAN FUND
The following fundamental policies and investment restrictions have been
adopted by Asian Fund and European Fund and, except as noted, such policies
cannot be changed without approval by the vote of a majority of the outstanding
voting securities of the applicable Fund, as defined in the 1940 Act. See
"Submission of Matters to Shareholders."
The Funds may not:
1. Purchase or sell real estate or interests in real estate
(except that this restriction does not preclude investments in
marketable securities of companies engaged in real estate
activities).
2. Purchase or sell commodities or commodity contracts, except
that the Funds may purchase and sell stock index and currency
options, stock index futures, interest rate futures, financial
futures and currency futures contracts and related options on
such futures.
3. Purchase any security on margin, except that the Funds may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of portfolio securities. The
payment by the Fund of initial or variation margin in
connection with futures or related options transactions shall
not be considered the purchase of a security on margin.
4. Make loans, although the Funds may (a) purchase money market
securities and enter into repurchase agreements, (b) acquire
bonds, debentures, notes and other debt securities,
governmental obligations and certificates of deposit, and (c)
lend portfolio securities.
5. Issue senior securities, except to the extent permitted by the
1940 Act, including permitted borrowings.
6. Underwrite securities of other persons, except to the extent
that a Fund may be deemed to be an underwriter within the
meaning of the 1933 Act in connection with the purchase and
sale of its portfolio securities in the ordinary course of
pursuing its investment program.
7. Purchase the securities of any issuer if, as a result, more
than 25% of the value of a Fund's total assets, taken at market
value, would be invested in the securities of issuers having
their principal business activities in the same industry. This
restriction does not apply to obligations issued or guaranteed
by the U.S. Government or by any of its agencies or
instrumentalities but will (unless and until SEC changes its
position) apply to foreign government obligations unless the
SEC permits their exclusion.
8. Purchase a security if, as a result, with respect to 75% of the
value of a Fund's total assets, taken at market value, more
than 5% of a Fund's total assets, taken at market value, would
be invested in the securities of any one issuer, except
securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities and except that a Fund may
purchase securities of other investment companies to the extent
permitted by applicable law or exemptive order.
9. Purchase a security if, as a result, more than 10% of the
outstanding voting securities of any issuer would be held by a
Fund, except that a Fund may purchase securities of other
investment companies to the extent permitted by applicable law
or exemptive order.
The following restrictions are non-fundamental and may be changed by the
Company's Board of Directors. Pursuant to such restrictions, each of the Funds
will not:
39
<PAGE> 172
10. Make investments for the purpose of exercising control or
management.
11. Lend its portfolio securities in excess of 33-1/3% of its total
assets, taken at market value; provided that loans of portfolio
securities shall be made in accordance with the guidelines set
forth under the heading "Lending of Portfolio Securities."
12. Invest in securities which are illiquid if more than 15% of a
Fund's net assets, taken at market value, would be invested in
such securities.
13. Effect short sales of securities, except that the Fund may make
short sales "against the box" to the extent that the value of
the securities sold short, in the aggregate, does not represent
more than 10% of the Fund's total assets, taken at market
value, at any given time.
The following non-fundamental policies apply to all Funds. Subject to
the investment restriction on lending portfolio securities (number 13 for
Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund and number 11
for Asian Fund and European Fund), the Funds may from time to time lend
securities from their respective portfolios to brokers, dealers and financial
institutions such as banks and trust companies and receive collateral in cash or
securities issued or guaranteed by the U.S. Government which will be maintained
in an amount equal to at least 100% of the current market value of the loaned
securities. Such cash will be invested in short-term securities, which will
increase the current income of the applicable Fund. Such loans will not be for
more than 30 days and will be terminable at any time. The Funds will have the
right to regain record ownership of loaned securities to exercise beneficial
rights such as voting rights, subscription rights and rights to dividends,
interest or other distributions. The Funds may pay reasonable fees to persons
unaffiliated with the Funds for services in arranging such loans. With respect
to the lending of portfolio securities, there is the risk of failure by the
borrower to return the securities involved in such transactions.
Each Fund's ability and decisions to purchase or sell portfolio
securities may be affected by laws or regulations relating to the convertibility
and repatriation of assets. Because the shares of a Fund are redeemable on a
daily basis in U.S. dollars, the Funds intend to manage their portfolios so as
to give reasonable assurance that they will be able to obtain U.S. dollars to
the extent necessary to meet anticipated redemptions. Under present conditions,
it is not believed that these considerations will have any significant effect on
the Funds' portfolio strategies.
MANAGEMENT
The overall management of the business and affairs of the Funds is
vested with the Company's Board of Directors. The Board of Directors approves
all significant agreements between the Company and persons or companies
furnishing services to a Fund, including the investment advisory agreement with
AIM, the administrative services agreement with AIM, the agreement with AIM
Distributors regarding the distribution of the shares of the Funds, the
agreement with State Street Bank and Trust Company as custodian and the
agreement with A I M Fund Services, Inc. ("AFS" or the "Transfer Agent") as
transfer agent. The day-to-day operations of each Fund are delegated to its
officers of the Company and to AIM, subject always to the objectives and
policies of the Fund and to the general supervision of the Company's Board of
Directors. Certain directors and officers of the Company are affiliated with AIM
and A I M Management Group Inc. ("AIM Management"), the parent corporation of
AIM.
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during at least the last five years are set forth below. Unless
otherwise indicated, the address of each director and officer is 11
40
<PAGE> 173
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. All of the Company's
executive officers hold similar offices with some or all of the other AIM Funds.
<TABLE>
<CAPTION>
======================================================================================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*CHARLES T. BAUER (80) Director and Chairman Chairman of the Board of Directors,
A I M Management Group Inc., A I M Advisors,
Inc., A I M Capital Management, Inc.,
A I M Distributors, Inc., A I M Fund Services,
Inc. and Fund Management Company; and Vice
Chairman and Director, AMVESCAP PLC.
- ----------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (55) Director Director, ACE Limited (insurance company).
906 Frome Lane Formerly, Director, President and Chief Executive
McLean, VA 22102 Officer, COMSAT Corporation; and Chairman, Board
of Governors of INTELSAT (international
communications company).
- ----------------------------------------------------------------------------------------------------------------------
OWEN DALY II (75) Director Director, Cortland Trust Inc. (investment
Six Blythewood Road company). Formerly, Director, CF & I Steel Corp.,
Baltimore, MD 21210 Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the
Board of Equitable Bancorporation.
- ----------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN, JR. (64) Director Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 8TH Floor, Mortgage Corp.; Formerly, Vice Chairman of the
Suite 805 Board of Directors, President and Chief
Baltimore, MD 21201 Operating Officer, Mercantile - Safe Deposit &
Trust Co.; and President, Mercantile Bankshares.
======================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------
JACK FIELDS (48) Director Chief Executive Officer, Texana Global, Inc.
Jetero Plaza, Suite E (foreign trading company) and Twenty First
8810 Will Clayton Parkway Century, Inc. (a governmental affairs company).
Humble, TX 77338 Formerly, Member of the U.S. House of
Representatives.
- ----------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (63) Director Partner, Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue (law firm).
New York, NY 10022
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------
* A director who is an "interested person" of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
41
<PAGE> 174
<TABLE>
<CAPTION>
======================================================================================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
*ROBERT H. GRAHAM (53) Director and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and
President, A I M Advisors, Inc.; Director and
Senior Vice President, A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company; and
Director, AMVESCAP PLC.
- ----------------------------------------------------------------------------------------------------------------------
PREMA MATHAI-DAVIS (49) Chief Executive Officer, YWCA of the USA.
350 Fifth Avenue, Suite 301
New York, NY 10118
- ----------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (57) Director Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
- ----------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (60) Director Executive Vice President, Development and
The Williams Tower, 50th Floor Operations, Hines Interests Limited Partnership
2800 Post Oak Blvd. (real estate development).
Houston, TX 77056
- ----------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (52) Senior Vice President Director and President, A I M Capital Management,
Inc.; Director and Executive Vice President,
A I M Management Group Inc.; Director and Senior
Vice President, A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP
PLC.
======================================================================================================================
</TABLE>
- --------
** A director who is an "interested person" of the Company as defined in the
1940 Act.
* A director who is an "interested person" of A I M Advisors, Inc. and the
Company as defined in the 1940 Act.
42
<PAGE> 175
<TABLE>
<CAPTION>
======================================================================================================================
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAROL F. RELIHAN (45)
Senior Vice Director, Senior Vice President, General Counsel
President and and Secretary, A I M Advisors, Inc.; Senior Vice
Secretary President, General Counsel and Secretary,
A I M Management Group Inc.; Director, Vice
President and General Counsel, Fund Management
Company; Vice President, A I M Capital
Management, Inc. and A I M Distributors, Inc.;
and General Counsel and Vice President,
A I M Fund Services, Inc.
- ----------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (41) Vice President and Vice President and Fund Controller,
Treasurer A I M Advisors, Inc.; and Assistant Vice
President and Assistant Treasurer, Fund
Management Company.
- ----------------------------------------------------------------------------------------------------------------------
ROBERT G. ALLEY (51) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
- ----------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (56) Vice President Vice President and Chief Compliance Officer,
A I M Advisors, Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund
Services, Inc. and Fund Management Company.
- ----------------------------------------------------------------------------------------------------------------------
EDGAR M. LARSEN (59) Vice President Vice President, A I M Capital Management, Inc.
======================================================================================================================
</TABLE>
The standing committees of the Board of Directors are the Audit
Committee, the Capitalization Committee, the Investments Committee and the
Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Crockett, Daly, Dunn
(Chairman), Fields, Frischling, Pennock, Sklar and Dr. Mathai-Davis. The Audit
Committee is responsible for: (i) considering management's recommendations of
independent accountants for each fund and evaluating such accountants'
performance, costs and financial stability; (ii) with AIM, reviewing and
coordinating audit plans prepared by the funds' independent accountants, and
management's internal audit staff; and (iii) reviewing financial statements
contained in periodic reports to shareholders with the funds' independent
accountants and management.
The members of the Capitalization Committee are Messrs. Bauer, Graham
(Chairman) and Pennock. The Capitalization Committee is responsible for: (i)
increasing or decreasing the aggregate number of shares of any class of the
company's common stock by classifying and reclassifying the company's authorized
but unissued shares of common stock, up to the company's authorized capital;
(ii) fixing the terms of such classified or reclassified shares of common stock;
and (iii) issuing such classified or reclassified shares of
43
<PAGE> 176
common stock upon the terms set forth in the applicable fund's prospectus, up to
the company's authorized capital.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly, Dunn, Fields, Frischling, Pennock, Sklar (Chairman) and Dr. Mathai-Davis.
The Investments Committee is responsible for: (i) overseeing AIM's investment
related compliance systems and procedures to ensure their continued adequacy;
and (ii) considering and acting, on an interim basis, between meetings of the
full Board, on investment related matters requiring Board consideration,
including dividends and distributions, brokerage policies and pricing matters.
The members of the Nominating and Compensation Committee are Messrs.
Crockett (Chairman), Daly, Dunn, Fields, Pennock, Sklar and Dr. Mathai-Davis.
The Nominating and Compensation Committee is responsible for: (i) considering
and nominating individuals to stand for election as independent directors as
long as the company maintains a distribution plan pursuant to Rule 12b-1 under
the 1940 Act; (ii) reviewing from time to time the compensation payable to the
independent directors; and (iii) making recommendations to the Board regarding
matters related to compensation, including deferred compensation plans and
retirement plans for the independent directors.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as directors, provided (i) that such
person is a shareholder of record at the time he or she submits such names and
is entitled to vote at the meeting of shareholders at which directors will be
elected, and (ii) that the nominating and Compensation Committee or the Board of
Directors, as applicable, shall make the final determination of persons to be
nominated.
All of the company's directors also serve as directors or trustee of
some or all of the investment companies managed or advised by AIM. All of the
company's executive offices hold similar offices with some or all of the other
investment companies managed or advised by AIM.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in attending each
meeting of the Board of Directors or any committee thereof. Each director who is
not also an officer of the Company is compensated for his services according to
a fee schedule which recognizes the fact that such director also serves as a
director or trustee of other AIM Funds. Each such director receives a fee,
allocated among the AIM Funds for which he serves as a director or trustee,
which consists of an annual retainer component and a meeting fee component.
44
<PAGE> 177
Set forth below is information regarding compensation paid or accrued
for each director of the Company:
<TABLE>
<CAPTION>
======================================================================================================================
RETIREMENT
BENEFITS TOTAL
AGGREGATE ACCRUED COMPENSATION
COMPENSATION BY ALL APPLICABLE FROM ALL APPLICABLE
DIRECTOR FROM COMPANY(1) AIM FUNDS(2) AIM FUNDS(3)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett 8,166 37,485 103,500
- ----------------------------------------------------------------------------------------------------------------------
Owen Daly Ii 8,166 122,898 103,500
- ----------------------------------------------------------------------------------------------------------------------
Edward K. Dunn, Jr. 8,166 55,565 103,500
- ----------------------------------------------------------------------------------------------------------------------
Jack Fields 8,009 15,826 101,500
- ----------------------------------------------------------------------------------------------------------------------
Carl Frischling(4) 8,122 97,791 103,500
- ----------------------------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- ----------------------------------------------------------------------------------------------------------------------
John F. Kroeger(5) 0 40,461 0
- ----------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis 8,166 11,870 101,500
- ----------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock 8,122 45,766 103,500
- ----------------------------------------------------------------------------------------------------------------------
Ian W. Robinson(6) 3,557 94,442 25,000
- ----------------------------------------------------------------------------------------------------------------------
Louis S. Sklar 8,122 90,232 101,500
======================================================================================================================
</TABLE>
(1) The total amount of compensation deferred by all directors of the
Company during the fiscal year ended October 31, 1999, including
interest earned thereon, was $51,056.
(2) During the fiscal year ended October 31, 1999, the total amount of
expenses allocated to the Company in respect of such retirement benefits
was $31,707. Data reflect compensation earned for the calendar year
ended December 31, 1999.
(3) Each Director serves as director or trustee of a total of twelve
registered investment companies advised by AIM. Data reflect total
compensation earned during the calendar year ended December 31, 1999.
(4) The Company paid the law firm of Kramer, Levin, Naftalis & Frankel LLP
$28,914 in legal fees for services provided to the Funds during the
fiscal year ended October 31, 1999. Mr. Frischling, a Director of the
Company, is a partner in such firm.
(5) Mr. Kroeger was a director until June 11, 1998. Mr. Kroeger passed away
on November 26, 1998. Mr. Kroeger's widow will receive his pension as
described below under "AIM Funds Retirement Plan for Eligible
Directors/Trustees."
(6) Mr. Robinson was a director until March 12, 1999, when he retired.
45
<PAGE> 178
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees, each director (who is not an employee of any of the AIM
Funds, AIM Management or any of their affiliates) may be entitled to certain
benefits upon retirement from the Board of Directors. Pursuant to such plan, a
director becomes eligible to retire and to receive full benefits under the plan
when he or she has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the applicable
AIM Funds). Each eligible director is entitled to receive an annual benefit from
the applicable AIM Funds commencing on the first day of the calendar quarter
coincident with or following his date of retirement equal to a maximum of 75% of
the annual retainer paid or accrued by the applicable AIM Funds for such
director during the twelve-month period immediately preceding the directors
retirement (including amounts deferred under a separate agreement between the
applicable AIM Funds and the director) and based on the number of such
director's years of service (not in excess of 10 years of service) completed
with respect to any of the applicable AIM Funds. Such benefit is payable to each
eligible director in quarterly installments. If an eligible director dies after
attaining the normal retirement date but before receipt of all benefits under
the plan, the director's surviving spouse (if any) shall receive a quarterly
survivor's benefit equal to 50% of the amount payable to the deceased director
for no more than ten years beginning the first day of the calendar quarter
following the date of the director's death. Payments under the plan are not
secured or funded by any applicable AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming the retainer amount
reflected below and various years of service. The estimated credited years of
service for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock,
Robinson, Sklar and Dr. Mathai-Davis are 13,13, 2, 3, 22, 20, 18, 11, 10 and 1
years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
========================================================================
Number of Years of Annual Retirement Compensation
Service with the Paid by all Applicable AIM Funds
Applicable AIM
Funds
========================================================================
<S> <C>
10 $67,500
------------------------------------------------------------------------
9 $60,750
------------------------------------------------------------------------
8 $54,000
------------------------------------------------------------------------
7 $47,250
------------------------------------------------------------------------
6 $40,500
------------------------------------------------------------------------
5 $33,750
========================================================================
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis
(the deferring directors) have each executed a deferred compensation agreement.
Pursuant to the agreements, the deferring directors may elect to defer receipt
of up to 100% of their compensation payable by the Company, and such amounts are
placed into a deferral account. Currently, the deferring directors may select
various AIM Funds in which all or part of their deferral accounts shall be
deemed to be invested. Distributions from the deferring directors' deferral
accounts will be paid in cash, in generally equal
46
<PAGE> 179
quarterly installments over a period of five (5) or ten (10) years (depending on
the agreement) beginning on the date the deferring director's retirement
benefits commence under the plan. The Company's Board of Directors, in its sole
discretion, may accelerate or extend the distribution of such deferral accounts
after the deferring director's termination of service as a director of the
Company. If a deferring director dies prior to the distribution of amounts in
his or her deferral account, the balance of the deferral account will be
distributed to his or her designated beneficiary in a single lump sum payment as
soon as practicable after such deferring director's death. The agreements are
not funded and, with respect to the payments of amounts held in the deferral
accounts, the deferring directors have the status of unsecured creditors of the
Company and of each other AIM Fund from which they are deferring compensation.
INVESTMENT ADVISORY, SUB-ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS
AIM is a wholly owned subsidiary of AIM Management, a holding company
that has been engaged in the financial services business since 1976. AIM
Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire
Square, London EC2M 4YR, United Kingdom. AMVESCAP PLC and its subsidiaries are
an independent investment management group engaged in institutional investment
management and retail mutual fund businesses in the United States, Europe and
the Pacific region. Certain of the directors and officers of AIM are also
executive officers of the Company and their affiliations are shown under
"Management" herein.
AIM and the Company have adopted a Code of Ethics which requires
investment personnel and certain other employees (a) to pre-clear personal
securities transactions subject to the Code of Ethics, (b) to file reports or
duplicate confirmations regarding such transactions, (c) to refrain from
personally engaging in (i) short-term trading of a security, (ii) transactions
involving a security within seven days of an AIM Fund transaction involving the
same security, unless the securities qualifies for the De minimus exemption. The
De minimus exemption would allow the trade if the issuer of the security has a
market capitalization of $2 billion or more. In addition, such a request can
only be granted once every thirty days for no more than 2,000 shares total, and
(iii) transactions involving securities being considered for investment by an
AIM Fund, unless the security qualifies for the De minimus exemption, as
previously explained, for which the personal security trade would be allowed
even if the security is being considered for investment by an AIM Fund, and (d)
to abide by certain other provisions under the Code of Ethics. The Code of
Ethics also prohibits investment personnel and all other AIM employees from
purchasing securities in an initial public offering. Personal trading reports
are reviewed periodically by AIM, and the Board of Directors reviews quarterly
and annual reports (including information on any substantial violations of the
Code of Ethics). Sanctions for violations of the Code of Ethics may include
censure, monetary penalties, suspension or termination of employment.
The Company, on behalf of the Funds, has entered into a Master
Investment Advisory Agreement ("Investment Advisory Agreement") and a Master
Administrative Services Agreement ("Administrative Services Agreement"), as
amended, with AIM. In addition, AIM has entered into a Master Sub-Advisory
Agreement (the "Sub-Advisory Agreement") with INVESCO Global Asset Management
Limited ("IGAM") with respect to Asian Fund and European Fund. In addition, IGAM
has entered into a Sub-Sub-Advisory Agreement with INVESCO Asia Limited ("IAL")
with respect to Asian Fund and a Sub-Sub-Advisory Agreement with INVESCO Asset
Management Limited ("IAML") with respect to European Fund. See "Fund Management"
in each Fund's Prospectus.
Under the terms of the Investment Advisory Agreement, AIM supervises
aspects of the Funds' operations and provides investment advisory services to
the Funds. AIM obtains and evaluates economic, statistical and financial
information to formulate and implement investment programs for the Funds. AIM
will not be liable to the Funds or their shareholders except in the case of
AIM's willful misfeasance, bad faith, gross negligence or reckless disregard of
duty.
Pursuant to the Administrative Services Agreement, AIM has agreed to
provide or arrange for the provision of certain accounting and other
administrative services to the Funds, including the services of a
47
<PAGE> 180
principal financial officer of the Funds and related staff. As compensation to
AIM for its services under the Administrative Service Agreements, the Funds
reimburse AIM for expenses incurred by AIM or its subsidiaries in connection
with such services.
By the terms of the Sub-Advisory Agreement and Sub-Sub-Advisory
Agreement, AIM has appointed IGAM and IGAM has appointed IAL to provide AIM with
international economic and market research, securities analyses and investment
recommendations with respect to the Fund's investment portfolio. IGAM has
delegated certain of its responsibilities to IAL through the Sub-Sub-Advisory
Agreement. IAL provides international economic and market research, securities
analyses and investment recommendations with respect to the Fund's investment
portfolio. The Sub-Advisor Agreement and Sub-Sub-Advisor Agreement provide that
neither IGAM nor IAL are responsible for the actual portfolio investment
decisions of the Fund or for the execution of portfolio transactions on behalf
of the Fund. The Fund's portfolio investment decisions and the execution of
securities transactions to carry out such decisions are solely the
responsibility of AIM as the Fund's investment advisor. The professional
investment staffs of IGAM and IAL include experienced portfolio managers and
research staffs.
The Investment Advisory Agreement and, with respect to Asian Fund and
European Fund, the Sub-Advisory Agreement and Sub-Sub-Advisory Agreements
provide that each Fund will pay or cause to be paid all expenses of the Fund not
assumed by AIM (or IGAM, IAL and IAML), including, without limitation: brokerage
commissions; taxes, legal, accounting, auditing or governmental fees; the cost
of preparing share certificates; custodian, transfer and shareholder service
agent costs; expenses of issue, sale, redemption and repurchase of shares;
expenses of registering and qualifying shares for sale; expenses relating to
directors and shareholders meetings; the cost of preparing and distributing
reports and notices to shareholders; the fees and other expenses incurred by the
Company on behalf of a Fund in connection with membership in investment company
organizations; the cost of printing copies of prospectuses and statements of
additional information distributed to each Fund's shareholders; and all other
charges and costs of a Fund's operations unless otherwise expressly provided.
The Investment Advisory Agreement for the Funds and the Sub-Advisory
Agreement and Sub-Sub-Advisory Agreements for Asian Fund and European Fund, each
provides that such agreement will continue in effect for two years, and from
year to year thereafter only if such continuance is specifically approved at
least annually by the Company's Board of Directors and by the affirmative vote
of a majority of the directors who are not parties to the agreement or
"interested persons" of any such party (the "Non-Interested Directors") by votes
cast in person at a meeting called for such purpose. The Investment Advisory
Agreement and the Sub-Advisory Agreement each provides that the Funds or AIM
and, with respect to the Sub-Sub-Advisory Agreements each provides that the
applicable Fund, Sub-Sub-Advisor or the Sub-Advisor, may terminate such
agreement on sixty (60) days' written notice without penalty. The Investment
Advisory Agreement, Sub-Advisory Agreement and Sub-Sub-Advisory Agreements each
terminates automatically in the event of its assignment. Under the Investment
Advisory Agreement, AIM is entitled to receive from each Fund a fee calculated
at the following annual rates based on the average daily net assets of the Fund:
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $ 500 million...................... 0.95%
Over $ 500 million....................... 0.90%
</TABLE>
48
<PAGE> 181
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
<S> <C>
Net Assets Annual Rate
---------- -----------
First $1 billion.......................... 0.90%
Over $1 billion........................... 0.85%
</TABLE>
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $1 billion.......................... 0.85%
Over $1 billion........................... 0.80%
</TABLE>
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $1 billion.......................... 0.70%
Over $1 billion........................... 0.65%
</TABLE>
AIM INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $1 billion.......................... 0.95%
Over $1 billion........................... 0.90%
</TABLE>
AIM may from time to time waive or reduce its fee. Voluntary fee
waivers or reductions may be rescinded at any time without further notice to
investors. During periods of voluntary fee waivers or reductions, AIM will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in a
Prospectus may not be terminated or amended to the Funds' detriment during the
period stated in the agreement between AIM and the Fund.
AIM has agreed to waive advisory fees under the Investment Advisory
Agreement in order to achieve the following annual fee structure for Equity
Fund: 0.95% of the first $500 million of Equity Fund's average daily net assets;
0.90% of the next $500 million of Equity Fund's average daily net assets; and
0.85% of Equity Fund's average daily net assets exceeding $1 billion.
For the fiscal years ended October 31, 1999, 1998 and 1997, and for the
fiscal year ended October 31, 1999 and the period November 3, 1997 (inception
date) through October 31, 1998 relating to Asian Fund and European Fund, AIM
received advisory fees, net of advisory fee waivers, from each Fund as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ 15,416,368 $ 20,126,609 $19,996,061
Asian Fund $ 39,283 $ 11,388 $ -0-
Equity Fund $ 24,083,233 $ 21,628,803 $17,546,102
European Fund $ 1,607,698 $ 410,537 $ -0-
Growth Fund $ 5,898,665 $ 4,042,472 $ 2,895,282
Income Fund $ 280,344 $ 152,633 $ 44,375
</TABLE>
49
<PAGE> 182
Under the Sub-Advisory Agreement, IGAM is entitled to receive from AIM
with respect to each of Asian Fund and European Fund, a fee calculated at the
following annual rates based on the average daily net assets of the Fund:
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C> <C>
First $ 500 million................................................. 0.20%
Over $ 500 million.................................................. 0.175%
</TABLE>
Under the Sub-Sub-Advisory Agreements IAL, with respect to Asian Fund,
and IAML, with respect to European Fund, are each entitled to receive from IGAM
an annual fee equal to 100% of the fee received by the Sub-Advisor with respect
to the applicable Fund.
For the fiscal years ended October 31, 1999, 1998 and 1997 and for the
fiscal year ended October 31, 1999 and the period November 3, 1997 (inception
date) through October 31, 1998 relating to Asian Fund and European Fund, AIM
waived advisory fees for each Fund as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ -0- $ -0- $ -0-
Asian Fund $ 207,130 $ 51,040 $ -0-
Equity Fund $ 1,122,543 $ 978,165 $ 738,005
European Fund $ -0- $ 114,120 $ -0-
Growth Fund $ -0- $ -0- $ -0-
Income Fund $ 423,180 $ 365,730 $ 302,278
</TABLE>
Although these fees are higher than those paid by most mutual funds
which invest in domestic securities, they are competitive with such fees paid by
mutual funds which invest primarily in foreign securities. The Company believes
such fees are justified due to the higher costs and additional expenses
associated with managing and operating funds holding primarily foreign
securities.
For the fiscal year ended October 31, 1999, AIM waived advisory fees
for Asian Fund, Equity Fund and Income Fund which represented 0.80%, 0.04% and
0.42% of such Fund's average daily net assets.
For the fiscal year ended October 31, 1999, each Fund reimbursed AIM
for administrative services in the following amounts, stated as a percentage of
the Fund's average daily net assets:
<TABLE>
<CAPTION>
Reimbursement
Payments
-------------
<S> <C>
Aggressive Growth Fund........................... 0.01%
Asian Fund....................................... 0.29%
Equity Fund...................................... 0.01%
European Fund.................................... 0.04%
Growth Fund...................................... 0.01%
Income Fund...................................... 0.07%
</TABLE>
The Administrative Services Agreement for the Funds provides that AIM
may perform, or arrange for the performance of, certain accounting and other
administrative services to each Fund which are not required to be performed by
AIM under the Investment Advisory Agreement. For such services, AIM is
50
<PAGE> 183
entitled to receive from each Fund reimbursement of AIM's costs or such
reasonable compensation as may be approved by the Company's Board of Directors.
The Administrative Services Agreement will continue in effect from year to year
only if such continuance is specifically approved at least annually by the
Company's Board of Directors, and by the affirmative vote of the Non-Interested
Directors by votes cast in person at a meeting called for such purpose.
For the fiscal years ended October 31, 1999, 1998 and 1997 and for the
fiscal year ended October 31, 1999 and the period November 3, 1997 (inception
date) through October 31, 1998 relating to Asian Fund and European Fund, AIM
received reimbursement of administrative service costs from each Fund as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Aggressive Growth Fund $ 127,117 $ 116,964 $ 109,161
Asian Fund $ 74,007 $ 74,604 $ --
Equity Fund $ 150,312 $ 115,146 $ 105,163
European Fund $ 75,332 $ 69,060 $ --
Growth Fund $ 97,142 $ 80,267 $ 87,673
Income Fund $ 66,799 $ 81,456 $ 74,031
</TABLE>
In addition, the Transfer Agency and Service Agreement for the Funds
provides that AFS, P.O. Box 4739, Houston, Texas 77210-4739, a registered
transfer agent and wholly owned subsidiary of AIM, will perform certain
shareholder services for the Funds for a fee per account serviced. The Transfer
Agency and Service Agreement provides that AFS will process orders for
purchases, redemptions and exchanges of shares, prepare and transmit payments
for dividends and distributions declared by the Funds, maintain shareholder
accounts and provide shareholders with information regarding the Funds and their
accounts.
THE DISTRIBUTION PLANS
THE CLASS A AND C PLAN
The Company has adopted a Master Distribution Plan pursuant to Rule
12b-1 under the 1940 Act relating to the Class A and Class C shares of the Funds
(the "Class A and C Plan"). The Class A and C Plan provides that for Aggressive
Growth Fund, Growth Fund and Income Fund the Class A shares pay 0.50% per annum
of their average daily net assets, for Equity Fund the Class A shares pay 0.30%
per annum of their average daily net assets and for Asian Fund and European Fund
the Class A shares pay 0.35% per annum of their average daily net assets as
compensation to AIM Distributors for the purpose of financing any activity which
is primarily intended to result in the sale of Class A shares. Under the Class A
and C Plan, Class C shares of each Fund pay compensation to AIM Distributors at
an annual rate of 1.00% of the average daily net assets attributable to Class C
shares. The Class A and C Plan is designed to compensate AIM Distributors, on a
quarterly basis, for certain promotional and other sales-related costs, and to
implement a dealer incentive program which provides for periodic payments to
selected dealers who furnish continuing personal shareholder services to their
customers who purchase and own Class A or Class C shares of a Fund. Payments can
also be directed by AIM Distributors to selected institutions who have entered
into service agreements with respect to Class A and Class C shares of each Fund
and who provide continuing personal services to their customers who own Class A
and Class C shares of each Fund and who provide continuing personal services to
their customers who own Class A and Class C shares of the Fund. The service fees
payable to selected institutions are calculated at the annual rate of 0.25% of
the average daily net asset value of those Fund shares that are held in such
institution's customers' accounts which were purchased on or after a prescribed
date set forth in the Plan. Activities appropriate for financing under the Class
A and C Plan include, but are not limited to, the following: printing of
prospectuses and statements of additional information and reports for other than
existing shareholders; overhead; preparation and distribution of advertising
material and sales
51
<PAGE> 184
literature; expenses of organizing and conducting sales seminars; supplemental
payments to dealers and other institutions such as asset-based sales charges or
as payments of service fees under shareholder service arrangements; and costs of
administering the Class A and C Plan.
Of the aggregate amount payable under the Class A and C Plan, payments
to dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the Fund,
in amounts of up to 25% of the average net assets of the Fund attributable to
the customers of such dealers or financial institutions are characterized as a
service fee, and payments to dealers and other financial institutions in excess
of such amount and payments to AIM Distributors would be characterized as an
asset-based sales charge pursuant to the Class A and C Plan. The Class A and C
Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to the
Fund.
THE CLASS B PLAN
The Company has also adopted a Master Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act relating to Class B shares of the Funds (the
"Class B Plan", and collectively with the Class A and C Plan, the "Plans").
Under the Class B Plan, each Fund pays compensation to AIM Distributors at an
annual rate of 1.00% of the average daily net assets attributable to Class B
shares. Of such amount, each Fund pays a service fee of 0.25% of the average
daily net assets attributable to Class B shares to selected dealers and other
institutions which furnish continuing personal shareholder services to their
customers who purchase and own Class B shares. Any amounts not paid as a service
fee would constitute an asset-based sales charge. Amounts paid in accordance
with the Class B Plan may be used to finance any activity primarily intended to
result in the sale of Class B shares, including but not limited to printing of
prospectuses and statements of additional information and reports for other than
existing shareholders; overhead; preparation and distribution of advertising
material and sales literature; expenses of organizing and conducting sales
seminars; supplemental payments to dealers and other institutions such as
asset-based sales charges or as payments of service fees under shareholder
service arrangements; and costs of administering the Class B Plan.
BOTH PLANS
Pursuant to an incentive program, AIM Distributors may enter into
agreements ("Shareholder Service Agreements") with investment dealers selected
from time to time by AIM Distributors for the provision of distribution
assistance in connection with the sale of the Funds' shares to such dealers'
customers, and for the provision of continuing personal shareholder services to
customers who may from time to time directly or beneficially own shares of the
Funds. The distribution assistance and continuing personal shareholder services
to be rendered by dealers under the Shareholder Service Agreements may include,
but shall not be limited to, the following: distributing sales literature;
answering routine customer inquiries concerning the Funds; assisting customers
in changing dividend options, account designations and addresses, and in
enrolling in any of several special investment plans offered in connection with
the purchase of the Funds' shares; assisting in the establishment and
maintenance of customer accounts and records and in the processing of purchase
and redemption transactions; investing dividends and any capital gains
distributions automatically in the Funds' shares; and providing such other
information and services as the Funds or the customer may reasonably request.
Under the Plans, in addition to the Shareholder Service Agreements
authorizing payments to selected dealers, banks may enter into Shareholder
Service Agreements authorizing payments under the Plans to be made to banks
which provide services to their customers who have purchased shares. Services
provided pursuant to Shareholder Service Agreements with banks may include some
or all of the following: answering shareholder inquiries regarding a Fund and
the Company; performing sub-accounting; establishing and maintaining shareholder
accounts and records; processing customer purchase and redemption transactions;
providing periodic statements showing a shareholder's account balance and the
integration of such statements with those of other transactions and balances in
the shareholder's other accounts serviced by the bank; forwarding applicable
prospectuses, proxy
52
<PAGE> 185
statements, reports and notices to bank clients who hold Fund shares; and such
other administrative services as a Fund reasonably may request, to the extent
permitted by applicable statute, rule or regulation. Similar agreements may be
permitted under the Plans for institutions which provide recordkeeping for and
administrative services to 401(k) plans.
Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
Under a Shareholder Service Agreement, a Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement generally will be calculated at the end of each payment period
for each business day of the Funds during such period at the annual rate of
0.25% of the average daily net asset value of the Funds' shares purchased or
acquired through exchange. Fees calculated in this manner shall be paid only to
those selected dealers or other institutions who are dealers or institutions of
record at the close of business on the last business day of the applicable
payment period for the account in which the Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made
to dealers and other financial institutions who provide continuing personal
shareholder services to their customers who purchase and own shares of the Funds
to no more than 0.25% per annum of the average daily net assets of the funds
attributable to the customers of such dealers or financial institutions, and by
imposing a cap on the total sales charges, including asset based sales charges,
that may be paid by the Funds and their respective classes.
AIM Distributors may from time to time waive or reduce any portion of
its 12b-1 fee for Class A and Class C shares. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM Distributors will
retain its ability to be reimbursed for such fee prior to the end of each fiscal
year. Contractual fee waivers or reductions set forth in the Fee Table in a
Prospectus may not be terminated or amended to the Funds' detriment during the
period stated in the agreement between AIM Distributors and the Fund.
Under the Plans, certain financial institutions which have entered into
service agreements and which sell shares of the Fund on an agency basis, may
receive payments from the Funds pursuant to the respective Plans. AIM
Distributors does not act as principal, but rather as agent for the Fund, in
making dealer incentive and shareholder servicing payments under the Plans.
These payments are an obligation of the Fund and not of AIM Distributors.
For the fiscal year ended October 31, 1999, the Funds paid the
following amounts under the Class A and C Plan and the Class B Plan:
<TABLE>
<CAPTION>
% of Class
Average Daily
Net Assets
-------------
Class A Class B Class C Class A Class B Class C
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund $4,209,929 $8,987,826 $ 140,985 0.50% 1.00% 1.00%
Asian Fund $ 61,006 $ 64,087 $ 20,619 0.35% 1.00% 1.00%
Equity Fund $5,566,448 $8,024,805 $ 871,229 0.30% 1.00% 1.00%
European Fund $ 332,066 $ 625,126 $ 118,428 0.35% 1.00% 1.00%
Growth Fund $1,585,224 $3,564,027 $ 205,127 0.50% 1.00% 1.00%
Income Fund $ 300,260 $ 385,265 $ 19,247 0.50% 1.00% 1.00%
</TABLE>
53
<PAGE> 186
An estimate by category of actual fees paid by the Funds with regard to
the Class A shares under the Class A and C Plan during the year ended October
31, 1999 follows:
<TABLE>
<CAPTION>
AGGRESSIVE ASIAN EQUITY EUROPEAN GROWTH INCOME
GROWTH FUND FUND FUND FUND FUND FUND
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Advertising ............................. $ 71,446 $ 7,880 $ 455,333 $ 63,247 $ 33,812 $ 1,993
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) ........................... $ 6,820 $ 756 $ 43,412 $ 6,135 $ 3,252 $ 185
SEMINARS ................................ $ 19,801 $ 2,568 $ 128,153 $ 18,258 $ 9,967 $ 605
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs ................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Compensation to Dealers ................. $4,111,862 $ 49,802 $4,939,550 $ 244,426 $1,538,194 $ 297,478
(INCLUDES FINDER'S FEES)
Compensation to Sales Personnel ......... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Annual Report Total ..................... $4,209,929 $ 61,006 $5,566,448 $ 332,066 $1,585,225 $ 300,261
</TABLE>
An estimate by category of actual fees paid by the Funds under the
Class B Plan during the year ended October 31, 1999 as follows:
<TABLE>
<CAPTION>
AGGRESSIVE ASIAN EQUITY EUROPEAN GROWTH INCOME
GROWTH FUND FUND FUND FUND FUND FUND
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CLASS B
Advertising ............................. $ 190,907 $ 5,128 $ 219,428 $ 47,290 $ 96,312 $ 15,684
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) ........................... $ 17,786 $ 327 $ 20,589 $ 4,058 $ 9,087 $ 1,652
SEMINARS ................................ $ 51,109 $ 909 $ 60,004 $ 11,272 $ 27,457 $ 4,079
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs ................... $6,740,869 $ 48,065 $6,018,604 $ 468,844 $2,673,020 $ 288,949
Compensation to Dealers ................. $1,987,155 $ 9,657 $1,706,180 $ 93,661 $ 758,151 $ 74,902
Compensation to Sales Personnel ......... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Annual Report Total ..................... $8,987,826 $ 64,086 $8,024,805 $ 625,125 $3,564,027 $ 385,266
</TABLE>
An estimate by category of actual fees paid by the Funds with regard to
the Class C shares under the Class A and C Plan during the year ended October
31, 1999 as follows:
54
<PAGE> 187
<TABLE>
<CAPTION>
AGGRESSIVE ASIAN EQUITY EUROPEAN GROWTH INCOME
GROWTH FUND FUND FUND FUND FUND FUND
----------- ----- ------ -------- ------ -------
CLASS C
<S> <C> <C> <C> <C> <C> <C>
Advertising ............................. $ 0 $ 396 $ 0 $ 4,827 $ 0 $ 64
Printing and mailing prospectuses,
semi-annual reports and annual
reports (other than to current
shareholders) ........................... $ 0 $ 39 $ 0 $ 420 $ 0 $ 0
SEMINARS ................................ $ 0 $ 0 $ 0 $ 1,166 $ 0 $ 0
Compensation to Underwriters to partially
offset upfront dealer commissions and
other marketing costs ................... $ 64,526 $ 15,408 $510,473 $ 83,930 $116,390 $ 11,019
Compensation to Dealers ................. $ 76,458 $ 4,776 $360,757 $ 28,085 $ 88,737 $ 8,163
Compensation to Sales Personnel ......... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Annual Report Total ..................... $140,984 $ 20,619 $871,230 $118,428 $205,127 $ 19,246
</TABLE>
The Plans require AIM Distributors to provide the Board of Directors at
least quarterly with a written report of the amounts expended pursuant to the
Plans and the purposes for which such expenditures were made. The Board of
Directors reviews these reports in connection with their decisions with respect
to the Plans.
As required by Rule 12b-1, the Plans and related forms of Shareholder
Service Agreements were approved by the Board of Directors, including a majority
of the directors who are not "interested persons" (as defined in the 1940 Act)
of the Company and who have no direct or indirect financial interest in the
operation of the Plans or in any agreements related to the Plans ("Qualified
Directors"). In approving the Plans in accordance with the requirements of Rule
12b-1, the directors considered various factors and determined that there is a
reasonable likelihood that the Plans would benefit each class of the Funds and
their respective shareholders.
The Plans do not obligate the Funds to reimburse AIM Distributors for
the actual expenses AIM Distributors may incur in fulfilling its obligations
under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee
payable to AIM Distributors thereunder at any given time, the Funds will not be
obligated to pay more than that fee. If AIM Distributors' expenses are less than
the fee it receives, AIM Distributors will retain the full amount of the fee.
Unless the Plans are terminated earlier in accordance with their terms,
the Plans continue in effect as long as such continuance is specifically
approved at least annually by the Board of Directors, including a majority of
the Qualified Directors.
The Plans may be terminated by the vote of a majority of the
Independent Directors, or, with respect to a particular class, by the vote of a
majority of the outstanding voting securities of that class.
Any change in the Plans that would increase materially the distribution
expenses paid by the applicable class requires shareholder approval; otherwise,
it may be amended by the directors, including a majority of the Qualified
Directors, by votes cast in person at a meeting called for the purpose of voting
upon such amendment. As long as the Plans are in effect, the selection or
nomination of the Qualified Directors is committed to the discretion of the
Qualified Directors. In the event the Class A and C Plan is amended in a manner
which the Board of Directors determines would materially increase the charges
paid under the Class A and C Plan, the Class B shares of the Funds will no
longer convert into Class A shares of the same Funds unless the Class B shares,
voting separately, approve such amendment. If the
55
<PAGE> 188
Class B shareholders do not approve such amendment, the Board of Directors will
(i) create a new class of shares of the Funds which is identical in all material
respects to the Class A shares as they existed prior to the implementation of
the amendment and (ii) ensure that the existing Class B shares of the Funds will
be exchanged or converted into such new class of shares no later than the date
the Class B shares were scheduled to convert into Class A shares.
The principal differences between the Class A and C Plan, on the one
hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan
allows payment to AIM Distributors or to dealers or financial institutions of up
to 0.50% of average daily net assets of the Class A shares of Aggressive Growth
Fund, Income Fund, and Growth Fund, of up to 0.35% of average daily net assets
of the Class A shares of Asian Fund and European Fund, and of up to 0.30% of
average daily net assets of the Class A shares of Equity Fund, as compared to
1.00% of such assets of each Fund's Class B shares; (ii) the Class B Plan
obligates the Class B shares to continue to make payments to AIM Distributors
following termination of the Class B shares Distribution Agreement with respect
to Class B shares sold by or attributable to the distribution efforts of AIM
Distributors unless there has been a complete termination of the Class B Plan
(as defined in such Plan) and (iii) the Class B Plan expressly authorizes AIM
Distributors to assign, transfer or pledge its rights to payments pursuant to
the Class B Plan.
THE DISTRIBUTOR
The Company has entered into distribution arrangements with AIM
Distributors, P. O. Box 4739, Houston, Texas 77210-4739, a registered
broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor in
the continuous offering of Class A, Class B and Class C shares of the Funds.
Certain directors and officers of the Company are affiliated with AIM
Distributors. A Master Distribution Agreement with AIM Distributors relating to
the Class A and Class C shares of the Funds was approved by the Board of
Directors on June 11, 1997. A Master Distribution Agreement with AIM
Distributors relating to the Class B shares of the Funds was also approved by
the Board of Directors on December 11, 1996. Both such Master Distribution
Agreements are hereinafter collectively referred to as the "Distribution
Agreements."
The Distribution Agreements provide AIM Distributors with the exclusive
right to distribute shares of the Funds directly and through institutions with
whom AIM Distributors has entered into selected dealer agreements. Under the
Distribution Agreement for the Class B shares, AIM Distributors sells Class B
shares at net asset value subject to a contingent deferred sales charge
established by AIM Distributors. AIM Distributors is authorized to advance to
institutions through whom Class B shares are sold a sales commission under
schedules established by AIM Distributors. The Distribution Agreement for the
Class B shares provides that AIM Distributors (or its assignee or transferee)
will receive 0.75% (of the total 1.00% payable under the distribution plan
applicable to Class B shares) of the Fund's average daily net assets
attributable to Class B shares attributable to the sales efforts of AIM
Distributors. In the event the Class B shares Distribution Agreement is
terminated, AIM Distributors would continue to receive payments of asset based
sales charges in respect of the outstanding Class B shares attributable to AIM
Distributors; provided, however, that a complete termination of the Class B
shares master distribution plan (as defined in the Plan) would terminate all
payments to AIM Distributors. Termination of the Class B shares distribution
plan or Distribution Agreement does not affect the obligation of Class B
shareholders to pay Contingent Deferred Sales Charges.
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing the Funds'
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Funds), and any promotional or sales
literature used by AIM Distributors or furnished by AIM Distributors to dealers
in connection with the public offering of the Funds' shares, including expenses
of advertising in connection with such public offerings. AIM Distributors has
not undertaken to sell any specified number of shares of any classes of the
Funds.
56
<PAGE> 189
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B and Class C shares of the
Funds at the time of such sales. Payments with respect to Class B shares will
equal 4.0% of the purchase price of the Class B shares sold by the dealer or
institution, and will consist of a sales commission equal to 3.75% of the
purchase price of the Class B shares sold plus an advance of the first year
service fee of 0.25% with respect to such shares. The portion of the payments to
AIM Distributors under the Class B Plan which constitutes an asset-based sales
charge (0.75%) is intended in part to permit AIM Distributors to recoup a
portion of such sales commissions plus financing costs. AIM Distributors
anticipates that it will require a number of years to recoup from Class B Plan
payments the sales commissions paid to dealers and institutions in connection
with sales of Class B shares. In the future, if multiple distributors serve a
Fund, each such distributor (or its assignee or transferee) would receive a
share of the payments under the Class B Plan based on the portion of the Fund's
Class B shares sold by or attributable to the distribution efforts of that
distributor.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record.
The Company (on behalf of any class of the Funds) or AIM Distributors
may terminate the Distribution Agreements on sixty (60) days' written notice
without penalty. The Distribution Agreements will terminate automatically in the
event of their assignment. In the event the Class B shares Distribution
Agreement is terminated, AIM Distributors would continue to receive payments of
asset based distribution fees in respect of the outstanding Class B shares
attributable to the distribution efforts of AIM Distributors; provided, however,
that a complete termination of the Class B Plan (as defined in such Plan) would
terminate all payments to AIM Distributors. Termination of the Class B Plan or
Distribution Agreement does not affect the obligation of the Funds and their
Class B shareholders to pay contingent deferred sales charges.
From time to time, AIM Distributors may transfer and sell its right to
payments under the Distribution Agreements relating to Class B shares in order
to finance distribution expenditures in respect of Class B shares.
The following chart reflects the total sales charges paid in connection
with the sale of Class A shares of each Fund and the amount retained by AIM
Distributors for the fiscal years ended October 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
Sales Amount Sales Amount Sales Amount
Charges Retained Charges Retained Charges Retained
------------ ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Fund $ 1,335,400 $ 267,534 $ 3,546,968 $ 622,054 $ 12,462,271 $ 2,200,552
Asian Fund* $ 251,652 $ 43,007 $ 180,148 $ 27,913 $ 0 $ 0
Equity Fund $ 2,227,910 $ 446,482 $ 3,608,107 $ 592,247 $ 7,481,513 $ 1,172,508
European Fund* $ 870,792 $ 143,067 $ 1,357,500 $ 207,603 $ 0 $ 0
Growth Fund $ 1,035,250 $ 195,571 $ 1,200,898 $ 208,115 $ 1,621,736 $ 286,414
Income Fund $ 159,748 $ 28,250 $ 285,983 $ 50,768 $ 348,033 $ 59,763
</TABLE>
- ---------------------
57
<PAGE> 190
* Asian Fund and European Fund commenced operations November 3, 1997.
The following chart reflects the contingent deferred sales charges paid
by Class A, Class B and Class C shareholders for the fiscal years ended October
31, 1999, 1998 and 1997 for Class A, Class B and Class C shares:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ----------- ----------
<S> <C> <C> <C>
Aggressive Growth Fund $ 101,594 $ 200,802 $ 133,018
Asian Fund* $ 240,319 $ 496 $ 0
Equity Fund $ 157,129 $ 208,603 $ 91,984
European Fund* $ 50,219 $ 7,299 $ 0
Growth Fund $ 24,812 $ 29,133 $ 25,870
Income Fund $ 3,743 $ 9,510 $ 3,397
</TABLE>
- ---------------------
* Asian Fund and European Fund commenced operations November 3, 1997.
SALES CHARGES AND DEALER CONCESSIONS
CATEGORY I. Certain AIM Funds are currently sold with a sales charge
ranging from 5.50% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds include Class A shares of each of AIM Advisor Flex
Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap Value Fund,
AIM Aggressive Growth Fund, AIM Asian Growth Fund, AIM Basic Value Fund, AIM
Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM
Constellation Fund, AIM Dent Demographic Trends Fund, AIM European Development
Fund, AIM Euroland Growth Fund, AIM Global Utilities Fund, AIM Global Growth &
Income Fund, AIM International Equity Fund, AIM Japan Growth Fund, AIM Large Cap
Basic Value Fund, AIM Large Cap Growth Fund, AIM Large Cap Opportunities Fund,
AIM Mid Cap Equity Fund, AIM Mid Cap Growth Fund, AIM Mid Cap Opportunities
Fund, AIM New Pacific Growth Fund, AIM Select Growth Fund, AIM Small Cap Growth
Fund, AIM Small Cap Opportunities Fund, AIM Value Fund and AIM Weingarten Fund.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge As a
------------------------------- --------------
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction(1) Price Invested Price
------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Less than $ 25,000 5.50% 5.82% 4.75%
$ 25,000 but less than $ 50,000 5.25 5.54 4.50
$ 50,000 but less than $ 100,000 4.75 4.99 4.00
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 3.00 3.09 2.50
$500,000 but less than $1,000,000 2.00 2.04 1.60
</TABLE>
- ----------------
* AIM Small Cap Opportunities Fund will not accept any single purchase in excess
of $250,000.
CATEGORY II. Certain AIM Funds are currently sold with a sales charge
ranging from 4.75% to 2.00% of the offering price on purchases of less than
$1,000,000. These AIM Funds are: the Class A
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<PAGE> 191
shares of each of AIM Advisor Real Estate Fund, AIM Balanced Fund, AIM
Developing Markets Fund, AIM Emerging Markets Debt Fund, AIM Global Aggressive
Growth Fund, AIM Global Consumer Products and Services Fund, AIM Global
Financial Services Fund, AIM Global Government Income Fund, AIM Global Growth
Fund, AIM Global Health Care Fund, AIM Global Income Fund, AIM Global
Infrastructure Fund, AIM Global Resources Fund, AIM Global Telecommunications
and technology Fund, AIM Global Trends Fund, AIM High Income Municipal Fund, AIM
High Yield Fund, AIM High Yield Fund II, AIM Income Fund, AIM Intermediate
Government Fund, AIM Latin American Growth Fund, AIM Municipal Bond Fund, AIM
Strategic Income Fund and AIM Tax-Exempt Bond Fund of Connecticut.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge As a
------------------------------- --------------
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction Price Invested Price
------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Less than $ 50,000 4.75% 4.99% 4.00%
$ 50,000 but less than $ 100,000 4.00 4.17 3.25
$100,000 but less than $ 250,000 3.75 3.90 3.00
$250,000 but less than $ 500,000 2.50 2.56 2.00
$500,000 but less than $ 1,000,000 2.00 2.04 1.60
</TABLE>
CATEGORY III. Certain AIM Funds are currently sold with a sales charge
ranging from 1.00% to 0.50% of the offering price on purchases of less than
$1,000,000. These AIM Funds are the Class A shares of each of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund.
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge As a
------------------------------- --------------
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment in Offering Amount Offering
Single Transaction(1) Price Invested Price
------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more of Category
I, II or III Funds; however, AIM Distributors may pay a dealer concession and/or
advance a service fee on such transactions as set forth below.
ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the
entire initial sales charge to dealers for all sales with respect to which
orders are placed with AIM Distributors during a particular period. Dealers to
whom substantially the entire sales charge is re-allowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.
In addition to amounts paid to dealers as a dealer concession out of the
initial sales charge paid by investors, AIM Distributors may, from time to time,
at its expense or as an expense for which it may be compensated under a
distribution plan, if applicable, pay a bonus or other consideration or
incentive to dealers who sell a minimum dollar amount of the shares of the AIM
Funds during a specified period of time. At the option of the dealer, such
incentives may take the form of payment for travel expenses,
59
<PAGE> 192
including lodging, incurred in connection with trips taken by qualifying
registered representatives and their families to places within or outside the
United States. The total amount of such additional bonus payments or other
consideration shall not exceed 0.25% of the public offering price of the shares
sold. Any such bonus or incentive programs will not change the price paid by
investors for the purchase of the applicable AIM Fund's shares or the amount
that any particular AIM Fund will receive as proceeds from such sales. Dealers
may not use sales of the AIM Funds' shares to qualify for any incentives to the
extent that such incentives may be prohibited by the laws of any state.
AIM Distributors may make payments to dealers and institutions who are
dealers of record for purchases of $1 million or more of Class A shares (or
shares which normally involve payment of initial sales charges), which are sold
at net asset value and are subject to a contingent deferred sales charge, for
all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury
Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million
of such purchases, plus 0.80% of the next $1 million of such purchases, plus
0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess
of $20 million of such purchases. AIM Distributors may make payments to dealers
and institutions who are dealers of record for purchases of $1 million or more
of Class A shares (or shares which normally involve payment of initial sales
charges), and which are sold at net asset value and are not subject to a
contingent deferred sales charge, in an amount up to 0.10% of such purchases of
Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to
0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class B shares of the AIM Funds at the time of such sales. Payments
with respect to Class B shares will equal 4.00% of the purchase price of the
Class B shares sold by the dealer or institution, and will consist of a sales
commission equal to 3.75% of the purchase price of the Class B shares sold plus
an advance of the first year service fee of 0.25% with respect to such shares.
The portion of the payments to AIM Distributors under the Class B Plan which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of such sales commissions plus financing
costs.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record. These
commissions are not paid on sales to investors exempt from the CDSC, including
shareholders of record of AIM Advisor Funds, Inc. on April 30, 1995, who
purchase additional shares in any of the Funds on or after May 1, 1995, and in
circumstances where AIM Distributors grants an exemption on particular
transactions.
Exchanges of AIM Cash Reserve Shares of AIM Money Market Fund for Class
B shares or Class C shares are considered sales of such Class B or Class C
shares for purposes of the sales charges and dealer concessions discussed above.
AIM Distributors may pay investment dealers or other financial service
firms for share purchases (measured on an annual basis) of Class A Shares of all
AIM Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate
Fund and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit
plan as follows: 1% of the first $2 million of such purchases, plus 0.80% of the
next $1 million of such purchases, plus 0.50% of the next $17 million of such
purchases, plus 0.25% of amounts in excess of $20 million of such purchases and
up to 0.10% of the net asset value of any Class A shares
60
<PAGE> 193
of AIM Limited Maturity Treasury Fund sold at net asset value to an employee
benefit plan in accordance with this paragraph.
REDUCTIONS IN INITIAL SALES CHARGES
Reductions in the initial sales charges shown in the sales charge tables
(quantity discounts) apply to purchases of shares of the AIM Funds that are
otherwise subject to an initial sales charge, provided that such purchases are
made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM
Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class
B and Class C shares of the AIM Funds will not be taken into account in
determining whether a purchase qualifies for a reduction in initial sales
charges.
The term "purchaser" means:
o an individual and his or her spouse and children, including any
trust established exclusively for the benefit of any such person;
or a pension, profit-sharing, or other benefit plan established
exclusively for the benefit of any such person, such as an IRA,
Roth IRA, a single-participant money-purchase/profit-sharing plan
or an individual participant in a 403(b) plan (unless such 403(b)
plan qualifies as the purchaser as defined below);
o a 403(b) plan, the employer/sponsor of which is an organization
described under Section 501(c)(3) of the Internal Revenue Code of
1986, as amended (the "Code"), if:
a. the employer/sponsor must submit contributions for all
participating employees in a single contribution transmittal
(i.e., the Funds will not accept contributions submitted with
respect to individual participants);
b. each transmittal must be accompanied by a single check or wire
transfer; and
c. all new participants must be added to the 403(b) plan by
submitting an application on behalf of each new participant
with the contribution transmittal;
o a trustee or fiduciary purchasing for a single trust, estate or
single fiduciary account (including a pension, profit-sharing or
other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Code) and 457 plans, although more than
one beneficiary or participant is involved;
o a Simplified Employee Pension (SEP), Salary Reduction and other
Elective Simplified Employee Pension account (SAR-SEP) or a
Savings Incentive Match Plans for Employees IRA (SIMPLE IRA),
where the employer has notified the distributor in writing that
all of its related employee SEP, SAR-SEP or SIMPLE IRA accounts
should be linked; or
o any other organized group of persons, whether incorporated
or not, provided the organization has been in existence for at
least six months and has some purpose other than the purchase at a
discount of redeemable securities of a registered investment
company.
Investors or dealers seeking to qualify orders for a reduced initial
sales charge must identify such orders and, if necessary, support their
qualification for the reduced charge. AIM Distributors reserves the right to
determine whether any purchaser is entitled, by virtue of the foregoing
definition, to the reduced sales charge. No person or entity may distribute
shares of the AIM Funds without payment of the applicable sales charge other
than to persons or entities who qualify for a reduction in the sales charge as
provided herein.
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<PAGE> 194
1. LETTERS OF INTENT. A purchaser, as previously defined, may pay
reduced initial sales charges by completing the appropriate section of the
account application and by fulfilling a Letter of Intent ("LOI"). The LOI
privilege is also available to holders of the Connecticut General Guaranteed
Account, established for tax qualified group annuities, for contracts purchased
on or before June 30, 1992. The LOI confirms such purchaser's intention as to
the total investment to be made in shares of the AIM Funds (except for (i) Class
A shares of AIM Tax-Exempt Cash Fund, and AIM Cash Reserve Shares of AIM Money
Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) SHARES
OF AIM Floating Rate Fund) within the following 13 consecutive months. By
marking the LOI section on the account application and by signing the account
application, the purchaser indicates that he understands and agrees to the terms
of the LOI and is bound by the provisions described below.
Each purchase of fund shares normally subject to an initial sales
charge made during the 13-month period will be made at the public offering price
applicable to a single transaction of the total dollar amount indicated by the
LOI, as described under "Sales Charges and Dealer Concessions." It is the
purchaser's responsibility at the time of purchase to specify the account
numbers that should be considered in determining the appropriate sales charge.
The offering price may be further reduced as described under "Rights of
Accumulation" if the Transfer Agent is advised of all other accounts at the time
of the investment. Shares acquired through reinvestment of dividends and capital
gains distributions will not be applied to the LOI. At any time during the
13-month period after meeting the original obligation, a purchaser may revise
his intended investment amount upward by submitting a written and signed
request. Such a revision will not change the original expiration date. By
signing an LOI, a purchaser is not making a binding commitment to purchase
additional shares, but if purchases made within the 13-month period do not total
the amount specified, the investor will pay the increased amount of sales charge
as described below. Purchases made within 90 days before signing an LOI will be
applied toward completion of the LOI. The LOI effective date will be the date of
the first purchase within the 90-day period. The Transfer Agent will process
necessary adjustments upon the expiration or completion date of the LOI.
Purchases made more than 90 days before signing an LOI will be applied toward
completion of the LOI based on the value of the shares purchased calculated at
the public offering price on the effective date of the LOI.
To assure compliance with the provisions of the 1940 Act, out of the
initial purchase (or subsequent purchases if necessary) the Transfer Agent will
escrow in the form of shares an appropriate dollar amount (computed to the
nearest full share). All dividends and any capital gain distributions on the
escrowed shares will be credited to the purchaser. All shares purchased,
including those escrowed, will be registered in the purchaser's name. If the
total investment specified under this LOI is completed within the 13-month
period, the escrowed shares will be promptly released. If the intended
investment is not completed, the purchaser will pay the Transfer Agent the
difference between the sales charge on the specified amount and the amount
actually purchased. If the purchaser does not pay such difference within 20 days
of the expiration date, he irrevocably constitutes and appoints the Transfer
Agent as his attorney to surrender for redemption any or all shares, to make up
such difference within 60 days of the expiration date.
If at any time before completing the LOI Program, the purchaser wishes
to cancel the agreement, he must give written notice to AIM Distributors. If at
any time before completing the LOI Program the purchaser requests the Transfer
Agent to liquidate or transfer beneficial ownership of his total shares, a
cancellation of the LOI will automatically be effected. If the total amount
purchased is less than the amount specified in the LOI, the Transfer Agent will
redeem an appropriate number of escrowed shares equal to the difference between
the sales charge actually paid and the sales charge that would have been paid if
the total purchases had been made at a single time.
2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may
also qualify for reduced initial sales charges based upon such purchaser's
existing investment in shares of any of the AIM Funds (except for (i) Class A
shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) SHARES
OF AIM Floating Rate Fund) at the time of the proposed purchase. Rights of
Accumulation are also available to
62
<PAGE> 195
holders of the Connecticut General Guaranteed Account, established for
tax-qualified group annuities, for contracts purchased on or before June 30,
1992. To determine whether or not a reduced initial sales charge applies to a
proposed purchase, AIM Distributors takes into account not only the money which
is invested upon such proposed purchase, but also the value of all shares of the
AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash Fund and AIM
Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and Class C shares
of the AIM Funds and (iii) shares of AIM floating rate fund) owned by such
purchaser, calculated at their then current public offering price. If a
purchaser so qualifies for a reduced sales charge, the reduced sales charge
applies to the total amount of money then being invested by such purchaser and
not just to the portion that exceeds the breakpoint above which a reduced sales
charge applies. For example, if a purchaser already owns qualifying shares of
any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000
in a fund, with a maximum initial sales charge of 5.50%, the reduced initial
sales charge of 5.25% will apply to the full $20,000 purchase and not just to
the $15,000 in excess of the $25,000 breakpoint. To qualify for obtaining the
discount applicable to a particular purchase, the purchaser or his dealer must
furnish AFS with a list of the account numbers and the names in which such
accounts of the purchaser are registered at the time the purchase is made.
PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM
Funds at net asset value (without payment of an initial sales charge) may be
made in connection with: (a) the reinvestment of dividends and distributions
from a fund; (b) exchanges of shares of certain funds; (c) use of the
reinstatement privilege; or (d) a merger, consolidation or acquisition of assets
of a fund.
The following purchasers will not pay initial sales charges on
purchases of Class A shares because there is a reduced sales effort involved in
sales to these purchasers:
o AIM Management and its affiliates, or their clients;
o Any current or retired officer, director or employee (and members
of their immediate family) of AIM Management, its affiliates or
The AIM Family of Funds --Registered Trademark--; and any
foundation, trust or employee
benefit plan established exclusively for the benefit of, or by,
such persons;
o Any current or retired officer, director, or employee (and members
of their immediate family), of CIGNA Corporation or its
affiliates, or of First Data Investor Services Group; and any
deferred compensation plan for directors of investment companies
sponsored by CIGNA Investments, Inc. or its affiliates;
o Sales representatives and employees (and members of their
immediate family) of selling group members or financial
institutions that have arrangements with such selling group
members;
o Purchases through approved fee-based programs;
o Employee benefit plans designated as purchasers as defined above,
and non-qualified plans offered in conjunction therewith, provided
the initial investment in the plan(s) is at least $1 million; the
sponsor signs a $1 million LOI; the employer-sponsored plan(s) has
at least 100 eligible employees; or all plan transactions are
executed through a single omnibus account per Fund and the
financial institution or service organization has entered into the
appropriate agreements with the distributor. Section 403(b) plans
sponsored by public educational institutions are not eligible for
a sales charge exception based on the aggregate investment made by
the plan or the number of eligible employees. Purchases of AIM
Small Cap Opportunities Fund by such plans are subject to initial
sales charges;
o Shareholders of record or discretionary advised clients of any
investment advisor holding shares of AIM Weingarten Fund or AIM
Constellation Fund on September 8, 1986, or of AIM
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Charter Fund on November 17, 1986, who have continuously owned
shares having a market value of at least $500 and who purchase
additional shares of the same Fund;
o Shareholders of record of Advisor Class shares of AIM
International Growth Fund or AIM Worldwide Growth Fund on February
12, 1999 who have continuously owned shares of the AIM Funds;
o Unitholders of G/SET series unit investment trusts investing
proceeds from such trusts in shares of AIM Weingarten Fund or AIM
Constellation Fund; provided, however, prior to the termination
date of the trusts, a unitholder may invest proceeds from the
redemption or repurchase of his units only when the investment in
shares of AIM Weingarten Fund and AIM Constellation Fund is
effected within 30 days of the redemption or repurchase;
o A shareholder of a fund that merges or consolidates with an AIM
Fund or that sells its assets to an AIM Fund in exchange for
shares of an AIM Fund;
o Shareholders of the GT Global Funds as of April 30, 1987 who since
that date continually have owned shares of one or more of these
funds; and
o Certain former AMA Investment Advisers' shareholders who became
shareholders of the AIM Global Health Care Fund in October 1989,
and who have continuously held shares in the GT Global Funds since
that time.
o Shareholders of record of advisor class shares of an AIM Fund on
February 11, 2000 who have continuously owned shares of that AIM
Fund, and who purchase additional shares of that AIM Fund.
As used above, immediate family includes an individual and his or her
spouse, children, parents and parents of spouse.
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS
Former GT Global Funds Class A shares that are subject to a contingent
deferred sales charge and that were purchased before June 1, 1998 are entitled
to the following waivers from the contingent deferred sales charge otherwise due
upon redemption: (1) minimum required distributions made in connection with an
IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other
retirement plan following attainment of age 70 1/2; (2) total or partial
redemptions resulting from a distribution following retirement in the case of a
tax-qualified employer-sponsored retirement plan; (3) when a redemption results
from a tax-free return of an excess contribution pursuant to Section 408(d)(4)
or (5) of the Code or from the death or disability of the employee; (4)
redemptions pursuant to a Fund's right to liquidate a shareholder's account
involuntarily; (5) redemptions pursuant to distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in the former GT Global
Funds, which are permitted to be made without penalty pursuant to the Code,
other than tax-free rollovers or transfers of assets, and the proceeds of which
are reinvested in the former GT Global Funds; (6) redemptions made in connection
with participant-directed exchanges between options in an employer-sponsored
benefit plan; (7) redemptions made for the purpose of providing cash to fund a
loan to a participant in a tax-qualified retirement plan; (8) redemptions made
in connection with a distribution from any retirement plan or account that is
permitted in accordance with the provisions of Section 72(t)(2) of the Code, and
the regulations promulgated thereunder; (9) redemptions made in connection with
a distribution from any retirement plan or account that involves the return of
an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of
the Code; (10) redemptions made in connection with a distribution from a
qualified profit-sharing or stock bonus plan described in Section 401(k) of the
Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code
upon hardship of the covered employee (determined pursuant to Treasury
Regulation Section 1.401(k)-1(d)(2)); and (11) redemptions made by or
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for the benefit of certain states, counties or cities, or any instrumentalities,
departments or authorities thereof where such entities are prohibited or limited
by applicable law from paying a sales charge or commission.
Former GT Global Funds Class B shares purchased before June 1, 1998 are
subject to the following waivers from the contingent deferred sales charge
otherwise due upon redemption in addition to the waivers provided for
redemptions of currently issued Class B shares as described in a Prospectus: (1)
total or partial redemptions resulting from a distribution following retirement
in the case of a tax-qualified employer-sponsored retirement; (2) minimum
required distributions made in connection with an IRA, Keogh Plan or custodial
account under Section 403(b) of the Code or other retirement plan following
attainment of age 70 1/2; (3) redemptions pursuant to distributions from a
tax-qualified employer-sponsored retirement plan, which is invested in the
former GT Global Funds, which are permitted to be made without penalty pursuant
to the Code, other than tax-free rollovers or transfers of assets, and the
proceeds of which are reinvested in the former GT Global Funds; (4) redemptions
made in connection with participant-directed exchanges between options in an
employer-sponsored benefit plan; (5) redemptions made for the purpose of
providing cash to fund a loan to a participant in a tax-qualified retirement
plan; (6) redemptions made in connection with a distribution from any retirement
plan or account that is permitted in accordance with the provisions of Section
72(t)(2) of the Code, and the regulations promulgated thereunder; (7)
redemptions made in connection with a distribution from a qualified
profit-sharing or stock bonus plan described in Section 401(k) of the Code to a
participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon
hardship of the covered employee (determined pursuant to Treasury Regulation
Section 1.401(k)-1(d)(2)); and (8) redemptions made by or for the benefit of
certain states, counties or cities, or any instrumentalities, departments or
authorities thereof where such entities are prohibited or limited by applicable
law from paying a sales charge or commission.
CDSCs will not apply to the following:
o Additional purchases of Class C shares of AIM Advisor Flex Fund,
AIM Advisor International Value Fund, AIM Advisor Large Cap Value
Fund and AIM Advisor Real Estate Fund by shareholders of record on
April 30, 1995, of these Funds, except that shareholders whose
broker-dealers maintain a single omnibus account with AFS on
behalf of those shareholders, perform sub-accounting functions
with respect to those shareholders, and are unable to segregate
shareholders of record prior to April 30, 1995, from shareholders
whose accounts were opened after that date will be subject to a
CDSC on all purchases made after March 1, 1996;
o Redemptions following the death or post-purchase disability of (1)
any registered shareholders on an account or (2) a settlor of a
living trust, of shares held in the account at the time of death
or initial determination of post-purchase disability;
o Certain distributions from individual retirement accounts, Section
403(b) retirement plans, Section 457 deferred compensation plans
and Section 401 qualified plans, where redemptions result from (i)
required minimum distributions to plan participants or
beneficiaries who are age 70-1/2 or older, and only with respect
to that portion of such distributions that does not exceed 12%
annually of the participant's or beneficiary's account value in a
particular AIM Fund; (ii) in kind transfers of assets where the
participant or beneficiary notifies the distributor of the
transfer no later than the time the transfer occurs; (iii)
tax-free rollovers or transfers of assets to another plan of the
type described above invested in Class B or Class C shares of one
or more of the AIM Funds; (iv) tax-free returns of excess
contributions or returns of excess deferral amounts; and (v)
distributions on the death or disability (as defined in the
Internal Revenue Code of 1986, as amended) of the participant or
beneficiary;
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o Amounts from a Systematic Withdrawal Plan of up to an annual
amount of 12% of the account value on a per fund basis, at the
time the withdrawal plan is established, provided the investor
reinvests his dividends;
o Liquidation by the Fund when the account value falls below the
minimum required account size of $500;
o Investment account(s) of AIM; and
o Class C shares where the investor's dealer of record notifies the
distributor prior to the time of investment that the dealer waives
the payment otherwise payable to him.
Upon the redemption of shares of funds in sales charge Categories I and
II (see "Sales Charges and Dealer Concessions") purchased in amounts of $1
million or more, no CDSC will be applied in the following situations:
o Shares held more than 18 months;
o Redemptions from employee benefit plans designated as qualified
purchasers, as defined above, where the redemptions are in
connection with employee terminations or withdrawals, provided the
total amount invested in the plan is at least $1,000,000; the
sponsor signs a $1 million LOI; or the employer-sponsored plan has
at least 100 eligible employees; provided, however, that 403(b)
plans sponsored by public educational institutions shall qualify
for the CDSC waiver on the basis of the value of each plan
participant's aggregate investment in the AIM Funds, and not on
the aggregate investment made by the plan or on the number of
eligible employees;
o Private foundations or endowment funds;
o Redemption of shares by the investor where the investor's dealer
waives the amounts otherwise payable to it by the distributor and
notifies the distributor prior to the time of investment; and
o Shares acquired by exchange from Class A shares of funds in sales
charge Categories I and II unless the shares acquired by exchange
are redeemed within 18 months of the original purchase of the
Class A shares.
HOW TO PURCHASE AND REDEEM SHARES
A complete description of the manner by which shares of each Fund may
be purchased appears in the Prospectus under the heading "Purchasing Shares."
The sales charge normally deducted on purchases of Class A shares of
each Fund is used to compensate AIM Distributors and participating dealers for
their expenses incurred in connection with the distribution of the Fund's Class
A shares. Since there is little expense associated with unsolicited orders
placed directly with AIM Distributors by persons who, because of their
relationship with the Funds or with AIM and its affiliates, are familiar with
the Funds, or whose programs for purchase involve little expense (e.g., because
of the size of the transaction and shareholder records required), AIM
Distributors believes that it is appropriate and in the Funds' best interest
that such persons, and certain other persons whose purchases result in
relatively low expenses of distribution, be permitted to purchase Class A shares
of the Funds through AIM Distributors without payment of a sales charge. The
persons who may purchase Class A shares of the Funds without a sales charge are
under the caption "Reduction in Initial Sales Charges - Purchases at Net Asset
Value."
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Complete information concerning the method of exchanging shares of the
Funds for shares of the other AIM Funds is set forth in each Prospectus under
the heading "Exchanging Shares."
Information concerning redemption of the Funds' shares is set forth in
the Prospectus under the heading "Redeeming Shares - How to Redeem Shares."
Shares of the AIM Funds may be redeemed directly through AIM Distributors or
through any dealer who has entered into an agreement with AIM Distributors. In
addition to the Funds' obligation to redeem shares, AIM Distributors may also
repurchase shares as an accommodation to shareholders. To effect a repurchase,
those dealers who have executed Selected Dealer Agreements with AIM Distributors
must phone orders to the order desk of the Fund (Telephone: (800) 959-4246) and
guarantee delivery of all required documents in good order. A repurchase is
effected at the net asset value per share of a Fund next determined after the
repurchase order is received. Such arrangement is subject to timely receipt by
AFS, the Funds' transfer agent, of all required documents in good order. If such
documents are not received within a reasonable time after the order is placed,
the order is subject to cancellation. While there is no charge imposed by the
Funds or by AIM Distributors (other than any applicable CDSC) when shares are
redeemed or repurchased, dealers may charge a fair service fee for handling the
transaction. AIM may redeem all shares of Aggressive Growth Fund, Asian Fund,
European Fund, Equity Fund and Growth Fund in cash.
The right of redemption may be suspended or the date of payment
postponed when (a) trading on the New York Stock Exchange ("the NYSE ") is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the NYSE is closed for other than customary weekend and holiday closings, (c)
the SEC has by order permitted such suspension, or (d) an emergency as
determined by the SEC exists making disposition of portfolio securities or the
valuation of the net assets of a Fund not reasonably practicable.
BACKUP WITHHOLDING
Accounts submitted without a correct, certified taxpayer identification
number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8
(for non-resident aliens) or Form W-9 (certifying exempt status) accompanying
the registration information will generally be subject to backup withholding.
Each AIM Fund, and other payers, must, according to IRS regulations,
withhold 31% of redemption payments and reportable dividends (whether paid or
accrued) in the case of any shareholder who fails to provide the Fund with a
taxpayer identification number ("TIN") and a certification that he is not
subject to backup withholding.
An investor is subject to backup withholding if:
(1) the investor fails to furnish a correct TIN to the Fund, or
(2) the IRS notifies the Fund that the investor furnished an incorrect
TIN, or
(3) the investor or the Fund is notified by the IRS that the investor
is subject to backup withholding because the investor failed to
report all of the interest and dividends on such investor's tax
return (for reportable interest and dividends only), or
(4) the investor fails to certify to the Fund that the investor is not
subject to backup withholding under (3) above (for reportable
interest and dividend accounts opened after 1983 only), or
(5) the investor does not certify his TIN. This applies only to
non-exempt mutual fund accounts opened after 1983.
Interest and dividend payments are subject to backup withholding in all
five situations discussed above. Redemption proceeds and long-term distributions
are subject to backup withholding only if (1) (2) or (5) above applies.
Certain payees and payments are exempt from backup withholding and
information reporting. A complete listing of such exempt entities appears in the
Instructions for the Requester of Form W-9 (which can be obtained from the IRS)
and includes, among others, the following:
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o a corporation
o an organization exempt from tax under Section 501(a), an
individual retirement plan (IRA), or a custodial account under
Section 403(b)(7)
o the United States or any of its agencies or instrumentalities
o a state, the District of Columbia, a possession of the United
States, or any of their political subdivisions or
instrumentalities
o a foreign government or any of its political subdivisions,
agencies or instrumentalities
o an international organization or any of its agencies or
instrumentalities
o a foreign central bank of issue
o a dealer in securities or commodities required to register in the
U.S. or a possession of the U.S.
o a futures commission merchant registered with the Commodity
Futures Trading Commission
o a real estate investment trust
o an entity registered at all times during the tax year under the
1940 Act
o a common trust fund operated by a bank under Section 584(a)
o a financial institution
o a middleman known in the investment community as a nominee or
listed in the most recent publication of the American Society of
Corporate Secretaries, Inc., Nominee List
o a trust exempt from tax under Section 664 or described in Section
4947
Investors should contact the IRS if they have any questions concerning
entitlement to an exemption from backup withholding.
NOTE: Section references are to sections of the Code.
IRS PENALTIES - Investors who do not supply the AIM Funds with a
correct TIN will be subject to a $50 penalty imposed by the IRS unless such
failure is due to reasonable cause and not willful neglect. If an investor
falsifies information on this form or makes any other false statement resulting
in no backup withholding on an account which should be subject to backup
withholding, such investor may be subject to a $500 penalty imposed by the IRS
and to certain criminal penalties including fines and/or imprisonment.
NONRESIDENT ALIENS - Nonresident alien individuals and foreign entities
are not subject to the backup withholding previously discussed, but must certify
their foreign status by attaching IRS Form W-8 to their application. Form W-8
remains in effect for three calendar years beginning with the calendar year in
which it is received by the Fund. Such shareholders may, however, be subject to
federal income tax withholding at a 30% rate on ordinary income dividends and
distributions and return of capital distributions. Under applicable treaty law,
residents of treaty countries may qualify for a reduced rate of withholding or a
withholding exemption.
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NET ASSET VALUE DETERMINATION
In accordance with the current rules and regulations of the SEC, the
net asset value of a share of each Fund is determined once daily as of the close
of the customary trading session of the NYSE (generally 4:00 p.m. Eastern Time),
on each business day of the Fund. In the event the NYSE closes early (i.e.,
before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a
Fund share is determined as of the close of the customary trading session of the
NYSE on such day. For purposes of determining net asset value per share, futures
and options contract closing prices which are available fifteen (15) minutes
after the close of the customary trading session on the NYSE will generally be
used. The net asset values per share of the Classes will differ because
different expenses are attributable to each class. The income or loss and the
expenses (except those listed below) of a Fund are allocated to each class on
the basis of the net assets of the Fund allocable to each such class, calculated
as of the close of business on the previous business day, as adjusted for the
current day's shareholder activity of each class. Distribution and service fees
and transfer agency fees (to the extent different rates are charged to different
classes) are allocated only to the class to which such expenses relate. The net
asset value per share of a class is determined by subtracting the liabilities
(e.g., the expenses) of the Fund allocated to the class from the assets of the
Fund allocated to the class and dividing the result by the total number of
shares outstanding of such class. Determination of each Fund's net asset value
per share is made in accordance with generally accepted accounting principles.
A security listed or traded on an exchange (except convertible bonds)
is valued at its last sales price on the exchange where the security is
principally traded or, lacking any sales on a particular day, the security is
valued at the closing bid price on that day, prior to the determination of net
asset value. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market system) is valued on
the basis of prices provided by independent pricing services. Each security
reported on the NASDAQ National Market System is valued at the last sales price
on the valuation date, or lacking a last sale, at the closing bid price on that
day; option contracts are valued at the mean between the closing bid and asked
prices on the exchange where the contracts are principally traded; futures
contracts are valued at final settlement price quotations from the primary
exchange on which they are traded. 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 dividend rate, yield, type of issue, coupon rate and maturity date.
Securities for which market quotations are not readily available or for which
market quotations are not reflective of fair value are valued at fair value as
determined in good faith by or under the supervision of the Company's officers
in a manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having sixty (60) days or less to maturity are valued at
amortized cost, which approximates market value. (See also "Purchasing Shares-
How to Purchase Shares," and "Redeeming Shares - How to Redeem Shares" and
"Pricing of Shares" in each Prospectus.)
Generally, trading in foreign securities, as well as corporate bonds,
U.S. Government securities and money market instruments, is substantially
completed each day at various times prior to the close of the customary trading
session of the NYSE. The values of such securities used in computing the net
asset value of a Fund's shares are determined as of such times. Foreign currency
exchange rates are also generally determined prior to the close of the customary
trading session of the NYSE. 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 customary trading session of the NYSE which will
not be reflected in the computation of the Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value as determined in good faith
by or under the supervision of the Board of Directors.
Fund securities primarily traded in foreign markets may be traded in
such markets on days which are not business days of the Fund. Because the net
asset value per share of each Fund is determined
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only on business days of the Fund, the net asset value per share of a Fund may
be significantly affected on days when an investor can not exchange or redeem
shares of the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
Income dividends and capital gains distributions are automatically
reinvested in additional shares of the same class of each Fund unless the
shareholder has requested in writing to receive such dividends and distributions
in cash or that they be invested in shares of another AIM Fund, subject to the
terms and conditions set forth in each Prospectus under the caption "Special
Plans - Automatic Investment Plan," and "Special Plans-Automatic Dividend
Investment." If a shareholder's account does not have any shares in it on a
dividend or capital gains distribution payment date, the dividend or
distribution will be paid in cash whether or not the shareholder has elected to
have such dividends or distributions reinvested.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting each Fund and its shareholders that are not
described in each Fund's Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of each Fund or its shareholders, and the
discussion here and in each Fund's Prospectus is not intended as a substitute
for careful tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each Fund intends to qualify each year as a regulated investment
company under Part I of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). In order to qualify for tax treatment as a regulated
investment company under the Code, each Fund is required, among other things, to
derive at least 90% of its gross income in each taxable year from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies and other
income (including but not limited to gains from options, futures or forward
contracts derived with respect to the Fund's business of investing in such
stock, securities or currencies) (the "Income Requirement"). Foreign currency
gains (including gains from options, futures or forward contracts on foreign
currencies) that are not "directly related" to a Fund's principal business may,
under regulations not yet issued, not be qualifying income for purposes of the
Income Requirement.
At the close of each quarter of its taxable year, at least 50% of the
value of each Fund's assets must consist of cash and cash items, U.S. Government
securities, securities of other regulated investment companies, and securities
of other issuers (as to which the Fund has not invested more than 5% of the
value of its total assets in securities of such issuer and as to which the Fund
does not hold more than 10% of the outstanding voting securities of such
issuer), and no more than 25% of the value of its total assets may be invested
in the securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which the Fund controls and which are engaged in the same or similar trades or
businesses (the "Asset Diversification Test"). For purposes of the Asset
Diversification Test, it is unclear under present law who should be treated as
the issuer of forward foreign currency exchange contracts, of options on foreign
currencies, or of foreign currency futures and related options. It has been
suggested that the issuer in each case may be the foreign central bank or
foreign government backing the particular currency. Consequently, a Fund may
find it necessary to seek a ruling from the Internal Revenue Service on this
issue or to curtail its trading in forward foreign currency exchange contracts
in order to stay within the limits of the Asset Diversification Test.
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If for any taxable year a Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and
such distributions will be taxable as ordinary dividends to the extent of the
Fund's current and accumulated earnings and profits. Such distributions will be
eligible for the dividends received deduction in the case of corporate
shareholders.
FUND DISTRIBUTIONS
Under the Code, each Fund is exempt from U.S. federal income tax on its
net investment income and realized capital gains which it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (net investment income, net foreign currency ordinary
gain or loss and the excess of net short-term capital gain over net long-term
capital loss) and its net exempt-interest income for the year. Distributions of
investment company taxable income will be taxable to shareholders as ordinary
income, regardless of whether such distributions are paid in cash or are
reinvested in shares.
Each Fund also intends to distribute to shareholders substantially all
of the excess of its net long-term capital gain over net short-term capital loss
as a capital gain dividend. Capital gain dividends are taxable to shareholders
as a long-term capital gain, regardless of the length of time a shareholder has
held his shares.
Treasury regulations permit a regulated investment company, in
determining its investment company taxable income and undistributed net capital
gain for any taxable year, to elect to treat all or part of any net capital
loss, any net long-term capital loss, or any net foreign currency loss incurred
after October 31 as if it had been incurred in the succeeding year.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to distribute in each calendar year an amount equal to 98%
of their ordinary taxable income for the calendar year plus 98% of their
"capital gain net income" (excess of capital gains over capital losses) for the
one-year period ending on October 31 of such calendar year. The balance of such
income must be distributed during the next calendar year. For the foregoing
purposes, a regulated investment company is treated as having distributed any
amount on which it is subject to income tax for any taxable year ending in such
calendar year.
For purposes of the excise tax, a regulated investment company shall
(1) offset a net ordinary loss (but not below the net capital gain) for any
calendar year in determining its capital gain net income for the one-year period
ending on October 31 of such calendar year and (2) exclude foreign currency
gains and losses incurred after October 31 of any year in determining the amount
of ordinary taxable income for the current calendar year (and, instead, to
include such gains and losses in determining ordinary taxable income for the
succeeding calendar year). Each Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and capital gain net income
prior to the end of each calendar year to avoid liability for the excise tax.
INVESTMENT IN FOREIGN FINANCIAL INSTRUMENTS
Under Code Section 988, gains or losses from certain foreign currency
forward contracts or fluctuations in exchange rates will generally be treated as
ordinary income or loss. Such Code Section 988 gains or losses will increase or
decrease the amount of a Fund's investment company taxable income available to
be distributed to shareholders as ordinary income, rather than increasing or
decreasing the amount of the Fund's net capital gains. Additionally, if Code
Section 988 losses exceed other investment company taxable income during a
taxable year, the Fund would not be able to pay any ordinary income dividends,
and any such dividends paid before the losses were realized, but in the same
taxable year, would be recharacterized as a return of capital to shareholders,
thereby reducing the tax basis of Fund shares.
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HEDGING TRANSACTIONS
Some of the forward foreign currency exchange contracts, options and
futures contracts that the Funds may enter into will be subject to special tax
treatment as "Section 1256 contracts." Section 1256 contracts are treated as if
they are sold for their fair market value on the last business day of the
taxable year, regardless of whether a taxpayer's obligations (or rights) under
such contracts have terminated (by delivery, exercise, entering into a closing
transaction or otherwise) as of such date. Any gain or loss recognized as a
consequence of the year-end deemed disposition of Section 1256 contracts is
combined with any other gain or loss that was previously recognized upon the
termination of Section 1256 contracts during that taxable year. The net amount
of such gain or loss for the entire taxable year (including gain or loss arising
as a consequence of the year-end deemed sale of such contracts) is deemed to be
60% long-term (taxable at a maximum 20% to non-corporate shareholders) and 40%
short-term gain or loss. However, in the case of Section 1256 contracts that are
forward foreign currency exchange contracts, the net gain or loss is separately
determined and (as discussed above) can be treated as ordinary income or loss.
The Funds may engage in certain hedging transactions (such as short
sales "against the box") that may be subject to special tax treatment as
"constructive sales" under Section 1259 of the Code if a Fund holds certain
"appreciated financial positions" (defined generally as any interest (including
a future or forward contract, short sale or option) with respect to stock,
certain debt instruments, or partnership interest if there would be a gain were
such interest sold, assigned, or otherwise terminated at its fair market value.)
Upon entering into a constructive sales transaction with respect to an
appreciated financial position, a Fund will be deemed to have constructively
sold such appreciated financial position and will recognize gain as if such
position were sold, assigned or otherwise terminated at its fair market value on
the date of such constructive sale (and will generally take into account any
gain in the taxable year which includes such date ).
Other hedging transactions in which the Funds may engage may result in
"straddles" or "conversion transactions" for U.S. federal income tax purposes.
The straddle and conversion transaction rules may affect the character of gains
(or in the case of the straddle rules, losses) realized by the Funds. In
addition, losses realized by the Funds on positions that are part of a straddle
may be deferred under the straddle rules, rather than being taken into account
in calculating the taxable income for the taxable year in which the losses are
realized. Because only a few regulations implementing the straddle rules and the
conversion transaction rules have been promulgated, the tax consequences to the
Funds of hedging transactions are not entirely clear. The hedging transactions
may increase the amount of short-term capital gain realized by the Funds (and,
if they are conversion transactions, the amount of ordinary income) which is
taxed as ordinary income when distributed to shareholders.
Each Fund may make one or more of the elections available under the
Code which are applicable to straddles. If a Fund makes any of the elections,
the amount, character, and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of any of the foregoing rules governing Section
1256 contracts, constructive sales, straddle and conversion transactions may
affect the character of gains or losses, defer losses and/or accelerate the
recognition of gains or losses from the affected investment or straddle
positions, the amount which must be distributed to shareholders and which will
be taxed to shareholders as ordinary income or long-term capital gain may be
increased or decreased as compared to a fund that did not engage in such
transactions.
PFIC INVESTMENTS
Each Fund may invest in stocks of foreign companies that are
classified under the Code as passive foreign investment companies ("PFICs"). In
general, a foreign company is classified as a PFIC if at least one-half of its
assets constitute investment-type assets or 75% or more of its gross income is
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<PAGE> 205
investment-type income. Under the PFIC rules, an "excess distribution" received
with respect to PFIC stock is treated as having been realized ratably over the
period during which the Fund held the PFIC stock. The Fund itself will be
subject to tax on the portion, if any, of the excess distribution that is
allocated to the Fund's holding period in prior taxable years (and an interest
factor will be added to the tax, as if the tax had actually been payable in such
prior taxable years) even though the Fund distributes the corresponding income
to shareholders. Excess distributions include any gain from the sale of PFIC
stock as well as certain distributions from a PFIC. All excess distributions are
taxable as ordinary income.
Each Fund can elect alternative tax treatment with respect to PFIC
stock. Under one such election (the "QEF Election"), a Fund generally would be
required to include in its gross income its share of the earnings of a PFIC on a
current basis, regardless of whether any distributions are received from the
PFIC. Because the QEF Election imposes substantial requirements on the PFIC, it
is unlikely that a fund will be able to make the QEF Election. For taxable years
beginning after December 31, 1997, each Fund will alternatively be able to make
an election to mark any shares of PFIC stock that it holds to market (the
"Section 1296 Election"). If the Section 1296 election is made with respect to
any PFIC stock, a Fund will recognize ordinary income to the extent that the
fair market value of such PFIC stock at the close of any taxable year exceeds
its adjusted basis and will also recognize ordinary income in the event that it
disposes of any shares of such PFIC stock at a gain. In each case, such ordinary
income will be treated as dividend income for purposes of the Income
Requirement. A Fund making the Section 1296 Election with respect to any PFIC
stock will similarly recognize a deductible ordinary loss to the extent that the
adjusted basis of such PFIC stock exceeds its fair market value at the close of
any taxable year and will also recognize a deductible ordinary loss in the event
that it disposes of such PFIC stock at a loss. However, the amount of any
ordinary loss recognized by a Fund making a Section 1296 Election with respect
to any PFIC stock may not exceed the amount of ordinary income previously
recognized by such Fund by reason of marking such PFIC stock to market. If
either the QEF Election or the Section 1296 Election is made, the special rules,
discussed above, relating to the taxation of excess distributions, would not
apply. The Funds' intentions to qualify annually as regulated investment
companies may limit their ability to invest and hold PFIC stock.
Because the application of the PFIC rules may affect, among other
things, the character of gains, the amount of gain or loss and the timing of the
recognition of income with respect to PFIC stock, as well as subject the Funds
themselves to tax on certain income from PFIC stock, the amount that must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gains, may be increased or decreased substantially
as compared to a fund that did not invest in PFIC stock.
REDEMPTION OR EXCHANGE OF SHARES
Upon a redemption or exchange of shares, a shareholder will recognize
a taxable gain or loss depending upon his or her basis in the shares. Unless the
shares are disposed of as part of a conversion transaction, such gain or loss
will be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands and will be long-term or short-term, depending upon the
shareholder's holding period for the shares. Except to the extent otherwise
provided in future Treasury regulations any long-term capital gain recognized by
a non-corporate shareholder will be subject to tax at a maximum rate of 20%. Any
loss recognized by a shareholder on the sale of Fund shares held six months or
less will be treated as a long-term capital loss to the extent of any
distributions of net capital gains received by the shareholder with respect to
such shares.
If a shareholder exercises the exchange privilege within 90 days of
acquiring Class A shares, then the loss such shareholder recognizes on the
exchange will be reduced (or the gain increased) to the extent the sales charge
paid upon the purchase of Class A shares reduces any charge such shareholder
would have owed upon purchase of the new Class A shares in the absence of the
exchange privilege. Instead, such sales charge will be treated as an amount paid
for the new Class A shares. In addition, any loss recognized on a sale or
exchange will be disallowed to the extent that disposed Class A shares, Class B
shares or Class C shares are replaced within the 61-day period beginning 30 days
before and
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<PAGE> 206
ending 30 days after the disposition of such shares. In such a case, the basis
of the shares acquired will be increased to reflect the disallowed loss.
Shareholders should particularly note that this loss disallowance rule applies
even where shares are automatically replaced under the dividend reinvestment
plan.
FOREIGN INCOME TAXES
Investment income received by each Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Funds to a reduced rate of, or exemption from, taxes on such income.
It is impossible to determine the effective rate of foreign tax in advance since
the amount of a Fund's assets to be invested in various countries is not known.
If more than 50% of the value of a Fund's total assets at the close of
each taxable year consists of the stock or securities of foreign corporations,
the Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant to
the Foreign Tax Election, shareholders will be required (i) to include in gross
income, even though not actually received, their respective pro-rata shares of
the foreign income taxes paid by the Fund that are attributable to any
distributions they receive; and (ii) either to deduct their pro-rata share of
foreign taxes in computing their taxable income, or to use it (subject to
various Code limitations) as a foreign tax credit against Federal income tax
(but not both). No deduction for foreign taxes may be claimed by a non-corporate
shareholder who does not itemize deductions or who is subject to alternative
minimum tax.
Unless certain requirements are met, a credit for foreign taxes is
subject to the limitation that it may not exceed the shareholder's U.S. tax
(determined without regard to the availability of the credit) attributable to
the shareholder's foreign source taxable income. In determining the source and
character of distributions received from a Fund for this purpose, shareholders
will be required to allocate Fund distributions according to the source of the
income realized by the Fund. Each Fund's gains from the sale of stock and
securities and certain currency fluctuation gains and losses will generally be
treated as derived from U.S. sources. In addition, the limitation on the foreign
tax credit is applied separately to foreign source "passive" income, such as
dividend income. Moreover, no foreign tax credits will be allowable to any
shareholder who has not held his shares of the Fund for at least 16 days during
the 30-day period beginning 15 days before the day such shares become
ex-dividend with respect to any Fund distribution to which foreign income taxes
are attributed (taking into account certain holding period reduction
requirements of the Code). Because of these limitations, shareholders may be
unable to claim a credit for the full amount of their proportionate shares of
the foreign income taxes paid by a Fund.
BACKUP WITHHOLDING
Under certain provisions of the Code, the Funds may be required to
withhold 31% of reportable dividends, capital gains distributions and redemption
payments ("backup withholding"). Generally, shareholders subject to backup
withholding will be those for whom a certified taxpayer identification number is
not on file with the Company or who, to the Company's knowledge, have furnished
an incorrect number, or who have been notified by the Internal Revenue Service
that they are subject to backup withholding. When establishing an account, an
investor must provide his or her taxpayer identification number and certify
under penalty of perjury that such number is correct and that he or she is not
otherwise subject to backup withholding. Corporate shareholders and other
shareholders specified in the Code are exempt from backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against a shareholder's U.S. federal income tax liability.
REINSTATEMENT PRIVILEGE
For federal income tax purposes, exercise of your reinstatement
privilege may increase the amount of gain or reduce the amount of loss
recognized in the original redemption transaction, because
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<PAGE> 207
the initial sales charge will not be taken into account in determining such gain
or loss to the extent there has been a reduction in the initial sales charge
payable upon reinvestment. Wash sale rules may also limit the amount of loss
recognized.
FOREIGN SHAREHOLDERS
Dividends from a Fund's investment company taxable income and
distributions constituting returns of capital paid to a nonresident alien
individual, a foreign trust or estate, foreign corporation, or foreign
partnership (a "foreign shareholder") generally will be subject to U.S.
withholding tax at a rate of 30% (or lower treaty rate) upon the gross amount of
the dividend. Foreign shareholders may be subject to U.S. withholding tax at a
rate of 30% on the income resulting from the Fund's election to treat any
foreign income taxes paid by it as paid by its shareholders, but may not be able
to claim a credit or deduction with respect to the withholding tax for the
foreign taxes treated as having been paid by them.
A foreign shareholder generally will not be subject to U.S. taxation
on gain realized upon the redemption or exchange of shares of a Fund or on
capital gain dividends. In the case of a foreign shareholder who is a
nonresident alien individual, however, gain realized upon the sale or redemption
of shares of a Fund and capital gain dividends ordinarily will be subject to
U.S. income tax if such individual is physically present in the U.S. for 183
days or more during the taxable year and certain other conditions are met. In
the case of a foreign shareholder who is a nonresident alien individual, the
Funds may be required to withhold U.S. federal income tax at a rate of 31%
unless proper notification of such shareholder's foreign status is provided.
Notwithstanding the foregoing, if distributions by the Funds are
effectively connected with a U.S. trade or business of a foreign shareholder,
then dividends from such Fund's investment company taxable income, capital
gains, and any gains realized upon the sale of shares of the Fund will be
subject to U.S. income tax at the graduated rates applicable to U.S. citizens or
domestic corporations.
Transfers by gift of shares of a Fund by a foreign shareholder who is
a nonresident alien individual will not be subject to U.S. federal gift tax. An
individual who, at the time of death, is a foreign shareholder will nevertheless
be subject to U.S. federal estate tax with respect to shares at the graduated
rates applicable to U.S. citizens and residents, unless a treaty exception
applies. In the absence of a treaty, there is a $13,000 statutory estate tax
credit.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisors with
respect to the particular tax consequences to them of an investment in any of
the Funds.
MISCELLANEOUS CONSIDERATIONS; EFFECT OF FUTURE LEGISLATION
The foregoing general discussion of federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect at the date
of this SAI. Future legislative or administrative changes or court decisions may
significantly change the conclusions expressed herein, and any such changes or
decisions may have a retroactive effect with respect to the transactions
contemplated herein.
Rules of state and local taxation of dividend and capital gain
distributions from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. Shareholders are urged to
consult their tax advisors as to the consequences of these and other U.S. state
and local tax rules affecting investments in the Funds.
SHAREHOLDER INFORMATION
This information supplements the discussion in each Fund's Prospectus
under the title "Shareholder Information."
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TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to
ensure that all orders are transmitted on a timely basis to the Transfer Agent.
Any loss resulting from the dealer's failure to submit an order within the
prescribed time frame will be borne by that dealer. If a check used to purchase
shares does not clear, or if any investment order must be canceled due to
nonpayment, the investor will be responsible for any resulting loss to an AIM
Fund or to AIM Distributors.
SHARES CERTIFICATES. AIM Funds will issue share certificates upon
written request to AFS. Otherwise, shares are held on the shareholder's behalf
and recorded on the Fund books. AIM Funds will not issue certificates for shares
held in prototype retirement plans.
SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all
shares are to be held by the Transfer Agent and all dividends and distributions
are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To
provide funds for payments made under the Systematic Withdrawal Plan, the
Transfer Agent redeems sufficient full and fractional shares at their net asset
value in effect at the time of each such redemption.
Payments under a Systematic Withdrawal Plan constitute taxable events.
Since such payments are funded by the redemption of shares, they may result in a
return of capital and in capital gains or losses, rather than in ordinary
income. Because sales charges are imposed on additional purchases of shares
(other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve
Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases
while a Systematic Withdrawal Plan is in effect.
Each AIM Fund bears its share of the cost of operating the Systematic
Withdrawal Plan.
Terms and Conditions of Exchanges. Normally, shares of an AIM Fund to
be acquired by exchange are purchased at their net asset value or applicable
offering price, as the case may be, determined on the date that such request is
received, but under unusual market conditions such purchases may be delayed for
up to five business days if it is determined that a fund would be materially
disadvantaged by an immediate transfer of the proceeds of the exchange. If a
shareholder is exchanging into a fund paying daily dividends, and the release of
the exchange proceeds is delayed for the foregoing five-day period, such
shareholder will not begin to accrue dividends until the sixth business day
after the exchange.
EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with
certain dealers and investment advisory firms to accept telephone instructions
to exchange shares between any of the AIM Funds. AIM Distributors reserves the
right to impose conditions on dealers or investment advisors who make telephone
exchanges of shares of the funds, including the condition that any such dealer
or investment advisor enter into an agreement (which contains additional
conditions with respect to exchanges of shares) with AIM Distributors. To
exchange shares by telephone, a shareholder, dealer or investment advisor who
has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a
shareholder is unable to reach AFS by telephone, he may also request exchanges
by telegraph or use overnight courier services to expedite exchanges by mail,
which will be effective on the business day received by the Transfer Agent as
long as such request is received prior to NYSE Close. The Transfer Agent and AIM
Distributors may in certain cases be liable for losses due to unauthorized or
fraudulent transactions if they do not follow reasonable procedures for
verification of telephone transactions. Such reasonable procedures may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transaction.
By signing an account application form, an investor appoints the
Transfer Agent as his true and lawful attorney-in-fact to surrender for
redemption any and all unissued shares held by the Transfer Agent in the
designated account(s), or in any other account with any of the AIM Funds,
present or future, which has the identical registration as the designated
account(s), with full power of substitution in the premises.
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The Transfer Agent and AIM Distributors are thereby authorized and directed to
accept and act upon any telephone redemptions of shares held in any of the
account(s) listed, from any person who requests the redemption proceeds to be
applied to purchase shares in any one or more of the AIM Funds, provided that
such fund is available for sale and provided that the registration and mailing
address of the shares to be purchased are identical to the registration of the
shares being redeemed. An investor acknowledges by signing the form that he
understands and agrees that the Transfer Agent and AIM Distributors may not be
liable for any loss, expense or cost arising out of any telephone exchange
requests effected in accordance with the authorization set forth in these
instructions if they reasonably believe such request to be genuine, but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for verification of telephone transactions may include
recordings of telephone transactions (maintained for six months), requests for
confirmation of the shareholder's Social Security Number and current address,
and mailings of confirmations promptly after the transactions. The Transfer
Agent reserves the right to modify or terminate the telephone exchange privilege
at any time without notice. An investor may elect not to have this privilege by
marking the appropriate box on the application. Then any exchanges must be
effected in writing by the investor.
REDEMPTIONS BY TELEPHONE. By signing an account application form, an
investor appoints the Transfer Agent as his true and lawful attorney-in-fact to
surrender for redemption any and all unissued shares held by the Transfer Agent
in the designated account(s), present or future, with full power of substitution
in the premises. The Transfer Agent and AIM Distributors are thereby authorized
and directed to accept and act upon any telephone redemptions of shares held in
any of the account(s) listed, from any person who requests the redemption. An
investor acknowledges by signing the form that he understands and agrees that
the Transfer Agent and AIM Distributors may not be liable for any loss, expense
or cost arising out of any telephone redemption requests effected in accordance
with the authorization set forth in these instructions if they reasonably
believe such request to be genuine, but may in certain cases be liable for
losses due to unauthorized or fraudulent transactions. Procedures for
verification of telephone transactions may include recordings of telephone
transactions (maintained for six months), requests for confirmation of the
shareholder's Social Security Number and current address, and mailings of
confirmations promptly after the transactions. The Transfer Agent reserves the
right to cease to act as attorney-in-fact subject to this appointment, and AIM
Distributors reserves the right to modify or terminate the telephone redemption
privilege at any time without notice. An investor may elect not to have this
privilege by marking the appropriate box on the application. Then any
redemptions must be effected in writing by the investor.
SIGNATURE GUARANTEES. In addition to those circumstances listed in the
"Shareholder Information" section of each Fund's Prospectus, signature
guarantees are required in the following situations: (1) requests to transfer
the registration of shares to another owner; (2) telephone exchange and
telephone redemption authorization forms; (3) changes in previously designated
wiring or electronic funds transfer instructions; and (4) written redemptions or
exchanges of shares previously reported as lost, whether or not the redemption
amount is under $50,000 or the proceeds are to be sent to the address of record.
The AIM Funds may waive or modify any signature guarantee requirements at any
time.
Acceptable guarantors include banks, broker-dealers, credit unions,
national securities exchanges, savings associations and any other organization,
provided that such institution or organization qualifies as an "eligible
guarantor institution" as that term is defined in rules adopted by the SEC, and
further provided that such guarantor institution is listed in one of the
reference guides contained in the Transfer Agent's current Signature Guarantee
Standards and Procedures, such as certain domestic banks, credit unions,
securities dealers, or securities exchanges. The Transfer Agent will also accept
signatures with either: (1) a signature guaranteed with a medallion stamp of the
STAMP Program, or (2) a signature guaranteed with a Medallion Stamp of the NYSE
Medallion Signature Program, provided that in either event, the amount of the
transaction involved does not exceed the surety coverage amount indicated on the
medallion. For information regarding whether a particular institution or
organization qualifies as an "eligible guarantor institution," an investor
should contact the Client Services Department of AFS.
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Transactions by Internet. An investor may effect transactions in his
account through the Internet by selecting the AIM Internet Connect option on his
completed account application form or completing an AIM Internet Connect
Authorization Form. By signing either form the investor acknowledges and agrees
that the Transfer Agent and AIM Distributors will not be liable for any loss,
expense or cost arising out of any internet transaction effected in accordance
with the instructions set forth in the forms if they reasonably believe such
request to be genuine. Procedures for verification of internet transactions
include requests for confirmation of the shareholder's personal identification
number and mailing of confirmations promptly after the transactions. The
investor also acknowledges that (1) if he no longer wants the AIM Internet
Contract option, he will notify the Transfer Agent in writing, and (2) the AIM
Internet Connect option may be terminated at any time by the AIM Funds.
DIVIDENDS AND DISTRIBUTIONS. In determining the amount of capital
gains, if any, available for distribution, net capital gains are offset against
available net capital losses, if any, carried forward from previous fiscal
periods.
For funds that do not declare a dividend daily, such dividends and
distributions will be reinvested at the net asset value per share determined on
the ex-dividend date. For funds that declare a dividend daily, such dividends
and distributions will be reinvested at the net asset value per share determined
on the payable date.
Dividends on Class B and Class C shares are expected to be lower than
those for Class A shares or AIM Cash Reserve Shares because of higher
distribution fees paid by Class B and Class C shares. Dividends on all shares
may also be affected by other class-specific expenses.
Changes in the form of dividend and distribution payments may be made
by the shareholder at any time by notice to the Transfer Agent and are effective
as to any subsequent payment if such notice is received by the Transfer Agent
prior to the record date of such payment. Any dividend and distribution election
remains in effect until the Transfer Agent receives a revised written election
by the shareholder.
Any dividend or distribution paid by a fund which does not declare
dividends daily has the effect of reducing the net asset value per share on the
ex-dividend date by the amount of the dividend or distribution. Therefore, a
dividend or distribution declared shortly after a purchase of shares by an
investor would represent, in substance, a return of capital to the shareholder
with respect to such shares even though it would be subject to income taxes.
MISCELLANEOUS INFORMATION
CHANGES FOR CERTAIN ACCOUNT INFORMATION
The Transfer Agent may impose certain copying changes for requests for
copies of shareholder account statements and other historical account
information older than the current year and the immediately preceding year.
AUDIT REPORTS
The Board of Directors will issue to shareholders semi-annually the
Funds' financial statements. Financial statements, audited by independent
auditors, will be issued annually. The firm of KPMG LLP, 700 Louisiana, Houston,
Texas 77002, currently serves as the auditors of each Fund.
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LEGAL MATTERS
Legal matters for the Company are passed upon by Ballard Spahr Andrews
& Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company (the "Custodian"), 225 Franklin
Street, Boston, Massachusetts 02110, is custodian of all securities and cash of
the Funds. Under its contract with the Company relating to each Fund, the
Custodian is authorized to establish separate accounts in foreign currencies and
to cause foreign securities owned by each Fund to be held in its offices outside
the United States and with certain foreign banks and securities depositories.
The Custodian attends to the collection of principal and income, pays and
collects all monies for securities bought and sold by each Fund, and performs
certain other ministerial duties. AFS, a wholly owned subsidiary of AIM, P.O.
Box 4739, Houston, Texas 77210-4739, is the transfer and dividend disbursing
agent for the Class A, Class B and Class C shares of each of the Funds. Each
Fund pays the Custodian and the Transfer Agent such compensation as may be
agreed upon from time to time.
Chase Bank of Texas, N.A. (formerly, Texas Commerce Bank National
Association), 712 Main, Houston, Texas 77002, serves as Sub-Custodian for retail
purchases of the AIM Funds.
PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Company, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of each of the
Company's portfolios as of February 1, 2000, and the amount of outstanding
shares held by such holders are set forth below:
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
FUND OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---- ---------------- ------------ --------------
<S> <C> <C> <C>
AIM International Merrill Lynch, Pierce, 35.92%** -0-
Equity Fund - Fenner & Smith
Class A shares FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
</TABLE>
- ------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a Fund
may be presumed to be in "control" of such Fund, as defined in the 1940
Act.
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<PAGE> 212
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
FUND OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---- ---------------- ------------ --------------
<S> <C> <C> <C>
Class B shares Merrill Lynch, Pierce, 33.01%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, 55.04%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
AIM Global Aggressive Merrill Lynch, Pierce 11.91% -0-
Growth Fund - Fenner & Smith
Class A shares FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, 23.01% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, 36.71%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
</TABLE>
- -------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
** A shareholder who holds 25% or more of the outstanding shares of a Fund
may be presumed to be in "control" of such Fund, as defined in the 1940
Act.
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<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
FUND OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---- ---------------- ------------ --------------
<S> <C> <C> <C>
AIM Global Growth Merrill Lynch, Pierce, 9.22% -0-
Fund - Fenner & Smith
Class A shares FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, 17.19% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce 28.07%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
AIM Global Income Fund -
Class B shares Merrill Lynch Pierce 5.39% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
Class C shares Lewco Securities Corp. 7.79% -0-
FBO a/c # WB5-800453-0-01
34 Exchange Place, 4th Floor
Jersey City, New Jersey 07311
Merrill Lynch Pierce 7.53% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
</TABLE>
- -----------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
81
<PAGE> 214
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
FUND OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---- ---------------- ------------ --------------
<S> <C> <C> <C>
AIM European Merrill Lynch, Pierce, 5.84% -0-
Development Fund - Fenner & Smith
Class A shares FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch Pierce 9.90% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, 14.02% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
3rd Floor
Jacksonville, FL 32246
AIM Asian Growth Fund - Merrill Lynch Pierce 6.67% -0-
Class A Shares Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch Pierce 7.94% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch Pierce 21.55% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 3rd Floor
Jacksonville, FL 32246
</TABLE>
- -----------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
82
<PAGE> 215
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
FUND OF RECORD OWNER RECORD ONLY* BENEFICIALLY
- ---- ---------------- ------------ --------------
<S> <C> <C> <C>
Robert A. Merkel and -0- 6.33%
Margaret M. Merkel Ttees
Robert A. Merkel and
Margaret M. Merkel Trust
Dtd. 05/27/94
5118 S. 288th Pl.
Auburn, WA 98001
</TABLE>
As of February 1, 2000, the directors and officers of the Company as a
group owned less than 1% of the outstanding shares of each class of Aggressive
Growth Fund, Growth Fund, Equity Fund, Income Fund, Asian Fund and European
Fund.
OTHER INFORMATION
Each Prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement which the portfolios
of the Company have filed with the SEC under the 1933 Act and the 1940 Act, and
reference is hereby made to the Registration Statement for further information
with respect to each portfolio of the Company and the securities offered hereby.
The Registration Statement is available for inspection by the public at the
Securities and Exchange Commission in Washington, D.C.
- -----------------
* The Company has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
83
<PAGE> 216
APPENDIX A
- --------------------------------------------------------------------------------
DESCRIPTION OF MONEY MARKET OBLIGATIONS
The following list does not purport to be an exhaustive list of all
Money Market Obligations, and the Funds reserve the right to invest in Money
Market Obligations other than those listed below:
1. GOVERNMENT OBLIGATIONS.
U.S. GOVERNMENT DIRECT OBLIGATIONS-- Bills, notes, and bonds issued by
the U.S. Treasury.
U.S. GOVERNMENT AGENCIES SECURITIES-- Certain federal agencies such as
the Government National Mortgage Association have been established as
instrumentalities of the U. S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States or are guaranteed by the Treasury or supported by the issuing agencies'
right to borrow from the Treasury.
FOREIGN GOVERNMENT OBLIGATIONS -- These are U.S. dollar denominated
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities that are determined
by the Fund's investment advisor to be of comparable quality to the other
obligations in which the Fund may invest. Such securities also include debt
obligations of supranational entities. Supranational entities include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related government agencies. Examples include the International
Bank for Reconstruction and Development (the World Bank), the European Coal and
Steel Community, the Asian Development Bank and the InterAmerican Development
Bank. The percentage of the Fund's assets invested in securities issued by
foreign governments will vary depending on the relative yields of such
securities, the economic and financial markets of the countries in which the
investments are made and the interest rate climate of such countries.
2. BANK INSTRUMENTS.
BANKERS' ACCEPTANCES -- A bill of exchange or time draft drawn on and
accepted by a commercial bank. It is used by corporations to finance the
shipment and storage of goods and to furnish dollar exchange. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT -- A negotiable interest-bearing instrument
with a specific maturity. Certificates of deposit are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market, prior to maturity.
TIME DEPOSITS -- A non-negotiable receipt issued by a bank in exchange
for the deposit of funds. Like a certificate of deposit, it earns a specified
rate of interest over a definite period of time; however, it cannot be traded in
the secondary market.
EURODOLLAR OBLIGATIONS -- A Eurodollar obligation is a U.S.
dollar-denominated obligation issued by a foreign branch of a domestic bank.
YANKEE DOLLAR OBLIGATIONS -- A Yankee dollar obligation is a U.S.
dollar-denominated obligation issued by a domestic branch of a foreign bank.
A-1
<PAGE> 217
3. COMMERCIAL INSTRUMENTS.
COMMERCIAL PAPER -- The term used to designate unsecured short-term
promissory notes issued by corporations and other entities. Maturities on these
issues vary from a few days to nine months.
MASTER DEMAND NOTES -- Master demand notes are demand notes that permit
investment of fluctuating amounts of money at variable rates of interest
pursuant to arrangements with the issuers. The interest rate on a master demand
note is periodically redetermined according to a prescribed formula. Although
there is no secondary market in master demand notes, the payee may demand
payment of the principal amount of the note on relatively short notice. Master
demand notes may be secured or unsecured.
4. REPURCHASE AGREEMENTS -- A repurchase agreement is a contractual
undertaking whereby the seller of securities (limited to U.S. Government
securities, including securities issued or guaranteed by the U.S. Treasury or
the various agencies and instrumentalities of the U.S. Government) agrees to
repurchase the securities at a specified price on a future date determined by
negotiations.
A-2
<PAGE> 218
APPENDIX B
- --------------------------------------------------------------------------------
DESCRIPTION OF CORPORATE BOND RATINGS
Investment grade debt securities are those rating categories indicated
by an asterisk (*).
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS ARE AS FOLLOWS:
*Aaa
Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
*Aa
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high grade bonds. These are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than the Aaa
securities.
*A
Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
*Baa
Bonds which are rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
B-1
<PAGE> 219
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca
Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in the Aa and A
groups when assigning ratings to industrial development bonds and bonds secured
by either a letter of credit or bond insurance. The modifier 1 indicates that
the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic rating category.
STANDARD AND POOR'S RATINGS SERVICES CLASSIFICATIONS ARE AS FOLLOWS:
*AAA
Debt rated "AAA" has the highest rating assigned by Standard & Poor's
("S&P"). Capacity to pay interest and repay principal is extremely strong.
*AA
Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in a small degree.
*A
Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
*BBB
Debt rated "BBB" regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher categories.
BB, B, CCC, CC, C
Debt rated "BB", "B", "CCC", "CC" and "C" is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
B-2
<PAGE> 220
BB
Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
B
Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
CCC
Debt rated "CCC" has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B-" rating.
CC
The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
C
The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
C1
The rating "C1" is reserved for income bonds on which no interest is
being paid.
D
Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal or principal payments are not made on the
date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.
PLUS (+) OR MINUS (-)
The rating from "AA" to "CCC" may be modified by the addition of a plus
or minus sign to show relative standing within the major categories.
B-3
<PAGE> 221
DUFF & PHELPS FIXED-INCOME RATINGS ARE AS FOLLOWS:
*AAA
Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
*AA+, AA AND AA-
High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions.
*A+, A AND A-
Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.
*BBB+, BBB AND BBB-
Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic cycles.
BB+, BB AND BB-
Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or down
frequently within this category.
B+, B AND B-
Below investment grade and possessing risk that obligations will not be
met when due. Financial protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company fortunes. Potential exists
for frequent changes in quality rating within this category or into a higher or
lower quality rating grade.
CCC
Well below investment grade securities. May be in default or have
considerable uncertainty as to timely payment of interest, preferred dividends
and/or principal. Protection factors are narrow and risk can be substantial with
unfavorable economic/industry conditions, and/or with unfavorable company
developments.
DD
Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP
Preferred stock with dividend arrearages.
B-4
<PAGE> 222
FITCH IBCA, INC.'S BOND RATINGS ARE AS FOLLOWS:
*AAA
Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
*AA
Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated "F-1+."
*A
Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
*BBB
Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
BB
Bonds are considered speculative. The obligor's ability to pay interest
and repay principal may be affected over time by adverse economic changes.
However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements.
B
Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.
CCC
Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC
Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C
Bonds are in imminent default in payment of interest or principal.
B-5
<PAGE> 223
DDD, DD, AND D
Bonds are in default on interest and/or principal payments. Such bonds
are extremely speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the obligor. "DDD" represents
the highest potential for recovery on these bonds, and "D" represents the lowest
potential for recovery.
PLUS (+) MINUS (-)
Plus and minus signs are used with a rating symbol to indicate the
relative position of a credit within the rating category. Plus and minus signs,
however, are not used in the "AAA", "DDD", "DD", or "D" categories.
B-6
<PAGE> 224
APPENDIX C
- --------------------------------------------------------------------------------
DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY
U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES
The following list includes certain common securities, issued or
guaranteed by U.S. Government Agencies or Instrumentalities and does not purport
to be exhaustive.
EXPORT-IMPORT BANK CERTIFICATES--are certificates of beneficial interest and
participation certificates issued and guaranteed by the Export-Import Bank of
the United States.
FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS--are bonds issued by a cooperatively
owned, nationwide system of banks and associations supervised by the Farm Credit
Administration, and independent agency of the U.S. Government.
FEDERAL HOME LOAN BANK NOTES AND BONDS--are notes and bonds issued by the
Federal Home Loan Bank System.
FHA DEBENTURES--are debentures issued by the Federal Housing Authority of the
U.S. Government.
FHA INSURED NOTES--are bonds issued by the Farmers Home Administration of the
U.S. Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS--are bonds issued and
guaranteed by FHLMC, a corporate instrumentality of the U.S. Government. The
Federal Home Loan Banks own all the capital stock of FHLMC, which obtains its
funds by selling mortgages (as well as participation interests in the mortgages)
and by borrowing funds through the issuance of debentures and otherwise.
FHLMC PARTICIPATION CERTIFICATES OF "FREDDIE MACS"--represent undivided
interests in specified groups of conventional mortgage loans (and/or
participation interests in those loans) underwritten and owned by FHLMC. At
least 95% of the aggregate principal balance of the whole mortgage loans and/or
participations in a group formed by FHLMC typically consists of single-family
mortgage loans, and not more than 5% consists of multi-family loans. FHLMC
Participation Certificates are not guaranteed by, and do not constitute a debt
or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC
Participation Certificates are issued in fully registered form only, in original
unpaid principal balances of $25,000, $100,000, $200,00, $500,000, $1 million
and $5 million. FHLMC guarantees to each registered holder of a Participation
Certificate, to the extent of such holder's pro rata share (i) the timely
payment of interest accruing at the applicable certificate rate on the unpaid
principal balance outstanding on the mortgage loans, and (ii) collection of all
principal on the mortgage loans without any offset or deductions. Pursuant to
these guaranties, FHLMC indemnifies holders of Participation Certificates
against any reduction in principal by reason of charges for property repairs,
maintenance, and foreclosure.
FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS--are bonds issued and
guaranteed by FNMA, a federally chartered and privately-owned corporation.
FNMA PASS-THROUGH CERTIFICATES OR "FANNIE-MAES"--are mortgage pass-through
certificates issued and guaranteed by FNMA. FNMA Certificates represent a
fractional undivided ownership interest in a pool of mortgage loans either
provided from FNMA's own portfolio or purchased from primary lenders. The
mortgage loans included in the pool are conventional, insured by the Federal
Housing Administration or guaranteed by the Veterans Administration. FNMA
Certificates are not backed by, nor entitled to, the full faith and credit of
the U.S. Government.
Loans not provided from FNMA's own portfolio are purchased only from
primary lenders that satisfy certain criteria developed by FNMA, including depth
of mortgage origination experience, servicing
C-1
<PAGE> 225
experience and financial capacity. FNMA may purchase an entire loan pool from a
single lender, and issue Certificates backed by that loan pool alone, or may
package a pool made up of loans purchased from various lenders.
Various types of mortgage loans, and loans with varying interest rates,
may be included in a single pool, although each pool will consist of mortgage
loans related to one-family or two-to-four family residential properties.
Substantially all FNMA mortgage pools currently consist of fixed interest rate
and growing equity mortgage loans, although FNMA mortgage pools may also consist
of adjustable interest rate mortgage loans or other types of mortgage loans.
Each mortgage loan must conform to FNMA's published requirements or guidelines
with respect to maximum principal amount, loan-to-loan value ratio, loan term,
underwriting standards and insurance coverage.
All mortgage loans are held by FNMA as trustee pursuant to a trust
indenture for the benefit of Certificate holders. The trust indenture gives FNMA
responsibility for servicing and administering the loans in a pool. FNMA
contracts with the lenders or other servicing institutions to perform all
services and duties customary to the servicing of mortgages, as well as duties
specifically prescribed by FNMA, all under FNMA supervision. FMNA may remove
service providers for cause.
The pass-through rate on FNMA Certificates is the lowest annual
interest rate borne y an underlying mortgage loan in the pool, less a fee to
FNMA as compensation for servicing and for FNMA's guarantee. Lenders servicing
the underlying mortgage loans receive as compensation a portion of the fee paid
to FNMA, the excess yields on pooled loans with coupon rates above the lowest
rate borne by any mortgage loan and certain other amounts collected, such as
late charges.
The minimum size of a FNMA pool is $1 million of mortgage loans.
Registered holders purchase Certificates in amounts not less than $25,000.
FNMA Certificates are marketed by the servicing lender banks, usually
through securities dealers. The lender of a single lender pool typically markets
all Certificates based on that pool, and lenders of multiple lender pools market
Certificates based on a pro rata interest in the aggregate pool. The amount of
FNMA Certificates currently outstanding is limited.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR "GINNIE
MAES"--are mortgage-backed securities which represent a partial ownership
interest in a pool of mortgage loans issued by lenders such as mortgage bankers,
commercial banks and savings and loan associations. Each mortgage loan included
in the pool is either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled, and, after being approved by GNMA, is offered to investors through
securities dealers. GNMA is a U.S. Government corporation within the Department
of Housing and Urban Development.
GNMA Certificates differ from bonds in that the principal is paid back
monthly by the borrower over the term of the loan rather than returned in a lump
sum at maturity. GNMA Certificates are called "modified pass-through" securities
because they entitle the holder to receive its proportionate share of all
interest and principal payments owed on the mortgage pool, net of fees paid to
the issuer and GNMA, regardless of whether or not the mortgagor actually makes
the payment. Payment of principal of and interest on GNMA Certificates of the
"modified pass-through" type is guaranteed by GNMA and backed by the full faith
and credit of the U.S. Government.
The average life of a GNMA Certificate is likely to be substantially
less than the original maturity of the mortgage pools underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return on the greater part of principal invested far in advance of
the maturity of the mortgages in the pool. Foreclosures impose little risk to
principal investment because of the GNMA guarantee.
C-2
<PAGE> 226
As the prepayment rates of individual mortgage pools will vary widely,
it is not possible to accurately predict the average lie of a particular issue
of GNMA Certificates. However, statistics published by the Federal Housing
Authority indicate that the average life of a single-family dwelling mortgage
with 25- to 30-year maturity, the type of mortgage which backs the vast majority
of GNMA Certificates, is approximately 12 years. It is therefore customary
practice to treat GNMA Certificates as 30-year mortgage-backed securities which
prepay fully in the twelfth year.
As a consequence of the fees paid to GNMA and the issuer of GNMA
Certificates, the coupon rate of interest rate of interest of GNMA Certificates
is lower than the interest paid on the VA-guaranteed or FHA-insured mortgages
underlying the Certificates.
The yield which will be earned on GNMA Certificates may vary from their
coupon rates for the following reasons: (i) Certificates may be issued at a
premium or discount, rather than at par; (ii) Certificates may trade in the
secondary market at a premium or discount after issuance; (iii) interest is
earned and compounded monthly which has the effect of raising the effective
yield earned on the Certificates; and (iv) the actual yield of each Certificate
is affected by prepayment of mortgages included in the mortgage pool underlying
the Certificates and the rate at which principal so prepaid is reinvested. In
addition, prepayment of mortgages included in the mortgage pool underlying a
GNMA Certificate purchased at a premium may result in a loss to the Fund.
Due to the large amount of GNMA Certificates outstanding and active
participation in the secondary market by securities dealers and investors, GNMA
Certificates are highly liquid instruments. Prices of GNMA Certificates are
readily available from securities dealers and depend on, among other things, the
level of market rates, the Certificate's coupon rate and the prepayment
experience of the pool of mortgages backing each Certificate.
GENERAL SERVICES ADMINISTRATION ("GSA") PARTICIPATION CERTIFICATES--are
participation certificates issued by the General Services Administration of the
U.S. Government.
MARITIME ADMINISTRATION BONDS--are bonds issued and provided by the Department
of Transportation of the U.S. Government.
NEW COMMUNITIES DEBENTURES--are debentures issued in accordance with the
provisions of Title IV of the Housing and Urban Development Act of 1968, as
supplemented and extended by Title VII of the Housing and Urban Development Act
of 1970, the payment of which guaranteed by the U.S. Government.
PUBLIC HOUSING NOTES AND BONDS--are short-term project notes and long-term bonds
issued by public housing and urban renewal agencies in connection with programs
administered by the Department of Housing and Urban Development of the U.S.
Government, the payment of which is secured by the U.S. Government.
SBA DEBENTURES--are debentures fully guaranteed as to principal and interest by
the Small Business Administration of the U.S. Government.
SLMA DEBENTURES--are debentures backed by the Student Loan Marketing
Association.
TITLE XI BONDS--are bonds issued in accordance with the provisions of Title XI
of the Merchant Marine Act of 1936, as amended, the payment of which is
guaranteed by the U.S. Government.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BOND--are bonds issued by
Washington Metropolitan Area Transit Authority and are guaranteed by the
Secretary of Transportation of the U.S. Government.
C-3
<PAGE> 227
FINANCIAL STATEMENTS
FS
<PAGE> 228
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of the AIM Asian Growth Fund (a portfolio of
AIM International Funds, Inc.) including the schedule of
investments, as of October 31, 1999, the related statement
of operations for the year then ended, the statement of
changes in net assets and financial highlights for the year
then ended and the period November 3, 1997 (date operations
commenced) through October 31, 1998. 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, 1999, 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 the AIM Asian
Growth Fund as of October 31, 1999, the results of its
operations for the year then ended, changes in its net
assets and financial highlights for the year then ended and
the period November 3, 1997 (date operations commenced)
through October 31, 1998, in conformity with generally
accepted accounting principles.
KPMG LLP
December 3, 1999
Houston, Texas
FS-1
<PAGE> 229
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-90.31%
AUSTRALIA-13.85%
Austar United Communications Ltd.
(Broadcasting-Television, Radio &
Cable)(a) 51,700 $ 168,195
- --------------------------------------------------------------
Brambles Industries Ltd. (Air
Freight) 25,800 725,790
- --------------------------------------------------------------
BRL Hardy Ltd. (Beverages-Alcoholic) 167,000 729,726
- --------------------------------------------------------------
Computershare Ltd.
(Computers-Software & Services) 196,800 715,571
- --------------------------------------------------------------
ERG Ltd. (Electrical Equipment) 325,000 1,281,222
- --------------------------------------------------------------
Foster's Brewing Group Ltd.
(Beverages-Alcoholic) 255,000 677,986
- --------------------------------------------------------------
James Hardie Industries Ltd.
(Building Materials) 212,000 513,892
- --------------------------------------------------------------
TABCORP Holdings Ltd. (Leisure Time
Products) 87,058 552,011
- --------------------------------------------------------------
Telstra Corp. Ltd. (Telephone) 162,700 522,045
- --------------------------------------------------------------
5,886,438
- --------------------------------------------------------------
HONG KONG-26.33%
ASM Pacific Technology Ltd.
(Machinery-Diversified) 600,000 706,737
- --------------------------------------------------------------
China Telecom Ltd.
(Telecommunications-
Cellular/Wireless)(a) 204,000 697,236
- --------------------------------------------------------------
Cosco Pacific Ltd.
(Financial-Diversified) 630,000 446,055
- --------------------------------------------------------------
Dah Sing Financial Group
(Banks-Regional) 182,800 729,496
- --------------------------------------------------------------
Dao Heng Bank Group Ltd.
(Banks-Regional) 148,500 674,817
- --------------------------------------------------------------
Esprit Asia Holdings Ltd.
(Retail-Stores) 820,000 770,587
- --------------------------------------------------------------
Giordano International Ltd.
(Retail-Specialty-Apparel) 839,500 891,579
- --------------------------------------------------------------
Guangdong Kelon Electrical Holdings
Co. Ltd. (Household Furniture &
Appliances) 446,000 396,159
- --------------------------------------------------------------
HKR International Ltd. (Land
Development) 516,600 392,366
- --------------------------------------------------------------
Hutchison Whampoa Ltd. (Retail-Food
Chains) 74,000 743,039
- --------------------------------------------------------------
Johnson Electric Holdings Ltd.
(Electrical Equipment) 137,000 740,722
- --------------------------------------------------------------
Kerry Properties Ltd. (Land
Development) 441,000 437,134
- --------------------------------------------------------------
Li & Fung Ltd. (Distributors-Food &
Health) 482,000 837,657
- --------------------------------------------------------------
Shenzhen Expressway Co. Ltd.
(Services-Commercial & Consumer) 2,402,000 358,687
- --------------------------------------------------------------
Shui On Construction and Materials
Ltd. (Construction-Cement &
Aggregates) 486,000 675,686
- --------------------------------------------------------------
Television Broadcasts Ltd.
(Broadcasting-Television, Radio &
Cable) 133,000 710,534
- --------------------------------------------------------------
Wing Hang Bank Ltd. (Banks-Major
Regional) 190,500 621,667
- --------------------------------------------------------------
Zhejiang Expressway Co. Ltd.
(Services-Commercial & Consumer) 2,356,000 357,884
- --------------------------------------------------------------
11,188,042
- --------------------------------------------------------------
INDIA-3.76%
ITC Ltd. (Tobacco) 19,600 371,420
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INDIA-(CONTINUED)
Satyam Infoway Ltd.-ADR
(Computers-Software & Services)(a) 12,000 $ 465,000
- --------------------------------------------------------------
Videsh Sanchar Nigam Ltd.-GDR
(Telecommunications-Cellular/Wireless) 47,600 760,410
- --------------------------------------------------------------
1,596,830
- --------------------------------------------------------------
INDONESIA-2.42%
Gulf Indonesia Resources Ltd.
(Oil-International Integrated)(a) 49,700 394,494
- --------------------------------------------------------------
PT Indofood Sukses Makmur Tbk
(Foods)(a) 536,000 633,348
- --------------------------------------------------------------
1,027,842
- --------------------------------------------------------------
NEW ZEALAND-1.21%
Sky Network Television Ltd.
(Broadcasting-Television, Radio,
Cable)(a) 283,000 430,698
- --------------------------------------------------------------
Sky Network Television Ltd.-ADR
(Broadcasting-Television, Radio &
Cable)(a) 5,400 81,675
- --------------------------------------------------------------
512,373
- --------------------------------------------------------------
PHILIPPINES-6.48%
Bank of the Philippine Islands
(Banks-Major Regional) 209,110 552,760
- --------------------------------------------------------------
Equitable PCI Bank (Banks-Major
Regional) 131,350 232,565
- --------------------------------------------------------------
International Container Terminal
Services, Inc. (Air Freight)(a) 2,873,000 275,837
- --------------------------------------------------------------
Jollibee Foods Corp. (Restaurants),
Wts., expiring 03/24/03(b) 1,605,000 610,380
- --------------------------------------------------------------
Manila Electric Co. (Electric Power) 181,300 497,332
- --------------------------------------------------------------
SM Prime Holdings, Inc. (Land
Development) 3,304,900 585,157
- --------------------------------------------------------------
2,754,031
- --------------------------------------------------------------
SINGAPORE-15.43%
Allgreen Properties Ltd.
(Homebuilding)(a) 690,000 585,133
- --------------------------------------------------------------
Datacraft Asia Ltd. (Communications
Equipment) 155,600 715,760
- --------------------------------------------------------------
DBS Group Holdings Ltd. (Banks-Money
Center) 63,127 713,771
- --------------------------------------------------------------
Keppel Corp. Ltd. (Engineering &
Construction) 231,000 627,967
- --------------------------------------------------------------
Keppel Land Ltd. (Land Development) 419,000 592,199
- --------------------------------------------------------------
Natsteel Electronics Ltd.
(Computers-Hardware) 105,500 412,432
- --------------------------------------------------------------
NatSteel Ltd. (Iron & Steel) 396,000 662,104
- --------------------------------------------------------------
OMNI Industries Ltd.
(Electronics-Component Distributors) 625,000 593,913
- --------------------------------------------------------------
Singapore Airlines Ltd. (Airlines) 57,000 603,356
- --------------------------------------------------------------
Singapore Press Holdings Ltd.
(Publishing-Newspapers) 38,000 651,350
- --------------------------------------------------------------
Venture Manufacturing Ltd.
(Electronics-Component Distributors) 45,000 400,553
- --------------------------------------------------------------
6,558,538
- --------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 230
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SOUTH KOREA-10.20%
Kookmin Bank (Banks-Major Regional) 52,000 $ 810,671
- --------------------------------------------------------------
Kookmin Bank (Banks-Major Regional),
Rts., expiring 11/04/99 5,223 31,787
- --------------------------------------------------------------
Korea Electric Power Corp.-ADR
(Electric Companies) 37,400 589,050
- --------------------------------------------------------------
Korea Telecom Corp.-ADR
(Telephone)(a) 21,904 772,116
- --------------------------------------------------------------
L.G. Chemical Ltd.
(Chemicals-Specialty) 23,800 720,250
- --------------------------------------------------------------
Pohang Iron & Steel Co. Ltd.-ADR
(Iron & Steel) 19,800 660,825
- --------------------------------------------------------------
Samsung Electronics
(Electronics-Component
Distributors) 4,500 750,313
- --------------------------------------------------------------
4,335,012
- --------------------------------------------------------------
TAIWAN-6.16%
Compal Electronics, Inc.
(Computers-Hardware) 193,550 649,845
- --------------------------------------------------------------
Far Eastern Textile Ltd.
(Chemicals-Diversified) 581,010 794,951
- --------------------------------------------------------------
Hon Hai Precision Industry Co. Ltd.
(Electronics-Component
Distributors)(a) 112,000 766,204
- --------------------------------------------------------------
Ritek Inc. (Consumer-Jewelry,
Novelties & Gifts)(a) 62,000 406,557
- --------------------------------------------------------------
2,617,557
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
THAILAND-4.47%
Advanced Info Service Public Co.
Ltd. (Telephone)(a) 56,000 $ 652,765
- --------------------------------------------------------------
PTT Exploration and Production
Public Co. Ltd. (Oil &
Gas-Exploration & Production) 77,000 562,466
- --------------------------------------------------------------
Siam Commercial Bank PLC, 5.25% Pfd.
(Banks-Regional)(a) 605,000 685,630
- --------------------------------------------------------------
1,900,861
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$31,193,627) 38,377,524
- --------------------------------------------------------------
MONEY MARKET FUNDS-7.33%
STIC Liquid Assets Portfolio(c) 1,557,615 1,557,615
- --------------------------------------------------------------
STIC Prime Portfolio(c) 1,557,615 1,557,615
- --------------------------------------------------------------
Total Money Market Funds (Cost
$3,115,230) 3,115,230
- --------------------------------------------------------------
TOTAL INVESTMENTS-97.64% 41,492,754
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-2.36% 1,004,345
- --------------------------------------------------------------
NET ASSETS-100.00% $42,497,099
- --------------------------------------------------------------
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
Pfd. - Preferred
Rts. - Rights
Wts. - Warrants
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(c)The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-3
<PAGE> 231
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$34,308,857) $41,492,754
- -----------------------------------------------------------
Foreign currencies, at value (cost $1,066,940) 1,062,360
- -----------------------------------------------------------
Receivables for:
Investments sold 451,237
- -----------------------------------------------------------
Capital stock sold 434,594
- -----------------------------------------------------------
Dividends and interest 10,643
- -----------------------------------------------------------
Investment for deferred compensation plan 7,658
- -----------------------------------------------------------
Other assets 26,195
- -----------------------------------------------------------
Total assets 43,485,441
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 754,485
- -----------------------------------------------------------
Capital stock reacquired 101,659
- -----------------------------------------------------------
Deferred compensation 7,658
- -----------------------------------------------------------
Accrued advisory fees 48,172
- -----------------------------------------------------------
Accrued administrative services fees 4,247
- -----------------------------------------------------------
Accrued directors' fees 716
- -----------------------------------------------------------
Accrued distribution fees 22,071
- -----------------------------------------------------------
Accrued transfer agent fees 15,101
- -----------------------------------------------------------
Accrued operating expenses 34,233
- -----------------------------------------------------------
Total liabilities 988,342
- -----------------------------------------------------------
Net assets applicable to shares outstanding $42,497,099
- -----------------------------------------------------------
NET ASSETS:
Class A $25,419,567
- -----------------------------------------------------------
Class B $12,069,543
- -----------------------------------------------------------
Class C $ 5,007,989
- -----------------------------------------------------------
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 2,361,340
- -----------------------------------------------------------
Class B:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 1,133,253
- -----------------------------------------------------------
Class C:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 471,104
- -----------------------------------------------------------
Class A:
Net asset value and redemption price per
share $ 10.76
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $10.76
divided by 94.50%) $ 11.39
- -----------------------------------------------------------
Class B:
Net asset value and offering price per share $ 10.65
- -----------------------------------------------------------
Class C:
Net asset value and offering price per share $ 10.63
- -----------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $99,541 foreign withholding
tax) $ 302,917
- -----------------------------------------------------------
Interest 65,008
- -----------------------------------------------------------
Total investment income 367,925
- -----------------------------------------------------------
EXPENSES:
Advisory fees 246,413
- -----------------------------------------------------------
Administrative services fees 74,007
- -----------------------------------------------------------
Custodian fees 62,478
- -----------------------------------------------------------
Directors' fees 7,780
- -----------------------------------------------------------
Distribution fees-Class A 61,006
- -----------------------------------------------------------
Distribution fees-Class B 64,087
- -----------------------------------------------------------
Distribution fees-Class C 20,619
- -----------------------------------------------------------
Transfer agent fees-Class A 61,457
- -----------------------------------------------------------
Transfer agent fees-Class B 36,637
- -----------------------------------------------------------
Transfer agent fees-Class C 11,787
- -----------------------------------------------------------
Registration and filing fees 61,091
- -----------------------------------------------------------
Other 71,023
- -----------------------------------------------------------
Total expenses 778,385
- -----------------------------------------------------------
Less: Fees waived and reimbursed by advisor (207,130)
- -----------------------------------------------------------
Expenses paid indirectly (853)
- -----------------------------------------------------------
Net expenses 570,402
- -----------------------------------------------------------
Net investment income (loss) (202,477)
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 935,968
- -----------------------------------------------------------
Foreign currencies (9,786)
- -----------------------------------------------------------
926,182
- -----------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 6,895,666
- -----------------------------------------------------------
Foreign currencies 1,173
- -----------------------------------------------------------
6,896,839
- -----------------------------------------------------------
Net gain from investment securities and
foreign currencies 7,823,021
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $7,620,544
- -----------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 232
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 1999 and the period November 3, 1997 (date
operations commenced)
through October 31, 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (202,477) $ 30,244
- -----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies 926,182 (1,687,076)
- -----------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 6,896,839 288,673
- -----------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 7,620,544 (1,368,159)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (43,024) --
- -----------------------------------------------------------------------------------------
Class B (3,910) --
- -----------------------------------------------------------------------------------------
Class C (898) --
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 12,107,278 8,755,042
- -----------------------------------------------------------------------------------------
Class B 7,604,535 3,340,169
- -----------------------------------------------------------------------------------------
Class C 3,780,454 705,068
- -----------------------------------------------------------------------------------------
Net increase in net assets 31,064,979 11,432,120
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 11,432,120 --
- -----------------------------------------------------------------------------------------
End of period $42,497,099 $11,432,120
- -----------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $36,066,914 $12,781,818
- -----------------------------------------------------------------------------------------
Undistributed net investment income (loss) (7,889) 45,035
- -----------------------------------------------------------------------------------------
Undistributed net realized (loss) from investment
securities and foreign currencies (747,438) (1,683,406)
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 7,185,512 288,673
- -----------------------------------------------------------------------------------------
$42,497,099 $11,432,120
- -----------------------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Asian Growth Fund (the "Fund") is a series portfolio of AIM International
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of six separate
portfolios. 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 will
be 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 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 the 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 its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are
FS-5
<PAGE> 233
valued at the last bid price in the case of equity securities and in the case
of debt obligations, the mean between the last bid and asked prices.
Securities for which market quotations are not readily available or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Company's officers in a manner specifically authorized
by the Board of Directors of the Company. Short-term obligations having 60
days or less to maturity are valued at amortized cost which approximates
market value. For purposes of determining net asset value per share, futures
and options contracts generally will be valued 15 minutes after the close of
trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
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. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales 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 the accrual basis. Dividend income is recorded on the
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for Federal income tax purposes.
Distributions from income and net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was increased by
$197,385, undistributed net realized gains increased by $9,786 and paid-in
capital decreased $207,171 as a result of differing book/tax treatment of
foreign currency transactions and net operating loss reclassifications 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 reclassification discussed above.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund has a capital loss
carryforward of $350,698 as of October 31, 1999 which may be carried forward
to offset future taxable gains, if any, which expires, if not previously
utilized, in the year 2006.
D. 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. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
E. 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.
F. Expenses -- Distribution expenses 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 investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first
$500 million of the Fund's average daily net assets, plus 0.90% of the Fund's
average daily net assets in excess of $500 million. Under the terms of a
sub-advisory agreement between AIM and INVESCO Global Asset Management Limited
("IGAM"), AIM pays IGAM a fee at an annual rate of 0.20% of the first $500
million of the Fund's average daily net assets, plus 0.175% of the Fund's
average daily net assets in excess of $500 million. During the year ended
October 31, 1999, AIM waived fees of $207,130.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1999, AIM was
paid $74,007 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 and
shareholder services to the Fund. During the year ended October 31, 1999, AFS
was paid $64,165 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 a plan
pursuant to Rule 12b-1 under
FS-6
<PAGE> 234
the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class
C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM
Distributors compensation at the annual rate of 0.35% of the Fund's average
daily net assets of Class A shares and 1.00% of the average daily net assets of
Class B and C 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 Class 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, 1999, the Class A,
Class B and Class C shares paid AIM Distributors $61,006, $64,087 and $20,619,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $43,007 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1999,
AIM Distributors received $240,319 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, 1999, the Fund paid legal fees of $3,540 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$339 and $514, respectively, under expense offset arrangements. The effect of
the above arrangements resulted in a reduction of the Fund's total expenses of
$853 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests 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. During the year
ended October 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. 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, 1999 was
$53,369,215 and $31,161,990, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 7,981,120
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (1,193,961)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 6,787,159
- ---------------------------------------------------------
Cost of investments for tax purposes is $34,705,595.
</TABLE>
FS-7
<PAGE> 235
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 7,418,728 $ 73,010,343 2,150,231 $ 17,226,640
- -------------------------------------------------------------------------------------------------------------------
Class B 1,590,485 15,858,499 516,509 4,177,886
- -------------------------------------------------------------------------------------------------------------------
Class C 1,155,486 11,034,900 268,694 2,084,897
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 5,228 39,837 -- --
- -------------------------------------------------------------------------------------------------------------------
Class B 494 3,756 -- --
- -------------------------------------------------------------------------------------------------------------------
Class C 118 897 -- --
- -------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (6,066,544) (60,942,902) (1,146,303) (8,471,598)
- -------------------------------------------------------------------------------------------------------------------
Class B (854,740) (8,257,720) (119,495) (837,717)
- -------------------------------------------------------------------------------------------------------------------
Class C (774,549) (7,255,343) (178,645) (1,379,829)
- -------------------------------------------------------------------------------------------------------------------
2,474,706 $ 23,492,267 1,490,991 $ 12,800,279
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A, Class B and
Class C capital stock outstanding for the year ended October 31, 1999 and the
period November 3, 1997 (date operations commenced) through October 31, 1998.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------- ------------------- -------------------
1999(A) 1998 1999(A) 1998 1999(A) 1998
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 7.69 $ 10.00 $ 7.63 $ 10.00 $ 7.61 $ 10.00
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Income from investment operations:
Net investment income (loss) (0.03) 0.05 (0.13) (0.01) (0.13) (0.01)
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Net gains (losses) on securities (both realized and
unrealized) 3.14 (2.36) 3.16 (2.36) 3.16 (2.38)
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Total from investment operations 3.11 (2.31) 3.03 (2.37) 3.03 (2.39)
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Less distributions:
Dividends from net investment income (0.04) -- (0.01) -- (0.01) --
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Net asset value, end of period $10.76 $ 7.69 $10.65 $ 7.63 $10.63 $ 7.61
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Total return(b) 40.66% (23.10)% 39.76% (23.70)% 39.86% (23.90)%
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $25,420 $ 7,716 $12,070 $ 3,030 $5,008 $ 686
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Ratio of expenses to average net assets(c) 1.92%(d) 1.92%(e) 2.79%(d) 2.80%(e) 2.79%(d) 2.80%(e)
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Ratio of net investment income (loss) to average net
assets(f) (0.50)%(d) 0.70%(e) (1.37)%(d) (0.18)%(e) (1.37)%(d) (0.18)%(e)
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
Portfolio turnover rate 142% 79% 142% 79% 142% 79%
- ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.72% and 4.88% (annualized) for Class A for 1999-1998, 3.59% (annualized)
and 5.75% (annualized) for Class B for 1999-1998; and 3.59% (annualized) and
5.75% (annualized) for Class C for 1999-1998.
(d) Ratios are based on average net assets of $17,430,236, $6,408,688 and
$2,061,860 for Class A, Class B and Class C, respectively.
(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 (1.30)% and (2.27)% (annualized) for Class A for
1999-1998, (2.17)% and (3.15)% (annualized) for Class B for 1999-1998,
(2.17)% and (3.15)% (annualized) for Class C for 1999-1998.
FS-8
<PAGE> 236
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM International Funds, Inc.
We have audited the accompanying statement of assets and
liabilities of the AIM European Development Fund (a
portfolio of AIM International Funds, Inc.), including the
schedule of investments, as of October 31, 1999, and the
related statement of operations for the year then ended,
and the statement of changes in net assets and financial
highlights for the year then ended and the period November
3, 1997 (date operations commenced) through October 31,
1998. 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, 1999, 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 the AIM
European Development Fund as of October 31, 1999, the
results of its operations for the year then ended, changes
in its net assets and financial highlights for the year
then ended and the period November 3, 1997 (date operations
commenced) through October 31, 1998, in conformity with
generally accepted accounting principles.
KPMG LLP
December 3, 1999
Houston, Texas
FS-9
<PAGE> 237
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
STOCKS & OTHER EQUITY
INTERESTS-93.25%
DENMARK-2.36%
Damgaard A/S (Computers-Software &
Services)(a) 15,000 $ 795,964
- --------------------------------------------------------------
De Sammensluttede Vognmaend A/S
(Truckers) 9,400 904,498
- --------------------------------------------------------------
Vestas Wind Systems A/S
(Manufacturing- Specialized)(a) 19,090 2,498,726
- --------------------------------------------------------------
4,199,188
- --------------------------------------------------------------
FINLAND-5.57%
JOT Automation Group Oyj
(Manufacturing- Specialized)(a) 627,000 3,232,213
- --------------------------------------------------------------
Nokia Oyj (Communications Equipment) 38,680 4,427,837
- --------------------------------------------------------------
Perlos Oyj
(Electronics-Semiconductors)(a) 81,400 1,335,935
- --------------------------------------------------------------
Sonera Oyj
(Telecommunications-Cellular/
Wireless) 30,850 926,611
- --------------------------------------------------------------
9,922,596
- --------------------------------------------------------------
FRANCE-21.34%
Accor S.A. (Lodging-Hotels) 4,200 945,583
- --------------------------------------------------------------
Alstom (Engineering & Construction) 8,350 252,997
- --------------------------------------------------------------
ALTEN (Computers-Software &
Services)(a) 20,000 2,186,160
- --------------------------------------------------------------
Altran Technologies, S.A.
(Services-Commercial & Consumer) 7,300 2,502,901
- --------------------------------------------------------------
AXA (Insurance-Multi-Line) 16,750 2,363,088
- --------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 20,100 1,765,708
- --------------------------------------------------------------
Bertrand Faure S.A. (Auto Parts &
Equipment)(a) 13,000 785,040
- --------------------------------------------------------------
BRICE (Retail-Specialty-Apparel) 12,200 798,338
- --------------------------------------------------------------
Carrefour Supermarche S.A.
(Retail-Food Chains) 25,900 4,795,665
- --------------------------------------------------------------
Galeries Lafayette
(Retail-Department Stores) 9,600 1,413,955
- --------------------------------------------------------------
GFI Informatique (Computers-Software
& Services) 24,400 2,181,952
- --------------------------------------------------------------
Havas Advertising S.A.
(Services-Advertising/ Marketing) 9,900 2,775,676
- --------------------------------------------------------------
M6 Metropole Television
(Broadcasting- Television, Radio &
Cable) 9,400 2,571,210
- --------------------------------------------------------------
NRJ S.A. (Broadcasting-Television,
Radio & Cable)(a) 6,600 2,055,285
- --------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 9,600 1,831,072
- --------------------------------------------------------------
PSA Peugeot Citreon (Automobiles) 4,400 844,796
- --------------------------------------------------------------
Renault S.A. (Automobiles) 15,000 776,413
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Societe Television Francaise 1
(Broadcasting- Television, Radio &
Cable) 7,900 $ 2,476,736
- --------------------------------------------------------------
Total Fina S.A.-Class B (Oil &
Gas-Refining & Marketing) 23,438 3,168,609
- --------------------------------------------------------------
Unilog S.A. (Services-Commercial &
Consumer)(a) 22,200 1,522,779
- --------------------------------------------------------------
38,013,963
- --------------------------------------------------------------
GERMANY-9.26%
Beate Uhse A.G. (Entertainment)(a) 79,650 1,441,287
- --------------------------------------------------------------
Deutsche Bank A.G. (Banks-Major
Regional)(a) 24,000 1,721,995
- --------------------------------------------------------------
EM.TV & Merchandising A.G.
(Broadcasting- Television, Radio &
Cable) 17,500 865,311
- --------------------------------------------------------------
EM.TV & Merchandising A.G.-Rts.,
expiring 11/12/99
(Broadcasting-Television, Radio &
Cable) 17,500 184
- --------------------------------------------------------------
GPK A.G. (Services-Commercial &
Consumer)(a) 50,000 1,412,377
- --------------------------------------------------------------
Kamps A.G. (Retail-Food Chains) 46,000 2,574,577
- --------------------------------------------------------------
Mannesmann A.G.
(Machinery-Diversified) 17,400 2,736,698
- --------------------------------------------------------------
Porsche A.G.-Pfd. (Automobiles) 925 2,520,449
- --------------------------------------------------------------
PrimaCom A.G.
(Broadcasting-Television, Radio, &
Cable)(a) 23,500 1,169,406
- --------------------------------------------------------------
Steag Hamatech A.G. (Manufacturing-
Specialized)(a) 48,200 1,196,728
- --------------------------------------------------------------
Zapf Creation A.G. (Leisure
Time-Products)(a) 25,000 861,366
- --------------------------------------------------------------
16,500,378
- --------------------------------------------------------------
GREECE-1.87%
M.J. Maillis S.A. (Containers &
Packaging-Paper) 64,500 2,437,219
- --------------------------------------------------------------
Panafon Hellenic Telecom S.A.-GDR
(Telecommunications-Cellular/Wireless)
(Acquired 11/20/98-04/23/99; Cost
$765,458)(a)(b) 71,200 890,000
- --------------------------------------------------------------
3,327,219
- --------------------------------------------------------------
IRELAND-2.59%
Bank of Ireland (Banks-Major
Regional) 106,000 828,574
- --------------------------------------------------------------
CRH PLC (Construction-Cement &
Aggregates) 79,500 1,501,302
- --------------------------------------------------------------
Esat Telecom Group PLC-ADR
(Telecommunications-Long
Distance)(a) 35,000 1,566,250
- --------------------------------------------------------------
Ryanair Holdings PLC-ADR
(Airlines)(a) 17,600 726,000
- --------------------------------------------------------------
4,622,126
- --------------------------------------------------------------
</TABLE>
FS-10
<PAGE> 238
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ISRAEL-0.45%
Partner Communications Co. Ltd.-ADR
(Telecommunications-Cellular/Wireless)(a) 51,500 $ 811,125
- --------------------------------------------------------------
ITALY-0.43%
Credito Italiano S.p.A. (Banks-Major
Regional) 163,600 765,913
- --------------------------------------------------------------
NETHERLANDS-6.92%
Aegon N.V. (Insurance Brokers) 18,400 1,698,640
- --------------------------------------------------------------
CMG PLC (Computers-Software &
Services) 27,000 1,042,476
- --------------------------------------------------------------
Detron Group N.V. (Communications
Equipment)(a) 56,000 706,978
- --------------------------------------------------------------
Draka Holding N.V. (Metal
Fabricators)(a) 7,065 254,571
- --------------------------------------------------------------
Equant N.V.
(Computers-Networking)(a) 10,200 992,609
- --------------------------------------------------------------
Exact Holding N.V.
(Computers-Software & Services)(a) 30,000 1,129,902
- --------------------------------------------------------------
GTI Holding N.V. (Engineering &
Construction) 68,200 1,381,184
- --------------------------------------------------------------
Gucci Group N.V.-ADR-New York Shares
(Textiles) 20,900 1,687,675
- --------------------------------------------------------------
Koninklijke (Royal) Philips
Electronics N.V. (Electrical
Equipment) 18,020 1,848,399
- --------------------------------------------------------------
Koninklijke Ahold N.V. (Retail-Food
Chains) 51,600 1,585,145
- --------------------------------------------------------------
12,327,579
- --------------------------------------------------------------
NORWAY-0.53%
Tomra Systems A.S.A. (Manufacturing-
Specialized) 24,500 936,365
- --------------------------------------------------------------
SPAIN-4.30%
Banco Popular Espanol S.A.
(Banks-Major Regional) 12,400 834,907
- --------------------------------------------------------------
Cortefiel S.A. (Retail-Department
Stores) 77,000 2,011,425
- --------------------------------------------------------------
NH Hoteles, S.A. (Investment
Management)(a) 206,600 2,336,550
- --------------------------------------------------------------
Telefonica S.A. (Telephone)(a) 150,900 2,482,918
- --------------------------------------------------------------
7,665,800
- --------------------------------------------------------------
SWEDEN-4.67%
Europolitan Holdings A.B.
(Telecommunications-
Cellular/Wireless) 97,800 1,123,796
- --------------------------------------------------------------
Framtidsfabriken A.B.
(Computers-Software & Services)(a) 21,000 845,209
- --------------------------------------------------------------
Hennes & Mauritz A.B.-Class B
(Retail- Specialty-Apparel) 56,000 1,487,841
- --------------------------------------------------------------
Modern Times Group MTG A.B.-Class B
(Broadcasting-Television, Radio &
Cable)(a) 99,000 3,202,091
- --------------------------------------------------------------
NetCom A.B.
(Telecommunications-Cellular/
Wireless)(a) 20,800 863,716
- --------------------------------------------------------------
Teligent A.B. (Communications
Equipment)(a) 82,000 792,680
- --------------------------------------------------------------
8,315,333
- --------------------------------------------------------------
SWITZERLAND-5.57%
Compagnie Financiere Richemont A.G.
(Tobacco) 905 1,728,445
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND-(CONTINUED)
Fantastic Corp.-Ctfs.
(Computers-Software & Services)(a) 20,000 $ 1,409,747
- --------------------------------------------------------------
Kudelski S.A. (Electronics-Component
Distributors)(a) 310 1,289,041
- --------------------------------------------------------------
PubliGroupe S.A.
(Services-Advertising/ Marketing) 2,800 2,053,125
- --------------------------------------------------------------
Straumann A.G. (Health
Care-Specialized Services)(a) 4,210 1,863,809
- --------------------------------------------------------------
Zurich Allied A.G.
(Insurance-Multi-Line) 2,800 1,584,836
- --------------------------------------------------------------
9,929,003
- --------------------------------------------------------------
UNITED STATES-0.88%
UnitedGlobalCom Inc.-Class A
(Broadcasting- Television, Radio &
Cable)(a) 18,000 1,566,000
- --------------------------------------------------------------
UNITED KINGDOM-26.51%
Aggreko PLC (Services-Facilities &
Environmental) 292,000 1,466,636
- --------------------------------------------------------------
AMEC PLC (Construction-Cement &
Aggregates) 250,000 881,649
- --------------------------------------------------------------
ARM Holdings PLC (Electronics-
Semiconductors)(a) 28,000 795,481
- --------------------------------------------------------------
Barclays PLC (Banks-Major Regional) 75,200 2,303,345
- --------------------------------------------------------------
BP Amoco PLC (Oil & Gas-Refining &
Marketing) 165,600 1,607,713
- --------------------------------------------------------------
British Sky Broadcasting Group PLC
(Broadcasting-Television, Radio &
Cable) 172,000 1,848,001
- --------------------------------------------------------------
British Telecommunications PLC
(Communications Equipment) 107,000 1,941,263
- --------------------------------------------------------------
Eidos PLC-ADR (Computers
Software/Services)(a) 43,500 3,036,844
- --------------------------------------------------------------
eircom PLC (Telecommunication-Long
Distance)(a) 353,000 1,472,497
- --------------------------------------------------------------
Granada Group PLC (Leisure
Time-Products) 115,800 915,760
- --------------------------------------------------------------
Hays PLC (Services-Commercial &
Consumer) 186,000 2,129,915
- --------------------------------------------------------------
Iceland Group PLC (Retail-Food
Chains) 171,000 813,904
- --------------------------------------------------------------
J.D. Wetherspoon PLC (Leisure
Time-Products) 150,000 843,423
- --------------------------------------------------------------
JJB Sports PLC (Retail-General
Merchandise) 125,000 939,192
- --------------------------------------------------------------
Kewill Systems PLC
(Computers-Software & Services)(a) 195,000 2,180,077
- --------------------------------------------------------------
Kingston Communication (Hull) PLC
(Telecommunications-Long
Distance)(a) 647,300 4,746,448
- --------------------------------------------------------------
Logica PLC (Computer Software &
Services) 95,500 1,460,993
- --------------------------------------------------------------
Matalan PLC (Retail-Discounters) 157,000 3,536,295
- --------------------------------------------------------------
Nestor Healthcare Group PLC
(Services- Commercial & Consumer) 177,000 1,732,211
- --------------------------------------------------------------
Orange PLC (Telephone)(a) 142,000 3,541,622
- --------------------------------------------------------------
Pace Micro Technology PLC
(Communications Equipment) 524,000 2,354,072
- --------------------------------------------------------------
</TABLE>
FS-11
<PAGE> 239
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Sage Group PLC (The)
(Computers-Software & Services) 43,850 $ 2,250,047
- --------------------------------------------------------------
Shell Transport & Trading Co.
(Oil-International Integrated) 218,000 1,672,000
- --------------------------------------------------------------
Vodafone AirTouch PLC
(Telecommunications-
Cellular/Wireless) 595,000 2,768,418
- --------------------------------------------------------------
47,237,806
- --------------------------------------------------------------
Total Stocks & Other Equity
Interests (Cost $128,083,371) 166,140,394
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-6.01%
STIC Liquid Assets Portfolio(c) 5,351,762 $ 5,351,762
- --------------------------------------------------------------
STIC Prime Portfolio(c) 5,351,762 5,351,762
- --------------------------------------------------------------
Total Money Market Funds (Cost
$10,703,524) 10,703,524
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.26% 176,843,918
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.74% 1,316,649
- --------------------------------------------------------------
NET ASSETS-100.00% $178,160,567
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Ctfs. - Certificates
Pfd. - Preferred
Rts. - Rights
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with provisions of Rule 144A under the Securities Act of 1933 as
amended. The valuation of this security has been determined in accordance
with procedures established by the Board of Directors. The market value of
this security at 10/31/99 was $890,000 which represented 0.50% of the Fund's
net assets.
(c) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-12
<PAGE> 240
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$138,786,895) $176,843,918
- -----------------------------------------------------------
Foreign currencies, at value (cost
$1,645,977) 1,648,250
- -----------------------------------------------------------
Receivables for:
Investments sold 1,975,354
- -----------------------------------------------------------
Capital stock sold 550,867
- -----------------------------------------------------------
Dividends and interest 304,844
- -----------------------------------------------------------
Investment for deferred compensation plan 8,111
- -----------------------------------------------------------
Other assets 54,409
- -----------------------------------------------------------
Total assets 181,385,753
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,425,603
- -----------------------------------------------------------
Capital stock reacquired 431,336
- -----------------------------------------------------------
Deferred compensation 8,111
- -----------------------------------------------------------
Accrued advisory fees 138,587
- -----------------------------------------------------------
Accrued administrative services fees 4,110
- -----------------------------------------------------------
Accrued directors' fees 2,852
- -----------------------------------------------------------
Accrued distribution fees 101,932
- -----------------------------------------------------------
Accrued transfer agent fees 45,941
- -----------------------------------------------------------
Accrued operating expenses 66,714
- -----------------------------------------------------------
Total liabilities 3,225,186
- -----------------------------------------------------------
Net assets applicable to shares outstanding $178,160,567
- -----------------------------------------------------------
NET ASSETS:
Class A $ 99,148,218
- -----------------------------------------------------------
Class B $ 67,074,079
- -----------------------------------------------------------
Class C $ 11,938,270
- -----------------------------------------------------------
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 6,039,960
- -----------------------------------------------------------
Class B:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 4,140,854
- -----------------------------------------------------------
Class C:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 736,702
- -----------------------------------------------------------
Class A:
Net asset value and redemption price per
share $ 16.42
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $16.42 divided
by 94.50%) $ 17.38
- -----------------------------------------------------------
Class B:
Net asset value and offering price per
share $ 16.20
- -----------------------------------------------------------
Class C:
Net asset value and offering price per
share $ 16.21
- -----------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $260,349 foreign withholding
tax) $ 1,625,502
- ------------------------------------------------------------
Interest 396,652
- ------------------------------------------------------------
Total investment income 2,022,154
- ------------------------------------------------------------
EXPENSES:
Advisory fees 1,607,698
- ------------------------------------------------------------
Administrative services fees 75,332
- ------------------------------------------------------------
Custodian fees 237,707
- ------------------------------------------------------------
Directors' fees 10,764
- ------------------------------------------------------------
Distribution fees-Class A 332,066
- ------------------------------------------------------------
Distribution fees-Class B 625,126
- ------------------------------------------------------------
Distribution fees-Class C 118,428
- ------------------------------------------------------------
Transfer agent fees-Class A 261,250
- ------------------------------------------------------------
Transfer agent fees-Class B 230,660
- ------------------------------------------------------------
Transfer agent fees-Class C 43,698
- ------------------------------------------------------------
Other 201,279
- ------------------------------------------------------------
Total expenses 3,744,008
- ------------------------------------------------------------
Less: Expenses paid indirectly (2,843)
- ------------------------------------------------------------
Net expenses 3,741,165
- ------------------------------------------------------------
Net investment income (loss) (1,719,011)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES AND
FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities (5,917,105)
- ------------------------------------------------------------
Foreign currencies 122,677
- ------------------------------------------------------------
(5,794,428)
- ------------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 43,122,813
- ------------------------------------------------------------
Foreign currencies 3,938
- ------------------------------------------------------------
43,126,751
- ------------------------------------------------------------
Net gain from investment securities and
foreign
currencies 37,332,323
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $ 35,613,312
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
FS-13
<PAGE> 241
STATEMENT OF CHANGES IN NET ASSETS
For the year ended October 31, 1999 and the period November 3, 1997 (date
operations commenced)
through October 31, 1998
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,719,011) $ (481,507)
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities and
foreign currencies (5,794,428) (6,005,211)
- ----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies 43,126,751 (5,080,217)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 35,613,312 (11,566,935)
- ----------------------------------------------------------------------------------------------
Distribution from investment income -- Class A (80,229) --
- ----------------------------------------------------------------------------------------------
Share transactions -- net:
Class A 2,449,615 82,027,769
- ----------------------------------------------------------------------------------------------
Class B 3,977,973 55,436,905
- ----------------------------------------------------------------------------------------------
Class C (246,455) 10,548,612
- ----------------------------------------------------------------------------------------------
Net increase in net assets 41,714,216 136,446,351
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 136,446,351 --
- ----------------------------------------------------------------------------------------------
End of period $ 178,160,567 $ 136,446,351
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 152,753,815 $ 147,994,681
- ----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (9,989) 19,453
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies (12,629,793) (6,487,566)
- ----------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities and foreign currencies 38,046,534 (5,080,217)
- ----------------------------------------------------------------------------------------------
$ 178,160,567 $ 136,446,351
==============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-14
<PAGE> 242
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM European Development Fund (the "Fund") is a series portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of six
separate portfolios. The Fund 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 will be 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 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 the 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 its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market prices are
not provided by any of the above methods are valued based upon quotes
furnished by independent sources and are valued at the last bid price in the
case of equity securities and in the case of debt obligations, the mean
between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and options
contracts generally will be valued 15 minutes after the close of trading of
the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
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. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales 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 the accrual basis. Dividend income is recorded on the
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for Federal income tax purposes.
Distributions from income and net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was increased by
$1,769,798, undistributed net realized gains decreased by $347,799 and
paid-in capital decreased by $1,421,999 as a result of differing book/tax
treatment of foreign currency transactions and net operating
reclassifications 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 reclassification discussed above.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $12,347,306 as of October 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires, if not
previously utilized, in the year 2007.
D. 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
FS-15
<PAGE> 243
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
E. 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.
F. Expenses -- Distribution expenses 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 investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first
$500 million of the Fund's average daily net assets, plus 0.90% of the Fund's
average daily net assets in excess of $500 million. Under the terms of a
sub-advisory agreement between AIM and INVESCO Global Asset Management Limited
("IGAM"), AIM pays IGAM a fee at an annual rate of 0.20% of the first $500
million of the Fund's average daily net assets, plus 0.175% of the Fund's
average daily net assets in excess of $500 million.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1999, AIM was
paid $75,332 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 and
shareholder services to the Fund. During the year ended October 31, 1999, AFS
was paid $336,086 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 a plan
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund ,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C 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 Class 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,
1999, the Class A, Class B and Class C shares paid AIM Distributors $332,066,
$625,126 and $118,428, respectively, as compensation under the Plans.
AIM Distributors received commissions of $143,067 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1999,
AIM Distributors received $50,219 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, 1999, the Fund paid legal fees of $3,014 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$1,989 and $854, respectively, under expense offset arrangements. The effect of
the above arrangements resulted in a reduction of the Fund's total expenses of
$2,843 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests 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. During the year
ended October 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
FS-16
<PAGE> 244
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, 1999 was
$201,019,098 and $192,916,235, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $40,275,044
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,500,509)
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities $37,774,535
=========================================================================
</TABLE>
Cost of investments for tax purposes is $139,069,383.
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 7,243,646 $103,416,688 11,368,616 $156,555,432
- -------------------------------------------------------------------------------------------------------------------
Class B 3,045,028 43,081,822 4,734,982 66,433,513
- -------------------------------------------------------------------------------------------------------------------
Class C 2,148,542 29,835,245 1,685,991 25,251,599
- -------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 5,672 76,739 -- --
- -------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (7,125,444) (101,043,812) (5,452,530) (74,527,663)
- -------------------------------------------------------------------------------------------------------------------
Class B (2,797,703) (39,103,849) (841,453) (10,996,608)
- -------------------------------------------------------------------------------------------------------------------
Class C (2,160,106) (30,081,700) (937,724) (12,702,987)
- -------------------------------------------------------------------------------------------------------------------
359,635 $ 6,181,133 10,557,882 $150,013,286
===================================================================================================================
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A, Class B and
Class C capital stock outstanding during the year ended October 31, 1999 and the
period November 3, 1997 (date operations commenced) through October 31, 1998.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------------------- ----------------------- -----------------------
1999 1998 1999 1998 1999 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.96 $ 10.00 $ 12.87 $ 10.00 $ 12.88 $10.00
- ------------------------------------------------ ------- ------- ------- ------- ------- ------
Income from investment operations:
Net investment income (loss) (0.11) (0.08)(a) (0.22) (0.18)(a) (0.23) (0.18)(a)
- ------------------------------------------------ ------- ------- ------- ------- ------- ------
Net gains on securities (both realized and
unrealized) 3.58 3.04 3.55 3.05 3.56 3.06
- ------------------------------------------------ ------- ------- ------- ------- ------- ------
Total from investment operations 3.47 2.96 3.33 2.87 3.33 2.88
- ------------------------------------------------ ------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.01) -- -- -- -- --
- ------------------------------------------------ ------- ------- ------- ------- ------- ------
Net asset value, end of period $ 16.42 $ 12.96 $ 16.20 $ 12.87 $ 16.21 $12.88
================================================ ======= ======= ======= ======= ======= ======
Total return(b) 26.81% 29.60% 25.87% 28.70% 25.85% 28.80%
================================================ ======= ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $99,148 $76,686 $67,074 $50,121 $11,938 $9,639
================================================ ======= ======= ======= ======= ======= ======
Ratio of expenses to average net assets 1.88%(c) 1.98%(d) 2.63%(c) 2.72%(d) 2.63%(c) 2.72%(d)
================================================ ======= ======= ======= ======= ======= ======
Ratio of net investment income (loss) to average
net assets (0.69)%(c) (0.58)%(e) (1.44)%(c) (1.32)%(e) (1.44)%(c) (1.32)%(e)
================================================ ======= ======= ======= ======= ======= ======
Portfolio turnover rate 122% 93% 122% 93% 122% 93%
================================================ ======= ======= ======= ======= ======= ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $94,875,922, $62,512,593 and
$11,842,849, for Class A, Class B and Class C shares, respectively.
(d) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.15% (annualized), 2.89% (annualized) and 2.89% (annualized) for Class A,
Class B and Class C, respectively, for 1998.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (0.75)% (annualized), (1.49)% (annualized) and (1.49)%
(annualized) for Class A, Class B and Class C, respectively, for 1998.
FS-17
<PAGE> 245
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of the AIM Global Aggressive Growth Fund (a
portfolio of AIM International Funds, Inc.), including the
schedule of investments, as of October 31, 1999, and the
related statement of operations for the year then ended,
the statement of changes in net assets for each of the
years in the two-year period then ended and the financial
highlights for each of the years in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these
financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1999, by correspondence
with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Aggressive Growth Fund as of October 31, 1999, the results
of its operations for the year then ended, the changes in
its net assets for each of the years in the two-year period
then ended and the financial highlights for each of the
years in the five-year period then ended in conformity with
generally accepted accounting principles.
KPMG LLP
December 3, 1999
Houston, Texas
FS-18
<PAGE> 246
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-33.56%
BROADCASTING (TELEVISION, RADIO &
CABLE)-1.41%
Hispanic Broadcasting Corp.(a) 144,100 $ 11,672,100
- ---------------------------------------------------------------
UnitedGlobalCom Inc.-Class A(a) 157,100 13,667,700
- ---------------------------------------------------------------
25,339,800
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-10.15%
ANTEC Corp.(a) 125,000 6,062,500
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 150,000 17,025,000
- ---------------------------------------------------------------
Dycom Industries, Inc.(a) 210,800 6,864,175
- ---------------------------------------------------------------
Harmonic, Inc.(a) 500,000 29,687,500
- ---------------------------------------------------------------
JDS Uniphase Corp.(a) 734,994 122,652,124
- ---------------------------------------------------------------
182,291,299
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.49%
Emulex Corp.(a) 171,200 26,696,500
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.92%
Network Appliance, Inc.(a) 82,300 6,090,200
- ---------------------------------------------------------------
QLogic Corp.(a) 100,000 10,412,500
- ---------------------------------------------------------------
16,502,700
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-1.86%
Citrix Systems, Inc.(a) 231,600 14,851,350
- ---------------------------------------------------------------
Concord Communications, Inc.(a) 88,400 4,591,275
- ---------------------------------------------------------------
VERITAS Software Corp.(a) 129,100 13,926,662
- ---------------------------------------------------------------
33,369,287
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.34%
Patterson Dental Co.(a) 133,550 6,018,097
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.39%
Cree Research, Inc.(a) 150,000 6,403,125
- ---------------------------------------------------------------
Sanmina Corp.(a) 136,700 12,311,544
- ---------------------------------------------------------------
Sawtek, Inc.(a) 150,000 6,150,000
- ---------------------------------------------------------------
24,864,669
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.22%
Power-One, Inc.(a) 200,000 4,000,000
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.38%
Alpha Industries, Inc.(a) 125,000 6,906,250
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-4.68%
ANADIGICS, Inc.(a) 200,000 7,700,000
- ---------------------------------------------------------------
Dallas Semiconductor Corp. 115,000 6,770,625
- ---------------------------------------------------------------
Micrel, Inc.(a) 195,800 10,646,625
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 225,000 14,990,625
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 154,700 14,580,475
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (SEMICONDUCTORS)-(CONTINUED)
SDL, Inc.(a) 130,000 $ 16,030,625
- ---------------------------------------------------------------
Semtech Corp.(a) 200,000 7,662,500
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 122,000 5,596,750
- ---------------------------------------------------------------
83,978,225
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC &
OTHER)-0.76%
Alpharma, Inc.-Class A 250,000 8,796,875
- ---------------------------------------------------------------
Medicis Pharmaceutical
Corp.-Class A(a) 160,100 4,883,050
- ---------------------------------------------------------------
13,679,925
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-0.18%
Province Healthcare Co.(a) 201,800 3,254,025
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.22%
Express Scripts, Inc.-Class A(a) 80,000 3,930,000
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.13%
ResMed, Inc.(a) 80,000 2,770,000
- ---------------------------------------------------------------
Sybron International Corp.(a) 344,300 8,198,644
- ---------------------------------------------------------------
VISX, Inc.(a) 150,000 9,384,375
- ---------------------------------------------------------------
20,353,019
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.18%
Advance Paradigm, Inc.(a) 75,000 3,196,875
- ---------------------------------------------------------------
RESTAURANTS-0.95%
CEC Entertainment, Inc.(a) 450,000 14,428,125
- ---------------------------------------------------------------
Papa John's International,
Inc.(a) 68,200 2,548,975
- ---------------------------------------------------------------
16,977,100
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.18%
CDW Computer Centers, Inc.(a) 343,000 21,180,250
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-0.82%
Footstar, Inc.(a) 94,500 3,307,500
- ---------------------------------------------------------------
O'Reilly Automotive, Inc.(a) 217,300 9,479,712
- ---------------------------------------------------------------
Tuesday Morning Corp.(a) 86,300 1,984,900
- ---------------------------------------------------------------
14,772,112
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-2.26%
American Eagle Outfitters,
Inc.(a) 130,000 5,565,625
- ---------------------------------------------------------------
AnnTaylor Stores Corp.(a) 128,900 5,486,306
- ---------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 410,000 8,994,375
- ---------------------------------------------------------------
Pacific Sunwear of California(a) 414,750 12,520,266
- ---------------------------------------------------------------
</TABLE>
FS-19
<PAGE> 247
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY-APPAREL)-(CONTINUED)
Too Inc.(a) 500,000 $ 8,000,000
- ---------------------------------------------------------------
40,566,572
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.83%
Insight Enterprises, Inc.(a) 400,000 14,950,000
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.54%
Affiliated Computer Services,
Inc.-Class A(a) 149,100 5,665,800
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 599,407 16,221,452
- ---------------------------------------------------------------
NOVA Corp.(a) 221,500 5,759,000
- ---------------------------------------------------------------
27,646,252
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.36%
Powerwave Technologies, Inc.(a) 100,000 6,506,250
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.31%
Quicksilver, Inc.(a) 400,000 5,650,000
- ---------------------------------------------------------------
Total Domestic Common Stocks
(Cost $240,178,870) 602,629,207
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-62.47%
AUSTRALIA-1.34%
Brambles Industries Ltd. (Air
Freight) 235,000 6,610,877
- ---------------------------------------------------------------
ERG Ltd. (Electrical Equipment) 3,098,000 12,213,004
- ---------------------------------------------------------------
TABCORP Holdings Ltd. (Leisure
Time Products) 828,000 5,250,121
- ---------------------------------------------------------------
24,074,002
- ---------------------------------------------------------------
BELGIUM-0.34%
UCB S.A.
(Manufacturing-Diversified) 165,000 6,153,703
- ---------------------------------------------------------------
BRAZIL-1.53%
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar-Pfd. GDR (Retail-Food
Chains) 277,419 6,068,541
- ---------------------------------------------------------------
Embratel Participacoes S.A.-ADR
(Telephone) 285,200 3,671,950
- ---------------------------------------------------------------
Petroleo Brasileiro
S.A.-Petrobras-Pfd. (Oil &
Gas-Exploration & Production) 70,200 11,166,547
- ---------------------------------------------------------------
Tele Centro Sul Participacoes
S.A.-ADR (Telephone) 63,700 3,806,075
- ---------------------------------------------------------------
Telesp Participacoes S.A.-ADR
(Telephone) 170,800 2,764,825
- ---------------------------------------------------------------
27,477,938
- ---------------------------------------------------------------
CANADA-4.10%
Biovail Corp. International
(Health Care- Drugs-Generic &
Other)(a) 114,300 6,307,931
- ---------------------------------------------------------------
Celestica Inc. (Electronics-
Semiconductors)(a) 134,000 7,453,750
- ---------------------------------------------------------------
Cinar Films, Inc.-Class B
(Entertainment)(a) 126,000 2,189,250
- ---------------------------------------------------------------
C-MAC Industries, Inc.
(Electronics- Component
Distributors)(a) 309,200 9,807,539
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Dorel Industries Inc. (Household
Furniture & Appliances)(a) 151,400 $ 2,699,348
- ---------------------------------------------------------------
Four Seasons Hotels, Inc.
(Lodging-Hotels) 185,900 7,749,706
- ---------------------------------------------------------------
Intertape Polymer Group, Inc.
(Chemicals- Specialty) 100,000 2,699,857
- ---------------------------------------------------------------
Onex Corp. (Investments) 138,000 2,601,032
- ---------------------------------------------------------------
Research in Motion Ltd.
(Communications Equipment) 500,000 15,502,955
- ---------------------------------------------------------------
Rogers Cantel Mobile
Communications Inc.
(Telecommunications-
Cellular/Wireless)(a) 95,200 2,715,751
- ---------------------------------------------------------------
Sears Canada, Inc.
(Retail-Department Stores) 323,000 7,130,001
- ---------------------------------------------------------------
Shaw Communications, Inc.
(Broadcasting- Television,
Radio & Cable) 223,000 6,778,000
- ---------------------------------------------------------------
73,635,120
- ---------------------------------------------------------------
CHILE-0.07%
Madeco S.A.-ADR (Metal
Fabricators) 129,000 1,273,875
- ---------------------------------------------------------------
DENMARK-0.67%
Vestas Wind Systems A/S
(Manufacturing- Specialized)(a) 92,500 12,107,501
- ---------------------------------------------------------------
FINLAND-0.98%
JOT Automation Group Oyj
(Manufacturing- Specialized)(a) 1,553,000 8,005,785
- ---------------------------------------------------------------
Sonera Oyj
(Telecommunications-Cellular/
Wireless) 320,000 9,611,529
- ---------------------------------------------------------------
17,617,314
- ---------------------------------------------------------------
FRANCE-4.89%
Altran Technologies, S.A.
(Services- Commercial &
Consumer) 54,900 18,823,184
- ---------------------------------------------------------------
Bertrand Faure S.A. (Auto Parts &
Equipment)(a) 100,000 6,038,767
- ---------------------------------------------------------------
Business Objects S.A.-ADR
(Computers- Software &
Services)(a) 100,000 7,200,000
- ---------------------------------------------------------------
Galeries Lafayette
(Retail-Department Stores) 70,000 10,310,090
- ---------------------------------------------------------------
GFI Informatique
(Computers-Software & Services) 67,000 5,991,425
- ---------------------------------------------------------------
Havas Advertising S.A.
(Services-Advertising/
Marketing) 44,000 12,336,338
- ---------------------------------------------------------------
M6 Metropole Television
(Broadcasting- Television,
Radio & Cable) 22,000 6,017,726
- ---------------------------------------------------------------
NRJ S.A.
(Broadcasting-Television, Radio
& Cable)(a) 11,000 3,425,475
- ---------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting-Television, Radio
& Cable) 56,500 17,713,366
- ---------------------------------------------------------------
87,856,371
- ---------------------------------------------------------------
GERMANY-2.18%
EM.TV & Merchandising A.G.
(Broadcasting- Television,
Radio & Cable) 170,000 8,405,879
- ---------------------------------------------------------------
</TABLE>
FS-20
<PAGE> 248
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
GERMANY-(CONTINUED)
EM.TV & Merchandising A.G.-Rts.,
expiring 11/12/99
(Broadcasting-Television, Radio &
Cable) 170,000 $ 1,788
- ---------------------------------------------------------------
Kamps A.G. (Retail-Food Chains) 70,000 3,917,834
- ---------------------------------------------------------------
Marschollek, Lautenschlaeger and
Partner A.G.
(Services-Commercial &
Consumer) 30,000 6,328,081
- ---------------------------------------------------------------
Porsche A.G.-Pfd. (Automobiles) 6,270 17,084,556
- ---------------------------------------------------------------
PrimaCom A.G.
(Broadcasting-Television,
Radio, & Cable)(a) 67,000 3,334,052
- ---------------------------------------------------------------
39,072,190
- ---------------------------------------------------------------
GREECE-1.05%
M.J. Maillis S.A. (Containers &
Packaging- Paper) 210,000 7,935,132
- ---------------------------------------------------------------
Panafon Hellenic Telecom S.A.-GDR
(Telecommunications-Cellular/Wireless)
(Acquired 11/20/98-04/23/99;
Cost $3,591,542)(a)(b) 341,200 4,265,000
- ---------------------------------------------------------------
Titan Cement (Construction-Cement
& Aggregates) 60,000 6,652,436
- ---------------------------------------------------------------
18,852,568
- ---------------------------------------------------------------
HONG KONG-2.99%
China Telecom Ltd.
(Telecommunications-
Cellular/Wireless)(a) 3,428,000 11,716,301
- ---------------------------------------------------------------
Cosco Pacific Ltd.
(Financial-Diversified) 12,224,000 8,654,883
- ---------------------------------------------------------------
Dao Heng Bank Group Ltd. (Banks-
Regional)(a) 3,047,000 13,846,256
- ---------------------------------------------------------------
Esprit Holdings Ltd.
(Retail-Stores) 3,506,000 3,294,731
- ---------------------------------------------------------------
Hutchison Whampoa Ltd.
(Retail-Food Chains) 1,615,000 16,216,321
- ---------------------------------------------------------------
53,728,492
- ---------------------------------------------------------------
HUNGARY-0.51%
Magyar Tavkozlesi Rt-ADR
(Telecommunications-Long
Distance) 320,000 9,220,000
- ---------------------------------------------------------------
INDONESIA-0.55%
Gulf Indonesia Resources Ltd.
(Oil- International
Integrated)(a) 606,600 4,814,887
- ---------------------------------------------------------------
PT Indofood Sukses Makmur Tbk
(Foods)(a) 4,247,000 5,018,337
- ---------------------------------------------------------------
9,833,224
- ---------------------------------------------------------------
IRELAND-0.96%
CRH PLC (Construction-Cement &
Aggregates) 490,000 9,253,306
- ---------------------------------------------------------------
Esat Telecom Group PLC-ADR
(Telecommunications-Long
Distance)(a) 110,500 4,944,875
- ---------------------------------------------------------------
Ryanair Holdings PLC-ADR
(Airlines)(a) 72,200 2,978,250
- ---------------------------------------------------------------
17,176,431
- ---------------------------------------------------------------
ISRAEL-0.79%
Orbotech, Ltd.
(Computers-Software &
Services)(a) 138,000 10,781,250
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ISRAEL-(CONTINUED)
Partner Communications Co.
Ltd.-ADR
(Telecommunications-
Cellular/Wireless)(a) 215,000 $ 3,386,250
- ---------------------------------------------------------------
14,167,500
- ---------------------------------------------------------------
ITALY-1.47%
Banca Popolare di Brescia (Banks-
Regional) 314,000 13,296,334
- ---------------------------------------------------------------
Gruppo Editoriale L'Espresso
(Publishing) 600,000 13,034,899
- ---------------------------------------------------------------
26,331,233
- ---------------------------------------------------------------
JAPAN-9.55%
Bellsystem 24, Inc.
(Services-Commercial &
Consumer) 42,000 40,285,838
- ---------------------------------------------------------------
Circle K Japan Co. Ltd.
(Retail-Food Chains) 244,200 9,790,955
- ---------------------------------------------------------------
Hokuto Corp. (Agricultural
Products) 240,750 14,201,837
- ---------------------------------------------------------------
Orix Corp.
(Financial-Diversified) 27,600 3,706,297
- ---------------------------------------------------------------
Sanix Inc. (Services-Commercial &
Consumer) 108,600 10,104,264
- ---------------------------------------------------------------
Shohkoh Fund & Co. Ltd.
(Financial- Diversified) 20,600 12,606,398
- ---------------------------------------------------------------
Softbank Corp.
(Computers-Software &
Services)(a) 68,000 28,242,291
- ---------------------------------------------------------------
Trend Micro Inc.
(Computers-Software &
Services)(a) 115,650 22,962,496
- ---------------------------------------------------------------
Yahoo Japan Corp.
(Computers-Software &
Services)(a) 5,600 29,542,948
- ---------------------------------------------------------------
171,443,324
- ---------------------------------------------------------------
MEXICO-6.02%
Cemex S.A. de C.V.-ADR
(Construction- Cement &
Aggregates)(a) 259,400 5,836,500
- ---------------------------------------------------------------
Cifra S.A. de C.V.
(Retail-General Merchandise)(a) 5,300,000 8,102,964
- ---------------------------------------------------------------
Coca-Cola Femsa S.A.-ADR
(Beverages- Non-Alcoholic) 566,300 7,857,412
- ---------------------------------------------------------------
Controladora Comercial Mexicana
S.A. de C.V. (Retail-Department
Stores)(c) 5,079,000 4,204,768
- ---------------------------------------------------------------
Corporacion Interamericana de
Entretenimiento S.A.
(Entertainment)(a) 3,288,144 8,891,497
- ---------------------------------------------------------------
Fomento Economico Mexicano, S.A.
de C.V.-ADR
(Beverages-Non-Alcoholic) 446,880 14,663,250
- ---------------------------------------------------------------
Grupo Financiero Banamex Accival,
S.A. de C.V. (Banacci)
(Financial-Diversified)(a) 2,368,000 5,923,079
- ---------------------------------------------------------------
Grupo Modelo S.A. de C.V.-Series
C (Beverages-Alcoholic) 3,161,000 7,725,793
- ---------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 323,000 13,727,500
- ---------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de
C.V.- Class A (Paper & Forest
Products) 2,014,000 6,451,503
- ---------------------------------------------------------------
Organizacion Soriana S.A. de C.V.
(Retail- Department Stores) 1,776,000 6,575,725
- ---------------------------------------------------------------
Telefonos de Mexico S.A.-ADR
(Telephone) 142,000 12,141,000
- ---------------------------------------------------------------
</TABLE>
FS-21
<PAGE> 249
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO-(CONTINUED)
Tubos de Acero de Mexico S.A.-ADR
(Oil & Gas-Drilling & Equipment) 541,800 $ 5,925,937
- ---------------------------------------------------------------
108,026,928
- ---------------------------------------------------------------
NETHERLANDS-2.43%
CMG PLC (Computers-Software &
Services) 267,000 10,308,933
- ---------------------------------------------------------------
Draka Holding N.V. (Metal
Fabricators)(a) 21,573 777,334
- ---------------------------------------------------------------
Getronics N.V.
(Computers-Software & Services) 300,000 14,960,151
- ---------------------------------------------------------------
Gucci Group N.V.-New York Shares
(Textiles) 118,000 9,528,500
- ---------------------------------------------------------------
Nutreco Holding N.V.
(Agricultural Products) 235,000 8,035,032
- ---------------------------------------------------------------
43,609,950
- ---------------------------------------------------------------
NORWAY-1.45%
Merkantildata A.S.A
(Services-Commercial &
Consumer) 872,000 7,387,477
- ---------------------------------------------------------------
Tomra Systems A.S.A.
(Manufacturing- Specialized) 486,000 18,574,431
- ---------------------------------------------------------------
25,961,908
- ---------------------------------------------------------------
PHILIPPINES-0.35%
International Container Terminal
Services, Inc. (Air Freight)(a) 6,112,500 586,861
- ---------------------------------------------------------------
SM Prime Holdings, Inc. (Land
Development) 32,000,000 5,665,835
- ---------------------------------------------------------------
6,252,696
- ---------------------------------------------------------------
SINGAPORE-1.98%
Datacraft Asia Ltd.
(Communications Equipment) 834,500 3,838,700
- ---------------------------------------------------------------
DBS Group Holdings Ltd.
(Banks-Money Center)(a) 640,813 7,245,615
- ---------------------------------------------------------------
Keppel Corp. Ltd. (Engineering &
Construction) 1,939,000 5,271,113
- ---------------------------------------------------------------
Keppel Land Ltd. (Land
Development) 3,413,000 4,823,811
- ---------------------------------------------------------------
NatSteel Ltd. (Iron & Steel) 3,946,000 6,597,630
- ---------------------------------------------------------------
Singapore Press Holdings Ltd.
(Publishing- Newspapers) 459,000 7,867,625
- ---------------------------------------------------------------
35,644,494
- ---------------------------------------------------------------
SOUTH AFRICA-0.41%
Dimension Data Holdings Ltd.
(Computers- Software &
Services)(a) 1,519,563 7,372,076
- ---------------------------------------------------------------
SOUTH KOREA-2.80%
Hyundai Motor Co. Ltd.
(Automobiles)(a) 213,000 3,746,811
- ---------------------------------------------------------------
Korea Electric Power Corp.-ADR
(Electric Companies) 486,600 7,663,950
- ---------------------------------------------------------------
Korea Telecom Corp.-ADR
(Telephone)(a) 274,500 9,676,125
- ---------------------------------------------------------------
L.G. Chemical Ltd.
(Chemicals-Specialty) 357,000 10,803,752
- ---------------------------------------------------------------
Pohang Iron & Steel Co. Ltd.-ADR
(Iron & Steel) 301,900 10,075,913
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SOUTH KOREA-(CONTINUED)
Samsung Electronics
(Electronics-Component
Distributors) 50,000 $ 8,336,807
- ---------------------------------------------------------------
50,303,358
- ---------------------------------------------------------------
SPAIN-1.27%
Cortefiel S.A. (Retail-Department
Stores) 155,000 4,048,972
- ---------------------------------------------------------------
Mapfre Vida S.A.
(Insurance-Life/Health) 158,000 4,125,677
- ---------------------------------------------------------------
NH Hotels S.A. (Investment
Management)(a) 1,287,000 14,555,375
- ---------------------------------------------------------------
22,730,024
- ---------------------------------------------------------------
SWEDEN-2.15%
Assa Abloy A.B.-Class B (Metal
Fabricators) 920,000 10,235,895
- ---------------------------------------------------------------
Europolitan Holdings A.B.
(Telecommunications-
Cellular/Wireless) 484,200 5,563,825
- ---------------------------------------------------------------
Framtidsfabriken A.B.
(Computers-Software &
Services)(a) 86,000 3,461,333
- ---------------------------------------------------------------
Modern Times Group A.B.-Class B
(Broadcasting-Television, Radio
& Cable)(a) 469,000 15,169,504
- ---------------------------------------------------------------
NetCom A.B.
(Telecommunications-Cellular/
Wireless)(a) 102,600 4,260,445
- ---------------------------------------------------------------
38,691,002
- ---------------------------------------------------------------
SWITZERLAND-0.73%
Kudelski S.A.
(Electronics-Component
Distributors)(a) 1,220 5,072,998
- ---------------------------------------------------------------
PubliGroupe S.A.
(Services-Advertising/
Marketing) 11,000 8,065,849
- ---------------------------------------------------------------
13,138,847
- ---------------------------------------------------------------
TAIWAN-1.45%
Compal Electronics, Inc.
(Computers- Hardware) 2,801,000 9,404,366
- ---------------------------------------------------------------
Far Eastern Textile Ltd.
(Chemicals- Diversified) 5,641,040 7,718,195
- ---------------------------------------------------------------
Taiwan Semiconductor
Manufacturing Co.
(Electronics-Semiconductors)(a) 2,021,000 8,983,638
- ---------------------------------------------------------------
26,106,199
- ---------------------------------------------------------------
THAILAND-0.70%
Advanced Info Service Public Co.
Ltd. (Telephone)(a) 569,000 6,632,561
- ---------------------------------------------------------------
Siam Commercial Bank PLC, 5.25%
Pfd. (Banks-Regional)(a) 5,189,000 5,880,553
- ---------------------------------------------------------------
12,513,114
- ---------------------------------------------------------------
UNITED KINGDOM-6.76%
Aggreko PLC (Services-Facilities
& Environmental) 1,000,000 5,022,726
- ---------------------------------------------------------------
AMEC PLC (Construction-Cement &
Aggregates) 678,000 2,391,031
- ---------------------------------------------------------------
ARM Holdings PLC (Electronics-
Semiconductors)(a) 112,000 3,181,925
- ---------------------------------------------------------------
</TABLE>
FS-22
<PAGE> 250
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Avis Europe PLC
(Services-Commercial &
Consumer)(c) 1,484,550 $ 6,345,947
- ---------------------------------------------------------------
Cattles PLC (Consumer Finance) 1,020,000 4,779,399
- ---------------------------------------------------------------
Compass Group PLC
(Services-Commercial &
Consumer) 670,000 7,182,086
- ---------------------------------------------------------------
Eidos PLC-ADR (Computer Software/
Services)(a) 216,000 15,079,500
- ---------------------------------------------------------------
Iceland Group PLC (Retail-Food
Chains) 862,000 4,102,835
- ---------------------------------------------------------------
J.D. Wetherspoon PLC (Leisure
Time- Products) 1,000,000 5,622,822
- ---------------------------------------------------------------
Logica PLC (Computer Software &
Services) 775,000 11,856,222
- ---------------------------------------------------------------
Matalan PLC (Retail-Discounters) 160,000 3,603,867
- ---------------------------------------------------------------
Mayflower Corp. PLC (The) (Auto
Parts & Equipment) 2,240,000 7,733,846
- ---------------------------------------------------------------
Nestor Healthcare Group PLC
(Services- Commercial &
Consumer) 300,000 2,935,952
- ---------------------------------------------------------------
Pace Micro Technology PLC
(Communications Equipment) 1,360,000 6,109,804
- ---------------------------------------------------------------
Provident Financial PLC (Consumer
Finance) 964,912 10,779,668
- ---------------------------------------------------------------
Sage Group PLC (The)
(Computers-Software & Services) 369,150 18,941,958
- ---------------------------------------------------------------
Stagecoach Holdings PLC
(Shipping) 1,980,000 5,631,700
- ---------------------------------------------------------------
121,301,288
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$778,989,784) 1,121,672,670
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS & NOTES-0.27%
MANUFACTURING (DIVERSIFIED)-0.27%
Shanghai Industrial Investment
Trust Co. (United Kingdom),
Conv. Gtd. Bonds, 1.00%,
02/24/03 (Acquired 03/05/98-
03/09/98; Cost $5,218,750)(b) $ 5,000,000 $ 4,762,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-4.34%
STIC Liquid Assets Portfolio(d) 38,938,805 38,938,805
- ---------------------------------------------------------------
STIC Prime Portfolio(d) 38,938,805 38,938,805
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $77,877,610) 77,877,610
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.64% 1,806,941,987
- ---------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(0.64%) (11,446,930)
- ---------------------------------------------------------------
NET ASSETS-100.00% $1,795,495,057
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
GDR - Global Depositary Receipt
Gtd. - Guaranteed
Pfd. - Preferred
Rts. - Rights
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of this security has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at 10/31/99 was $9,027,500, which
represented 0.50% of the Fund's net assets.
(c) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(d) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-23
<PAGE> 251
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,102,265,014)) $ 1,806,941,987
- ------------------------------------------------------------
Foreign currencies, at value (cost
$12,540,812)) 12,603,459
- ------------------------------------------------------------
Receivables for:
Investments sold 2,533,659
- ------------------------------------------------------------
Capital stock sold 1,489,698
- ------------------------------------------------------------
Dividends and interest 1,340,732
- ------------------------------------------------------------
Foreign exchange contracts 11,893
- ------------------------------------------------------------
Investment for deferred compensation plan 36,447
- ------------------------------------------------------------
Other assets 46,712
- ------------------------------------------------------------
Total assets 1,825,004,587
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 22,853,421
- ------------------------------------------------------------
Capital stock reacquired 2,845,059
- ------------------------------------------------------------
Deferred compensation 36,447
- ------------------------------------------------------------
Foreign exchange contracts 1,869
- ------------------------------------------------------------
Accrued advisory fees 1,282,152
- ------------------------------------------------------------
Accrued administrative services fees 12,779
- ------------------------------------------------------------
Accrued directors' fees 4,950
- ------------------------------------------------------------
Accrued distribution fees 1,364,737
- ------------------------------------------------------------
Accrued transfer agent fees 671,017
- ------------------------------------------------------------
Accrued operating expenses 437,099
- ------------------------------------------------------------
Total liabilities 29,509,530
- ------------------------------------------------------------
Net assets applicable to shares outstanding $ 1,795,495,057
============================================================
NET ASSETS:
Class A $ 852,198,373
============================================================
Class B $ 926,971,942
============================================================
Class C $ 16,324,742
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 38,827,789
============================================================
Class B:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 43,427,805
============================================================
Class C:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 764,714
============================================================
Class A:
Net asset value and redemption price per
share $ 21.95
- ------------------------------------------------------------
Offering price per share:
(Net asset value $21.95 / 95.25%) $ 23.04
============================================================
Class B:
Net asset value and offering price per
share $ 21.35
============================================================
Class C:
Net asset value and offering price per
share $ 21.35
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,233,796 foreign
withholding tax) $ 9,907,460
- -------------------------------------------------------------
Interest 5,073,170
- -------------------------------------------------------------
Total investment income 14,980,630
- -------------------------------------------------------------
EXPENSES:
Advisory fees 15,416,368
- -------------------------------------------------------------
Administrative services fees 127,117
- -------------------------------------------------------------
Custodian fees 1,206,826
- -------------------------------------------------------------
Directors' fees 25,466
- -------------------------------------------------------------
Distribution fees-Class A 4,209,929
- -------------------------------------------------------------
Distribution fees-Class B 8,987,826
- -------------------------------------------------------------
Distribution fees-Class C 140,985
- -------------------------------------------------------------
Transfer agent fees-Class A 2,565,991
- -------------------------------------------------------------
Transfer agent fees-Class B 3,267,402
- -------------------------------------------------------------
Transfer agent fees-Class C 64,107
- -------------------------------------------------------------
Other 830,046
- -------------------------------------------------------------
Total expenses 36,842,063
- -------------------------------------------------------------
Less: Expenses paid indirectly (61,092)
- -------------------------------------------------------------
Net expenses 36,780,971
- -------------------------------------------------------------
Net investment income (loss) (21,800,341)
- -------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 197,468,014
- -------------------------------------------------------------
Foreign currencies (1,896,989)
- -------------------------------------------------------------
195,571,025
- -------------------------------------------------------------
Change in net unrealized appreciation of:
Investment securities 394,282,624
- -------------------------------------------------------------
Foreign currencies 8,398
- -------------------------------------------------------------
394,291,022
- -------------------------------------------------------------
Net gain from investment securities and
foreign
currencies 589,862,047
- -------------------------------------------------------------
Net increase in net assets resulting from
operations $ 568,061,706
=============================================================
</TABLE>
See Notes to Financial Statements.
FS-24
<PAGE> 252
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (21,800,341) $ (19,250,738)
- ----------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 195,571,025 8,287,562
- ----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies 394,291,022 (163,765,028)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 568,061,706 (174,728,204)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A (361,902,444) (230,924,075)
- ----------------------------------------------------------------------------------------------
Class B (307,272,112) (195,608,768)
- ----------------------------------------------------------------------------------------------
Class C (1,457,883) 10,146,858
- ----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (102,570,733) (591,114,189)
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,898,065,790 2,489,179,979
- ----------------------------------------------------------------------------------------------
End of period $1,795,495,057 $1,898,065,790
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 992,683,210 $1,684,292,210
- ----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (13,357,764) (10,598,077)
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities and foreign currencies 111,551,104 (85,955,828)
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 704,618,507 310,327,485
- ----------------------------------------------------------------------------------------------
$1,795,495,057 $1,898,065,790
==============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-25
<PAGE> 253
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Aggressive Growth Fund (the "Fund") is a series portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of six
separate portfolios. 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 will be 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 above-average 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 the 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 its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and options contracts generally will be
valued 15 minutes after the close of trading of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
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. Securities Transactions, Investment Income and Distributions
-- Securities transactions are accounted for on a trade date basis. Realized
gains or losses on sales 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 the accrual basis. Dividend income is recorded on the
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for Federal income tax purposes.
Distributions from income and net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was increased by
$19,040,654, undistributed net realized gains increased by $1,935,907 and
paid-in capital decreased by $20,976,561 as a result of differing book/tax
treatment of foreign currency transactions and net operating loss
reclassifications 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 reclassification discussed above.
C. 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.
D. 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. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
FS-26
<PAGE> 254
fluctuations are included with the net realized and unrealized gain or loss
from investments.
E. 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.
F. Bond Premiums -- It is the policy of the Fund not to amortize
market premiums on bonds for financial reporting purposes.
G. Expenses -- Distribution expenses 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 investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.90% of the first $1
billion of the Fund's average daily net assets, plus 0.85% of the Fund's average
daily net assets in excess of $1 billion.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1999, AIM was
paid $127,117 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 and
shareholder services to the Fund. During the year ended October 31, 1999, AFS
was paid $3,367,288 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 a plan
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C 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 Class 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,
1999, the Class A, Class B and Class C shares paid AIM Distributors $4,209,929,
$8,987,826 and $140,985, respectively, as compensation under the Plans.
AIM Distributors received commissions of $267,534 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1999,
AIM Distributors received $101,594 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, 1999, the Fund paid legal fees of $6,959 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$21,196 and $39,896, respectively, under expense offset arrangements. The effect
of the above arrangements resulted in a reduction of the Fund's total expenses
of $61,092 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests 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. During the year
ended October 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
FS-27
<PAGE> 255
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, 1999 was
$980,253,634 and $1,451,494,862, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $727,202,713
- --------------------------------------------------------------------------
Aggregate unrealized appreciation (depreciation) of
investment securities (35,792,955)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $691,409,758
==========================================================================
</TABLE>
Cost of investments for tax purposes is $1,115,532,229.
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
----------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 44,392,973 $ 788,784,876 98,887,924 $ 1,735,509,689
- ---------------------------------------------------------------------------------------------------------------------
Class B 2,884,425 50,807,802 8,273,209 143,682,325
- ---------------------------------------------------------------------------------------------------------------------
Class C 812,924 14,207,396 839,541 14,593,832
- ---------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Reacquired:
Class A (64,640,003) (1,150,687,320) (111,697,312) (1,966,433,764)
- ---------------------------------------------------------------------------------------------------------------------
Class B (20,494,580) (358,079,914) (20,304,373) (339,291,093)
- ---------------------------------------------------------------------------------------------------------------------
Class C (897,630) (15,665,279) (265,144) (4,446,974)
- ---------------------------------------------------------------------------------------------------------------------
(37,941,891) $ (670,632,439) (24,266,155) $ (416,385,985)
=====================================================================================================================
</TABLE>
FS-28
<PAGE> 256
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
capital stock outstanding during each of the years in the five-year period ended
October 31, 1999 and for a share of Class C capital stock outstanding during
each of the years in the two-year period ended October 31, 1999 and the period
August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.87 $ 17.28 $ 15.76 $ 13.09 $ 10.22
- ------------------------------------------------------------ -------- -------- ---------- -------- --------
Income from investment operations:
Net investment income (loss) (0.17)(a) (0.10)(a) (0.15)(a) (0.09)(a) (0.09)(a)
- ------------------------------------------------------------ -------- -------- ---------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 6.25 (1.31) 1.67 2.81 2.96
- ------------------------------------------------------------ -------- -------- ---------- -------- --------
Total from investment operations 6.08 (1.41) 1.52 2.72 2.87
- ------------------------------------------------------------ -------- -------- ---------- -------- --------
Less distributions:
Distributions from net realized gains -- -- -- (0.05) --
- ------------------------------------------------------------ -------- -------- ---------- -------- --------
Net asset value, end of period $ 21.95 $ 15.87 $ 17.28 $ 15.76 $ 13.09
============================================================ ======== ======== ========== ======== ========
Total return(b) 38.31% (8.16)% 9.65% 20.83% 28.08%
============================================================ ======== ======== ========== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $852,198 $937,587 $1,242,505 $919,319 $186,029
============================================================ ======== ======== ========== ======== ========
Ratio of expenses to average net assets 1.80%(c) 1.75% 1.75% 1.83% 2.11%
============================================================ ======== ======== ========== ======== ========
Ratio of net investment income (loss) to average net assets (0.95)%(c) (0.55)% (0.88)% (0.62)% (0.68)%
============================================================ ======== ======== ========== ======== ========
Portfolio turnover rate 60% 50% 57% 44% 64%
============================================================ ======== ======== ========== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) Ratios are based on average net assets of $841,985,823.
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------- -----------------------------
1999 1998 1997 1996 1995 1999 1998 1997
-------- -------- ---------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.52 $ 17.00 $ 15.58 $ 13.02 $ 10.21 $ 15.52 $ 17.00 $ 18.39
- ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.27)(a) (0.19)(a) (0.24)(a) (0.17)(a) (0.14)(a) (0.27)(a) (0.19)(a) (0.04)(a)
- ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 6.10 (1.29) 1.66 2.78 2.95 6.10 (1.29) (1.35)
- ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- -------
Total from investment
operations 5.83 (1.48) 1.42 2.61 2.81 5.83 (1.48) (1.39)
- ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- -------
Less distributions:
Distributions from net realized
gains -- -- -- (0.05) -- -- -- --
- ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- -------
Net asset value, end of period $ 21.35 $ 15.52 $ 17.00 $ 15.58 $ 13.02 $ 21.35 $ 15.52 $ 17.00
===================================== ======== ======== ========== ======== ======== ======= ======= =======
Total return(b) 37.56% (8.71)% 9.11% 20.09% 27.52% 37.56% (8.71)% (7.56)%
===================================== ======== ======== ========== ======== ======== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $926,972 $947,293 $1,241,999 $807,215 $118,199 $16,325 $13,186 $ 4,676
===================================== ======== ======== ========== ======== ======== ======= ======= =======
Ratio of expenses to average net
assets 2.37%(c) 2.32% 2.30% 2.37% 2.62% 2.37%(c) 2.34% 2.36%(d)
===================================== ======== ======== ========== ======== ======== ======= ======= =======
Ratio of net investment income (loss)
to average net assets (1.52)%(c) (1.11)% (1.44)% (1.16)% (1.19)% (1.52)%(c) (1.13)% (1.50)%(d)
===================================== ======== ======== ========== ======== ======== ======= ======= =======
Portfolio turnover rate 60% 50% 57% 44% 64% 60% 50% 57%
===================================== ======== ======== ========== ======== ======== ======= ======= =======
</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 $898,782,589 and $14,098,451 for
Class B and Class C, respectively.
(d) Annualized.
FS-29
<PAGE> 257
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, 1999, and the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and the financial
highlights for each of the years in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1999, 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, 1999, the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended and the financial highlights for each of the
years in the five-year period then ended in conformity
with generally accepted accounting principles.
KPMG LLP
December 3, 1999
Houston, Texas
FS-30
<PAGE> 258
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-37.74%
BANKS (MONEY CENTER)-0.54%
Chase Manhattan Corp. (The) 52,500 $ 4,587,187
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-2.63%
Adelphia Communications Corp.(a) 64,500 3,523,312
- --------------------------------------------------------------
AT&T Corp. - Liberty Media
Group-Class A(a) 107,300 4,258,469
- --------------------------------------------------------------
Clear Channel Communications,
Inc.(a) 57,000 4,581,375
- --------------------------------------------------------------
Comcast Corp.-Class A 115,700 4,873,862
- --------------------------------------------------------------
Infinity Broadcasting Corp.-Class
A(a) 145,000 5,011,562
- --------------------------------------------------------------
22,248,580
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-2.85%
Comverse Technology, Inc.(a) 61,800 7,014,300
- --------------------------------------------------------------
General Instrument Corp.(a) 91,500 4,923,844
- --------------------------------------------------------------
JDS Uniphase Corp.(a) 47,192 7,875,165
- --------------------------------------------------------------
Motorola, Inc. 43,600 4,248,275
- --------------------------------------------------------------
24,061,584
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-1.48%
Dell Computer Corp.(a) 93,500 3,751,687
- --------------------------------------------------------------
Sun Microsystems, Inc.(a) 83,000 8,782,437
- --------------------------------------------------------------
12,534,124
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-1.11%
Cisco Systems, Inc.(a) 126,900 9,390,600
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.71%
EMC Corp.(a) 131,400 9,592,200
- --------------------------------------------------------------
Lexmark International Group,
Inc.-Class A(a) 62,000 4,839,875
- --------------------------------------------------------------
14,432,075
- --------------------------------------------------------------
COMPUTERS (SOFTWARE &
SERVICES)-4.82%
America Online, Inc.(a)(b) 64,000 8,300,000
- --------------------------------------------------------------
Intuit, Inc.(a) 127,500 3,713,437
- --------------------------------------------------------------
Microsoft Corp.(a) 87,600 8,108,475
- --------------------------------------------------------------
Novell, Inc.(a) 188,500 3,781,781
- --------------------------------------------------------------
Unisys Corp.(a) 108,000 2,619,000
- --------------------------------------------------------------
VERITAS Software Corp.(a) 91,000 9,816,625
- --------------------------------------------------------------
Yahoo! Inc.(a) 24,500 4,387,031
- --------------------------------------------------------------
40,726,349
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.17%
Conexant Systems, Inc.(a) 53,000 4,948,875
- --------------------------------------------------------------
Sanmina Corp.(a) 55,000 4,953,438
- --------------------------------------------------------------
9,902,313
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-2.94%
Intel Corp. 116,000 8,982,750
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (SEMICONDUCTORS)-(CONTINUED)
LSI Logic Corp.(a) 71,000 $ 3,776,313
- --------------------------------------------------------------
Texas Instruments, Inc. 62,000 5,564,500
- --------------------------------------------------------------
Xilinx, Inc.(a) 82,500 6,486,563
- --------------------------------------------------------------
24,810,126
- --------------------------------------------------------------
ENTERTAINMENT-0.63%
Time Warner Inc. 76,500 5,331,094
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.57%
Fannie Mae 100,000 7,075,000
- --------------------------------------------------------------
Freddie Mac 115,000 6,217,188
- --------------------------------------------------------------
13,292,188
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-3.43%
American Home Products Corp. 125,500 6,557,375
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 113,600 8,725,900
- --------------------------------------------------------------
Johnson & Johnson 84,000 8,799,000
- --------------------------------------------------------------
Warner-Lambert Co. 62,000 4,948,375
- --------------------------------------------------------------
29,030,650
- --------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-1.04%
Pfizer, Inc. 222,900 8,804,550
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-0.90%
Guidant Corp. 154,400 7,623,500
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.08%
American International Group, Inc. 88,750 9,135,703
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.57%
Morgan Stanley, Dean Witter,
Discover & Co. 44,000 4,853,750
- --------------------------------------------------------------
LODGING-HOTELS-0.48%
Carnival Corp. 90,600 4,031,700
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.80%
Tyco International Ltd. 170,000 6,789,375
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.56%
Home Depot, Inc. (The) 114,000 8,607,000
- --------------------------------------------------------------
Lowe's Companies, Inc. 82,900 4,559,500
- --------------------------------------------------------------
13,166,500
- --------------------------------------------------------------
RETAIL (COMPUTERS &
ELECTRONICS)-0.49%
Best Buy Co., Inc.(a) 75,200 4,178,300
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.31%
Kroger Co. (The)(a) 125,000 2,601,563
- --------------------------------------------------------------
</TABLE>
FS-31
<PAGE> 259
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (GENERAL MERCHANDISE)-2.15%
Costco Wholesale Corp.(a) 54,000 $ 4,336,875
- --------------------------------------------------------------
Dayton Hudson Corp. 68,900 4,452,663
- --------------------------------------------------------------
Wal-Mart Stores, Inc. 164,900 9,347,769
- --------------------------------------------------------------
18,137,307
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.72%
Gap, Inc. (The) 75,750 2,812,219
- --------------------------------------------------------------
Intimate Brands, Inc. 79,170 3,245,970
- --------------------------------------------------------------
6,058,189
- --------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.63%
Outdoor Systems, Inc.(a) 125,000 5,296,875
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-0.74%
Fiserv, Inc.(a) 195,000 6,240,000
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.57%
Nextel Communications, Inc.-Class
A(a) 55,600 4,792,025
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.82%
MCI WorldCom, Inc.(a)(b) 80,400 6,899,325
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $227,333,243) 318,955,532
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-54.81%
AUSTRALIA-2.04%
AMP Ltd. (Insurance-Life/Health) 201,840 2,053,107
- --------------------------------------------------------------
Austar United Communications Ltd.
(Broadcasting-Television, Radio,
& Cable)(a) 514,100 1,672,516
- --------------------------------------------------------------
Brambles Industries Ltd. (Air
Freight) 102,000 2,869,402
- --------------------------------------------------------------
Cable & Wireless Optus Ltd.
(Telephone)(a) 701,800 1,607,165
- --------------------------------------------------------------
Foster's Brewing Group Ltd.
(Beverages- Alcoholic) 950,000 2,525,829
- --------------------------------------------------------------
TABCORP Holdings Ltd. (Leisure Time
Products) 361,000 2,289,002
- --------------------------------------------------------------
Telstra Corp. Ltd. (Telephone)(a) 1,315,900 4,222,245
- --------------------------------------------------------------
17,239,266
- --------------------------------------------------------------
BELGIUM-0.27%
UCB S.A.
(Manufacturing-Diversified) 60,300 2,248,899
- --------------------------------------------------------------
BRAZIL-0.96%
Embratel Participacoes S.A.-ADR
(Telephone) 134,100 1,726,538
- --------------------------------------------------------------
Petroleo Brasileiro
S.A.-Petrobras-Pfd. (Oil &
Gas-Exploration & Production) 21,286 3,385,834
- --------------------------------------------------------------
Tele Centro Sul Participacoes
S.A.-ADR (Telephone) 28,900 1,726,775
- --------------------------------------------------------------
Telesp Participacoes S.A.-ADR
(Telephone) 79,200 1,282,050
- --------------------------------------------------------------
8,121,197
- --------------------------------------------------------------
CANADA-3.08%
BCE, Inc. (Telephone) 110,330 6,639,434
- --------------------------------------------------------------
Bombardier Inc. (Aerospace/Defense) 111,360 1,962,774
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Loblaw Co. Ltd. (Retail-Food
Chains) 43,000 $ 1,001,766
- --------------------------------------------------------------
Nortel Networks Corp.
(Communications Equipment) 218,092 13,508,073
- --------------------------------------------------------------
Toronto-Dominion Bank (The)
(Banks-Regional) 126,440 2,898,424
- --------------------------------------------------------------
26,010,471
- --------------------------------------------------------------
FINLAND-1.34%
Nokia Oyj (Communications
Equipment) 99,200 11,355,777
- --------------------------------------------------------------
FRANCE-6.33%
Accor S.A. (Lodging-Hotels) 13,000 2,926,803
- --------------------------------------------------------------
Alstom (Engineering & Construction) 23,650 716,572
- --------------------------------------------------------------
AXA (Insurance-Multi-Line) 63,080 8,899,320
- --------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 69,560 6,110,580
- --------------------------------------------------------------
Carrefour Supermarche S.A.
(Retail-Food Chains) 70,020 12,964,959
- --------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 25,320 4,829,452
- --------------------------------------------------------------
PSA Peugeot Citreon (Automobiles) 10,000 1,919,991
- --------------------------------------------------------------
Renault S.A. (Automobiles) 35,000 1,811,630
- --------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting- Television, Radio
& Cable) 17,170 5,382,982
- --------------------------------------------------------------
Total Fina S.A.-Class B (Oil &
Gas-Refining & Marketing) 58,469 7,904,363
- --------------------------------------------------------------
53,466,652
- --------------------------------------------------------------
GERMANY-1.62%
Deutsche Bank A.G. (Banks-Major
Regional)(a) 22,000 1,578,496
- --------------------------------------------------------------
EM.TV & Merchandising A.G.
(Broadcasting- Television, Radio
& Cable) 50,000 2,472,318
- --------------------------------------------------------------
EM.TV & Merchandising A.G.-Rts.,
expiring 11/12/99
(Broadcasting-Television, Radio &
Cable) 50,000 526
- --------------------------------------------------------------
Mannesmann A.G.
(Machinery-Diversified) 61,060 9,603,607
- --------------------------------------------------------------
13,654,947
- --------------------------------------------------------------
HONG KONG-1.95%
China Telecom Ltd.
(Telecommunications-
Cellular/Wireless)(a) 1,496,000 5,113,065
- --------------------------------------------------------------
Cosco Pacific Ltd.
(Financial-Diversified) 5,219,000 3,695,176
- --------------------------------------------------------------
Dao Heng Bank Group Ltd.
(Banks-Regional)(a) 828,000 3,762,619
- --------------------------------------------------------------
Hutchison Whampoa Ltd. (Retail-Food
Chains) 392,000 3,936,098
- --------------------------------------------------------------
16,506,958
- --------------------------------------------------------------
INDONESIA-0.11%
Gulf Indonesia Resources Ltd. (Oil-
International Integrated)(a) 122,200 969,963
- --------------------------------------------------------------
IRELAND-0.58%
Bank of Ireland (Banks-Major
Regional) 180,484 1,410,795
- --------------------------------------------------------------
</TABLE>
FS-32
<PAGE> 260
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
IRELAND-(CONTINUED)
CRH PLC (Construction-Cement &
Aggregates) 186,000 $ 3,512,479
- --------------------------------------------------------------
4,923,274
- --------------------------------------------------------------
ITALY-0.91%
Banca Popolare di Brescia
(Banks-Regional) 143,000 6,055,337
- --------------------------------------------------------------
Credito Italiano S.p.A.
(Banks-Major Regional) 345,200 1,616,096
- --------------------------------------------------------------
7,671,433
- --------------------------------------------------------------
JAPAN-17.16%
Advantest Corp.
(Electronics-Instrumentation) 46,900 7,062,779
- --------------------------------------------------------------
Alps Electric Co., Ltd.
(Electronics-Component
Distributors) 207,000 4,010,743
- --------------------------------------------------------------
DDI Corp. (Telecommunications) 6,300 6,888,878
- --------------------------------------------------------------
Hirose Electric Co. Ltd.
(Electronics- Component
Distributors) 36,800 6,420,718
- --------------------------------------------------------------
Hoya Corp.
(Manufacturing-Specialized) 50,000 3,596,950
- --------------------------------------------------------------
Ibiden Co., Ltd.
(Electronics-Component
Distributors) 153,000 2,568,222
- --------------------------------------------------------------
Kirin Brewery Co., Ltd.
(Beverages-Alcoholic) 361,000 4,134,420
- --------------------------------------------------------------
Kyocera Corp.
(Electronics-Component
Distributors) 57,300 5,496,139
- --------------------------------------------------------------
Matsushita Communication Industrial
Co., Ltd. (Telephone) 63,000 10,587,118
- --------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics- Component
Distributors) 65,000 8,354,515
- --------------------------------------------------------------
NEC Corp. (Computers-Hardware) 358,000 7,245,504
- --------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telecommunications-Long
Distance) 6,080 9,330,967
- --------------------------------------------------------------
NTT Data Corp. (Computers-Software
& Services) 3,180 5,032,852
- --------------------------------------------------------------
NTT Mobile Communications Network,
Inc.
(Telecommunications-Cellular/Wireless) 4,250 11,292,024
- --------------------------------------------------------------
Okuma Corp. (Hardware & Tools) 582,000 2,372,548
- --------------------------------------------------------------
Omron Corp. (Electronics-Component
Distributors) 13,000 271,833
- --------------------------------------------------------------
Orix Corp. (Financial-Diversified) 12,600 1,692,005
- --------------------------------------------------------------
Ricoh Co., Ltd. (Office Equipment &
Supplies) 328,000 5,351,571
- --------------------------------------------------------------
Rohm Co. Ltd.
(Electronics-Component
Distributors) 15,000 3,366,745
- --------------------------------------------------------------
Sanix Inc. (Services-Commercial &
Consumer) 51,100 4,754,400
- --------------------------------------------------------------
Sharp Corp. (Electrical Equipment) 185,000 2,945,662
- --------------------------------------------------------------
Sony Corp. (Electronics-Component
Distributors) 63,300 9,872,505
- --------------------------------------------------------------
Takeda Chemical Industries Ltd.
(Health Care- Drugs-Generic &
Other) 94,000 5,400,796
- --------------------------------------------------------------
Tokyo Electron Ltd. (Electronics-
Semiconductors) 44,000 3,654,885
- --------------------------------------------------------------
Trend Micro Inc.
(Computers-Software &
Services)(a) 52,650 10,453,743
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-(CONTINUED)
Ushio, Inc. (Electronics-Component
Distributors) 235,000 $ 2,891,996
- --------------------------------------------------------------
145,050,518
- --------------------------------------------------------------
MEXICO-2.42%
Cifra S.A. de C.V. (Retail-General
Merchandise)(a) 2,327,000 3,557,660
- --------------------------------------------------------------
Coca-Cola Femsa S.A.-ADR
(Beverages- Non-Alcoholic) 174,900 2,426,738
- --------------------------------------------------------------
Fomento Economico Mexicano, S.A. de
C.V.-ADR
(Beverages-Non-Alcoholic) 111,590 3,661,547
- --------------------------------------------------------------
Grupo Modelo S.A. de C.V.-Series C
(Beverages-Alcoholic) 445,440 1,088,699
- --------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 105,200 4,471,000
- --------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de
C.V.-Class A (Paper & Forest
Products) 518,000 1,659,324
- --------------------------------------------------------------
Telefonos de Mexico S.A.-ADR
(Telephone) 42,500 3,633,750
- --------------------------------------------------------------
20,498,718
- --------------------------------------------------------------
NETHERLANDS-2.47%
Aegon N.V. (Insurance Brokers) 52,200 4,818,968
- --------------------------------------------------------------
Equant N.V.
(Computers-Networking)(a) 8,500 827,174
- --------------------------------------------------------------
Getronics N.V. (Computers-Software
& Services) 47,560 2,371,683
- --------------------------------------------------------------
Koninklijke (Royal) Philips
Electronics N.V. (Electrical
Equipment) 46,560 4,775,886
- --------------------------------------------------------------
Koninklijke Ahold N.V. (Retail-Food
Chains) 152,200 4,675,563
- --------------------------------------------------------------
Verenigde Nederlandse
Uitgeversbedrijven Verenigd Bezit
(Publishing) 101,830 3,444,238
- --------------------------------------------------------------
20,913,512
- --------------------------------------------------------------
NEW ZEALAND-0.30%
Auckland International Airport Ltd.
(Airlines) 1,800,000 2,502,004
- --------------------------------------------------------------
SINGAPORE-1.44%
Allgreen Properties Ltd.
(Homebuilding)(a) 1,020,000 864,979
- --------------------------------------------------------------
DBS Group Holdings Ltd.
(Banks-Money Center)(a) 280,283 3,169,135
- --------------------------------------------------------------
Keppel Corp. Ltd. (Engineering &
Construction) 782,600 2,127,475
- --------------------------------------------------------------
NatSteel Ltd. (Iron & Steel) 1,553,000 2,596,584
- --------------------------------------------------------------
Singapore Press Holdings Ltd.
(Publishing- Newspapers) 200,000 3,428,159
- --------------------------------------------------------------
12,186,332
- --------------------------------------------------------------
SOUTH KOREA-1.35%
Korea Electric Power Corp.-ADR
(Electric Companies) 131,000 2,063,250
- --------------------------------------------------------------
Korea Telecom Corp.-ADR
(Telephone)(a) 122,200 4,307,550
- --------------------------------------------------------------
L.G. Chemical Ltd.
(Chemicals-Specialty) 167,000 5,053,856
- --------------------------------------------------------------
11,424,656
- --------------------------------------------------------------
</TABLE>
FS-33
<PAGE> 261
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SPAIN-1.04%
Banco Popular Espanol S.A.
(Banks-Major Regional) 26,000 $ 1,750,611
- --------------------------------------------------------------
Telefonica S.A. (Telephone)(a) 430,380 7,081,499
- --------------------------------------------------------------
8,832,110
- --------------------------------------------------------------
SWEDEN-0.66%
Hennes & Mauritz A.B.-Class B
(Retail- Specialty-Apparel) 210,640 5,596,406
- --------------------------------------------------------------
SWITZERLAND-1.78%
ABB Ltd. (Electrical Equipment)(a) 32,420 3,263,901
- --------------------------------------------------------------
Adecco S.A. (Services-Commercial &
Consumer) 6,600 3,999,738
- --------------------------------------------------------------
Compagnie Financiere Richemont A.G.
(Tobacco) 2,000 3,819,768
- --------------------------------------------------------------
Zurich Allied A.G.
(Insurance-Multi-Line) 6,960 3,939,517
- --------------------------------------------------------------
15,022,924
- --------------------------------------------------------------
UNITED KINGDOM-7.00%
Barclays PLC (Banks-Major Regional) 225,500 6,906,971
- --------------------------------------------------------------
BP Amoco PLC (Oil & Gas-Refining &
Marketing) 220,000 2,135,850
- --------------------------------------------------------------
British Sky Broadcasting Group PLC
(Broadcasting-Television, Radio &
Cable) 440,000 4,727,445
- --------------------------------------------------------------
British Telecommunications PLC
(Communications Equipment) 116,000 2,104,547
- --------------------------------------------------------------
Compass Group PLC
(Services-Commercial & Consumer) 288,800 3,095,801
- --------------------------------------------------------------
General Electric Co. PLC
(Manufacturing- Diversified) 367,100 3,992,477
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Granada Group PLC (Leisure
Time-Products) 270,000 $ 2,135,193
- --------------------------------------------------------------
Hays PLC (Services-Commercial &
Consumer) 461,300 5,282,419
- --------------------------------------------------------------
Invensys PLC (Electronics-Component
Distributors) 290,000 1,425,599
- --------------------------------------------------------------
Orange PLC (Telephone)(a) 450,300 11,230,931
- --------------------------------------------------------------
Provident Financial PLC (Consumer
Finance) 202,478 2,262,015
- --------------------------------------------------------------
Shell Transport & Trading Co. (Oil-
International Integrated) 458,000 3,512,735
- --------------------------------------------------------------
Vodafone AirTouch PLC
(Telecommunications-
Cellular/Wireless) 1,361,500 6,334,791
- --------------------------------------------------------------
WPP Group PLC
(Services-Advertising/ Marketing) 366,600 3,981,012
- --------------------------------------------------------------
59,127,786
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$332,274,553) 463,323,803
- --------------------------------------------------------------
MONEY MARKET FUNDS-6.14%
STIC Liquid Assets Portfolio(c) 25,959,462 25,959,462
- --------------------------------------------------------------
STIC Prime Portfolio(c) 25,959,462 25,959,462
- --------------------------------------------------------------
Total Money Market Funds (Cost
$51,918,924) 51,918,924
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.69% 834,198,259
- --------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.31% 11,052,814
- --------------------------------------------------------------
NET ASSETS-100.00% $845,251,073
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Pfd. - Preferred
Rts. - Rights
Notes to Schedule of Investments:
(a) Non-Income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-34
<PAGE> 262
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$611,526,720) $834,198,259
- -------------------------------------------------------
Foreign currencies, at value (cost
$13,236,307) 13,245,860
- -------------------------------------------------------
Receivables for:
Investments sold 8,377,903
- -------------------------------------------------------
Capital stock sold 1,986,057
- -------------------------------------------------------
Dividends and interest 1,081,214
- -------------------------------------------------------
Investment for deferred compensation plan 23,205
- -------------------------------------------------------
Other assets 38,824
- -------------------------------------------------------
Total assets 858,951,322
- -------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 8,594,115
- -------------------------------------------------------
Capital stock reacquired 1,016,512
- -------------------------------------------------------
Deferred compensation 23,205
- -------------------------------------------------------
Options written (premiums received
$1,753,505) 2,674,700
- -------------------------------------------------------
Accrued advisory fees 581,419
- -------------------------------------------------------
Accrued administrative services fees 10,970
- -------------------------------------------------------
Accrued directors' fees 2,400
- -------------------------------------------------------
Accrued distribution fees 612,902
- -------------------------------------------------------
Accrued transfer agent fees 223,736
- -------------------------------------------------------
Accrued operating expenses (39,710)
- -------------------------------------------------------
Total liabilities 13,700,249
- -------------------------------------------------------
Net assets applicable to shares
outstanding $845,251,073
=======================================================
NET ASSETS:
Class A $388,549,182
=======================================================
Class B $425,345,431
=======================================================
Class C $ 31,356,460
=======================================================
CAPITAL STOCK, $0.001 PAR VALUE PER
SHARE:
Class A:
Authorized 200,000,000
- -------------------------------------------------------
Outstanding 16,580,603
=======================================================
Class B:
Authorized 200,000,000
- -------------------------------------------------------
Outstanding 18,669,410
=======================================================
Class C:
Authorized 200,000,000
- -------------------------------------------------------
Outstanding 1,375,854
=======================================================
Class A:
Net asset value and redemption price
per share $ 23.43
- -------------------------------------------------------
Offering price per share:
(Net asset value $23.43
divided by 95.25%) $ 24.60
=======================================================
Class B:
Net asset value and offering price per
share $ 22.78
=======================================================
Class C:
Net asset value and offering price per
share $ 22.79
=======================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $677,229 foreign
withholding tax) $ 5,811,440
- --------------------------------------------------------
Interest 1,816,133
- --------------------------------------------------------
Total investment income 7,627,573
- --------------------------------------------------------
EXPENSES:
Advisory fees 5,898,665
- --------------------------------------------------------
Administrative services fees 97,142
- --------------------------------------------------------
Custodian fees 341,569
- --------------------------------------------------------
Directors' fees 12,734
- --------------------------------------------------------
Distribution fees -- Class A 1,585,224
- --------------------------------------------------------
Distribution fees -- Class B 3,564,027
- --------------------------------------------------------
Distribution fees -- Class C 205,127
- --------------------------------------------------------
Transfer agent fees -- Class A 708,552
- --------------------------------------------------------
Transfer agent fees -- Class B 982,114
- --------------------------------------------------------
Transfer agent fees -- Class C 66,129
- --------------------------------------------------------
Other 237,509
- --------------------------------------------------------
Total expenses 13,698,792
- --------------------------------------------------------
Less:
Expenses paid indirectly (12,008)
- --------------------------------------------------------
Net expenses 13,686,784
- --------------------------------------------------------
Net investment income (loss) (6,059,211)
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FUTURES AND OPTION
CONTRACTS:
Net realized gain (loss) from:
Investment securities 63,517,124
- --------------------------------------------------------
Foreign currencies 162,721
- --------------------------------------------------------
Forward currency contacts 81,453
- --------------------------------------------------------
Futures contracts 2,042,833
- --------------------------------------------------------
Options contracts written (1,820,509)
- --------------------------------------------------------
63,983,622
- --------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 142,665,744
- --------------------------------------------------------
Foreign currencies (114,912)
- --------------------------------------------------------
Futures contracts (797,175)
- --------------------------------------------------------
Options contracts written (921,195)
- --------------------------------------------------------
140,832,462
- --------------------------------------------------------
Net gain from investment securities,
foreign currencies, futures and
option contracts 204,816,084
- --------------------------------------------------------
Net increase in net assets resulting from
operations $198,756,873
========================================================
</TABLE>
See Notes to Financial Statements.
FS-35
<PAGE> 263
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (6,059,211) $ (2,809,816)
- -------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 63,983,622 18,919,692
- -------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities, foreign currencies, futures and option
contracts 140,832,462 20,734,353
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 198,756,873 36,844,229
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (6,185,053) (4,566,706)
- -------------------------------------------------------------------------------------------
Class B (7,892,012) (5,964,749)
- -------------------------------------------------------------------------------------------
Class C (358,333) (47,034)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 84,229,840 27,194,800
- -------------------------------------------------------------------------------------------
Class B 49,286,118 44,408,521
- -------------------------------------------------------------------------------------------
Class C 14,141,472 11,162,365
- -------------------------------------------------------------------------------------------
Net increase in net assets 331,978,905 109,031,426
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 513,272,168 404,240,742
- -------------------------------------------------------------------------------------------
End of period $845,251,073 $ 513,272,168
===========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $568,723,576 $ 416,466,146
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (806,662) (1,238,947)
- -------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 55,673,261 17,216,533
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 221,660,898 80,828,436
- -------------------------------------------------------------------------------------------
$845,251,073 $ 513,272,168
===========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Growth Fund (the "Fund") is a series portfolio of AIM International
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of six separate
portfolios. 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 will
be 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 the 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 its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued
FS-36
<PAGE> 264
based upon quotes furnished by independent sources and are valued at the last
bid price in the case of equity securities and in the case of debt
obligations, the mean between the last bid and asked prices. Securities for
which market quotations are not readily available or are questionable are
valued at fair value as determined in good faith by or under the supervision
of the Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value. For
purposes of determining net asset value per share, futures and options
contracts generally will be valued 15 minutes after the close of trading of
the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
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. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales 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 the accrual basis. Dividend income is recorded on the
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for Federal income tax purposes.
Distributions from income and net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was increased
by $6,491,496, undistributed net realized gains decreased by $11,091,496 and
paid-in capital increased by $4,600,000 as a result of differing book/tax
treatment of foreign currency transactions, equalization credits and net
operating loss reclassifications 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 reclassification
discussed above.
C. 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.
D. Futures Contracts -- The Fund may purchase or sell 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 value of
the contracts may not correlate with changes in the value of the securities
being hedged.
E. 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. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
F. 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.
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
FS-37
<PAGE> 265
exceeds the premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written option is exercised, the
Fund realizes a gain or a loss from the sale of the underlying security and
the proceeds of the sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the 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, the
Fund pays an option premium. The option's underlying instrument may be a
security or a futures contract. Put options may be used by the 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. Bond Premiums -- It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
J. Expenses -- Distribution expenses 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 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 pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1999, AIM was
paid $97,142 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 and
shareholder services to the Fund. During the year ended October 31, 1999, AFS
was paid $931,153 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 a plan
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund ,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C 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 Class 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,
1999, the Class A, Class B and Class C shares paid AIM Distributors $1,585,224,
$3,564,027 and $205,127, respectively, as compensation under the Plans.
AIM Distributors received commissions of $195,571 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1999,
AIM Distributors received $24,812 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, 1999, the Fund paid legal fees of $3,064 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$8,262 and $3,746, respectively, under expense offset arrangements. The effect
of the above arrangements resulted in a reduction of the Fund's total expenses
of $12,008 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests directors' fees, if so elected
by a director, in mutual fund shares in accordance with a deferred compensation
plan.
FS-38
<PAGE> 266
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. During the year
ended October 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. 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, 1999 was
$723,201,067 and $601,838,894, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $233,438,852
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (11,796,546)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $221,642,306
=========================================================
</TABLE>
Cost of investments for tax purposes is $612,555,953.
NOTE 7-OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 1999 are
summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
-----------------------
NUMBER
OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
<S> <C> <C>
Beginning of period -- --
- --------------------------------------------------------- ---------- ----------
Written 2,084 $2,630,916
- --------------------------------------------------------- ---------- ----------
Closed (640) (877,411)
- --------------------------------------------------------- ---------- ----------
End of period 1,444 $1,753,505
========================================================= ========== ==========
</TABLE>
Open call option contracts written at October 31, 1999 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS 1999 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
- -------------------------------------------------- -------- ------ --------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
American Online, Inc. Apr-00 $130 640 $1,214,039 $1,328,000 $(113,961)
- -------------------------------------------------- -------- ------ --------- ---------- ------------ --------------
MCI Worldcom, Inc. Dec-99 70 804 539,466 1,346,700 (807,234)
- -------------------------------------------------- -------- ------ --------- ---------- ------------ --------------
1,444 $1,753,505 $2,674,700 $(921,195)
================================================== ======== ====== ========= ========== ============ ==============
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Sold
Class A 10,512,070 $ 211,966,029 14,601,141 $ 264,657,310
- -------------------------------------------------------------------------------------------------------------------------
Class B 4,204,829 83,820,436 4,603,864 82,487,081
- -------------------------------------------------------------------------------------------------------------------------
Class C 944,252 18,989,474 731,595 13,444,846
- -------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 314,736 5,777,296 265,883 4,315,756
- -------------------------------------------------------------------------------------------------------------------------
Class B 411,104 7,371,231 348,564 5,562,820
- -------------------------------------------------------------------------------------------------------------------------
Class C 37,653 676,846 2,787 44,837
- -------------------------------------------------------------------------------------------------------------------------
Issued in connection with acquisition*:
Class A 3,763,754 73,826,199 -- --
- -------------------------------------------------------------------------------------------------------------------------
Class B 1,833,252 35,102,320 -- --
- -------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (10,242,303) (207,339,684) (13,382,242) (241,778,266)
- -------------------------------------------------------------------------------------------------------------------------
Class B (3,903,318) (77,007,869) (2,513,498) (43,641,380)
- -------------------------------------------------------------------------------------------------------------------------
Class C (277,476) (5,524,848) (130,050) (2,327,318)
- -------------------------------------------------------------------------------------------------------------------------
7,598,553 $ 147,657,430 4,528,044 $ 82,765,686
=========================================================================================================================
</TABLE>
* The Fund acquired AIM Worldwide Growth Fund on February 12, 1999. The acquired
fund's net assets as of the closing date were $109,306,659. The net assets of
the Fund immediately prior to acquisition were $581,902,071.
FS-39
<PAGE> 267
NOTE 9-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 five year period ended
October 31, 1999 and for a share of Class C capital stock outstanding during
each of the years in the two-year period October 31, 1999 and the period August
4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
1999 1998 1997 1996 1995
--------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.91 $ 16.65 $ 14.20 $ 12.32 $ 10.23
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Income from investment operations:
Net investment income (loss) (0.10) (0.05) (0.04) (0.01) (0.02)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Net gains on securities (both realized and unrealized) 6.12 1.74 2.49 2.11 2.11
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Total from investment operations 6.02 1.69 2.45 2.10 2.09
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income - - - - (0.004)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Distributions from net realized gains (0.50) (0.43) - (0.22) -
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Total distributions (0.50) (0.43) - (0.22) (0.004)
- ------------------------------------------------------------ -------- -------- -------- -------- -------
Net asset value, end of period $ 23.43 $ 17.91 $ 16.65 $ 14.20 $ 12.32
============================================================ ======== ======== ======== ======== =======
Total return(a) 34.43% 10.43% 17.25% 17.26% 20.48%
============================================================ ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $388,549 $219,050 $178,917 $114,971 $23,754
============================================================ ======== ======== ======== ======== =======
Ratio of expenses to average net assets(b) 1.67%(c) 1.70% 1.76% 1.93% 2.12%
============================================================ ======== ======== ======== ======== =======
Ratio of net investment income (loss) to average net
assets(d) (0.57)%(c) (0.27)% (0.30)% (0.13)% (0.28)%
============================================================ ======== ======== ======== ======== =======
Portfolio turnover rate 93% 97% 96% 82% 79%
============================================================ ======== ======== ======== ======== =======
</TABLE>
(a) Does not deduct sales charges.
(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% and 2.98% for 1996-1995.
(c) Ratios are based on average net assets of $317,044,851.
(d) 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)% and (1.14)% for 1996-1995.
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------- ---------------------------
1999 1998 1997 1996 1995 1999 1998 1997
-------- -------- -------- -------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.52 $ 16.39 $ 14.05 $ 12.26 $ 10.22 $ 17.52 $ 16.39 $17.39
- ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------
Income from investment operations:
Net investment income (loss) (0.23)(a) (0.15)(a) (0.11) (0.05) (0.04) (0.23)(a) (0.15)(a)(0.03)
- ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------
Net gains (losses) on securities (both
realized and unrealized) 5.99 1.71 2.45 2.06 2.08 6.00 1.71 (0.97)
- ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------
Total from investment operations 5.76 1.56 2.34 2.01 2.04 5.77 1.56 (1.00)
- ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------
Less distributions:
Distributions from net realized gains (0.50) (0.43) - (0.22) - (0.50) (0.43) -
- ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------
Net asset value, end of period $ 22.78 $ 17.52 $ 16.39 $ 14.05 $ 12.26 $ 22.79 $ 17.52 $16.39
========================================= ======== ======== ======== ======== ======= ======= ======= ======
Total return(b) 33.69% 9.78% 16.65% 16.60% 19.96% 33.69% 9.78% (5.75)%
========================================= ======== ======== ======== ======== ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $425,345 $282,456 $224,225 $121,848 $17,157 $31,356 $11,765 $1,100
========================================= ======== ======== ======== ======== ======= ======= ======= ======
Ratio of expenses to average net assets 2.23%(c) 2.26% 2.29% 2.48%(d) 2.64%(d) 2.23%(c) 2.26% 2.29%(e)
========================================= ======== ======== ======== ======== ======= ======= ======= ======
Ratio of net investment income (loss) to
average net assets (1.13)%(c) (0.83)% (0.83)% (0.69)%(f) (0.79)%(f) (1.13)%(c) (0.83)% (0.83)%(e)
========================================= ======== ======== ======== ======== ======= ======= ======= ======
Portfolio turnover rate 93% 97% 96% 82% 79% 93% 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 $356,402,709 and $20,512,721 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% and 3.38% for 1996-1995.
(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)% and (1.54)% for 1996-1995.
FS-40
<PAGE> 268
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of the AIM Global Income Fund (a portfolio of
AIM International Funds, Inc.), including the schedule of
investments, as of October 31, 1999, and the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and the financial
highlights for each of the years in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Global
Income Fund as of October 31, 1999, the results of its
operations for the year then ended, the changes in its
net assets for each of the years in the two-year period
then ended and the financial highlights for each of the
years in the five-year period then ended, in conformity
with generally accepted accounting principles.
KPMG LLP
December 3, 1999
Houston, Texas
FS-41
<PAGE> 269
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
U.S. DOLLAR DENOMINATED BONDS &
NOTES-62.27%
AIR FREIGHT-0.40%
Atlas Air, Inc., Sr. Unsec. Notes,
10.75%, 08/01/05 $ 350,000 $ 350,000
- --------------------------------------------------------------
AIRLINES-3.80%
Air 2 US, Series C, Equipment Trust,
10.127%, 10/01/20 (Acquired
10/28/99; Cost $450,000)(b) 450,000 457,920
- --------------------------------------------------------------
Airplanes Pass Through Trust, Series
D Gtd. Sub. Bonds, 10.875%,
03/15/19 230,000 204,845
- --------------------------------------------------------------
Delta Air Lines, Inc., Deb.,
9.00%, 05/15/16 550,000 583,297
- --------------------------------------------------------------
10.375%, 12/15/22 1,000,000 1,208,370
- --------------------------------------------------------------
Dunlop Standard Aero Holdings
(United Kingdom), Sr. Notes,
11.875%, 05/15/09(c) 530,000 537,950
- --------------------------------------------------------------
United Air Lines, Inc., Pass Through
Ctfs., 9.56%, 10/19/18 300,000 329,784
- --------------------------------------------------------------
3,322,166
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.75%
Advance Stores Co., Inc., Series B,
Sr. Unsec. Gtd. Sub. Notes,
10.25%, 04/15/08 270,000 249,750
- --------------------------------------------------------------
Exide Corp., Sr. Notes, 10.00%,
04/15/05 430,000 402,050
- --------------------------------------------------------------
651,800
- --------------------------------------------------------------
AUTOMOBILES-0.34%
DaimlerChrysler N.A. Holdings
(Germany), Gtd. Notes, 7.20%,
09/01/09 300,000 301,065
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-2.55%
Midland Bank PLC (United Kingdom),
Sub. Notes, 7.65%, 05/01/25 280,000 283,480
- --------------------------------------------------------------
Regions Financial Corp., Sub. Notes,
7.75%, 09/15/24 500,000 497,940
- --------------------------------------------------------------
Republic New York Corp.,
Sub. Notes, 9.70%, 02/01/09 400,000 455,340
- --------------------------------------------------------------
Sub. Deb., 9.50%, 04/15/14 370,000 412,546
- --------------------------------------------------------------
Deutsche Bank Finance B.V.
(Netherlands), Conv. Bonds, 4.50%,
02/12/17(e) 1,200,000 579,060
- --------------------------------------------------------------
2,228,366
- --------------------------------------------------------------
BANKS (MONEY CENTER)-1.26%
Capital One Financial Corp., Unsec.
Notes, 7.25%, 05/01/06 600,000 570,000
- --------------------------------------------------------------
Riggs Capital Trust II, Series C
Gtd. Bonds, 8.875%, 03/15/27 570,000 533,722
- --------------------------------------------------------------
1,103,722
- --------------------------------------------------------------
BANKS (REGIONAL)-0.75%
Mercantile Bancorp, Inc., Unsec.
Sub. Notes, 7.30%, 06/15/07 660,000 654,562
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO &
CABLE)-5.94%
British Sky Broadcasting (United
Kingdom), Unsec. Gtd. Notes,
8.20%, 07/15/09 (Acquired
07/01/99-08/10/99; Cost
$890,547)(b) $ 900,000 $ 877,254
- --------------------------------------------------------------
Comcast Cable Communications, Unsec.
Notes, 8.50%, 05/01/27 500,000 540,710
- --------------------------------------------------------------
Cox Communications, Inc., Unsec.
Notes, 7.75%, 08/15/06 400,000 409,744
- --------------------------------------------------------------
CSC Holdings, Inc., Sr. Unsec. Deb.,
7.875%, 02/15/18 400,000 381,784
- --------------------------------------------------------------
7.625%, 07/15/18 1,600,000 1,489,024
- --------------------------------------------------------------
Fox Family Worldwide, Inc., Sr.
Unsec. Disc. Notes, 10.25%,
11/01/07(f) 940,000 618,050
- --------------------------------------------------------------
Knology Holdings, Inc., Sr. Disc.
Notes, 11.875%, 10/15/07(f) 700,000 393,750
- --------------------------------------------------------------
USA Networks, Inc., Sr. Unsec. Gtd.
Notes, 6.75%, 11/15/05 500,000 477,914
- --------------------------------------------------------------
5,188,230
- --------------------------------------------------------------
CHEMICALS-1.63%
Agrium, Inc. (Canada), Unsec. Notes,
7.00%, 02/01/04 350,000 337,536
- --------------------------------------------------------------
Airgas, Inc., Medium Term Notes,
7.14%, 03/08/04 500,000 474,010
- --------------------------------------------------------------
Nova Gas Transmission Ltd. (Canada),
Yankee Deb., 8.50%, 12/15/12 450,000 482,634
- --------------------------------------------------------------
Sterling Chemicals, Inc., Sr. Unsec.
Sub. Notes, 11.75%, 08/15/06 200,000 127,000
- --------------------------------------------------------------
1,421,180
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-0.93%
Dialog Corp. PLC (United Kingdom),
Series A, Sr. Sub. Yankee Notes,
11.00%, 11/15/07 750,000 637,500
- --------------------------------------------------------------
ProNet, Inc., Sr. Sub. Notes,
11.875%, 06/15/05 250,000 171,250
- --------------------------------------------------------------
808,750
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.33%
Exodus Communications, Sr. Unsec.
Notes, 11.25%, 07/01/08 280,000 290,500
- --------------------------------------------------------------
CONSTRUCTION (CEMENT &
AGGREGATES)-0.34%
Schuff Steel Co., Sr. Unsec. Gtd.
Sub. Notes, 10.50%, 06/01/08 350,000 299,250
- --------------------------------------------------------------
CONSUMER FINANCE-1.25%
Countrywide Capital, Gtd. Notes,
8.05%, 06/15/27 350,000 332,052
- --------------------------------------------------------------
MBNA Capital I, Series A Bonds,
8.278%, 12/01/26 835,000 757,161
- --------------------------------------------------------------
1,089,213
- --------------------------------------------------------------
</TABLE>
FS-42
<PAGE> 270
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
DISTRIBUTORS (FOOD & HEALTH)-0.26%
Fleming Companies, Inc., Sr. Unsec.
Gtd. Sub. Notes, 10.625%, 07/31/07 $ 255,000 $ 229,500
- --------------------------------------------------------------
ELECTRIC COMPANIES-2.30%
Cleveland Electric Illumination,
Series D, Sr. Sec. Notes, 7.88%,
11/01/17 500,000 482,969
- --------------------------------------------------------------
CMS Energy Corp., Sr. Unsec. Notes,
7.50%, 01/15/09 750,000 690,172
- --------------------------------------------------------------
El Paso Electric Co., Series D, Sec.
First Mortgage Bonds, 8.90%,
02/01/06 250,000 265,052
- --------------------------------------------------------------
Series E, Sec. First Mortgage Bonds,
9.40%, 05/01/11 250,000 273,007
- --------------------------------------------------------------
Niagara Mohawk Power, Series H, Sr.
Unsec. Disc. Notes, 8.50%,
07/01/10 (Acquired 08/11/99; Cost
$291,000)(b) 400,000 302,664
- --------------------------------------------------------------
2,013,864
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-0.23%
Panda Funding Corp., Series A-1,
Pooled Project Bonds, 11.625%,
08/20/12 198,404 199,396
- --------------------------------------------------------------
ENTERTAINMENT-1.88%
News America Holdings, Inc., Notes,
8.45%, 08/01/34 500,000 512,615
- --------------------------------------------------------------
Time Warner Inc., Deb., 9.125%,
01/15/13 1,000,000 1,127,140
- --------------------------------------------------------------
1,639,755
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.07%
Finova Capital Corp., Unsec. Sr.
Notes, 7.625%, 09/21/09 210,000 210,244
- --------------------------------------------------------------
Sumitomo Bank International Finance
N.V. (Japan), Gtd. Sub. Notes,
8.50%, 06/15/09 700,000 724,511
- --------------------------------------------------------------
934,755
- --------------------------------------------------------------
FOODS-1.02%
ConAgra, Inc., Sr. Unsec. Notes,
7.125%, 10/01/26 900,000 889,443
- --------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-0.09%
Harborside Healthcare, Sr. Unsec.
Gtd. Disc. Sub. Notes, 11.00%,
08/01/08(e) 300,000 78,000
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED
SERVICES)-0.54%
Team Health, Inc., Sr. Sub. Notes,
12.00%, 03/15/09(c) 470,000 472,350
- --------------------------------------------------------------
HOMEBUILDING-0.06%
D.R. Horton, Inc., Unsec. Gtd.
Notes, 10.00%, 04/15/06 55,000 55,275
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS
(NON-DURABLES)-0.50%
Procter & Gamble Co. (The), Putable
Deb., 8.00%, 09/01/24 400,000 434,548
- --------------------------------------------------------------
HOUSEWARES-0.35%
Decora Industries, Inc., Series B,
Sr. Sec. Gtd. Notes, 11.00%,
05/01/05 350,000 306,250
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.79%
Torchmark Corp., Notes, 7.875%,
05/15/23 750,000 693,143
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
INSURANCE (PROPERTY-CASUALTY)-1.09%
Terra Nova Holdings, Co. (United
Kingdom), Sr. Unsec. Gtd. Notes,
7.20%, 08/15/07 $ 500,000 $ 479,330
- --------------------------------------------------------------
7.00%, 05/15/08 500,000 471,800
- --------------------------------------------------------------
951,130
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-1.61%
HSBC America Capital Trust II, Gtd.
Bonds, 8.38%, 05/15/27 (Acquired
08/12/99; Cost $479,210)(b) 500,000 479,120
- --------------------------------------------------------------
Lehman Brothers, Inc.,
Sr. Sub. Notes, 7.375%, 01/15/07 530,000 523,667
- --------------------------------------------------------------
Notes, 8.50%, 08/01/15 390,000 404,305
- --------------------------------------------------------------
1,407,092
- --------------------------------------------------------------
IRON & STEEL-0.47%
Acme Metal, Inc., Sr. Unsec. Gtd.
Deb., 10.875%, 12/15/07(d)(g) 438,000 94,170
- --------------------------------------------------------------
GS Technologies, Inc., Sr. Gtd.
Notes, 12.00%, 09/01/04 200,000 111,000
- --------------------------------------------------------------
Sheffield Steel Corp., Series B,
First Mortgage Notes, 11.50%,
12/01/05 250,000 208,750
- --------------------------------------------------------------
413,920
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.46%
Marvel Enterprises, Inc., Sr. Unsec.
Gtd. Sub. Notes, 12.00%, 06/15/09 440,000 402,600
- --------------------------------------------------------------
LODGING-HOTELS-0.35%
John Q. Hammons Hotels, Inc., Sec.
First Mortgage Notes, 9.75%,
10/01/05 100,000 90,500
- --------------------------------------------------------------
Stena Line A.B. (Sweden), Sr. Unsec.
Yankee Notes, 10.625%, 06/01/08 310,000 217,775
- --------------------------------------------------------------
308,275
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.24%
Glenoit Corp., Sr. Unsec. Gtd. Sub.
Notes, 11.00%, 04/15/07 380,000 210,900
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.52%
First Wave Marine, Inc., Sr. Unsec.
Gtd. Sub. Notes, 11.00%, 02/01/08 250,000 188,750
- --------------------------------------------------------------
MMI Products, Inc., Sr. Unsec. Sub.
Notes, 11.25%, 04/15/07 260,000 265,200
- --------------------------------------------------------------
453,950
- --------------------------------------------------------------
METALS MINING-0.27%
Rio Algom Ltd. (Canada), Yankee
Unsec. Deb., 7.05%, 11/01/05 250,000 238,455
- --------------------------------------------------------------
NATURAL GAS-1.80%
Dynegy, Inc., Sr. Unsec. Deb.,
7.125%, 05/15/18 500,000 459,975
- --------------------------------------------------------------
Enron Corp., Sr. Sub. Deb., 8.25%,
09/15/12 500,000 515,220
- --------------------------------------------------------------
</TABLE>
FS-43
<PAGE> 271
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
NATURAL GAS-(CONTINUED)
Sonat, Inc., Unsec. Notes, 7.625%,
07/15/11 $ 600,000 $ 600,828
- --------------------------------------------------------------
1,576,023
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-1.43%
Oneok, Inc., Unsec. Notes, 7.75%,
08/15/06 400,000 401,224
- --------------------------------------------------------------
Pogo Producing Co., Series B, Sr.
Unsec. Sub. Notes, 10.375%,
02/15/09 500,000 520,000
- --------------------------------------------------------------
Queen Sand Resources, Inc., Sr.
Unsec. Gtd. Sub. Notes, 12.50%,
07/01/08 160,000 92,000
- --------------------------------------------------------------
Talisman Energy, Inc. (Canada),
Yankee Deb., 7.125%, 06/01/07 250,000 240,210
- --------------------------------------------------------------
1,253,434
- --------------------------------------------------------------
OIL & GAS (REFINING &
MARKETING)-0.70%
Texas Petrochemical Corp., Sr.
Unsec. Sub. Notes, 11.125%,
07/01/06 750,000 611,250
- --------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.54%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 470,000 472,350
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.30%
AES Corp., Sr. Notes, 8.00%,
12/31/08 750,000 686,250
- --------------------------------------------------------------
Kincaid Generation LLC, Sec. Bonds,
7.33%, 06/15/20 (Acquired
04/30/98; Cost $501,235)(b) 500,000 453,630
- --------------------------------------------------------------
1,139,880
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.65%
News America Holdings, Inc., Sr.
Gtd. Deb., 9.25%, 02/01/13 250,000 274,755
- --------------------------------------------------------------
United News & Media PLC (United
Kingdom), Sr. Unsec. Yankee Notes,
7.75%, 07/01/09 300,000 292,905
- --------------------------------------------------------------
567,660
- --------------------------------------------------------------
RAILROADS-1.48%
CSX Corp., Sr. Unsec. Putable Deb.,
7.25%, 05/01/27 750,000 747,173
- --------------------------------------------------------------
Norfolk Southern Corp., Putable
Bonds, 7.05%, 05/01/37 550,000 546,816
- --------------------------------------------------------------
1,293,989
- --------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-1.22%
Glenborough Properties, Series B,
Sr. Unsec. Notes, 7.625%, 03/15/05 500,000 445,514
- --------------------------------------------------------------
Health Care REIT, Inc., Sr. Unsec.
Notes, 7.625%, 03/15/08 200,000 169,320
- --------------------------------------------------------------
Spieker Properties LP, Unsec. Deb.,
7.35%, 12/01/17 500,000 446,705
- --------------------------------------------------------------
1,061,539
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.19%
Plainwell, Inc., Series B, Sr.
Unsec. Sub. Notes, 11.00%,
03/01/08 230,000 166,750
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-2.31%
Amazon.com, Inc., Conv. Deb., 4.75%,
02/01/09 (Acquired 01/29/99; Cost
$501,875)(b) $ 500,000 $ 532,500
- --------------------------------------------------------------
CEX Holdings, Inc., Series B Sr.
Unsec. Gtd. Sub. Notes, 9.625%,
06/01/08 170,000 184,450
- --------------------------------------------------------------
CSK Auto Inc., Series A, Sr. Gtd.
Sub. Deb, 11.00%, 11/01/06 130,000 134,550
- --------------------------------------------------------------
Neff Corp., Sr. Unsec. Gtd. Sub.
Notes, 10.25%, 06/01/08 840,000 814,800
- --------------------------------------------------------------
Rent-A-Center, Inc., Sr. Unsec. Gtd.
Sub. Notes, 11.00%, 08/15/08 350,000 350,000
- --------------------------------------------------------------
2,016,300
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.15%
J Crew Operating Corp., Sr. Sub.
Notes, 10.375%, 10/15/07 150,000 126,750
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.02%
Sovereign Bancorp, Inc., Medium Term
Sub. Notes, 8.00%, 03/15/03 600,000 595,242
- --------------------------------------------------------------
Washington Mutual, Inc., Notes,
7.50%, 08/15/06 290,000 293,622
- --------------------------------------------------------------
888,864
- --------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.22%
MDC Communications Corp. (Canada),
Sr. Unsec. Sub. Yankee Notes,
10.50%, 12/01/06 200,000 195,000
- --------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-0.65%
Hydrochem Industrial Service Co.,
Series B, Sr. Sec. Gtd. Sub.
Notes, 10.375%, 08/01/07 150,000 131,250
- --------------------------------------------------------------
Laidlaw, Inc. (Canada), Unsec.
Yankee Deb., 6.70%, 05/01/08 500,000 436,010
- --------------------------------------------------------------
567,260
- --------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.28%
MSX International, Inc., Sr. Unsec.
Sub. Notes, 11.375%, 01/15/08 260,000 245,700
- --------------------------------------------------------------
SOVEREIGN DEBT-2.38%
Province of Manitoba (Canada),
Yankee Deb., 7.75%, 07/17/16 550,000 585,629
- --------------------------------------------------------------
Province of Quebec (Canada), Series
A, Medium Term Putable Yankee
Notes, 5.735%, 03/02/26 500,000 497,670
- --------------------------------------------------------------
Series A, Medium Term Yankee
Notes, 6.29%, 03/06/26 1,000,000 993,710
- --------------------------------------------------------------
2,077,009
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.64%
PageMart Wireless, Inc., Sr. Sub.
Disc. Notes, 11.25%, 02/01/08(f) 600,000 189,000
- --------------------------------------------------------------
US Unwired Inc., Sr. Disc. Notes,
13.375%, 11/01/09 (Acquired
10/26/99; Cost $366,142)(b)(f) 700,000 369,250
- --------------------------------------------------------------
558,250
- --------------------------------------------------------------
</TABLE>
FS-44
<PAGE> 272
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG
DISTANCE)-4.14%
Call-Net Enterprises, Inc. (Canada),
Sr. Unsec. Disc. Yankee Notes,
8.94%, 08/15/08(e) $ 330,000 $ 196,350
- --------------------------------------------------------------
Centel Capital, Deb., 9.00%,
10/15/19 300,000 342,225
- --------------------------------------------------------------
Econophone, Inc., Sr. Unsec. Notes,
13.50%, 07/15/07 750,000 781,875
- --------------------------------------------------------------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee Notes,
11.50%, 12/15/07 250,000 256,250
- --------------------------------------------------------------
MCI Communications Corp., Putable
Sr. Unsec. Deb., 7.125%, 06/15/27 650,000 655,025
- --------------------------------------------------------------
Primus Telecommunications Group,
Inc., Sr. Notes, 11.25%, 01/15/09 750,000 693,750
- --------------------------------------------------------------
Tele1 Europe B.V. (Netherlands), Sr.
Unsec. Notes, 13.00%, 05/15/09(c) 500,000 497,500
- --------------------------------------------------------------
Versatel Telecom B.V. (Netherlands),
Sr. Notes, 13.25%, 05/15/08 190,000 191,900
- --------------------------------------------------------------
3,614,875
- --------------------------------------------------------------
TELEPHONE-4.42%
AT&T Canada Inc., Notes, 7.65%,
09/15/06 (Acquired 09/15/99) Cost
$369,123)(b) 370,000 370,758
- --------------------------------------------------------------
Bell Atlantic Financial Services,
Inc., Conv. Bonds, 4.25%, 09/15/05 500,000 528,806
- --------------------------------------------------------------
Esat Holdings Ltd. (Ireland), Sr.
Yankee Notes, 12.50%, 02/01/07(f) 350,000 255,500
- --------------------------------------------------------------
ICG Services, Inc., Sr. Unsec. Disc.
Notes, 10.00%, 02/15/08(f) 600,000 321,096
- --------------------------------------------------------------
Liberty Media Group, Bonds, 7.875%,
07/15/09 (Acquired 06/30/99; Cost
$397,616)(b) 400,000 398,910
- --------------------------------------------------------------
Logix Communications, Sr. Unsec.
Notes, 12.25%, 06/15/08 350,000 280,875
- --------------------------------------------------------------
SBC Communications, Inc., Deb.,
7.375%, 07/15/43 500,000 466,490
- --------------------------------------------------------------
Williams Communications Group, Inc.,
Sr. Unsec. Notes, 10.70%, 10/01/07 450,000 469,125
- --------------------------------------------------------------
Worldwide Fiber, Inc. (Canada), Sr.
Notes,
12.50%, 12/15/05 230,000 235,750
- --------------------------------------------------------------
12.00%, 08/01/09(c) 530,000 532,650
- --------------------------------------------------------------
3,859,960
- --------------------------------------------------------------
TRUCKERS-0.33%
Travelcenters of America, Inc., Sr.
Unsec. Gtd. Sub. Deb., 10.25%,
04/01/07 290,000 286,375
- --------------------------------------------------------------
WASTE MANAGEMENT-2.05%
Browning-Ferris, Deb., 9.25%,
05/01/21 350,000 302,750
- --------------------------------------------------------------
Waste Management Inc., Sr. Unsec.
Notes,
7.125%, 10/01/09 525,000 447,258
- --------------------------------------------------------------
7.125%, 12/15/17 190,000 145,263
- --------------------------------------------------------------
WMX Technologies, Inc., Unsec.
Putable Notes, 7.10%, 08/01/26 980,000 897,327
- --------------------------------------------------------------
1,792,598
- --------------------------------------------------------------
Total U.S. Dollar Denominated
Bonds & Notes (Cost
$58,071,172) 54,413,221
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(h) VALUE
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED BONDS
& NOTES-33.28%
AUSTRALIA-1.97%
New South Wales Treasury Corp.
(Sovereign Debt), Gtd. Notes,
7.00%, 04/01/04 AUD 1,320,000 $ 856,995
- --------------------------------------------------------------
State Bank New South Wales
(Banks-Major Regional), Series E
Medium Term Sr. Unsec. Gtd.
Notes, 8.625%, 08/20/01 AUD 1,300,000 862,743
- --------------------------------------------------------------
1,719,738
- --------------------------------------------------------------
CANADA-9.47%
B.C. Generic Residual (Sovereign
Debt), Deb.,13.88%,
06/21/04(e) CAD 150,000 76,004
- --------------------------------------------------------------
Bank of Montreal (Banks-Money
Center), Sub. Deb., 7.92%,
07/31/12 CAD 300,000 216,435
- --------------------------------------------------------------
Bell Mobility Cellular
(Telecommunications-
Cellular/Wireless), Deb., 6.55%,
06/02/08 CAD 750,000 492,805
- --------------------------------------------------------------
British Columbia Municipal Finance
Authority (Sovereign Debt),
Bonds, 7.75%, 12/01/05 CAD 500,000 362,997
- --------------------------------------------------------------
Canadian Oil Debco Inc. (Oil &
Gas- Exploration & Production),
Deb., 11.00%, 10/31/00 CAD 450,000 317,870
- --------------------------------------------------------------
Canadian Pacific Ltd.,
(Railroads), Unsec. Medium Term
Disc. Notes, 5.85%, 03/30/09
(Acquired 03/24/99; Cost
$661,416)(b)(f) CAD 1,000,000 634,015
- --------------------------------------------------------------
Clearnet Communications Inc.
(Telecommunications-Cellular/Wireless),
Sr. Disc. Notes, 11.75%,
08/13/07(f) CAD 1,100,000 524,859
- --------------------------------------------------------------
10.40%, 05/15/08(f) CAD 1,200,000 507,369
- --------------------------------------------------------------
Sr. Unsec. Disc. Notes, 10.75%,
02/15/09(f) CAD 1,300,000 509,916
- --------------------------------------------------------------
GMAC Canada Ltd. (Financial
Diversified), Sr. Unsec. Gtd.
Unsub. Notes, 6.50%, 03/23/04GBP 450,000 718,447
- --------------------------------------------------------------
Loblaw Co. Ltd. (Retail-Food
Chains), Unsec. Medium Term
Disc. Notes, 6.45%, 03/01/39 CAD 750,000 460,896
- --------------------------------------------------------------
Molson Breweries Co. Ltd.
(Beverages- Alcoholic), Unsec.
Unsub. Notes, 6.00%, 06/02/08CAD 700,000 453,605
- --------------------------------------------------------------
NAV Canada (Services-Commercial &
Consumer), Bonds, 7.40%,
06/01/27 CAD 1,000,000 730,551
- --------------------------------------------------------------
Poco Petroleums Ltd. (Oil &
Gas-Exploration & Production),
Unsec. Deb., 6.60%, 09/11/07 CAD 750,000 484,961
- --------------------------------------------------------------
Province of Ontario (Sovereign
Debt), Sr. Unsec. Unsub. Notes,
6.25%, 12/03/08 NZD 1,500,000 672,945
- --------------------------------------------------------------
Telegobe Canada, Inc. (Telephone),
Unsec. Deb., 8.35%, 06/20/03 CAD 650,000 453,958
- --------------------------------------------------------------
TransCanada Pipelines (Natural
Gas), Series Q, Deb., 10.625%,
10/20/09 CAD 375,000 318,211
- --------------------------------------------------------------
</TABLE>
FS-45
<PAGE> 273
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(h) VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Westcoast Energy, Inc. (Natural
Gas), Series V, Unsec. Deb.,
6.45%, 12/18/06 CAD $ 500,000 $ 335,635
- --------------------------------------------------------------
8,271,479
- --------------------------------------------------------------
DENMARK-1.08%
Kingdom of Denmark (Sovereign
Debt), Bonds, 7.00%, 12/15/04DKK 6,150,000 940,928
- --------------------------------------------------------------
GERMANY-2.86%
Bundesrepublik Deutschland
(Sovereign Debt), Series 92
Bonds, 7.25%, 10/21/02 EUR 810,000 921,185
- --------------------------------------------------------------
Hypovereins Finance N.V.
(Banks-Major Regional), Gtd.
Series E Medium Term Notes,
6.00%, 03/12/07 DEM 250,000 134,974
- --------------------------------------------------------------
International Bank for
Reconstruction & Development
(Banks-Money Center), Unsec.
Deb., 7.125%, 04/12/05 DEM 1,400,000 826,494
- --------------------------------------------------------------
Treuhandanstalt (Sovereign Debt),
Gtd. Notes, 6.00%, 11/12/03 EUR 560,000 618,697
- --------------------------------------------------------------
2,501,350
- --------------------------------------------------------------
GREECE-1.18%
Hellenic Republic (Sovereign
Debt), Bonds, 6.60%, 01/15/04GRD 333,000,000 1,032,847
- --------------------------------------------------------------
NETHERLANDS-4.70%
Dresdner Finance B.V. (Banks-Major
Regional), Series 11 Floating
Rate Gtd. Notes, 3.532%,
07/30/03 EUR 1,000,000 1,047,839
- --------------------------------------------------------------
KPNQWest B.V.
(Telecommunications-Long
Distance), Sr. Unsec. Notes,
7.125%, 06/01/09 (Acquired
05/25/99; Cost $1,051,124)(b)EUR 1,000,000 1,019,104
- --------------------------------------------------------------
Mannesmann Finance B.V. (Machinery
Diversified), Gtd. Unsec. Unsub.
Notes, 4.75%, 05/27/09 EUR 900,000 843,286
- --------------------------------------------------------------
Prudential Financial B.V.
(Investment Banking/ Brokerage),
Sr. Unsec. Gtd. Bonds, 9.375%,
06/04/07 GBP 400,000 749,353
- --------------------------------------------------------------
SPT Telecom A.S.
(Telecommunications-Long
Distance), Gtd. Unsec. Unsub.
Notes, 5.125%, 05/07/03 DEM 275,000 147,120
- --------------------------------------------------------------
Tecnost International Finance N.V.
(Financial- Diversified), Series
E Medium Term Gtd. Notes,
6.125%, 07/30/09 EUR 290,000 297,125
- --------------------------------------------------------------
4,103,827
- --------------------------------------------------------------
NEW ZEALAND-2.59%
Inter-American Development Bank,
(Banks- Money Center), Unsec.
Bonds, 5.75%, 04/15/04 NZD 2,000,000 951,163
- --------------------------------------------------------------
International Bank for
Reconstruction & Development
(Banks-Money Center),
Unsec. Notes, 5.50%, 04/15/04NZD 800,000 378,406
- --------------------------------------------------------------
Sr. Unsec. Notes, 6.77%,
08/20/07(e) NZD 750,000 209,131
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(h) VALUE
<S> <C> <C>
NEW ZEALAND-(CONTINUED)
New Zealand Government (Sovereign
Debt), Bonds,
10.00%, 03/15/02 NZD $ 675,000 $ 369,771
- --------------------------------------------------------------
8.00%, 04/15/04 NZD 675,000 357,696
- --------------------------------------------------------------
2,266,167
- --------------------------------------------------------------
SWEDEN-2.23%
AB Spintab (Banks-Regional),
Series 161, Unsec. Deb., 7.50%,
06/15/04 SEK 6,700,000 861,443
- --------------------------------------------------------------
Stadshypotek A.B.
(Banks-Regional), Series 1562,
Notes, 3.50%, 09/15/04 SEK 10,000,000 1,086,187
- --------------------------------------------------------------
1,947,630
- --------------------------------------------------------------
U.S.A.-0.61%
AT&T Canada, Inc. (Telephone), Sr.
Unsec. Notes, 7.15%, 09/23/04CAD 800,000 537,070
- --------------------------------------------------------------
UNITED KINGDOM-6.59%
Airtours PLC (Services-Commercial
& Consumer), Conv. Sub. Notes,
5.75%, 01/05/04 (Acquired
12/09/98; Cost $494,636)(b) GBP 299,000 452,874
- --------------------------------------------------------------
Lloyds Bank PLC (Banks-Major
Regional), Sub. Notes, 5.25%,
07/14/08 DEM 1,500,000 771,334
- --------------------------------------------------------------
Merrill Lynch & Co. (Investment
Banking/ Brokerage), Sr. Unsec.
Unsub. Notes, 7.375%,
12/17/07 GBP 245,000 408,554
- --------------------------------------------------------------
National Power PLC (Electric
Companies), Sr. Unsec. Unsub.
Bonds, 8.00%, 02/21/07 AUD 800,000 512,359
- --------------------------------------------------------------
National Westminster Bank PLC
(Banks-Money Center), Series E,
Medium Term Unsec. Unsub. Notes,
5.125%, 06/30/11 EUR 210,000 200,584
- --------------------------------------------------------------
Scotia Holdings PLC (Health
Care-Drugs- Generic & Other),
Conv. Unsec. Unsub. Notes,
8.50%, 03/26/02 GBP 650,000 917,237
- --------------------------------------------------------------
Sutton Bridge Financial Ltd.
(Financial- Diversified), Gtd.
Eurobonds, 8.625%, 06/30/22 GBP 450,000 845,032
- --------------------------------------------------------------
TeleWest Communications PLC
(Broadcasting- Television, Radio
& Cable), Sr. Unsec. Notes,
5.25%, 02/19/07 GBP 400,000 651,844
- --------------------------------------------------------------
Union Bank Switzerland London,
(Banks-Major Regional), Unsec.
Sub. Notes, 7.375%, 11/26/04 GBP 600,000 1,000,628
- --------------------------------------------------------------
5,760,446
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Bonds & Notes
(Cost $30,661,602) 29,081,482
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS & OTHER EQUITY
INTERESTS-1.71%
BANKS (MAJOR REGIONAL)-0.09%
Societe Generale (France) 350 76,221
- --------------------------------------------------------------
BANKS (REGIONAL)-1.40%
First Republic Capital Corp.,
Series A-Pfd. (Acquired
05/26/99; Cost $750,000)(b) 750 746,250
- --------------------------------------------------------------
</TABLE>
FS-46
<PAGE> 274
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BANKS (REGIONAL)-(CONTINUED)
Westpac Banking Corp. STRYPES
Trust-$3.135 Conv. Pfd. 16,000 $ 480,000
- --------------------------------------------------------------
1,226,250
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.00%
Knology Holdings, Inc.-Wts.,
expiring 10/15/07(i) 700 1,575
- --------------------------------------------------------------
Wireless One, Inc.-Wts., expiring
10/19/00(i) 150 0
- --------------------------------------------------------------
1,575
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.00%
Electronic Retailing Systems
International, Inc.-Wts.,
expiring 02/01/04(i) 290 290
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.09%
Glaxo Wellcome PLC (United
Kingdom) 2,607 76,980
- --------------------------------------------------------------
PERSONAL CARE-0.00%
IHF Capital, Inc., Series I-Wts.,
expiring 11/14/99(i) 70 35
- --------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.01%
Clearnet Communications Inc.-Wts.
(Canada), expiring 09/15/05(i) 330 4,290
- --------------------------------------------------------------
Loral Space & Communications,
Ltd.-Wts., expiring 01/15/07(i) 420 4,095
- --------------------------------------------------------------
8,385
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-0.08%
Tele1 Europe B.V.-Wts.
(Netherlands), expiring
05/15/09(i) 500 $ 40,125
- --------------------------------------------------------------
Versatel Telecom B.V.-Wts.
(Netherlands), expiring
05/15/08(i) 190 27,597
- --------------------------------------------------------------
67,722
- --------------------------------------------------------------
TELEPHONE-0.04%
Esat Holdings Ltd.-Wts. (Ireland),
expiring 02/01/07(i) 350 25,375
- --------------------------------------------------------------
Intermedia Communications,
Inc.-Wts., expiring 06/01/00(i) 150 13,763
- --------------------------------------------------------------
39,138
- --------------------------------------------------------------
Total Common Stocks & Other
Equity Interests (Cost
$1,339,360) 1,496,596
- --------------------------------------------------------------
MONEY MARKET FUNDS-1.35%
STIC Liquid Assets Portfolio(j) 588,479 588,479
- --------------------------------------------------------------
STIC Prime Portfolio(j) 588,479 588,479
- --------------------------------------------------------------
Total Money Market Funds (Cost
$1,176,958) 1,176,958
- --------------------------------------------------------------
TOTAL INVESTMENTS-98.61% 86,168,257
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.39% 1,214,655
- --------------------------------------------------------------
NET ASSETS-100.00% $87,382,912
==============================================================
</TABLE>
Investment Abbreviations:
AUD - Australian Dollar
CAD - Canadian Dollars
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DEM - German Deutsche Mark
Disc. - Discounted
DKK - Danish Krone
FRF - French Franc
GBP - British Pound Sterling
GRD - Greek Drachma
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
PRIDES - Preferred Redemption Increase Dividend Equity Security
Sec. - Secured
Sr. - Senior
STRYPES - Structured Yield Product Exchangeable for Stock
SEK - Swedish Krona
Sub. - Subordinated
Unsec. - Unsecured
Unsub. - Unsubordinated
Wts. - Warrants
Notes to Schedule of Investments:
(a) Principal amount is in U.S. Dollars, except as indicated by note (h).
(b) Restricted securities. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at 10/31/99 was $7,094,249 which
represented 8.14% of the Fund's net assets.
(c) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(d) Non-income producing security.
(e) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(f) Discounted bond at purchase. Interest rate shown represent the coupon rate
at which the bond will accrue at a specified future date.
(g) Defaulted security. Currently, the issue is in default with respect to
interest payments.
(h) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(i) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(j) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-47
<PAGE> 275
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$91,252,953) $ 86,168,257
- -----------------------------------------------------------
Foreign currencies (cost $18,242) 18,464
- -----------------------------------------------------------
Receivables for:
Investments sold 764,818
- -----------------------------------------------------------
Forward currency contracts 4,248
- -----------------------------------------------------------
Capital stock sold 85,861
- -----------------------------------------------------------
Dividends and interest 2,088,500
- -----------------------------------------------------------
Investment for deferred compensation plan 20,023
- -----------------------------------------------------------
Other assets 13,214
- -----------------------------------------------------------
Total assets 89,163,385
- -----------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,059,968
- -----------------------------------------------------------
Capital stock reacquired 478,062
- -----------------------------------------------------------
Dividends 101,464
- -----------------------------------------------------------
Deferred compensation plan 20,023
- -----------------------------------------------------------
Accrued administrative services fees 4,247
- -----------------------------------------------------------
Accrued directors' fees 617
- -----------------------------------------------------------
Accrued distribution fees 55,603
- -----------------------------------------------------------
Accrued transfer agent fees 26,401
- -----------------------------------------------------------
Accrued operating expenses 34,088
- -----------------------------------------------------------
Total liabilities 1,780,473
- -----------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 87,382,912
===========================================================
NET ASSETS:
Class A $ 51,076,640
===========================================================
Class B $ 34,422,767
===========================================================
Class C $ 1,883,505
===========================================================
Capital stock, $0.001 par value per share:
Class A:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 5,255,715
===========================================================
Class B:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 3,543,063
===========================================================
Class C:
Authorized 200,000,000
- -----------------------------------------------------------
Outstanding 193,937
===========================================================
Class A:
Net asset value and redemption price per
share $ 9.72
- -----------------------------------------------------------
Offering price per share:
(Net asset value of $9.72 divided by
95.25%) $ 10.20
===========================================================
Class B:
Net asset value and offering price per
share $ 9.72
===========================================================
Class C:
Net asset value and offering price per
share $ 9.71
===========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 7,761,097
- -----------------------------------------------------------
Dividends (net of $476 foreign withholding
tax) 64,902
- -----------------------------------------------------------
Total investment income 7,825,999
- -----------------------------------------------------------
EXPENSES:
Advisory fees 703,524
- -----------------------------------------------------------
Administrative services fees 66,799
- -----------------------------------------------------------
Custodian fees 48,756
- -----------------------------------------------------------
Directors' fees 8,112
- -----------------------------------------------------------
Distribution fees-Class A 300,260
- -----------------------------------------------------------
Distribution fees-Class B 385,265
- -----------------------------------------------------------
Distribution fees-Class C 19,247
- -----------------------------------------------------------
Transfer agent fees-Class A 114,393
- -----------------------------------------------------------
Transfer agent fees-Class B 73,389
- -----------------------------------------------------------
Transfer agent fees-Class C 3,666
- -----------------------------------------------------------
Other 160,098
- -----------------------------------------------------------
Total expenses 1,883,509
- -----------------------------------------------------------
Less:
Fees waived by advisor (423,180)
- -----------------------------------------------------------
Expenses paid indirectly (2,351)
- -----------------------------------------------------------
Net expenses 1,457,978
- -----------------------------------------------------------
Net investment income 6,368,021
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (3,425,545)
- -----------------------------------------------------------
Foreign currencies (699,509)
- -----------------------------------------------------------
Forward currency contracts 117,048
- -----------------------------------------------------------
(4,008,006)
- -----------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities (4,733,538)
- -----------------------------------------------------------
Foreign currencies (5,039)
- -----------------------------------------------------------
Forward currency contracts 267,350
- -----------------------------------------------------------
(4,471,227)
- -----------------------------------------------------------
Net gain (loss) from investment securities,
foreign currencies and forward currency
contracts (8,479,233)
- -----------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $(2,111,212)
===========================================================
</TABLE>
See Notes to Financial Statements.
FS-48
<PAGE> 276
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income $ 6,368,021 $ 4,564,973
- ----------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and forward currency contracts (4,008,006) (293,145)
- ----------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and forward
currency contracts (4,471,227) (2,380,155)
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations (2,111,212) 1,891,673
- ----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (3,538,334) (2,295,926)
- ----------------------------------------------------------------------------------------
Class B (2,065,556) (1,495,827)
- ----------------------------------------------------------------------------------------
Class C (102,985) (42,707)
- ----------------------------------------------------------------------------------------
Return of capital distribution:
Class A (483,962) (354,717)
- ----------------------------------------------------------------------------------------
Class B (310,211) (250,576)
- ----------------------------------------------------------------------------------------
Class C (15,757) (8,211)
- ----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A -- (258,088)
- ----------------------------------------------------------------------------------------
Class B -- (181,448)
- ----------------------------------------------------------------------------------------
Class C -- (5,682)
- ----------------------------------------------------------------------------------------
Share transactions-net:
Class A (1,856,726) 29,014,691
- ----------------------------------------------------------------------------------------
Class B 1,178,036 12,527,487
- ----------------------------------------------------------------------------------------
Class C 263,914 1,597,917
- ----------------------------------------------------------------------------------------
Net increase (decrease) in net assets (9,042,793) 40,138,586
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 96,425,705 56,287,119
- ----------------------------------------------------------------------------------------
End of period $87,382,912 $96,425,705
========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $95,576,239 $96,795,220
- ----------------------------------------------------------------------------------------
Undistributed net investment income (45,192) 222,498
- ----------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and forward currency
contracts (3,069,640) 15,255
- ----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward currency
contracts (5,078,495) (607,268)
- ----------------------------------------------------------------------------------------
$87,382,912 $96,425,705
========================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Income Fund (the "Fund") is a series portfolio of AIM International
Funds, Inc. (the "Company"). The Company is a Maryland corporation registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of six separate
portfolios. The Fund 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 will
be 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 high current income. Its secondary
objective is protection of principal and 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 the 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 its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at
FS-49
<PAGE> 277
the closing bid price on that day. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the closing bid price. Debt
obligations (including convertible bonds) are valued on the basis of prices
provided by an independent pricing service. Prices provided by the pricing
service may be determined without exclusive reliance on quoted prices, and
may reflect appropriate factors such as yield, type of issue, coupon rate
and maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and options contracts generally will be
valued 15 minutes after the close of trading of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
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. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales 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 the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Such distributions are
declared and paid monthly. The Fund may elect to use a portion of the
proceeds of capital stock redemptions as distributions for Federal income
tax purposes. Distributions from net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was decreased by
$118,906, undistributed net realized gains increased by $923,111 and
paid-in-capital decreased by $804,205 as a result of a tax return of capital
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 reclassification discussed above.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $3,052,967 as of October 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires, if not
previously utilized, in the year 2007.
D. 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. The
Fund does not separately account for that portion of the results of
operations resulting from changes in foreign exchange rates on investments
and the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
E. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
Outstanding forward currency contracts at October 31, 1999 were as
follows:
<TABLE>
<CAPTION>
CONTRACT UNREALIZED
SETTLEMENT TO CONTRACT TO APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
- ---------- --------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
11/10/99 AUD 650,000 424,775 414,696 10,079
- ------------------------------------------------------------------------------------
11/04/99 CAD 5,000,000 3,344,705 3,396,451 (51,745)
- ------------------------------------------------------------------------------------
11/26/99 GBP 800,000 1,279,104 1,315,326 (36,222)
- ------------------------------------------------------------------------------------
11/26/99 GBP 2,600,000 4,305,600 4,274,808 30,792
- ------------------------------------------------------------------------------------
11/26/99 NZD 2,300,000 1,218,885 1,167,541 51,344
- ------------------------------------------------------------------------------------
$10,573,069 $10,568,822 $ 4,248
====================================================================================
</TABLE>
F. Bond Premiums -- It is the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes.
G. Expenses -- Distribution expenses 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 investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.70% of the first $1
billion of the Fund's average daily net assets, plus 0.65% of the Fund's average
daily net assets in excess of $1 billion. During the year ended October 31,
1999, AIM waived fees of $423,180.
FS-50
<PAGE> 278
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1999, AIM was
paid $66,799 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 and
shareholder services to the Fund. During the year ended October 31, 1999, AFS
was paid $148,724 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 a plan
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C 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 Class 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,
1999, the Class A, Class B and Class C shares paid AIM Distributors $300,260,
$385,265 and $19,247, respectively, as compensation under the Plans.
AIM Distributors received commissions of $28,250 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1999,
AIM Distributors received $3,743 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, 1999, the Fund paid legal fees of $3,672 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$1,167 and $1,184, respectively, under expense offset arrangements. The effect
of the above arrangements resulted in a reduction of the Fund's total expenses
of $2,351 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests 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. During the year
ended October 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. 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, 1999 was
$90,400,242 and $90,308,631, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 815,437
- ------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (5,913,598)
- ------------------------------------------------------------
Net unrealized depreciation of investment
securities $(5,098,161)
============================================================
</TABLE>
Cost of investments for tax purposes is $91,266,418.
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 2,496,536 $ 26,051,117 3,840,125 $ 41,970,650
- ----------------------------------------------------------------------------
Class B 1,275,307 13,306,447 1,818,456 19,865,377
- ----------------------------------------------------------------------------
Class C 101,598 1,053,223 155,501 1,696,174
- ----------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 315,101 3,238,097 221,486 2,412,254
- ----------------------------------------------------------------------------
Class B 188,786 1,938,556 144,487 1,573,639
- ----------------------------------------------------------------------------
Class C 9,111 93,556 4,387 47,595
- ----------------------------------------------------------------------------
Reacquired:
Class A (3,041,035) (31,145,940) (1,406,526) (15,368,213)
- ----------------------------------------------------------------------------
Class B (1,370,398) (14,066,967) (814,522) (8,911,529)
- ----------------------------------------------------------------------------
Class C (85,444) (882,865) (13,394) (145,852)
- ----------------------------------------------------------------------------
(110,438) $ (414,776) 3,950,000 $ 43,140,095
============================================================================
</TABLE>
FS-51
<PAGE> 279
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A and Class B
capital stock outstanding during each of the years in the five-year period ended
October 31, 1999 and for a share of Class C capital stock outstanding during
each of the years in the two-year period ended October 31, 1999 and the period
August 4, 1997 (date sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.60 $ 10.93 $ 10.85 $10.74 $10.02
- ------------------------------------------------------ ------- ------- ------- ------ ------
Income from investment operations:
Net investment income 0.67 0.71 0.72 0.79(a) 0.79
- ------------------------------------------------------ ------- ------- ------- ------ ------
Net gains (losses) on securities (both realized and
unrealized) (0.86) (0.27) 0.21 0.25 0.75
- ------------------------------------------------------ ------- ------- ------- ------ ------
Total from investment operations (0.19) 0.44 0.93 1.04 1.54
- ------------------------------------------------------ ------- ------- ------- ------ ------
Less distributions:
Dividends from investment income (0.61) (0.61) (0.72) (0.81) (0.82)
- ------------------------------------------------------ ------- ------- ------- ------ ------
Distributions from net realized gains -- (0.07) (0.13) (0.12) --
- ------------------------------------------------------ ------- ------- ------- ------ ------
Return of capital (0.08) (0.09) -- -- --
- ------------------------------------------------------ ------- ------- ------- ------ ------
Total distributions (0.69) (0.77) (0.85) (0.93) (0.82)
- ------------------------------------------------------ ------- ------- ------- ------ ------
Net asset value, end of period $ 9.72 $ 10.60 $ 10.93 $10.85 $10.74
====================================================== ======= ======= ======= ====== ======
Total return(b) (1.94)% 3.95% 9.05% 10.22% 16.07%
====================================================== ======= ======= ======= ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $51,077 $58,115 $30,924 $21,926 $10,004
====================================================== ======= ======= ======= ====== ======
Ratio of expenses to average net assets(c) 1.25%(d) 1.23% 1.25% 1.25% 1.25%
====================================================== ======= ======= ======= ====== ======
Ratio of net investment income to average net assets(e) 6.54%(d) 6.38% 6.54% 7.27% 7.38%
====================================================== ======= ======= ======= ====== ======
Portfolio turnover rate 93% 47% 61% 83% 128%
====================================================== ======= ======= ======= ====== ======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) After fee waivers and/or expense reimbursements. The ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.67%, 1.73%, 1.86%, 2.02% and 3.03% for the periods 1999-1995.
(d) Ratios are based on average net assets of $60,052,093.
(e) After fee waivers and/or expense reimbursements. The ratios of net
investment income to average net assets prior to fee waivers and/or expense
reimbursements were 6.12%, 5.89%, 5.93%, 6.51% and 5.59% for the periods
1999-1995.
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------- --------------------------
1999 1998 1997 1996 1995 1999 1998 1997
------- ------- ------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.59 $ 10.92 $ 10.84 $ 10.73 $10.01 $10.59 $10.92 $10.76
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Income from investment operations:
Net investment income 0.62 0.65 0.67 0.74(a) 0.74 0.62 0.66 0.15(a)
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Net gains (losses) on securities (both
realized and unrealized) (0.85) (0.27) 0.21 0.24 0.75 (0.86) (0.28) 0.17
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Total from investment operations (0.23) 0.38 0.88 0.98 1.49 (0.24) 0.38 0.32
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Less distributions:
Dividends from investment income (0.56) (0.55) (0.67) (0.75) (0.77) (0.56) (0.55) (0.13)
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Distributions from net realized gains -- (0.07) (0.13) (0.12) -- -- (0.07) (0.03)
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Return of capital (0.08) (0.09) -- -- -- (0.08) (0.09) --
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Total distributions (0.64) (0.71) (0.80) (0.87) (0.77) (0.64) (0.71) (0.16)
- ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------
Net asset value, end of period $ 9.72 $ 10.59 $ 10.92 $ 10.84 $10.73 $ 9.71 $10.59 $10.92
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Total return(b) (2.37)% 3.38% 8.48% 9.66% 15.56% (2.47)% 3.39% 2.99%
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $34,423 $36,525 $25,121 $16,787 $4,207 $1,884 $1,785 $ 242
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Ratio of expenses to average net assets(c) 1.75%(d) 1.75% 1.76% 1.75% 1.73% 1.75%(d) 1.73% 1.76%(e)
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Ratio of net investment income to average
net assets(f) 6.04%(d) 5.87% 6.03% 6.77% 6.88% 6.04%(d) 5.88% 6.03%(e)
========================================== ======= ======= ======= ======= ====== ====== ====== ======
Portfolio turnover rate 93% 47% 61% 83% 128% 93% 47% 61%
========================================== ======= ======= ======= ======= ====== ====== ====== ======
</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) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.17%, 2.25%, 2.37%, 2.53% and 3.57% for 1999-1995 for Class B and 2.17%,
2.22% and 2.37% (annualized) for 1999-1997 for Class C.
(d) Ratios are based on average net assets of $38,526,539 and $1,924,739 for
Class B and Class C, respectively.
(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 5.62%, 5.37%, 5.42%, 6.00% and 5.05% for 1999-1995 for
Class B and 5.62%, 5.40% and 5.42% (annualized) for 1999-1997 for Class C.
FS-52
<PAGE> 280
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
AIM International Funds, Inc.:
We have audited the accompanying statement of assets and
liabilities of AIM International Equity Fund (a portfolio
of AIM International Funds, Inc.), including the schedule
of investments, as of October 31, 1999, the related
statement of operations for the year then ended, the
statement of changes in net assets for each of the years
in the two-year period then ended and financial
highlights for each of the years in the five-year period
then ended. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1999, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
International Equity Fund as of October 31, 1999, the
results of its operations for the year then ended, the
changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights
for each of the years in the five-year period then ended,
in conformity with generally accepted accounting
principles.
KPMG LLP
December 3, 1999
Houston, Texas
FS-53
<PAGE> 281
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-94.17%
AUSTRALIA-1.53%
AMP Ltd. (Insurance-Life/Health) 1,352,000 $ 13,752,481
- ---------------------------------------------------------------
Brambles Industries Ltd. (Air
Freight) 383,000 10,774,322
- ---------------------------------------------------------------
Cable & Wireless Optus Ltd.
(Telephone)(a) 3,103,700 7,107,662
- ---------------------------------------------------------------
Telstra Corp. Ltd. (Telephone)(a) 4,774,700 15,320,279
- ---------------------------------------------------------------
46,954,744
- ---------------------------------------------------------------
BELGIUM-0.40%
UCB S.A.
(Manufacturing-Diversified) 328,600 12,255,194
- ---------------------------------------------------------------
BRAZIL-0.97%
Embratel Participacoes S.A.-ADR
(Telephone) 492,800 6,344,800
- ---------------------------------------------------------------
Petroleo Brasileiro
S.A.-Petrobras-Pfd. (Oil &
Gas-Exploration & Production) 78,071 12,418,632
- ---------------------------------------------------------------
Tele Centro Sul Participacoes
S.A.-ADR (Telephone) 105,840 6,323,940
- ---------------------------------------------------------------
Telesp Participacoes S.A.-ADR
(Telephone) 286,300 4,634,481
- ---------------------------------------------------------------
29,721,853
- ---------------------------------------------------------------
CANADA-6.33%
BCE, Inc. (Telephone) 672,500 40,469,673
- ---------------------------------------------------------------
Bombardier Inc.
(Aerospace/Defense) 1,403,100 24,730,317
- ---------------------------------------------------------------
Imasco Ltd.
(Manufacturing-Diversified) 351,100 9,419,582
- ---------------------------------------------------------------
Loblaw Co. Ltd. (Retail-Food
Chains) 275,000 6,406,643
- ---------------------------------------------------------------
Nortel Networks Corp.
(Communications Equipment) 1,000,714 61,981,723
- ---------------------------------------------------------------
Research in Motion Ltd.
(Communications Equipment)(a) 460,000 14,262,462
- ---------------------------------------------------------------
Rogers Communications, Inc.
(Telecommunications-Cellular/Wireless)(a) 675,000 13,662,297
- ---------------------------------------------------------------
Shaw Communications, Inc.
(Broadcasting- Television,
Radio & Cable) 376,000 11,428,377
- ---------------------------------------------------------------
Toronto-Dominion Bank (The)
(Banks- Regional) 510,200 11,695,476
- ---------------------------------------------------------------
194,056,550
- ---------------------------------------------------------------
FINLAND-2.98%
Nokia Oyj (Communications
Equipment) 654,342 74,904,859
- ---------------------------------------------------------------
Sonera Oyj
(Telecommunications-Cellular/
Wireless) 546,900 16,426,703
- ---------------------------------------------------------------
91,331,562
- ---------------------------------------------------------------
FRANCE-12.32%
Accor S.A. (Lodging-Hotels) 96,500 21,725,885
- ---------------------------------------------------------------
Altran Technologies, S.A.
(Services- Commercial &
Consumer) 93,200 31,954,840
- ---------------------------------------------------------------
AXA (Insurance-Multi-Line) 288,614 40,717,636
- ---------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 432,900 38,028,609
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-(CONTINUED)
Carrefour Supermarche S.A.
(Retail-Food Chains) 477,200 $ 88,358,734
- ---------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail- General Merchandise) 221,750 42,295,855
- ---------------------------------------------------------------
PSA Peugeot Citroen (Automobiles) 75,000 14,399,934
- ---------------------------------------------------------------
Renault S.A. (Automobiles) 254,000 13,147,258
- ---------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting-Television, Radio
& Cable) 113,075 35,450,245
- ---------------------------------------------------------------
Total Fina S.A.-Class B (Oil &
Gas-Refining & Marketing) 379,262 51,271,770
- ---------------------------------------------------------------
377,350,766
- ---------------------------------------------------------------
GERMANY-4.16%
Deutsche Bank A.G. (Banks-Major
Regional)(a) 415,000 29,776,171
- ---------------------------------------------------------------
EM.TV & Merchandising A.G.
(Broadcasting- Television,
Radio & Cable) 187,500 9,271,191
- ---------------------------------------------------------------
EM.TV & Merchandising A.G.-Rts.,
expiring 11/12/99
(Broadcasting-Television, Radio
& Cable) 187,500 1,973
- ---------------------------------------------------------------
Mannesmann A.G.
(Machinery-Diversified) 380,200 59,798,417
- ---------------------------------------------------------------
Porsche A.G.-Pfd. (Automobiles) 10,500 28,610,500
- ---------------------------------------------------------------
127,458,252
- ---------------------------------------------------------------
HONG KONG-3.19%
China Telecom Ltd.
(Telecommunications-
Cellular/Wireless)(a) 9,104,000 31,115,871
- ---------------------------------------------------------------
Cosco Pacific Ltd.
(Financial-Diversified) 30,166,000 21,358,247
- ---------------------------------------------------------------
Dao Heng Bank Group Ltd. (Banks-
Regional)(a) 3,880,000 17,631,596
- ---------------------------------------------------------------
Hutchison Whampoa Ltd.
(Retail-Food Chains) 2,744,000 27,552,683
- ---------------------------------------------------------------
97,658,397
- ---------------------------------------------------------------
INDONESIA-0.30%
Gulf Indonesia Resources Ltd.
(Oil- International
Integrated)(a) 1,172,000 9,302,750
- ---------------------------------------------------------------
IRELAND-1.44%
Bank of Ireland (Banks-Major
Regional) 2,344,400 18,325,545
- ---------------------------------------------------------------
CRH PLC (Construction-Cement &
Aggregates) 1,360,000 25,682,645
- ---------------------------------------------------------------
44,008,190
- ---------------------------------------------------------------
ITALY-1.63%
Banca Popolare di Brescia (Banks-
Regional) 887,000 37,560,026
- ---------------------------------------------------------------
Credito Italiano S.p.A.
(Banks-Major Regional) 2,620,100 12,266,319
- ---------------------------------------------------------------
49,826,345
- ---------------------------------------------------------------
</TABLE>
FS-54
<PAGE> 282
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
JAPAN-25.23%
Advantest Corp. (Electronics-
Instrumentation) 235,900 $ 35,524,723
- ---------------------------------------------------------------
Alps Electric Co., Ltd.
(Electronics- Component
Distributors) 1,197,000 23,192,557
- ---------------------------------------------------------------
DDI Corp. (Telecommunications) 34,750 37,998,178
- ---------------------------------------------------------------
Hirose Electric Co. Ltd.
(Electronics- Component
Distributors) 206,800 36,081,646
- ---------------------------------------------------------------
Hoya Corp.
(Manufacturing-Specialized) 270,000 19,423,529
- ---------------------------------------------------------------
Ibiden Co., Ltd.
(Electronics-Component
Distributors) 820,000 13,764,328
- ---------------------------------------------------------------
Kirin Brewery Co., Ltd.
(Beverages- Alcoholic) 1,732,000 19,836,059
- ---------------------------------------------------------------
Kyocera Corp.
(Electronics-Component
Distributors) 314,000 30,118,460
- ---------------------------------------------------------------
Matsushita Communication
Industrial Co., Ltd.
(Telephone) 363,000 61,001,966
- ---------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics- Component
Distributors) 367,000 47,170,879
- ---------------------------------------------------------------
NEC Corp. (Computers-Hardware) 2,088,000 42,258,693
- ---------------------------------------------------------------
Nippon Telegraph & Telephone
Corp. (Telecommunications-Long
Distance) 3,338 51,228,238
- ---------------------------------------------------------------
NTT Data Corp.
(Computers-Software & Services) 1,984 31,399,933
- ---------------------------------------------------------------
NTT Mobile Communications
Network, Inc.
(Telecommunications-Cellular/Wireless) 2,379 63,208,767
- ---------------------------------------------------------------
Okuma Corp. (Hardware & Tools) 3,251,000 13,252,842
- ---------------------------------------------------------------
Orix Corp.
(Financial-Diversified) 46,600 6,257,733
- ---------------------------------------------------------------
Ricoh Co., Ltd. (Office Equipment
& Supplies) 1,735,000 28,307,851
- ---------------------------------------------------------------
Rohm Co. Ltd.
(Electronics-Component
Distributors) 74,000 16,609,275
- ---------------------------------------------------------------
Sanix Inc. (Services-Commercial &
Consumer) 185,600 17,268,428
- ---------------------------------------------------------------
Sharp Corp. (Electrical
Equipment) 918,000 14,616,853
- ---------------------------------------------------------------
Sony Corp. (Electronics-Component
Distributors) 345,900 53,947,859
- ---------------------------------------------------------------
Takeda Chemical Industries Ltd.
(Health Care-Drugs-Generic &
Other) 642,000 36,886,288
- ---------------------------------------------------------------
Tokyo Electron Ltd. (Electronics-
Semiconductors) 229,000 19,022,013
- ---------------------------------------------------------------
Trend Micro Inc.
(Computers-Software &
Services)(a) 197,100 39,134,526
- ---------------------------------------------------------------
Ushio, Inc.
(Electronics-Component
Distributors) 1,261,000 15,518,325
- ---------------------------------------------------------------
773,029,949
- ---------------------------------------------------------------
MEXICO-3.27%
Cifra S.A. de C.V.
(Retail-General Merchandise)(a) 8,782,000 13,426,459
- ---------------------------------------------------------------
Coca-Cola Femsa S.A.-ADR
(Beverages- Non-Alcoholic) 796,800 11,055,600
- ---------------------------------------------------------------
Fomento Economico Mexicano, S.A.
de C.V.-ADR
(Beverages-Non-Alcoholic) 669,970 21,983,391
- ---------------------------------------------------------------
Grupo Modelo S.A. de C.V.-Series
C (Beverages-Alcoholic) 4,538,900 11,093,515
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO-(CONTINUED)
Grupo Televisa S.A.-GDR
(Entertainment)(a) 536,200 $ 22,788,500
- ---------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de
C.V.- Class A (Paper & Forest
Products) 1,979,000 6,339,386
- ---------------------------------------------------------------
Telefonos de Mexico S.A.-ADR
(Telephone) 156,000 13,338,000
- ---------------------------------------------------------------
100,024,851
- ---------------------------------------------------------------
NETHERLANDS-4.68%
Aegon N.V. (Insurance Brokers) 195,000 18,001,891
- ---------------------------------------------------------------
CMG PLC (Computers-Software &
Services) 274,000 10,579,204
- ---------------------------------------------------------------
Equant N.V.
(Computers-Networking)(a) 100,000 9,731,462
- ---------------------------------------------------------------
Getronics N.V.
(Computers-Software & Services) 442,000 22,041,289
- ---------------------------------------------------------------
Koninklijke (Royal) Philips
Electronics N.V. (Electrical
Equipment) 306,000 31,387,912
- ---------------------------------------------------------------
Koninklijke Ahold N.V.
(Retail-Food Chains) 957,514 29,414,696
- ---------------------------------------------------------------
Verenigde Nederlandse
Uitgeversbedrijven Verenigd
Bezit (Publishing) 654,600 22,140,803
- ---------------------------------------------------------------
143,297,257
- ---------------------------------------------------------------
SINGAPORE-1.49%
Datacraft Asia Ltd.
(Communications Equipment) 1,418,400 6,524,640
- ---------------------------------------------------------------
DBS Group Holdings Ltd.
(Banks-Money Center)(a) 1,393,274 15,753,624
- ---------------------------------------------------------------
Keppel Corp. Ltd. (Engineering &
Construction) 3,901,900 10,607,198
- ---------------------------------------------------------------
Singapore Press Holdings Ltd.
(Publishing- Newspapers) 749,000 12,838,456
- ---------------------------------------------------------------
45,723,918
- ---------------------------------------------------------------
SOUTH KOREA-2.06%
Korea Electric Power Corp.-ADR
(Electric Companies) 659,900 10,393,425
- ---------------------------------------------------------------
Korea Telecom Corp.-ADR
(Telephone)(a) 464,000 16,356,000
- ---------------------------------------------------------------
L.G. Chemical Ltd.
(Chemicals-Specialty) 597,000 18,066,778
- ---------------------------------------------------------------
Pohang Iron & Steel Co. Ltd.-ADR
(Iron & Steel) 548,300 18,299,512
- ---------------------------------------------------------------
63,115,715
- ---------------------------------------------------------------
SPAIN-2.07%
Banco Popular Espanol S.A.
(Banks-Major Regional) 197,000 13,264,246
- ---------------------------------------------------------------
NH Hoteles, S.A. (Investment
Management)(a) 556,500 6,293,758
- ---------------------------------------------------------------
Telefonica S.A. (Telephone)(a) 2,668,827 43,913,045
- ---------------------------------------------------------------
63,471,049
- ---------------------------------------------------------------
SWEDEN-1.51%
Hennes & Mauritz A.B.-Class B
(Retail- Specialty-Apparel) 1,466,768 38,969,943
- ---------------------------------------------------------------
NetCom A.B.
(Telecommunications-Cellular/
Wireless)(a) 176,400 7,324,976
- ---------------------------------------------------------------
46,294,919
- ---------------------------------------------------------------
</TABLE>
FS-55
<PAGE> 283
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND-3.11%
ABB Ltd. (Electrical
Equipment)(a) 151,150 $ 15,217,108
- ---------------------------------------------------------------
Adecco S.A. (Services-Commercial
& Consumer) 29,191 17,690,355
- ---------------------------------------------------------------
Compagnie Financiere Richemont
A.G. (Tobacco) 16,100 30,749,131
- ---------------------------------------------------------------
Zurich Allied A.G.
(Insurance-Multi-Line) 56,106 31,756,725
- ---------------------------------------------------------------
95,413,319
- ---------------------------------------------------------------
TAIWAN-0.92%
Far Eastern Textile Ltd.
(Chemicals- Diversified) 9,331,470 12,767,522
- ---------------------------------------------------------------
Taiwan Semiconductor
Manufacturing Co.
(Electronics-Semiconductors)(a) 3,472,000 15,433,544
- ---------------------------------------------------------------
28,201,066
- ---------------------------------------------------------------
THAILAND-0.46%
Siam Commercial Bank PLC Wts.,
expiring 05/10/02
(Banks-Regional)(b) 9,404,000 3,288,538
- ---------------------------------------------------------------
Siam Commercial Bank PLC, 5.25%
Pfd. (Banks-Regional)(a) 9,404,000 10,657,298
- ---------------------------------------------------------------
13,945,836
- ---------------------------------------------------------------
UNITED KINGDOM-14.12%
Barclays PLC (Banks-Major
Regional) 1,392,000 42,636,380
- ---------------------------------------------------------------
BP Amoco PLC (Oil & Gas-Refining
& Marketing) 2,930,000 28,445,643
- ---------------------------------------------------------------
British Sky Broadcasting Group
PLC (Broadcasting-Television,
Radio & Cable) 2,810,000 30,191,184
- ---------------------------------------------------------------
British Telecommunications PLC
(Communications Equipment) 1,598,875 29,007,819
- ---------------------------------------------------------------
Compass Group PLC
(Services-Commercial &
Consumer) 1,996,500 21,401,546
- ---------------------------------------------------------------
General Electric Co. PLC
(Manufacturing- Diversified) 2,139,000 23,263,168
- ---------------------------------------------------------------
Granada Group PLC (Leisure Time-
Products) 1,861,950 14,724,527
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Hays PLC (Services-Commercial &
Consumer) 3,280,700 $ 37,567,809
- ---------------------------------------------------------------
Invensys PLC
(Electronics-Component-
Distributors) 2,500,000 12,289,648
- ---------------------------------------------------------------
Logica PLC (Computer Software &
Services) 1,033,500 15,810,845
- ---------------------------------------------------------------
Orange PLC (Telephone)(a) 2,902,300 72,386,256
- ---------------------------------------------------------------
Provident Financial PLC (Consumer
Finance) 963,933 10,768,731
- ---------------------------------------------------------------
Shell Transport & Trading Co.
(Oil- International Integrated) 2,840,000 21,782,023
- ---------------------------------------------------------------
Vodafone Airtouch PLC
(Telecommunications-Cellular/
Wireless) 9,171,500 42,673,183
- ---------------------------------------------------------------
WPP Group PLC
(Services-Advertising/
Marketing) 2,729,500 29,640,406
- ---------------------------------------------------------------
432,589,168
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$1,993,503,584) 2,885,031,650
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. DOLLAR DENOMINATED
CONVERTIBLE BONDS & NOTES-0.08%
SHIPPING-0.08%
Cosco Treasury Co. Ltd. (Hong
Kong), Conv. Gtd. Bonds, 1.00%,
03/13/03 (Cost $2,038,832) $ 2,754,000 2,569,534
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-3.68%
STIC Liquid Assets Portfolio(c) 56,392,364 56,392,364
- ---------------------------------------------------------------
STIC Prime Portfolio(c) 56,392,364 56,392,364
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $112,784,728) 112,784,728
- ---------------------------------------------------------------
TOTAL INVESTMENTS-97.93% 3,000,385,912
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-2.07% 63,347,198
- ---------------------------------------------------------------
NET ASSETS-100.00% $3,063,733,110
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
GDR - Global Depositary Receipt
Gtd. - Guaranteed
Pfd. - Preferred
Rts. - Rights
Wts. - Warrants
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Non-income producing security acquired as part of a unit with or in exchange
for other securities.
(c) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
FS-56
<PAGE> 284
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$2,108,327,144) $3,000,385,912
- ------------------------------------------------------------
Foreign currencies, at value (cost
$74,813,071) 74,702,387
- ------------------------------------------------------------
Receivables for:
Investments sold 56,015,112
- ------------------------------------------------------------
Capital stock sold 18,461,482
- ------------------------------------------------------------
Dividends and interest 6,337,504
- ------------------------------------------------------------
Foreign exchange contracts 14,794
- ------------------------------------------------------------
Investment for deferred compensation plan 49,495
- ------------------------------------------------------------
Other assets 64,941
- ------------------------------------------------------------
Total assets 3,156,031,627
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 80,677,634
- ------------------------------------------------------------
Capital stock reacquired 6,310,879
- ------------------------------------------------------------
Deferred compensation 49,495
- ------------------------------------------------------------
Accrued advisory fees 2,182,463
- ------------------------------------------------------------
Accrued administrative services fees 15,624
- ------------------------------------------------------------
Accrued custodian fees 308,014
- ------------------------------------------------------------
Accrued directors' fees 1,989
- ------------------------------------------------------------
Accrued distribution fees 1,957,696
- ------------------------------------------------------------
Accrued transfer agent fees 474,904
- ------------------------------------------------------------
Accrued operating expenses 319,819
- ------------------------------------------------------------
Total liabilities 92,298,517
- ------------------------------------------------------------
Net assets applicable to shares outstanding $3,063,733,110
============================================================
NET ASSETS:
Class A $2,058,418,998
============================================================
Class B $ 887,106,232
============================================================
Class C $ 118,207,880
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 400,000,000
- ------------------------------------------------------------
Outstanding 94,727,616
============================================================
Class B:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 42,019,748
============================================================
Class C:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 5,595,038
============================================================
Class A:
Net asset value and redemption price per
share $ 21.73
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $21.73 / 94.50%) $ 22.99
============================================================
Class B:
Net asset value and offering price per
share $ 21.11
============================================================
Class C:
Net asset value and offering price per
share $ 21.13
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $4,188,410 foreign
withholding tax) $ 30,386,931
- -----------------------------------------------------------
Interest 6,418,977
- -----------------------------------------------------------
Total investment income 36,805,908
- -----------------------------------------------------------
EXPENSES:
Advisory fees 25,205,776
- -----------------------------------------------------------
Administrative services fees 150,312
- -----------------------------------------------------------
Custodian fees 2,096,887
- -----------------------------------------------------------
Directors' fees 30,233
- -----------------------------------------------------------
Distribution fees-Class A 5,566,448
- -----------------------------------------------------------
Distribution fees-Class B 8,024,805
- -----------------------------------------------------------
Distribution fees-Class C 871,229
- -----------------------------------------------------------
Transfer agent fees-Class A 3,503,290
- -----------------------------------------------------------
Transfer agent fees-Class B 2,144,697
- -----------------------------------------------------------
Transfer agent fees-Class C 275,741
- -----------------------------------------------------------
Other 1,047,772
- -----------------------------------------------------------
Total expenses 48,917,190
- -----------------------------------------------------------
Less: Fees waived by advisor (1,122,543)
- -----------------------------------------------------------
Expenses paid indirectly (38,898)
- -----------------------------------------------------------
Net expenses 47,755,749
- -----------------------------------------------------------
Net investment income (loss) (10,949,841)
- -----------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES AND
FOREIGN CURRENCIES:
Net realized gain (loss) from:
Investment securities 182,981,531
- -----------------------------------------------------------
Foreign currencies (190,675)
- -----------------------------------------------------------
182,790,856
- -----------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities 476,714,401
- -----------------------------------------------------------
Foreign currencies (900,290)
- -----------------------------------------------------------
475,814,111
- -----------------------------------------------------------
Net gain from investment securities and
foreign
currencies 658,604,967
- -----------------------------------------------------------
Net increase in net assets resulting from
operations $647,655,126
===========================================================
</TABLE>
See Notes to Financial Statements.
FS-57
<PAGE> 285
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (10,949,841) $ 796,378
- -----------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 182,790,856 132,726,915
- -----------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities and foreign currencies 475,814,111 28,100,960
- -----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 647,655,126 161,624,253
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (10,410,630) (5,803,939)
- -----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (20,381,375) --
- -----------------------------------------------------------------------------------------------
Class B (9,045,542) --
- -----------------------------------------------------------------------------------------------
Class C (756,877) --
- -----------------------------------------------------------------------------------------------
Share transactions-net:
Class A (81,882,865) 22,585,920
- -----------------------------------------------------------------------------------------------
Class B (28,939,533) 35,370,772
- -----------------------------------------------------------------------------------------------
Class C 39,293,753 45,396,283
- -----------------------------------------------------------------------------------------------
Net increase in net assets 535,532,057 259,173,289
- -----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,528,201,053 2,269,027,764
- -----------------------------------------------------------------------------------------------
End of period $3,063,733,110 $2,528,201,053
===============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $2,002,598,882 $2,001,298,592
- -----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (8,098,861) (315,829)
- -----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities
and foreign currencies 177,562,192 111,361,504
- -----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 891,670,897 415,856,786
- -----------------------------------------------------------------------------------------------
$3,063,733,110 $2,528,201,053
===============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-58
<PAGE> 286
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM International Equity Fund (the "Fund") is a series portfolio of AIM
International Funds, Inc. (the "Company"). The Company is a Maryland corporation
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of six
separate portfolios. 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 will be 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 long-term growth of capital
by investing in a diversified portfolio of international equity securities whose
issuers are considered by the Fund's portfolio managers to have strong earnings
momentum.
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 the 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 its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and options contracts generally will be
valued 15 minutes after the close of trading of the New York Stock Exchange
("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
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. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales 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 the accrual basis. Dividend income is recorded on the
ex-dividend date. The Fund may elect to use a portion of the proceeds of
capital stock redemptions as distributions for Federal income tax purposes.
Distributions from income and net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, $13,577,439 was reclassified from undistributed net
investment income (loss), undistributed net realized gains was decreased by
$86,406,374 and paid in capital was increased by $72,828,935 as a result of
differing book/tax treatment of foreign currency transactions and net
operating loss reclassifications 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 reclassification
discussed above.
C. 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.
D. 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. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
FS-59
<PAGE> 287
fluctuations are included with the net realized and unrealized gain or loss
from investments.
E. 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.
F. Bond Premiums -- It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
G. Expenses -- Distribution expenses 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 investment advisory agreement,
the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first $1
billion of the Fund's average daily net assets, plus 0.90% of the Fund's average
daily net assets in excess of $1 billion. AIM has contractually agreed to waive
a portion of its advisory fees paid to the Fund by AIM to the extent necessary
to reduce the fees paid by the Fund at the net asset levels higher than those
currently incorporated in the present advisory fee schedule. Under the
contractual waiver, AIM will receive a fee calculated at the annual rate of
0.95% of the first $500 million of the Fund's average daily net assets, plus
0.90% of the Fund's average daily net assets in excess of $500 million to and
including $1 billion, plus 0.85% of the Fund's average daily net assets in
excess of $1 billion. The waiver of fees is contractual and may not be
terminated without approval of the Board of Directors of the Company. During the
year ended October 31, 1999, AIM waived fees of $1,122,543.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1999, AIM was
paid $150,312 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 and
shareholder services to the Fund. During the year ended October 31, 1999, AFS
was paid $2,547,913 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 a plan
pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A
shares, Class B shares and Class C shares (collectively the "Plans"). The Fund,
pursuant to the Plans, pays AIM Distributors compensation at the annual rate of
0.30% of the Fund's average daily net assets of Class A shares and 1.00% of the
average daily net assets of Class B and C 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 Class 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,
1999, the Class A, Class B and Class C shares paid AIM Distributors $5,566,448,
$8,024,805 and $871,229, respectively, as compensation under the Plans.
AIM Distributors received commissions of $446,482 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1999,
AIM Distributors received $157,129 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, 1999, the Fund paid legal fees of $8,665 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of
$32,748 and $6,150, respectively, under expense offset arrangements. The effect
of the above arrangements resulted in a reduction of the Fund's total expenses
of $38,898 during the year ended October 31, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid to directors who are not an
"interested person" of AIM. The Company invests 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. During the year
ended October 31, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. Prior to
May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated
among the funds based on their respective average net assets for the period.
FS-60
<PAGE> 288
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, 1999 was
$2,215,214,374 and $2,387,679,858, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $915,052,506
- --------------------------------------------------------------------------
Aggregate unrealized appreciation (depreciation) of
investment securities (34,222,893)
- --------------------------------------------------------------------------
Net unrealized appreciation of investment securities $880,829,613
==========================================================================
Cost of investments for tax purposes is $2,119,556,299
</TABLE>
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during the years ended October 31, 1999 and
1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 144,897,083 $ 2,695,101,630 255,642,183 $ 4,635,171,469
- -----------------------------------------------------------------------------------------------------------------------------
Class B 11,600,846 212,065,890 12,193,983 217,550,365
- -----------------------------------------------------------------------------------------------------------------------------
Class C 9,254,771 168,733,197 25,679,581 472,331,833
- -----------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 1,596,985 28,282,611 332,423 5,441,633
- -----------------------------------------------------------------------------------------------------------------------------
Class B 482,230 8,356,948 -- --
- -----------------------------------------------------------------------------------------------------------------------------
Class C 39,786 689,883 -- --
- -----------------------------------------------------------------------------------------------------------------------------
Issued in connection with acquisition*:
Class A 5,974,789 106,921,489 -- --
- -----------------------------------------------------------------------------------------------------------------------------
Class B 2,061,255 35,971,364 -- --
- -----------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (155,781,747) (2,912,188,595) (252,737,021) (4,618,027,182)
- -----------------------------------------------------------------------------------------------------------------------------
Class B (15,614,562) (285,333,735) (10,435,828) (182,179,593)
- -----------------------------------------------------------------------------------------------------------------------------
Class C (7,117,246) (130,129,327) (23,050,474) (426,935,550)
- -----------------------------------------------------------------------------------------------------------------------------
(2,605,810) $ (71,528,645) 7,624,847 $ 103,352,975
=============================================================================================================================
</TABLE>
* The Fund acquired AIM International Growth Fund on February 12, 1999. The
acquired fund's net assets as of the closing date were $125,802,235. The net
assets of the Fund immediately prior to acquisition were $2,655,808,540.
FS-61
<PAGE> 289
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during each of the years in the five-year period ended October 31,
1999, for a share of Class B capital stock outstanding during each of the years
in the five-year period ended October 31, 1999 and for a share of Class C
capital stock outstanding during each of the years in the two-year period ended
October 31, 1999 and the period August 4, 1997 (date sales commenced) through
October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.59 $ 16.64 $ 15.37 $ 13.65 $ 13.50
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income (loss) (0.03) 0.05(a) 0.04(a) 0.04(a) 0.01
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Net gains on securities (both realized and unrealized) 4.49 0.96 1.68 2.07 0.62
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Total from investment operations 4.46 1.01 1.72 2.11 0.63
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net investment income (0.11) (0.06) (0.02) (0.01) (0.04)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Distributions from net realized gains (0.21) -- (0.43) (0.38) (0.44)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Total distributions (0.32) (0.06) (0.45) (0.39) (0.48)
- ------------------------------------------------------------ ---------- ---------- ---------- ---------- --------
Net asset value, end of period $ 21.73 $ 17.59 $ 16.64 $ 15.37 $ 13.65
============================================================ ========== ========== ========== ========== ========
Total return(b) 25.73% 6.11% 11.43% 15.79% 5.24%
============================================================ ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,058,419 $1,724,635 $1,577,390 $1,108,395 $654,764
============================================================ ========== ========== ========== ========== ========
Ratio of expenses to average net assets(c) 1.48%(d) 1.45% 1.47% 1.58% 1.67%
============================================================ ========== ========== ========== ========== ========
Ratio of net investment income (loss) to average net
assets(e) (0.14)%(d) 0.28% 0.24% 0.25% 0.10%
============================================================ ========== ========== ========== ========== ========
Portfolio turnover rate 86% 78% 50% 66% 68%
============================================================ ========== ========== ========== ========== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges and is not annualized for periods less than
one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.52%, 1.49%, 1.51%, 1.60% and 1.68% for 1999-1995.
(d) Ratios are based on average net assets of $1,855,482,758.
(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 (0.18)%, 0.24%, 0.20%, 0.22% and 0.09% for 1999-1995.
<TABLE>
<CAPTION>
CLASS B CLASS C
----------------------------------------------------------------- --------
1999 1998 1997 1996 1995 1999
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.13 $ 16.27 $ 15.13 $ 13.54 $ 13.49 $ 17.14
- ------------------------------------------------ ---------- ---------- ---------- ---------- -------- --------
Income from investment operations:
Net investment income (loss) (0.17)(a) (0.09)(a) (0.09)(a) (0.07)(a) (0.09) (0.17)(a)
- ------------------------------------------------ ---------- ---------- ---------- ---------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 4.36 0.95 1.66 2.04 0.61 4.37
- ------------------------------------------------ ---------- ---------- ---------- ---------- -------- ---------
Total from investment operations 4.19 0.86 1.57 1.97 0.52 4.20
- ------------------------------------------------ ---------- ---------- ---------- ---------- -------- ---------
Less distributions:
Dividends from net investment income -- -- -- -- (0.03) --
- ------------------------------------------------ ---------- ---------- ---------- ---------- -------- --------
Distributions from net realized gains (0.21) -- (0.43) (0.38) (0.44) (0.21)
- ------------------------------------------------ ---------- ---------- ---------- ---------- -------- --------
Total distributions (0.21) -- (0.43) (0.38) (0.47) (0.21)
- ------------------------------------------------ ---------- ---------- ---------- ---------- -------- --------
Net asset value, end of period $ 21.11 $ 17.13 $ 16.27 $ 15.13 $ 13.54 $ 21.13
================================================ ========== ========== ========== ========== ======== ========
Total return(b) 24.72% 5.29% 10.61% 14.88% 4.35% 24.76%
================================================ ========== ========== ========== ========== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 887,106 $ 744,987 $ 678,809 $ 368,355 $ 51,964 $118,208
================================================ ========== ========== ========== ========== ======== ========
Ratio of expenses to average net assets(c) 2.27%(d) 2.22% 2.25% 2.35% 2.55% 2.27%(d)
================================================ ========== ========== ========== ========== ======== ========
Ratio of net investment income (loss) to average
net assets(f) (0.93)%(d) (0.49)% (0.53)% (0.53)% (0.78)% (0.93)%(d)
================================================ ========== ========== ========== ========== ======== ========
Portfolio turnover rate 86% 78% 50% 66% 68% 86%
================================================ ========== ========== ========== ========== ======== ========
<CAPTION>
CLASS C
--------------------
1998 1997
-------- --------
<S> <C> <C>
Net asset value, beginning of period $ 16.27 $ 17.64
- ------------------------------------------------ -------- --------
Income from investment operations:
Net investment income (loss) (0.09)(a) (0.02)(a)
- ------------------------------------------------ -------- --------
Net gains (losses) on securities (both
realized and unrealized) 0.96 (1.35)
- ------------------------------------------------ -------- --------
Total from investment operations 0.87 (1.37)
- ------------------------------------------------ -------- --------
Less distributions:
Dividends from net investment income -- --
- ------------------------------------------------ -------- --------
Distributions from net realized gains -- --
- ------------------------------------------------ -------- --------
Total distributions -- --
- ------------------------------------------------ -------- --------
Net asset value, end of period $ 17.14 $ 16.27
================================================ ======== ========
Total return(b) 5.35% (7.77)%
================================================ ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 58,579 $ 12,829
================================================ ======== ========
Ratio of expenses to average net assets(c) 2.22%() 2.27%(e)
================================================ ======== ========
Ratio of net investment income (loss) to average
net assets(f) (0.49)%() (0.55)%(e)
================================================ ======== ========
Portfolio turnover rate 78% 50%
================================================ ======== ========
</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) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.31%, 2.26%, 2.28%, 2.37% and 2.56% for 1999-1995 for Class B and 2.31%,
2.26% and 2.30% (annualized) for 1999-1997 for Class C.
(d) Ratios are based on average net assets of $802,480,523 and $87,122,931 for
Class B and Class C, respectively.
(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 (0.97)%, (0.53)%, (0.57)%, (0.55)% and (0.79)%, for
1999-1995 for Class B and (0.97)%, (0.53)% and (0.57)% (annualized) for
1999-1997 for Class C.
FS-62
<PAGE> 290
APPENDIX II
ANNUAL REPORT / OCTOBER 31 1999
AIM GLOBAL GOVERNMENT INCOME FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 291
[COVER IMAGE]
-------------------------------------
THE PARLIAMENT OF LONDON BY CLAUDE MONET
TO PROVIDE A STEADY FLOW OF INCOME AND GROWTH OF CAPITAL FOR
OUR SHAREHOLDERS, AIM GLOBAL GOVERNMENT INCOME FUND
INVESTS IN GOVERNMENT DEBT SECURITIES OF THE HIGHEST QUALITY
AND SAFETY. THE PARLIAMENT OF LONDON, PICTURED HERE, IS REPRE-
SENTATIVE OF THE INHERENT STABILITY OF THE COUNTRIES IN WHICH
THE FUND INVESTS.
-------------------------------------
AIM Global Government Income Fund is for shareholders who primarily seek a high
level of current income, and secondarily seek capital appreciation and
protection of principal. The fund invests primarily in high-quality U.S. and
foreign government debt obligations.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Government Income Fund's performance figures are historical and
reflect reinvestment of all distributions and changes in net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 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
expenses.
o The fund's average annual total returns, including sales charges, for the
period ended 9/30/99 (the most recent calendar quarter end), are as follows:
for Class A shares, one year, -9.24%; five years, 4.61%; 10 years, 6.15%.
For Class B shares, one year, -9.81%; five years, 4.64%; inception
(10/22/92), 4.66%. For class C shares, inception (3/1/99), -3.64 %. For
Advisor Class shares, one year, -4.28%; inception (6/1/95), 4.67%.
o Because Class C shares have been offered for less than one year (since
3/1/99), all total return figures for Class C shares reflect cumulative
total return that has not been annualized.
o Beginning 3/1/99, Advisor Class shares were closed to new investors.
o The 30-day yield is calculated on the basis of a formula defined by the SEC.
The formula is based on the portfolio's potential earnings from dividends,
interest, yield-to-maturity or yield-to-call of its holdings, net of all
expenses and expressed on an annualized basis.
o The fund's annualized distribution rate reflects its most recent monthly
dividend distribution multiplied by 12 and divided by the most recent
month-end maximum offering price. The fund's distribution rate and 30-day
SEC yield will differ.
o During the year ended 10/31/99, the fund paid distributions of $0.435 per
Class A share, $0.376 per Class B share, $0.210 per Class C share and $0.465
per Advisor Class share.
o Government securities, such as U.S. Treasury bills, notes and bonds, offer a
high degree of safety and are guaranteed as to the timely payment of
principal and interest if held to maturity. Fund shares are not insured, and
their value and yield will vary with market conditions.
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.
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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The J.P. Morgan Global Government Bond Index is a market value-weighted
average of government bonds from 13 major developed bond markets. It
includes the effect of reinvested coupons and is measured in U.S. dollars.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE A PORTION OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM GLOBAL GOVERNMENT INCOME FUND
<PAGE> 292
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
The fiscal year discussed in this report reconfirmed our
[PHOTO OF faith in two long-established principles of investing:
Charles T. portfolio diversification and long-term thinking. We could
Bauer, title this report "What a Difference a Year Makes."
Chairman of An investor surveying conditions when the fiscal year
the Board of opened on October 31, 1998, saw a market dominated by
THE FUND large-capitalization stocks and high-quality bonds,
APPEARS HERE] especially U.S. Treasuries. Ten months into 1998, two
well-known indexes of large-capitalization U.S. company
stocks, the S&P 500 and the Dow Jones Industrial Average,
were up by double digits, but the smaller-company stocks in
the Russell 2000 had lost 12.80%. Overseas, many markets
were languishing, especially in Asia, where many financial
difficulties originated in 1997.
In bond markets also, name-brand quality was the place
to be. The Lehman Corporate/Government Bond Index, which
follows intermediate and long-term government and investment-grade debt, was up
8.56%, while the Lehman High Yield Index, which tracks riskier "junk bonds," had
dropped 2.30%.
It would be easy for an investor to conclude that blue chips, whether equity
or fixed-income, were the only place to be. That investor, of course, would be
wrong.
MARKETS TURN
While large-capitalization stocks continue to do very well, during 1999 markets
broadened considerably, with many investment sectors performing a complete
turnaround. Year to date by October 31, 1999, the small-cap stocks in the
Russell 2000 were back in positive territory, and the many Asian markets had
staged a comeback. The same holds true for bonds. The higher-quality Lehman
index is down 1.49% year to date through October 31, 1999, while high-yield
bonds have moved into positive returns.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the markets'
overall trend has been upward. Selecting an asset class or a market sector on
the basis of a short-term snapshot of conditions is usually unwise, as is
concentrating your portfolio in one asset class. Staying fully invested in a
diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by signs of
economic health in Europe and Asia, not to mention the prolonged U.S. economic
expansion. However, we are aware of how easily an investor could have been
misled by conditions just 12 months ago. For our shareholders, we therefore
reiterate our commitment to investing through a financial advisor. In addition
to helping you select investments appropriate to your time horizon and risk
tolerance, a financial advisor can keep you informed about how changing market
conditions affect you and your portfolio and can help assure that when you do
alter your investments, there's a logical reason for doing so. AIM believes
every investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended October 31, 1999, how the markets
behaved and what they foresee for the near future. We trust you will find their
discussion informative. If you have any questions or comments, we invite you to
contact us, either at our Web site, aimfunds.com, or through our Client Services
department at 800-959-4246. Information about your account is also available
through our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED
PORTFOLIO REMAINS
A COMPELLING STRATEGY
AND ONE OF YOUR
BEST PROSPECTS FOR
LONG-TERM GAIN.
-------------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
<PAGE> 293
ANNUAL REPORT / MANAGERS' OVERVIEW
FUND REMAINS STABLE THROUGH GLOBAL DISINFLATION
HOW WOULD YOU CHARACTERIZE THE FIXED-INCOME CLIMATE OVER THE FISCAL YEAR, AND
HOW DID AIM GLOBAL GOVERNMENT INCOME FUND FARE?
Sentiment has remained bearish across the fixed-income markets. The rise in bond
yields and the resulting drop in prices has caused performance in most sectors
to suffer this year. The fund's total return for the year ended October 31,
1999, was -3.97% for Class A shares, -4.62% for Class B shares and -3.73% for
Advisor Class shares. Class C shares commenced sales March 1, 1999, and produced
cumulative total return of -2.80% through the end of the fiscal year. The fund's
benchmark, the J.P. Morgan Global Government Bond Index, had a return of 1.94%
over the 12-month period. These returns are at net asset value, without a sales
charge.
The fund produced a high level of current income throughout the reporting
period. As of October 31, 1999, the fund's 30-day distribution rate at net asset
value was 5.13% for Class A shares, 4.40% for Class B and C shares and 5.47% for
Advisor Class shares. The fund's 30-day SEC yield at maximum offering price was
4.23% for Class A shares, 3.81% for Class B and Class C shares and 4.77% for
Advisor Class shares.
HOW WAS THE FUND STRUCTURED AT THE END OF THE FISCAL YEAR?
As of October 31, the fund had 24 holdings, with total net assets divided as
follows: international government bonds, 50.12%; domestic government bonds,
18.64%; international corporate bonds, 15.91%; domestic corporate bonds, 7.23%
and cash/cash equivalents, 8.10%.
NOTWITHSTANDING OVERALL BOND MARKET VOLATILITY, WHAT FACTORS INFLUENCED FUND
PERFORMANCE?
A primary factor that hindered the fund's performance during the reporting
period was rising interest rates. In addition, our global bond portfolio
maintained an overall duration of 6.4 years, which was moderately greater than
that of the index at 5.6 years. In an environment with rising interest rates,
the slightly longer duration of our fund negatively impacted performance.
The lack of exposure to the Japanese yen for most of the fiscal year also
detracted from relative performance. We did not capitalize on the yen's sharp
rally in the third quarter of this year. We adjusted the portfolio to recoup
some of that exposure and the fund gained considerable ground compared with both
the fund's index and its peer group.
HAVE YOU REGAINED CONFIDENCE IN JAPAN AS ITS ECONOMIC ENVIRONMENT IMPROVES?
Japan was among the few developed countries to post positive returns in the
global bond market this year. While performance in Japanese bonds was strong
this year, better than 10% unhedged, there are fundamental reasons why optimism
may be shortsighted.
We believe the rapid deterioration in Japan's public finances will be the
dominant factor influencing the Japanese bond market going forward. Further, we
believe the yen, relative to the dollar, remains at risk as the government may
weaken its currency to keep the economic recovery going.
We are outright bearish in our Japan outlook. We believe several developing
markets represent attractive opportunities. In this environment, we will
continue our efforts to position the fund to capitalize on market trends while
providing a high degree of safety and a steady flow of income for our
shareholders.
WHAT KINDS OF TRENDS HAVE YOU NOTICED INTERNATIONALLY?
There's virtually been a synchronization of growth worldwide, whereas
previously, the United States led the way. The resurgence of global growth has
caused investors and governments to worry about the potential for higher
inflation. To date, however, inflation has remained relatively flat, confounding
expectations.
HOW IS THE GLOBAL ENVIRONMENT FOR BONDS?
The Federal Reserve Board (the Fed), the European Central Bank and the Bank of
England all kept rates unchanged while they waited for further evidence of
inflationary pressures. With the ever-present threat of higher interest rates
looming, bonds have been unable to rally.
Our bias has been to buy into this weakness, favoring the U.S. market over
foreign bond markets. This view is predicated on the long-term theme of
disinfla-
-------------------------------------
THERE'S VIRTUALLY BEEN A SYNCHRO-
NIZATION OF GROWTH WORLDWIDE,
WHEREAS PREVIOUSLY, THE UNITED
STATES LED THE WAY.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM GLOBAL GOVERNMENT INCOME FUND
2
<PAGE> 294
ANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of October 31, 1999, based on total net assets
<TABLE>
<CAPTION>
======================================================================================
TOP FIVE COUNTRIES TOP FIVE BOND HOLDINGS COUPON MATURITY %
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. United States 26% 1. Bundesrepublik Deutschland 6.000% 01/06 11.44
2. Euroland 23 2. UBS Jersey (U.K.) 8.750 06/05 10.19
3. Denmark 11 3. U.S. Treasury Bonds 6.375 08/27 7.55
4. Switzerland 10 4. Buoni Poliennali Del Tesoro 7.250 11/26 5.99
5. United Kingdom 6 5. FNMA 7.500 11/29 5.99
======================================================================================
</TABLE>
<TABLE>
<CAPTION>
BOND ALLOCATION BY SECTOR
================================================================================
<S> <C>
INTERNATIONAL GOVERNMENT 50.12%
DOMESTIC CORPORATE 7.23%
DOMESTIC GOVERNMENT 18.64%
CASH/CASH EQUIVALENTS 8.10%
INTERNATIONAL CORPORATE 15.91%
The fund's portfolio is subject to change, and there is no assurance that the
fund will continue to hold any particular security.
================================================================================
</TABLE>
tion. Market action ran counter to the long-term trend due to persisting
concerns that strong growth would lead to higher inflation.
Two of the better-performing bond markets were Canada and the United
Kingdom, and the fund benefited from its exposure to these markets. The U.K.
bond market got a boost from low inflation, and the Bank of England acted
diligently to keep it in check.
HOW HAS THE EURO EMERGED IN THE BOND MARKET?
Euroland bonds performed poorly as the economy languished before showing signs
of picking up toward the end of the fiscal year. We offset our euro exposure by
reinvesting the proceeds into the base currency of U.S. dollars for roughly the
first half of the year. This strategy helped reduce currency risk and protect
capital.
The euro increases price transparency, one more factor helping the long-term
disinflation story. It's certainly too soon to tell whether the euro will
succeed. That will take quite a few years to assess. The euro forges a historic
business environment, and we will continue to monitor its development.
WHAT WERE THE CIRCUMSTANCES SURROUNDING THE DOMESTIC BOND MARKET'S PERFORMANCE?
This year has been the worst year for bonds in the United States since 1994, and
the second worst year on record. Investors were concerned that continued strong
economic growth would prompt the Fed to raise interest rates to keep inflation
at bay, and this had an unsettling effect on the bond market.
The continued strength of the U.S. economy is still not producing
inflationary pressure, and the Fed has emphasized that the mix of strong growth
and low inflation should foster greater productivity.
WHAT IS YOUR OUTLOOK FOR THE IMMEDIATE FUTURE?
We expect continued volatility initially, but over the long term, we foresee
positive fundamentals. We've seen interest rate hikes on both sides of the
Atlantic during the reporting period, and there are probably further hikes to
come. That provides a negative background for bonds in the near term since
yields may be higher in the future.
We think the six- to 12-month view of interest rates is overly pessimistic.
Once the near-term worries are worked out, the market will be able to focus on
the positive inflation fundamentals. We maintain a bullish bias and expect
returns to be positive.
See important fund and index disclosures inside front cover.
AIM GLOBAL GOVERNMENT INCOME FUND
3
<PAGE> 295
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL GOVERNMENT INCOME FUND VS. BENCHMARK INDEX
3/29/88-10/31/99
in thousands
================================================================================
AIM Global
Government J.P Morgan
Income Global Gov-
Fund, Class ernment
A Shares Bond Index
- --------------------------------------------------------------------------------
3/88 9525 10000
10/88 9589 10241.5
10/89 10345 10746.4
10/90 11579 11915.8
10/91 12666 13254.8
10/92 13465 14922.2
10/93 16413 16563.6
10/94 14958 16998.6
10/95 16337 19607.9
10/96 17501 20805.2
10/97 18337 21530.6
10/98 20207 24325.1
10/99 19405 23606.6
Past performance cannot guarantee comparable future results.
Source: Bloomberg.
================================================================================
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 compares your fund's Class A shares to a benchmark index. It is
intended to give you a general idea of how your fund compared to the bond market
over the period 3/29/88-10/31/99. (Please note that the index's performance
figures are for the period 3/31/88-10/31/99.) It is important to understand
differences between your fund and this index. Your fund's total return is shown
with a sales charge and includes fund expenses and management fees. An index
measures the performance of a hypothetical portfolio, in this case the J.P.
Morgan Global Government Bond Index. Unlike your fund, an index is not managed,
incurring no sales charge, expenses or fees. But 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.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
================================================================================
CLASS A SHARES
10 Years 5.98%
5 years 4.32
1 year -8.56*
* -3.97% excluding sales charge
CLASS B SHARES
Inception (10/22/92) 4.61
5 years 4.31
1 year -9.19*
* -4.62% excluding sales charge
CLASS C SHARES
Inception (3/1/99) -3.75
ADVISOR CLASS SHARES*
Inception (6/1/95) 4.58
1 year -3.73
* Beginning March 1, 1999, Advisor Class shares were closed to new investors.
Sales charges do not apply.
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class B and Class C shares will differ from Class
A shares due to differing fees and expenses. For fund performance calculations
and descriptions of the indexes cited on this page, please refer to the inside
front cover.
AIM GLOBAL GOVERNMENT INCOME FUND
4
<PAGE> 296
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
CORPORATE BONDS-15.91%
AUSTRALIA-1.40%
KFW International Finance
(Investment Banking/Brokerage),
Gtd. Unsec. Unsub. Bonds,
7.25%, 07/16/07 AUD 3,100,000 $ 1,987,002
- ---------------------------------------------------------------
GERMANY-1.56%
Bayerische Landesbank
Girozentrale (Banks- Money
Center), Unsec. Sub. Notes,
5.875%, 12/01/08 2,400,000 2,213,702
- ---------------------------------------------------------------
SWITZERLAND-10.19%
UBS Jersey
(Financial-Diversified), Sub.
Bonds, 8.75%, 06/20/05 GBP 8,200,000 14,475,660
- ---------------------------------------------------------------
TUNISIA-2.76%
Banque Cent de Tunisie
(Banks-Money Center), Unsec.
Bonds, 8.25%, 09/19/27 4,750,000 3,916,214
- ---------------------------------------------------------------
Total Corporate Bonds (Cost
$23,886,964) 22,592,578
- ---------------------------------------------------------------
GOVERNMENT BONDS & NOTES-45.37%
CANADA-3.59%
Canadian Government, Bonds,
6.00%, 06/01/08 CAD 7,520,000 5,092,848
- ---------------------------------------------------------------
DENMARK-5.88%
Kingdom of Denmark, Bonds, 7.00%,
11/10/24 DKK 53,300,000 8,345,569
- ---------------------------------------------------------------
GERMANY-11.44%
Bundesrepublik Deutschland,
Bonds, 6.00%, 01/05/06 EUR 14,650,000 16,246,489
- ---------------------------------------------------------------
GREECE-6.44%
Hellenic Republic, Bonds
9.20%, 03/21/02
GRD 2,210,000,000 7,223,898
- ---------------------------------------------------------------
8.80%, 06/19/07 GRD 550,000,000 1,914,372
- ---------------------------------------------------------------
9,138,270
- ---------------------------------------------------------------
ITALY-10.09%
Buoni Poliennali del Tesoro,
Deb., 8.50%, 01/01/04 EUR 4,890,000 5,817,747
- ---------------------------------------------------------------
Bonds, 7.25%, 11/01/26 EUR 7,000,000 8,503,343
- ---------------------------------------------------------------
14,321,090
- ---------------------------------------------------------------
UNITED KINGDOM-5.93%
United Kingdom Treasury, Gtd.
Bonds, 9.00%, 10/13/08 GBP 4,190,000 8,425,473
- ---------------------------------------------------------------
URUGUAY-2.00%
Republica Orient Uruguay, Unsec.
Bonds, 7.875%, 07/15/27 3,000,000 2,842,500
- ---------------------------------------------------------------
Total Government Bonds &
Notes (Cost $72,124,983) 64,412,239
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
<S> <C> <C>
MORTGAGE BACKED NOTES-4.75%
DENMARK-4.75%
Realkredit Danmark A/S (Banking),
6.00%, 10/01/26 (Cost
$7,313,393) DKK 50,414,000 $ 6,748,531
- ---------------------------------------------------------------
ASSET-BACKED SECURITIES-7.23%
BANKS (MONEY CENTER)-2.45%
First USA Credit Card Master
Trust, Sub. Series 1998-3 C
Floating Rate Notes, 5.356%,
02/18/04(b) 3,500,000 3,481,953
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUST-1.28%
Contimortgage Home Equity Loan
Trust, Sub. Series 1999-2 B
Notes, 8.50%, 04/25/29(b) 2,000,000 1,818,437
- ---------------------------------------------------------------
RETAIL (HOME SHOPPING)-3.50%
Fingerhut Master Trust, Sub.
Series 1998-1 C Floating Rate
Notes, 5.738%, 02/15/05(b) 5,000,000 4,958,594
- ---------------------------------------------------------------
Total Asset-Backed Securities
(Cost $10,257,846) 10,258,984
- ---------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES-9.86%
FEDERAL HOME LOAN MORTGAGE CORP.
("FHLMC")-0.71%
Pass Through Certificates,
8.50%, 03/01/10 971,355 1,007,470
- ---------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION ("FNMA")-9.15%
Pass Through Certificates-TBA,
7.50%, 11/01/29(c) 8,500,000 8,502,635
- ---------------------------------------------------------------
Sr. Unsub. Notes,
6.375%, 08/15/07 AUD 7,300,000 4,488,457
- ---------------------------------------------------------------
12,991,092
- ---------------------------------------------------------------
Total U.S. Government Agency
Securities (Cost
$14,779,756) 13,998,562
- ---------------------------------------------------------------
U.S. TREASURY SECURITIES-8.78%
U.S. TREASURY NOTES-1.23%
5.625%, 05/15/08 1,800,000 1,737,378
- ---------------------------------------------------------------
U.S. TREASURY BONDS-7.55%
6.375%, 08/15/27(d) 10,750,000 10,720,760
- ---------------------------------------------------------------
Total U.S. Treasury
Securities (Cost
$12,937,328) 12,458,138
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 297
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MONEY MARKET FUNDS-6.46%
STIC Liquid Assets Portfolio(e) 4,587,352 $ 4,587,352
- ---------------------------------------------------------------
STIC Prime Portfolio(e) 4,587,352 4,587,352
- ---------------------------------------------------------------
Total Money Market Funds
(Cost $9,174,704) 9,174,704
- ---------------------------------------------------------------
TOTAL INVESTMENTS-98.36% 139,643,736
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-1.64% 2,323,523
- ---------------------------------------------------------------
NET ASSETS-100.00% $141,967,259
===============================================================
</TABLE>
Investment Abbreviations:
AUD - Australian Dollar
CAD - Canadian Dollar
Deb. - Debentures
DKK - Danish Krone
EUR - Euro
GBP - British Pound Sterling
GRD - Greek Drachma
Gtd. - Guaranteed
Sr. - Senior
Sub. - Subordinated
TBA - To Be Announced
Unsec. - Unsecured
Unsub. - Unsubordinated
USD - U.S. Dollar
Notes to Schedule of Investments:
(a) Principal amount in U.S. Dollars, except as otherwise indicated.
(b) The coupon rate shown on floating rate note represents rate at period end.
(c) Security purchased on a forward commitment basis. These securities are
subject to dollar roll transactions. See Note 1 Section F.
(d) The principal balance was pledged as collateral to cover securities
purchased on a forward commitment basis.
(e) The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
6
<PAGE> 298
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $150,474,974) $139,643,736
- ------------------------------------------------------------
Foreign currencies, at value (cost $7,789,654) 8,143,813
- ------------------------------------------------------------
Receivables for:
Fund shares sold 213,493
- ------------------------------------------------------------
Dividends and interest 3,282,169
- ------------------------------------------------------------
Other assets 8,228
- ------------------------------------------------------------
Total assets 151,291,439
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 8,524,792
- ------------------------------------------------------------
Fund shares reacquired 407,460
- ------------------------------------------------------------
Forward contracts 20,290
- ------------------------------------------------------------
Accrued advisory fees 86,440
- ------------------------------------------------------------
Accrued accounting services fees 4,247
- ------------------------------------------------------------
Accrued distribution fees 92,478
- ------------------------------------------------------------
Accrued trustees' fees 2,483
- ------------------------------------------------------------
Accrued operating expenses 185,990
- ------------------------------------------------------------
Total liabilities 9,324,180
- ------------------------------------------------------------
Net assets applicable to shares outstanding $141,967,259
============================================================
NET ASSETS:
Class A $ 85,669,094
============================================================
Class B $ 55,849,297
============================================================
Class C $ 242,724
============================================================
Advisor Class $ 206,144
- ------------------------------------------------------------
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 10,462,287
============================================================
Class B 6,821,145
============================================================
Class C 29,660
============================================================
Advisor Class 25,070
- ------------------------------------------------------------
Class A:
Net asset value and redemption price per
share $ 8.19
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $8.19 / 95.25%) $ 8.60
- ------------------------------------------------------------
Class B:
Net asset value and offering price per share $ 8.19
- ------------------------------------------------------------
Class C:
Net asset value and offering price per share $ 8.18
- ------------------------------------------------------------
Advisor Class:
Net asset value, redemption and offering
price per share $ 8.22
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $10,916,810
- ------------------------------------------------------------
Dividend 9,622
- ------------------------------------------------------------
Securities lending 38,923
- ------------------------------------------------------------
Total investment income 10,965,355
- ------------------------------------------------------------
EXPENSES:
Advisory and administrative fees 1,272,103
- ------------------------------------------------------------
Accounting services fees 55,858
- ------------------------------------------------------------
Custodian fees 83,324
- ------------------------------------------------------------
Distribution fees -- Class A 363,720
- ------------------------------------------------------------
Distribution fees -- Class B 710,164
- ------------------------------------------------------------
Distribution fees -- Class C 1,320
- ------------------------------------------------------------
Interest (Note 5) 62,649
- ------------------------------------------------------------
Trustees' fees 15,984
- ------------------------------------------------------------
Transfer agent fees -- Class A 140,477
- ------------------------------------------------------------
Transfer agent fees -- Class B 95,998
- ------------------------------------------------------------
Transfer agent fees -- Class C 266
- ------------------------------------------------------------
Transfer agent fees -- Advisor Class 633
- ------------------------------------------------------------
Printing fees 215,029
- ------------------------------------------------------------
Other 116,476
- ------------------------------------------------------------
Total expenses 3,134,001
- ------------------------------------------------------------
Less: Expenses paid indirectly (2,214)
- ------------------------------------------------------------
Net expenses 3,131,787
- ------------------------------------------------------------
Net investment income 7,833,568
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES AND
FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (3,878,935)
- ------------------------------------------------------------
Foreign currencies (540,747)
- ------------------------------------------------------------
Forward currency contracts 1,386,145
- ------------------------------------------------------------
(3,033,537)
- ------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities (12,237,893)
- ------------------------------------------------------------
Foreign currencies 241,116
- ------------------------------------------------------------
Forward currency contracts (69,604)
- ------------------------------------------------------------
(12,066,381)
- ------------------------------------------------------------
Net gain (loss) from investment securities,
foreign currencies and forward currency
contracts (15,099,918)
- ------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations $(7,266,350)
============================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 299
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 7,833,568 $ 14,544,704
- --------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities,
foreign currencies and forward currency contracts (3,033,537) 11,183,037
- --------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and forward
currency contracts (12,066,381) (2,416,473)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations (7,266,350) 23,311,268
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (5,214,153) (8,450,756)
- --------------------------------------------------------------------------------------------
Class B (3,093,713) (5,569,246)
- --------------------------------------------------------------------------------------------
Class C (5,619) --
- --------------------------------------------------------------------------------------------
Advisor Class (24,763) (22,257)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A (26,367,395) (37,966,528)
- --------------------------------------------------------------------------------------------
Class B (29,686,097) (40,171,903)
- --------------------------------------------------------------------------------------------
Class C 255,619 --
- --------------------------------------------------------------------------------------------
Advisor Class (170,615) 300,289
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (71,573,086) (68,569,133)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 213,540,345 282,109,478
- --------------------------------------------------------------------------------------------
End of period $ 141,967,259 $ 213,540,345
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 282,651,180 $ 338,619,386
- --------------------------------------------------------------------------------------------
Undistributed net investment income 469,694 --
- --------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities, foreign currencies and forward currency
contracts (130,631,972) (126,623,779)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities, foreign currencies and forward currency
contracts (10,521,643) 1,544,738
- --------------------------------------------------------------------------------------------
$ 141,967,259 $ 213,540,345
============================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 300
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Government Income Fund (the "Fund") is a separate series of AIM
Investment Funds (the "Trust"). The Trust is organized as a Delaware business
trust and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end series management investment company consisting
of twelve separate series portfolios, each having an unlimited number of shares
of beneficial interest. The Fund consists of four different classes of shares:
Class A shares, Class B shares, Class C shares and Advisor Class 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. Advisor Class shares were sold
without a sales charge. Matters affecting each portfolio or class will be 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 high current income, and its secondary
investment objective is growth of capital and protection of principal.
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 the 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 its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price on that day. Each
security reported on the NASDAQ National Market System is valued at the
last sales price on the valuation date or absent a last sales price, at the
closing bid price. Debt obligations (including convertible bonds) are
valued on the basis of prices provided by an independent pricing service.
Prices provided by the pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as
yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Trust's officers in a manner specifically authorized by the Board of
Trustees. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value. For purposes of
determining net asset value per share, futures and options contracts
generally will be valued 15 minutes after the close of trading of the New
York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
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 Trustees.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales 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 the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Such distributions are
declared and paid monthly. The Fund may elect to use a portion of the
proceeds of fund share redemptions as distributions for Federal income tax
purposes. Distributions from net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, paid-in capital increased by $282, undistributed
net investment income increased by $974,374, and undistributed net realized
losses was decreased by $974,656 as a result of differing book/tax
treatment of foreign currency transactions and net operating loss
reclassifications 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 reclassification discussed above.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $130,001,314 as of October 31, 1999 which may be carried
forward to offset future taxable gains, if any, which expires, if not
previously utilized, in the year 2007. D. Foreign Currency Translations
-- Portfolio securities and other assets and liabilities denominated in
foreign currencies are
9
<PAGE> 301
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. The Fund does not separately account for that portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. Such fluctuations are included with the net
realized and unrealized gain or loss from investments.
E. 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.
<TABLE>
<CAPTION>
SETTLEMENT CONTRACT TO CONTRACT TO UNREALIZED
DATE DELIVER RECEIVE VALUE DEPRECIATION
---------- ----------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
01/24/00 CAD 8,000,000 $ 5,427,408 $5,447,698 $(20,290)
----------------------------------------------------------------------------------
</TABLE>
F. Mortgage Dollar Rolls -- The Fund may engage in dollar roll transactions
with respect to mortgage backed securities issued by GNMA, FNMA and FHLMC.
In a dollar roll transaction, the Fund sells a mortgage backed security
held in the Fund to a financial institution such as a bank or
broker-dealer, and simultaneously agrees to repurchase a substantially
similar security (same type, coupon and maturity) from the institution at a
later date at an agreed upon price. The mortgage backed securities that are
repurchased will bear the same interest rate as those sold, but generally
will be collateralized by different pools of mortgages with prepayment
histories. During the period between the sale and repurchase, the Fund will
not be entitled to receive interest and principal payments on securities
sold. Proceeds of the sale will be invested in short-term instruments, and
the income from these investments, together with any additional fee income
received on the sale, could generate income for the Fund exceeding the
yield on the security sold.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the
securities that the Fund has sold but is obligated to repurchase under the
agreement. In the event the buyer of securities in a dollar roll
transaction files for bankruptcy or becomes insolvent, the Fund's use of
the proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to repurchase the securities.
G. Expenses -- Distribution 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.
H. Foreign Securities -- There are certain additional considerations and risks
associated with investing in foreign securities and currency transactions
that are not inherent in investments of domestic origin. The Fund's
investment in emerging market countries may involve greater risks than
investments in more developed markets and the price of such investments may
be volatile. These risks of investing in foreign and emerging markets may
include foreign currency exchange fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
I. Indexed Securities -- The Fund may invest in indexed securities whose
value is linked either directly or indirectly to changes in foreign
currencies, interest rates, equities, indices, or other reference
instruments. Indexed securities may be more volatile than the reference
instrument itself, but any loss is limited to the amount of the original
investment.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's subadvisor. The Fund pays AIM
investment management and administration fees at an annual rate of 0.725% on the
first $500 million of the Fund's average daily net assets, plus 0.70% on the
next $1 billion of the Fund's average daily net assets, plus 0.675% on the next
$1 billion of the Fund's average daily net assets, plus 0.65% on the Fund's
average daily net assets exceeding $2.5 billion. AIM has contractually agreed to
limit the Fund's expenses (exclusive of brokerage commissions, taxes, interest
and extraordinary expenses) to the maximum annual rate of 1.75%, 2.40%, 2.40%
and 1.40% of the average daily net assets of the Fund's Class A, Class B, Class
C and Advisor Class shares, respectively.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund. Prior to July 1, 1999, AIM was the
pricing and accounting agent for the Fund. The monthly fee for these services
paid to AIM was a percentage, not to exceed 0.03% annually, of a Fund's average
daily net assets. The annual fee rate was derived based on the aggregate net
assets of the funds which comprised the following investment companies: AIM
Growth Series, AIM Investment Funds, AIM Series Trust, G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust. The fee was
calculated at the rate of 0.03% of the first $5 billion of assets and 0.02% to
the assets in excess of $5 billion. An amount is allocated to and paid by each
such fund based on its relative average daily net assets. For the year ended
October 31, 1999, AIM was paid $55,858 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 and
shareholder services to the Fund.
10
<PAGE> 302
For the year ended October 31, 1999, AFS was paid $196,597 for such services.
The Trust 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, Class C and Advisor Class shares of the Fund. The Trust has
adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares, Class B shares and Class C shares (collectively the
"Plans"). The Fund , pursuant to the Plans, pays AIM Distributors compensation
at the annual rate of 0.35% of the Fund's average daily net assets of Class A
shares and 1.00% of the average daily net assets of Class B and C 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 Class 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. For the year ended October 31, 1999, the Class A, Class B and Class C
shares paid AIM Distributors $363,720, $710,164 and $1,320, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $10,533 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1999,
AIM Distributors received $418 in contingent deferred sales charges imposed on
redemptions of Fund shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
During the year ended October 31, 1999, the Fund received reductions in
custodian fees of $2,214 under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of
$2,214 during the year ended October 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $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. The funds which
are party to the line of credit are charged a commitment fee of 0.09% 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. Prior to May
28, 1999, the Fund, along with certain other funds advised and/or administered
by AIM, had a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allowed the Fund and certain other
funds to borrow, on a first come, first served basis, an aggregate maximum
amount of $250,000,000.
During the year ended October 31, 1999, the average outstanding daily balance
of bank loans for the Fund was $1,145,937 with a weighted average interest rate
of 5.47%. Interest expense for the Fund for the year ended October 31, 1999 was
$62,649.
NOTE 5-PORTFOLIO SECURITIES LOANED
At October 31, 1999, there were no securities on loan to brokers. For the year
ended October 31, 1999, the Fund received fees of $38,923 for securities
lending.
For international securities, cash collateral is received by the Fund against
loaned securities in an amount at least equal to 105% of the market value of the
loaned securities at the inception of each loan. This collateral must be
maintained at not less than 103% of the market value of the loaned securities
during the period of the loan. For domestic securities, cash collateral is
received by the Fund against loaned securities in the amount at least equal to
102% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 100% of the market value of
the loaned securities during the period of the loan. The cash collateral is
invested in a securities lending trust which consists of a portfolio of high
quality short duration securities whose average effective duration is restricted
to 120 days or less.
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, 1999 was
$179,706,395 and $245,341,305, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 241,589
- ---------------------------------------------------------
Aggregate unrealized appreciation
(depreciation) of investment securities (11,703,485)
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of investment securities $(11,461,896)
- ---------------------------------------------------------
Cost of investments for tax purposes is $151,105,632.
</TABLE>
11
<PAGE> 303
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold:
Class A 10,753,759 $ 95,017,270 82,946,586 $720,078,445
- ----------------------------------------------------------------------------------------------------------------------
Class B 1,683,644 14,905,906 33,203,356 287,724,801
- ----------------------------------------------------------------------------------------------------------------------
Class C* 28,983 250,000 -- --
- ----------------------------------------------------------------------------------------------------------------------
Advisor Class 56,528 507,460 397,514 3,461,130
- ----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 385,899 3,327,811 537,397 4,673,843
- ----------------------------------------------------------------------------------------------------------------------
Class B 217,787 1,880,996 342,811 2,983,470
- ----------------------------------------------------------------------------------------------------------------------
Class C* 677 5,619 -- --
- ----------------------------------------------------------------------------------------------------------------------
Advisor Class 2,482 21,819 2,169 19,000
- ----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (14,190,581) (124,712,476) (87,859,651) (762,718,816)
- ----------------------------------------------------------------------------------------------------------------------
Class B (5,321,253) (46,472,999) (38,124,508) (330,880,174)
- ----------------------------------------------------------------------------------------------------------------------
Advisor Class (80,666) (699,894) (366,368) (3,179,841)
- ----------------------------------------------------------------------------------------------------------------------
(6,462,741) $ (55,968,488) (8,920,694) $(77,838,142)
======================================================================================================================
</TABLE>
* Class C shares commenced sales on March 1, 1999.
12
<PAGE> 304
NOTE 8-FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.97 $ 8.62 $ 8.74 $ 8.81 $ 8.63
- -------------------------------------------------------- ------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.41 0.54 0.52 0.57 0.62
- -------------------------------------------------------- ------- -------- -------- -------- --------
Net realized and unrealized gain (loss) on investments (0.76) 0.32 (0.13) 0.03 0.15
- -------------------------------------------------------- ------- -------- -------- -------- --------
Net increase (decrease) from investment operations (0.35) 0.86 0.39 0.60 0.77
- -------------------------------------------------------- ------- -------- -------- -------- --------
Distributions to shareholders:
From net investment income (0.43) (0.16) (0.31) (0.57) (0.59)
- -------------------------------------------------------- ------- -------- -------- -------- --------
From net realized gain on investments -- -- -- (0.10) --
- -------------------------------------------------------- ------- -------- -------- -------- --------
In excess of net investment income -- (0.35) (0.20) -- --
- -------------------------------------------------------- ------- -------- -------- -------- --------
Total distributions (0.43) (0.51) (0.51) (0.67) (0.59)
- -------------------------------------------------------- ------- -------- -------- -------- --------
Net asset value, end of period $ 8.19 $ 8.97 $ 8.62 $ 8.74 $ 8.81
======================================================== ======= ======== ======== ======== ========
Total return(b) (3.97)% 10.20% 4.78% 7.11% 9.22%
======================================================== ======= ======== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period (in 000's) $85,669 $121,268 $154,272 $240,945 $385,404
======================================================== ======= ======== ======== ======== ========
Ratio of net investment income to average net assets: 4.72%(c) 6.06% 6.04% 6.52% 6.98%
======================================================== ======= ======== ======== ======== ========
Ratio of expenses to average net assets (excluding
interest expense): 1.49%(c) 1.52% 1.51% 1.39% 1.38%
======================================================== ======= ======== ======== ======== ========
Ratio of interest expense to average net assets 0.04% 0.29% -- -- --
======================================================== ======= ======== ======== ======== ========
Portfolio turnover rate 110% 305% 241% 268% 385%
======================================================== ======= ======== ======== ======== ========
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $103,919,944.
13
<PAGE> 305
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.97 $ 8.62 $ 8.74 $ 8.80 $ 8.64
- -------------------------------------------------------- ------ ------ -------- -------- --------
Income from investment operations:
Net investment income 0.35 0.47 0.46 0.51 0.55
- -------------------------------------------------------- ------ ------ -------- -------- --------
Net realized and unrealized gain (loss) on investments (0.75) 0.34 (0.12) 0.04 0.14
- -------------------------------------------------------- ------ ------ -------- -------- --------
Net increase (decrease) from investment operations (0.40) 0.81 0.34 0.55 0.69
- -------------------------------------------------------- ------ ------ -------- -------- --------
Distributions to shareholders:
From net investment income (0.38) (0.11) (0.28) (0.51) (0.53)
- -------------------------------------------------------- ------ ------ -------- -------- --------
From net realized gain on investments -- -- -- (0.10) --
- -------------------------------------------------------- ------ ------ -------- -------- --------
In excess of net investment income -- (0.35) (0.18) -- --
- -------------------------------------------------------- ------ ------ -------- -------- --------
Total distributions (0.38) (0.46) (0.46) (0.61) (0.53)
- -------------------------------------------------------- ------ ------ -------- -------- --------
Net asset value, end of period $ 8.19 $ 8.97 $ 8.62 $ 8.74 $ 8.80
======================================================== ====== ====== ======== ======== ========
Total return(b) (4.62)% 9.65% 4.00% 6.54% 8.22%
======================================================== ====== ====== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period (in 000's) $55,849 $91,852 $127,722 $166,577 $235,481
======================================================== ====== ====== ======== ======== ========
Ratio of net investment income (loss) to average net assets: 4.07%(c) 5.41% 5.39% 5.87% 6.33%
======================================================== ====== ====== ======== ======== ========
Ratio of expenses to average net assets (excluding interest
expense): 2.14%(c) 2.17% 2.16% 2.04% 2.03%
======================================================== ====== ====== ======== ======== ========
Ratio of interest expense to average net assets 0.04% 0.29% -- -- --
======================================================== ====== ====== ======== ======== ========
Portfolio turnover rate 110% 305% 241% 268% 385%
======================================================== ====== ====== ======== ======== ========
</TABLE>
(a) These selected per share data were calculated based upon average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $71,016,370.
14
<PAGE> 306
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS C ADVISOR CLASS
------------------- --------------------------------------------------------
JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO
MARCH 1, 1999 TO ---------------------------------------- OCTOBER 31,
OCTOBER 31, 1999(a) 1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
------------------- ------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.63 $ 9.00 $ 8.61 $ 8.73 $ 8.80 $ 8.98
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.20 0.45 0.56 0.55 0.60 0.26
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Net realized and unrealized gain (loss) on
investments (0.44) (0.77) 0.37 (0.13) 0.03 (0.19)
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Net increase (decrease) from investment
operations (0.24) (0.32) 0.93 0.42 0.63 0.07
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Distributions to shareholders:
From net investment income (0.21) (0.46) (0.19) (0.33) (0.60) (0.25)
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
From net realized gain on investments -- -- -- -- (0.10) --
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
In excess of net investment income -- -- (0.35) (0.21) -- --
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Total distributions (0.21) (0.46) (0.54) (0.54) (0.70) (0.25)
- ---------------------------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end of period $ 8.18 $ 8.22 $ 9.00 $ 8.61 $ 8.73 $ 8.80
============================================== ====== ====== ====== ====== ====== ======
Total return(b) (2.80)% (3.73)% 11.18% 5.15% 7.49% 0.83%
============================================== ====== ====== ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in 000's) $ 243 $ 206 $ 421 $ 116 $ 86 $ 131
============================================== ====== ====== ====== ====== ====== ======
Ratio of net investment income (loss) to average
net assets: 4.07%(c) 5.07%(d) 6.41% 6.39% 6.87% 7.33%(e)
============================================== ====== ====== ====== ====== ====== ======
Ratio of expenses to average net assets
(excluding interest expense): 2.14%(c) 1.14%(d) 1.17% 1.16% 1.04% 1.03%(e)
============================================== ====== ====== ====== ====== ====== ======
Ratio of interest expense to average net assets 0.04% 0.04% 0.29% -- -- --
============================================== ====== ====== ====== ====== ====== ======
Portfolio turnover rate 110% 110% 305% 241% 268% 385%
============================================== ====== ====== ====== ====== ====== ======
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $196,715.
(d) Ratios are based on average net assets of $468,333.
(e) Annualized.
NOTE 9-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The proposed effective date of this conversion
is February 11, 2000.
15
<PAGE> 307
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Government Income Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Global Government Income Fund at October 31, 1999,
and the results of its operations, the changes in its net
assets and the financial highlights for the periods
indicated, in conformity with generally accepted
accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with generally accepted auditing standards
which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits, which included confirmation of securities at
October 31, 1999 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion
expressed above.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
December 23, 1999
16
<PAGE> 308
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
C. Derek Anderson Robert H. Graham 11 Greenway Plaza
President, Plantagenet Capital Chairman and President Suite 100
Management, LLC (an investment Houston, TX 77046
partnership); Chief Executive Officer, Dana R. Sutton
Plantagenet Holdings, Ltd. Vice President and Treasurer INVESTMENT MANAGER
(an investment banking firm)
Samuel D. Sirko A I M Advisors, Inc.
Frank S. Bayley Vice President and Secretary 11 Greenway Plaza
Partner, law firm of Suite 100
Baker & McKenzie Melville B. Cox Houston, TX 77046
Vice President
Robert H. Graham SUB-ADVISOR
President and Chief Executive Officer, Gary T. Crum
A I M Management Group Inc. Vice President INVESCO Asset Management Ltd.
11 Devonshire Square
Ruth H. Quigley Carol F. Relihan London EC2M 4YR
Private Investor Vice President England
Mary J. Benson TRANSFER AGENT
Assistant Vice President and
Assistant Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Sheri Morris Houston, TX 77210-4739
Assistant Vice President and
Assistant Treasurer CUSTODIAN
Nancy L. Martin State Street Bank and Trust Company
Assistant Secretary 225 Franklin Street
Boston, MA 02110
Ofelia M. Mayo
Assistant Secretary COUNSEL TO THE FUND
Kathleen J. Pflueger Kirkpatrick & Lockhart LLP
Assistant Secretary 1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
COUNSEL TO THE TRUSTEES
Paul, Hastings, Janofsky & Walker LLP
Twenty Third Floor
555 South Flower Street
Los Angeles, CA 90071
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
PricewaterhouseCoopers LLP
160 Federal St.
Boston, MA 02110
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION -- UNAUDITED
AIM Global Government Income Fund paid ordinary dividends in the amount of
$0.435, $0.376, $0.210 and $0.465 per share to Class A, Class B, Class C and
Advisor Class shareholders, respectively during the Fund's tax year ended
October 31, 1999. Of these amounts, 0.01% is eligible for the dividends received
deduction for corporations.
<PAGE> 309
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual-fund industry since
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund 1976 and managed approximately $120 billion
AIM Capital Development Fund in assets for more than 6.4 million
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS shareholders, including individual
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund investors, corporate clients and financial
AIM Large Cap Growth Fund AIM Asian Growth Fund institutions, as of September 30, 1999.
AIM Mid Cap Equity Fund AIM Developing Markets Fund The AIM Family of Funds--Registered
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) Trademark-- is distributed nationwide, and
AIM Mid Cap Opportunities Fund AIM European Development Fund AIM today is the 10th-largest mutual fund
AIM Select Growth Fund AIM International Equity Fund complex in the United States in assets under
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund management, according to Strategic Insight,
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund an independent mutual fund monitor.
AIM Value Fund AIM New Pacific Growth Fund
AIM Weingarten Fund
GLOBAL GROWTH FUNDS
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund
AIM Advisor Flex Fund AIM Global Growth Fund
AIM Advisor Large Cap Value Fund
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS
AIM Balanced Fund AIM Global Growth & Income Fund
AIM Basic Value Fund AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund
AIM Floating Rate Fund AIM Global Government Income Fund
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund
AIM Income Fund
AIM Intermediate Government Fund THEME FUNDS
AIM Limited Maturity Treasury Fund AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
TAX-FREE INCOME FUNDS AIM Global Health Care Fund
AIM High Income Municipal Fund AIM Global Infrastructure Fund
AIM Municipal Bond Fund AIM Global Resources Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(5)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(6)
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors on November 16, 1998.
(2) AIM Small Cap Growth Fund closed to new investors on November 8, 1999. (3)
AIM Small Cap Opportunities Fund closed to new investors on November 4, 1999.
(4) On September 1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth
Fund. Previously the fund invested in all size companies in most areas of
Europe. The fund now seeks to invest at least 65% of its assets in large-cap
companies within countries using the euro as their currency (EMU-member
countries). (5) On June 1, 1999, AIM Global Telecommunications Fund was renamed
AIM Global Telecommunications and Technology Fund. (6) Effective August 27,
1999, AIM Global Trends Fund was restructured to operate as a traditional mutual
fund. Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
sales material after January 20, 2000, this report must be accompanied by a
current Quarterly Review of Performance for AIM Funds.
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc. GGVI-AR 1
<PAGE> 310
APPENDIX III
ANNUAL REPORT / OCTOBER 31 1999
AIM GLOBAL GROWTH & INCOME FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 311
[COVER IMAGE]
-------------------------------------
HEROES ON WHEELS BY JANE WOOSTER SCOTT
JANE WOOSTER SCOTT'S IMAGINATIVE PAINTING OF A CYCLING CHAMPIONSHIP
CAPTURES THE SPIRIT OF AN INTERNATIONAL CELEBRATION.
LIKE SPORTS, INVESTING BRINGS THE WORLD TOGETHER, UNITING
AND ENRICHING PEOPLE ALL OVER THE GLOBE.
-------------------------------------
AIM Global Growth & Income Fund seeks to provide long-term growth of capital
together with current income. The fund invests in stocks of blue-chip companies
and high-quality government bonds from around the world.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Global Growth & Income Fund's performance figures are historical and
reflect the reinvestment of all distributions and changes in net asset
value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B 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, C, and Advisor Class shares will
differ from that of its Class A shares due to differences in sales-charge
structure and expenses.
o The fund's average annual total returns, including sales charges, for the
period ended 9/30/99 (the most recent calendar quarter-end) are as follows:
for Class A shares, one year, -1.83%; five years, 10.71%; inception
(9/25/90), 11.03%. Class B shares, one year, -1.21%; five years, 10.98%;
inception (10/22/92), 11.43%. Class C shares, cumulative since inception
(3/1/99), -5.19%. Advisor Class shares, one year, 4.13%; inception (6/1/95),
12.84%.
o Because C shares have been offered for less than one year (since 3/1/99),
the return provided is the cumulative total return that has not been
annualized.
o Advisor Class shares were closed to new investors on 3/1/99.
o During the fiscal year ended 10/31/99, the fund's Class A shares paid
distributions of $1.613; Class B shares, $1.553; Class C shares, $.093; and
Advisor Class shares, $1.643.
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.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The J.P. Morgan Global Government Bond Index is a market-value-weighted
average of government bonds from 13 major developed bond markets. It is
measured in U.S. dollars, and it includes the effect of reinvested coupons.
o The unmanaged MSCI World Index is a group of global securities listed on
major world stock exchanges and tracked by Morgan Stanley Capital
International.
o The unmanaged MSCI All Country World Index tracks the performance of the
more than 50 countries covered by Morgan Stanley Capital International that
are considered either a developed or emerging market.
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 An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM GLOBAL GROWTH & INCOME FUND
<PAGE> 312
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
The fiscal year discussed in this report reconfirmed our
[PHOTO OF faith in two long-established principles of investing:
Charles T. portfolio diversification and long-term thinking. We could
Bauer, title this report "What a Difference a Year Makes."
Chairman of An investor surveying conditions when the fiscal year
the Board of opened on October 31, 1998, saw a market dominated by
THE FUND large-capitalization stocks and high-quality bonds,
APPEARS HERE] especially U.S. Treasuries. Ten months into 1998, two
well-known indexes of large-capitalization U.S. company
stocks, the S&P 500 and the Dow Jones Industrial Average,
were up by double digits, but the smaller-company stocks in
the Russell 2000 had lost 12.80%. Overseas, many markets
were languishing, especially in Asia, where many financial
difficulties originated in 1997.
In bond markets also, name-brand quality was the place
to be. The Lehman Corporate/Government Bond Index, which
follows intermediate and long-term government and investment-grade debt, was up
8.56%, while the Lehman High Yield Index, which tracks riskier "junk bonds," had
dropped 2.30%.
It would be easy for an investor to conclude that blue chips, whether equity
or fixed-income, were the only place to be. That investor, of course, would be
wrong.
MARKETS TURN
While large-capitalization stocks continue to do very well, during 1999 markets
broadened considerably, with many investment sectors performing a complete
turnaround. Year to date by October 31, 1999, the small-cap stocks in the
Russell 2000 were back in positive territory, and the many Asian markets had
staged a comeback. The same holds true for bonds. The higher-quality Lehman
index is down 1.49% year to date through October 31, 1999, while high-yield
bonds have moved into positive returns.
The point, at the risk of sounding repetitive to those of you who have
invested with us for a long time, is that this is why diversification is a
fundamental investing principle. Market sectors and asset classes go in and out
of favor, but over the long run--and the long run is several years--the markets'
overall trend has been upward. Selecting an asset class or a market sector on
the basis of a short-term snapshot of conditions is usually unwise, as is
concentrating your portfolio in one asset class. Staying fully invested in a
diversified portfolio remains a compelling strategy and one of your best
prospects for long-term gain.
LOOKING AHEAD
As we look about at the close of this fiscal year, we are encouraged by signs of
economic health in Europe and Asia, not to mention the prolonged U.S. economic
expansion. However, we are aware of how easily an investor could have been
misled by conditions just 12 months ago. For our shareholders, we therefore
reiterate our commitment to investing through a financial advisor. In addition
to helping you select investments appropriate to your time horizon and risk
tolerance, a financial advisor can keep you informed about how changing market
conditions affect you and your portfolio and can help assure that when you do
alter your investments, there's a logical reason for doing so. AIM believes
every investor should be guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the year ended October 31, 1999, how the markets
behaved and what they foresee for the near future. We trust you will find their
discussion informative. If you have any questions or comments, we invite you to
contact us, either at our Web site, aimfunds.com, or through our Client Services
department at 800-959-4246. Information about your account is also available
through our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of Funds
- --Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
-------------------------------------
STAYING FULLY
INVESTED IN A DIVERSIFIED
PORTFOLIO REMAINS
A COMPELLING STRATEGY
AND ONE OF YOUR
BEST PROSPECTS FOR
LONG-TERM GAIN.
-------------------------------------
AIM GLOBAL GROWTH & INCOME FUND
<PAGE> 313
ANNUAL REPORT / MANAGERS' OVERVIEW
BOND MARKET HAMPERS PERFORMANCE
HOW DID AIM GLOBAL GROWTH & INCOME FUND PERFORM?
The fund had a disappointing year, reporting a 1.03% return for Class A shares
and a 0.42% return for Class B shares for the period ending October 31, 1999.
Class C shares had a -1.98% cumulative return since their inception on March 31,
1999. These figures are at net asset value, without a sales charge. Advisor
Class shares returned 1.30%.
During the reporting period, the MSCI World Index rose 24.91%, while the
J.P. Morgan Global Government Bond Index returned -2.95%. These indexes help
explain the performance of the fund--global equity markets did well over the
fiscal year, but bond markets underperformed.
WHAT WERE MARKET CONDITIONS LIKE DURING THIS TIME?
Investor concern over interest rates made the U.S. markets very volatile during
the reporting period. In June and August, the Federal Reserve Board (the Fed)
raised rates in two quarter-point moves. At its October meeting, the Fed chose
to leave rates unchanged but adopted a "tightening bias," indicating that it may
be inclined to raise rates in the near future. Shortly after the close of the
fiscal year, the Fed increased interest rates by another quarter point.
Bond markets suffered a difficult period; in fact, 1999 has been the worst
year for bonds since 1994, and the second worst year on record. For example, the
yield of the benchmark 30-year U.S. Treasury bond rose from 5.15% at the
beginning of the fiscal year to 6.16% at its end.
The domestic equity market changed from an exclusively large-cap growth
environment of the last two years to a much broader market, which included value
and cyclical as well as small- and mid-cap stocks. These stocks had been
undervalued for some time, but they became attractive as many large companies
suffered earnings disappointments.
Across the Atlantic, merger activity continued to dominate. Toward the end
of the reporting period, the European merger market topped the United States for
the first time. Ten European deals were announced in the third quarter of 1999
with values of more than $10 billion each.
For most of the fiscal year Japan led Asia's recovery. Investors flocked to
Japanese securities after Japan posted two consecutive quarters of economic
growth, signaling an end to its extended recession. As Japan struggled to regain
its economic strength and foothold in the world economy, it has done so at a
cost to the United States. The dollar/yen relationship gyrated severely during
the third quarter of 1999, nearly causing the dollar to reach a 44-month low.
HOW DID YOU MANAGE THE FUND IN THIS ENVIRONMENT?
The fund maintained its strict blue-chip investment discipline. We invest in
stocks with a market capitalization of more than $1 billion and a dividend yield
greater than that of the MSCI World Index. We also look for good stocks that are
selling at a discount relative to the market. Because of our investment
criteria, the fund has avoided several areas that have performed well over the
fiscal year.
JAPAN: The universe of Japanese stocks that meet our criteria is very small.
At this time, these stocks have neither the growth nor the dividend yield we
look for.
TECHNOLOGY: The fund has avoided high-flying technology stocks, because we
consider many of these to be overpriced.
WHAT ABOUT THE FUND'S BOND COMPONENT?
The fund weightings are currently 70% stocks and 30% bonds. We invested in
investment-grade U.S. and European government bonds. Sovereign debt made up
15.27% of the fund's total assets. Our bond performance was hurt by rising
-------------------------------------
WE MUST EMPHASIZE THAT WE
ARE INVESTORS FOR THE LONG TERM.
OUR DISCIPLINE HAS MET WITH DIFFICULT
PERIODS IN THE PAST, AND FOR THE SAME
REASONS AS THIS PAST YEAR. BUT, OVER A
PERIOD OF MANY YEARS, OUR INVESTORS
HAVE ENJOYED EXCELLENT TOTAL RETURNS
WITH BELOW AVERAGE RISK.
-------------------------------------
PORTFOLIO COMPOSITION
As of 10/31/99, based on total net assets
================================================================================
TOP 10 EQUITY HOLDINGS
- --------------------------------------------------------------------------------
1. Royal Dutch Petroleum Co. (Netherlands) 3.30
2. Bristol-Myers Squibb Co. (U.S.) 3.19
3. Mobil Corp. (U.S.) 3.04
4. McGraw-Hill Cos., Inc. (The) (U.S.) 3.03
5. Bestfoods (U.S.) 2.77
6. Bell Atlantic Corp. (U.S.) 2.55
7. First Tennessee National Corp. ( U.S.) 2.35
8. Bank of America Corp. (U.S.) 2.32
9. Anheuser-Busch Companies, Inc. (U.S.) 2.12
10. Julius Baer Holding A.G. (Switzerland) 2.08
================================================================================
See important fund and index disclosures inside front cover.
AIM GLOBAL GROWTH & INCOME FUND
2
<PAGE> 314
ANNUAL REPORT / MANAGERS' OVERVIEW
interest rates over the past year. Our holdings for most of the period had a
longer than average maturity, which made the impact of rising interest rates
somewhat worse for the fund than for our benchmark index. Bond returns were
further aggravated by our absence from Japan, where the strong value of the yen
made it one of the best performing bond markets globally.
WHAT CHANGES HAVE YOU MADE TO THE FUND'S PORTFOLIO?
Over the fiscal year, we increased our U.S. holdings from 48.6% to 52.88% of the
fund. Most of our top equity holdings were major U.S. corporations across a wide
spectrum of industries, including pharmaceuticals, oil, publishing, food
products, telecommunications, financials and beverage companies.
New to the fund are Bank of America and Swiss banking firm Julius Baer
Holding AG. We consider financial stocks to be a good buying opportunity, as
interest rate concerns have caused them to experience substantial volatility
this year. The long-term prospects for banks are favorable based on their
earnings strength.
The fund had capital gains of 7.81% over the fiscal year because it sold
long-term holdings that had begun to suffer from deteriorating quality and
declining earnings growth prospects. We also reduced our holdings in countries
where we no longer felt comfortable with market conditions.
WHAT'S YOUR OUTLOOK FOR THE FUND OVER THE NEAR TERM?
Clearly our conservative investment approach--our blue-chip discipline and bond
component--hurt the fund's performance over the past fiscal year. We must
emphasize that we are investors for the long term. Our discipline has met with
difficult periods in the past, and for the same reasons as this past year. But
over a period of many years, our investors have enjoyed excellent total returns
with below average risk.
Although there seems to be a great deal of concern in the fixed-income
markets, we believe this market environment provides a good buying opportunity.
Our large weighting on the bond side may pay off not just in dividends, but in
performance as well. In the United Kingdom, the bond market is benefiting from
low inflation and a Bank of England that has acted vigilantly to keep it in
check. Euroland bonds are showing signs of improvement as well.
================================================================================
PORTFOLIO ALLOCATION
- --------------------------------------------------------------------------------
Cash/Other 2.46%
International
Bonds 15.27%
U.S. Government
Notes and Bonds 13.76%
International
Common Stocks 31.16%
U.S. Common Stocks 37.35%
================================================================================
================================================================================
TOP 10 COUNTRIES
- --------------------------------------------------------------------------------
1. United States 52.88%
2. United Kingdom 15.51
3. Netherlands 6.71
4. France 6.26
5. Germany 6.17
6. Australia 3.10
7. Switzerland 3.07
8. New Zealand 1.62
9. Belgium 1.47
10. Denmark 1.36
================================================================================
================================================================================
TOP 5 FIXED-INCOME HOLDINGS
- --------------------------------------------------------------------------------
COUPON MATURITY %
U.S. Treasury Notes 6.63 06/30/01 5.65
Government of France, Deb. 4.00 10/25/09 3.76
Bundesrepublik Deutschland, Bonds 8.375 05/21/01 3.35
U.S. Treasury Notes 5.63 05/15/08 3.11
U.S. Treasury Bonds 8.75 08/15/20 2.97
================================================================================
See important fund and index disclosures inside front cover.
AIM GLOBAL GROWTH & INCOME FUND
3
<PAGE> 315
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM GLOBAL GROWTH & INCOME FUND VS. BENCHMARK INDEXES
9/25/90-10/31/99
in thousands
AIM Global Growth JP Morgan Global MSCI All
& Income Fund Government Bond MSCI World Country World
Class A Shares Index Index Index
-------------- ----- ----- -----
9/30/90 -- -- -- --
10/31/90 9,464 10,396 10,930 10,927
10/31/91 10,948 11,564 12,651 12,796
10/31/92 11,593 13,018 11,939 12,250
10/31/93 15,503 14,451 15,227 15,674
10/31/94 14,958 14,830 16,392 17,292
10/31/95 15,896 17,107 17,947 18,524
10/31/96 18,567 18,151 20,872 21,414
10/31/97 22,095 18,784 24,373 24,785
10/31/98 26,019 21,222 28,091 27,948
10/31/99 26,286 20,595 35,070 35,328
Source: Lipper, Inc.
Past performance cannot guarantee comparable future results.
ABOUT THIS CHART
The chart compares your fund's Class A shares to benchmark indexes. It is
intended to give you an idea of how your fund performed compared to these
benchmarks over the period 9/25/90-10/31/99. (Please note that the indexes'
performance figures are for the period (9/30/90-10/31/99.) It is important to
understand the differences between your fund and an index. An index measures
performance of a hypothetical portfolio. A market index is not managed,
incurring no sales charges, expenses or fees. 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. Since the last reporting period, AIM
Global Growth & Income Fund has elected to use the MSCI All Country World Index
as its benchmark instead of the MSCI World Index. The new index more closely
resembles the securities in which the fund invests. The fund will no longer
measure its performance against the MSCI World Index. Because this is the first
reporting period since we have adopted the new index, SEC guidelines require
that we compare the fund's performance to both the old and the new index.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/99, including sales charges
================================================================================
CLASS A SHARES
- --------------------------------------------------------------------------------
Inception (9/25/90) 11.21%
5 years 10.68
1 year -4.54*
*1.03% excluding sales charges
CLASS B SHARES
- --------------------------------------------------------------------------------
Inception (10/22/92) 11.65%
5 years 10.96
1 year -3.80*
*0.42% excluding sales charges
CLASS C SHARES
- --------------------------------------------------------------------------------
Inception (3/01/99) -2.95%*
*Cumulative return; -1.98 excluding sales charges
ADVISOR CLASS SHARES
- --------------------------------------------------------------------------------
Inception (6/1/95) 13.17%
1 year 1.30*
*Advisor Class Shares were closed to new investors as of March 1, 1999
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class B, Class C and Advisor Class shares will
differ from Class A shares due to differing fees and expenses. For fund
performance calculations and descriptions of the indexes cited on this page,
please refer to the inside front cover.
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
AIM GLOBAL GROWTH & INCOME FUND
4
<PAGE> 316
SCHEDULE OF INVESTMENTS
October 31, 1999
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-37.35%
BANKS (MONEY CENTER)-2.32%
Bank of America Corp. 230,000 $ 14,806,250
- --------------------------------------------------------------
BANKS (REGIONAL)-2.35%
First Tennessee National Corp. 440,800 14,987,200
- --------------------------------------------------------------
BEVERAGES (ALCOHOLIC)-3.12%
Anheuser-Busch Companies, Inc. 188,371 13,527,392
- --------------------------------------------------------------
Brown-Forman Corp.-Class B 93,600 6,318,000
- --------------------------------------------------------------
19,845,392
- --------------------------------------------------------------
ELECTRIC COMPANIES-3.72%
Southern Co. 420,000 11,156,250
- --------------------------------------------------------------
Texas Utilities Co. 323,000 12,516,250
- --------------------------------------------------------------
23,672,500
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.56%
Emerson Electric Co. 165,000 9,910,312
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.98%
American General Corp. 170,000 12,611,875
- --------------------------------------------------------------
FOODS-2.77%
Bestfoods 300,000 17,625,000
- --------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-3.19%
Bristol-Myers Squibb Co. 264,800 20,339,950
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-1.22%
PIMCO Advisors Holdings L.P. 225,000 7,804,688
- --------------------------------------------------------------
OIL (INTERNATIONAL
INTEGRATED)-3.04%
Mobil Corp. 200,500 19,348,250
- --------------------------------------------------------------
PERSONAL CARE-1.18%
Avon Products, Inc. 234,000 7,546,500
- --------------------------------------------------------------
PUBLISHING-3.03%
McGraw-Hill Cos., Inc. (The) 324,000 19,318,500
- --------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUSTS-2.88%
Equity Office Properties Trust 457,000 10,111,125
- --------------------------------------------------------------
Equity Residential Properties
Trust 197,000 8,237,063
- --------------------------------------------------------------
18,348,188
- --------------------------------------------------------------
SERVICES (COMMERCIAL &
CONSUMER)-1.43%
Dun & Bradstreet Corp. (The) 309,800 9,100,375
- --------------------------------------------------------------
TELEPHONE-2.55%
Bell Atlantic Corp. 250,000 16,234,375
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TOBACCO-1.01%
Philip Morris Companies, Inc. 255,000 $ 6,422,813
- --------------------------------------------------------------
Total Domestic Common Stocks
(Cost $165,685,250) 237,922,168
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-31.16%
AUSTRALIA-3.10%
Foster's Brewing Group Ltd.
(Beverages-Alcoholic) 3,500,000 9,305,685
- --------------------------------------------------------------
National Australia Bank Ltd.
(Banks-Major Regional) 674,825 10,417,395
- --------------------------------------------------------------
19,723,080
- --------------------------------------------------------------
BELGIUM-1.47%
Electrabel S.A. (Electric
Companies) 27,760 9,158,659
- --------------------------------------------------------------
Fortis A.G.-CVG
(Financial-Diversified)(a) 34,440 185,149
- --------------------------------------------------------------
9,343,808
- --------------------------------------------------------------
FRANCE-2.50%
Compagnie de Saint Gobain
(Manufacturing-Diversified)(a) 51,000 8,853,001
- --------------------------------------------------------------
Pernod Ricard
(Beverages-Non-alcoholic) 104,720 7,072,957
- --------------------------------------------------------------
15,925,958
- --------------------------------------------------------------
GERMANY-0.98%
MobilCom A.G.
(Telecommunications-Cellular/
Wireless) 120,000 6,223,928
- --------------------------------------------------------------
ITALY-1.16%
Seat Pagine Gialle S.p.A.
(Publishing)(a) 5,200,000 7,412,744
- --------------------------------------------------------------
NETHERLANDS-6.71%
ING Groep N.V. (Insurance Brokers) 176,878 10,435,619
- --------------------------------------------------------------
Koninklijke KPN N.V.
(Telecommunications-Long
Distance) 220,005 11,292,751
- --------------------------------------------------------------
Royal Dutch Petroleum Co.
(Oil-International Integrated) 351,840 21,035,811
- --------------------------------------------------------------
42,764,181
- --------------------------------------------------------------
NEW ZEALAND-1.62%
Telecom Corp. of New Zealand Ltd.
(Telephone) 2,264,200 9,120,112
- --------------------------------------------------------------
Telecom Corp. of New Zealand
Ltd.-ADR (Telephone) 38,000 1,235,000
- --------------------------------------------------------------
10,355,112
- --------------------------------------------------------------
SWITZERLAND-3.07%
Julius Baer Holding A.G.
(Banks-Major Regional) 4,400 13,231,455
- --------------------------------------------------------------
Swisscom A.G. (Telephone) 20,820 6,342,815
- --------------------------------------------------------------
19,574,270
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 317
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-10.55%
Abbey National PLC (Savings & Loan
Companies) 170,000 $ 3,326,014
- --------------------------------------------------------------
Allied Zurich PLC
(Insurance-Mulit-Line) 600,000 7,250,481
- --------------------------------------------------------------
Cadbury Schweppes PLC (Foods) 1,863,600 12,217,480
- --------------------------------------------------------------
CGU PLC (Insurance Brokers) 694,750 10,125,944
- --------------------------------------------------------------
Diageo PLC (Beverages-Alcoholic) 659,559 6,668,943
- --------------------------------------------------------------
EMAP PLC (Publishing) 250,000 3,247,098
- --------------------------------------------------------------
EMI Group PLC (Leisure
Time-Products) 853,500 6,707,484
- --------------------------------------------------------------
Lloyds TSB Group PLC (Banks-Major
Regional) 688,428 9,524,471
- --------------------------------------------------------------
Reckitt & Colman PLC (Household
Products/ Non-durables) 668,093 8,111,770
- --------------------------------------------------------------
67,179,685
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$147,527,140) 198,502,766
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
NON-U.S. DOLLAR DENOMINATED
GOVERNMENT BONDS & NOTES-15.27%
DENMARK-1.36%
Kingdom of Denmark, Bonds, 8.00%,
03/15/06 DKK 54,000,000 8,647,572
- --------------------------------------------------------------
FRANCE-3.76%
Government of France, Deb., 4.00%,
10/25/09 EUR 25,200,000 23,913,664
- --------------------------------------------------------------
GERMANY-5.19%
Bundesrepublik Deutschland, Bonds,
8.375%, 05/21/01 EUR 19,000,000 21,336,865
- --------------------------------------------------------------
6.00%, 01/04/07 4,600,000 5,085,825
- --------------------------------------------------------------
6.50%, 07/04/27 5,800,000 6,651,676
- --------------------------------------------------------------
33,074,366
- --------------------------------------------------------------
UNITED KINGDOM-4.96%
United Kingdom Treasury, Bond,
7.00%, 06/07/02 GBP 5,500,000 9,225,047
- --------------------------------------------------------------
Gtd. Note, 9.00%, 10/13/08 4,500,000 9,048,837
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Gtd. Bond, 9.00%, 08/06/12 GBP 6,022,000 $ 13,324,001
- --------------------------------------------------------------
31,597,885
- --------------------------------------------------------------
Total Non-U.S. Dollar
Denominated Government Bonds
& Notes (Cost $98,119,358) 97,233,487
- --------------------------------------------------------------
U.S. TREASURY SECURITIES-13.76%
U.S. TREASURY NOTES-8.76%
6.63%, 06/30/01 $35,550,000 36,012,505
- --------------------------------------------------------------
5.63%, 05/15/08 20,500,000 19,787,227
- --------------------------------------------------------------
55,799,732
- --------------------------------------------------------------
U.S. TREASURY BONDS-5.00%
8.75%, 08/15/20 15,120,000 18,950,350
- --------------------------------------------------------------
6.50%, 11/15/26 12,745,000 12,898,832
- --------------------------------------------------------------
31,849,182
- --------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $87,847,744) 87,648,914
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS-1.77%
STIC Liquid Assets Portfolio(c) 5,642,621 5,642,621
- --------------------------------------------------------------
STIC Prime Portfolio(c) 5,642,621 5,642,621
- --------------------------------------------------------------
Total Money Market Funds (Cost
$11,285,242) 11,285,242
- --------------------------------------------------------------
TOTAL INVESTMENTS-99.31% 632,592,577
- --------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.69% 4,397,411
- --------------------------------------------------------------
NET ASSETS-100.00% $636,989,988
==============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
Deb. - Debentures
Gtd. - Guaranteed
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(c)The security shares the same investment advisor as the Fund.
See Notes to Financial Statements.
6
<PAGE> 318
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $510,464,734) $632,592,577
- ------------------------------------------------------------
Cash 1,245,276
- ------------------------------------------------------------
Receivables for:
Investments sold 1,922,211
- ------------------------------------------------------------
Fund shares sold 986,563
- ------------------------------------------------------------
Dividends and interest 5,456,781
- ------------------------------------------------------------
Other assets 651
- ------------------------------------------------------------
Total assets 642,204,059
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Forward contracts closed 1,618,625
- ------------------------------------------------------------
Fund shares reacquired 2,270,985
- ------------------------------------------------------------
Forward contracts 32,908
- ------------------------------------------------------------
Accrued administrative services fees 11,447
- ------------------------------------------------------------
Accrued advisory fees 526,363
- ------------------------------------------------------------
Accrued distribution fees 423,592
- ------------------------------------------------------------
Accrued transfer agent fees 84,253
- ------------------------------------------------------------
Accrued trustees' fees 1,500
- ------------------------------------------------------------
Accrued operating expenses 244,398
- ------------------------------------------------------------
Total liabilities 5,214,071
- ------------------------------------------------------------
Net assets applicable to shares outstanding $636,989,988
============================================================
NET ASSETS:
Class A $254,060,449
============================================================
Class B $376,180,588
============================================================
Class C $ 1,344,034
============================================================
Advisor Class $ 5,404,917
============================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 32,565,310
============================================================
Class B 48,228,206
============================================================
Class C 172,358
============================================================
Advisor Class 693,765
============================================================
Class A:
Net asset value and redemption price per
share $ 7.80
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $7.80 / 94.50%) $ 8.25
============================================================
Class B:
Net asset value and offering price per share $ 7.80
============================================================
Class C:
Net asset value and offering price per share $ 7.80
============================================================
Advisor Class:
Net asset value, redemption and offering
price per share $ 7.79
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $815,230 foreign withholding
tax) $ 16,045,328
- ------------------------------------------------------------
Interest 13,957,993
- ------------------------------------------------------------
Securities lending 193,458
- ------------------------------------------------------------
Total investment income 30,196,779
- ------------------------------------------------------------
EXPENSES:
Advisory and administrative fees 7,315,050
- ------------------------------------------------------------
Accounting services fees 207,383
- ------------------------------------------------------------
Custodian fees 358,452
- ------------------------------------------------------------
Distribution fees -- Class A 1,039,956
- ------------------------------------------------------------
Distribution fees -- Class B 4,535,906
- ------------------------------------------------------------
Distribution fees -- Class C 6,314
- ------------------------------------------------------------
Trustees' fees 35,961
- ------------------------------------------------------------
Transfer agent fees -- Class A 508,709
- ------------------------------------------------------------
Transfer agent fees -- Class B 776,580
- ------------------------------------------------------------
Transfer agent fees -- Class C 1,110
- ------------------------------------------------------------
Transfer agent fees -- Advisor Class 9,861
- ------------------------------------------------------------
Interest expense 15,102
- ------------------------------------------------------------
Other 608,387
- ------------------------------------------------------------
Total expenses 15,418,771
- ------------------------------------------------------------
Less: Expenses paid indirectly (4,831)
- ------------------------------------------------------------
Net expenses 15,413,940
- ------------------------------------------------------------
Net investment income 14,782,839
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
AND FORWARD CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities 59,608,133
- ------------------------------------------------------------
Foreign currencies (573,951)
- ------------------------------------------------------------
Forward currency contracts 589,736
- ------------------------------------------------------------
59,623,918
- ------------------------------------------------------------
Change in net unrealized appreciation
(depreciation) of:
Investment securities (64,691,362)
- ------------------------------------------------------------
Foreign currencies (204,635)
- ------------------------------------------------------------
Forward currency contracts (257,665)
- ------------------------------------------------------------
(65,153,662)
- ------------------------------------------------------------
Net gain (loss) from investment securities,
foreign currencies and forward currency
contracts (5,529,744)
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $ 9,253,095
============================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 319
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 14,782,839 $ 12,068,853
- -------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and forward currency contracts 59,623,918 146,741,450
- -------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities, foreign currencies and forward
currency contracts (65,153,662) (29,909,686)
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 9,253,095 128,900,617
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (3,856,782) (4,583,653)
- -------------------------------------------------------------------------------------------
Class B (2,710,473) (4,410,176)
- -------------------------------------------------------------------------------------------
Class C (654) --
- -------------------------------------------------------------------------------------------
Advisor Class (96,889) (100,933)
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (50,854,509) (8,368,465)
- -------------------------------------------------------------------------------------------
Class B (78,557,367) (13,388,382)
- -------------------------------------------------------------------------------------------
Class C (9,250) --
- -------------------------------------------------------------------------------------------
Advisor Class (1,015,481) (131,267)
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A (1,923,750) (24,946,235)
- -------------------------------------------------------------------------------------------
Class B (30,585,595) (31,695,480)
- -------------------------------------------------------------------------------------------
Class C 1,396,141 --
- -------------------------------------------------------------------------------------------
Advisor Class (873,736) 3,071,389
- -------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (159,835,250) 44,347,415
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 796,825,238 752,477,823
- -------------------------------------------------------------------------------------------
End of period $ 636,989,988 $796,825,238
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 455,586,900 $467,573,561
- -------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, and forward currency
contracts 59,366,359 142,061,286
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and forward currency contracts 122,036,729 187,190,391
- -------------------------------------------------------------------------------------------
$ 636,989,988 $796,825,238
===========================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 320
NOTES TO FINANCIAL STATEMENTS
October 31, 1999
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Global Growth & Income Fund (the "Fund") is a separate series of AIM
Investment Funds (the "Trust"). The Trust is organized as a Delaware business
trust and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end series management investment company consisting
of twelve separate series portfolios, each having an unlimited number of shares
of beneficial interest. The Fund consists of four different classes of shares:
Class A shares, Class B shares, Class C shares and Advisor Class 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. Advisor Class shares were sold
without a sales charge. Matters affecting each portfolio or class will be 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 long-term growth of capital together with
current income.
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 the 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 its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the closing bid price on that day. Each security
reported on the NASDAQ National Market System is valued at the last sales
price on the valuation date or absent a last sales price, at the closing bid
price. Debt obligations (including convertible bonds) are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as yield, type of issue,
coupon rate and maturity date. Securities for which market prices are not
provided by any of the above methods are valued based upon quotes furnished
by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the
last bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Trust's officers in a manner
specifically authorized by the Board of Trustees. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value. For purposes of determining net asset value per
share, futures and options contracts generally will be valued 15 minutes
after the close of trading of the New York Stock Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the NYSE
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
Trustees.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales 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 the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Such distributions are
declared and paid quarterly. The Fund may elect to use a portion of the
proceeds of fund share redemptions as distributions for Federal income tax
purposes. Distributions from net realized capital gains, if any, are
generally paid annually and recorded on ex-dividend date.
On October 31, 1999, undistributed net investment income was decreased by
$8,118,041, undistributed net realized gains decreased by $11,882,238 and
paid-in capital increased by $20,000,279 as a result of differing book/tax
treatment of foreign currency transactions and equalization credits 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 reclassification discussed above.
C. 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.
D. 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
9
<PAGE> 321
transactions. The Fund does not separately account for that portion of the
results of operations resulting from changes in foreign exchange rates on
investments and the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
E. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
Outstanding forward currency contracts at October 31, 1999 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACT TO CONTRACT TO APPRECIATION
DATE DELIVER RECEIVE VALUE (DEPRECIATION)
---------- ---------------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
02/09/00 GBP 19,600,000 $32,208,288 $32,241,196 $(32,908)
====================================================================================
</TABLE>
F. Expenses -- Distribution 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.
G. Foreign Securities -- There are certain additional considerations and risks
associated with investing in foreign securities and currency transactions
that are not inherent in investments of domestic origin. The Fund's
investment in emerging market countries may involve greater risks than
investments in more developed markets and the price of such investments may
be volatile. These risks of investing in foreign and emerging markets may
include foreign currency exchange fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
H. Indexed Securities -- The Fund may invest in indexed securities whose value
is linked either directly or indirectly to changes in foreign currencies,
interest rates, equities, indices, or other reference instruments. Indexed
securities may be more volatile than the reference instrument itself, but any
loss is limited to the amount of the original investment.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
A I M Advisors, Inc. ("AIM") is the Fund's investment manager and administrator.
INVESCO Asset Management Limited is the Fund's subadvisor. The Fund pays AIM
investment management and administration fees at an annual rate of 0.975% on the
first $500 million of the Fund's average daily net assets, plus 0.95% on the
next $500 million of the Fund's average daily net assets, plus 0.925% on the
next $500 million of the Fund's average daily net assets, plus 0.90% on the
Fund's average daily net assets exceeding $1.5 billion. AIM has contractually
agreed to limit the Fund's expenses (exclusive of brokerage commissions, taxes,
interest and extraordinary expenses) to the maximum annual rate of 1.75%, 2.40%,
2.40% and 1.40% of the average daily net assets of the Fund's Class A, Class B,
Class C and Advisor Class shares, respectively.
Effective July 1, 1999, the Trust entered into a master administrative
services agreement with AIM, replacing the prior pricing and accounting
agreement. The Fund, pursuant to the master administrative services agreement
with AIM, has agreed to pay AIM for certain administrative costs incurred in
providing accounting services to the Fund. Prior to July 1, 1999, AIM was the
pricing and accounting agent for the Fund. The monthly fee for these services
paid to AIM was a percentage, not to exceed 0.03% annually, of a Fund's average
daily net assets. The annual fee rate was derived based on the aggregate net
assets of the funds which comprised the following investment companies: AIM
Growth Series, AIM Investment Funds, AIM Series Trust, G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust. The fee was
calculated at the rate of 0.03% of the first $5 billion of assets and 0.02% to
the assets in excess of $5 billion. An amount is allocated to and paid by each
such fund based on its relative average daily net assets. For the year ended
October 31, 1999, AIM was paid $207,383 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 and
shareholder services to the Fund. For the year ended October 31, 1999, AFS was
paid $1,226,855 for such services.
The Trust 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, Class C and Advisor Class shares of the Fund. The Trust has
adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares, Class B shares and Class C shares (collectively the
"Plans"). The Fund , pursuant to the Plans, pays AIM Distributors compensation
at the annual rate of 0.35% of the Fund's average daily net assets of Class A
shares and 1.00% of the average daily net assets of Class B and C 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 Class 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. For the year ended October 31, 1999, the Class A, Class B and Class C
shares paid AIM Distributors $1,039,956, $4,535,906 and $6,314, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $80,124 from sales of the Class A
shares of the Fund during the year ended October 31, 1999. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended October 31, 1999,
AIM Distributors received $3,994 in contingent deferred sales charges
10
<PAGE> 322
imposed on redemptions of Fund shares. Certain officers and trustees of the
Trust are officers and directors of AIM, AFS and AIM Distributors.
NOTE 3-INDIRECT EXPENSES
During the year ended October 31, 1999, the Fund received reductions in
custodian fees of $4,831 under expense offset arrangements. The effect of the
above arrangements resulted in a reduction of the Fund's total expenses of
$4,831 during the year ended October 31, 1999.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $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. The funds which
are party to the line of credit are charged a commitment fee of 0.09% 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. Prior to May
28, 1999, the Fund, along with certain other funds advised and/or administered
by AIM, had a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allowed the Fund and certain other
funds to borrow, on a first come, first served basis, an aggregate maximum
amount of $250,000,000.
During the year ended October 31, 1999, the average outstanding daily balance
of bank loans for the Fund was $268,364 with a weighted average interest rate of
5.63%. Interest expense for the Fund for the year ended October 31, 1999 was
$15,102.
NOTE 5-PORTFOLIO SECURITIES LOANED
At October 31, 1999, securities with an aggregate value of $926,250 were on loan
to brokers. The loans were secured by cash collateral of $944,775 received by
the Fund. For the year ended October 31, 1999, the Fund received fees of
$193,458 for securities lending.
For international securities, cash collateral is received by the Fund against
loaned securities in an amount at least equal to 105% of the market value of the
loaned securities at the inception of each loan. This collateral must be
maintained at not less than 103% of the market value of the loaned securities
during the period of the loan. For domestic securities, cash collateral is
received by the Fund against loaned securities in the amount at least equal to
102% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 100% of the market value of
the loaned securities during the period of the loan. The cash collateral is
invested in a securities lending trust which consists of a portfolio of high
quality short duration securities whose average effective duration is restricted
to 120 days or less.
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, 1999 was
$654,207,941 and $785,726,810, respectively.
The amount of unrealized appreciation of investment securities, for tax
purposes, as of October 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $131,225,983
- ---------------------------------------------------------
Aggregate unrealized appreciation
(depreciation) of investment securities (10,184,073)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $121,041,910
=========================================================
Cost of investments for tax purposes is
$511,550,667.
</TABLE>
11
<PAGE> 323
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended October 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 8,613,668 $ 72,437,015 40,631,419 $ 363,947,180
- -----------------------------------------------------------------------------------------------------------------------
Class B 5,303,281 44,812,675 12,852,707 115,998,695
- -----------------------------------------------------------------------------------------------------------------------
Class C* 195,189 1,576,712 -- --
- -----------------------------------------------------------------------------------------------------------------------
Advisor Class 328,566 2,706,042 4,670,023 41,740,705
- -----------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Class A 6,015,569 49,459,293 1,294,169 11,189,344
- -----------------------------------------------------------------------------------------------------------------------
Class B 8,680,071 71,410,220 1,736,739 14,930,372
- -----------------------------------------------------------------------------------------------------------------------
Class C* 1,149 9,140 -- --
- -----------------------------------------------------------------------------------------------------------------------
Advisor Class 135,251 1,109,119 25,259 222,124
- -----------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (15,145,571) (123,820,058) (44,464,914) (400,082,759)
- -----------------------------------------------------------------------------------------------------------------------
Class B (18,003,582) (146,808,490) (17,992,943) (162,624,547)
- -----------------------------------------------------------------------------------------------------------------------
Class C* (23,980) (189,711) -- --
- -----------------------------------------------------------------------------------------------------------------------
Advisor Class (552,173) (4,688,897) (4,285,866) (38,891,440)
- -----------------------------------------------------------------------------------------------------------------------
(4,452,562) $ (31,986,940) (5,533,407) $ (53,570,326)
=======================================================================================================================
</TABLE>
* Class C shares commenced sales on March 1, 1999.
NOTE 8-FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1999(a) 1998(a) 1997(a) 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.26 $ 8.21 $ 7.11 $ 6.35 $ 6.21
- ------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.20 0.17 0.21 0.22 0.24
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.05) 1.25 1.12 0.82 0.13
- ------------------------------------------------------------------------------------------------------------------------
Net increase from investment operations 0.15 1.42 1.33 1.04 0.37
- ------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (0.11) (0.13) (0.21) (0.24) (0.22)
- ------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (1.50) (0.24) (0.02) (0.04) (0.01)
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (1.61) (0.37) (0.23) (0.28) (0.23)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.80 $ 9.26 $ 8.21 $ 7.11 $ 6.35
========================================================================================================================
Total return(b) 1.03% 17.76% 19.01% 16.80% 6.27%
========================================================================================================================
Ratios and supplemental data:
Net assets, end of period (in 000's) $254,060 $306,279 $292,528 $286,203 $284,069
========================================================================================================================
Ratio of net investment income to average net assets: 2.34%(c) 1.87% 2.74% 3.17% 3.85%
========================================================================================================================
Ratio of expenses to average net assets: 1.65%(c) 1.65% 1.64% 1.66% 1.74%
========================================================================================================================
Portfolio turnover rate 89% 92% 50% 39% 83%
========================================================================================================================
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $297,130,261.
12
<PAGE> 324
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1999(a) 1998(a) 1997(a) 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.25 $ 8.21 $ 7.11 $ 6.35 $ 6.21
- ----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.14 0.11 0.16 0.17 0.20
- ----------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.04) 1.25 1.13 0.82 0.13
- ----------------------------------------------------------------------------------------------------------------------
Net increase from investment operations 0.10 1.36 1.29 0.99 0.33
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (0.05) (0.08) (0.17) (0.20) (0.18)
- ----------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (1.50) (0.24) (0.02) (0.03) (0.01)
- ----------------------------------------------------------------------------------------------------------------------
Total distributions (1.55) (0.32) (0.19) (0.23) (0.19)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.80 $ 9.25 $ 8.21 $ 7.11 $ 6.35
======================================================================================================================
Total return(b) 0.42% 16.93% 18.28% 16.06% 5.57%
======================================================================================================================
Ratios and supplemental data:
Net assets, end of period (in 000's) $376,181 $483,307 $456,893 $383,966 $356,796
======================================================================================================================
Ratio of net investment income to average net assets: 1.69%(c) 1.22% 2.09% 2.52% 3.20%
======================================================================================================================
Ratio of expenses to average net assets: 2.30%(c) 2.30% 2.29% 2.31% 2.39%
======================================================================================================================
Portfolio turnover rate 89% 92% 50% 39% 83%
======================================================================================================================
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $453,590,643.
13
<PAGE> 325
NOTE 8-FINANCIAL HIGHLIGHTS (CONTINUED)
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS C ADVISOR CLASS
------------------- ------------------------------------------
MARCH 1, 1999 YEAR ENDED OCTOBER 31, JUNE 1, 1995
TO ------------------------------------------ TO
OCTOBER 31, 1999(a) 1999(a) 1998(a) 1997(a) 1996 OCTOBER 31, 1995
------------------- ------- ------- ------- ------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.05 $ 9.26 $ 8.20 $ 7.10 $ 6.35 $ 6.24
- ---------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.10 0.22 0.21 0.23 0.23 0.11
- ---------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.26) (0.05) 1.25 1.13 0.82 0.13
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment
operations (0.16) 0.17 1.46 1.36 1.05 0.24
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (0.02) (0.14) (0.16) (0.24) (0.26) (0.13)
- ---------------------------------------------------------------------------------------------------------------------------------
From net realized gain on investments (0.07) (1.50) (0.24) (0.02) (0.04) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.09) (1.64) (0.40) (0.26) (0.30) (0.13)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.80 $ 7.79 $ 9.26 $ 8.20 $ 7.10 $ 6.35
=================================================================================================================================
Total return(b) (1.98)% 1.30% 18.27% 19.23% 17.19% 3.83%
=================================================================================================================================
Ratios and supplemental data:
Net assets, end of period (in 000's) $1,344 $5,405 $7,239 $3,057 $3,085 $ 944
=================================================================================================================================
Ratio of net investment income to average
net assets: 1.69%(c) 2.69%(d) 2.22% 3.09% 3.52% 4.20%(e)
=================================================================================================================================
Ratio of expenses to average net assets: 2.30%(c) 1.30%(d) 1.30% 1.29% 1.31% 1.39%(e)
=================================================================================================================================
Portfolio turnover rate 89% 89% 92% 50% 39% 83%
=================================================================================================================================
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $944,451.
(d) Ratios are based on average net assets of $5,759,984.
(e) Annualized.
NOTE 9-SUBSEQUENT EVENT
On November 3, 1999, the Board of Trustees approved the conversion of Advisor
Class Shares into Class A Shares. The proposed effective date of this conversion
is February 11, 2000.
14
<PAGE> 326
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of AIM Global Growth & Income Fund
and Board of Trustees of AIM Investment Funds:
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and
the related statements of operations and of changes in
net assets and the financial highlights present fairly,
in all material respects, the financial position of the
AIM Global Growth & Income Fund at October 31, 1999, and
the results of its operations, the changes in its net
assets and the financial highlights for the periods
indicated, in conformity with generally accepted
accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion
on these financial statements based on our audits. We
conducted our audits of these financial statements in
accordance with generally accepted auditing standards
which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our
audits, which included confirmation of securities at
October 31, 1999 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion
expressed above.
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
December 23, 1999
15
<PAGE> 327
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
C. Derek Anderson Robert H. Graham 11 Greenway Plaza
President, Plantagenet Capital Chairman and President Suite 100
Management, LLC (an investment Houston, TX 77046
partnership); Chief Executive Officer, Dana R. Sutton
Plantagenet Holdings, Ltd. Vice President and Treasurer INVESTMENT MANAGER
(an investment banking firm)
Samuel D. Sirko A I M Advisors, Inc.
Frank S. Bayley Vice President and Secretary 11 Greenway Plaza
Partner, law firm of Suite 100
Baker & McKenzie Melville B. Cox Houston, TX 77046
Vice President
Robert H. Graham SUB-ADVISOR
President and Chief Executive Officer, Gary T. Crum
A I M Management Group Inc. Vice President INVESCO Asset Management Ltd.
11 Devonshire Square
Arthur C. Patterson Carol F. Relihan London EC2M 4YR
Managing Partner, Accel Partners Vice President England
(a venture capital firm)
Mary J. Benson TRANSFER AGENT
Ruth H. Quigley Assistant Vice President and
Private Investor Assistant Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Sheri Morris Houston, TX 77210-4739
Assistant Vice President and
Assistant Treasurer CUSTODIAN
Nancy L. Martin State Street Bank and Trust Company
Assistant Secretary 225 Franklin Street
Boston, MA 02110
Ofelia M. Mayo
Assistant Secretary COUNSEL TO THE FUND
Kathleen J. Pflueger Kirkpatrick & Lockhart LLP
Assistant Secretary 1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
COUNSEL TO THE TRUSTEES
Paul, Hastings, Janofsky & Walker LLP
Twenty Third Floor
555 South Flower Street
Los Angeles, CA 90071
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
PricewaterhouseCoopers LLP
160 Federal St.
Boston, MA 02110
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION -- UNAUDITED
AIM Global Growth & Income Fund paid ordinary dividends in the amount of $0.110,
$0.050, $0.019 and $0.140 per share to Class A, Class B, Class C and Advisor
Class shareholders, respectively during its tax year ended October 31, 1999. Of
this amount, 85.46% is eligible for the dividends received deduction for
corporations. The Fund also distributed long-term capital gains of $130,436,607
during the Fund's tax year ended October 31, 1999.
REQUIRED STATE INCOME TAX INFORMATION
Of the total income dividends paid, 22% was derived from U.S. Treasury
obligations.
16
<PAGE> 328
-------------------------------------
OUR AUTOMATED
AIM INVESTOR LINE,
800-246-5463,
PROVIDES CURRENT ACCOUNT
INFORMATION AND THE PRICE,
YIELD AND TOTAL RETURN
ON ALL AIM FUNDS
24 HOURS A DAY.
-------------------------------------
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INVESTING EASY
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<PAGE> 329
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has
AIM Aggressive Growth Fund(1) AIM Money Market Fund provided leadership in the
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund mutual fund industry since 1976
AIM Capital Development Fund and managed approximately $120
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS billion in assets for more than
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund 6.4 million shareholders,
AIM Large Cap Growth Fund AIM Asian Growth Fund including individual investors,
AIM Mid Cap Equity Fund AIM Developing Markets Fund corporate clients and financial
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(4) institutions, as of September
AIM Mid Cap Opportunities Fund AIM European Development Fund 30, 1999.
AIM Select Growth Fund AIM International Equity Fund The AIM Family of Funds
AIM Small Cap Growth Fund(2) AIM Japan Growth Fund --Registered Trademark-- is
AIM Small Cap Opportunities Fund(3) AIM Latin American Growth Fund distributed nationwide, and AIM
AIM Value Fund AIM New Pacific Growth Fund today is the 10th-largest mutual
AIM Weingarten Fund fund complex in the United
GLOBAL GROWTH FUNDS States in assets under
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund management, according to
AIM Advisor Flex Fund AIM Global Growth Fund Strategic Insight, an
AIM Advisor Large Cap Value Fund independent mutual fund monitor.
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS
AIM Balanced Fund AIM Global Growth & Income Fund
AIM Basic Value Fund AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund
AIM Floating Rate Fund AIM Global Government Income Fund
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund
AIM Income Fund
AIM Intermediate Government Fund THEME FUNDS
AIM Limited Maturity Treasury Fund AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
TAX-FREE INCOME FUNDS AIM Global Health Care Fund
AIM High Income Municipal Fund AIM Global Infrastructure Fund
AIM Municipal Bond Fund AIM Global Resources Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(5)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(6)
</TABLE>
(1)AIM Aggressive Growth Fund reopened to new investors on November 16, 1998.
(2)AIM Small Cap Growth Fund closed to new investors on November 8, 1999. (3)AIM
Small Cap Opportunities Fund closed to new investors on November 4, 1999. (4)On
September 1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth Fund.
Previously the fund invested in all size companies in most areas of Europe. The
fund now seeks to invest at least 65% of its assets in large-cap companies
within countries using the euro as their currency (EMU-member countries). (5)On
June 1, 1999, AIM Global Telecommunications Fund was renamed AIM Global
Telecommunications and Technology Fund. (6)Effective August 27, 1999, AIM Global
Trends Fund was restructured to operate as a traditional mutual fund. Before
that date, the fund operated as a fund of funds. For more complete information
about any AIM fund(s), including sales charges and expenses, ask your financial
advisor or securities dealer for a free prospectus(es). Please read the
prospectus(es) carefully before you invest or send money. If used as sales
material after January 20, 2000, this report must be accompanied by a current
Quarterly Review of Performance for AIM Funds.
[AIM LOGO APPEARS HERE]
Invest with DISCIPLINE
--Registered Trademark--
A I M Distributors, Inc.
GGI-AR-1
<PAGE> 330
APPENDIX IV
AIM GLOBAL INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (a) MARKET VALUE
- -------------------------------------- ------------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
U.S. DOLLAR
DENOMINATED BONDS &
NOTES--27.65%
AIR FREIGHT--0.15%
Atlas Air, Inc., Sr. Unsec. Notes, 10.75%,
$ - $ 350,000 $ 350,000 08/01/05 $ - $ 350,000 $ 350,000
========== =========== =========== =========== =========== ===========
AIRLINES--1.45%
Air 2 US, Series C, Equipment Trust Ctfs.,
10.127%, 10/01/20 (Acquired 10/28/99; Cost
- 450,000 450,000 $450,000) b - 457,920 457,920
---------- ----------- ----------- ----------- ----------- -----------
Airplanes Pass Through Trust, Series D Gtd.
- 230,000 230,000 Sub. Bonds, 10.875%, 03/15/19 - 204,845 204,845
---------- ----------- ----------- ----------- ----------- -----------
Delta Air Lines, Inc., Deb.
- 550,000 550,000 9.00%, 05/15/16 - 583,297 583,297
---------- ----------- ----------- ----------- ----------- -----------
- 1,000,000 1,000,000 10.375%, 12/15/22 - 1,208,370 1,208,370
---------- ----------- ----------- ----------- ----------- -----------
Dunlop Standard Aero Holdings (United
- 530,000 530,000 Kingdom), Sr. Notes, 11.875%, 05/15/09 c - 537,950 537,950
---------- ----------- ----------- ----------- ----------- -----------
United Air Lines, Inc., Pass Through Ctfs.,
- 300,000 300,000 9.56%, 10/19/18 - 329,784 329,784
========== =========== =========== =========== =========== ===========
- 3,322,166 3,322,166
========== =========== =========== =========== =========== ===========
AUTO PARTS & EQUIPMENT--0.28%
Advance Stores Co., Inc., Series B, Sr.
- 270,000 270,000 Unsec. Gtd. Sub. Notes, 10.25%, 04/15/08 - 249,750 249,750
---------- ----------- ----------- ----------- ----------- -----------
- 430,000 430,000 Exide Corp., Sr. Notes, 10.00%, 04/15/05 - 402,050 402,050
========== =========== =========== =========== =========== ===========
- 651,800 651,800
========== =========== =========== =========== =========== ===========
AUTOMOBILES--0.13%
DaimlerChrysler N.A. Holdings (Germany),
- 300,000 300,000 Gtd. Notes, 7.20%, 09/01/09 - 301,065 301,065
========== =========== =========== =========== =========== ===========
BANKS (MAJOR REGIONAL)--0.97%
Deutsche Bank Finance B.V. (Netherlands),
- 1,200,000 1,200,000 Conv. Bonds, 4.50%,02/12/17 de - 579,060 579,060
---------- ----------- ----------- ----------- ----------- -----------
Midland Bank PLC (United Kingdom), Sub.
- 280,000 280,000 Notes, 7.65%, 05/01/25 - 283,480 283,480
---------- ----------- ----------- ----------- ----------- -----------
Regions Financial Corp., Sub. Notes, 7.75%,
- 500,000 500,000 09/15/24 - 497,940 497,940
---------- ----------- ----------- ----------- ----------- -----------
Republic New York Corp.,
- 400,000 400,000 Sub. Notes, 9.70%, 02/01/09 - 455,340 455,340
---------- ----------- ----------- ----------- ----------- -----------
- 370,000 370,000 Sub. Deb., 9.50%, 04/15/14 - 412,546 412,546
========== =========== =========== =========== =========== ===========
- 2,228,366 2,228,366
========== =========== =========== =========== =========== ===========
BANKS (MONEY CENTER)--3.15%
Banque Cent de Tunisie (Tunisia), Unsec.
4,750,000 - 4,750,000 Bonds, 8.25%, 09/19/27 3,916,214 - 3,916,214
---------- ----------- ----------- ----------- ----------- -----------
Bayerische Landesbank Girozentrale
(Germany), Unsec. Sub. Notes, 5.875%,
2,400,000 - 2,400,000 12/01/08 2,213,702 - 2,213,702
---------- ----------- ----------- ----------- ----------- -----------
Capital One Financial Corp., Unsec. Notes,
- 600,000 600,000 7.25%, 05/01/06 - 570,000 570,000
---------- ----------- ----------- ----------- ----------- -----------
Riggs Capital Trust II, Series C Gtd. Bonds,
- 570,000 570,000 8.875%, 03/15/27 - 533,722 533,722
========== =========== =========== =========== =========== ===========
6,129,916 1,103,722 7,233,638
========== =========== =========== =========== =========== ===========
BANKS (REGIONAL)--0.29%
Mercantile Bancorp, Inc., Unsec. Sub. Notes,
- 660,000 660,000 7.30%, 06/15/07 - 654,562 654,562
========== =========== =========== =========== =========== ===========
BROADCASTING (TELEVISION, RADIO & CABLE)--
2.26%
British Sky Broadcasting (United Kingdom),
Unsec. Gtd. Notes, 8.20%, 07/15/09
(Acquired 07/01/99-08/10/99; Cost
- 900,000 900,000 $890,547) b - 877,254 877,254
---------- ----------- ----------- ----------- ----------- -----------
Comcast Cable Communications, Unsec.
- 500,000 500,000 Notes, 8.50%, 05/01/27 - 540,710 540,710
---------- ----------- ----------- ----------- ----------- -----------
Cox Communications, Inc., Unsec. Notes,
- 400,000 400,000 7.75%, 08/15/06 - 409,744 409,744
---------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<PAGE> 331
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT(a) MARKET VALUE
- ------------------------------------ ------------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
CSC Holdings, Inc., Sr. Unsec. Deb.,
$ - $ 400,000 $ 400,000 7.875%, 02/15/18 $ - $ 381,784 $ 381,784
- --------- ----------- ----------- ----------- ----------- -----------
- 1,600,000 1,600,000 7.625%, 07/15/18 - 1,489,024 1,489,024
- --------- ----------- ----------- ----------- ----------- -----------
Fox Family Worldwide, Inc., Sr. Unsec.
- 940,000 940,000 Disc. Notes, 10.25%, 11/01/07 f - 618,050 618,050
- --------- ----------- ----------- ----------- ----------- -----------
Knology Holdings, Inc., Sr. Disc. Notes,
- 700,000 700,000 11.875%, 10/15/07 f - 393,750 393,750
- --------- ----------- ----------- ----------- ----------- -----------
USA Networks, Inc., Sr. Unsec. Gtd. Notes,
- 500,000 500,000 6.75%, 11/15/05 - 477,914 477,914
========= =========== =========== =========== =========== ===========
- 5,188,230 5,188,230
========= =========== =========== =========== =========== ===========
CHEMICALS--0.62%
Agrium, Inc. (Canada), Unsec. Notes, 7.00%,
- 350,000 350,000 02/01/04 - 337,536 337,536
- --------- ----------- ----------- ----------- ----------- -----------
Airgas, Inc., Medium Term Notes, 7.14%,
- 500,000 500,000 03/08/04 - 474,010 474,010
- --------- ----------- ----------- ----------- ----------- -----------
Nova Gas Transmission Ltd. (Canada),
- 450,000 450,000 Yankee Deb., 8.50%, 12/15/12 - 482,634 482,634
- --------- ----------- ----------- ----------- ----------- -----------
Sterling Chemicals, Inc., Sr. Unsec. Sub.
- 200,000 200,000 Notes, 11.75%, 08/15/06 - 127,000 127,000
========= =========== =========== =========== =========== ===========
- 1,421,180 1,421,180
========= =========== =========== =========== =========== ===========
COMMUNICATIONS EQUIPMENT--0.35%
Dialog Corp. PLC (United Kingdom), Series
- 750,000 750,000 A, Sr. Sub. Yankee Notes, 11.00%, 11/15/07 - 637,500 637,500
- --------- ----------- ----------- ----------- ----------- -----------
ProNet, Inc., Sr. Sub. Notes, 11.875%,
- 250,000 250,000 06/15/05 - 171,250 171,250
========= =========== =========== =========== =========== ===========
- 808,750 808,750
========= =========== =========== =========== =========== ===========
COMPUTERS (NETWORKING)--0.13%
Exodus Communications, Sr. Unsec. Notes,
- 280,000 280,000 11.25%, 07/01/08 - 290,500 290,500
========= =========== =========== =========== =========== ===========
CONSTRUCTION (CEMENT & AGGREGATES)--
0.13%
Schuff Steel Co., Sr. Unsec. Gtd. Sub. Notes,
- 350,000 350,000 10.50%, 06/01/08 - 299,250 299,250
========= =========== =========== =========== =========== ===========
CONSUMER FINANCE--0.47%
Countrywide Capital, Gtd. Notes, 8.05%,
- 350,000 350,000 06/15/27 - 332,052 332,052
- --------- ----------- ----------- ----------- ----------- -----------
MBNA Capital I, Series A Bonds, 8.278%,
- 835,000 835,000 12/01/26 - 757,161 757,161
========= =========== =========== =========== =========== ===========
- 1,089,213 1,089,213
========= =========== =========== =========== =========== ===========
DISTRIBUTORS (FOOD & HEALTH)--0.10%
Fleming Companies, Inc., Sr. Unsec. Gtd.
- 255,000 255,000 Sub. Notes, 10.625%, 07/31/07 - 229,500 229,500
========= =========== =========== =========== =========== ===========
ELECTRIC COMPANIES--0.88%
Cleveland Electric Illumination, Series D, Sr.
- 500,000 500,000 Sec. Notes, 7.88%, 11/01/17 - 482,969 482,969
- --------- ----------- ----------- ----------- ----------- -----------
CMS Energy Corp., Sr. Unsec. Notes, 7.50%,
- 750,000 750,000 01/15/09 - 690,172 690,172
- --------- ----------- ----------- ----------- ----------- -----------
El Paso Electric Co., Sec. First Mortgage
Bonds,
- 250,000 250,000 Series D, 8.90%, 02/01/06 - 265,052 265,052
- --------- ----------- ----------- ----------- ----------- -----------
- 250,000 250,000 Series E, 9.40%, 05/01/11 - 273,007 273,007
- --------- ----------- ----------- ----------- ----------- -----------
Niagara Mohawk Power, Series H, Sr. Unsec.
Disc. Notes, 8.50%, 07/01/10 (Acquired
- 400,000 400,000 08/11/99; Cost $291,000) b - 302,664 302,664
========= =========== =========== =========== =========== ===========
- 2,013,864 2,013,864
========= =========== =========== =========== =========== ===========
ELECTRONICS (SEMICONDUCTORS)--0.09%
Panda Funding Corp., Series A-1, Pooled
- 198,404 198,404 Project Bonds, 11.625%, 08/20/12 - 199,396 199,396
========= =========== =========== =========== =========== ===========
ENTERTAINMENT--0.72%
News America Holdings, Inc., Notes, 8.45%,
- 500,000 500,000 08/01/34 - 512,615 512,615
- --------- ----------- ----------- ----------- ----------- -----------
- 1,000,000 1,000,000 Time Warner Inc., Deb., 9.125%, 01/15/13 - 1,127,140 1,127,140
========= =========== =========== =========== =========== ===========
- 1,639,755 1,639,755
========= =========== =========== =========== =========== ===========
</TABLE>
<PAGE> 332
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (a) MARKET VALUE
- ------------------------------------ ------------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL (DIVERSIFIED)--0.41%
Finova Capital Corp., Unsec. Sr. Notes,
$ - $ 210,000 $ 210,000 7.625%, 09/21/09 $ - $ 210,244 $ 210,244
- --------- --------- --------- ----------- ----------- -----------
Sumitomo Bank International Finance N.V.
- 700,000 700,000 (Japan), Gtd. Sub. Notes, 8.50%, 06/15/09 - 724,511 724,511
========= ========= ========= =========== =========== ===========
- 934,755 934,755
========= ========= ========= =========== =========== ===========
FOODS--0.39%
ConAgra, Inc., Sr. Unsec. Notes, 7.125%,
- 900,000 900,000 10/01/26 - 889,443 889,443
========= ========= ========= =========== =========== ===========
HEALTH CARE (LONG TERM CARE)--0.03%
Harborside Healthcare, Sr. Unsec. Gtd. Disc.
- 300,000 300,000 Sub. Notes, 11.00%, 08/01/08 e - 78,000 78,000
========= ========= ========= =========== =========== ===========
HEALTH CARE (SPECIALIZED SERVICES)--0.21%
Team Health, Inc., Sr. Sub. Notes, 12.00%,
- 470,000 470,000 03/15/09 c - 472,350 472,350
========= ========= ========= =========== =========== ===========
HOMEBUILDING--0.02%
D.R. Horton, Inc., Unsec. Gtd. Notes,
- 55,000 55,000 10.00%, 04/15/06 - 55,275 55,275
========= ========= ========= =========== =========== ===========
HOUSEHOLD PRODUCTS (NON-DURABLES)--
0.19%
Procter & Gamble Co. (The), Putable Deb.,
- 400,000 400,000 8.00%, 09/01/24 - 434,548 434,548
========= ========= ========= =========== =========== ===========
HOUSEWARES--0.13%
Decora Industries, Inc., Series B, Sr. Sec.
- 350,000 350,000 Gtd. Notes, 11.00%, 05/01/05 - 306,250 306,250
========= ========= ========= =========== =========== ===========
INSURANCE (LIFE/HEALTH)--0.30%
- 750,000 750,000 Torchmark Corp., Notes, 7.875%, 05/15/23 - 693,143 693,143
========= ========= ========= =========== =========== ===========
INSURANCE (PROPERTY-CASUALTY)--0.41.%
Terra Nova Holdings, Co. (United Kingdom),
Sr. Unsec. Gtd. Notes,
- 500,000 500,000 7.20%, 08/15/07 - 479,330 479,330
- --------- --------- --------- ----------- ----------- -----------
- 500,000 500,000 7.00%, 05/15/08 - 471,800 471,800
========= ========= ========= =========== =========== ===========
- 951,130 951,130
========= ========= ========= =========== =========== ===========
INVESTMENT BANKING/BROKERAGE--0.61%
HSBC America Capital Trust II, Gtd. Bonds,
8.38%, 05/15/27 (Acquired 08/12/99; Cost
- 500,000 500,000 $479,210) b - 479,120 479,120
- --------- --------- --------- ----------- ----------- -----------
Lehman Brothers, Inc.,
- 390,000 390,000 Notes, 8.50%, 08/01/15 - 404,305 404,305
- --------- --------- --------- ----------- ----------- -----------
- 530,000 530,000 Sr. Sub. Notes, 7.375%, 01/15/07 - 523,667 523,667
========= ========= ========= =========== =========== ===========
- 1,407,092 1,407,092
========= ========= ========= =========== =========== ===========
IRON & STEEL--0.18%
Acme Metal, Inc., Sr. Unsec. Gtd. Deb.,
- 438,000 438,000 10.875%, 12/15/07 g - 94,170 94,170
- --------- --------- --------- ----------- ----------- -----------
GS Technologies, Inc., Sr. Gtd. Notes,
- 200,000 200,000 12.00%, 09/01/04 - 111,000 111,000
- --------- --------- --------- ----------- ----------- -----------
Sheffield Steel Corp., Series B, First
- 250,000 250,000 Mortgage Notes, 11.50%, 12/01/05 - 208,750 208,750
========= ========= ========= =========== =========== ===========
- 413,920 413,920
========= ========= ========= =========== =========== ===========
LEISURE TIME (PRODUCTS)--0.18%
Marvel Enterprises, Inc., Sr. Unsec. Gtd.
- 440,000 440,000 Sub. Notes, 12.00%, 06/15/09 - 402,600 402,600
========= ========= ========= =========== =========== ===========
LODGING-HOTELS--0.13%
John Q. Hammons Hotels, Inc., Sec. First
- 100,000 100,000 Mortgage Notes, 9.75%, 10/01/05 - 90,500 90,500
- --------- --------- --------- ----------- ----------- -----------
Stena Line A.B. (Sweden), Sr. Unsec.
- 310,000 310,000 Yankee Notes, 10.625%, 06/01/08 - 217,775 217,775
========= ========= ========= =========== =========== ===========
- 308,275 308,275
========= ========= ========= =========== =========== ===========
MANUFACTURING (DIVERSIFIED)--0.09%
Glenoit Corp., Sr. Unsec. Gtd. Sub. Notes,
- 380,000 380,000 11.00%, 04/15/07 - 210,900 210,900
========= ========= ========= =========== =========== ===========
MANUFACTURING (SPECIALIZED)--0.20%
First Wave Marine, Inc., Sr. Unsec. Gtd.
$ - $ 250,000 $ 250,000 Sub. Notes, 11.00%, 02/01/08 $ - $ 188,750 $ 188,750
- --------- --------- --------- ----------- ----------- -----------
</TABLE>
<PAGE> 333
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (a) MARKET VALUE
- ------------------------------------ ------------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
MMI Products, Inc., Sr. Unsec. Sub. Notes,
- 260,000 260,000 11.25%, 04/15/07 - 265,200 265,200
- 453,950 453,950
========= =========== =========== ========= =========== ===========
METALS MINING--0.10%
Rio Algom Ltd. (Canada), Unsec. Yankee
- 250,000 250,000 Deb., 7.05%, 11/01/05 - 238,455 238,455
========= =========== =========== ========= =========== ===========
NATURAL GAS--0.69%
Dynegy, Inc., Sr. Unsec. Deb., 7.125%,
- 500,000 500,000 05/15/18 - 459,975 459,975
- --------- ----------- ----------- --------- ----------- -----------
- 500,000 500,000 Enron Corp., Sr. Sub. Deb., 8.25%, 09/15/12 - 515,220 515,220
- --------- ----------- ----------- --------- ----------- -----------
- 600,000 600,000 Sonat, Inc., Unsec. Notes, 7.625%, 07/15/11 - 600,828 600,828
========= =========== =========== ========= =========== ===========
- 1,576,023 1,576,023
========= =========== =========== ========= =========== ===========
OIL & GAS (EXPLORATION & PRODUCTION)--
0.55%
- 400,000 400,000 Oneok, Inc., Unsec. Notes, 7.75%, 08/15/06 - 401,224 401,224
- --------- ----------- ----------- --------- ----------- -----------
Pogo Producing Co., Series B, Sr. Unsec.
- 500,000 500,000 Sub. Notes, 10.375%, 02/15/09 - 520,000 520,000
- --------- ----------- ----------- --------- ----------- -----------
Queen Sand Resources, Inc., Sr. Unsec. Gtd.
- 160,000 160,000 Sub. Notes, 12.50%, 07/01/08 - 92,000 92,000
- --------- ----------- ----------- --------- ----------- -----------
Talisman Energy, Inc. (Canada), Yankee
- 250,000 250,000 Deb., 7.125%, 06/01/07 - 240,210 240,210
========= =========== =========== ========= =========== ===========
- 1,253,434 1,253,434
========= =========== =========== ========= =========== ===========
OIL & GAS (REFINING & MARKETING)--0.27%
Texas Petrochemical Corp., Sr. Unsec. Sub.
- 750,000 750,000 Notes, 11.125%, 07/01/06 - 611,250 611,250
========= =========== =========== ========= =========== ===========
PHOTOGRAPHY/IMAGING--0.21%
Polaroid Corp., Sr. Unsec. Notes, 11.50%,
- 470,000 470,000 02/15/06 - 472,350 472,350
========= =========== =========== ========= =========== ===========
POWER PRODUCERS (INDEPENDENT)--0.50%
- 750,000 750,000 AES Corp., Sr. Notes, 8.00%, 12/31/08 - 686,250 686,250
- --------- ----------- ----------- --------- ----------- -----------
7.33%, 06/15/20 (Acquired 04/30/98; Cost
- 500,000 500,000 $501,235) b - 453,630 453,630
========= =========== =========== ========= =========== ===========
- 1,139,880 1,139,880
========= =========== =========== ========= =========== ===========
PUBLISHING (NEWSPAPERS)--0.25%
News America Holdings, Inc., Sr. Gtd. Deb.,
- 250,000 250,000 9.25%, 02/01/13 - 274,755 274,755
- --------- ----------- ----------- --------- ----------- -----------
United News & Media PLC (United
Kingdom), Sr. Unsec. Yankee Notes, 7.75%,
- 300,000 300,000 07/01/09 - 292,905 292,905
========= =========== =========== ========= =========== ===========
- 567,660 567,660
========= =========== =========== ========= =========== ===========
RAILROADS--0.56%
CSX Corp., Sr. Unsec. Putable Deb., 7.25%,
- 750,000 750,000 05/01/27 - 747,173 747,173
- --------- ----------- ----------- --------- ----------- -----------
Norfolk Southern Corp., Putable Bonds,
- 550,000 550,000 7.05%, 05/01/37 - 546,816 546,816
========= =========== =========== ========= =========== ===========
- 1,293,989 1,293,989
========= =========== =========== ========= =========== ===========
REAL ESTATE INVESTMENT TRUSTS--0.46%
Glenborough Properties, Series B, Sr. Unsec.
- 500,000 500,000 Notes, 7.625%, 03/15/05 - 445,514 445,514
- --------- ----------- ----------- --------- ----------- -----------
Health Care REIT, Inc., Sr. Unsec. Notes,
- 200,000 200,000 7.625%, 03/15/08 - 169,320 169,320
- --------- ----------- ----------- --------- ----------- -----------
Spieker Properties LP, Unsec. Deb., 7.35%,
- 500,000 500,000 12/01/17 - 446,705 446,705
========= =========== =========== ========= =========== ===========
- 1,061,539 1,061,539
========= =========== =========== ========= =========== ===========
RETAIL (GENERAL MERCHANDISE)--0.07%
Plainwell, Inc., Series B, Sr. Unsec. Sub.
- 230,000 230,000 Notes, 11.00%, 03/01/08 - 166,750 166,750
========= =========== =========== ========= =========== ===========
</TABLE>
<PAGE> 334
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (a) MARKET VALUE
- ------------------------------------ ------------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
RETAIL (SPECIALTY)--0.88%
Amazon.com, Inc., Conv. Deb., 4.75%,
$ - $ 500,000 $ 500,000 02/01/09 (Acquired 01/29/99; Cost b $ - $ 532,500 $ 532,500
---------- ----------- ----------- ----------- ----------- -----------
CEX Holdings, Inc., Series B, Sr. Unsec.
- 170,000 170,000 Gtd. Sub. Notes, 9.625%, 06/01/08 - 184,450 184,450
---------- ----------- ----------- ----------- ----------- -----------
CSK Auto Inc., Series A, Sr. Gtd. Sub. Deb,
- 130,000 130,000 11.00%, 11/01/06 - 134,550 134,550
---------- ----------- ----------- ----------- ----------- -----------
Neff Corp., Sr. Unsec. Gtd. Sub. Notes,
- 840,000 840,000 10.25%, 06/01/08 - 814,800 814,800
---------- ----------- ----------- ----------- ----------- -----------
Rent-A-Center, Inc., Sr. Unsec. Gtd. Sub.
- 350,000 350,000 Notes, 11.00%, 08/15/08 - 350,000 350,000
========== =========== =========== =========== =========== ===========
- 2,016,300 2,016,300
========== =========== =========== =========== =========== ===========
RETAIL (SPECIALTY-APPAREL)--0.06%
J Crew Operating Corp., Sr. Sub. Notes,
- 150,000 150,000 10.375%, 10/15/07 - 126,750 126,750
========== =========== =========== =========== =========== ===========
SAVINGS & LOAN COMPANIES--0.39%
Sovereign Bancorp, Inc., Medium Term Sub.
- 600,000 600,000 Notes, 8.00%, 03/15/03 - 595,242 595,242
---------- ----------- ----------- ----------- ----------- -----------
Washington Mutual, Inc., Notes, 7.50%,
- 290,000 290,000 08/15/06 - 293,622 293,622
========== =========== =========== =========== =========== ===========
- 888,864 888,864
========== =========== =========== =========== =========== ===========
SERVICES (ADVERTISING/MARKETING)--0.09%
MDC Communications Corp. (Canada), Sr.
Unsec. Sub. Yankee Notes, 10.50%,
- 200,000 200,000 12/01/06 - 195,000 195,000
========== =========== =========== =========== =========== ===========
SERVICES (COMMERCIAL & CONSUMER)--
0.25%
Hydrochem Industrial Service Co., Series B,
- 150,000 150,000 Sr. Sec. Gtd. Sub. Notes, 10.375%, 08/01/07 - 131,250 131,250
---------- ----------- ----------- ----------- ----------- -----------
Laidlaw, Inc. (Canada), Unsec. Yankee Deb.,
- 500,000 500,000 6.70%, 05/01/08 - 436,010 436,010
========== =========== =========== =========== =========== ===========
- 567,260 567,260
========== =========== =========== =========== =========== ===========
SERVICES (EMPLOYMENT)--0.11%
MSX International, Inc., Sr. Unsec. Sub.
- 260,000 260,000 Notes, 11.375%, 01/15/08 - 245,700 245,700
========== =========== =========== =========== =========== ===========
SOVEREIGN DEBT--2.15%
Province of Manitoba (Canada), Yankee
- 550,000 550,000 Deb., 7.75%, 07/17/16 - 585,629 585,629
---------- ----------- ----------- ----------- ----------- -----------
Province of Quebec (Canada), Series A,
Medium Term Putable Yankee Notes,
- 500,000 500,000 5.735%, 03/02/26 - 497,670 497,670
---------- ----------- ----------- ----------- ----------- -----------
Medium Term Yankee Notes,
- 1,000,000 1,000,000 6.29%, 03/06/26 - 993,710 993,710
---------- ----------- ----------- ----------- ----------- -----------
Republica Orient Uruguay (Uraguay), Unsec.
3,000,000 - 3,000,000 Bonds, 7.875%, 07/15/27 2,842,500 - 2,842,500
========== =========== =========== =========== =========== ===========
2,842,500 2,077,009 4,919,509
========== =========== =========== =========== =========== ===========
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--
0.24%
PageMart Wireless, Inc., Sr. Sub. Disc.
- 600,000 600,000 Notes, 11.25%, 02/01/08 f - 189,000 189,000
---------- ----------- ----------- ----------- ----------- -----------
US Unwired Inc., Sr. Disc. Notes, 13.375%,
11/01/09 (Acquired 10/26/99; Cost
- 700,000 700,000 $366,142) bf - 369,250 369,250
========== =========== =========== =========== =========== ===========
- 558,250 558,250
========== =========== =========== =========== =========== ===========
TELECOMMUNICATIONS (LONG DISTANCE)--
1.58%
Call-Net Enterprises, Inc. (Canada), Sr.
- 330,000 330,000 Unsec. Disc. Yankee Notes, 8.94%, 08/15/08 e - 196,350 196,350
---------- ----------- ----------- ----------- ----------- -----------
- 300,000 300,000 Centel Capital, Deb., 9.00%, 10/15/19 - 342,225 342,225
---------- ----------- ----------- ----------- ----------- -----------
Econophone, Inc., Sr. Unsec. Notes, 13.50%,
- 750,000 750,000 07/15/07 - 781,875 781,875
---------- ----------- ----------- ----------- ----------- -----------
Esprit Telecom Group PLC (United
Kingdom), Sr. Unsec. Yankee Notes,
- 250,000 250,000 11.50%, 12/15/07 - 256,250 256,250
---------- ----------- ----------- ----------- ----------- -----------
MCI Communications Corp., Putable Sr.
- 650,000 650,000 Unsec. Deb., 7.125%, 06/15/27 - 655,025 655,025
---------- ----------- ----------- ----------- ----------- -----------
Primus Telecommunications Group, Inc., Sr.
- 750,000 750,000 Notes, 11.25%, 01/15/09 - 693,750 693,750
---------- ----------- ----------- ----------- ----------- -----------
Tele1 Europe B.V. (Netherlands), Sr. Unsec.
- 500,000 500,000 Notes, 13.00%, 05/15/09 c - 497,500 497,500
---------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<PAGE> 335
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (a) MARKET VALUE
- ------------------------------------ ------------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
Versatel Telecom B.V. (Netherlands), Sr.
$ - $ 190,000 $ 190,000 Notes, 13.25%, 05/15/08 $ - $ 191,900 $ 191,900
========== =========== =========== =========== =========== ===========
- 3,614,875 3,614,875
========== =========== =========== =========== =========== ===========
TELEPHONE--1.68%
AT&T Canada Inc., Notes, 7.65%, 09/15/06
- 370,000 370,000 (Acquired 09/15/99; Cost $369,123) b - 370,758 370,758
---------- ----------- ----------- ----------- ----------- -----------
Bell Atlantic Financial Services, Inc., Conv.
- 500,000 500,000 Bonds, 4.25%, 09/15/05 - 528,806 528,806
---------- ----------- ----------- ----------- ----------- -----------
Esat Holdings Ltd. (Ireland), Sr. Yankee
- 350,000 350,000 Notes, 12.50%, 02/01/07 f - 255,500 255,500
---------- ----------- ----------- ----------- ----------- -----------
ICG Services, Inc., Sr. Unsec. Disc. Notes,
- 600,000 600,000 10.00%, 02/15/08 f - 321,096 321,096
---------- ----------- ----------- ----------- ----------- -----------
Liberty Media Group, Bonds, 7.875%,
- 400,000 400,000 07/15/09 (Acquired 06/30/99; Cost b - 398,910 398,910
---------- ----------- ----------- ----------- ----------- -----------
Logix Communications, Sr. Unsec. Notes,
- 350,000 350,000 12.25%, 06/15/08 - 280,875 280,875
---------- ----------- ----------- ----------- ----------- -----------
SBC Communications, Inc., Deb., 7.375%,
- 500,000 500,000 07/15/43 - 466,490 466,490
---------- ----------- ----------- ----------- ----------- -----------
Williams Communications Group, Inc., Sr.
- 450,000 450,000 Unsec. Notes, 10.70%, 10/01/07 - 469,125 469,125
---------- ----------- ----------- ----------- ----------- -----------
Worldwide Fiber, Inc. (Canada), Sr. Notes,
- 530,000 530,000 12.00%, 08/01/09 c - 532,650 532,650
---------- ----------- ----------- ----------- ----------- -----------
- 230,000 230,000 12.50%, 12/15/05 - 235,750 235,750
========== =========== =========== =========== =========== ===========
- 3,859,960 3,859,960
========== =========== =========== =========== =========== ===========
TRUCKERS--0.13%
Travelcenters of America, Inc., Sr. Unsec.
- 290,000 290,000 Gtd. Sub. Deb., 10.25%, 04/01/07 - 286,375 286,375
========== =========== =========== =========== =========== ===========
WASTE MANAGEMENT--0.78%
- 350,000 350,000 Browning-Ferris, Deb., 9.25%, 05/01/21 - 302,750 302,750
---------- ----------- ----------- ----------- ----------- -----------
Waste Management Inc., Sr. Unsec. Notes,
- 525,000 525,000 7.125%, 10/01/09 - 447,258 447,258
---------- ----------- ----------- ----------- ----------- -----------
- 190,000 190,000 7.125%, 12/15/17 - 145,263 145,263
---------- ----------- ----------- ----------- ----------- -----------
WMX Technologies, Inc., Unsec. Putable
- 980,000 980,000 Notes, 7.10%, 08/01/26 - 897,327 897,327
========== =========== =========== =========== =========== ===========
- 1,792,598 1,792,598
========== =========== =========== =========== =========== ===========
Total U.S. Dollar Denominated Bonds &
Notes (Cost $68,160,294) 8,972,416 54,413,221 63,385,637
========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (h)
- ------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING
INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
NON-U.S. DOLLAR
DENOMINATED BONDS &
NOTES--46.71%
AUSTRALIA--1.62%
KFW International Finance (Investment
Banking/Brokerage), Gtd. Unsec. Unsub.
3,100,000 - 3,100,000 AUD Bonds, 7.25%, 07/16/07 1,987,002 - 1,987,002
---------- ----------- ------------- ----------- ----------- -----------
New South Wales Treasury Corp. (Sovereign
- 1,320,000 1,320,000 AUD Debt), Gtd. Notes, 7.00%, 04/01/04 - 856,995 856,995
---------- ----------- ------------- ----------- ----------- -----------
State Bank New South Wales (Banks-Major
Regional), Series E, Medium Term Sr.
- 1,300,000 1,300,000 AUD Unsec. Gtd. Notes, 8.625%, 08/20/01 - 862,743 862,743
========== =========== ============= =========== =========== ===========
1,987,002 1,719,738 3,706,740
========== =========== ============= =========== =========== ===========
CANADA--5.83%
B.C. Generic Residual (Sovereign Debt),
- 150,000 150,000 CAD Deb., 13.88%, 06/21/04 e - 76,004 76,004
---------- ----------- ------------- ----------- ----------- -----------
Bank of Montreal (Banks-Money Center),
- 300,000 300,000 CAD Sub. Deb., 7.92%, 07/31/12 - 216,435 216,435
---------- ----------- ------------- ----------- ----------- -----------
Bell Mobility Cellular (Telecommunications-
- 750,000 750,000 CAD (Cellular/Wireless), Deb., 6.55%, 06/02/08 - 492,805 492,805
---------- ----------- ------------- ----------- ----------- -----------
British Columbia Municipal Finance
Authority (Sovereign Debt), Bonds, 7.75%,
- 500,000 500,000 CAD 12/01/05 - 362,997 362,997
---------- ----------- ------------- ----------- ----------- -----------
Canadian Government Bonds, (Sovereign
7,520,000 - 7,520,000 CAD Debt), 6.00%, 06/01/08 5,092,848 - 5,092,848
---------- ----------- ------------- ----------- ----------- -----------
Canadian Oil Debco Inc. (Oil & Gas-
Exploration & Production), Deb., 11.00%,
- 450,000 450,000 CAD 10/31/00 - 317,870 317,870
---------- ----------- ------------- ----------- ----------- -----------
Canadian Pacific Ltd., (Railroads), Unsec.
Medium Term Disc. Notes, 5.85%, 03/30/09
- 1,000,000 1,000,000 CAD (Acquired 03/24/99; Cost $661,416) bf $ - $ 634,015 $ 634,015
---------- ----------- ------------- ----------- ----------- -----------
</TABLE>
<PAGE> 336
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (a) MARKET VALUE
- ------------------------------------ ---------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
Clearnet Communications Inc.
(Telecommunications- Cellular/Wireless), Sr.
Disc. Notes,
- 1,100,000 1,100,000 CAD 11.75%, 08/13/07 f - 524,859 524,859
- ------------- ----------- ----------------- ----------- ----------- -----------
- 1,200,000 1,200,000 CAD 10.40%, 05/15/08 f - 507,369 507,369
- ------------- ----------- ----------------- ----------- ----------- -----------
- 1,300,000 1,300,000 CAD Sr. Unsec. Disc. Notes, 10.75%, 02/15/09 f - 509,916 509,916
- ------------- ----------- ----------------- ----------- ----------- -----------
GMAC Canada Ltd. (Financial Diversified),
Sr. Unsec. Gtd. Unsub. Notes, 6.50%,
- 450,000 450,000 GBP 03/23/04 - 718,447 718,447
- ------------- ----------- ----------------- ----------- ----------- -----------
Loblaw Co. Ltd. (Retail-Food Chains),
- 750,000 750,000 CAD Unsec. Medium Term Disc. Notes, 6.45%, - 460,896 460,896
- ------------- ----------- ----------------- ----------- ----------- -----------
Molson Breweries Co. Ltd. (Beverages-
Alcoholic), Unsec. Unsub. Notes, 6.00%,
- 700,000 700,000 CAD 06/02/08 - 453,605 453,605
- ------------- ----------- ----------------- ----------- ----------- -----------
NAV Canada (Services-Commercial &
- 1,000,000 1,000,000 CAD Consumer), Bonds, 7.40%, 06/01/27 - 730,551 730,551
- ------------- ----------- ----------------- ----------- ----------- -----------
Poco Petroleums Ltd. (Oil & Gas-
- 750,000 750,000 CAD Exploration & Production), Unsec. Deb., - 484,961 484,961
- ------------- ----------- ----------------- ----------- ----------- -----------
Province of Ontario (Sovereign Debt), Sr.
- 1,500,000 1,500,000 NZD Unsec. Unsub. Notes, 6.25%, 12/03/08 - 672,945 672,945
- ------------- ----------- ----------------- ----------- ----------- -----------
Telegobe Canada, Inc. (Telephone), Unsec.
- 650,000 650,000 CAD Deb., 8.35%, 06/20/03 - 453,958 453,958
- ------------- ----------- ----------------- ----------- ----------- -----------
TransCanada Pipelines (Natural Gas), Series
- 375,000 375,000 CAD Q, Deb., 10.625%, 10/20/09 - 318,211 318,211
- ------------- ----------- ----------------- ----------- ----------- -----------
Westcoast Energy, Inc. (Natural Gas), Series
- 500,000 500,000 CAD V, Unsec. Deb., 6.45%, 12/18/06 - 335,635 335,635
============= =========== ================= =========== =========== ===========
5,092,848 8,271,479 13,364,327
============= =========== ================= =========== =========== ===========
DENMARK--4.05%
Kingdom of Denmark (Sovereign Debt),
Bonds,
- 6,150,000 6,150,000 DKK 7.00%, 12/15/04 - 940,928 940,928
- ------------- ----------- ----------------- ----------- ----------- -----------
53,300,000 - 53,300,000 DKK 7.00%, 11/10/24 8,345,569 - 8,345,569
============= =========== ================= =========== =========== ===========
8,345,569 940,928 9,286,497
============= =========== ================= =========== =========== ===========
GERMANY--8.17%
Bundesrepublik Deutschland (Sovereign
- 810,000 810,000 EUR Series 92 Bonds, 7.25%, 10/21/02 - 921,185 921,185
- ------------- ----------- ----------------- ----------- ----------- -----------
14,650,000 - 14,650,000 EUR Bonds, 6.00%, 01/05/06 16,246,489 - 16,246,489
- ------------- ----------- ----------------- ----------- ----------- -----------
Hypovereins Finance N.V. (Banks-Major
Regional), Gtd. Series E, Medium Term
- 250,000 250,000 DEM Notes, 6.00%, 03/12/07 - 134,974 134,974
- ------------- ----------- ----------------- ----------- ----------- -----------
International Bank for Reconstruction &
Development (Banks-Money Center), Unsec.
- 1,400,000 1,400,000 DEM Deb., 7.125%, 04/12/05 - 826,494 826,494
- ------------- ----------- ----------------- ----------- ----------- -----------
Treuhandanstalt (Sovereign Debt), Gtd.
- 560,000 560,000 EUR Notes, 6.00%, 11/12/03 - 618,697 618,697
============= =========== ================= =========== =========== ===========
16,246,489 2,501,350 18,747,839
============= =========== ================= =========== =========== ===========
GREECE--4.44%
Hellenic Republic (Sovereign Debt), Bonds,
2,210,000,000 - 2,210,000,000 GRD 9.20%, 03/21/02 7,223,898 - 7,223,898
- ------------- ----------- ----------------- ----------- ----------- -----------
333,000,000 333,000,000 GRD 6.60%, 01/15/04 - 1,032,847 1,032,847
- ------------- ----------- ----------------- ----------- ----------- -----------
550,000,000 - 550,000,000 GRD 8.80%, 06/19/07 1,914,372 - 1,914,372
============= =========== ================= =========== =========== ===========
9,138,270 1,032,847 10,171,117
ITALY--6.24%
Buoni Poliennali del Tesoro,
4,890,000 - 4,890,000 EUR Deb., 8.50%, 01/01/04 5,817,747 - 5,817,747
- ------------- ----------- ----------------- ----------- ----------- -----------
7,000,000 - 7,000,000 EUR Bonds, 7.25%, 11/01/26 8,503,343 - 8,503,343
============= =========== ================= =========== =========== ===========
14,321,090 - 14,321,090
============= =========== ================= =========== =========== ===========
</TABLE>
<PAGE> 337
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (a) MARKET VALUE
- ------------------------------------ -----------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
NETHERLANDS--1.79%
Dresdner Finance B.V. (Banks-Major
Regional), Series 11 Floating Rate Gtd.
- 1,000,000 1,000,000 EUR Notes, 3.072%, 07/30/03 $ - $ 1,047,839 $ 1,047,839
---------- ----------- ------------- ----------- ----------- -----------
KPNQWest B.V. (Telecommunications-Long
Distance), Sr. Unsec. Notes, 7.125%,
06/01/09 (Acquired 05/25/99; Cost
- 1,000,000 1,000,000 EUR $1,051,124) b - 1,019,104 1,019,104
---------- ----------- ------------- ----------- ----------- -----------
Mannesmann Finance B.V. (Machinery
Diversified), Gtd. Unsec. Unsub. Notes,
- 900,000 900,000 EUR 4.75%, 05/27/09 - 843,286 843,286
---------- ----------- ------------- ----------- ----------- -----------
Prudential Financial B.V. (Investment
Banking/Brokerage), Sr. Unsec. Gtd. Bonds,
- 400,000 400,000 GBP 9.375%, 06/04/07 - 749,353 749,353
---------- ----------- ------------- ----------- ----------- -----------
SPT Telecom A.S. (Telecommunications-
Long Distance), Gtd. Unsec. Unsub. Notes,
- 275,000 275,000 DEM 5.125%, 05/07/03 - 147,120 147,120
---------- ----------- ------------- ----------- ----------- -----------
Tecnost International Finance N.V.
(Financial-Diversified), Series E Medium
- 290,000 290,000 EUR Term Gtd. Notes, 6.125%, 07/30/09 - 297,125 297,125
========== =========== ============= =========== =========== ===========
- 4,103,827 4,103,827
========== =========== ============= =========== =========== ===========
NEW ZEALAND--0.99%
Inter-American Development Bank, (Banks-
Money Center), Unsec. Bonds, 5.75%,
- 2,000,000 2,000,000 NZD 04/15/04 - 951,163 951,163
---------- ----------- ------------- ----------- ----------- -----------
International Bank for Reconstruction &
Development (Banks-Money Center),
- 750,000 750,000 NZD Sr. Unsec. Notes, 6.77%, 08/20/07 e - 209,131 209,131
---------- ----------- ------------- ----------- ----------- -----------
- 800,000 800,000 NZD Unsec. Notes, 5.50%, 04/15/04 - 378,406 378,406
---------- ----------- ------------- ----------- ----------- -----------
New Zealand Government (Sovereign Debt),
Bonds,
- 675,000 675,000 NZD 10.00%, 03/15/02 - 369,771 369,771
---------- ----------- ------------- ----------- ----------- -----------
- 675,000 675,000 NZD 8.00%, 04/15/04 - 357,696 357,696
========== =========== ============= =========== =========== ===========
- 2,266,167 2,266,167
========== =========== ============= =========== =========== ===========
SWEDEN--0.85%
AB Spintab (Banks-Regional), Series 161,
- 6,700,000 6,700,000 SEK Unsec. Deb., 7.50%, 06/15/04 - 861,443 861,443
---------- ----------- ------------- ----------- ----------- -----------
Stadshypotek A.B. (Banks-Regional), Series
- 10,000,000 10,000,000 SEK 1562, Notes, 3.50%, 09/15/04 - 1,086,187 1,086,187
========== =========== ============= =========== =========== ===========
1,947,630 1,947,630
========== =========== ============= =========== =========== ===========
SWITZERLAND--6.31%
UBS Jersey (Financial-Diversified), Sub.
8,200,000 - 8,200,000 GBP Bonds, 8.75%, 06/20/05 14,475,660 - 14,475,660
========== =========== ============= =========== =========== ===========
UNITED KINGDOM--6.19%
Airtours PLC (Services-Commercial &
Consumer), Conv. Sub. Notes, 5.75%,
- 299,000 299,000 GBP 01/05/04 (Acquired 12/09/98; Cost b - 452,874 452,874
---------- ----------- ------------- ----------- ----------- -----------
Lloyds Bank PLC (Banks-Major Regional),
- 1,500,000 1,500,000 DEM Sub. Notes, 5.25%, 07/14/08 - 771,334 771,334
---------- ----------- ------------- ----------- ----------- -----------
Merrill Lynch & Co. (Investment
Banking/Brokerage), Sr. Unsec. Unsub.
- 245,000 245,000 GBP Notes, 7.375%, 12/17/07 - 408,554 408,554
---------- ----------- ------------- ----------- ----------- -----------
National Power PLC (Electric Companies),
- 800,000 800,000 AUD Sr. Unsec. Unsub. Bonds, 8.00%, 02/21/07 - 512,359 512,359
---------- ----------- ------------- ----------- ----------- -----------
National Westminster Bank PLC (Banks-
Money Center), Series E, Medium Term
- 210,000 210,000 EUR Unsec. Unsub. Notes, 5.125%, 06/30/11 - 200,584 200,584
---------- ----------- ------------- ----------- ----------- -----------
Scotia Holdings PLC (Health Care-Drugs-
Generic & Other), Conv. Unsec. Unsub.
- 650,000 650,000 GBP Notes, 8 50%, 03/26/02 - 917,237 917,237
---------- ----------- ------------- ----------- ----------- -----------
Sutton Bridge Financial Ltd. (Financial-
Diversified), Gtd. Eurobonds, 8.625%,
- 450,000 450,000 GBP 06/30/22 - 845,032 845,032
---------- ----------- ------------- ----------- ----------- -----------
TeleWest Communications PLC
(Broadcasting-Television, Radio & Cable),
- 400,000 400,000 GBP Sr. Unsec. Notes, 5.25%, 02/19/07 - 651,844 651,844
---------- ----------- ------------- ----------- ----------- -----------
Union Bank Switzerland London, (Banks-
Major Regional), Unsec. Sub. Notes,
- 600,000 600,000 GBP 7.375%, 11/26/04 - 1,000,628 1,000,628
---------- ----------- ------------- ----------- ----------- -----------
United Kingdom Treasury (Sovereign Debt),
4,190,000 - 4,190,000 GBP Gtd. Bonds, 9.00%, 10/13/08 8,425,473 - 8,425,473
========== =========== ============= =========== =========== ===========
8,425,473 5,760,446 14,185,919
========== =========== ============= =========== =========== ===========
</TABLE>
<PAGE> 338
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (a) MARKET VALUE
- ------------------------------------ ----------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
UNITED STATES OF AMERICA--0.23%
AT&T Canada, Inc. (Telephone), Sr. Unsec.
- 800,000 800,000 CAD Notes, 7.15%, 09/23/04 $ - $ 537,070 $ 537,070
========= =========== =========== ========== =========== ===========
Total Non-U.S. Dollar Denominated Bonds
& Notes (Cost $116,588,288) 78,032,401 29,081,482 107,113,883
========= =========== =========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING
INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS &
OTHER EQUITY
INTERESTS--0.65%
Banks (Major Regional)--0.03%
- 350 350 Societe Generale (France) - 76,221 76,221
========= =========== =========== ========= =========== ===========
BANKS (REGIONAL)--0.53%
First Republic Capital Corp., Series A-Pfd.
- 750 750 (Acquired 05/26/99; Cost $750,000) b - 746,250 746,250
- --------- ----------- ----------- --------- ----------- -----------
Westpac Banking Corp. STRYPES Trust-
- 16,000 16,000 $3.135 Conv. Pfd. - 480,000 480,000
========= =========== =========== ========= =========== ===========
- 1,226,250 1,226,250
========= =========== =========== ========= =========== ===========
BROADCASTING (TELEVISION, RADIO & CABLE)--
0.00%
Knology Holdings, Inc.-Wts., expiring
- 700 700 10/15/07 i - 1,575 1,575
- --------- ----------- ----------- --------- ----------- -----------
- 150 150 Wireless One, Inc.-Wts., expiring 10/19/00 i - - -
========= =========== =========== ========= =========== ===========
- 1,575 1,575
========= =========== =========== ========= =========== ===========
ELECTRICAL EQUIPMENT--0.00%
Electronic Retailing Systems International,
- 290 290 Inc.-Wts., expiring 02/01/04 i - 290 290
========= =========== =========== ========= =========== ===========
HEALTH CARE (DRUGS-GENERIC & OTHER)--
0.03%
- 2,607 2,607 Glaxo Wellcome PLC (United Kingdom) - 76,980 76,980
========= =========== =========== ========= =========== ===========
PERSONAL CARE--0.00%
IHF Capital, Inc., Series I-Wts., expiring
- 70 70 11/14/99 i - 35 35
========= =========== =========== ========= =========== ===========
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--
0.01%
Clearnet Communications Inc.-Wts.
- 330 330 (Canada), expiring 09/15/05 i - 4,290 4,290
- --------- ----------- ----------- --------- ----------- -----------
Loral Space & Communications, Ltd.-Wts.,
- 420 420 expiring 01/15/07 i - 4,095 4,095
========= =========== =========== ========= =========== ===========
- 8,385 8,385
========= =========== =========== ========= =========== ===========
TELECOMMUNICATIONS (LONG DISTANCE)--
0.03%
Tele1 Europe B.V.-Wts. (Netherlands),
- 500 500 expiring 05/15/09 i - 40,125 40,125
- --------- ----------- ----------- --------- ----------- -----------
Versatel Telecom B.V.-Wts. (Netherlands),
- 190 190 expiring 05/15/08 i - 27,597 27,597
========= =========== =========== ========= =========== ===========
- 67,722 67,722
TELEPHONE--0.02%
Esat Holdings Ltd.-Wts. (Ireland), expiring
- 350 350 02/01/07 i - 25,375 25,375
- --------- ----------- ----------- --------- ----------- -----------
Intermedia Communications, Inc-Wts.,
- 150 150 expiring 06/01/00 i - 13,763 13,763
========= =========== =========== ========= =========== ===========
- 39,138 39,138
========= =========== =========== ========= =========== ===========
Total Common Stocks & Other Equity
Interests (Cost $1,339,360) - 1,496,596 1,496,596
========= =========== =========== ========= =========== ===========
</TABLE>
<PAGE> 339
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (a) MARKET VALUE
- ------------------------------------ ---------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING GOVERNMENT INCOME COMBINING
INCOME FUND FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
MORTGAGED BACKED
NOTES--2.94%
Denmark--2.94%
Realkredit Danmark A/S (Banking), 6.00%,
$ 50,414,000 $ - $ 50,414,000 10/01/26 (Cost $7,313,393) $ 6,748,531 $ - $ 6,748,531
============= =========== ============== =========== =========== ===========
ASSET-BACKED
SECURITIES--4.47%
BANKS (MONEY CENTER)--1.52%
First USA Credit Card Master Trust, Sub.
Series 1998-3 C Floating Rate Notes,
3,500,000 - 3,500,000 5.356%, 02/18/04 j 3,481,953 - 3,481,953
============= =========== ============== =========== =========== ===========
REAL ESTATE INVESTMENT TRUST--0.79%
Sub. Series 1999-2 B Notes, 8.50%,
2,000,000 - 2,000,000 04/25/29 j 1,818,437 - 1,818,437
============= =========== ============== =========== =========== ===========
RETAIL (HOME SHOPPING)--2.16%
Fingerhut Master Trust, Sub. Series 1998-1
5,000,000 - 5,000,000 C Floating Rate Notes, 5.738%, 02/15/05 j 4,958,594 - 4,958,594
============= =========== ============== =========== =========== ===========
Total Asset-Backed Securities
(Cost $10,257,846) 10,258,984 - 10,258,984
============= =========== ============== =========== =========== ===========
U.S. GOVERNMENT
AGENCY SECURITIES--
6.10%
FEDERAL HOME LOAN MORTGAGE CORP.
( "FHLMC ")--0.44%
Pass Through Ctfs.,
971,355 - 971,355 8.50%, 03/01/10 1,007,470 - 1,007,470
============= =========== ============== =========== =========== ===========
FEDERAL NATIONAL MORTGAGE ASSOCIATION
( "FNMA ")--5.66%
Pass Through Ctfs.-TBA,
8,500,000 - 8,500,000 7.50%, 11/01/29 k 8,502,635 - 8,502,635
S------------ ----------- -------------- ----------- ----------- -----------
Sr. Unsub. Notes,
7,300,000 - 7,300,000 AUD 6.375%, 08/15/07 4,488,457 - 4,488,457
============= =========== ============== =========== =========== ===========
12,991,092 - 12,991,092
============= =========== ============== =========== =========== ===========
Total U.S. Government Agency Securities
(Cost $14,779,756) 13,998,562 - 13,998,562
============= =========== ============== =========== =========== ===========
U.S. TREASURY
SECURITIES--5.43%
U.S. TREASURY BONDS--4.67%
10,750,000 - 10,750,000 6.375%, 08/15/27 l 10,720,760 - 10,720,760
============= =========== ============== =========== =========== ===========
U.S. TREASURY NOTES--0.76%
1,800,000 - 1,800,000 5.63%, 05/15/08 1,737,378 - 1,737,378
============= =========== ============== =========== =========== ===========
Total U.S. Treasury Securities
(Cost $12,937,328) 12,458,138 - 12,458,138
============= =========== ============== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ------------------------------------
AIM GLOBAL AIM GLOBAL PRO FORMA
GOVERNMENT INCOME COMBINING
INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
MONEY MARKET FUNDS--
4.51%
4,587,352 588,479 5,175,831 STIC Liquid Assets Portfolio m 4,587,352 588,479 5,175,831
- --------- ------- --------- ============== ============ ===========
4,587,352 588,479 5,175,831 STIC Prime Portfolio m 4,587,352 588,479 5,175,831
- --------- ------- --------- ============== ============ ===========
Total Money Market Funds
(Cost $10,351,662) 9,174,704 1,176,958 10,351,662
============== ============ ===========
TOTAL INVESTMENTS--98.46%
(Cost $241,727,927) 139,643,736 86,168,257 225,811,993
============== ============ ===========
OTHER ASSETS LESS LIABILITIES--1.54% 2,323,523 1,214,655 3,538,178
============== ============ ===========
NET ASSETS--100.00% $ 141,967,259 $ 87,382,912 229,350,171
============== ============ ===========
</TABLE>
<PAGE> 340
Abbreviations:
AUD - Australian Dollar
CAD - Canadian Dollar
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
DEM - German Deutschmark
Disc. - Discounted
DKK - Danish Krone
EUR - Euro
GBP - British Pound Sterling
GRD - Greek Drachma
Gtd. - Guaranteed
NZD - New Zealand Dollar
Pfd. - Preferred
PRIDES - Preferred Redemption Increase Dividend Equity Security
Sec. - Secured
SEK - Swedish Krona
Sr. - Senior
STRYPES - Structured Yield Product Exchangeable for Stock
Sub. - Subordinated
TBA - To Be Announced
Unsec. - Unsecured
Unsub. - Unsubordinated
USD - U.S. Dollar
Wts. - Warrants
Notes to Schedule of Investments
(a) Principal Amount is in U.S. Dollars, except as indicated by note (h).
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees/Directors.
The aggregate market value of these securities at 10/31/99 was $6,460,234
which represented 7.42% of the Fund's net assets.
(c) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended.
(d) Non-income producing security.
(e) Discounted bond at purchase. Interest rate shown represent the coupon rate
at which the bond will accrue at a specified future date.
(f) Defaulted security. Currently, the issue is in default with respect to
interest payments.
(g) Zero coupon bond issued at a discount. The interest rate shown represents
the rate of original issue discount.
(h) Foreign denominated security. Par value and coupon are denominated in
currency indicated.
(i) Non-income producing security acquired as part of a unit with or in
exchange for other securities.
(j) The coupon rate shown on floating rate note represents rate at period end.
(k) Security purchased on a forward commitment basis. These securities are
subject to dollar roll transactions.
(l) The principal amount was pledged as collateral to cover securities
purchased on a forward commitment basis.
(m) The money market fund has the same investment advisor as the Fund.
See Accompanying Notes to Pro Forma Financial Statements.
<PAGE> 341
AIM GLOBAL INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
AIM GLOBAL
GOVERNMENT AIM GLOBAL PRO FORMA
INCOME FUND INCOME FUND COMBINING
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments, at market value $ 139,643,736 $ 86,168,257 $ 225,811,993
(cost $150,474,974-AIM Global Government Income Fund)
(cost $91,252,953-AIM Global Income Fund)
(cost $241,727,927-Pro Forma Combining)
-------------- -------------- --------------
Foreign currencies, at value 8,143,813 18,464 8,162,277
(cost $7,789,654-AIM Global Government Income Fund)
(cost $18,242-AIM Global Income Fund)
(cost $7,807,896-Pro Forma Combining)
-------------- -------------- --------------
Receivables for:
-------------- -------------- --------------
Investments sold -- 764,818 764,818
-------------- -------------- --------------
Foreign currency contracts -- 4,248 4,248
-------------- -------------- --------------
Fund shares/Capital stock sold 213,493 85,861 299,354
-------------- -------------- --------------
Dividends and interest 3,282,169 2,088,500 5,370,669
-------------- -------------- --------------
Investment for deferred compensation plan -- 20,023 20,023
-------------- -------------- --------------
Other assets 8,228 13,214 21,442
============== ============== ==============
Total assets 151,291,439 89,163,385 240,454,824
============== ============== ==============
LIABILITIES:
Payables for:
Investments purchased 8,524,792 1,059,968 9,584,760
-------------- -------------- --------------
Fund shares/Capital stock reacquired 407,460 478,062 885,522
-------------- -------------- --------------
Dividends -- 101,464 101,464
-------------- -------------- --------------
Deferred compensation -- 20,023 20,023
-------------- -------------- --------------
Foreign currency contracts 20,290 -- 20,290
-------------- -------------- --------------
Accrued accounting/administrative service fees 4,247 4,247 8,494
-------------- -------------- --------------
Accrued advisory fees 86,440 -- 86,440
-------------- -------------- --------------
Accrued trustees'/directors' fees 2,483 617 3,100
-------------- -------------- --------------
Accrued distribution fees 92,478 55,603 148,081
-------------- -------------- --------------
Accrued transfer agent fees 23,368 26,401 49,769
-------------- -------------- --------------
Accrued operating expenses 162,622 34,088 196,710
Total liabilities 9,324,180 1,780,473 11,104,653
============== ============== ==============
Net assets applicable to shares outstanding 141,967,259 87,382,912 229,350,171
============== ============== ==============
NET ASSETS:
Class A $ 85,669,094 $ 51,076,640 $ 136,951,878
============== ============== ==============
Advisor Class 206,144 -- --
============== ============== ==============
Class B 55,849,297 34,422,767 90,272,064
============== ============== ==============
Class C 242,724 1,883,505 2,126,229
============== ============== ==============
Capital stock/Fund shares, $0.01 par value per share AIM Global Government
Income Fund: Capital stock/Fund shares, $0.001 par value per share AIM Global
Income Fund: Class A:
Authorized -- 200,000,000 200,000,000
-------------- -------------- --------------
Outstanding 10,462,287 5,255,715 14,092,362
============== ============== ==============
Advisor Class:
Authorized -- -- --
-------------- -------------- --------------
Outstanding 25,070 -- --
============== ============== ==============
Class B:
Authorized -- 200,000,000 200,000,000
-------------- -------------- --------------
Outstanding 6,821,145 3,543,063 9,290,509
============== ============== ==============
Class C:
Authorized -- 200,000,000 200,000,000
-------------- -------------- --------------
Outstanding 29,660 193,937 218,923
============== ============== ==============
Class A:
Net asset value and redemption price per share $ 8.19 $ 9.72 $ 9.72
-------------- -------------- --------------
Offering price per share:
(Net asset value of $8.19 / 95.25%-AIM Global Government Income Fund)
(Net asset value of $9.72 / 95.25%-AIM Global Income Fund) $ 8.60 $ 10.20 $ 10.20
============== ============== ==============
Advisor Class:
Net asset value and offering price per share $ 8.22 $ -- --
============== ============== ==============
Class B:
Net asset value and offering price per share $ 8.19 $ 9.72 $ 9.72
============== ============== ==============
Class C:
Net asset value and offering price per share $ 8.18 $ 9.71 $ 9.71
============== ============== ==============
</TABLE>
See Accompanying Notes to Pro Forma Combining Financial Statements.
<PAGE> 342
AIM GLOBAL INCOME FUND
AIM GLOBAL GOVERNMENT INCOME FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
AIM GLOBAL
GOVERNMENT AIM GLOBAL PRO FORMA
INCOME FUND INCOME FUND ADJUSTMENTS COMBINING
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 10,916,810 $ 7,761,097 $ -- $ 18,677,907
------------ ------------ ------------ ------------
Dividends 9,622 64,902 -- 74,524
(net of $0 foreign withholding tax-AIM Global Government Fund)
(net of $476 foreign withholding tax-AIM Global Income Fund)
------------ ------------ ------------ ------------
Securities lending income 38,923 -- -- 38,923
============ ============ ============ ============
Total investment income 10,965,355 7,825,999 -- 18,791,354
============ ============ ============ ============
EXPENSES:
Advisory and administration fees 1,272,103 703,524 (43,347) 1,932,280
------------ ------------ ------------ ------------
Accounting/administrative services fees 55,858 66,799 (47,436) 75,221
------------ ------------ ------------ ------------
Custodian fees 83,324 48,756 -- 132,080
------------ ------------ ------------ ------------
Distribution fees - Class A 363,720 300,260 158,222 822,202
------------ ------------ ------------ ------------
Distribution fees - Class B 710,164 385,265 -- 1,095,429
------------ ------------ ------------ ------------
Distribution fees - Class C 1,320 19,247 -- 20,567
------------ ------------ ------------ ------------
Interest expense 62,649 -- (62,649) --
------------ ------------ ------------ ------------
Printing fees 215,029 49,027 (142,213) 121,843
------------ ------------ ------------ ------------
Transfer agent fees - Class A 140,477 114,393 633 255,503
------------ ------------ ------------ ------------
Transfer agent fees - Advisor Class 633 -- (633) --
------------ ------------ ------------ ------------
Transfer agent fees - Class B 95,998 73,389 -- 169,387
------------ ------------ ------------ ------------
Transfer agent fees - Class C 266 3,666 -- 3,932
------------ ------------ ------------ ------------
Trustees'/Directors fees 15,984 8,112 -- 24,096
------------ ------------ ------------ ------------
Other expenses 116,476 111,071 -- 227,547
============ ============ ============ ============
Total expenses 3,134,001 1,883,509 (137,423) 4,880,087
============ ============ ============ ============
Less: Expense waived by advisor -- (423,180) (448,407) (871,587)
------------ ------------ ------------ ------------
Expense paid indirectly (2,214) (2,351) -- (4,565)
============ ============ ============ ============
Net expenses 3,131,787 1,457,978 (585,830) 4,003,935
============ ============ ============ ============
Net investment income 7,833,568 6,368,021 585,830 14,787,419
============ ============ ============ ============
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FOREIGN CURRENCY CONTRACTS:
Net realized gain (loss) from:
Investment securities (3,878,935) (3,425,545) -- (7,304,480)
------------ ------------ ------------ ------------
Foreign currencies (540,747) (699,509) -- (1,240,256)
------------ ------------ ------------ ------------
Foreign currency contracts 1,386,145 117,048 -- 1,503,193
============ ============ ============ ============
(3,033,537) (4,008,006) -- (7,041,543)
============ ============ ============ ============
Change in net unrealized appreciation (depreciation) of:
Investment securities (12,237,893) (4,733,538) -- (16,971,431)
------------ ------------ ------------ ------------
Foreign currencies 241,116 (5,039) -- 236,077
------------ ------------ ------------ ------------
Foreign currency contracts (69,604) 267,350 -- 197,746
============ ============ ============ ============
(12,066,381) (4,471,227) -- (16,537,608)
============ ============ ============ ============
Net gain (loss) from investment securities, foreign currencies and
foreign currency contracts (15,099,918) (8,479,233) -- (23,579,151)
============ ============ ============ ============
Net increase (decrease) in net assets resulting from operations $ (7,266,350) $ (2,111,212) $ 585,830 $ (8,791,732)
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Pro Forma Combining Financial Statements.
<PAGE> 343
AIM GLOBAL GOVERNMENT INCOME FUND
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
OCTOBER 31, 1999
(UNAUDITED)
NOTE 1--BASIS OF PRO FORMA PRESENTATION
The pro forma financial statements and the accompanying pro forma
schedule of investments give effect to the proposed Agreement and
Plan of Reorganization between AIM Global Government Income Fund and
AIM International Funds, Inc. and the consummation of the
transactions contemplated therein to be accounted for as a tax-free
reorganization of investment companies. The Agreement and Plan of
Reorganization would be accomplished by an exchange of shares of AIM
Global Income Fund for the net assets of AIM Global Government Income
Fund and the distribution of AIM Global Income Fund shares to AIM
Global Government Income Fund shareholders. If the Agreement and Plan
of Reorganization were to have taken place at October 31, 1999, AIM
Global Government Income Fund -- Class A shareholders would have
received 8,815,446 shares of AIM Global Income Fund -- Class A
shares, AIM Global Government Income Fund -- Advisor Class
shareholders would have received 21,201 shares of AIM Global Income
Fund -- Class A shares, AIM Global Government Income Fund -- Class B
Shareholders would have received 5,747,446 shares of AIM Global
Income Fund -- Class B shares, and AIM Global Government Income --
Class C shareholders would have received 24,986 shares of AIM Global
Income Fund -- Class C shares.
NOTE 2 -- PRO FORMA ADJUSTMENTS
Pro forma adjustments have been made to reflect the contractual
expenses of the combined entities.
<PAGE> 344
AIM GLOBAL GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND
PRO FORMA COMBINING SCHEDULE OF INVESTMENTS
OCTOBER 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
==================================== ========================================
AIM Global AIM Global
Growth & AIM Global Pro Forma Growth & AIM Global Pro Forma
Income Fund Growth Fund Combining Income Fund Growth Fund Combining
<S> <C> <C> <C> <C> <C> <C> <C>
DOMESTIC COMMON STOCKS-37.57%
BANKS (MONEY CENTER)--1.31%
230,000 -- 230,000 Bank of America Corp. $ 14,806,250 $ -- $ 14,806,250
- ----------- ----------- ----------- ------------ ------------ ------------
-- 52,500 52,500 Chase Manhattan Corp. (The) -- 4,587,187 4,587,187
=========== =========== =========== ============ ============ ============
19,393,437
=========== =========== =========== ============ ============ ============
BANKS (REGIONAL)--1.01%
440,800 -- 440,800 First Tennessee National Corp. 14,987,200 -- 14,987,200
=========== =========== =========== ============ ============ ============
BEVERAGES (ALCOHOLIC)--1.34%
188,371 -- 188,371 Anheuser-Busch Companies, Inc. 13,527,392 -- 13,527,392
- ----------- ----------- ----------- ------------ ------------ ------------
93,600 -- 93,600 Brown-Forman Corp.-Class B 6,318,000 -- 6,318,000
=========== =========== =========== ============ ============ ============
19,845,392
=========== =========== =========== ============ ============ ============
BROADCASTING (TELEVISION,
RADIO & CABLE)--1.50%
-- 64,500 64,500 Adelphia Communications Corp. a -- 3,523,312 3,523,312
- ----------- ----------- ----------- ------------ ------------ ------------
AT&T Corp. - Liberty Media
-- 107,300 107,300 Group-Class A a -- 4,258,469 4,258,469
- ----------- ----------- ----------- ------------ ------------ ------------
-- 57,000 57,000 Clear Channel Communications, Inc. a -- 4,581,375 4,581,375
- ----------- ----------- ----------- ------------ ------------ ------------
-- 115,700 115,700 Comcast Corp.-Class A -- 4,873,862 4,873,862
- ----------- ----------- ----------- ------------ ------------ ------------
-- 145,000 145,000 Infinity Broadcasting Corp.-Class A a -- 5,011,562 5,011,562
=========== =========== =========== ============ ============ ============
22,248,580
=========== =========== =========== ============ ============ ============
COMMUNICATIONS EQUIPMENT--1.62%
-- 61,800 61,800 Comverse Technology, Inc. a -- 7,014,300 7,014,300
- ----------- ----------- ----------- ------------ ------------ ------------
-- 91,500 91,500 General Instrument Corp. a -- 4,923,844 4,923,844
- ----------- ----------- ----------- ------------ ------------ ------------
-- 47,192 47,192 JDS Uniphase Corp. a -- 7,875,165 7,875,165
- ----------- ----------- ----------- ------------ ------------ ------------
-- 43,600 43,600 Motorola, Inc. -- 4,248,275 4,248,275
=========== =========== =========== ============ ============ ============
24,061,584
=========== =========== =========== ============ ============ ============
COMPUTERS (HARDWARE)--0.84%
-- 93,500 93,500 Dell Computer Corp. a -- 3,751,687 3,751,687
- ----------- ----------- ----------- ------------ ------------ ------------
-- 83,000 83,000 Sun Microsystems, Inc. a -- 8,782,437 8,782,437
=========== =========== =========== ============ ============ ============
12,534,124
=========== =========== =========== ============ ============ ============
COMPUTERS (NETWORKING)--0.63%
-- 126,900 126,900 Cisco Systems, Inc. a -- 9,390,600 9,390,600
=========== =========== =========== ============ ============ ============
COMPUTERS (PERIPHERALS)--0.97%
-- 131,400 131,400 EMC Corp. a -- 9,592,200 9,592,200
-- 62,000 62,000 Lexmark International Group, Inc.
-Class A a -- 4,839,875 4,839,875
=========== =========== =========== ============ ============ ============
14,432,075
=========== =========== =========== ============ ============ ============
COMPUTERS (SOFTWARE & SERVICES)--2.75%
-- 64,000 64,000 America Online, Inc. ab -- 8,300,000 8,300,000
- ----------- ----------- ----------- ------------ ------------ ------------
-- 127,500 127,500 Intuit, Inc. a -- 3,713,437 3,713,437
- ----------- ----------- ----------- ------------ ------------ ------------
-- 87,600 87,600 Microsoft Corp. a -- 8,108,475 8,108,475
- ----------- ----------- ----------- ------------ ------------ ------------
-- 188,500 188,500 Novell, Inc. a -- 3,781,781 3,781,781
- ----------- ----------- ----------- ------------ ------------ ------------
-- 108,000 108,000 Unisys Corp. a -- 2,619,000 2,619,000
- ----------- ----------- ----------- ------------ ------------ ------------
-- 91,000 91,000 VERITAS Software Corp. a -- 9,816,625 9,816,625
- ----------- ----------- ----------- ------------ ------------ ------------
-- 24,500 24,500 Yahoo! Inc. a -- 4,387,031 4,387,031
=========== =========== =========== ============ ============ ============
40,726,349
=========== =========== =========== ============ ============ ============
ELECTRIC COMPANIES--1.60%
420,000 -- 420,000 Southern Co. 11,156,250 -- 11,156,250
- ----------- ----------- ----------- ------------ ------------ ------------
323,000 -- 323,000 Texas Utilities Co. 12,516,250 -- 12,516,250
=========== =========== =========== ============ ============ ============
23,672,500
=========== =========== =========== ============ ============ ============
ELECTRICAL EQUIPMENT--1.34%
-- 53,000 53,000 Conexant Systems, Inc. a -- 4,948,875 4,948,875
- ----------- ----------- ----------- ------------ ------------ ------------
165,000 -- 165,000 Emerson Electric Co. 9,910,312 -- 9,910,312
- ----------- ----------- ----------- ------------ ------------ ------------
-- 55,000 55,000 Sanmina Corp. a -- 4,953,438 4,953,438
=========== =========== =========== ============ ============ ============
19,812,625
=========== =========== =========== ============ ============ ============
ELECTRONICS (SEMICONDUCTORS)--1.67%
-- 116,000 116,000 Intel Corp. -- 8,982,750 8,982,750
- ----------- ----------- ----------- ------------ ------------ ------------
-- 71,000 71,000 LSI Logic Corp. a -- 3,776,313 3,776,313
- ----------- ----------- ----------- ------------ ------------ ------------
-- 62,000 62,000 Texas Instruments, Inc. -- 5,564,500 5,564,500
- ----------- ----------- ----------- ------------ ------------ ------------
-- 82,500 82,500 Xilinx, Inc. a -- 6,486,563 6,486,563
=========== =========== =========== ============ ============ ============
24,810,126
=========== =========== =========== ============ ============ ============
ENTERTAINMENT--0.36%
-- 76,500 76,500 Time Warner Inc. -- 5,331,094 5,331,094
=========== =========== =========== ============ ============ ============
</TABLE>
<PAGE> 345
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
==================================== ========================================
AIM Global AIM Global
Growth & AIM Global Pro Forma Growth & AIM Global Pro Forma
Income Fund Growth Fund Combining Income Fund Growth Fund Combining
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL (DIVERSIFIED)--1.75%
170,000 -- 170,000 American General Corp. $12,611,875 $ -- $12,611,875
- ----------- ----------- ---------- ------------ ----------- -----------
-- 100,000 100,000 Fannie Mae -- 7,075,000 7,075,000
- ----------- ----------- ---------- ------------ ----------- -----------
-- 115,000 115,000 Freddie Mac -- 6,217,188 6,217,188
=========== =========== ========== ============ =========== ===========
25,904,063
=========== =========== ========== ============ =========== ===========
FOODS--1.19%
300,000 -- 300,000 Bestfoods 17,625,000 -- 17,625,000
=========== =========== ========== ============ =========== ===========
HEALTH CARE (DIVERSIFIED)--0.59%
-- 125,500 125,500 American Home Products Corp. -- 6,557,375 6,557,375
- ----------- ----------- ---------- ------------ ----------- -----------
264,800 113,600 378,400 Bristol-Myers Squibb Co. 20,339,950 8,725,900 29,065,850
- ----------- ----------- ---------- ------------ ----------- -----------
-- 84,000 84,000 Johnson & Johnson -- 8,799,000 8,799,000
- ----------- ----------- ---------- ------------ ----------- -----------
-- 62,000 62,000 Warner-Lambert Co. -- 4,948,375 4,948,375
=========== =========== ========== ============ =========== ===========
49,370,600
=========== =========== ========== ============ =========== ===========
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)--
--0.59%
-- 222,900 222,900 Pfizer, Inc. -- 8,804,550 8,804,550
=========== =========== ========== ============ =========== ===========
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--
0.51%
-- 154,400 154,400 Guidant Corp. -- 7,623,500 7,623,500
=========== =========== ========== ============ =========== ===========
INSURANCE (MULTI-LINE)--0.62%
-- 88,750 88,750 American International Group, Inc. -- 9,135,703 9,135,703
=========== =========== ========== ============ =========== ===========
INVESTMENT BANKING/BROKERAGE--0.33%
-- 44,000 44,000 Morgan Stanley, Dean Witter, Discover & Co. -- 4,853,750 4,853,750
=========== =========== ========== ============ =========== ===========
INVESTMENT MANAGEMENT--0.53%
225,000 -- 225,000 PIMCO Advisors Holdings L.P 7,804,688 -- 7,804,688
=========== =========== ========== ============ =========== ===========
LODGING-HOTELS--0.27%
-- 90,600 90,600 Carnival Corp. -- 4,031,700 4,031,700
=========== =========== ========== ============ =========== ===========
MANUFACTURING (DIVERSIFIED)--0.46%
-- 170,000 170,000 Tyco International Ltd. -- 6,789,375 6,789,375
=========== =========== ========== ============ =========== ===========
OIL (INTERNATIONAL INTEGRATED)--1.31%
200,500 -- 200,500 Mobil Corp. 19,348,250 -- 19,348,250
=========== =========== ========== ============ =========== ===========
PERSONAL CARE--0.51%
234,000 -- 234,000 Avon Products, Inc. 7,546,500 -- 7,546,500
=========== =========== ========== ============ =========== ===========
PUBLISHING--1.30%
324,000 -- 324,000 McGraw-Hill Cos., Inc. (The) 19,318,500 -- 19,318,500
=========== =========== ========== ============ =========== ===========
REAL ESTATE INVESTMENT TRUSTS--1.24%
457,000 -- 457,000 Equity Office Properties Tr 10,111,125 -- 10,111,125
- ----------- ----------- ---------- ------------ ----------- -----------
197,000 -- 197,000 Equity Residential Properties Trust 8,237,063 -- 8,237,063
=========== =========== ========== ============ =========== ===========
18,348,188
=========== =========== ========== ============ =========== ===========
RETAIL (BUILDING SUPPLIES)--0.89%
-- 114,000 114,000 Home Depot, Inc. (The) -- 8,607,000 8,607,000
- ----------- ----------- ---------- ------------ ----------- -----------
-- 82,900 82,900 Lowe's Companies, Inc. -- 4,559,500 4,559,500
=========== =========== ========== ============ =========== ===========
13,166,500
=========== =========== ========== ============ =========== ===========
RETAIL (COMPUTERS & ELECTRONICS)--0.28%
-- 75,200 75,200 Best Buy Co., Inc. a -- 4,178,300 4,178,300
=========== =========== ========== ============ =========== ===========
RETAIL (FOOD CHAINS)--0.18%
-- 125,000 125,000 Kroger Co. (The) a -- 2,601,563 2,601,563
=========== =========== ========== ============ =========== ===========
RETAIL (GENERAL MERCHANDISE)--1.22%
-- 54,000 54,000 Costco Wholesale Corp. a -- 4,336,875 4,336,875
- ----------- ----------- ---------- ------------ ----------- -----------
-- 68,900 68,900 Dayton Hudson Corp. -- 4,452,663 4,452,663
- ----------- ----------- ---------- ------------ ----------- -----------
-- 164,900 164,900 Wal-Mart Stores, Inc. -- 9,347,769 9,347,769
=========== =========== ========== ============ =========== ===========
18,137,307
=========== =========== ========== ============ =========== ===========
RETAIL (SPECIALTY-APPAREL)--0.41%
-- 75,750 75,750 Gap, Inc. (The) -- 2,812,219 2,812,219
- ----------- ----------- ---------- ------------ ----------- -----------
-- 79,170 79,170 Intimate Brands, Inc. -- 3,245,970 3,245,970
=========== =========== ========== ============ =========== ===========
6,058,189
=========== =========== ========== ============ =========== ===========
SERVICES (ADVERTISING/MARKETING)--0.36%
-- 125,000 125,000 Outdoor Systems, Inc. a -- 5,296,875 5,296,875
=========== =========== ========== ============ =========== ===========
SERVICES (COMMERCIAL & CONSUMER)--0.61%
309,800 -- 309,800 Dun & Bradstreet Corp. (The) 9,100,375 -- 9,100,375
=========== =========== ========== ============ =========== ===========
</TABLE>
<PAGE> 346
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
==================================== ========================================
AIM Global AIM Global
Growth & AIM Global Pro Forma Growth & AIM Global Pro Forma
Income Fund Growth Fund Combining Income Fund Growth Fund Combining
<S> <C> <C> <C> <C> <C> <C>
SERVICES (DATA PROCESSING)--0.42%
-- 195,000 195,000 Fiserv, Inc. $ -- $ 6,240,000 $ 6,240,000
=========== =========== ========== ============ ============ ==============
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.32%
-- 55,600 55,600 Nextel Communications, Inc.-Class A a -- 4,792,025 4,792,025
=========== =========== ========== ============ ============ ==============
TELECOMMUNICATIONS (LONG DISTANCE)--0.47%
-- 80,400 80,400 MCI WorldCom, Inc. ab -- 6,899,325 4,899,325
=========== =========== ========== ============ ============ ==============
TELEPHONE--1.10%
250,000 -- 250,000 Bell Atlantic Corp. 16,234,375 -- 16,234,375
=========== =========== ========== ============ ============ ==============
TOBACCO--0.43%
255,000 -- 255,000 Philip Morris Companies, Inc. 6,422,813 -- 6,422,813
=========== =========== ========== ============ ============ ==============
Total Domestic Common Stocks (Cost
$393,018,493) 237,922,168 318,955,532 556,877,700
=========== =========== ========== ============ ============ ==============
FOREIGN STOCKS & OTHER
EQUITY INTERESTS--44.65%
AUSTRALIA--2.49%
-- 201,840 201,840 AMP Ltd. (Insurance-Life/Health) -- 2,053,107 2,053,107
- ----------- ----------- ---------- ------------ ------------ --------------
Austar United Communications Ltd.
-- 514,100 514,100 (Broadcasting-Television, Radio, & Cable) a -- 1,672,516 1,672,516
- ----------- ----------- ---------- ------------ ------------ --------------
-- 102,000 102,000 Brambles Industries Ltd. (Air Freight) -- 2,869,402 2,869,402
- ----------- ----------- ---------- ------------ ------------ --------------
-- 701,800 701,800 Cable & Wireless Optus Ltd. (Telephone) a -- 1,607,165 1,607,165
- ----------- ----------- ---------- ------------ ------------ --------------
Foster's Brewing Group Ltd. (Beverages-
3,500,000 950,000 4,450,000 Alcoholic) 9,305,685 2,525,829 11,831,514
- ----------- ----------- ---------- ------------ ------------ --------------
National Australia Bank Ltd. (Banks-Major
674,825 -- 674,825 Regional) 10,417,395 -- 10,417,395
- ----------- ----------- ---------- ------------ ------------ --------------
TABCORP Holdings Ltd. (Leisure Time
-- 361,000 361,000 Products) -- 2,289,002 2,289,002
- ----------- ----------- ---------- ------------ ------------ --------------
-- 1,315,900 1,315,900 Telstra Corp. Ltd. (Telephone) a -- 4,222,245 4,222,245
=========== =========== ========== ============ ============ ==============
36,962,346
=========== =========== ========== ============ ============ ==============
BELGIUM--0.78%
27,760 -- 27,760 Electrabel S.A. (Electric Companies) 9,158,659 -- 9,158,659
- ----------- ----------- ---------- ------------ ------------ --------------
34,440 -- 34,440 Fortis A.G.-CVG (Financial-Diversified) a 185,149 -- 185,149
- ----------- ----------- ---------- ------------ ------------ --------------
-- 60,300 60,300 UCB S.A. (Manufacturing-Diversified) -- 2,248,899 2,248,899
=========== =========== ========== ============ ============ ==============
11,592,707
=========== =========== ========== ============ ============ ==============
BRAZIL--0.55%
-- 134,100 134,100 Embratel Participacoes S.A.-ADR (Telephone) -- 1,726,538 1,726,538
- ----------- ----------- ---------- ------------ ------------ --------------
Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil &
-- 21,286 21,286 Gas-Exploration & Production) -- 3,385,834 3,385,834
- ----------- ----------- ---------- ------------ ------------ --------------
Tele Centro Sul Participacoes S.A.-ADR
-- 28,900 28,900 (Telephobe) -- 1,726,775 1,726,775
- ----------- ----------- ---------- ------------ ------------ --------------
-- 79,200 79,200 Telesp Participacoes S.A.-ADR (Telephone) -- 1,282,050 1,282,050
=========== =========== ========== ============ ============ ==============
8,121,197
=========== =========== ========== ============ ============ ==============
CANADA--1.75%
-- 110,330 110,330 BCE, Inc. (Telephone)
- ----------- ----------- ----------
-- 111,360 111,360 Bombardier Inc. (Aerospace/Defense) -- 6,639,434 6,639,434
- ----------- ----------- ---------- ------------ ------------ --------------
-- 43,000 43,000 Loblaw Co. Ltd. (Retail-Food Chains) -- 1,962,774 1,962,774
- ----------- ----------- ---------- ------------ ------------ --------------
-- 218,092 218,092 Nortel Networks Corp. (Communications Equipment) -- 1,001,766 1,001,766
- ----------- ----------- ---------- ------------ ------------ --------------
-- 126,440 126,440 Toronto-Dominion Bank (The) (Banks-Regional) -- 13,508,073 13,508,073
- ----------- ----------- ---------- ------------ ------------ --------------
-- 2,898,424 2,898,424
=========== =========== ========== ============ ============ ==============
26,010,471
=========== =========== ========== ============ ============ ==============
FINLAND--0.77%
-- 99,200 99,200 Nokia Oyj (Communications Equipment) -- 11,355,777 11,355,777
=========== =========== ========== ============ ============ ==============
FRANCE--4.68%
-- 13,000 13,000 Accor S.A. (Lodging-Hotels) -- 2,926,803 2,926,803
- ----------- ----------- ---------- ------------ ------------ --------------
-- 23,650 23,650 Alstom (Engineering & Construction) -- 716,572 716,572
- ----------- ----------- ---------- ------------ ------------ --------------
-- 63,080 63,080 AXA (Insurance-Multi-Line) -- 8,899,320 8,899,320
- ----------- ----------- ---------- ------------ ------------ --------------
Banque Nationale de Paris (Banks - Major
-- 69,560 69,560 Regional) -- 6,110,580 6,110,580
- ----------- ----------- ---------- ------------ ------------ --------------
Carrefour Supermarche S.A. (Retail-Food
-- 70,020 70,020 Chains) -- 12,964,959 12,964,959
- ----------- ----------- ---------- ------------ ------------ --------------
Compagnie de Saint Gobain (Manufacturing-
51,000 -- 51,000 Diversified) a 8,853,001 -- 8,853,001
- ----------- ----------- ---------- ------------ ------------ --------------
104,720 -- 104,720 Pernod Ricard (Beverages-Non-alcoholic) 7,072,957 -- 7,072,957
- ----------- ----------- ---------- ------------ ------------ --------------
Pinault-Printemps-Redoute S.A. (Retail-General
-- 25,320 25,320 Merchandise) -- 4,829,452 4,829,452
- ----------- ----------- ---------- ------------ ------------ --------------
-- 10,000 10,000 PSA Peugeot Citreon (Automobiles) -- 1,919,991 1,919,991
- ----------- ----------- ---------- ------------ ------------ --------------
-- 35,000 35,000 Renault S.A. (Automobiles) -- 1,811,630 1,811,630
- ----------- ----------- ---------- ------------ ------------ --------------
Societe Television Francaise 1 (Broadcasting-
-- 17,170 17,170 Television, Radio & Cable) $ -- $ 5,382,982 $ 5,382,982
- ----------- ----------- ---------- ------------ ------------ --------------
Total Fina S.A.-Class B (Oil & Gas-Refining
-- 58,469 58,469 & Marketing) -- 7,904,363 7,904,363
=========== =========== ========== ============ ============ ==============
69,392,610
=========== =========== ========== ============ ============ ==============
</TABLE>
<PAGE> 347
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
==================================== ========================================
AIM Global AIM Global
Growth & AIM Global Pro Forma Growth & AIM Global Pro Forma
Income Fund Growth Fund Combining Income Fund Growth Fund Combining
<S> <C> <C> <C> <C> <C> <C>
GERMANY--1.34%
-- 22,000 22,000 Deutsche Bank A.G. (Banks-Major Regional) a -- 1,578,496 1,578,496
- ----------- ----------- ---------- ------------ ------------ --------------
EM.TV & Merchandising A.G. (Broadcasting-
-- 50,000 50,000 Television, Radio & Cable) -- 2,472,318 2,472,318
- ----------- ----------- ---------- ------------ ------------ --------------
EM.TV & Merchandising A.G.-Rts., expiring
-- 50,000 50,000 11/12/29 (Broadcasting-Television, Radio & Cable) -- 526 526
- ----------- ----------- ---------- ------------ ------------ --------------
-- 61,060 61,060 Mannesmann A.G. (Machinery-Diversified) -- 9,603,607 9,603,607
- ----------- ----------- ---------- ------------ ------------ --------------
MobilCom A.G.
120,000 -- 120,000 (Telecommunications-Cellular/Wireless) 6,223,928 -- 6,223,928
=========== =========== ========== ============ ============ ==============
19,878,875
=========== =========== ========== ============ ============ ==============
HONG KONG--1.11%
China Telecom Ltd. (Telecommunications -
-- 1,496,000 1,496,000 Cellular/Wireless) a -- 5,113,065 5,113,065
- ----------- ----------- ---------- ------------ ------------ --------------
-- 5,219,000 5,219,000 Cosco Pacific Ltd. (Financial-Diversified) -- 3,695,176 3,695,176
- ----------- ----------- ---------- ------------ ------------ --------------
-- 828,000 828,000 Dao Heng Bank Group Ltd. (Banks - Regional) a -- 3,762,619 3,762,619
- ----------- ----------- ---------- ------------ ------------ --------------
-- 392,000 392,000 Hutchison Whampoa Ltd. (Retail-Food Chains) -- 3,936,098 3,936,098
=========== =========== ========== ============ ============ ==============
16,506,958
=========== =========== ========== ============ ============ ==============
INDONESIA--0.07%
Gulf Indonesia Resources Ltd. (Oil-
-- 122,200 122,200 International Integrated) a -- 969,963 969,963
=========== =========== ========== ============ ============ ==============
IRELAND--0.33%
-- 180,484 180,484 Bank of Ireland (Banks-Major Regional) -- 1,410,795 1,410,795
- ----------- ----------- ---------- ------------ ------------ --------------
-- 186,000 186,000 CRH PLC (Construction-Cement & Aggregates) -- 3,512,479 3,512,479
=========== =========== ========== ============ ============ ==============
4,923,274
=========== =========== ========== ============ ============ ==============
ITALY--1.02%
-- 143,000 143,000 Banca Popolare di Brescia (Banks-Regional) -- 6,055,337 6,055,337
- ----------- ----------- ---------- ------------ ------------ --------------
-- 345,200 345,200 Credito Italiano S.p.A. (Banks-Major Regional) -- 1,616,096 1,616,096
- ----------- ----------- ---------- ------------ ------------ --------------
5,200,000 -- 5,200,000 Seat Pagine Gialle S.p.A. (Publishing) a 7,412,744 -- 7,412,744
=========== =========== ========== ============ ============ ==============
7,671,433 15,084,177
=========== =========== ========== ============ ============ ==============
JAPAN--9.79%
-- 46,900 46,900 Advantest Corp. (Electronics-Instrumentation) -- 7,062,779 7,062,779
- ----------- ----------- ---------- ------------ ------------ --------------
Alps Electric Co., Ltd. (Electronics-Component
-- 207,000 207,000 Distributors) -- 4,010,743 4,010,743
- ----------- ----------- ---------- ------------ ------------ --------------
-- 6,300 6,300 DDI Corp. (Telecommunications) -- 6,888,878 6,888,878
- ----------- ----------- ---------- ------------ ------------ --------------
Hirose Electric Co. Ltd. (Electronics-Component
-- 36,800 36,800 Distributors) -- 6,420,718 6,420,718
- ----------- ----------- ---------- ------------ ------------ --------------
-- 50,000 50,000 Hoya Corp. (Manufacturing-Specialized) -- 3,596,950 3,596,950
- ----------- ----------- ---------- ------------ ------------ --------------
Ibiden Co., Ltd. (Electronics-Component
-- 153,000 153,000 Distributors) -- 2,568,222 2,568,222
- ----------- ----------- ---------- ------------ ------------ --------------
-- 361,000 361,000 Kirin Brewery Co., Ltd. (Beverages-Alcoholic) -- 4,134,420 4,134,420
- ----------- ----------- ---------- ------------ ------------ --------------
Kyocera Corp. (Electronics-Component
-- 57,300 57,300 Distributors) -- 5,496,139 5,496,139
- ----------- ----------- ---------- ------------ ------------ --------------
Matsushita Communication Industrial Co., Ltd.
-- 63,000 63,000 (Telephone) -- 10,587,118 10,587,118
- ----------- ----------- ---------- ------------ ------------ --------------
Murata Manufacturing Co., Ltd. (Electronics-
-- 65,000 65,000 Component Distributors) -- 8,354,515 8,354,515
- ----------- ----------- ---------- ------------ ------------ --------------
-- 358,000 358,000 NEC Corp. (Computers-Hardware) -- 7,245,504 7,245,504
- ----------- ----------- ---------- ------------ ------------ --------------
Nippon Telegraph & Telephone Corp.
-- 6,080 6,080 (Telecommunications-Long Distance) -- 9,330,967 9,330,967
- ----------- ----------- ---------- ------------ ------------ --------------
NTT Data Corp. (Computers-Software
-- 3,180 3,180 & Services) -- 5,032,852 5,032,852
- ----------- ----------- ---------- ------------ ------------ --------------
NTT Mobile Communications Network, Inc.
-- 4,250 4,250 (Telecommunications-Cellular/Wireless) -- 11,292,024 11,292,024
- ----------- ----------- ---------- ------------ ------------ --------------
-- 582,000 582,000 Okuma Corp. (Hardware & Tools) -- 2,372,548 2,372,548
- ----------- ----------- ---------- ------------ ------------ --------------
Omron Corp. (Electronics-Component
-- 13,000 13,000 Distributors) -- 271,833 271,833
- ----------- ----------- ---------- ------------ ------------ --------------
-- 12,600 12,600 Orix Corp. (Financial-Diversified) -- 1,692,005 1,692,005
- ----------- ----------- ---------- ------------ ------------ --------------
-- 328,000 328,000 Ricoh Co., Ltd. (Office Equipment & Supplies) -- 5,351,571 5,351,571
- ----------- ----------- ---------- ------------ ------------ --------------
Rohm Co. Ltd. (Electronics-Component
-- 15,000 15,000 Distributors) -- 3,366,745 3,366,745
- ----------- ----------- ---------- ------------ ------------ --------------
-- 51,100 51,100 Sanix Inc. (Services-Commercial & Consumer) -- 4,754,400 4,754,400
- ----------- ----------- ---------- ------------ ------------ --------------
-- 185,000 185,000 Sharp Corp. (Electrical Equipment) -- 2,945,662 2,945,662
- ----------- ----------- ---------- ------------ ------------ --------------
Sony Corp. (Electronics-Component
-- 63,300 63,300 Distributors) -- 9,872,505 9,872,505
- ----------- ----------- ---------- ------------ ------------ --------------
Takeda Chemical Industries Ltd. (Health Care-
-- 94,000 94,000 Drugs-Generic & Other) -- 5,400,796 5,400,796
- ----------- ----------- ---------- ------------ ------------ --------------
Tokyo Electron Ltd. (Electronics-
-- 44,000 44,000 Semiconductors) -- 3,654,885 3,654,885
- ----------- ----------- ---------- ------------ ------------ --------------
Trend Micro Inc. (Computers-Software
-- 52,650 52,650 & Services) a -- 10,453,743 10,453,743
- ----------- ----------- ---------- ------------ ------------ --------------
Ushio, Inc. (Electronics-
-- 235,000 235,000 Component Distributors) -- 2,891,996 2,891,996
=========== =========== ========== ============ ============ ==============
145,050,518
=========== =========== ========== ============ ============ ==============
</TABLE>
<PAGE> 348
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
==================================== ========================================
AIM Global AIM Global
Growth & AIM Global Pro Forma Growth & AIM Global Pro Forma
Income Fund Growth Fund Combining Income Fund Growth Fund Combining
<S> <C> <C> <C> <C> <C> <C>
MEXICO--1.38%
Cifra S.A. de C.V. (Retail-General
-- 2,327,000 2,327,000 Merchandise) a -- 3,557,660 3,557,660
- ----------- ----------- ---------- ------------ ------------ --------------
Coca-Cola Femsa S.A.-ADR (Beverages-Non-
-- 174,900 174,900 Alcoholic) -- 2,426,738 2,426,738
- ----------- ----------- ---------- ------------ ------------ --------------
Fomento Economico Mexicano, S.A. de C.V.-
-- 111,590 111,590 ADR (Beverages-Non-Alcoholic) -- 3,661,547 3,661,547
- ----------- ----------- ---------- ------------ ------------ --------------
Grupo Modelo S.A. de C.V.-Series C
-- 445,440 445,440 (Beverages-Alcoholic) -- 1,088,699 1,088,699
- ----------- ----------- ---------- ------------ ------------ --------------
-- 105,200 105,200 Grupo Televisa S.A.-GDR (Entertainment) a -- 4,471,000 4,471,000
- ----------- ----------- ---------- ------------ ------------ --------------
Kimberly-Clark de Mexico, S.A. de C.V.-Class A
-- 518,000 518,000 (Paper & Forest Products) -- 1,659,324 1,659,324
- ----------- ----------- ---------- ------------ ------------ --------------
-- 42,500 42,500 Telefonos de Mexico S.A.-ADR (Telephone) -- 3,633,750 3,633,750
=========== =========== ========== ============ ============ ==============
20,498,718
=========== =========== ========== ============ ============ ==============
NETHERLANDS--4.30%
-- 52,200 52,200 Aegon N.V. (Insurance Brokers) -- 4,818,968 4,818,968
- ----------- ----------- ---------- ------------ ------------ --------------
-- 8,500 8,500 Equant N.V. (Computers-Networking) a -- 827,174 827,174
- ----------- ----------- ---------- ------------ ------------ --------------
-- 47,560 47,560 Getronics N.V. (Computers-Software & Services) -- 2,371,683 2,371,683
- ----------- ----------- ---------- ------------ ------------ --------------
176,878 -- 176,878 ING Groep N.V. (Insurance Brokers) 10,435,619 -- 10,435,619
- ----------- ----------- ---------- ------------ ------------ --------------
Koninklijke (Royal) Philips Electronics N.V.
-- 46,560 46,560 (Electrical Equipment) -- 4,775,886 4,775,886
- ----------- ----------- ---------- ------------ ------------ --------------
-- 152,200 152,200 Koninklijke Ahold N.V. (Retail-Food Chains) -- 4,675,563 4,675,563
- ----------- ----------- ---------- ------------ ------------ --------------
Koninklijke KPN N.V. (Telecommunications-
220,005 -- 220,005 Long Distance) 11,292,751 -- 11,292,751
- ----------- ----------- ---------- ------------ ------------ --------------
Royal Dutch Petroleum Co. (Oil-International
351,840 -- 351,840 Integrated) 21,035,811 -- 21,035,811
- ----------- ----------- ---------- ------------ ------------ --------------
Verenigde Nederlandse Uitgeversbedrijven
-- 101,830 101,830 Verenigd Bezit (Publishing) -- 3,444,238 3,444,238
=========== =========== ========== ============ ============ ==============
63,677,693
=========== =========== ========== ============ ============ ==============
NEW ZEALAND--0.87%
-- 1,800,000 1,800,000 Auckland International Airport Ltd. (Airlines) -- 2,502,004 2,502,004
- ----------- ----------- ---------- ------------ ------------ --------------
2,264,200 -- 2,264,200 Telecom Corp. of New Zealand Ltd. (Telephone) 9,120,112 -- 9,120,112
- ----------- ----------- ---------- ------------ ------------ --------------
38,000 -- 38,000 Telecom Corp. of New Zealand Ltd.-ADR (Telephone) 1,235,000 -- 1,235,000
=========== =========== ========== ============ ============ ==============
12,857,116
=========== =========== ========== ============ ============ ==============
SINGAPORE--0.82%
-- 1,020,000 1,020,000 Allgreen Properties Ltd. (Homebuilding) a -- 864,979 864,979
- ----------- ----------- ---------- ------------ ------------ --------------
DBS Group Holdings Ltd. (Banks-Money
-- 280,283 280,283 Center) a -- 3,169,135 3,169,135
- ----------- ----------- ---------- ------------ ------------ --------------
Keppel Corp. Ltd. (Engineering &
-- 782,600 782,600 Construction) -- 2,127,475 2,127,475
- ----------- ----------- ---------- ------------ ------------ --------------
-- 1,553,000 1,553,000 NatSteel Ltd. (Iron & Steel) -- 2,596,584 2,596,584
- ----------- ----------- ---------- ------------ ------------ --------------
Singapore Press Holdings Ltd. (Publishing-
-- 200,000 200,000 Newspapers) -- 3,428,159 3,428,159
=========== =========== ========== ============ ============ ==============
12,186,332
=========== =========== ========== ============ ============ ==============
SOUTH KOREA--0.77%
Korea Electric Power Corp.-ADR (Electric
-- 131,000 131,000 Companies) -- 2,063,250 2,063,250
- ----------- ----------- ---------- ------------ ------------ --------------
-- 122,200 122,200 Korea Telecom Corp.-ADR (Telephone) a -- 4,307,550 4,307,550
- ----------- ----------- ---------- ------------ ------------ --------------
-- 167,000 167,000 L.G. Chemical Ltd. (Chemicals-Specialty) -- 5,053,856 5,053,856
=========== =========== ========== ============ ============ ==============
11,424,656
=========== =========== ========== ============ ============ ==============
SPAIN--0.60%
Banco Popular Espanol S.A. (Banks-Major
-- 26,000 26,000 Regional) -- 1,750,611 1,750,611
- ----------- ----------- ---------- ------------ ------------ --------------
-- 430,380 430,380 Telefonica S.A. (Telephone) a -- 7,081,499 7,081,499
=========== =========== ========== ============ ============ ==============
8,832,110
=========== =========== ========== ============ ============ ==============
SWEDEN--0.38%
Hennes & Mauritz A.B.-Class B (Retail-
-- 210,640 210,640 Specialty-Apparel) -- 5,596,406 5,596,406
=========== =========== ========== ============ ============ ==============
SWITZERLAND--2.33%
-- 32,420 32,420 ABB Ltd. (Electrical Equipment) a -- 3,263,901 3,263,901
- ----------- ----------- ---------- ------------ ------------ --------------
Adecco S.A. (Services-Commercial &
-- 6,600 6,600 Consumer) -- 3,999,738 3,999,738
- ----------- ----------- ---------- ------------ ------------ --------------
Compagnie Financiere Richemont A.G.
-- 2,000 2,000 (Tobacco) -- 3,819,768 3,819,768
- ----------- ----------- ---------- ------------ ------------ --------------
Julius Baer Holding A.G. (Banks-Major
4,400 -- 4,400 Regional) 13,231,455 -- 13,231,455
- ----------- ----------- ---------- ------------ ------------ --------------
20,820 -- 20,820 Swisscom A.G. (Telephone) 6,342,815 -- 6,342,815
- ----------- ----------- ---------- ------------ ------------ --------------
-- 6,960 6,960 Zurich Allied A.G. (Insurance-Multi-Line) $ -- 3,939,517 3,939,517
=========== =========== ========== ============ ============ ==============
34,597,194
=========== =========== ========== ============ ============ ==============
</TABLE>
<PAGE> 349
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
==================================== ========================================
AIM Global AIM Global
Growth & AIM Global Pro Forma Growth & AIM Global Pro Forma
Income Fund Growth Fund Combining Income Fund Growth Fund Combining
<S> <C> <C> <C> <C> <C> <C>
UNITED KINGDOM--8.52%
Abbey National PLC (Savings & Loan
170,000 -- 170,000 Companies) 3,326,014 -- 3,326,014
- ----------- ----------- ---------- ------------ ------------ --------------
600,000 -- 600,000 Allied Zurich PLC (Insurance-Mulit-Line) 7,250,481 -- 7,250,481
- ----------- ----------- ---------- ------------ ------------ --------------
-- 225,500 225,500 Barclays PLC (Banks-Major Regional) -- 6,906,971 6,906,971
- ----------- ----------- ---------- ------------ ------------ --------------
BP Amoco PLC (Oil & Gas-Refining &
-- 220,000 220,000 Marketing) -- 2,135,850 2,135,850
- ----------- ----------- ---------- ------------ ------------ --------------
British Sky Broadcasting Group PLC
-- 440,000 440,000 (Broadcasting-Television, Radio & C -- 4,727,445 4,727,445
- ----------- ----------- ---------- ------------ ------------ --------------
British Telecommunications PLC
-- 116,000 116,000 (Communications Equipment) -- 2,104,547 2,104,547
- ----------- ----------- ---------- ------------ ------------ --------------
1,863,600 -- 1,863,600 Cadbury Schweppes PLC (Foods) 12,217,480 -- 12,217,480
- ----------- ----------- ---------- ------------ ------------ --------------
694,750 -- 694,750 CGU PLC (Insurance Brokers) 10,125,944 -- 10,125,944
- ----------- ----------- ---------- ------------ ------------ --------------
Compass Group PLC (Services-Commercial &
-- 288,800 288,800 Consumer) -- 3,095,801 3,095,801
- ----------- ----------- ---------- ------------ ------------ --------------
659,559 -- 659,559 Diageo PLC (Beverages-Alcoholic) 6,668,943 -- 6,668,943
- ----------- ----------- ---------- ------------ ------------ --------------
250,000 -- 250,000 EMAP PLC (Publishing) 3,247,098 -- 3,247,098
- ----------- ----------- ---------- ------------ ------------ --------------
853,500 -- 853,500 EMI Group PLC (Leisure Time-Products) 6,707,484 -- 6,707,484
- ----------- ----------- ---------- ------------ ------------ --------------
General Electric Co. PLC (Manufacturing-
-- 367,100 367,100 Diversified) -- 3,992,477 3,992,477
- ----------- ----------- ---------- ------------ ------------ --------------
-- 270,000 270,000 Granada Group PLC (Leisure Time-Products) -- 2,135,193 2,135,193
- ----------- ----------- ---------- ------------ ------------ --------------
-- 461,300 461,300 Hays PLC (Services-Commercial & Consumer) -- 5,282,419 5,282,419
- ----------- ----------- ---------- ------------ ------------ --------------
Invensys PLC (Electronics-Component-
-- 290,000 290,000 Distributors) -- 1,425,599 1,425,599
- ----------- ----------- ---------- ------------ ------------ --------------
688,428 -- 688,428 Lloyds TSB Group PLC (Banks-Major Regional) 9,524,471 -- 9,524,471
- ----------- ----------- ---------- ------------ ------------ --------------
-- 450,300 450,300 Orange PLC (Telephone) a -- 11,230,931 11,230,931
- ----------- ----------- ---------- ------------ ------------ --------------
-- 202,478 202,478 Provident Financial PLC (Consumer Finance) -- 2,262,015 2,262,015
- ----------- ----------- ---------- ------------ ------------ --------------
Reckitt & Colman PLC (Household
668,093 -- 668,093 Products/Non-durables) 8,111,770 -- 8,111,770
- ----------- ----------- ---------- ------------ ------------ --------------
Shell Transport & Trading Co. (Oil-
-- 458,000 458,000 International Integrated) -- 3,512,735 3,512,735
- ----------- ----------- ---------- ------------ ------------ --------------
Vodafone AirTouch PLC (Telecommunications-
-- 1,361,500 1,361,500 Cellular/Wireless) -- 6,334,791 6,334,791
- ----------- ----------- ---------- ------------ ------------ --------------
WPP Group PLC (Services-
-- 366,600 366,600 Advertising/Marketing) -- 3,981,012 3,981,012
=========== =========== ========== ============ ============ ==============
126,307,471
=========== =========== ========== ============ ============ ==============
Total Foreign Stocks & Other Equity Interests
(Cost $479,801,693) 198,502,766 463,323,803 661,826,569
=========== =========== ========== ============ ============ ==============
</TABLE>
<TABLE>
<CAPTION>
NON-U.S. DOLLAR
DENOMINATED GOVERNMENT
BONDS & NOTES--6.56%
PRINCIPAL AMOUNT
======================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DENMARK--0.59%
DKK 54,000,000 -- 54,000,000 Kingdom of Denmark, Bonds, 8.00%, 03/15/06 c 8,647,572 -- 8,647,572
=== ========== == ========== ========================================== ============ ============ ==============
FRANCE--1.61%
EUR 25,200,000 -- 25,200,000 Government of France, Deb., 4.00%, 10/25/09 c 23,913,664 -- 23,913,664
=== ========== == ========== ========================================== ============ ============ ==============
GERMANY--2.23%
Bundesrepublik Deutschland, Bonds,
EUR 19,000,000 -- 19,000,000 8.375%, 05/21/01 c 21,336,865 -- 21,336,865
EUR 4,600,000 -- 4,600,000 6.00%, 01/04/07 c 5,085,825 -- 5,085,825
EUR 5,800,000 -- 5,800,000 6.50%, 07/04/27 c 6,651,676 -- 6,651,676
=== ========== == ========== ========================================== ============ ============ ==============
33,074,366
=== ========== == ========== ========================================== ============ ============ ==============
UNITED KINGDOM--2.13%
United Kingdom Treasury,
GBP 5,500,000 -- 5,500,000 Bond, 7.00%, 06/07/02 c 9,225,047 -- 9,225,047
GBP 4,500,000 -- 4,500,000 Gtd. Note, 9.00%, 10/13/08 c 9,048,837 -- 9,048,837
GBP 6,022,000 -- 6,022,000 Bond, 9.00%, 08/06/12 c 13,324,001 -- 13,324,001
=== ========== == ========== ========================================== ============ ============ ==============
31,597,885
=== ========== == ========== ========================================== ============ ============ ==============
Total Non-U.S. Dollar Denominated
Government Bonds & Notes (Cost $98,119,358) 97,233,487 -- 97,233,487
=== ========== == ========== ========================================== ============ ============ ==============
U.S. TREASURY SECURITIES--5.91%
U.S. TREASURY NOTES--3.76%
35,550,000 -- 35,550,000 6.63%, 06/30/01 36,012,505 -- 36,012,505
20,500,000 -- 20,500,000 5.63%, 05/15/08 19,787,227 -- 19,787,227
=== ========== == ========== ========================================== ============ ============ ==============
55,799,732
=== ========== == ========== ========================================== ============ ============ ==============
</TABLE>
<PAGE> 350
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
==================================== ========================================
AIM Global AIM Global
Growth & AIM Global Pro Forma Growth & AIM Global Pro Forma
Income Fund Growth Fund Combining Income Fund Growth Fund Combining
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. TREASURY BONDS--2.15%
$ 15,120,000 -- $15,120,000 8.75%, 08/15/20 18,950,350 -- 18,950,350
12,745,000 -- 12,745,000 6.50%, 11/15/26 12,898,832 -- 12,898,832
=== ========== == ========== ========================================== ============ ============ ==============
31,849,182
=== ========== == ========== ========================================== ============ ============ ==============
Total U.S. Treasury Securities
(Cost $87,847,744) 87,648,914 -- 87,648,914
========================================== ============ ============ ==============
MONEY MARKET FUNDS--4.27%
SHARES
======================================
5,642,621 25,959,462 31,602,083 STIC Liquid Assets Portfolio d 5,642,621 25,959,462 31,602,083
5,642,621 25,959,462 31,602,083 STIC Prime Portfolio d 5,642,621 25,959,462 31,602,083
Total Money Market Funds (Cost 11,285,242 51,918,924 63,204,166
TOTAL INVESTMENTS--(COST
$ 1,121,991,454) -- 98.96% 632,592,577 834,198,259 1,466,790,836
====================================== ============ ============ ==============
OTHER ASSETS LESS LIABILITIES--1.04% 4,397,411 11,052,814 15,450,225
====================================== ============ ============ ==============
NET ASSETS--100.00% $636,989,988 $845,251,073 $1,482,241,061
====================================== ============ ============ ==============
</TABLE>
Investment Abbreviations:
ADR - American Depository Receipt
Deb. - Debentures
DKK - Danish Krona
EUR - Euro
GBP - British Pound
Gtd. - Guaranteed
Pfd. - Preferred
Rts. - Rights
Notes to Schedule of Investments:
a Non-Income producing security.
b A portion of this security is subject to call options written.
c Foreign denominated security. Par value and coupon are denominated
in currency indicated.
d The money market fund has the same investment advisor as the Fund.
See accompanying notes to Proforma Financial Statements.
<PAGE> 351
AIM GLOBAL GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
AIM GLOBAL
GROWTH & INCOME AIM GLOBAL PRO FORMA
FUND GROWTH FUND COMBINING
--------------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments, at market value $ 632,592,577 $ 834,198,259 $1,466,790,836
(cost $510,464,734 - AIM Global Growth & Income Fund)
(cost $611,526,720 - AIM Global Growth Fund)
(cost $1,121,991,454 Pro forma combination)
-------------- -------------- --------------
Foreign currencies, at market value 13,245,860
(cost $13,236,307 - AIM Global Growth Fund) -- 13,245,860
-------------- -------------- --------------
Cash 1,245,276 -- 1,245,276
-------------- -------------- --------------
Receivables for:
Investments sold 1,922,211 8,377,903 10,300,114
-------------- -------------- --------------
Capital stock/fund shares sold 986,563 1,986,057 2,972,620
-------------- -------------- --------------
Dividends and interest 5,456,781 1,081,214 6,537,995
-------------- -------------- --------------
Investments for deferred compensation plan -- 23,205 23,205
-------------- -------------- --------------
Other assets 651 38,824 39,475
============== ============== ==============
Total Assets 642,204,059 858,951,322 1,501,155,381
============== ============== ==============
LIABILITIES:
Payables for:
Investments purchased -- 8,594,115 8,594,115
-------------- -------------- --------------
Capital stock/fund shares reacquired 2,270,985 1,016,512 3,287,497
-------------- -------------- --------------
Forward contracts closed 1,618,625 -- 1,618,625
-------------- -------------- --------------
Deferred compensation -- 23,205 23,205
-------------- -------------- --------------
Options written
(premiums received $1,753,505 -AIM Global Growth Fund) -- 2,674,700 2,674,700
-------------- -------------- --------------
Forward contracts 32,908 -- 32,908
-------------- -------------- --------------
Accrued advisory fees 526,363 581,419 1,107,782
-------------- -------------- --------------
Accrued administrative services fees 11,447 10,970 22,417
-------------- -------------- --------------
Accrued trustees'/directors' fees 1,500 2,400 3,900
-------------- -------------- --------------
Accrued distribution fees 423,592 612,902 1,036,494
-------------- -------------- --------------
Accrued transfer agent fees 84,253 223,736 307,989
-------------- -------------- --------------
Accrued operating expenses 244,398 (39,710) 204,688
-------------- -------------- --------------
Total liabilities 5,214,071 13,700,249 18,914,320
============== ============== ==============
Net assets applicable to shares outstanding $ 636,989,988 $ 845,251,073 $1,482,241,061
============== ============== ==============
NET ASSETS:
Class A $ 254,060,449 $ 388,549,182 $ 648,014,548
============== ============== ==============
Advisor Class $ 5,404,917 $ -- --
============== ============== ==============
Class B $ 376,180,588 $ 425,345,431 $ 801,526,019
============== ============== ==============
Class C $ 1,344,034 $ 31,356,460 $ 32,700,494
============== ============== ==============
SHARES OUTSTANDING, $.001 PAR VALUE PER SHARE (GLOBAL GROWTH); $.01 PAR VALUE PER SHARE (GLOBAL GROWTH & INCOME):
Class A 32,565,310 16,580,603 27,652,470
============== ============== ==============
Advisor Class 693,765 -- --
============== ============== ==============
Class B 48,228,206 18,669,410 35,183,019
============== ============== ==============
Class C 172,358 1,375,854 1,434,844
============== ============== ==============
Class A:
Net asset value and redemption price per share $ 7.80 $ 23.43 $ 23.43
-------------- -------------- --------------
Offering price per share:
(Net asset value of $23.43 / 95.25%) - AIM Global Growth Fund $ 8.25 $ 24.60 $ 24.60
(Net asset value of $7.80 / 94.5%) - AIM Global Growth & Income Fund
============== ============== ==============
Advisor Class:
Net asset value, offering and redemption price per share $ 7.79 -- --
============== ============== ==============
Class B:
Net asset value and offering price per share $ 7.80 $ 22.78 $ 22.78
============== ============== ==============
Class C:
Net asset value and offering price per share $ 7.80 $ 22.79 $ 22.79
============== ============== ==============
</TABLE>
See accompanying notes to Pro Forma Combining Financial Statements.
<PAGE> 352
AIM GLOBAL GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
For the year ended October 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
AIM GLOBAL
GROWTH & AIM GLOBAL PRO FORMA
INCOME FUND GROWTH FUND ADJUSTMENTS COMBINING
----------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Investment income:
Dividends $16,045,328 $ 5,811,440 $ -- $ 21,856,768
(net of foreign withholding tax of $677,229 - AIM Global
Growth Fund)
(net of foreign withholding tax of $815,230 - AIM Global
Growth & Income Fund)
Interest 13,957,993 1,816,133 -- 15,774,126
----------- ------------ ----------- ------------
Securities lending 193,458 -- -- 193,458
=========== ============ =========== ============
Total investment income 30,196,779 7,627,573 -- 37,824,352
=========== ============ =========== ============
EXPENSES:
Advisory and administrative fees 7,315,050 5,898,665 (1,102,630) 12,111,085
----------- ------------ ----------- ------------
Accounting fees 207,383 97,142 (155,983) 148,542
----------- ------------ ----------- ------------
Custodian fees 358,452 341,569 -- 700,021
----------- ------------ ----------- ------------
Distribution fees - Class A 1,039,956 1,585,224 474,495 3,099,675
----------- ------------ ----------- ------------
Distribution fees - Class B 4,535,906 3,564,027 -- 8,099,933
----------- ------------ ----------- ------------
Distribution fees - Class C 6,314 205,127 -- 211,441
----------- ------------ ----------- ------------
Transfer agent fees - Class A 508,709 708,552 9,861 1,227,122
----------- ------------ ----------- ------------
Transfer agent fees - Advisor Class 9,861 -- (9,861) --
----------- ------------ ----------- ------------
Transfer agent fees - Class B 776,580 982,114 -- 1,758,694
----------- ------------ ----------- ------------
Transfer agent fees - Class C 1,110 66,129 -- 67,239
----------- ------------ ----------- ------------
Trustees'/Directors' fees 35,961 12,734 -- 48,695
----------- ------------ ----------- ------------
Interest expense 15,102 -- (15,102) --
----------- ------------ ----------- ------------
Other 608,387 237,509 -- 845,896
=========== ============ =========== ============
Total expenses 15,418,771 13,698,792 (799,220) 28,318,343
=========== ============ =========== ============
Less: Expenses paid indirectly (4,831) (12,008) -- (16,839)
=========== ============ =========== ============
Advisory fee waivers -- -- (653,124) (653,124)
=========== ============ =========== ============
Net expenses 15,413,940 13,686,784 (1,452,344) 27,648,380
=========== ============ =========== ============
Net investment income (loss) 14,782,839 (6,059,211) 1,452,344 10,175,972
=========== ============ =========== ============
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURE AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 59,608,133 63,517,124 -- 123,125,257
----------- ------------ ----------- ------------
Foreign currencies (573,951) 162,721 -- (411,230)
----------- ------------ ----------- ------------
Foreign currency contracts 589,736 81,453 -- 671,189
----------- ------------ ----------- ------------
Future contracts -- 2,042,833 -- 2,042,833
----------- ------------ ----------- ------------
Option contracts written -- (1,820,509) -- (1,820,509)
=========== ============ =========== ============
59,623,918 63,983,622 -- 123,607,540
=========== ============ =========== ============
Net unrealized appreciation (depreciation) of:
Investment securities (64,691,362) 142,665,744 -- 77,974,382
----------- ------------ ----------- ------------
Foreign currencies (204,635) (114,912) -- (319,547)
----------- ------------ ----------- ------------
Foreign currency contracts (257,665) -- -- (257,665)
----------- ------------ ----------- ------------
Future contracts -- (797,175) -- (797,175)
----------- ------------ ----------- ------------
Option contracts written -- (921,195) -- (921,195)
=========== ============ =========== ============
(65,153,662) 140,832,462 -- 75,678,800
=========== ============ =========== ============
Net gain (loss) on investment securities, foreign currencies,
foreign currency contracts, future and option contracts (5,529,744) 204,816,084 -- 199,286,340
=========== ============ =========== ============
Net increase in net assets resulting from operations $ 9,253,095 $198,756,873 $ 1,452,344 $209,462,312
=========== ============ =========== ============
</TABLE>
See accompanying notes to Pro Forma Combining Financial Statements.
<PAGE> 353
AIM GLOBAL GROWTH FUND
AIM GLOBAL GROWTH & INCOME FUND
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
OCTOBER 31, 1999
(UNAUDITED)
Note 1 - Basis of Pro Forma Presentation
The pro forma financial statements and the accompanying pro forma schedule of
investments give effect to the proposed Agreement and Plan of Reorganization
between AIM Global Growth & Income Fund and AIM Global Growth Fund and the
consummation of the transactions contemplated therein to be accounted for as a
tax-free reorganization of investment companies. The Agreement and Plan of
Reorganization would be accomplished by an exchange of shares of AIM Global
Growth Fund for the net assets of AIM Global Growth & Income Fund and the
distribution of AIM Global Growth Fund shares to AIM Global Growth & Income
shareholders. If the agreement and Plan of Reorganization were to have taken
place at October 31, 1999, AIM Global Growth & Income Fund Class A shareholders
would have received 10,841,204 shares of AIM Global Growth Fund - Class A
shares, AIM Global Growth & Income Fund Advisor Class shareholders would have
received 230,663 shares of AIM Global Growth Fund - Class A shares, AIM Global
Growth & Income Fund C Class C shareholders would have received 58,990 shares of
AIM Global Growth Fund - Class C shares.
Note 2 - Pro Forma Adjustments
Pro Forma adjustments have been made to reflect the contractual expenses of the
combined entities.
<PAGE> 354
GLOBAL GROWTH & INCOME INTO GLOBAL GROWTH
<TABLE>
<CAPTION>
NAVS
Global Global Shares conversion Gl Growth NEW SHARE
G & I Growth Ratio Gl G&I shares shares BALANCE
----- -------- ------ ------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
A $ 7.80 $ 23.43 33.2907% 32,565,310 10,841,204 16,580,603 27,652,470 includes Advisor shares
B $ 7.80 $ 22.78 34.2406% 48,228,206 16,513,609 18,669,410 35,183,019
C $ 7.80 $ 22.79 34.2255% 172,358 58,990 1,375,854 1,434,844
Advisor $ 7.79 $ 23.43 33.2480% 693,765 230,663
</TABLE>
<PAGE> 355
PART C. OTHER INFORMATION
Item 15. Indemnification
Pursuant to the Maryland General Corporation Law and the Registrant's
Charter and By-Laws, the Registrant may indemnify any person who was
or is a director, officer, employee or agent of the Registrant to the
maximum extent permitted by the Maryland General Corporation Law. The
specific terms of such indemnification are reflected in the
Registrant's Charter and By-Laws, which are incorporated herein as
part of this Registration Statement. No indemnification will be
provided by the Registrant to any director or officer of the
Registrant for any liability to Registrant or shareholders to which
such director or officer would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of duty.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered hereby, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy and will
be governed by the final adjudication of such issue. Insurance
coverage is provided under a joint Mutual Fund and Investment Advisory
Professional Directors and Officers Liability Policy, issued by ICI
Mutual Insurance Company, with a $35,000,000 limit of liability.
Item 16. Exhibits.
1 (a) Articles of Incorporation of Registrant were filed as an
Exhibit to Registrant's Registration Statement on December
19, 1991.
(b) Articles of Amendment, dated May 21, 1992, were filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1 on
February 23, 1993.
(c) Articles of Amendment, dated May 21, 1992, were filed as an
Exhibit to Registrant's Post-Effective Amendment No. 1 on
February 23, 1993.
(d) Articles Supplementary, dated June 29, 1994, to Articles of
Incorporation of Registrant were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on August 17,
1994.
(e) Articles Supplementary, dated August 4, 1994, to Articles of
Incorporation of Registrant were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 5 on August 17,
1994.
(f) Articles of Amendment, dated November 14, 1994, were filed
electronically as an Exhibit to Post-Effective Amendment No.
9 on February 28, 1996.
1
<PAGE> 356
Item 16. Exhibits.
(g) Articles of Restatement, dated November 14, 1994, were filed
electronically as an Exhibit to Post-Effective Amendment No.
9 on February 28, 1996, and are hereby incorporated by
reference.
(h) Articles Supplementary to Articles of Incorporation of
Registrant, dated June 12, 1997, were filed electronically as
an Exhibit to Post-Effective Amendment No. 12 on August 4,
1997, and are hereby incorporated by reference.
(i) Articles of Amendment to Articles of Incorporation of
Registrant, dated October 14, 1997, were filed electronically
as an Exhibit to Post-Effective Amendment No. 13 on October
17, 1997, and are hereby incorporated by reference.
(j) Articles Supplementary to Articles of Incorporation of
Registrant, dated June 9, 1999, were filed electronically as
an Exhibit to Post-Effective Amendment No. 17 on February 23,
2000, and are hereby incorporated by reference.
(k) Articles Supplementary to Articles of Incorporation of
Registrant, dated December 23, 1999, were filed
electronically as an Exhibit to Post-Effective Amendment No.
17 on February 23, 2000, and are hereby incorporated by
reference.
2 (a) By-Laws of the Registrant were filed as an Exhibit to
Registrant's Registration Statement on December 19, 1991, and
were filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996.
(b) First Amendment, dated March 14, 1995, to By-Laws of
Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996.
(c) Amended and Restated By-Laws, dated effective December 11,
1996, were filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on February 24, 1997, and are
hereby incorporated by reference.
(d) First Amendment, dated June 9, 1999, to Amended and Restated
By-Laws of Registrant were filed electronically as an Exhibit
to Post-Effective Amendment No. 17 on February 23, 2000, and
are hereby incorporated by reference.
3 Voting Trust Agreements - None.
4 A copy of the form of Agreement and Plan of Reorganization
between the Registrant and AIM Investment Funds is attached as
Appendix 1 to the Prospectus contained in this Registration
Statement.
5 None
6 (a) (1) Investment Advisory Agreement, dated as of November
8, 1991, between Registrant and A I M Advisors, Inc.
was filed as an Exhibit to Registrant's Registration
Statement on December 19, 1991.
(2) Investment Advisory Agreement, dated as of October
18, 1993, between Registrant on behalf of its AIM
International Equity Fund and A I M Advisors, Inc.
was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 3 on February 24, 1994,
and was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996.
2
<PAGE> 357
Item 16. Exhibits.
(3) Master Investment Advisory Agreement, dated as of
July 1, 1994, between A I M Advisors, Inc. and
Registrant on behalf of its AIM Global Aggressive
Growth Fund, AIM Global Growth Fund and AIM Global
Income Fund was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on September 2, 1994,
and was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996.
(4) Master Investment Advisory Agreement, dated February
28, 1997, between A I M Advisors, Inc. and
Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 11 on May 16, 1997, and
is hereby incorporated by reference.
(5) Amendment No. 1, dated as of November 1, 1997, to
Master Investment Advisory Agreement, dated February
28, 1997, between A I M Advisors, Inc. and
Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on October 17, 1997,
and is hereby incorporated by reference.
(b) (1) Master Sub-Advisory Agreement, dated as of November
1, 1997, between A I M Advisors, Inc. and INVESCO
Global Asset Management Limited was filed
electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, 1997, and is hereby
incorporated by reference.
(2) Sub-Sub-Advisory Agreement, dated as of November 1,
1997, between INVESCO Global Asset Management
Limited and INVESCO Asset Management Limited was
filed electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, 1997, and is hereby
incorporated by reference.
(3) Sub-Sub-Advisory Agreement, dated as of November 1,
1997, between INVESCO Global Asset Management
Limited and INVESCO Asia Limited was filed
electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, 1997, and is hereby
incorporated by reference.
7 (a) (1) Distribution Agreement, dated December 11, 1991,
between Registrant and A I M Distributors, Inc. was
filed as an Exhibit to Registrant's Registration
Statement on December 19, 1991.
(2) Distribution Agreement, dated October 18, 1993,
between Registrant and A I M Distributors, Inc. was
filed as an Exhibit to Registrant's Post-Effective
Amendment No. 3 on February 24, 1994.
(3) Master Distribution Agreement, dated September 10,
1994, between Registrant (on behalf of the
portfolios' Class A shares) and A I M Distributors,
Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 7 on February 23, 1995,
and was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996.
(4) Master Distribution Agreement, dated September 10,
1994, between the Registrant (on behalf of the
portfolios' Class B shares) and A I M Distributors,
Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 7 on February 23, 1995.
3
<PAGE> 358
Item 16. Exhibits.
(5) Amended and Restated Master Distribution Agreement,
dated May 2, 1995, between the Registrant (on behalf
of the portfolios' Class B shares) and A I M
Distributors, Inc. was electronically filed as an
Exhibit to Post-Effective Amendment No. 8 on
December 1, 1995.
(6) Master Distribution Agreement, dated February 28,
1997, between Registrant (on behalf of the
portfolios' Class A shares) and A I M Distributors,
Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 11 on May 16, 1997.
(7)(i) Master Distribution Agreement, dated February 28,
1997, between Registrant (on behalf of the
portfolios' Class B shares) and A I M Distributors,
Inc. was filed electronically as an Exhibit to
Post-Effective Amendment No. 11 on May 16, 1997.
(7)(ii) Amendment No. 1, dated November 1, 1997, to Master
Distribution Agreement between Registrant (on behalf
of the portfolios' Class B shares) and A I M
Distributors, Inc. was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on
October 17, 1997, and is hereby incorporated by
reference.
(8)(i) Amended and Restated Master Distribution Agreement,
dated as of August 4, 1997, between Registrant (on
behalf of the portfolios' Class A and Class C
shares) and A I M Distributors, Inc. was filed
electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, 1997, and is hereby
incorporated by reference.
(8)(ii) Amendment No. 1, dated November 1, 1997, to Amended
and Restated Master Distribution Agreement, dated as
of August 4, 1997, (on behalf of the portfolios'
Class A and Class C shares) was filed electronically
as an Exhibit to Post-Effective Amendment No. 13 on
October 17, 1997, and is hereby incorporated by
reference.
(b) Form of Selected Dealer Agreement between A I M Distributors,
Inc. and selected dealers was filed electronically as an
Exhibit to Post-Effective Amendment No. 15 on December 23,
1998, and is hereby incorporated by reference.
(c) Form of Bank Selling Group Agreement between A I M
Distributors, Inc. and banks was filed electronically as an
Exhibit to Post-Effective Amendment No. 15 on December 23,
1998, and is hereby incorporated by reference.
8 (a) Retirement Plan for Registrant's Non-Affiliated Directors was
filed as an Exhibit to Registrant's Post-Effective Amendment
No. 4 on June 29, 1994.
(b) Retirement Plan for Registrant's Non-Affiliated Directors
effective as of March 8, 1994, as restated September 18,
1995, was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996 and is
hereby incorporated by reference.
(c) Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 4 on June 29, 1994.
(d) Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Directors as approved December 5, 1995, was
filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996, and is hereby
incorporated by reference.
(e) Form of Deferred Compensation Agreement for Registrant's
Non-Affiliated Director's as approved March 12, 1997, was
filed as an Exhibit to Post-Effective Amendment No. 14 on
February 20, 1998, and is hereby incorporated by reference.
4
<PAGE> 359
Item 16. Exhibits.
9 (a) Custodian Agreement between Registrant and State Street Bank
and Trust Company, dated as of November 8, 1991, was filed as
an Exhibit to Registrant's Registration Statement on December
19, 1991, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996, and is
hereby incorporated by reference.
(b) Amendment, dated July 1, 1994, to Custodian Agreement between
Registrant and State Street Bank and Trust Company dated
November 8, 1991, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on September 2, 1994, and was
filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996, and is hereby
incorporated by reference.
(c) Amendment No. 2, dated September 19, 1995, to the Custodian
Contract, dated November 8, 1991, was filed electronically as
an Exhibit to Post-Effective Amendment No. 9 on February 28,
1996, and is hereby incorporated by reference.
(d) Amendment No. 3, dated November 1, 1997, to the Custodian
Contract, dated November 8, 1991, between Registrant and
State Street Bank and Trust Company was filed electronically
as an Exhibit to Post-Effective Amendment No. 13 on October
17, 1997, and is hereby incorporated by reference.
(e) Amendment, dated September 9, 1998, to the Custodian
Contract, dated November 8, 1991, between Registrant and
State Street Bank and Trust Company was filed electronically
as an Exhibit to Post-Effective Amendment No. 15 on December
23, 1998 and is hereby incorporated by reference.
(f) Subcustodian Agreement, dated September 9, 1994, among Texas
Commerce Bank National Association, State Street Bank and
Trust Company, A I M Fund Services, Inc. and Registrant was
filed electronically as an Exhibit to Post-Effective
Amendment No. 9, on February 28, 1996, and is hereby
incorporated by reference.
10 (a) (1) Registrant's Distribution Plan was filed as an
Exhibit to Registrant's Post-Effective Amendment No.
1 on February 23, 1993.
(2) Distribution Plan, and related forms of agreements,
on behalf of the Registrant's AIM International
Equity Fund, dated September 27, 1993, were filed as
an Exhibit to Registrant's Post-Effective Amendment
No. 3 on February 24, 1994.
(3) Master Distribution Plan, and related forms of
agreements, for Registrant's Class A shares were
filed as Exhibits to Registrant's Post-Effective
Amendment No. 7 on February 23, 1995.
(4) Master Distribution Plan, and related forms of
agreements, for Registrant's Class B shares were
filed as Exhibits to Registrant's Post-Effective
Amendment No. 7 on February 23, 1995.
(5) Amended Master Distribution Plan, dated September
10, 1994, for Registrant's Class A shares was
electronically filed as an Exhibit to Post-Effective
Amendment No. 8 on December 1, 1995.
(6) Amended Master Distribution Plan, dated September
10, 1994, for Registrant's Class B shares was
electronically filed as an Exhibit to Post-Effective
Amendment No. 8 on December 1, 1995.
5
<PAGE> 360
Item 16. Exhibits.
(7) Amended and Restated Master Distribution Plan, dated
as of September 10, 1994, as amended as of September
10, 1994, and as amended and restated as of May 2,
1995, for Registrant's Class B shares was
electronically filed as an Exhibit to Post-Effective
Amendment No. 8 on December 1, 1995,
(8) Amended and Restated Master Distribution Plan, dated
as of September 10, 1994, as amended as of September
10, 1994, and amended and restated as of June 30,
1997, for Registrant's Class A shares was filed
electronically as an Exhibit to Post-Effective
Amendment No. 12 on August 4, 1997.
(9)(i) Second Amended and Restated Master Distribution
Plan, dated as of September 10, 1994, as amended
September 10, 1994, and as amended and restated as
of May 2, 1995, and amended and restated as of June
30, 1997, for Registrant's Class B shares was filed
electronically as an Exhibit to Post-Effective
Amendment No. 12 on August 4, 1997, and is hereby
incorporated by reference.
(9)(ii) Amendment No. 1, dated November 1, 1997, to Second
Amended and Restated Master Distribution Plan for
Registrant's Class B shares was filed electronically
as an Exhibit to Post-Effective Amendment No. 13 on
October 17, 1997, and is hereby incorporated by
reference.
(10)(i) Second Amended and Restated Master Distribution
Plan, dated as of September 10, 1994, as amended as
of September 10, 1994, as amended and restated as of
June 30, 1997, and as amended and restated as of
August 4, 1997, for Registrant's Class A and Class C
shares was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on October 17, 1997.
(10)(ii) Amendment No. 1, dated November 1, 1997, to Second
Amended and Restated Master Distribution Plan for
Registrants Class A and Class C shares was filed
electronically as an Exhibit to Post-Effective
Amendment No. 13 on October 17, 1997.
(10)(iii) Third Amended and Restated Master Distribution Plan
for Registrant's Class A and Class C shares was
filed electronically as an Exhibit to Post-Effective
Amendment No. 15 on December 23, 1998 and is hereby
incorporated by reference.
(b) Form of Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed electronically as an Exhibit to Post-Effective
Amendment No. 16 on February 19, 1999, and is hereby
incorporated by reference.
(c) Form of Bank Shareholder Service Agreement to be used in
connection with Registrant's Master Distribution Plan was
filed electronically as an Exhibit to Post-Effective
Amendment No. 16 on February 19, 1999, and is hereby
incorporated by reference.
(d) (1) Form of Agency Pricing Agreement (for Class A
Shares) to be used in connection with Registrant's
Master Distribution Plan was filed electronically as
an Exhibit to Post-Effective Amendment No. 16 on
February 19, 1999, and is hereby incorporated by
reference.
6
<PAGE> 361
Item 16. Exhibits.
(2) Form of Service Agreement for Certain Retirement
Plans (for the Institutional Classes) to be used in
connection with Registrant's Master Distribution
Plan was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996.
(e) Forms of Service Agreement for Brokers for Bank Trust
Departments and for Bank Trust Departments to be used in
connection with Registrant's Master Distribution Plan were
filed electronically as an Exhibit to Post-Effective
Amendment No. 16 on February 19, 1999, and are hereby
incorporated by reference.
(f) Form of Variable Group Annuity Contractholder Service
Agreement to be used in connection with Registrant's Master
Distribution Plan was filed electronically as an Exhibit to
Post-Effective Amendment No. 16 on February 19, 1999, and is
hereby incorporated by reference.
(g) Rule 18f-3 Amended and Restated Multiple Class Plan
(effective July 1, 1997) was filed electronically as an
Exhibit to Post-Effective Amendment No. 12 on August 12,
1997.
(h) Rule 18f-3 Second Amended and Restated Multiple Class Plan
(effective September 1, 1997) was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on October 17,
1997.
(i) Third Amended and Restated Multiple Class Plan (Rule 18f-3
Plan) was filed electronically as an Exhibit to
Post-Effective Amendment No. 17 on February 23, 2000, and is
hereby incorporated by reference.
11 Opinion and consent of Ballard Spahr Andrews & Ingersoll,
LLP, as to the legality of the securities being registered is
filed herewith electronically.
12 Opinion and consent of Ballard Spahr Andrews & Ingersoll,
LLP, supporting the tax matters and consequences to
shareholders discussed in the prospectus will be filed as an
amendment to this Registration Statement.
13 (a) (1) Transfer Agency Agreement between Registrant and The
Shareholder Services Group, Inc., dated May 15,
1992, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 1 on February 23, 1993.
(2) Amendment, dated May 15, 1992, to Transfer Agency
Agreement between Registrant and The Shareholder
Services Group, Inc., dated May 15, 1992, was filed
as an Exhibit to Registrant's Post-Effective
Amendment No. 1 on February 23, 1993.
(3) Form of Amendment No. 2 to Transfer Agency Agreement
between Registrant and The Shareholder Services
Group, Inc., dated May 15, 1992, was filed as an
Exhibit to Registrant's Post-Effective Amendment No.
6 on September 2, 1994.
(4) Amendment No. 3, dated July 1, 1994, to Transfer
Agency Agreement between Registrant and The
Shareholder Services Group, Inc., dated May 15,
1992, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on September 2, 1994.
7
<PAGE> 362
Item 16. Exhibits.
(5)(i) Transfer Agency and Service Agreement, dated as of
November 1, 1994, between the Registrant and A I M
Fund Services, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 7 on
February 23, 1995, and was filed electronically as
an Exhibit to Post-Effective Amendment No. 9 on
February 28, 1996, and is hereby incorporated by
reference.
(5)(ii) Amendment No. 1, dated August 4, 1997, to the
Transfer Agency and Service Agreement, dated as of
November 1, 1994, between the Registrant and A I M
Fund Services, Inc., was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on
October 17, 1997, and is hereby incorporated by
reference.
(5)(iii) Amendment No. 2, dated January 1, 1999, to the
Transfer Agency and Service Agreement, dated as of
November 1, 1999, between Registrant and A I M Fund
Services, Inc., was filed electronically as an
Exhibit to Post-Effective Amendment No. 17 on
February 23, 2000, and is hereby incorporated by
reference.
(6)(i) Remote Access and Related Services Agreement, dated
as of December 23, 1994, between the Registrant and
The Shareholder Services Group, Inc. was filed as an
Exhibit to Post-Effective Amendment No. 7 on
February 23, 1995, and was filed electronically as
an Exhibit to Post-Effective Amendment No. 9 on
February 28, 1996, and is hereby incorporated by
reference.
(6)(ii) Amendment No. 1, dated October 4, 1995, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First
Data Investor Services Group, Inc. (formerly The
Shareholder Services Group, Inc.) was filed
electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996, and is hereby
incorporated by reference.
(6)(iii) Addendum No. 2, dated October 12, 1995, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between Registrant and First Data
Investor Services Group, Inc. (formerly The
Shareholder Services Group, Inc.) was filed
electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996, and is hereby
incorporated by reference.
(6)(iv) Amendment No. 3, dated February 1, 1997, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between Registrant and First Data
Investor Services Group, Inc. (formerly The
Shareholder Services Group, Inc.) was filed
electronically as an Exhibit to Post-Effective
Amendment No. 12 on August 4, 1997, and is hereby
incorporated by reference.
(6)(v) Amendment No. 4, dated as of June 30, 1998, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First
Data Investor Services Group, Inc. was filed
electronically as an Exhibit to Post-Effective
Amendment No. 15 on December 23, 1998, and is hereby
incorporated by reference.
(6) (vi) Amendment No. 5, dated July 1, 1998, to the Remote
Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First
Data Investor Services Group, Inc., was filed
electronically as an Exhibit to Post-Effective
Amendment No. 15 on December 23, 1998, and is hereby
incorporated by reference.
8
<PAGE> 363
Item 16. Exhibits.
(6)(vii) Amendment No. 6, dated August 30, 1999, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First
Data Investor Services Group, Inc., was filed
electronically as an Exhibit to Post-Effective
Amendment No. 17 on February 23, 2000, and is hereby
incorporated by reference.
(6)(viii) Exhibit 1, effective as of August 4, 1997, to the
Remote Access and Related Services Agreement, dated
December 23, 1994, between the Registrant and First
Data Investor Services Group, Inc. was filed
electronically as an Exhibit to Post-Effective
Amendment No. 14 on February 20, 1998, and is
hereby incorporated by reference.
(6)(ix) Preferred Registration Technology Escrow Agreement,
dated September 10, 1997, between Registrant and
First Data Investor Services Group, Inc., was filed
electronically as an Exhibit to Post-Effective
Amendment No. 14 on February 20, 1998, and is hereby
incorporated by reference.
(b) (1) Administrative Services Agreement, dated December
10, 1991, between the Registrant and A I M Advisors,
Inc. was filed as an Exhibit to Registrant's
Registration Statement on December 19, 1991.
(2) Administrative Services Agreement, dated as of
October 18, 1993, between A I M Advisors, Inc. and
Registrant, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 3 on February 24, 1994,
and was filed electronically as an Exhibit to
Post-Effective Amendment No. 9 on February 28, 1996.
(3) Master Administrative Services Agreement, dated as
of July 1, 1994, between A I M Advisors, Inc. and
Registrant on behalf of its AIM Global Aggressive
Growth Fund, AIM Global Growth Fund and AIM Global
Income Fund was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 6 on September 2, 1994,
and was filed electronically as an Exhibit to
Post-Effective Amendment No. 9, on February 28,
1996.
(4)(i) Administrative Services Agreement, dated as of
October 18, 1993, between A I M Advisors, Inc. on
behalf of Registrant's portfolios, and A I M Fund
Services, Inc., was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on
February 24, 1994.
(4)(ii) Amendment No. 1, dated May 11, 1994, to
Administrative Services Agreement, dated October 18,
1993, between A I M Advisors, Inc., on behalf of
Registrant's portfolios, and A I M Fund Services,
Inc. was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 4 on June 29, 1994.
(4)(iii) Amendment No. 2, dated July 1, 1994, to
Administrative Services Agreement, dated October 18,
1993, between A I M Advisors, Inc., on behalf of
Registrant's portfolios and classes, and A I M Fund
Services, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 6 on
September 2, 1994.
(4)(iv) Amendment No. 3, dated September 16, 1994, to the
Administrative Services Agreement, dated October 18,
1993, between A I M Advisors, Inc., on behalf of
Registrant's portfolios and classes, and A I M Fund
Services, Inc. was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 7 on
February 23, 1995.
9
<PAGE> 364
Item 16. Exhibits.
(5)(i) Administrative Services Agreement, dated as of
February 28, 1997, between A I M Advisors, Inc. and
Registrant was filed as an Exhibit to Post-Effective
Amendment No. 11 on May 16, 1997, and is hereby
incorporated by reference.
(5)(ii) Amendment No. 1, dated November 1, 1997, to Master
Administrative Services Agreement, dated February
28, 1997, between A I M Advisors, Inc. and
Registrant was filed electronically as an Exhibit to
Post-Effective Amendment No. 13 on October 17, 1997,
and is hereby incorporated by reference.
(c) (1) Accounting Services Agreement, dated as of November
5, 1991, between the Registrant and State Street
Bank and Trust Company was filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 2 on April
2, 1992, and was filed electronically as an Exhibit
to Post-Effective Amendment No. 9 on February 28,
1996.
(2) Amendment No. 1, dated July 1, 1994, to Accounting
Services Agreement, dated as of November 5, 1991,
between the Registrant and State Street Bank and
Trust Company was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 6 on
September 2, 1994, and was filed electronically as
an Exhibit to Post-Effective Amendment No. 9 on
February 28, 1996.
(d) (1) Shareholder Sub-Accounting Services Agreement among
the Registrant, First Data Investor Services Group
(formerly The Shareholder Services Group, Inc.),
Financial Data Services, Inc. and Merrill Lynch,
Pierce, Fenner & Smith, Inc., was filed as an
Exhibit to Registrant's Post-Effective Amendment No.
1 on February 23, 1993, and was filed electronically
as an Exhibit to Post-Effective Amendment No. 9 on
February 28, 1996, and is hereby incorporated by
reference.
(2) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated February 1,
1993, was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 1 on February 23, 1993,
and was filed electronically as an Exhibit to
Post-Effective Amendment No. 10 on February 24,
1997, and is hereby incorporated by reference.
(3) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated as of
November 1, 1997, among the Registrant, First Data
Investor Services Group, Inc., Financial Data
Services, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on
October 17, 1997 and is hereby incorporated by
reference.
(4) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated as of
September 28, 1998, among the Registrant, First Data
Investor Services Group, Inc., Financial Data
Services, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated was filed electronically as an
Exhibit to Post-Effective Amendment No. 16 on
February 19, 1999, and is hereby incorporated by
reference.
10
<PAGE> 365
Item 16. Exhibits.
(5) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated as of March
1, 1999, among the Registrant, First Data Investor
Services Group, Inc., and Merrill Lynch, Pierce,
Fenner & Smith Incorporated was filed electronically
as an Exhibit to Post-Effective Amendment No. 17 on
February 23, 2000, and is hereby incorporated by
reference.
(6) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated as of May
12, 1999, among the Registrant, First Data Investor
Services Group, Inc., and Merrill Lynch, Pierce,
Fenner & Smith Incorporated was filed electronically
as an Exhibit to Post-Effective Amendment No. 17 on
February 23, 2000, and is hereby incorporated by
reference
(7) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated as of
November 1, 1999, among the Registrant, First Data
Investor Services Group, Inc., and Merrill Lynch,
Pierce, Fenner & Smith Incorporated was filed
electronically as an Exhibit to Post-Effective
Amendment No. 17 on February 23, 2000, and is hereby
incorporated by reference
(8) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated as of
December 31, 1999, among the Registrant, First Data
Investor Services Group, Inc., and Merrill Lynch,
Pierce, Fenner & Smith Incorporated was filed
electronically as an Exhibit to Post-Effective
Amendment No. 17 on February 23, 2000, and is hereby
incorporated by reference
14 (a) Consent of KPMG LLP is filed herewith electronically.
(b) Consent of PriceWaterhouseCoopers LLP is filed
herewith electronically.
15 Financial Statements - None.
16 None.
17 (a) Form of Proxy.
(b) Prospectus of AIM Global Government Income Fund.
(c) Prospectus of AIM Global Growth & Income Fund.
Item 17. Undertakings
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which
is a part of this registration statement by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c) of the Securities Act
[17 CRF 203.145c], the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by persons who
may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering of them.
11
<PAGE> 366
SIGNATURES
Pursuant to the Securities Act of 1933, as amended, the Registrant has
duly caused this Registration Statement on Form N-14 to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Houston, State of
Texas, on the 22nd day of March, 2000.
AIM INTERNATIONAL FUNDS, INC.
Registrant
By: *
--------------------------------------
Robert H. Graham
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form N-14 has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Charles T. Bauer Chairman & Director March 22, 2000
- -----------------------------------
Charles T. Bauer
* Director & President March 22, 2000
- -----------------------------------
Robert H. Graham
/s/ Bruce L. Crockett Director March 22, 2000
- -----------------------------------
Bruce L. Crockett
/s/ Owen Daly II Director March 22, 2000
- -----------------------------------
Owen Daly II
/s/ Prema Mathai-Davis Director March 22, 2000
- -----------------------------------
Prema Mathai-Davis
/s/ Edward K. Dunn, Jr. Director March 22, 2000
- -----------------------------------
Edward K. Dunn, Jr.
/s/ Jack Fields Director March 22, 2000
- -----------------------------------
Jack Fields
/s/ Carl Frishling Director March 22, 2000
- -----------------------------------
Carl Frishling
/s/ Lewis F. Pennock Director March 22, 2000
- -----------------------------------
Lewis F. Pennock
/s/ Louis Sklar Director March 22, 2000
- -----------------------------------
Louis Sklar
* Vice President & Treasurer March 22, 2000
- ----------------------------------- (Principal Financial Officer)
Dana R. Sutton
* By: /s/ Carol F. Relihan
-----------------------------
Carol F. Relihan
Attorney-In-Fact
</TABLE>
<PAGE> 367
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Carol F. Relihan, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all his capacities as a director or officer of AIM
International Funds, Inc., a Maryland corporation, to sign on his or its behalf
any and all Registration Statements (including any pre-effective amendments to
Registration Statements) under the Securities Act of 1933, the Investment
Company Act of 1940 and any amendments and supplements thereto and applications
thereunder, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
and any other applicable regulatory authority, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, and fully as to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, may lawfully do or cause to be done by virtue hereof.
DATED this 22nd day of March, 2000.
/s/ ROBERT H. GRAHAM
--------------------------------
Robert H. Graham
<PAGE> 368
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert H. Graham or Carol F. Relihan, and each of them, her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for her and in her name, place and stead, in any and all his
capacities as a director or officer of AIM International Funds, Inc. a Maryland
corporation, to sign on her or its behalf any and all Registration Statements
(including any pre-effective amendments to Registration Statements) under the
Securities Act of 1933, the Investment Company Act of 1940 and any amendments
and supplements thereto and applications thereunder, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any other applicable regulatory
authority, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, and fully as to
all intents and purposes as she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, and each of them,
may lawfully do or cause to be done by virtue hereof.
DATED this 22nd day of March, 2000.
/s/ DANA R. SUTTON
-----------------------------------
Dana R. Sutton
<PAGE> 369
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
11 Opinion of Counsel and Consent of Ballard Spahr Andrews & Ingersoll,
LLP as to securities registered
14(a) Consent of KPMG LLP
14(b) Consent of PriceWaterhouseCoopers LLP
17(a) Form of Proxy
17(b) Prospectus of AIM Global Government Income Fund
17(c) Prospectus of AIM Global Growth & Income Fund
</TABLE>
<PAGE> 1
EXHIBIT 11
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
1735 MARKET STREET, 51ST FLOOR
PHILADELPHIA, PENNSYLVANIA 19103-7599
(215) 665-8500
March 22, 2000
AIM International Funds, Inc.
11 Greenway Plaza
Suite 100
Houston, Texas 77046
Re: Shares of Stock of AIM Global Income Fund and AIM Global Growth
Fund, Portfolios of AIM International Funds, Inc.
Ladies and Gentlemen:
We have acted as counsel to AIM International Funds, Inc.,
a Maryland corporation (the "Company"), in connection with that certain
Agreement and Plan of Reorganization between the Company, acting on behalf of
AIM Global Income Fund and AIM Global Growth Fund (the "Acquiring Funds"), each
an investment portfolio of the Company, and AIM Investment Funds, a Delaware
business trust ("AIF"), acting on behalf of AIM Global Government Income Fund
and AIM Global Growth & Income Fund (the "Acquired Funds"), each an investment
portfolio of AIF (the "Agreement"), and the consummation of the transactions
contemplated therein.
The Agreement provides for the combination of AIM Global
Government Income Fund with AIM Global Income Fund and the combination of AIM
Global Growth & Income Fund with AIM Global Growth Fund (the
"Reorganizations"). Pursuant to the Agreement, all of the assets of the
Acquired Fund will be transferred to the Acquiring Fund with which it will
combine, the Acquiring Fund will assume all of the liabilities of the Acquired
Fund and the Company will issue Class A shares of the Acquiring Fund to the
Acquired Fund's Class A shareholders, Class B shares of the Acquiring Fund to
the Acquired Fund's Class B shareholders and Class C shares of the Acquiring
Fund to the Acquired Fund's Class C shareholders. The value of each Acquired
Fund shareholder's account with the Acquiring Fund immediately after the
Reorganization will be the same as the value of such shareholder's account with
the Acquired Fund immediately prior to the Reorganization.
<PAGE> 2
AIM International Funds, Inc.
March 22, 2000
Page 2
The opinion expressed below is based on the assumption
that a Registration Statement on Form N-14 with respect to the Class A, Class B
and Class C shares of the Acquiring Funds to be issued pursuant to the
Agreement (the "Acquiring Fund Shares") will have been filed by the Company
with the Securities and Exchange Commission and will have become effective
before the Reorganizations occur.
Based on the foregoing, we are of the opinion that the
Acquiring Fund Shares, when issued by the Company directly to the shareholders
of the Acquired Funds in accordance with the terms and conditions of the
Agreement, will be legally issued, fully paid and nonassessable.
We express no opinion concerning the laws of any
jurisdiction other than the federal laws of the United States of America and
the laws of the State of Maryland.
We consent to the filing of this opinion as Exhibit 11 to
the Company's Registration Statement on Form N-14 and to the references to this
firm in such Registration Statement.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
<PAGE> 1
EXHIBIT 14(a)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors and Shareholders
AIM International Funds, Inc.:
We consent to the use of our reports on the AIM Global Growth Fund and the AIM
Global Income Fund (portfolios of AIM International Funds, Inc.) dated December
3, 1999 included herein and the references to our firm under the heading
"Financial Information" in the Statement of Additional Information and
"Accountants" in the Agreement and Plan of Reorganization.
/s/ KPMG LLP
KPMG LLP
Houston, Texas
March 22, 2000
<PAGE> 1
EXHIBIT 14(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use and incorporation by reference in this Registration
Statement on Form N-14 of our reports dated December 23, 1999, relating to the
financial statements and financial highlights which appear in the October 31,
1999 Annual Reports to Shareholders of the AIM Global Government Income Fund and
the AIM Global Growth & Income Fund, which are also incorporated by reference
and included in the Registration Statement.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 21, 2000
<PAGE> 1
EXHIBIT 17(a)
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY TODAY!
PROXY CARD PROXY SOLICITED BY THE BOARD OF TRUSTEES OF PROXY CARD
AIM GLOBAL GOVERNMENT INCOME FUND
(a portfolio of AIM Investment Funds)
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 31, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, and each of
them separately, proxies with the power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders on May 31, 2000, at 3:00 p.m., Central time, and at any
adjournment thereof, all of the shares of the fund which the undersigned would
be entitled to vote if personally present. IF THIS PROXY IS SIGNED AND RETURNED
WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED "FOR" THE APPROVAL OF THE
PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. All joint owners
should sign. When signing as executor,
administrator, attorney, trustee or guardian
or as custodian for a minor, please give
full title as such. If a corporation, please
sign in full corporate name and indicate the
signer's office. If a partner, sign in the
partnership name.
-------------------------------------------
Signature
-------------------------------------------
Signature (if held jointly)
--------------------------------------------
Dated
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE TRUSTEES
RECOMMEND VOTING "FOR" THE PROPOSAL TO VOTE, FILL IN BOX COMPLETELY.
EXAMPLE: [X]
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. To approve an Agreement and Plan of Reorganization among AIM Investment
Funds, acting on behalf of AIM Global Government Income Fund,
AIM International Funds, Inc. acting on behalf of AIM Global Income Fund
and A I M Advisors, Inc. [ ] [ ] [ ]
2. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 2
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN YOUR PROXY TODAY!
PROXY CARD PROXY SOLICITED BY THE BOARD OF TRUSTEES OF PROXY CARD
AIM GLOBAL GROWTH & INCOME FUND
(a portfolio of AIM Investment Funds)
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 31, 2000
The undersigned hereby appoints Robert H. Graham and Gary T. Crum, and each of
them separately, proxies with the power of substitution to each, and hereby
authorizes them to represent and to vote, as designated below, at the Special
Meeting of Shareholders on May 31, 2000, at 3:00 p.m., Central time, and at any
adjournment thereof, all of the shares of the fund which the undersigned would
be entitled to vote if personally present. IF THIS PROXY IS SIGNED AND RETURNED
WITH NO CHOICES INDICATED, THE SHARES WILL BE VOTED "FOR" THE APPROVAL OF THE
PROPOSAL.
CONTROL NUMBER:
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. All joint owners
should sign. When signing as executor,
administrator, attorney, trustee or guardian
or as custodian for a minor, please give
full title as such. If a corporation, please
sign in full corporate name and indicate the
signer's office. If a partner, sign in the
partnership name.
-------------------------------------------
Signature
-------------------------------------------
Signature (if held jointly)
-------------------------------------------
Dated
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THE TRUSTEES
RECOMMEND VOTING "FOR" THE PROPOSAL TO VOTE, FILL IN BOX COMPLETELY.
EXAMPLE: [X]
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. To approve an Agreement and Plan of Reorganization among AIM Investment
Funds, acting on behalf of AIM Global Growth & Income Fund, AIM
International Funds, Inc. acting on behalf of AIM Global Growth Fund
and A I M Advisors, Inc. [ ] [ ] [ ]
2. IN THE DISCRETION OF SUCH PROXIES, UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
<PAGE> 1
EXHIBIT 17(b)
CLASS A, CLASS B AND CLASS C SHARES OF
AIM GLOBAL GOVERNMENT INCOME FUND
Supplement dated March 22, 2000
to the Prospectus dated February 28, 2000
The Board of Trustees of AIM Investment Funds unanimously approved, on March
22, 2000, a Plan of Reorganization ("Plan") pursuant to which AIM Global
Government Income Fund ("Government Income Fund"), a series of AIM Investment
Funds, would transfer substantially all of its assets to AIM Global Income Fund
("Global Income Fund"), a series of AIM International Funds, Inc. As a result
of the transaction, shareholders of Government Income Fund would receive shares
of Global Income Fund in exchange for their shares of Government Income Fund,
and Government Income Fund would cease operations. Government Income Fund and
Global Income Fund have the same investment objective. The investment objective
of each Fund is to seek high current income and secondarily, growth of capital
and protection of principal.
The Plan requires approval of Government Income Fund shareholders and will be
submitted to the shareholders for their consideration at a meeting to be held
in May 2000. If the Plan is approved by shareholders of Government Income Fund
and certain conditions required by the Plan are satisfied, the transaction is
expected to become effective shortly thereafter.
Effective March 22, 2000, the following heading and paragraphs replace in their
entirety the heading and paragraphs appearing under the heading "Fund
Management - The Advisors" on page 5 of the Prospectus:
"THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment
advisor. The advisor is located at 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173. The advisor supervises all aspects of the
fund's operations and provides investment advisory services to the
fund, including obtaining and evaluating economic, statistical and
financial information to formulate and implement investment programs
for the fund.
The advisor has acted as an investment advisor since its
organization in 1976. Today, the advisor, together with its
subsidiaries, advises or manages over 120 investment portfolios,
including the fund, encompassing a broad range of investment
objectives."
Effective March 22, 2000, the following paragraph replaces in its entirety the
paragraph appearing under the heading "Fund Management - Portfolio Managers" on
page 5 of the Prospectus:
"The advisor uses a team approach to investment management. The
individual members of the team who are primarily responsible for the
day-to-day management of the fund's portfolio, all of whom are
officers of A I M Capital Management, Inc., a wholly owned
subsidiary of the advisor, are
o Robert G. Alley, Senior Portfolio Manager, who has been
responsible for the fund since 2000 and has been associated
with the advisor and/or its affiliates since 1992.
o Jan H. Friedli, Portfolio Manager, who has been responsible for
the fund since 2000 and has been associated with the advisor
and/or its affiliates since 1999. From 1997 to 1999, he was
global fixed-income portfolio manager for Nicholas-Applegate
Capital Management. From 1994 to 1997, he was international
fixed-income trader and analyst for Strong Capital Management."
Effective April 28, 2000, Class A, Class B and Class C shares of the fund will
be closed to new investors.
<PAGE> 2
AIM GLOBAL
GOVERNMENT INCOME FUND
--------------------------------------------------------------------------
AIM Global Government Income Fund primarily seeks to provide high current
income and, secondarily, growth of capital and protection of principal.
AIM--Registered Trademark--
PROSPECTUS
FEBRUARY 28, 2000
This prospectus contains important
information about Class A, B and C
shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information in
this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 3
---------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
---------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 3
Performance Table 3
FEE TABLE AND EXPENSE EXAMPLE 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 4
Expense Example 4
FUND MANAGEMENT 5
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisors 5
Advisor Compensation 5
Portfolio Managers 5
OTHER INFORMATION 5
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 5
Dividends and Distributions 5
FINANCIAL HIGHLIGHTS 6
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 4
---------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
---------------------------------
INVESTMENT OBJECTIVES AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's primary investment objective is high current income, and its
secondary investment objectives are growth of capital and protection of
principal.
The fund seeks to meet these objectives by investing at least 65% of its total
assets in debt securities (including mortgage-backed securities) issued or
guaranteed by U.S. and foreign governments or by their agencies, authorities,
and instrumentalities, as well as by supranational entities, such as the World
Bank. The fund primarily invests in high-quality government debt securities that
are rated in the top two ratings categories by Moody's Investors Service, Inc.
or Standard & Poor's or deemed by the portfolio managers to be of comparable
quality. The fund may invest in lower-quality debt securities, i.e., "junk
bonds."
The fund may invest up to 35% of its total assets in (1) foreign government
securities that are rated within the third and fourth highest ratings categories
by Moody's or S&P or deemed by the fund's portfolio managers to be of comparable
quality; (2) corporate debt obligations of U.S. or foreign issuers rated at
least investment grade (rated within the four highest ratings categories by
Moody's or S&P); (3) privately issued mortgage-backed and asset-backed
securities that are rated at least investment grade, or deemed by the portfolio
managers to be of comparable quality; and (4) common stocks, preferred stocks
and warrants, provided that the fund will invest no more than 20% of its total
assets in such securities.
The fund will normally invest in securities issued by at least three different
countries, including the United States, and may invest a significant portion of
its assets in the securities of U.S. issuers. However, the fund will invest no
more than 40% of its total assets in securities of any one country, other than
the U.S. The fund will only invest in a foreign currency or in securities
denominated in a foreign currency if the portfolio managers consider the
currency to be fully exchangeable into U.S. dollars or a multinational currency
unit.
The portfolio managers allocate assets among securities of countries and in
currency denominations where the combination of fixed-income market returns, the
price appreciation of fixed-income securities and currency exchange rate
movements will present opportunities for meeting the fund's investment
objectives. The principal determinants of the emphasis given to various country,
geographic, and industry sectors within the fund are fundamental economic
strength, credit quality, and currency and interest rate trends. Further, the
portfolio managers select particular issuers based on additional economic
criteria such as yield, maturity, issue classification, and quality
characteristics. Currency investments are based on economic factors (such as
relative inflation, interest rate levels and trends, growth rate forecasts,
balance of payments status, and economic policies) and on political and
technical data. The portfolio managers consider whether to sell a particular
security when any of those factors materially changes.
The fund is a non-diversified portfolio. With respect to 50% of its assets, it
is permitted to invest more than 5% of its assets in the securities of any one
issuer.
In anticipation of or in response to adverse market conditions, for cash
management purposes or for defensive purposes, the fund may temporarily hold all
or a portion of its assets in cash (U.S. dollars, foreign currencies or
multinational currency units), money market instruments, shares of affiliated
money market funds, or high-quality debt securities. As a result, the fund may
not achieve its investment objectives.
The fund may engage in active and frequent trading of portfolio securities to
achieve its investment objectives. If the fund does trade in this way, it may
incur increased transaction costs, which can lower the actual return on your
investment. Active trading may also increase short-term capital gains and
losses, which may affect the taxes you have to pay.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. Debt securities are particularly
vulnerable to credit risk and interest rate fluctuations. When interest rates
rise, bond prices fall; the longer a bond's duration, the more sensitive it is
to this risk. The fund could also lose money if any debt securities that the
fund holds are downgraded or go into default.
Mortgage-backed and asset-backed securities are subject to different risks
from bonds and, as a result, may respond to changes in interest rates
differently. If interest rates fall, people refinance or pay off their mortgages
ahead of time, which may cause mortgage-backed securities to lose value. If
interest rates rise, many people may refinance or prepay their mortgages at a
slower-than-expected rate. This may effectively lengthen the life of
mortgage-backed securities, which may cause the securities to be more sensitive
to changes in interest rates.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
1
<PAGE> 5
---------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
---------------------------------
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
These factors may affect the prices of securities issued by foreign companies
and governments located in developing countries more than those in countries
with mature economies. For example, many developing countries have, in the past,
experienced high rates of inflation or sharply devalued their currencies against
the U.S. dollar, thereby causing the value of investments in companies located
in those countries to decline. Transaction costs are often higher in developing
countries and there may be delays in settlement procedures.
Sovereign debt securities of developing country governments are generally
lower-quality debt securities. Sovereign debt securities are subject to the
additional risk that, under some political, diplomatic, social or economic
circumstances, some developing countries that issue lower-quality debt
securities may be unable or unwilling to make principal or interest repayments
as they come due.
Compared to higher-quality debt securities, junk bonds involve greater risk of
default or price changes due to changes in the credit quality of the issuer
because they are generally unsecured and may be subordinated to other creditors'
claims. The value of junk bonds often fluctuates in response to company,
political or economic developments and can decline significantly over short
periods of time or during periods of general or regional economic difficulty.
During those times, the bonds could be difficult to value or to sell at a fair
price. Credit ratings on junk bonds do not necessarily reflect their actual
market risk.
Because it is non-diversified, the fund may invest in fewer issuers than if it
was a diversified fund. Thus, the value of the fund's shares may vary more
widely, and the fund may be subject to greater investment and credit risk, than
if the fund invested more broadly.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
2
<PAGE> 6
---------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
---------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
- ----------- ------
<S> <C>
1990 ....................................... 8.77%
1991 ....................................... 13.67%
1992 ....................................... 1.95%
1993 ....................................... 25.52%
1994 ....................................... -13.95%
1995 ....................................... 15.63%
1996 ....................................... 6.06%
1997 ....................................... 3.37%
1998 ....................................... 12.13%
1999 ....................................... -7.82%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
7.01% (quarter ended September 30, 1998) and the lowest quarterly return was
- -8.76% (quarter ended March 31, 1994).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A (12.16)% 4.54% 5.44% 5.65% 03/29/88
Class B (12.76) 4.52 -- 4.25 10/22/92
Class C -- -- -- -- 03/01/99
J.P. Morgan Global Government Bond Index(1) (5.08) 6.69 7.81 7.34(2) 03/31/88(2)
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) The J.P. Morgan Global Government Bond Index is an average of government
bonds from 13 major bond markets.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
3
<PAGE> 7
---------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
---------------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 4.75% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.73% 0.73% 0.73%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses
Other 0.41 0.41 0.41
Interest 0.04 0.04 0.04
Total Other Expenses 0.45 0.45 0.45
---- ---- ----
Total Annual Fund
Operating Expenses 1.53 2.18 2.18
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $623 $935 $1,270 $2,212
Class B 721 982 1,370 2,349
Class C 321 682 1,170 2,513
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $623 $935 $1,270 $2,212
Class B 221 682 1,170 2,349
Class C 221 682 1,170 2,513
- ----------------------------------------------
</TABLE>
4
<PAGE> 8
---------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
---------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor.
INVESCO Asset Management Limited (the subadvisor), an affiliate of the advisor,
is the fund's subadvisor and is responsible for its day-to-day management. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The subadvisor is located at 11 Devonshire Square, London EC2M 4YR, England. The
advisors supervise all aspects of the fund's operations and provide investment
advisory services to the fund, including obtaining and evaluating economic,
statistical and financial information to formulate and implement investment
programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976,
and the subadvisor has acted as an investment advisor since 1967. Today, the
advisor, together with its subsidiaries, advises or manages over 120 investment
portfolios, including the fund, encompassing a broad range of investment
objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 1999, the advisor received compensation
of 0.73% of average daily net assets.
PORTFOLIO MANAGERS
The advisors use a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - Thomas J. Berger, Portfolio Manager, has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1997. From 1993 to 1997 he was Director of Mercury Asset Management PLC.
- - Paul Griffiths, Portfolio Manager, has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1994.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Global Government Income Fund are subject to
the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions will consist primarily of income.
DIVIDENDS
The fund generally declares and pays dividends, if any, monthly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
5
<PAGE> 9
---------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
---------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is included in the fund's annual
report, which is available upon request.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------
YEAR ENDED OCTOBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.97 $ 8.62 $ 8.74 $ 8.81 $ 8.63
Income from investment operations:
Net investment income 0.41 0.54 0.52 0.57 0.62
Net realized and unrealized gain (loss) on
investments (0.76) 0.32 (0.13) 0.03 0.15
Net increase (decrease) from investment
operations (0.35) 0.86 0.39 0.60 0.77
Distributions to shareholders:
From net investment income (0.43) (0.16) (0.31) (0.57) (0.59)
From net realized gain on investments -- -- -- (0.10) --
In excess of net investment income -- (0.35) (0.20) -- --
Total distributions (0.43) (0.51) (0.51) (0.67) (0.59)
Net asset value, end of period $ 8.19 $ 8.97 $ 8.62 $ 8.74 $ 8.81
Total return(b) (3.97)% 10.20% 4.78% 7.11% 9.22%
- ------------------------------------------------------------------------------------------------------
Ratios and supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $85,669 $121,268 $154,272 $240,945 $385,404
Ratio of net investment income to average net
assets 4.72%(c) 6.06% 6.04% 6.52% 6.98%
Ratio of expenses to average net assets
(excluding interest expense) 1.49%(c) 1.52% 1.51% 1.39% 1.38%
Ratio of interest expense to average net assets 0.04% 0.29% N/A N/A N/A
Portfolio turnover rate 110% 305% 241% 268% 385%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) These selected per share data were calculated based upon the average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $103,919,944.
N/A Not applicable.
6
<PAGE> 10
---------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
---------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------
YEAR ENDED OCTOBER 31,
1999(a) 1998(a) 1997(a) 1996(a) 1995(a)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 8.97 $ 8.62 $ 8.74 $ 8.80 $ 8.64
Income from investment operations:
Net investment income 0.35 0.47 0.46 0.51 0.55
Net realized and unrealized gain (loss) on
investments (0.75) 0.34 (0.12) 0.04 0.14
Net increase (decrease) from investment
operations (0.40) 0.81 0.34 0.55 0.69
Distributions to shareholders:
From net investment income (0.38) (0.11) (0.28) (0.51) (0.53)
From net realized gain on investments -- -- -- (0.10) --
In excess of net investment income -- (0.35) (0.18) -- --
Total distributions (0.38) (0.46) (0.46) (0.61) (0.53)
Net asset value, end of period $ 8.19 $ 8.97 $ 8.62 $ 8.74 $ 8.80
Total return(b) (4.62)% 9.65% 4.00% 6.54% 8.22%
- ------------------------------------------------------------------------------------------------------
Ratios and supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $55,849 $91,852 $127,722 $166,577 $235,481
Ratio of net investment income (loss) to average
net assets 4.07%(c) 5.41% 5.39% 5.87% 6.33%
Ratio of expenses to average net assets
(excluding interest expense) 2.14%(c) 2.17% 2.16% 2.04% 2.03%
Ratio of interest expense to average net assets 0.04% 0.29% N/A N/A N/A
Portfolio turnover rate 110% 305% 241% 268% 385%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) These selected per share data were calculated based upon average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $71,016,370.
N/A Not applicable.
<TABLE>
<CAPTION>
CLASS C
-------------------------------
MARCH 1, 1999 TO
OCTOBER 31, 1999(a)
- ------------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 8.63
Income from investment operations:
Net investment income 0.20
Net realized and unrealized gain (loss) on
investments (0.44)
Net increase (decrease) from investment
operations (0.24)
Distributions to shareholders:
From net investment income (0.21)
From net realized gain on investments --
In excess of net investment income --
Total distributions (0.21)
Net asset value, end of period $ 8.18
Total return(b) (2.80)%
- ------------------------------------------------------------------------------------
Ratios and supplemental data:
- ------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $ 243
Ratio of net investment income to average net
assets 4.07%(c)
Ratio of expenses to average net assets (excluding
interest expense) 2.14%(c)
Ratio of interest expense to average net assets 0.04%
Portfolio turnover rate 110%
- ------------------------------------------------------------------------------------
</TABLE>
(a) These selected per share data were calculated based upon average shares
outstanding during the period.
(b) Total return does not include sales charges and is not annualized for
periods less than one year.
(c) Ratios are annualized and based on average net assets of $196,715.
7
<PAGE> 11
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--02/00
<PAGE> 12
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--02/00 A-2
<PAGE> 13
-------------
THE AIM FUNDS
-------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--02/00
<PAGE> 14
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored
retirement plan assesses an annual maintenance fee of $10. Contact your
financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--02/00 A-4
<PAGE> 15
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- --------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--02/00
<PAGE> 16
-------------
THE AIM FUNDS
-------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited
MCF--02/00 A-6
<PAGE> 17
-------------
THE AIM FUNDS
-------------
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if
you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- --------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
- --------------------------------------------------------------------------------
A-7 MCF--02/00
<PAGE> 18
-------------
THE AIM FUNDS
-------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the customary trading session of the NYSE on each day the NYSE is open for
business. AIM Money Market Fund also determines its net asset value as of 12:00
noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THIS
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--02/00 A- 8
<PAGE> 19
---------------------------------
AIM GLOBAL GOVERNMENT INCOME FUND
---------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- ------------------------------------
AIM Global Government Income Fund
SEC 1940 Act file number: 811-05426
- ------------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GGVI-PRO-1 INVEST WITH DISCIPLINE
-- Registered Trademark --
<PAGE> 1
EXHIBIT 17(c)
CLASS A, CLASS B AND CLASS C SHARES OF
AIM GLOBAL GROWTH & INCOME FUND
Supplement dated March 22, 2000
to the Prospectus dated February 28, 2000
The Board of Trustees of AIM Investment Funds unanimously approved, on March
22, 2000, a Plan of Reorganization ("Plan") pursuant to which AIM Global Growth
& Income Fund ("Growth & Income Fund"), a series of AIM Investment Funds, would
transfer substantially all of its assets to AIM Global Growth Fund ("Growth
Fund"), a series of AIM International Funds, Inc. As a result of the
transaction, shareholders of Growth & Income Fund would receive shares of
Growth Fund in exchange for their shares of Growth & Income Fund, and Growth &
Income Fund would cease operations. Growth & Income Fund and Growth Fund have
similar investment objectives. Growth & Income Fund seeks long-term growth of
capital together with current income; Growth Fund seeks long-term growth of
capital.
The Plan requires approval of Growth & Income Fund shareholders and will be
submitted to the shareholders for their consideration at a meeting to be held
in May 2000. If the Plan is approved by shareholders of Growth & Income Fund
and certain conditions required by the Plan are satisfied, the transaction is
expected to become effective shortly thereafter.
Effective March 22, 2000, the following heading and paragraphs replace in their
entirety the heading and paragraphs appearing under the heading "Fund
Management - The Advisors" on page 4 of the Prospectus:
"THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment
advisor. The advisor is located at 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173. The advisor supervises all aspects of the
fund's operations and provides investment advisory services to the
fund, including obtaining and evaluating economic, statistical and
financial information to formulate and implement investment programs
for the fund.
The advisor has acted as an investment advisor since its
organization in 1976. Today, the advisor, together with its
subsidiaries, advises or manages over 120 investment portfolios,
including the fund, encompassing a broad range of investment
objectives."
Effective March 22, 2000, the following paragraph replaces in its entirety the
paragraph appearing under the heading "Fund Management - Portfolio Managers" on
page 4 of the Prospectus:
"The advisor uses a team approach to investment management. The
individual members of the team who are primarily responsible for the
day-to-day management of the fund's portfolio, all of whom are
officers of A I M Capital Management, Inc., a wholly owned subsidiary
of the advisor, are
o Monika H. Degan, Senior Portfolio Manager, who has been
responsible for the fund since 2000 and has been associated
with the advisor and/or its affiliates since 1995.
o A. Dale Griffin, III, Senior Portfolio Manager, who has been
responsible for the fund since 2000 and has been associated
with the advisor and/or its affiliates since 1989.
o Benjamin A. Hock, Jr., Portfolio Manager, who has been
responsible for the fund since 2000 and has been associated
with the advisor and/or its affiliates since 1999. From 1994
to 1999, he was, among other offices, head of equity research
at John Hancock Advisers, Inc.
<PAGE> 2
o Jason T. Holzer, Portfolio Manager, who has been responsible
for the fund since 2000 and has been associated with the
advisor and/or its affiliates since 1996. From 1994 to 1996,
he was an associate with JMB Realty.
o Clas G. Olsson, Senior Portfolio Manager, who has been
responsible for the fund since 2000 and has been associated
with the advisor and/or its affiliates since 1994.
o Jonathan C. Schoolar, Senior Portfolio Manager, who has been
responsible for the fund since 2000 and has been associated
with the advisor and/or its affiliates since 1986.
o Barrett K. Sides, Portfolio Manager, who has been responsible
for the fund since 2000 and has been associated with the
advisor and/or its affiliates since 1990."
Effective April 28, 2000, Class A, Class B and Class C shares of the fund will
be closed to new investors.
2
<PAGE> 3
AIM GLOBAL GROWTH
& INCOME FUND
-------------------------------------------------------------------------
AIM Global Growth & Income Fund seeks to provide long-term growth of
capital together with current income.
PROSPECTUS AIM--Registered Trademark--
FEBRUARY 28, 2000
This prospectus contains important
information about the Class A, B and C
shares of the fund. Please read it
before investing and keep it for
future reference.
As with all other mutual fund
securities, the Securities and
Exchange Commission has not approved
or disapproved these securities or
determined whether the information
in this prospectus is adequate or
accurate. Anyone who tells you
otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark--
<PAGE> 4
-------------------------------
AIM GLOBAL GROWTH & INCOME FUND
-------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisors 4
Advisor Compensation 4
Portfolio Managers 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Sales Charges 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Choosing a Share Class A-1
Purchasing Shares A-3
Redeeming Shares A-4
Exchanging Shares A-6
Pricing of Shares A-8
Taxes A-8
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com,
La Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest with
Discipline are registered service marks and AIM Bank Connection, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
<PAGE> 5
-------------------------------
AIM GLOBAL GROWTH & INCOME FUND
-------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital together with
current income.
The fund seeks to meet this objective by investing, normally, at least 65% of
its total assets in a combination of blue-chip equity securities and
high-quality government bonds of U.S. and foreign issuers. "Blue chip" equity
securities are those which (1) offered, during the issuer's most recent fiscal
year, an above average dividend yield relative to the latest reported dividend
yield on the Morgan Stanley Capital International World Index; and (2) are
issued by a company with total equity market capitalization of at least $1
billion. High-quality government bonds are rated within one of the two highest
ratings categories by Moody's Investors Service, Inc. or Standard & Poor's, or
are deemed by the portfolio managers to be of comparable quality.
The fund may invest up to 35% of its total assets in other equity securities
and government and corporate debt securities that are investment grade, i.e.,
rated within one of the four highest ratings categories by Moody's or S&P, or
are deemed by the portfolio managers to be of comparable quality. The fund may
purchase debt obligations issued or guaranteed by the U.S. or foreign
governments, including foreign states, provinces or municipalities, or their
agencies, authorities or instrumentalities and debt obligations of supranational
organizations, such as the World Bank. The fund will normally invest in
securities of issuers in at least three countries, including the United States,
and the fund may invest a significant portion of its assets in the securities of
U.S. issuers. However, the fund may invest no more than 40% of its assets in
securities of issuers in any one country, other than the U.S. The fund may
invest up to 100% of its total assets in either equity or debt securities in
response to general economic changes and market conditions around the world.
The portfolio managers allocate assets among securities of countries and in
currency denominations where opportunities for meeting the fund's investment
objective are expected to be the most attractive. The portfolio managers select
fixed-income securities based on economic criteria such as yield, maturity,
issue classification, and quality characteristics. The portfolio managers select
equity securities that they believe are undervalued relative to the issuer's
current or projected earnings and that they believe have above-average prospects
for future growth. Currency investments are based on economic factors and on
political and technical data. The portfolio managers consider whether to sell a
particular security when any of those factors materially changes.
The fund is non-diversified. With respect to 50% of its assets, it is
permitted to invest more than 5% of its assets in the securities of any one
issuer.
In anticipation of or in response to adverse market conditions, for cash
management purposes or for defensive purposes, the fund may temporarily hold all
or a portion of its assets in cash (U.S. dollars, foreign currencies or
multinational currency units), money market instruments, shares of affiliated
money market funds, or high-quality debt securities. As a result, the fund may
not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
- --------------------------------------------------------------------------------
There is a risk that you could lose all or a portion of your investment in the
fund and that the income you may receive from your investment may vary. The
value of your investment in the fund will go up and down with the prices of the
securities in which the fund invests. The prices of equity securities change in
response to many factors including the historical and prospective earnings of
the issuer, the value of its assets, general economic conditions, interest
rates, investor perceptions, and market liquidity. Debt securities are
particularly vulnerable to credit risk and interest rate fluctuations. When
interest rates rise, bond prices fall; the longer a bond's duration, the more
sensitive it is to this risk.
The prices of foreign securities may be further affected by other factors,
including:
- - Currency exchange rates--The dollar value of the fund's foreign investments
will be affected by changes in the exchange rates between the dollar and the
currencies in which those investments are traded.
- - Political and economic conditions--The value of the fund's foreign investments
may be adversely affected by political and social instability in their home
countries and by changes in economic or taxation policies in those countries.
- - Regulations--Foreign companies generally are subject to less stringent
regulations, including financial and accounting controls, than are U.S.
companies. As a result, there generally is less publicly available information
about foreign companies than about U.S. companies.
- - Markets--The securities markets of other countries are smaller than U.S.
securities markets. As a result, many foreign securities may be less liquid
and more volatile than U.S. securities.
Because it is non-diversified, the fund may invest in fewer issuers than if it
were a diversified fund. The value of the fund's shares may vary more widely,
and the fund may be subject to greater investment and credit risk, than if the
fund invested more broadly.
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
1
<PAGE> 6
-------------------------------
AIM GLOBAL GROWTH & INCOME FUND
-------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The following bar chart shows changes in the performance of the fund's Class A
shares from year to year. The bar chart does not reflect sales loads. If it did,
the annual total returns shown would be lower.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Returns
- ----------- -------
<S> <C>
1991 ........................................................... 19.14%
1992 ........................................................... 2.57%
1993 ........................................................... 27.36%
1994 ........................................................... -3.57%
1995 ........................................................... 15.32%
1996 ........................................................... 17.02%
1997 ........................................................... 18.16%
1998 ........................................................... 20.45%
1999 ........................................................... 0.12%
</TABLE>
During the periods shown in the bar chart, the highest quarterly return was
12.27% (quarter ended December 31, 1998) and the lowest quarterly return was
- -7.69% (quarter ended September 30, 1998).
PERFORMANCE TABLE
The following performance table compares the fund's performance to that of a
broad-based securities market index. The fund's performance reflects payment of
sales loads.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(for the periods ended SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS INCEPTION DATE
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (5.41)% 12.67% 11.66% 09/25/90
Class B (4.88) 12.98 12.22 10/22/92
Class C -- -- -- 03/01/99
MSCI World Index(1) 24.93 19.76 15.84(2) 09/30/90(2)
- ------------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International World Index measures the
performance of 1,578 securities listed on the major world stock exchanges.
(2) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
2
<PAGE> 7
-------------------------------
AIM GLOBAL GROWTH & INCOME FUND
-------------------------------
FEE TABLE AND EXPENSE EXAMPLE
- --------------------------------------------------------------------------------
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
SHAREHOLDER FEES
- - - - -- - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of
offering price) 5.50% None None
Maximum Deferred
Sales Charge (Load)
(as a percentage of
original purchase
price or redemption
proceeds, whichever
is less) None(1) 5.00% 1.00%
- -------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <C> <C>
Management Fees 0.97% 0.97% 0.97%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses 0.33 0.33 0.33
Total Annual Fund
Operating Expenses 1.65 2.30 2.30
- -------------------------------------------------------
</TABLE>
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares
within 18 months from the date of purchase, you may pay a 1% contingent
deferred sales charge (CDSC) at the time of redemption.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in different
classes of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual returns and
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $709 $1,042 $1,398 $2,397
Class B 733 1,018 1,430 2,473
Class C 333 718 1,230 2,636
- ----------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------
<S> <C> <C> <C> <C>
Class A $709 $1,042 $1,398 $2,397
Class B 233 718 1,230 2,473
Class C 233 718 1,230 2,636
- ----------------------------------------------
</TABLE>
3
<PAGE> 8
-------------------------------
AIM GLOBAL GROWTH & INCOME FUND
-------------------------------
FUND MANAGEMENT
- --------------------------------------------------------------------------------
THE ADVISORS
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor.
INVESCO Asset Management Limited (the subadvisor), an affiliate of the advisor,
is the fund's subadvisor and is responsible for its day-to-day management. The
advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173.
The subadvisor is located at 11 Devonshire Square, London EC2M 4YR, England. The
advisors supervise all aspects of the fund's operations and provide investment
advisory services to the fund, including obtaining and evaluating economic,
statistical and financial information to formulate and implement investment
programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976,
and the subadvisor has acted as an investment advisor since 1967. Today, the
advisor, together with its subsidiaries, advises or manages over 120 investment
portfolios, including the fund, encompassing a broad range of investment
objectives.
ADVISOR COMPENSATION
During the fiscal year ended October 31, 1999, the advisor received compensation
of 0.97% of average net assets.
PORTFOLIO MANAGERS
The advisors use a team approach to investment management. The individual
members of the team who are primarily responsible for the day-to-day management
of the fund's portfolio are
- - Anthony Broccardo, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1993.
- - Paul Griffiths, Portfolio Manager, who has been responsible for the fund since
1995 and has been associated with the advisor and/or its affiliates since
1994.
- - John Nadell, Portfolio Manager, who has been responsible for the fund since
1998 and has been associated with the advisor and/or its affiliates since
1994.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Global Growth & Income Fund are subject to
the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I
Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class"
section of this prospectus. Purchases of Class B and Class C shares are subject
to the contingent deferred sales charges listed in that section.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions will consist primarily of capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, quarterly.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any,
annually.
4
<PAGE> 9
-------------------------------
AIM GLOBAL GROWTH & INCOME FUND
-------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the fund's
financial performance. Certain information reflects financial results for a
single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP, whose report,
along with the fund's financial statements, is included in the fund's annual
report, which is available upon request.
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
1999(a) 1998(a) 1997(a) 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.26 $ 8.21 $ 7.11 $ 6.35 $ 6.21
Income from investment operations:
Net investment income 0.20 0.17 0.21 0.22 0.24
Net realized and unrealized gain (loss) on
investments (0.05) 1.25 1.12 0.82 0.13
Net increase from investment operations 0.15 1.42 1.33 1.04 0.37
Distributions to shareholders:
From net investment income (0.11) (0.13) (0.21) (0.24) (0.22)
From net realized gain on investments (1.50) (0.24) (0.02) (0.04) (0.01)
Total distributions (1.61) (0.37) (0.23) (0.28) (0.23)
Net asset value, end of period $ 7.80 $ 9.26 $ 8.21 $ 7.11 $ 6.35
Total return(b) 1.03% 17.76% 19.01% 16.80% 6.27%
- ----------------------------------------------------------------------------------------------------------
Ratios and supplemental data:
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $254,060 $306,279 $292,528 $286,203 $284,069
Ratio of net investment income to average net
assets 2.34%(c) 1.87% 2.74% 3.17% 3.85%
Ratio of expenses to average net assets 1.65%(c) 1.65% 1.64% 1.66% 1.74%
Portfolio turnover rate 89% 92% 50% 39% 83%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a)These selected per share data were calculated based upon the average shares
outstanding during the period.
(b)Total return does not include sales charges and is not annualized for periods
less than one year.
(c)Ratios are based on average net assets of $297,130,261.
5
<PAGE> 10
-------------------------------
AIM GLOBAL GROWTH & INCOME FUND
-------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
- ------------------------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
1999(a) 1998(a) 1997(a) 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.25 $ 8.21 $ 7.11 $ 6.35 $ 6.21
Income from investment operations:
Net investment income 0.14 0.11 0.16 0.17 0.20
Net realized and unrealized gain (loss) on
investments (0.04) 1.25 1.13 0.82 0.13
Net increase from investment operations 0.10 1.36 1.29 0.99 0.33
Distributions to shareholders:
From net investment income (0.05) (0.08) (0.17) (0.20) (0.18)
From net realized gain on investments (1.50) (0.24) (0.02) (0.03) (0.01)
Total distributions (1.55) (0.32) (0.19) (0.23) (0.19)
Net asset value, end of period $ 7.80 $ 9.25 $ 8.21 $ 7.11 $ 6.35
Total return(b) 0.42% 16.93% 18.28% 16.06% 5.57%
- ------------------------------------------------------------------------------------------------------
Ratios and supplemental data:
- ------------------------------------------------------------------------------------------------------
Net assets, end of period (in 000s) $376,181 $483,307 $456,893 $383,966 $356,796
Ratio of net investment income to average net
assets 1.69%(c) 1.22% 2.09% 2.52% 3.20%
Ratio of expenses to average net assets 2.30%(c) 2.30% 2.29% 2.31% 2.39%
Portfolio turnover rate 89% 92% 50% 39% 83%
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a)These selected per share data were calculated based upon the average shares
outstanding during the period.
(b)Total return does not include sales charges and is not annualized for periods
less than one year.
(c)Ratios are based on average net assets of $453,590,643.
<TABLE>
<CAPTION>
CLASS C
- ---------------------------------------------------------------------------------
MARCH 1, 1999
TO OCTOBER 31,
1999(a)
- ---------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 8.05
Income from investment operations:
Net investment income (loss) 0.10
Net realized and unrealized gain (loss) on investments (0.26)
Net increase (decrease) from investment operations (0.16)
Distributions to shareholders:
From net investment income (0.02)
From net realized gain on investments (0.07)
Total distributions (0.09)
Net asset value, end of period $ 7.80
Total return(b) (1.98)%
- ---------------------------------------------------------------------------------
Ratios and supplemental data:
- ---------------------------------------------------------------------------------
Net assets, end of period (in 000s) $1,344
Ratio of net investment income to average net assets 1.69%(c)
Ratio of expenses to average net assets 2.30%(c)
Portfolio turnover rate 89%
- ---------------------------------------------------------------------------------
</TABLE>
(a)These selected per share data were calculated based upon the average shares
outstanding during the period.
(b)Total return does not include sales charges and is not annualized for periods
less than one year.
(c)Ratios are annualized and based on average net assets of $944,451.
6
<PAGE> 11
-------------
THE AIM FUNDS
-------------
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
In addition to the fund, A I M Advisors, Inc. serves as investment advisor to
many other mutual funds (the AIM Funds). The following information is about all
the AIM Funds.
CHOOSING A SHARE CLASS
Many of the AIM Funds have multiple classes of shares, each class representing
an interest in the same portfolio of investments. When choosing a share class,
you should consider the factors below:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
- - Initial sales charge - No initial sales charge - No initial sales charge
- - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales
charge for certain purchases charge on redemptions within charge on redemptions within
six years one year
- - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00%
(12b-1) fee than Class B or
Class C shares (See "Fee Table
and Expense Example")
- Converts to Class A shares - Does not convert to Class A
after eight years along with a shares
pro rata portion of its
reinvested dividends and
distributions(1)
- - Generally more appropriate for - Purchase orders limited to - Generally more appropriate
long-term investors amounts less than $250,000 for short-term investors
</TABLE>
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve
Shares.
AIM Global Trends Fund: If you held Class B shares on May 29,
1998 and continue to hold them, those shares will convert to
Class A shares of that fund seven years after your date of
purchase. If you exchange those shares for Class B shares of
another AIM Fund, the shares into which you exchanged will
not convert to Class A shares until eight years after your
date of purchase of the original shares.
- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE (12b-1) FEES
Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans
that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc.
(the distributor) for the sale and distribution of its shares and fees for
services provided to shareholders, all or a substantial portion of which are
paid to the dealer of record. Because the AIM Fund pays these fees out of its
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
SALES CHARGES
Generally, you will not pay a sales charge on purchases or redemptions of Class
A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money
Market Fund. You may be charged a contingent deferred sales charge if you redeem
AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain
exchanges. Sales charges on all other AIM Funds and classes of those Funds are
detailed below. As used below, the term "offering price" with respect to all
categories of Class A shares includes the initial sales charge.
INITIAL SALES CHARGES
The AIM Funds are grouped into three categories with respect to initial sales
charges. The "Other Information" section of your prospectus will tell you in
what category your particular AIM Fund is classified.
<TABLE>
<CAPTION>
CATEGORY I INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 25,000 5.50% 5.82%
$ 25,000 but less than $ 50,000 5.25 5.54
$ 50,000 but less than $ 100,000 4.75 4.99
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 3.00 3.09
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
A-1 MCF--02/00
<PAGE> 12
-------------
THE AIM FUNDS
-------------
<TABLE>
<CAPTION>
CATEGORY II INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 50,000 4.75% 4.99%
$ 50,000 but less than $ 100,000 4.00 4.17
$100,000 but less than $ 250,000 3.75 3.90
$250,000 but less than $ 500,000 2.50 2.56
$500,000 but less than $1,000,000 2.00 2.04
- -------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CATEGORY III INITIAL SALES CHARGES
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTOR'S
SALES CHARGE
----------------------------
AMOUNT OF INVESTMENT AS A % OF AS A % OF
IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT
- -------------------------------------------------------------
<S> <C> <C>
Less than $ 100,000 1.00% 1.01%
$100,000 but less than $ 250,000 0.75 0.76
$250,000 but less than $1,000,000 0.50 0.50
- -------------------------------------------------------------
</TABLE>
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES
You can purchase $1,000,000 or more of Class A shares at net asset value.
However, if you purchase shares of that amount in Categories I or II, they will
be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them
prior to 18 months after the date of purchase. The distributor may pay a dealer
concession and/or a service fee for purchases of $1,000,000 or more.
CONTINGENT DEFERRED SALES CHARGES FOR
CLASS B AND CLASS C SHARES
You can purchase Class B and Class C shares at their net asset value per share.
However, when you redeem them, they are subject to a CDSC in the following
percentages:
<TABLE>
<CAPTION>
YEAR SINCE
PURCHASE MADE CLASS B CLASS C
- ----------------------------------------------------------
<S> <C> <C>
First 5% 1%
Second 4 None
Third 3 None
Fourth 3 None
Fifth 2 None
Sixth 1 None
Seventh and following None None
- ----------------------------------------------------------
</TABLE>
COMPUTING A CDSC
The CDSC on redemptions of shares is computed based on the lower of their
original purchase price or current market value, net of reinvested dividends and
capital gains distributions. In determining whether to charge a CDSC, we will
assume that you have redeemed shares on which there is no CDSC first and, then,
shares in the order of purchase.
REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS
You may qualify for reduced sales charges or sales charge exceptions. To qualify
for these reductions or exceptions, you or your financial consultant must
provide sufficient information at the time of purchase to verify that your
purchase qualifies for such treatment.
REDUCED SALES CHARGES
You may be eligible to buy Class A shares at reduced initial sales charge rates
under Rights of Accumulation or Letters of Intent under certain circumstances.
Rights of Accumulation
You may combine your new purchases of Class A shares with Class A shares
currently owned for the purpose of qualifying for the lower initial sales charge
rates that apply to larger purchases. The applicable initial sales charge for
the new purchase is based on the total of your current purchase and the current
value of all Class A shares you own.
Letters of Intent
Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount
of Class A shares of AIM Funds during a 13-month period. The amount you agree to
purchase determines the initial sales charge you pay. If the full face amount of
the LOI is not invested by the end of the 13-month period, your account will be
adjusted to the higher initial sales charge level for the amount actually
invested.
INITIAL SALES CHARGE EXCEPTIONS
You will not pay initial sales charges
- - on shares purchased by reinvesting dividends and distributions;
- - when exchanging shares among certain AIM Funds;
- - when using the reinstatement privilege; and
- - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs.
CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS
You will not pay a CDSC
- - if you redeem Class B shares you held for more than six years;
- - if you redeem Class C shares you held for more than one year;
- - if you redeem shares acquired through reinvestment of dividends and
distributions; and
- - on increases in the net asset value of your shares.
There may be other situations when you may be able to purchase or redeem shares
at reduced or without sales charges. Consult the fund's Statement of Additional
Information for details.
MCF--02/00 A-2
<PAGE> 13
-------------
THE AIM FUNDS
-------------
PURCHASING SHARES
MINIMUM INVESTMENTS PER AIM FUND ACCOUNT
The minimum investments for AIM Fund accounts (except for investments in AIM Mid
Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
TYPE OF ACCOUNT INVESTMENTS INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25
plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans)
(SEP) accounts, Salary Reduction (SARSEP)
accounts, Savings Incentive Match Plans for
Employee IRA (Simple IRA) accounts, 403(b) or
457 plans)
Automatic Investment Plans 50 50
IRA, Education IRA or Roth IRA 250 50
All other accounts 500 50
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE SHARES
You may purchase shares using one of the options below.
PURCHASE OPTIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Through a Financial Consultant Contact your financial consultant. Same
By Mail Mail completed account application Mail your check and the remittance
and purchase payment to the slip from your confirmation
transfer agent, statement to the transfer agent.
A I M Fund Services, Inc.,
P.O. Box 4739,
Houston, TX 77210-4739.
By Wire Mail completed account application Call the transfer agent to receive
to the transfer agent. Call the a reference number. Then, use the
transfer agent at (800) 959-4246 to wire instructions at left.
receive a reference number. Then,
use the following wire
instructions:
Beneficiary Bank ABA/Routing #:
113000609
Beneficiary Account Number:
00100366807
Beneficiary Account Name: A I M
Fund Services, Inc.
RFB: Fund Name, Reference #
OBI: Your Name, Account #
By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection
methods described above. form to the transfer agent. Once
the transfer agent has received the
form, call the transfer agent to
place your purchase order.
By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect
methods described above. option on your completed account
application or complete an AIM
Internet Connect Authorization
Form. Mail the application or form
to the transfer agent. Once your
request for this option has been
processed (which may take up to 10
days), you may place your purchase
order at www.aimfunds.com. The
maximum purchase amount per
transaction is $100,000. You may
not purchase shares in AIM
prototype retirement accounts on
the internet.
- ----------------------------------------------------------------------------------------------------------
</TABLE>
A-3 MCF--02/00
<PAGE> 14
-------------
THE AIM FUNDS
-------------
SPECIAL PLANS
AUTOMATIC INVESTMENT PLAN
You can arrange for periodic investments in any of the AIM Funds by authorizing
the AIM Fund to withdraw the amount of your investment from your bank account on
a day or dates you specify and in an amount of at least $50. You may stop the
Automatic Investment Plan at any time by giving the transfer agent notice ten
days prior to your next scheduled withdrawal.
DOLLAR COST AVERAGING
Dollar Cost Averaging allows you to make automatic monthly or quarterly
exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund
accounts with the identical registration. The account from which exchanges are
to be made must have a minimum balance of $5,000 before you can use this option.
Exchanges will occur on (or about) the 10th or 25th day of the month, whichever
you specify, in the amount you specify. The minimum amount you can exchange to
another AIM Fund is $50.
AUTOMATIC DIVIDEND INVESTMENT
All of your dividends and distributions may be paid in cash or invested in any
AIM Fund at net asset value. Unless you specify otherwise, your dividends and
distributions will automatically be reinvested in the same AIM Fund. You may
invest your dividends and distributions (1) into another AIM Fund in the same
class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM
Money Market Fund, or vice versa.
You must comply with the following requirements to be eligible to invest your
dividends and distributions in shares of another AIM Fund:
(1) Your account balance (a) in the AIM Fund paying the dividend must be at
least $5,000; or (b) in the AIM Fund receiving the dividend must be at least
$500;
(2) Both accounts must have identical registration information; and
(3) You must have completed an authorization form to reinvest dividends into
another AIM Fund.
PORTFOLIO REBALANCING PROGRAM
If you have at least $5,000 in your account, you may participate in the
Portfolio Rebalancing Program. Under this Program, you can designate how the
total value of your AIM Fund holdings should be rebalanced, on a percentage
basis, between two and ten of your AIM Funds on a quarterly, semiannual or
annual basis. Your portfolio will be rebalanced through the exchange of shares
in one or more of your AIM Funds for shares of the same class of one or more
other AIM Funds in your portfolio. If you wish to participate in the Program,
make changes or cancel the Program, the transfer agent must receive your request
to participate, changes, or cancellation in good order at least five business
days prior to the next rebalancing date, which is normally the 28th day of the
last month of the period you choose. You may realize taxable gains from these
exchanges. We may modify, suspend or terminate the Program at any time on 60
days' prior written notice.
RETIREMENT PLANS
Shares of most of the AIM Funds can be purchased through tax-sheltered
retirement plans made available to corporations, individuals and employees of
non-profit organizations and public schools. A plan document must be adopted to
establish a retirement plan. You may use AIM Funds-sponsored retirement plans,
which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans,
SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or
another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored
retirement plan assesses an annual maintenance fee of $10. Contact your
financial consultant for details.
REDEEMING SHARES
REDEMPTION FEES
Generally, we will not charge you any fees to redeem your shares. However, if
you acquired Class A shares of AIM Developing Markets Fund in connection with
the reorganization of AIM Eastern Europe Fund, you will be charged a redemption
fee of 2% of the net asset value of those shares, which will be paid to AIM
Developing Markets Fund, if you redeem your shares within the first year after
the reorganization. Your broker or financial consultant may charge service fees
for handling redemption transactions. Your shares also may be subject to a
contingent deferred sales charge (CDSC).
REDEMPTION OF AIM CASH RESERVE SHARES OF
AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE
If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares
subject to a CDSC within 18 months of the purchase of the Class A shares, you
will be charged a CDSC.
REDEMPTION OF CLASS B SHARES OR CLASS C
SHARES ACQUIRED BY EXCHANGE FROM AIM CASH
RESERVE SHARES OF AIM MONEY MARKET FUND
We will begin the holding period for purposes of calculating the CDSC on Class B
shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of
AIM Money Market Fund at the time of the exchange into Class B shares or Class C
shares.
REDEMPTION OF CLASS B SHARES ACQUIRED BY
EXCHANGE FROM AIM FLOATING RATE FUND
If you redeem Class B shares you acquired by exchange via a tender offer by AIM
Floating Rate Fund, the early withdrawal charge applicable to shares of AIM
Floating Rate Fund will be applied instead of the CDSC normally applicable to
Class B shares.
MCF--02/00 A-4
<PAGE> 15
-------------
THE AIM FUNDS
-------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Through a Financial Contact your financial consultant.
Consultant
By Mail Send a written request to the transfer agent. Requests must
include (1) original signatures of all registered owners;
(2) the name of the AIM Fund and your account number; (3) if
the transfer agent does not hold your shares, endorsed share
certificates or share certificates accompanied by an
executed stock power; and (4) signature guarantees, if
necessary (see below). The transfer agent may require that
you provide additional information, such as corporate
resolutions or powers of attorney, if applicable. If you are
redeeming from an IRA account, you must include a statement
of whether or not you are at least 59 1/2 years old and
whether you wish to have federal income tax withheld from
your proceeds. The transfer agent may require certain other
information before you can redeem from an employer-sponsored
retirement plan. Contact your employer for details.
By Telephone Call the transfer agent. You will be allowed to redeem by
telephone if (1) the proceeds are to be mailed to the
address on record (if there has been no change communicated
to us within the last 30 days) or transferred electronically
to a pre-authorized checking account; (2) you do not hold
physical share certificates; (3) you can provide proper
identification information; (4) the proceeds of the
redemption do not exceed $50,000; and (5) you have not
previously declined the telephone redemption privilege.
Certain accounts, including retirement accounts and 403(b)
plans, may not be redeemed by telephone. The transfer agent
must receive your call during the hours of the customary
trading session of the New York Stock Exchange (NYSE) in
order to effect the redemption at that day's closing price.
By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will
be allowed to redeem by internet if (1) you do not hold
physical share certificates; (2) you can provide proper
identification information; (3) the proceeds of the
redemption do not exceed $50,000; and (4) you have
established the internet trading option. AIM prototype
retirement accounts may not be redeemed on the internet. The
transfer agent must confirm your transaction during the
hours of the customary trading session of the NYSE in order
to effect the redemption at that day's closing price.
</TABLE>
- --------------------------------------------------------------------------------
TIMING AND METHOD OF PAYMENT
We normally will send out checks within one business day, and in any event no
more than seven days, after we accept your request to redeem. If you redeem
shares recently purchased by check, you will be required to wait up to ten
business days before we will send your redemption proceeds. This delay is
necessary to ensure that the purchase check has cleared.
REDEMPTION BY MAIL
If you mail us a request in good order to redeem your shares, we will mail you a
check in the amount of the redemption proceeds to the address on record with us.
If your request is not in good order, you may have to provide us with additional
documentation in order to redeem your shares.
REDEMPTION BY TELEPHONE
If you redeem by telephone, we will mail you a check in the amount of the
redemption proceeds to your address of record (if there has been no change
communicated to the transfer agent within the previous 30 days) or transmit them
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by telephone are genuine and are not
liable for telephone instructions that are reasonably believed to be genuine.
REDEMPTION BY INTERNET
If you redeem by internet, we will transmit your redemption proceeds
electronically to your pre-authorized bank account. We use reasonable procedures
to confirm that instructions communicated by internet are genuine and are not
liable for internet instructions that are reasonably believed to be genuine.
PAYMENT FOR SYSTEMATIC WITHDRAWALS
You may arrange for regular monthly or quarterly withdrawals from your account
of at least $50. You also may make annual withdrawals if you own Class A shares.
We will redeem enough shares from your account to cover the amount withdrawn.
You must have an account balance of at least $5,000 to establish a Systematic
Withdrawal Plan. You can stop this plan at any time by giving ten days prior
notice to the transfer agent.
EXPEDITED REDEMPTIONS
(AIM Cash Reserve Shares of AIM Money Market Fund only)
If we receive your redemption order before 11:30 a.m. Eastern Time, we will try
to transmit payment of redemption proceeds on that same day. If we receive your
redemption order after 11:30 a.m. Eastern Time and before the close of the
customary trading session of the NYSE, we generally will transmit payment on the
next business day.
A-5 MCF--02/00
<PAGE> 16
-------------
THE AIM FUNDS
-------------
REDEMPTIONS BY CHECK
(Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM
Money Market Fund only)
You may redeem shares of these AIM Funds by writing checks in amounts of $250 or
more if you have completed an authorization form. Redemption by check is not
available for retirement accounts.
SIGNATURE GUARANTEES
We require a signature guarantee when you redeem by mail and
(1) the amount is greater than $50,000;
(2) you request that payment be made to someone other than the name registered
on the account;
(3) you request that payment be sent somewhere other than the bank of record on
the account; or
(4) you request that payment be sent to a new address or an address that changed
in the last 30 days.
The transfer agent will accept a guarantee of your signature by a number of
financial institutions. Call the transfer agent for additional information. Some
institutions have transaction amount maximums for these guarantees. Please check
with the guarantor institution.
REINSTATEMENT PRIVILEGE (Class A shares only)
You may, within 90 days after you sell Class A shares (except Class A shares of
AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in
Class A shares of any AIM Fund at net asset value in an identically registered
account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM
Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting
the difference between the initial sales charges on those Funds and the ones in
which you will be investing. In addition, if you paid a contingent deferred
sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC
if you later redeem that amount. You must notify the transfer agent in writing
at the time you reinstate that you are exercising your reinstatement privilege.
You may exercise this privilege only once per year.
REDEMPTIONS BY THE AIM FUNDS
If your account has been open at least one year, you have not made an additional
purchase in the account during the past six calendar months, and the value of
your account falls below $500 for three consecutive months due to redemptions or
exchanges (excluding retirement accounts), the AIM Funds have the right to
redeem the account after giving you 60 days' prior written notice. You may avoid
having your account redeemed during the notice period by bringing the account
value up to $500 or by utilizing the Automatic Investment Plan.
If an AIM Fund determines that you have not provided a correct Social Security
or other tax ID number on your account application, the AIM Fund may, at its
discretion, redeem the account and distribute the proceeds to you.
EXCHANGING SHARES
You may, under certain circumstances, exchange shares in one AIM Fund for those
of another AIM Fund. Before requesting an exchange, review the prospectus of the
AIM Fund you wish to acquire. Exchange privileges also apply to holders of the
Connecticut General Guaranteed Account, established for tax-qualified group
annuities, for contracts purchased on or before June 30, 1992.
PERMITTED EXCHANGES
Except as otherwise stated below, you may exchange your shares for shares of the
same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM
Money Market Fund for Class A shares of another AIM Fund, or vice versa. You
also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B
shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve
Shares were purchased directly and not acquired by exchange. You may be required
to pay an initial sales charge when exchanging from a Fund with a lower initial
sales charge than the one into which you are exchanging. If you exchange from
Class A shares not subject to a CDSC into Class A shares subject to those
charges, you will be charged a CDSC when you redeem the exchanged shares. The
CDSC charged on redemption of those shares will be calculated starting on the
date you acquired those shares through exchange.
YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING:
(1) Class A shares with an initial sales charge (except for Class A shares of
AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for
Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money
Market Fund;
(2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund for
(a) one another;
(b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of
AIM Tax-Exempt Cash Fund; or
(c) Class A shares of another AIM Fund, but only if
(i) you acquired the original shares before May 1, 1994; or
(ii) you acquired the original shares on or after May 1, 1994 by way of
an exchange from shares with higher sales charges;
(3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM
Tax-Exempt Cash Fund for
(a) one another;
(b) Class A shares of an AIM Fund subject to an initial sales charge (except
for Class A shares of AIM Limited
MCF--02/00 A-6
<PAGE> 17
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THE AIM FUNDS
-------------
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if
you acquired the original shares
(i) prior to May 1, 1994 by exchange from Class A shares subject to an
initial sales charge;
(ii) on or after May 1, 1994 by exchange from Class A shares subject to
an initial sales charge (except for Class A shares of AIM Limited
Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or
(c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free
Intermediate Fund, but only if you acquired the original shares by
exchange from Class A shares subject to an initial sales charge; or
(4) Class B shares for other Class B shares, and Class C shares for other Class
C shares.
(5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and
Class C shares.
EXCHANGES NOT PERMITTED
You may not exchange Class A shares subject to contingent deferred sales charges
for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free
Intermediate Fund or AIM Tax-Exempt Cash Fund.
EXCHANGE CONDITIONS
The following conditions apply to all exchanges:
- - You must meet the minimum purchase requirements for the AIM Fund into which
you are exchanging;
- - Shares of the AIM Fund you wish to acquire must be available for sale in your
state of residence;
- - Exchanges must be made between accounts with identical registration
information;
- - The account you wish to exchange from must have a certified tax identification
number (or the Fund has received an appropriate Form W-8 or W-9);
- - Shares must have been held for at least one day prior to the exchange;
- - If you have physical share certificates, you must return them to the transfer
agent prior to the exchange; and
- - You are limited to a maximum of 10 exchanges per calendar year, because
excessive short-term trading or market-timing activity can hurt fund
performance. If you exceed that limit, or if an AIM Fund or the distributor
determines, in its sole discretion, that your short-term trading is excessive
or that you are engaging in market-timing activity, it may reject any
additional exchange orders. An exchange is the movement out of (redemption)
one AIM Fund and into (purchase) another AIM Fund.
TERMS OF EXCHANGE
Under unusual market conditions, an AIM Fund may delay the purchase of shares
being acquired in an exchange for up to five business days if it determines that
it would be materially disadvantaged by the immediate transfer of exchange
proceeds. There is no fee for exchanges. The exchange privilege is not an option
or right to purchase shares. Any of the participating AIM Funds or the
distributor may modify or discontinue this privilege at any time.
BY MAIL
If you wish to make an exchange by mail, you must include original signatures of
each registered owner exactly as the shares are registered, the account
registration and account number, the dollar amount or number of shares to be
exchanged and the names of the AIM Funds from which and into which the exchange
is to be made.
BY TELEPHONE
Conditions that apply to exchanges by telephone are the same as redemptions by
telephone, including that the transfer agent must receive exchange requests
during the hours of the customary trading session of the NYSE; however, you
still will be allowed to exchange by telephone even if you have changed your
address of record within the preceding 30 days.
BY INTERNET
You will be allowed to exchange by internet if (1) you do not hold physical
share certificates; (2) you can provide proper identification information; and
(3) you have established the internet trading option.
EXCHANGING CLASS B AND CLASS C SHARES
If you make an exchange involving Class B or Class C shares, the amount of time
you held the original shares will be added to the holding period of the Class B
or Class C shares, respectively, into which you exchanged for the purpose of
calculating contingent deferred sales charges (CDSC) if you later redeem the
exchanged shares. If you redeem Class B shares acquired by exchange via a tender
offer by AIM Floating Rate Fund, you will be credited with the time period you
held the shares of AIM Floating Rate Fund for the purpose of computing the early
withdrawal charge applicable to those shares.
- --------------------------------------------------------------------------------
EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND;
- REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND
SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
- --------------------------------------------------------------------------------
A-7 MCF--02/00
<PAGE> 18
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THE AIM FUNDS
-------------
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of each AIM Fund's shares is the fund's net asset value per share. The
AIM Funds value portfolio securities for which market quotations are readily
available at market value. The AIM Funds value short-term investments maturing
within 60 days at amortized cost, which approximates market value. AIM Money
Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at
amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM
Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value
variable rate securities that have an unconditional demand or put feature
exercisable within seven days or less at par, which reflects the market value of
such securities.
The AIM Funds value all other securities and assets at their fair value.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day. In addition, if,
between the time trading ends on a particular security and the close of the
customary trading session of the NYSE, events occur that materially affect the
value of the security, the AIM Funds may value the security at its fair value as
determined in good faith by or under the supervision of the Board of Directors
or Trustees of the AIM Fund. The effect of using fair value pricing is that an
AIM Fund's net asset value will be subject to the judgment of the Board of
Directors or Trustees or its designee instead of being determined by the market.
Because some of the AIM Funds may invest in securities that are primarily listed
on foreign exchanges, the value of those funds' assets may change on days when
you will not be able to purchase or redeem fund shares.
Each AIM Fund determines the net asset value of its shares as of the close of
the customary trading session of the NYSE on each day the NYSE is open for
business. AIM Money Market Fund also determines its net asset value as of 12:00
noon Eastern Time on each day the NYSE is open for business.
TIMING OF ORDERS
You can purchase, exchange or redeem shares during the hours of the customary
trading session of the NYSE. The AIM Funds price purchase, exchange and
redemption orders at the net asset value calculated after the transfer agent
receives an order in good form. An AIM Fund may postpone the right of redemption
only under unusual circumstances, as allowed by the Securities and Exchange
Commission, such as when the NYSE restricts or suspends trading.
TAXES
In general, dividends and distributions you receive are taxable as ordinary
income or long-term capital gains for federal income tax purposes, whether you
reinvest them in additional shares or take them in cash. Distributions are
taxable to you at different rates depending on the length of time the fund holds
its assets. Different tax rates apply to ordinary income and long-term capital
gain distributions, regardless of how long you have held your shares. Every
year, you will be sent information showing the amount of dividends and
distributions you received from each AIM Fund during the prior year.
Any long-term or short-term capital gains realized from redemptions of AIM
Fund shares will be subject to federal income tax. Exchanges of shares for
shares of another AIM Fund are treated as a sale, and any gain realized on the
transaction will generally be subject to federal income tax.
INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING
"OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THIS
PROSPECTUS.
The foreign, state and local tax consequences of investing in AIM Fund shares
may differ materially from the federal income tax consequences described above.
You should consult your tax advisor before investing.
MCF--02/00 A- 8
<PAGE> 19
-------------------------------
AIM GLOBAL GROWTH & INCOME FUND
-------------------------------
OBTAINING ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
BY TELEPHONE: (800) 347-4246
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
- ------------------------------------
AIM Global Growth & Income Fund
SEC 1940 Act file number: 811-05426
- ------------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GGI-PRO-1 INVEST WITH DISCIPLINE
--Registered Trademark--
