<PAGE> 1
As filed with the Securities and Exchange Commission on May 19, 2000
1933 Act Reg. No. 33-44611
1940 Act Reg. No. 811-6463
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ---
---
Post-Effective Amendment No. 19 X
------ ---
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 21 X
------ ---
(Check appropriate box or boxes.)
AIM INTERNATIONAL MUTUAL FUNDS
------------------------------
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, TX 77046
-----------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
--------------
Charles T. Bauer
11 Greenway Plaza, Suite 100, Houston, TX 77046
-----------------------------------------------
(Name and Address of Agent for Service)
Copy to:
P. Michelle Grace, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed As soon as practicable
Public Offering: after the effective date of this
Amendment
It is proposed that this filing will become effective (check appropriate box)
- ----- immediately upon filing pursuant to paragraph (b)
X
- ----- on June 1, 2000 pursuant to paragraph (b)
- ----- 60 days after filing pursuant to paragraph (a)(1)
- ----- on (date) pursuant to paragraph (a)(1)
- ----- 75 days after filing pursuant to paragraph (a)(2)
- ----- on (date) pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
X this post-effective amendment designates a new effective date for a
- ----- previously filed post-effective amendment.
Title of Securities Being Registered: Shares of beneficial interest
THE REGISTRANT IS THE SUCCESSOR ISSUER TO AIM INTERNATIONAL FUNDS, INC. (THE
"PREDECESSOR FUND"). BY FILING THIS POST-EFFECTIVE AMENDMENT TO CURRENTLY
EFFECTIVE REGISTRATION STATEMENT NO. 33-44611 OF THE PREDECESSOR FUND, THE
REGISTRANT EXPRESSLY ADOPTS THE REGISTRATION STATEMENT OF THE PREDECESSOR FUND
AS ITS OWN REGISTRATION STATEMENT FOR ALL PURPOSES OF THE SECURITIES ACT OF
1933, AS AMENDED, THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
<PAGE> 2
AIM ASIAN GROWTH FUND
-----------------------------------------------------------------------
AIM Asian Growth Fund seeks to provide long-term growth of capital.
PROSPECTUS AIM -- Registered Trademark --
JUNE 1, 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-- --Registered Trademark--
<PAGE> 3
---------------------
AIM ASIAN GROWTH FUND
---------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 2
- - - - - - - - - - - - - - - - - - - - - - - - -
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
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 Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos,
La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM
Internet Connect 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 ASIAN GROWTH FUND
---------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital. The investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 65% of
its assets in marketable equity securities issued by Asian companies (except
Japanese companies), including companies with market capitalizations of less
than $1 billion. The fund considers Asian companies to be those (1) organized
under the laws of a country in Asia and having a principal office in a country
in Asia; (2) that derive 50% or more of their total revenues from business in
Asia; or (3) whose equity securities are traded principally on a stock exchange,
or in an over-the-counter market, in Asia.
The fund may invest up to 20% of its total assets in securities exchangeable
for or convertible into equity securities of Asian companies. The fund may also
invest up to 35% of its total assets in securities of non-Asian companies. The
fund may also invest up to 35% of its total assets in high-grade short-term
securities and debt securities, including U.S. Government obligations,
investment grade corporate bonds or taxable municipal securities, whether
denominated in U.S. dollars or foreign currencies.
The fund will normally invest in companies located in at least three
countries, including countries in Asia as well as Australia and New Zealand. The
fund may also invest up to 100% of its total assets in companies in developing
countries, i.e., those that are in the initial stages of their industrial
cycles. Any percentage limitations with respect to assets of the fund are
applied at the time of purchase.
The portfolio managers focus on companies that have experienced above-average
long-term growth in earnings and have strong prospects for future growth. In
selecting countries in which the fund will invest, the 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
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 objective.
The fund may engage in active and frequent trading of portfolio securities to
achieve its investment objective. 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 gains and losses, which
may affect the taxes you have to pay.
1
<PAGE> 5
---------------------
AIM ASIAN GROWTH FUND
---------------------
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. This is
especially true with respect to equity securities of small and micro-cap
companies, whose prices may go up and down more than the prices of equity
securities of larger, more established companies. Also, since equity securities
of small and micro-cap companies may not be traded as often as equity securities
of larger, more established companies, it may be difficult or impossible for the
fund to sell securities at a desired price.
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.
The fund may participate in the initial public offering (IPO) market. Because
of the fund's small asset base, any investment the fund may make in IPOs may
significantly increase the fund's total return. As the fund's assets grow, the
impact of IPO investments will decline, which may reduce the fund's total
return.
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 ASIAN 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>
1998 ................................. -8.54%
1999 ................................. 67.98%
</TABLE>
The Class A shares' year-to-date total return as of March 31, 2000 was 20.42%.
During the periods shown in the bar chart, the highest quarterly return was
40.89% (quarter ended June 30, 1999) and the lowest quarterly return was -25.67%
(quarter ended June 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 INCEPTION DATE
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Class A 58.70% 11.14% 11/03/97
Class B 61.58 12.02 11/03/97
Class C 65.84 13.11 11/03/97
MSCI AC Asia Pacific Free ex-Japan
Index(1) 49.83 13.75(2) 10/31/97(2)
- -----------------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International All Country Asia Pacific Free
ex-Japan Index measures the performance of 12 of both developed and emerging
markets in this region. The index excludes shares that are not readily
purchased by non-local investors.
(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
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AIM ASIAN 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) 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 0.95% 0.95% 0.95%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses 1.42 1.64 1.64
Total Annual Fund
Operating Expenses 2.72 3.59 3.59
Fee Waivers and
Reimbursements(2) 0.80 0.80 0.80
Net Expenses 1.92 2.79 2.79
- -------------------------------------------------------
</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 waive fees and/or
reimburse expenses (excluding interest, taxes, dividends on short sales,
extraordinary items and increases for indirect credits, if any) for Class A,
Class B and Class C shares to the extent necessary to limit the total
operating expenses of Class A Shares to 1.92% (e.g. if AIM waives 0.80% of
Class A expenses, AIM will also waive 0.80% of Class B and Class C
expenses).
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,
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 $810 $1,348 $1,910 $3,433
Class B 862 1,400 2,059 3,662
Class C 462 1,100 1,859 3,854
- ----------------------------------------------
</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 $810 $1,348 $1,910 $3,433
Class B 362 1,100 1,859 3,662
Class C 362 1,100 1,859 3,854
- ----------------------------------------------
</TABLE>
4
<PAGE> 8
---------------------
AIM ASIAN 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 0.15% 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, both of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Shuxin Cao, Portfolio Manager, who has been responsible for the fund since
1999 and has been associated with the advisor and/or its affiliates since
1997. Prior to 1997, Mr. Cao was an international equity analyst for Boatmen's
Trust Company.
- - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for
the fund since its inception in 1997 and has been associated with the advisor
and/or its affiliates since 1989.
- - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund
since its inception in 1997 and has been associated with the advisor and/or
its affiliates since 1990.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Asian Growth 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, if any, 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.
5
<PAGE> 9
---------------------
AIM ASIAN 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 CLASS B CLASS C
-------------------------- -------------------------- --------------------------
NOVEMBER 3, NOVEMBER 3, NOVEMBER 3,
1997 1997 1997
YEAR ENDED THROUGH YEAR ENDED THROUGH YEAR ENDED THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
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% and 5.75%
(annualized) for Class B for 1999-1998, and 3.59% 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.
6
<PAGE> 10
-------------
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
eight years after the end of shares
the month in which shares
were purchased along with a
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 the end of the month in which shares were
purchased. 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 the end of the month in which
you purchased your 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--03/00
<PAGE> 11
-------------
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--03/00 A-2
<PAGE> 12
--------------
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.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
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--03/00
<PAGE> 13
-------------
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--03/00 A-4
<PAGE> 14
-------------
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--03/00
<PAGE> 15
--------------
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 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;
MCF--03/00 A-6
<PAGE> 16
--------------
THE AIM FUNDS
--------------
(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--03/00
<PAGE> 17
--------------
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 on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. 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 THEIR
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--03/00 A-8
<PAGE> 18
---------------------
AIM ASIAN 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 Asian Growth Fund
SEC 1940 Act file number: 811-6463
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com AAG-PRO-1 INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 19
AIM EUROPEAN
DEVELOPMENT FUND
--------------------------------------------------------------------------
AIM European Development Fund seeks to provide long-term growth of
capital.
PROSPECTUS AIM-- Registered Trademark --
JUNE 1, 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-- --Registered Trademark--
<PAGE> 20
-----------------------------
AIM EUROPEAN DEVELOPMENT FUND
-----------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 2
- - - - - - - - - - - - - - - - - - - - - - - - -
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
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 Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos,
La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM
Internet Connect 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> 21
-----------------------------
AIM EUROPEAN DEVELOPMENT FUND
-----------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital. The investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund seeks to meet its objective by investing, normally, at least 80% of
its total assets in marketable equity securities of European companies,
including companies with market capitalizations of less than $1 billion. The
fund considers European companies to be those (1) organized under the laws of a
country in Europe and having a principal office in a country in Europe; (2) that
derive 50% or more of their total revenues from business in Europe; or (3) whose
equity securities are traded principally in a stock exchange, or in an
over-the-counter market, in Europe.
The fund will normally invest in the securities of companies located in at
least three European countries. The fund may invest up to 65% of its total
assets in European 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 equity securities of European securities. The fund may
invest up to 20% of its total assets in securities of non-European companies.
The fund may also invest up to 20% 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. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers focus on companies that have experienced above-average
long-term growth in earnings and have strong prospects for future growth. In
selecting countries in which the fund will invest, the 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
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.
The fund may engage in active and frequent trading of portfolio securities to
achieve its investment objective. 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 gains and losses, which
may affect the taxes you have to pay.
1
<PAGE> 22
-----------------------------
AIM EUROPEAN DEVELOPMENT FUND
-----------------------------
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. This is
especially true with respect to equity securities of small and micro-cap
companies, whose prices may go up and down more than the prices of equity
securities of larger, more established companies. Also, since equity securities
of small and micro-cap companies may not be traded as often as equity securities
of larger, more established companies, it may be difficult or impossible for the
fund to sell securities at a desired price.
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.
The fund may participate in the initial public offering (IPO) market. Because
of the fund's small asset base, any investment the fund may make in IPOs may
significantly increase the fund's total return. As the fund's assets grow, the
impact of IPO investments will decline, which may reduce the fund's total
return.
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> 23
-----------------------------
AIM EUROPEAN DEVELOPMENT 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>
1998 ....................................... 40.62%
1999 ....................................... 66.62%
</TABLE>
The Class A shares' year-to-date total return as of March 31, 2000 was 19.49%.
During the periods shown in the bar chart, the highest quarterly return was
54.69% (quarter ended December 31, 1999) and the lowest quarterly return was
- -14.53% (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 INCEPTION DATE
- -----------------------------------------------------
<S> <C> <C> <C>
Class A 57.46% 45.52% 11/03/97
Class B 60.32 47.40 11/03/97
Class C 64.28 48.32 11/03/97
MSCI AC Europe
Index(1) 17.35 23.32(2) 10/31/97(2)
MSCI Europe Index(3) 15.89 23.06(2) 10/31/97(2)
- -----------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International All Country Europe Index is an
unmanaged index that is designed to represent the performance of stock
markets in Europe, including both developed and emerging countries. (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) The average annual total return given is since the date closest to the
inception date of the class with the longest performance history.
(3) The Morgan Stanley Capital International Europe Index is an unmanaged index
that is designed to represent the performance of developed stock markets in
Europe. The fund has elected to use the Morgan Stanley Capital International
Europe Index because it more closely reflects the performance of stocks in
which the fund invests.
3
<PAGE> 24
-----------------------------
AIM EUROPEAN DEVELOPMENT 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
- - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(paid directly from
your investment) CLASS A CLASS B CLASS C
- -------------------------------------------------------
<S> <C> <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> <C>
Management Fees 0.95% 0.95% 0.95%
Distribution and/or
Service (12b-1) Fees 0.35 1.00 1.00
Other Expenses 0.58 0.68 0.68
Total Annual Fund
Operating Expenses 1.88 2.63 2.63
- -------------------------------------------------------
</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 $730 $1,108 $1,510 $2,630
Class B 766 1,117 1,595 2,782
Class C 366 817 1,395 2,964
- ----------------------------------------------
</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 $730 $1,108 $1,510 $2,630
Class B 266 817 1,395 2,782
Class C 266 817 1,395 2,964
- ----------------------------------------------
</TABLE>
4
<PAGE> 25
-----------------------------
AIM EUROPEAN DEVELOPMENT 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 including the fund's investment
decisions and the execution of securities transactions. 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 0.95% 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, both of whom are officers of A I M Capital Management,
Inc., a wholly owned subsidiary of the advisor, are
- - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund
since 1999 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 its inception in 1997 and has been associated with the advisor
and/or its affiliates since 1994.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM European Development 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, if any, will consist primarily of
capital gains.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes any long-term and short-term capital gains, if
any, annually.
5
<PAGE> 26
-----------------------------
AIM EUROPEAN DEVELOPMENT 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 CLASS B CLASS C
--------------------------- --------------------------- ---------------------------
NOVEMBER 3, NOVEMBER 3, NOVEMBER 3,
1997 1997 1997
YEAR ENDED THROUGH YEAR ENDED THROUGH YEAR ENDED THROUGH
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1999 1998 1999 1998 1999 1998
- ---------------------------------------------------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 12.96 $ 10.00 $ 12.87 $ 10.00 $ 12.88 $10.00
Income from investment
operations:
Net investment income
(loss) (0.11) (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.
6
<PAGE> 27
-------------
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
eight years after the end of shares
the month in which shares
were purchased along with a
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 the end of the month in which shares were
purchased. 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 the end of the month in which
you purchased your 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--03/00
<PAGE> 28
-------------
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--03/00 A-2
<PAGE> 29
--------------
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.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
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--03/00
<PAGE> 30
-------------
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--03/00 A-4
<PAGE> 31
-------------
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--03/00
<PAGE> 32
--------------
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 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;
MCF--03/00 A-6
<PAGE> 33
--------------
THE AIM FUNDS
--------------
(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--03/00
<PAGE> 34
--------------
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 on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. 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 THEIR
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--03/00 A-8
<PAGE> 35
-----------------------------
AIM EUROPEAN DEVELOPMENT 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 European Development Fund
SEC 1940 Act file number: 811-6463
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com EDF-PRO-1 INVEST WITH DISCIPLINE
- --Registered Trademark-- -- Registered Trademark --
<PAGE> 36
AIM GLOBAL AGGRESSIVE GROWTH FUND
------------------------------------------------------------------------
AIM Global Aggressive Growth Fund seeks to provide above-average
long-term growth of capital.
AIM-- Registered Trademark --
PROSPECTUS
JUNE 1, 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-- --Registered Trademark--
<PAGE> 37
---------------------------------
AIM GLOBAL AGGRESSIVE GROWTH 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 Advisor 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 Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos,
La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM
Internet Connect 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> 38
---------------------------------
AIM GLOBAL AGGRESSIVE GROWTH FUND
---------------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is above-average long-term growth of capital.
The investment objective of the fund may be changed by the Board of Trustees
without shareholder approval.
The fund seeks to meet its 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 small- and
medium-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.
Any percentage limitations with respect to assets of the fund are applied at the
time of purchase.
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 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
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. This is
especially true with respect to equity securities of small- and medium-sized
companies, whose prices may go up and down more than the prices of equity
securities of larger, more established companies. Also, since equity securities
of small- and medium-sized companies may not be traded as often as equity
securities of larger, more established companies, it may be difficult or
impossible for the fund to sell securities at a desired price.
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> 39
---------------------------------
AIM GLOBAL AGGRESSIVE 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 ........................................... 32.15%
1996 ........................................... 23.53%
1997 ........................................... 4.03%
1998 ........................................... 3.93%
1999 ........................................... 70.58%
</TABLE>
The Class A shares' year-to-date total return as of March 31, 2000 was 17.24%.
During the periods shown in the bar chart, the highest quarterly return was
49.33% (quarter ended December 31, 1999) and the lowest quarterly return was
- -20.76% (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 62.50% 23.46% 22.18% 09/15/94
Class B 64.64 23.80 22.56 09/15/94
Class C 68.64 -- 21.42 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> 40
---------------------------------
AIM GLOBAL AGGRESSIVE 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 0.88% 0.88% 0.88%
Distribution and/or
Service (12b-1) Fees 0.50 1.00 1.00
Other Expenses 0.42 0.49 0.49
Total Annual Fund
Operating Expenses 1.80 2.37 2.37
- -------------------------------------------------------
</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 $649 $1,014 $1,404 $2,490
Class B 740 1,039 1,465 2,565
Class C 340 739 1,265 2,706
- ----------------------------------------------
</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 $649 $1,014 $1,404 $2,490
Class B 240 739 1,265 2,565
Class C 240 739 1,265 2,706
- ----------------------------------------------
</TABLE>
3
<PAGE> 41
---------------------------------
AIM GLOBAL AGGRESSIVE 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 0.88% 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
- - 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.
- - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund
since 1999 and has been associated with the advisor and/or its affiliates
since 1996. From 1994 to 1996, he was an associate with JMB Realty.
- - Robert M. Kippes, 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.
- - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the
fund since 1997 and has been associated with the advisor and/or its affiliates
since 1994.
- - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund
since 1995 and has been associated with the advisor and/or its affiliates
since 1990.
- - Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for
the fund since 1998 and has been associated with the advisor and/or its
affiliates since 1990.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM Global Aggressive 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, if any, 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.
4
<PAGE> 42
---------------------------------
AIM GLOBAL AGGRESSIVE 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(a) 1998(a) 1997(a) 1996(a) 1995(a)
- ----------------------------------------------------------------------------------------------------------------------------
<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) (0.10) (0.15) (0.09) (0.09)
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.
(c) Ratios are based on average net assets of $841,985,823.
5
<PAGE> 43
---------------------------------
AIM GLOBAL AGGRESSIVE GROWTH 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 per $ 15.52 $ 17.00 $ 15.58 $ 13.02 $ 10.21
Income from investment operations:
Net investment income (loss) (0.27) (0.19) (0.24) (0.17) (0.14)
Net gains (losses) on securities (both
realized and unrealized) 6.10 (1.29) 1.66 2.78 2.95
Total from investment operations 5.83 (1.48) 1.42 2.61 2.81
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
Total return(b) 37.56% (8.71)% 9.11% 20.09% 27.52%
- ---------------------------------------------------------------------------------------------------------
Ratios/supplement data:
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $926,972 $947,293 $1,241,999 $807,215 $118,199
Ratio of expenses to average net assets 2.37%(c) 2.32% 2.30% 2.37% 2.62%
Ratio of net investment income (loss) to
average net assets (1.52)%(c) (1.11)% (1.44)% (1.16)% (1.19)%
Portfolio turnover rate 60% 50% 57% 44% 64%
- ---------------------------------------------------------------------------------------------------------
</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.
<TABLE>
<CAPTION>
CLASS C
----------------------------------------------
FOR THE PERIOD
YEAR ENDED AUGUST 4,
OCTOBER 31, THROUGH
-------------------- OCTOBER 31,
1999(a) 1998(a) 1997(a)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 15.52 $ 17.00 $18.39
Income from investment operations:
Net investment income (loss) (0.27) (0.19) (0.04)
Net gains (losses) on securities (both realized and 6.10 (1.29) (1.35)
unrealized)
Total from investment operations 5.83 (1.48) (1.39)
Less distributions:
Distributions from net realized gains -- -- --
Net asset value, end of period $ 21.35 $ 15.52 $17.00
Total return(b) 37.56% (8.71)% (7.56)%
- --------------------------------------------------------------------------------------------------------------
Ratios/supplement data:
- --------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $16,325 $13,186 $4,676
Ratio of expenses to average net assets 2.37%(c) 2.34% 2.36%(d)
Ratio of net investment income (loss) to average net assets (1.52)%(c) (1.13)% (1.50)%(d)
Portfolio turnover rate 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 $14,098,451.
(d) Annualized.
6
<PAGE> 44
-------------
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
eight years after the end of shares
the month in which shares
were purchased along with a
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 the end of the month in which shares were
purchased. 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 the end of the month in which
you purchased your 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--03/00
<PAGE> 45
-------------
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--03/00 A-2
<PAGE> 46
--------------
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.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
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--03/00
<PAGE> 47
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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--03/00 A-4
<PAGE> 48
-------------
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--03/00
<PAGE> 49
--------------
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 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;
MCF--03/00 A-6
<PAGE> 50
--------------
THE AIM FUNDS
--------------
(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--03/00
<PAGE> 51
--------------
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 on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. 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 THEIR
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--03/00 A-8
<PAGE> 52
---------------------------------
AIM GLOBAL AGGRESSIVE 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 Aggressive Growth Fund
SEC 1940 Act file number: 811-6463
-----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com GLA-PRO-1 INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 53
AIM GLOBAL GROWTH FUND
------------------------------------------------------------------------
AIM Global Growth Fund seeks to provide long-term growth of capital.
AIM--Registered Trademark--
PROSPECTUS
JUNE 1, 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-- --Registered Trademark--
<PAGE> 54
-----------------------
AIM GLOBAL GROWTH 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 Advisor 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 Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos,
La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM
Internet Connect 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> 55
-----------------------
AIM GLOBAL GROWTH FUND
-----------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is long-term growth of capital. The investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund seeks to meet its 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.
Any percentage limitations with respect to assets of the fund are applied at the
time of purchase.
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> 56
-----------------------
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>
The Class A shares' year-to-date total return as of March 31, 2000 was 3.86%.
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> 57
-----------------------
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
Waiver(2) 0.07 0.07 0.07
Net Expenses 1.60 2.16 2.16
- -----------------------------------------------------------
</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 waive fees and/or
reimburse expenses (excluding interest, taxes, dividends on short sales,
extraordinary items and increases for indirect credits, if any) for Class A,
Class B and Class C shares to the extent necessary to limit the total
operating expenses of Class A Shares to 1.60% (e.g. if AIM waives 0.07% of
Class A expenses, AIM will also waive 0.07% of Class B and Class C
expenses).
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> 58
----------------------
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.
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, if any, 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.
4
<PAGE> 59
----------------------
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>
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.
5
<PAGE> 60
----------------------
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(d) 2.23%(c) 2.26% 2.29% 2.48% 2.64%
Ratio of net investment income (loss) to average
net assets(e) (1.13)%(c) (0.83)% (0.83)% (0.69)% (0.79)%
Portfolio turnover rate 93% 97% 96% 82% 79%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges.
(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.
6
<PAGE> 61
----------------------
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.
7
<PAGE> 62
-------------
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
eight years after the end of shares
the month in which shares
were purchased along with a
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 the end of the month in which shares were
purchased. 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 the end of the month in which
you purchased your 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--03/00
<PAGE> 63
-------------
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--03/00 A-2
<PAGE> 64
--------------
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.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
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--03/00
<PAGE> 65
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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--03/00 A-4
<PAGE> 66
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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--03/00
<PAGE> 67
--------------
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 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;
MCF--03/00 A-6
<PAGE> 68
--------------
THE AIM FUNDS
--------------
(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--03/00
<PAGE> 69
--------------
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 on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. 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 THEIR
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--03/00 A-8
<PAGE> 70
----------------------
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-- --Registered Trademark--
<PAGE> 71
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.
PROSPECTUS AIM-- Registered Trademark --
JUNE 1, 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 -- -- Registered Trademark --
<PAGE> 72
----------------------
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 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 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 Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos,
La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM
Internet Connect 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> 73
----------------------
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 investment
objectives of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund seeks to meet its 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." Any percentage limitations
with respect to assets of the fund are applied at the time of purchase.
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 and
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 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> 74
----------------------
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>
The Class A shares' year-to-date total return as of March 31, 2000 was 0.64%.
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.
2
<PAGE> 75
----------------------
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 waive fees and/or
reimburse expenses (excluding interest, taxes, dividends on short sales,
extraordinary items and increases for indirect credits, if any) for Class A,
Class B and Class C shares to the extent necessary to limit the total
operating expenses of Class A Shares to 1.25% (e.g. if AIM waives 0.42% of
Class A expenses, AIM will also waive 0.42% of Class B and Class C
expenses).
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>
3
<PAGE> 76
----------------------
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, if any, 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.
4
<PAGE> 77
----------------------
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 $ 10.74
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.
(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.
5
<PAGE> 78
----------------------
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.
(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.
6
<PAGE> 79
----------------------
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.
7
<PAGE> 80
-------------
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
eight years after the end of shares
the month in which shares
were purchased along with a
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 the end of the month in which shares were
purchased. 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 the end of the month in which
you purchased your 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--03/00
<PAGE> 81
-------------
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--03/00 A-2
<PAGE> 82
--------------
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.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
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--03/00
<PAGE> 83
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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--03/00 A-4
<PAGE> 84
-------------
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--03/00
<PAGE> 85
--------------
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 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;
MCF--03/00 A-6
<PAGE> 86
--------------
THE AIM FUNDS
--------------
(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--03/00
<PAGE> 87
--------------
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 on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. 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 THEIR
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--03/00 A-8
<PAGE> 88
----------------------
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-- -- Registered Trademark --
<PAGE> 89
AIM INTERNATIONAL
EQUITY FUND
--------------------------------------------------------------------
AIM International Equity Fund seeks to provide long-term growth of
capital.
AIM--Registered Trademark--
PROSPECTUS
JUNE 1, 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-- --Registered Trademark--
<PAGE> 90
-----------------------------
AIM INTERNATIONAL EQUITY 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 Advisor 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 Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos,
La Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM
Internet Connect 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> 91
-----------------------------
AIM INTERNATIONAL EQUITY FUND
-----------------------------
INVESTMENT OBJECTIVE AND STRATEGIES
- --------------------------------------------------------------------------------
The fund's investment objective is to provide long-term growth of capital. The
investment objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund seeks to meet its objective 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 fund invests, normally,
at least 70% of its total assets in marketable equity securities of foreign
companies that are listed on a recognized foreign securities exchange or traded
in a foreign over-the-counter market. The fund will normally invest in companies
located in at least four countries outside of the United States, emphasizing
investment in companies in the developed countries of Western Europe and the
Pacific Basin.
At the present time, the fund's portfolio managers intend to invest no more
than 20% of the fund's total assets in foreign 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
issuers. The fund may also invest up to 20% of its total assets in high-grade
short-term securities and debt securities, including U.S. Government
obligations, investment grade corporate bonds or taxable municipal securities,
whether denominated in U.S. dollars or foreign currencies. Any percentage
limitations with respect to assets of the fund are applied at the time of
purchase.
The portfolio managers focus on companies that have experienced above-average,
long-term growth in earnings and have strong 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 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 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 devaluated 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> 92
-----------------------------
AIM INTERNATIONAL EQUITY 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>
1993 ...................................... 45.78%
1994 ...................................... -3.34
1995 ...................................... 16.41
1996 ...................................... 18.98
1997 ...................................... 5.70
1998 ...................................... 13.42
1999 ...................................... 55.08
</TABLE>
The Class A shares' year-to-date total return as of March 31, 2000 was -0.68%.
During the periods shown in the bar chart, the highest quarterly return was
43.09% (quarter ended December 31, 1999) and the lowest quarterly return was
- -14.64% (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 46.58% 19.46% 17.67% 04/07/92
Class B 48.76 19.67 17.15 09/15/94
Class C 52.79 -- 21.79 08/04/97
MSCI EAFE Index(1) 26.96 12.83 13.14(2) 03/31/92(2)
- ------------------------------------------------------------
</TABLE>
(1) The Morgan Stanley Capital International Europe, Australia and Far East
Index measures performance of global stock markets in 20 developed
countries.
(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> 93
-----------------------------
AIM INTERNATIONAL EQUITY 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 0.92% 0.92% 0.92%
Distribution and/or
Service (12b-1) Fees 0.30 1.00 1.00
Other Expenses 0.30 0.39 0.39
Total Annual Fund
Operating Expenses 1.52 2.31 2.31
Fee Waiver(2) 0.04 0.04 0.04
Net Expenses 1.48 2.27 2.27
- -------------------------------------------------------
</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 waive 0.05% on average
net assets in excess of $500 million.
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,
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 $696 $1,004 $1,333 $2,263
Class B 734 1,021 1,435 2,448
Class C 334 721 1,235 2,646
- ------------------------------------------------
</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 $696 $1,004 $1,333 $2,263
Class B 234 721 1,235 2,448
Class C 234 721 1,235 2,646
- ----------------------------------------------
</TABLE>
3
<PAGE> 94
-----------------------------
AIM INTERNATIONAL EQUITY 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 0.88% 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
- - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for
the fund since its inception in 1992 and has been associated with the advisor
and/or its affiliates since 1989.
- - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund
since 1999 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 1997 and has been associated with the advisor and/or its affiliates
since 1994.
- - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund
since 1995 and has been associated with the advisor and/or its affiliates
since 1990.
OTHER INFORMATION
- --------------------------------------------------------------------------------
SALES CHARGES
Purchases of Class A shares of AIM International Equity 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, if any, 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.
4
<PAGE> 95
-----------------------------
AIM INTERNATIONAL EQUITY 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 $ 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 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.
(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.
5
<PAGE> 96
-----------------------------
AIM INTERNATIONAL EQUITY 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 $ 17.13 $ 16.27 $ 15.13 $ 13.54 $ 13.49
Income from investment operations:
Net investment income (loss) (0.17)(a) (0.09)(a) (0.09)(a) (0.07)(a) (0.09)
Net gains (losses) on securities (both realized and
unrealized) 4.36 0.95 1.66 2.04 0.61
Total from investment operations 4.19 0.86 1.57 1.97 0.52
Less distributions:
Dividends from net investment income -- -- -- -- (0.03)
Distributions from net realized gains (0.21) -- (0.43) (0.38) (0.44)
Total distributions (0.21) -- (0.43) (0.38) (0.47)
Net asset value, end of period $ 21.11 $ 17.13 $ 16.27 $ 15.13 $ 13.54
Total return(b) 24.72% 5.29% 10.61% 14.88% 4.35%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $887,106 $744,987 $678,809 $368,355 $51,964
Ratio of expenses to average net assets(c) 2.27%(d) 2.22% 2.25% 2.35% 2.55%
Ratio of net investment income (loss) to average net
assets(e) (0.93)%(d) (0.49)% (0.53)% (0.53)% (0.78)%
Portfolio turnover rate 86% 78% 50% 66% 68%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.31%, 2.26%, 2.28%, 2.37% and 2.56% for 1999-1995.
(d) Ratios are based on average net assets of $802,480,523.
(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 (0.97)%, (0.53)%, (0.57)%, (0.55)% and (0.79)%, for
1999-1995.
6
<PAGE> 97
-----------------------------
AIM INTERNATIONAL EQUITY 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 $ 17.14 $ 16.27 $ 17.64
Income from investment operations:
Net investment income (loss) (0.17)(a) (0.09)(a) (0.02)(a)
Net gains (losses) on securities (both realized and
unrealized) 4.37 0.96 (1.35)
Total from investment operations 4.20 0.87 (1.37)
Less distributions:
Dividends from net investment income -- -- --
Distributions from net realized gains (0.21) -- --
Total distributions (0.21) -- --
Net asset value, end of period $ 21.13 $ 17.14 $ 16.27
Total return(b) 24.76% 5.35% (7.77)%
- -------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $118,208 $58,579 $12,829
Ratio of expenses to average net assets(c) 2.27%(d) 2.22% 2.27%(e)
Ratio of net investment income (loss) to average net
assets(f) (0.93)%(d) (0.49)% (0.55)%(e)
Portfolio turnover rate 86% 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% and 2.30% (annualized) for 1999-1997.
(d) Ratios are based on average net assets of $87,122,931.
(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)% and (0.57)% (annualized) for 1999-1997.
7
<PAGE> 98
-------------
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
eight years after the end of shares
the month in which shares
were purchased along with a
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 the end of the month in which shares were
purchased. 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 the end of the month in which
you purchased your 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--03/00
<PAGE> 99
-------------
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--03/00 A-2
<PAGE> 100
--------------
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.
<TABLE>
<CAPTION>
PURCHASE OPTIONS
- ---------------------------------------------------------------------------------------------------------
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--03/00
<PAGE> 101
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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--03/00 A-4
<PAGE> 102
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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--03/00
<PAGE> 103
--------------
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 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;
MCF--03/00 A-6
<PAGE> 104
--------------
THE AIM FUNDS
--------------
(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--03/00
<PAGE> 105
--------------
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 on each day the
NYSE is open for business, as of the close of the customary trading session, or
any earlier NYSE closing time that day. 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 THEIR
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--03/00 A-8
<PAGE> 106
-----------------------------
AIM INTERNATIONAL EQUITY 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 International Equity Fund
SEC 1940 Act file number: 811-6463
------------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INT-PRO-1 INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 107
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 MUTUAL FUNDS)
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 JUNE 1, 2000,
RELATING TO THE AIM ASIAN GROWTH FUND PROSPECTUS DATED JUNE 1, 2000,
THE AIM EUROPEAN DEVELOPMENT FUND PROSPECTUS DATED JUNE 1, 2000,
THE AIM GLOBAL AGGRESSIVE GROWTH FUND PROSPECTUS DATED JUNE 1, 2000,
THE AIM GLOBAL GROWTH FUND PROSPECTUS DATED JUNE 1, 2000,
THE AIM GLOBAL INCOME FUND PROSPECTUS DATED JUNE 1, 2000,
AND THE AIM INTERNATIONAL EQUITY FUND PROSPECTUS DATED JUNE 1, 2000
<PAGE> 108
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION.......................................................................1
GENERAL INFORMATION ABOUT THE TRUST................................................1
The Trust and its Shares..................................................1
PERFORMANCE........................................................................3
Total Return Calculations.................................................4
Yield Quotations..........................................................5
Historical Portfolio Results..............................................5
PORTFOLIO TRANSACTIONS AND BROKERAGE...............................................8
General Brokerage Policy..................................................8
Allocation of Portfolio Transactions......................................9
Allocation of IPO Securities Transactions................................10
Section 28(e) Standards..................................................10
Transactions with Regular Brokers........................................11
Brokerage Commissions Paid...............................................11
Portfolio Turnover.......................................................12
INVESTMENT STRATEGIES AND RISKS...................................................12
All Funds (except Income Fund)...........................................13
Asian Fund...............................................................13
European Fund............................................................14
Aggressive Growth Fund and Growth Fund...................................16
Income Fund..............................................................17
Equity Fund..............................................................20
Real Estate Investment Trusts ("REITs")..................................20
Repurchase Agreements and Reverse Repurchase Agreements..................21
Lending of Portfolio Securities..........................................22
Interfund Loans..........................................................22
Securities Issued on a When-Issued or Delayed Delivery Basis.............22
Short Sales..............................................................22
Margin Transactions......................................................22
Illiquid Securities......................................................23
Rule 144A Securities.....................................................23
Foreign Securities.......................................................23
Foreign Exchange Transactions............................................26
Equity-Linked Derivatives................................................27
Investment in Other Investment Companies.................................27
Temporary Defensive Investments..........................................27
OPTIONS, FUTURES AND CURRENCY STRATEGIES..........................................27
Introduction.............................................................27
General Risks of Options, Futures and Currency Strategies................28
Cover....................................................................28
Writing Call Options.....................................................29
Writing Put Options......................................................29
Purchasing Put Options...................................................29
Purchasing Call Options..................................................30
Over-The-Counter Options.................................................30
Index Options............................................................31
Limitations on Options...................................................31
</TABLE>
i
<PAGE> 109
<TABLE>
<S> <C>
Interest Rate, Currency and Stock Index Futures Contracts.................31
Options on Futures Contracts..............................................32
Forward Contracts.........................................................33
Limitations on Use of Futures, Options on Futures and Certain Options
on Currencies.............................................................33
INVESTMENT RESTRICTIONS............................................................33
Fundamental Restrictions..................................................33
Non-Fundamental Restrictions..............................................34
MANAGEMENT.........................................................................35
Trustees and Officers.....................................................35
Remuneration of Trustees..................................................39
AIM Funds Retirement Plan for Eligible Directors/Trustees.................40
Deferred Compensation Agreements..........................................41
Investment Advisory and Other Services....................................41
THE DISTRIBUTION PLANS.............................................................45
The Class A and C Plan....................................................45
The Class B Plan..........................................................46
Both Plans................................................................46
THE DISTRIBUTOR....................................................................50
SALES CHARGES AND DEALER CONCESSIONS...............................................52
REDUCTIONS IN INITIAL SALES CHARGES................................................55
CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS........................................58
HOW TO PURCHASE AND REDEEM SHARES..................................................60
Backup Withholding........................................................61
NET ASSET VALUE DETERMINATION......................................................63
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS...........................................64
Reinvestment of Dividends and Distributions...............................64
Tax Matters...............................................................64
Qualification as a Regulated Investment Company...........................64
Fund Distributions........................................................65
Investment in Foreign Financial Instruments...............................65
Hedging Transactions......................................................65
PFIC Investments..........................................................66
Redemption or Exchange of Shares..........................................67
Foreign Income Taxes......................................................67
Backup Withholding........................................................68
Reinstatement Privilege...................................................68
Foreign Shareholders......................................................68
Miscellaneous Considerations; Effect of Future Legislation................69
SHAREHOLDER INFORMATION............................................................69
MISCELLANEOUS INFORMATION..........................................................72
Changes for Certain Account Information...................................72
Audit Reports.............................................................72
Legal Matters.............................................................72
Custodian and Transfer Agent..............................................72
</TABLE>
ii
<PAGE> 110
<TABLE>
<S> <C>
Principal Holders of Securities.......................................72
Other Information.....................................................76
APPENDIX A....................................................................A-1
APPENDIX B....................................................................B-1
APPENDIX C....................................................................C-1
FINANCIAL STATEMENTS...........................................................FS
</TABLE>
iii
<PAGE> 111
INTRODUCTION
AIM International Mutual Funds (the "Trust") 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 June 1,
2000, the AIM European Development Fund Prospectus dated June 1, 2000, the AIM
Global Aggressive Growth Fund Prospectus dated June 1, 2000, the AIM Global
Growth Fund Prospectus dated June 1, 2000, the AIM Global Income Fund Prospectus
dated June 1, 2000, and the AIM International Equity Fund Prospectus dated June
1, 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 Trust's Registration
Statement filed with the SEC. Copies of the Registration Statement, including
items omitted from each Prospectus and this Statement of Additional Information,
may be obtained from the SEC by paying the charges prescribed under its rules
and regulations.
GENERAL INFORMATION ABOUT THE TRUST
THE TRUST AND ITS SHARES
The Trust currently is organized as a Delaware business trust under an
Agreement and Declaration of Trust, dated December 6, 1999 (the "Trust
Agreement"). The Trust was previously organized as AIM International Funds, Inc.
("AIFI"), a Maryland corporation pursuant to Articles of Incorporation, dated
October 30, 1991, as amended. Pursuant to an Agreement and Plan of
Reorganization, the Funds were reorganized on June 1, 2000 as portfolios of the
Trust which is registered under the Investment Company Act of 1940, as amended
(the "1940 Act") as a diversified open-end series management investment company.
Each Fund is a series of shares of the Trust. The Trust 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 Trust offers Class A, Class B and Class C shares.
Pursuant to the Agreement and Plan of Reorganization, the Funds
succeeded to the assets and assumed the liabilities of the series portfolios
with corresponding names (the "Predecessor Funds") of AIFI. All historical
financial and other information contained in this Statement of Additional
Information for periods prior to June 1, 2000 relating to the Funds (or a class
thereof) is that of the Predecessor Funds (or the corresponding class thereof.)
Shares of beneficial interest of the Trust are redeemable at their net asset
value (subject, in certain circumstances, to a contingent deferred sales charge)
at the option of the shareholder or at the option of the Trust in certain
circumstances. For information concerning the methods of redemption, investors
should consult the Prospectuses under the caption "Redeeming Shares."
The assets received by the Trust from the issue or sale of shares of
each of its series of shares, and all income, earnings, profits and proceeds
thereof, subject only to the rights of creditors, are specifically allocated to
the appropriate Fund. They constitute the underlying assets of each Fund, are
required to be segregated on the Trust's books of account, and are to be charged
with the expenses with respect to such Fund and its respective classes. Any
general expenses of the Trust not readily identifiable as belonging to
1
<PAGE> 112
a particular Fund are allocated by or under the direction of the Board of
Trustees, primarily on the basis of relative net assets, or other relevant
factors.
Each share of each Fund represents an equal proportionate interest in
that Fund with each other share and is entitled to such dividends and
distributions out of the income belonging to such Fund as are declared by the
Board. Each such class represents interests in the same portfolio of investments
but, as further described in the Prospectuses, each such class is subject to
differing sales charges and expenses, which differences will result in differing
net asset values and dividends and distributions. Upon any liquidation of the
Trust, shareholders of each class are entitled to share pro rata in the net
assets belonging to the applicable Fund allocable to such class available for
distribution after satisfaction of outstanding liabilities of the Fund allocable
to such class.
The Trust is not required to hold annual or regular meetings of
shareholders. Meetings of shareholders of a Fund will be held from time to time
to consider matters requiring a vote of such shareholders in accordance with the
requirements of the 1940 Act, state law or the provisions of the Trust
Agreement. It is not expected that shareholder meetings will be held annually.
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
Trust's Board of Trustees with respect to the class of such Fund and, upon
liquidation of the Fund, to participate proportionately in the net assets of the
Fund allocable to such class remaining after satisfaction of outstanding
liabilities of the Fund allocable to such class.
Class B shares automatically convert to Class A shares at the end of
the month which is eight years after the date of purchase. A pro rata portion of
shares from reinvested dividends and distributions convert at the same time. No
other shares have conversion rights. Because Class B shares convert into Class A
shares, the holders of Class B shares (as well as the holders of Class A shares)
of each Fund must approve any material increase in fees payable with respect to
that Fund under the Class A and C Plan or a new class of shares into which the
Class B shares will convert must be created which will be identical in all
material respects to the Class A shares prior to the material increase in fees.
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 Trust 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. Shares do not have cumulative voting rights, which means that in
situations in which shareholders elect trustees, holders of more than 50% of the
shares voting for the election of trustees can elect all of the trustees of the
Trust, and the holders of less than 50% of the shares voting for the election of
trustees will not be able to elect any trustees.
The Trust Agreement provides that the trustees of the Trust shall hold
office during the existence of the Trust, except as follows: (a) any trustee may
resign or retire; (b) any trustee may be removed by a vote of at least
two-thirds of the outstanding shares of the Trust, or at any time by written
instrument signed by at least two-thirds of the trustees and specifying when
such removal becomes effective; or (c) any trustee who has died or become
incapacitated and is unable to serve may be retired by a written instrument
signed by a majority of the trustees and specifying the date of his or her
retirement.
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<PAGE> 113
Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations of liability extended to shareholders of
private for-profit corporations, however, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Trust to the extent the courts of another state which does
not recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. However, the Trust Agreement disclaims
shareholder liability for acts or obligations of the Trust and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the trustees to all parties, and each
party thereto must expressly waive all rights of action directly against
shareholders of the Trust. The Trust Agreement provides for indemnification out
of the property of a Fund for all losses and expenses of any shareholder of such
Fund held liable on account of being or having been a shareholder. Thus, the
risk of a shareholder incurring financial loss due to shareholder liability is
limited to circumstances in which a Fund would be unable to meet its obligations
and wherein the complaining party was held not to be bound by the disclaimer.
The Trust Agreement further provides that the trustees and officers
will not be liable for any act, omission or obligation of the Trust or any
trustee or officer. However, nothing in the Trust Agreement protects a trustee
or officer against any liability to the Trust or to the shareholders to which a
trustee or officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his or her office with the Trust. The Trust Agreement provides for
indemnification by the Trust of the trustees, officers, employees and agents of
the Trust, if it is determined that such person acted in good faith and
reasonably believed: (1) in the case of conduct in his or her official capacity
for the Trust, that his conduct was in the Trust's best interests, (2) in all
other cases, that his or her conduct was at least not opposed to the Trust's
best interests and (3) in a criminal proceeding, that he or she had no reason to
believe that his or her conduct was unlawful. The Trust Agreement also
authorizes the purchase of liability insurance on behalf of trustees and
officers.
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 has a small asset base, such as Asian Fund and European Fund. There is no
guarantee that as the Funds' assets grow, they will continue to experience
substantially similar performance by investing in IPOs.
3
<PAGE> 114
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:
Advertising Age Financial World Nation's Business
Barron's Forbes New York Times
Best's Review Fortune Pension World
Broker World Hartford Courant Pensions & Investment
Inc.
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
Each Fund may also compare its performance to performance data of
similar mutual funds as published by the following services:
Bank Rate Monitor Stanger
Donoghue's Weisenberger
Mutual Fund Values (Morningstar) Lipper, Inc.
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 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).
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<PAGE> 115
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 Funds, with respect to its Class A
shares, for the one-year and five-year (if applicable) periods ended October 31,
1999 and since inception (which include the maximum sales charge and
reinvestment of all dividends and distributions), were as follows:
5
<PAGE> 116
<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 Funds, with respect to its Class B
shares, for the one-year and five-year (if applicable) periods ended October 31,
1999 and since inception (which include the contingent deferred sales charge
applicable to the period 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 Funds, with respect to its Class C shares
for the one-year period ended October 31, 1999 and since inception (which
include the maximum contingent deferred sales charge and reinvestment of all
dividends and distributions) were as follows:
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<PAGE> 117
<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> 118
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 400 Midcap Index Dow Jones Industrial Average
Standard & Poor's Composite Index Lipper European Funds Index
of 500 Stocks Lipper International Funds Index
Consumer Price Index Morgan Stanley Capital International Indices,
Bond Buyer Index including:
NASDAQ EAFE Index
COFI AC Asia Free Ex-Japan
First Boston High Yield Index Europe Index
The Financial Times - Actuaries World Indices World Index
(a wide range of comprehensive measures AC World Index
of stock price performance for the world's Lehman World Government Bond Fund
major stock markets and regional areas) Salomon Bros World Gov't Bond Index
Russell 2000 Stock Index
</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
(asapplicable). While AIM seeks
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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 an AIM Fund, 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 and may invest in
affiliated money market funds, provided the Funds follow procedures adopted by
the Board of Directors/Trustees of the various AIM Funds, including the Trust.
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 Trust are
prohibited from dealing with the Trust 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 Trust from purchasing a security being
publicly underwritten by a syndicate of which certain persons affiliated with
the Trust 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 Trust 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 Trust's Board of Trustees and a determination is made that
the placement fee or other remuneration paid by the issuer to a person
affiliated with the Trust is fair and reasonable in relation to the fees charged
by others performing similar services.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous 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.
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
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<PAGE> 120
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 other accounts managed
by AIM 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 or 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 and accounts 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 or accounts in the three tiers receive
their Allocation, or until the shares are all allocated. Should securities
remain after this process, eligible AIM Funds and accounts will receive their
Allocation 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 AIM Funds and/or accounts 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 participates, 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 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
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<PAGE> 121
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 Trust's trustees 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
Trust, 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
Trust, 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 Trust, as defined in Rule 10b-1.
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 Trust, 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 Trust, 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
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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.
PORTFOLIO TURNOVER
Any particular security will be sold, and the proceeds reinvested,
whenever such action is deemed prudent from the viewpoint of a Fund's investment
objective(s), regardless of the holding period of that security. Each Fund's
historical portfolio turnover rates are included in the Financial Highlights
tables of the Fund's prospectus. A high rate of portfolio turnover may result in
higher transaction costs, including brokerage commissions. Also, to the extent
that higher portfolio turnover results in a higher rate of net realized capital
gains to a Fund, the portion of the Fund's distributions constituting taxable
capital gains may increase. See "Tax Matters."
INVESTMENT STRATEGIES AND RISKS
Information concerning each Fund's non-fundamental investment
objective(s) is set forth in the Prospectuses under the heading "Investment
Objective and Strategies." There can be no assurance that any Fund will achieve
its objective. The principal features of each Fund's investment program and the
principal risks associated with that investment program are discussed in the
Prospectuses under the heading "Investment Objective and Strategies" and
"Principal Risks of Investing in the Fund."
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Set forth in this section is a description of each Fund's investment
policies, strategies and practices. The investment objective(s) of each Fund
are non-fundamental policies and may be changed by the Board of Trustees
without shareholder approval. Each Fund's investment policies, strategies and
practices are also non-fundamental. The Board of Trustees of the Trust reserves
the right to change any of these non-fundamental investment policies,
strategies or practices without shareholder approval. However, shareholders
will be notified before any material change in the investment policies becomes
effective. Each Fund has adopted certain investment restrictions, some of which
are fundamental and cannot be changed without shareholder approval. See
"Investment Restrictions" in this Statement of Additional Information.
Individuals considering the purchase of shares of any Fund should recognize
that there are risks in the ownership of any security. Any percentage
limitations with respect to assets of a Fund will be applied at the time of
purchase.
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 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 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
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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
Trust's Board of Trustees 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, see "Investment
Strategies and Risks - Foreign Securities-Emerging Markets.".
A description of other investment strategies Asian Fund may pursue
follows after the section entitled "Investment Strategies and Risks " 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 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:
Australia New Zealand
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 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.
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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 "Investment Strategies and Risks " 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
Egypt Israel South Africa United States
</TABLE>
The above lists may include foreign countries that have not yet been
approved by the Trust'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 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.
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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.
Aggressive Growth 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 Aggressive Growth 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. Aggressive Growth
Fund will also invest in established smaller companies (under $1 billion in
market capitalization) which in AIM's judgment offer exceptional value based
upon substantially above average earnings growth potential relative to market
value. Investors should realize that equity securities of small to medium-sized
companies may involve greater risk than is associated with investing in more
established companies. Small to medium-sized companies often have limited
product and market diversification, fewer financial and managerial resources or
may be dependent on a few key managers. Also, because smaller companies normally
have fewer shares outstanding than larger companies and trade less frequently,
it may be more difficult for Aggressive Growth Fund to buy and sell shares
without an unfavorable impact on prevailing market prices. Some of the companies
in which Aggressive Growth Fund may invest may distribute, sell or produce
products which have recently been brought to market. Any of the foregoing
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may change suddenly and have an immediate impact on the value of Aggressive
Growth 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.
Growth 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 of Growth Fund and
Aggressive Growth 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). Growth Fund and Aggressive Growth Fund may also invest in the
securities of companies located in developing countries (such as Turkey, Poland
and Mexico) in various regions of the world. A "developing country" is a country
in the initial stages of 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.
Income 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
issuer. Income Fund will generally invest in the securities of issuers located
in at least four countries, including the United States.
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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
trustees 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
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
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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 "Investment Strategies and Risks " 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. Dollar roll transactions are considered to be borrowings under
the 1940 Act.
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.
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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.
NON-DIVERSIFIED PORTFOLIO. Income Fund is a non-diversified portfolio,
which means that it may invest a greater proportion of its assets in the
securities of a smaller number of issuers and therefore may be subject to
greater market and credit risk than a more broadly diversified portfolio. The
Fund is subject to the issuer diversification requirements of the Internal
Revenue Code of 1986, as amended, that are applicable to regulated investment
companies. To qualify as a regulated investment company, the Fund must diversify
its holdings so that, at the end of each fiscal quarter: (i) at least 50% of the
market value of the Fund's assets is represented by cash and cash items, U.S.
Government securities, securities of other regulated investment companies and
other securities, with such other securities limited, with respect to any one
issuer, to an amount not greater than 5% of the Fund's total assets and not more
than 10% of the outstanding voting securities of such issuer, and (ii) not more
than 25% of the Fund's total assets is invested in the securities (other than
U.S. Government securities or securities of other regulated investment
companies) of any one issuer, or of two or more issuers which the Fund controls
and which are determined to be engaged in the same, similar or related trades or
businesses.
EQUITY FUND
The investment objective of the Equity Fund is to provide long-term
growth of capital. 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 foreign securities
exchange or traded in a foreign over-the-counter-market. 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 foreign securities exchange or traded in a foreign over-the-counter
market. The Equity Fund may satisfy the foregoing requirements 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.
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 Trust's Board of Trustees 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 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
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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. Each of the Funds may enter into reverse
repurchase agreements in amounts not exceeding 33-1/3% of the value of its
total assets. Reverse repurchase agreements involve the risk that the market
value of securities retained by the Fund in lieu of liquidation may decline
below the repurchase price of the securities sold by the Fund which it is
obligated to repurchase. This risk, if encountered, could cause a reduction in
the net asset value of the Fund's shares. Reverse repurchase agreements are
considered to be borrowings under the 1940 Act.
LENDING OF PORTFOLIO SECURITIES
Consistent with applicable regulatory requirements, the Funds may lend
their portfolio securities (principally to broker-dealers) to the extent of
one-third of their respective total assets. Such loans would be callable at any
time and would be continuously secured by collateral equal to no less than the
market value, determined daily, of the loaned securities. Such collateral will
be cash or debt securities issued or guaranteed by the U.S. Government or any of
its agencies. The Funds would continue to receive the income on loaned
securities and would, at the same time, earn interest on the loan collateral or
on the investment of the loan collateral if it were cash. Any cash collateral
pursuant to these loans would be invested in short-term money market instruments
or affiliated money market funds. Where voting or consent rights with respect to
loaned securities pass to the borrower, the Funds will follow the policy of
calling the loan, in whole or in part as may be appropriate, to permit the
exercise of such voting or consent rights if the matters involved are expected
to have a material effect on the Funds' investment in the loaned securities.
Lending securities entails a risk of loss to the Funds if and to the extent that
the market value of the securities loaned were to increase and the lender did
not increase the collateral accordingly.
INTERFUND LOANS
Each Fund may lend up to 33 1/3% of its total assets to another AIM
Fund, on such terms and conditions as the SEC may require in an exemptive order.
An application for exemptive relief has been filed with the SEC on behalf of the
Funds and others. Each Fund may also borrow from another AIM Fund to satisfy
redemption requests or to cover unanticipated cash shortfalls due to a delay in
the delivery of cash to the Fund's custodian or improper delivery instructions
by a broker effectuating a transaction.
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.
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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.
MARGIN TRANSACTIONS
None of the Funds will purchase any security on margin, except that
each Fund may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of portfolio securities. The payment by a Fund
of initial or variation margin in connection with futures or related options
transactions will not be considered the purchase of a security on margin.
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 Trust's Board of Trustees, 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 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
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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.
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.
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 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.
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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 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
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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 Trustees.
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.
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.
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.
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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-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 advisor (the "Affiliated Money Market Funds"),
provided that investments in Affiliated Money Market Funds do not exceed 25% of
the total assets of such Fund.
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.
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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. 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
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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.
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
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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.
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."
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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 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
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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.
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.
32
<PAGE> 143
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, 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
FUNDAMENTAL 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 (1). Fundamental
restrictions may be changed only by a vote of the lesser of (i) 67% of more of
the Fund's shares present at a meeting if the holders of more than 50% of the
outstanding shares are present in person or represented by proxy, or (ii) more
than 50% of the Fund's outstanding shares. Any investment restriction that
involves a maximum or minimum percentage of securities or assets shall not be
considered to be violated unless an excess over or a deficiency under the
percentage occurs immediately after, and is caused by, an acquisition or
disposition of securities or utilization of assets by the Fund.
33
<PAGE> 144
(1) 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. (This restriction does not apply to Income Fund.)
(2) The Fund may not borrow money or issue senior securities, except as
permitted by the 1940 Act Laws, Interpretations and Exemptions.
(3) 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 1933 Act.
(4) 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.
(5) 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.
(6) 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.
(7) 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.
(8) 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 each of 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 each of the Funds has this flexibility, the
Board of Trustees has adopted non-fundamental restrictions for each of the Funds
relating to certain of these restrictions which the advisor must follow in
managing the Funds. Any changes to these non-fundamental restrictions, which are
set forth below, require the approval of the Board of Trustees.
34
<PAGE> 145
NON-FUNDAMENTAL RESTRICTIONS
The following non-fundamental investment restrictions apply to each of
the Funds, except that Income Fund is not subject to restriction (1). They may
be changed for any Fund without approval of that Fund's voting securities.
(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 or an affiliate of AIM as an investment advisor (an "AIM Advised
Fund"), subject to the terms and conditions of any exemptive orders issued by
the SEC. (This restriction does not apply to Income Fund.)
(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 an AIM Advised 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 Advised 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 restrictions 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.
MANAGEMENT
The overall management of the business and affairs of the Funds and the
Trust is vested in the Trust's Board of Trustees. The Board of Trustees approves
all significant agreements between the Trust on behalf of one or more of the
Funds, and persons or companies furnishing services to a Fund. The day-to-day
operations of each Fund are delegated to its officers of the Trust and to AIM,
subject always to the objectives, restrictions and policies of the applicable
Fund and to the general supervision of the Trust's Board of Trustees. Certain
trustees and officers of the Trust are affiliated with AIM and A I M Management
Group Inc. ("AIM Management"), the parent corporation of AIM.
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations
during at least the last five years are set forth below. Unless otherwise
indicated, the address of each trustee and officer is 11 Greenway Plaza,
35
<PAGE> 146
Suite 100, Houston, Texas 77046-1173. All of the Trust'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 (81) Trustee and Chairman Director and Chairman, 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 Executive Vice Chairman and
Director, AMVESCAP PLC.
BRUCE L. CROCKETT (56) Trustee 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) Trustee Formerly, Director, Cortland Trust Inc.
Six Blythewood Road (investment company), 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) Trustee 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 Operating
Baltimore, MD 21201 Officer, Mercantile - Safe Deposit & Trust Co.;
and President, Mercantile Bankshares.
JACK FIELDS (48) Trustee 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) Trustee Partner, Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue (law firm).
New York, NY 10022
</TABLE>
- ------------------------
* A trustee who is an "interested person" of A I M Advisors, Inc. and the
Trust as defined in the 1940 Act.
** A trustee who is an "interested person" of the Trust as defined in the 1940
Act.
36
<PAGE> 147
<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) Trustee 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) Trustee Chief Executive Officer, YWCA of the USA.
350 Fifth Avenue, Suite 301
New York, NY 10118
LEWIS F. PENNOCK (57) Trustee Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
LOUIS S. SKLAR (60) Trustee 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.
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.
</TABLE>
- ------------------------
* A trustee who is an "interested person" of A I M Advisors, Inc. and the
Trust as defined in the 1940 Act.
37
<PAGE> 148
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5
NAME, ADDRESS AND AGE REGISTRANT YEARS
- ----------------------------------------- ---------------------- ---------------------------------------------------
<S> <C> <C>
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 Trustees are the Audit
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 and 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 Investments Committee are Messrs. Bauer, Crockett,
Daly, Dunn, Fields, Frischling, Pennock and 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 and Sklar and Dr. Mathai-Davis.
The Nominating and Compensation Committee is responsible for: (i) considering
and nominating individuals to stand for election as independent trustees as long
as the Trust 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 trustees; and (iii) making recommendations to the Board regarding
matters related to compensation, including deferred compensation plans and
retirement plans for the independent trustees.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as trustees, 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 trustees will be
elected, and (ii)
38
<PAGE> 149
that the Nominating and Compensation Committee or the Board of Trustees, as
applicable, shall make the final determination of persons to be nominated.
All of the Trust's trustees also serve as directors or trustees of some
or all of the investment companies managed or advised by AIM. All of the Trust's
executive officers hold similar offices with some or all of the other investment
companies managed or advised by AIM.
REMUNERATION OF TRUSTEES
Each trustee is reimbursed for expenses incurred in connection with
each meeting of the Board of Trustees or any committee thereof. Each trustee who
is not also an officer of the Trust is compensated for his or her services
according to a fee schedule which recognizes the fact that such trustee also
serves as a director or trustee of other AIM Funds. Each such trustee receives a
fee, allocated among the AIM Funds for which he or she serves as a director or
trustee, which consists of an annual retainer component and a meeting fee
component.
Set forth below is information regarding compensation paid or accrued
for each trustee of the Trust:
<TABLE>
<CAPTION>
RETIREMENT
BENEFITS TOTAL
AGGREGATE COMPENSATION ACCRUED COMPENSATION
FROM TRUST(1) BY ALL APPLICABLE FROM ALL APPLICABLE
TRUSTEE 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 trustees of the Trust's
predecessor during the fiscal year ended October 31, 1999, including
earnings thereon, was $51,056.
(2) During the fiscal year ended October 31, 1999, the total amount of
expenses allocated to the Trust's predecessor in respect of such
retirement benefits was $31,707. Data reflect compensation earned for
the calendar year ended December 31, 1999.
39
<PAGE> 150
(3) Each trustee serves as director or trustee of at least 12 registered
investment companies advised by AIM. Data reflects total compensation
earned during the calendar year ended December 31, 1999.
(4) The Trust's predecessor 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 trustee
of the Trust, is a partner in such firm.
(5) Mr. Kroeger was a director of the Trust's predecessor 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 of the Trust's predecessor until March 12,
1999, when he retired.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each trustee (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 Trustees. Pursuant to the
Plan, a trustee 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 trustee 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 or her date of retirement
equal to a maximum of 75% of the annual retainer paid or accrued by the
Applicable AIM Funds for such trustee during the twelve-month period immediately
preceding the trustee's retirement (including amounts deferred under a separate
agreement between the Applicable AIM Funds and the trustee) and based on the
number of such trustee'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 trustee in quarterly installments. If an eligible
trustee dies after attaining the normal retirement date but before receipt of
all benefits under the Plan, the trustee's surviving spouse (if any) shall
receive a quarterly survivor's benefit equal to 50% of the amount payable to the
deceased trustee for no more than ten years beginning the first day of the
calendar quarter following the date of the trustee'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 trustee 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 and Sklar and Dr. Mathai-Davis are 13,13, 2, 3, 23, 20, 18, 11, 10 and
1 years, respectively.
40
<PAGE> 151
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
Number of Years of
Service with the
Applicable AIM Annual Retirement Compensation
Funds Paid by All 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 Trustees") have each executed a Deferred Compensation Agreement
(collectively, the "Compensation Agreements"). Pursuant to the Compensation
Agreements, the Deferring Trustees may elect to defer receipt of up to 100% of
their compensation payable by the Trust, and such amounts are placed into a
deferral account. Currently, the Deferring Trustees may select various AIM Funds
in which all or part of their deferral accounts shall be deemed to be invested.
Distributions from the Deferring Trustees' deferral accounts will be paid in
cash, generally in equal quarterly installments over a period of five (5) or ten
(10) years (depending on the Compensation Agreement) beginning on the date the
Deferring Trustee's retirement benefits commence under the Plan. The Trust's
Board of Trustees, in its sole discretion, may accelerate or extend the
distribution of such deferral accounts after the Deferring Trustee's termination
of service as a trustee of the Trust. If a Deferring Trustee 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 Trustee's
death. The Compensation Agreements are not funded and, with respect to the
payments of amounts held in the deferral accounts, the Deferring Trustees have
the status of unsecured creditors of the Trust and of each other AIM Fund from
which they are deferring compensation.
INVESTMENT ADVISORY AND OTHER SERVICES
AIM serves as the investment advisor to each Fund pursuant to a Master
Investment Advisory Agreement dated June 1, 2000 (the "Investment Advisory
Agreement"). AIM was organized in 1976, and together with its subsidiaries,
advises or manages approximately 120 investment portfolios encompassing a broad
range of investment objectives. AIM is a direct wholly owned subsidiary of AIM
Management, a holding company that has been engaged in the financial services
business since 1976. The address of AIM is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046. AIM Management is an indirect wholly owned subsidiary of
AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, England. 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 trustees and
officers of AIM are also executive officers of the Trust and their affiliations
are shown under "Management" herein.
AIM and the Trust have adopted a Code of Ethics which requires
investment personnel and certain other employees to (a) pre-clear all personal
securities transactions subject to the Code of Ethics; (b) file reports
regarding such transactions; (c) 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
41
<PAGE> 152
(subject to a de minimis exception), and (iii) transactions involving
securities being considered for investment by an AIM Fund (subject to the de
minimis exception); and (d) abide by certain other provisions of the Code of
Ethics. The de minimis exception under the Code of Ethics covers situations
where there is no material conflict of interest because of the large market
capitalization of a security and the relatively small number of shares
involved in a personal transaction. The Code of Ethics also generally
prohibits AIM employees from purchasing securities in initial public offerings.
Personal trading reports are periodically reviewed by AIM, and the Board of
Trustees reviews quarterly and annual reports (which summarize any significant
violations of the Code of Ethics). Sanctions for violating the Code of Ethics
may include censure, monetary penalties, suspension or termination of
employment.
The Trust, on behalf of the Funds, has entered into the Investment
Advisory Agreement and a Master Administrative Services Agreement dated June 1,
2000 ("Administrative Services Agreement"), with AIM. A prior investment
advisory agreement with substantially similar terms to the Investment Advisory
Agreement and a prior administrative services agreement with substantially
similar terms to the Administrative Services Agreement, were in effect prior to
June 1, 2000.
Under the terms of the Investment Advisory Agreement, AIM supervises
aspects of the Funds' operations and provides investment advisory services to
the Funds.
The Investment Advisory Agreement provides that each Fund will pay or
cause to be paid all expenses of the Fund not assumed by AIM, 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 trustees and shareholders meetings; the cost of preparing
and distributing reports and notices to shareholders; the fees and other
expenses incurred by the Trust on behalf of each Fund in connection with
membership in investment company organizations; and the cost of printing copies
of prospectuses and statements of additional information distributed to each
Fund's shareholders.
The Investment Advisory Agreement will continue in effect from year to
year only if such continuance is specifically approved at least annually (i) (a)
by the Trust's Board of Trustees or (b) by the vote of a majority of the
outstanding voting securities of each Fund and (ii) by the affirmative vote of a
majority of the trustees who are not parties to the Investment Advisory
Agreement or "interested persons" of any such party (the "Non-Interested
Trustees") by votes cast in person at a meeting called for such purpose. Each
Fund or AIM may terminate the Investment Advisory Agreement with respect to that
Fund on sixty (60) days' written notice without penalty. The Investment Advisory
Agreement automatically terminates in the event of its assignment.
Under the Investment Advisory Agreement, AIM is entitled to receive
from each Fund a fee calculated at the following annual rates based on the
average daily net assets of the Fund:
AIM ASIAN GROWTH FUND
AIM EUROPEAN DEVELOPMENT FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C> <C>
First $ 500 million................................................. 0.95%
Over $ 500 million.................................................. 0.90%
</TABLE>
42
<PAGE> 153
AIM GLOBAL AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C> <C>
First $1 billion.................................................... 0.90%
Over $1 billion..................................................... 0.85%
</TABLE>
AIM GLOBAL GROWTH FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C> <C>
First $1 billion.................................................... 0.85%
Over $1 billion..................................................... 0.80%
</TABLE>
AIM GLOBAL INCOME FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C> <C>
First $1 billion.................................................... 0.70%
Over $1 billion..................................................... 0.65%
</TABLE>
AIM INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C> <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 contractually agreed to waive advisory fees under the
Investment Advisory Agreement in order to achieve the following annual fee
structure for Equity Fund: 0.95% of the first $500 million of Equity Fund's
average daily net assets; 0.90% of the next $500 million of Equity Fund's
average daily net assets; and 0.85% of Equity Fund's average daily net assets
exceeding $1 billion. AIM has also voluntarily agreed, when net assets of a
Fund exceed $5 billion, to waive advisory fees for such Fund of 0.025% for each
$5 billion increment in net assets, up to a maximum waiver of 0.175% on assets
in excess of $35 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 pursuant to
the prior investment advisory agreement then in effect 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>
43
<PAGE> 154
Under a former Master Sub-Advisory Agreement terminated effective
June 1, 2000, between AIM and INVESCO Global Asset Management Limited
("IGAM") with respect to Asian Fund and European Fund, IGAM was entitled to
receive from AIM with respect to each of Asian Fund and European Fund, a fee
calculated at the following annual rates based on the average daily net assets
of the Fund:
<TABLE>
<CAPTION>
Net Assets Annual Rate
---------- -----------
<S> <C>
First $500 million.................................................. 0.20%
Over $500 million................................................... 0.175%
</TABLE>
Under former Sub-Sub-Advisory Agreements terminated effective
June 1, 2000, between (i) IGAM and INVESCO Asian Limited ("IAL"), with
respect to Asian Fund, and (ii) IGAM and INVESCO Asset Management Limited
("IAML"), with respect to European Fund, were each entitled to receive from IGAM
an annual fee equal to 100% of the fee received by IGAM 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 Trust 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.
In addition, if a Fund engages in securities lending, AIM will provide
the Fund investment advisory services and related administrative services. The
Master Investment Advisory Agreement describes the administrative services to be
rendered by AIM if a Fund engages in securities lending activities, as well as
the compensation AIM may receive for such administrative services. Services to
be provided include: (a) overseeing participation in the securities lending
program to ensure compliance with all applicable regulatory and investment
guidelines; (b) assisting the securities lending agent or principal (the agent)
in determining which specific securities are available for loan; (c) monitoring
the agent to ensure that securities loans are effected in accordance with AIM's
instructions and with procedures adopted by the Board; (d) preparing appropriate
periodic reports for, and seeking appropriate approvals from, the Board with
respect to securities lending activities; (e) responding to agent inquiries; and
(f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with
securities lending is included in the advisory fee schedule. As compensation for
the related administrative services AIM will provide, a lending Fund will pay
AIM a fee equal to 25% of the net monthly interest or fee income retained or
paid to the Fund from such activities. AIM currently intends to waive such fees,
and has agreed to seek Board approval prior to its receipt of all or a portion
of such fee.
For the fiscal year ended October 31, 1999, each Fund reimbursed AIM
for administrative services in the following amounts pursuant to the prior
administrative services agreement then in effect, stated as a percentage of the
Fund's average daily net assets:
44
<PAGE> 155
<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>
Under the terms of the Administrative Services Agreement, AIM is
entitled to receive from each Fund reimbursement of its costs or such reasonable
compensation as may be approved by the Board of Trustees. Currently, AIM is
reimbursed for the services of the Funds' principal financial officer and her
staff, and any expenses related to fund accounting services.
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. For such services, AIM is entitled to
receive from each Fund reimbursement of AIM's costs or such reasonable
compensation as may be approved by the Trust's Board of Trustees. The
Administrative Services Agreement will continue in effect from year to year only
if such continuance is specifically approved at least annually (i)(a) by the
Trust's Board of Trustees or (b) by the vote of a majority of the outstanding
voting securities of each Fund and (ii) by the affirmative vote of the
Non-Interested Trustees, 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 pursuant
to the prior administrative services agreement then in effect 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 A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"), 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 receive a per account fee plus out-of-pocket expenses to
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 Trust 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
45
<PAGE> 156
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. Activities
appropriate for financing under the Class A and C Plan include, but are not
limited to, the following: printing of prospectuses and statements of additional
information and reports for other than existing shareholders; overhead;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; supplemental payments to
dealers and other institutions such as asset-based sales charges or as payments
of service fees under shareholder service arrangements; and costs of
administering the Class A and C Plan.
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 Trust with respect to the
Fund.
THE CLASS B PLAN
The Trust 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'
46
<PAGE> 157
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 Trust; performing sub-accounting; establishing and maintaining shareholder
accounts and records; processing customer purchase and redemption transactions;
providing periodic statements showing a shareholder's account balance and the
integration of such statements with those of other transactions and balances in
the shareholder's other accounts serviced by the bank; forwarding applicable
prospectuses, proxy statements, reports and notices to bank clients who hold
Fund shares; and such other administrative services as a Fund reasonably may
request, to the extent permitted by applicable statute, rule or regulation.
Similar agreements may be permitted under the Plans for institutions which
provide recordkeeping for and administrative services to 401(k) plans.
Financial intermediaries and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
selling shares of one particular class over another.
Under a Shareholder Service Agreement, a Fund agrees to pay
periodically fees to selected dealers and other institutions who render the
foregoing services to their customers. The fees payable under a Shareholder
Service Agreement generally will be calculated at the end of each payment period
for each business day of the Funds during such period at the annual rate of
0.25% of the average daily net asset value of the Funds' shares purchased or
acquired through exchange. Fees calculated in this manner shall be paid only to
those selected dealers or other institutions who are dealers or institutions of
record at the close of business on the last business day of the applicable
payment period for the account in which the Fund's shares are held.
Payments pursuant to the Plans are subject to any applicable
limitations imposed by rules of the National Association of Securities Dealers,
Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made
to dealers and other financial institutions who provide continuing personal
shareholder services to their customers who purchase and own shares of the Funds
to no more than 0.25% per annum of the average daily net assets of the funds
attributable to the customers of such dealers or financial 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 Funds 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 Funds, 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 adopted by
the Trust's predecessor:
47
<PAGE> 158
<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>
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 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:
48
<PAGE> 159
<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 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:
<TABLE>
<CAPTION>
AGGRESSIVE ASIAN EQUITY EUROPEAN GROWTH INCOME
GROWTH FUND FUND FUND FUND FUND FUND
----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CLASS 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 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 Trustees 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
Trustees 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 Trustees, including a majority
of the trustees who are not "interested persons" (as defined in the 1940 Act) of
the Trust and who have no direct or indirect financial interest in the operation
of the Plans or in any agreements related to the Plans ("Qualified Trustees").
In approving the Plans in accordance with the requirements of Rule 12b-1, the
trustees 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.
49
<PAGE> 160
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 Trustees, including a majority of the
Qualified Trustees.
The Plans may be terminated by the vote of a majority of the
Independent Trustees, 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 trustees, including a majority of the Qualified
Trustees, 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 Trustees is committed to the discretion of the
Qualified Trustees. In the event the Class A and C Plan is amended in a manner
which the Board of Trustees determines would materially increase the charges
paid under the Class A and C Plan, the Class B shares of the Funds will no
longer convert into Class A shares of the same Funds unless the Class B shares,
voting separately, approve such amendment. If the Class B shareholders do not
approve such amendment, the Board of Trustees 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 Trust 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 trustees and officers of the Trust 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 Trustees on
February 3, 2000. A Master Distribution Agreement with AIM Distributors relating
to the Class B shares of the Funds was also approved by the Board of Trustees on
February 3, 2000. 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
50
<PAGE> 161
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.
The Distribution Agreements provide that AIM Distributors will bear the
expenses of printing from the final proof and distributing the Funds'
prospectuses and statements of additional information relating to public
offerings made by AIM Distributors pursuant to the Distribution Agreements
(other than those prospectuses and statements of additional information
distributed to existing shareholders of the Funds), and any promotional or sales
literature used by AIM Distributors or furnished by AIM Distributors to dealers
in connection with the public offering of the Funds' shares, including expenses
of advertising in connection with such public offerings. AIM Distributors has
not undertaken to sell any specified number of shares of any classes of the
Funds.
AIM Distributors expects to pay sales commissions from its own
resources to dealers and institutions who sell Class B and Class C shares of the
Funds at the time of such sales. Payments with respect to Class B shares will
equal 4.0% of the purchase price of the Class B shares sold by the dealer or
institution, and will consist of a sales commission equal to 3.75% of the
purchase price of the Class B shares sold plus an advance of the first year
service fee of 0.25% with respect to such shares. The portion of the payments to
AIM Distributors under the Class B Plan which constitutes an asset-based sales
charge (0.75%) is intended in part to permit AIM Distributors to recoup a
portion of such sales commissions plus financing costs. AIM Distributors
anticipates that it will require a number of years to recoup from Class B Plan
payments the sales commissions paid to dealers and institutions in connection
with sales of Class B shares. In the future, if multiple distributors serve a
Fund, each such distributor (or its assignee or transferee) would receive a
share of the payments under the Class B Plan based on the portion of the Fund's
Class B shares sold by or attributable to the distribution efforts of that
distributor.
AIM Distributors may pay sales commissions to dealers and institutions
who sell Class C shares of the AIM Funds at the time of such sales. Payments
with respect to Class C shares will equal 1.00% of the purchase price of the
Class C shares sold by the dealer or institution, and will consist of a sales
commission of 0.75% of the purchase price of the Class C shares sold plus an
advance of the first year service fee of 0.25% with respect to such shares. AIM
Distributors will retain all payments received by it relating to Class C shares
for the first year after they are purchased. The portion of the payments to AIM
Distributors under the Class A and C Plan attributable to Class C shares which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
AIM Distributors to recoup a portion of on-going sales commissions to dealers
plus financing costs, if any. After the first full year, AIM Distributors will
make such payments quarterly to dealers and institutions based on the average
net asset value of Class C shares which are attributable to shareholders for
whom the dealers and institutions are designated as dealers of record.
The Trust (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:
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<PAGE> 162
<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>
- ---------------------
* 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 Emerging Growth 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.
52
<PAGE> 163
<TABLE>
<CAPTION>
Dealer
Investor's Sales Charge Concession
----------------------------- ----------
As a
As a As a Percentage
Percentage Percentage of the
Amount of Investment in of the Public of the Net Public
Single Transaction(1) Offering Amount Offering
----------------------- 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 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.
53
<PAGE> 164
<TABLE>
<CAPTION>
Dealer
Concession
Investor's Sales Charge -----------
------------------------------- As a
As a As a Percentage
Percentage Percentage of the
of the Public of the Net Public
Amount of Investment In Offering Amount Offering
Single Transaction Price Invested Price
----------------------- ------------- ---------- -----------
<S> <C> <C> <C>
Less than $ 100,000 1.00% 1.01% 0.75%
$100,000 but less than $ 250,000 0.75 0.76 0.50
$250,000 but less than $ 1,000,000 0.50 0.50 0.40
</TABLE>
There is no sales charge on purchases of $1,000,000 or more 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, 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.
54
<PAGE> 165
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 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
55
<PAGE> 166
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.
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
56
<PAGE> 167
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 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;
57
<PAGE> 168
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 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
58
<PAGE> 169
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 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
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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;
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.,
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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."
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.
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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:
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
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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.
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 trading on 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 of 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 Trust's officers in
a manner specifically authorized by the Board of Trustees of the Trust.
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 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 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 Trustees.
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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 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.
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
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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 gain. Additionally, if Code
Section 988 losses exceed other investment company taxable income during a
taxable year, the Fund would not be able to pay any ordinary income dividends,
and any such dividends paid before the losses were realized, but in the same
taxable year, would be recharacterized as a return of capital to shareholders,
thereby reducing the tax basis of Fund shares.
HEDGING TRANSACTIONS
Some of the forward foreign currency exchange contracts, options and
futures contracts that the Funds may enter into will be subject to special tax
treatment as "Section 1256 contracts." Section 1256 contracts are treated as if
they are sold for their fair market value on the last business day of the
taxable year, regardless of whether a taxpayer's obligations (or rights) under
such contracts have terminated (by delivery, exercise, entering into a closing
transaction or otherwise) as of such date. Any gain or loss recognized as a
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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
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.
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Each Fund may 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. Alternatively,
each Fund may 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 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.
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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 Fund or who, to the Fund'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, if the initial sales charge
is not 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.
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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 on May 19,
2000. 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."
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. Shareholders of the Funds do not have the right to
demand or require the Trust to issue share certificates, although the Trust in
its sole discretion may issue them.
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.
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<PAGE> 180
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 the close of the customary trading
session of the NYSE. 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. 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
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<PAGE> 181
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.
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.
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<PAGE> 182
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 Trustees 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.
LEGAL MATTERS
Legal matters for the Trust 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 Trust 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 Trust, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of each of the
Trust's portfolios as of May 18, 2000, and the amount of outstanding shares
held by such holders, are set forth below:
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<PAGE> 183
<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
Equity Fund -
Class A shares Merrill Lynch, Pierce, 36.45%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, 32.89%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, 54.73%** -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
AIM Global Aggressive
Growth Fund -
Class A shares Merrill Lynch, Pierce 11.70% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
</TABLE>
- -----------------
* The Trust 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> 184
<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, 22.33% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, 30.96% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
AIM Global Growth
Fund -
Class A shares Merrill Lynch, Pierce, 8.99% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch, Pierce, 16.56% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce 27.09% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
</TABLE>
- -----------------------
* The Trust has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
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<PAGE> 185
<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 Income Fund -
Class A shares City National Bank 8.53% -0-
City National Corp.
Pooled #510001100
P.O. Box 60520
Attn: TR OPS/MUTUAL FD
Los Angeles, CA 90060
Class B shares Merrill Lynch Pierce 5.60% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 2nd Floor
Jacksonville, FL 32246
Class C shares Lewco Securities Corp. 7.49% -0-
FBO a/c # WB5-800453-0-01
34 Exchange Place,
4th Floor
Jersey City, New Jersey 07311
Merrill Lynch Pierce 5.86% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 2nd Floor
Jacksonville, FL 32246
AIM European
Development Fund -
Class A shares Merrill Lynch, Pierce, 7.53% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch Pierce 9.94% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 2nd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch, Pierce, 16.54% -0-
Fenner & Smith
FBO The Sole Benefit
of Customers
Fund Administration
4800 Deer Lake Dr. East
2nd Floor
Jacksonville, FL 32246
</TABLE>
- -----------------------
* The Trust has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
75
<PAGE> 186
<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 Asian Growth Fund -
Class A shares Merrill Lynch Pierce 8.40% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 2nd Floor
Jacksonville, FL 32246
Class B shares Merrill Lynch Pierce 7.74% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 2nd Floor
Jacksonville, FL 32246
Class C shares Merrill Lynch Pierce 17.42% -0-
Fenner & Smith
FBO The Sole Benefit of Customers
Attn: Fund Administration
4800 Deer Lake Dr. East 2nd Floor
Jacksonville, FL 32246
Robert A. Merkel and -0- 5.36%
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 May 18, 2000, the trustees and officers of the Trust as a group
owned less than 1% of the outstanding shares of each class of the Funds.
OTHER INFORMATION
Each Prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement which the portfolios
of the Trust 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 Trust 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 Trust has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
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<PAGE> 187
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.
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.
A-1
<PAGE> 188
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> 189
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> 190
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> 191
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> 192
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.
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.
B-4
<PAGE> 193
*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.
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.
B-5
<PAGE> 194
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> 195
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, an independent agency of the U.S. Government.
FEDERAL HOME LOAN BANK NOTES AND BONDS--are notes and bonds issued by the
Federal Home Loan Bank System.
FHA DEBENTURES--are debentures issued by the Federal Housing Authority of the
U.S. Government.
FHA INSURED NOTES--are bonds issued by the Farmers Home Administration of the
U.S. Government.
FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS--are bonds issued and
guaranteed by FHLMC, a corporate instrumentality of the U.S. Government. The
Federal Home Loan Banks own all the capital stock of FHLMC, which obtains its
funds by selling mortgages (as well as participation interests in the mortgages)
and by borrowing funds through the issuance of debentures and otherwise.
FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS"--represent undivided
interests in specified groups of conventional mortgage loans (and/or
participation interests in those loans) underwritten and owned by FHLMC. At
least 95% of the aggregate principal balance of the whole mortgage loans and/or
participations in a group formed by FHLMC typically consists of single-family
mortgage loans, and not more than 5% consists of multi-family loans. FHLMC
Participation Certificates are not guaranteed by, and do not constitute a debt
or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC
Participation Certificates are issued in fully registered form only, in original
unpaid principal balances of $25,000, $100,000, $200,00, $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 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.
C-1
<PAGE> 196
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.
As the prepayment rates of individual mortgage pools will vary widely,
it is not possible to accurately predict the average life of a particular issue
of GNMA Certificates. However, statistics published by the Federal Housing
Authority indicate that the average life of a single-family dwelling mortgage
with 25- to 30-year maturity, the type of mortgage which backs the vast
majority of GNMA Certificates, is approximately 12
C-2
<PAGE> 197
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> 198
FINANCIAL STATEMENTS
FS
<PAGE> 199
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.
/s/ KPMG LLP
KPMG LLP
December 3, 1999
Houston, Texas
FS-1
<PAGE> 200
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> 201
<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> 202
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> 203
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> 204
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> 205
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> 206
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> 207
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.
/s/ KPMG LLP
KPMG LLP
December 3, 1999
Houston, Texas
FS-9
<PAGE> 208
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> 209
<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> 210
<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> 211
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> 212
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> 213
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> 214
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> 215
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> 216
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.
/s/ KPMG LLP
KPMG LLP
December 3, 1999
Houston, Texas
FS-18
<PAGE> 217
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> 218
<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> 219
<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> 220
<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> 221
<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> 222
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> 223
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> 224
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> 225
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> 226
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> 227
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> 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 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.
/s/ KPMG LLP
KPMG LLP
December 3, 1999
Houston, Texas
FS-30
<PAGE> 229
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> 230
<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> 231
<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> 232
<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> 233
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> 234
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> 235
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> 236
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> 237
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> 238
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> 239
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.
/s/ KPMG LLP
KPMG LLP
December 3, 1999
Houston, Texas
FS-41
<PAGE> 240
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> 241
<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> 242
<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> 243
<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> 244
<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> 245
<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> 246
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> 247
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> 248
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> 249
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> 250
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> 251
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.
/s/ KPMG LLP
KPMG LLP
December 3, 1999
Houston, Texas
FS-53
<PAGE> 252
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> 253
<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> 254
<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> 255
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> 256
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> 257
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> 258
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> 259
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> 260
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> 261
PART C: OTHER INFORMATION
Item 23. Exhibits
a (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.
(2) - (a) Articles of Restatement, dated November 14, 1994, were
filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996.
- (b) 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.
- (c) 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.
- (d) Articles Supplementary, dated June 9, 1999, to Articles
of Incorporation were filed electronically as an Exhibit to
Post-Effective Amendment No. 17 on February 23, 2000.
- (e) Articles Supplementary, dated December 23, 1999, to
Articles of Incorporation were filed electronically as an
Exhibit to Post-Effective Amendment No. 17 on February 23,
2000.
(3) - (a) Amendment No. 1 to Agreement and Declaration of Trust of
AIM International Mutual Funds, dated May 10, 2000 is filed
herewith electronically.
(b) Agreement and Declaration of Trust of AIM International
Mutual Funds, dated December 6, 1999 was filed
electronically as an Exhibit to Post-Effective Amendment
No. 18 on March 23, 2000 and is hereby incorporated by
reference.
b (1) - (a) By-Laws of 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.
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(2) - (a) 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.
- (b) First Amendment, dated June 9, 1999, to Amended and
Restated Bylaws were filed electronically as an Exhibit to
Post-Effective Amendment No. 17 on February 23, 2000.
(3) - Bylaws of AIM International Mutual Funds, dated effective
December 6, 1999, are filed herewith electronically.
c - Instruments Defining Rights of Security Holders - None.
d (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.
(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) - (a) 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.
- (b) 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.
(5) - Form of Master Investment Advisory Agreement between A I M
Advisors, Inc. and AIM International Mutual Funds was filed
electronically as an Exhibit to Post-Effective Amendment
No. 18 on March 23, 2000 and is hereby incorporated by
reference.
(6) - (a) Copy of Foreign Country Selection and Mandatory
Securities Depository Delegation Agreement, dated September
9, 1998, between Registrant and A I M Advisors, Inc. was
filed electronically as an Exhibit in Post-Effective
Amendment No. 15 on December 23, 1998 and is hereby
incorporated by reference.
- (b) Amendment No. 1, dated September 28, 1998, to Foreign
Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit in Post-Effective Amendment No.
15 on December 23, 1998 and is hereby incorporated by
reference.
- (c) Amendment No. 2, dated December 14, 1998, to Foreign
Country Selection and Mandatory Securities Depositary
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
16 on February 19, 1999 and is hereby incorporated by
reference.
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- (d) Amendment No. 3, dated December 22, 1998, to Foreign
Country Selection and Mandatory Securities Depositary
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
16 on February 19, 1999 and is hereby incorporated by
reference.
- (e) Amendment No. 4, dated January 26, 1999, to Foreign
Country Selection and Mandatory Securities Depositary
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
16 on February 19, 1999 and is hereby incorporated by
reference.
- (f) Amendment No. 5, dated March 1, 1999, to Foreign Country
Selection and Mandatory Securities Depositary
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
16 on February 19, 1999 and is hereby incorporated by
reference.
- (g) Amendment No. 6, dated as of March 18, 1999, to Foreign
Country Selection and Mandatory Securities Depositary
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
17 on February 23, 2000, and is hereby incorporated by
reference.
- (h) Amendment No. 7, dated November 15, 1999, to Foreign
Country Selection and Mandatory Securities Depositary
Responsibilities Delegation Agreement, dated September 9,
1998, between Registrant and A I M Advisors, Inc. was filed
electronically as an Exhibit to Post-Effective Amendment No.
17 on February 23, 2000, and is hereby incorporated by
reference.
(7) - 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.
(8) - 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.
(9) - 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.
e (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
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<PAGE> 264
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.
(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) - (a) 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, and is hereby incorporated by reference.
- (b) 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) - (a) 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.
- (b) 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.
(9) - 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.
(10) - 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.
f (1) - 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.
(2) - 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.
(3) - 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.
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<PAGE> 265
(4) - 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.
(5) - Form of Deferred Compensation Agreement for Registrant"s
Non-Affiliated Directors 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.
g (1) - (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 in Post-Effective Amendment No. 15 on December
23, 1998 and is hereby incorporated by reference.
(2) - (a) Subcustodian Agreement with Texas Commerce Bank, 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.
- (b) Amendment No. 1, dated October 2, 1998, to Subcustodian
Agreement with Chase Bank of Texas, N.A. (formerly, Texas
Commerce Bank) among Chase Bank of Texas, N.A. (formerly,
Texas Commerce Bank), 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.
17 on February 23, 2000, and is hereby incorporated by
reference.
h (1) - (a) 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.
- (b) 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.
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<PAGE> 266
- (c) 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.
- (d) 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.
(2) - (a) 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.
- (b) 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.
- (c) Amendment No. 2, dated January 1, 1999, to the Transfer
Agency and Service Agreement, dated November 1, 1994,
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.
(3) - (a) Remote Access and Related Services Agreement, dated as
December 23, 1994, between the Registrant and The
Shareholder Services Group, Inc. was filed as an Exhibit to
Post-Effective Amendment No. 7 on February 23, 1995, and was
filed electronically as an Exhibit to Post-Effective
Amendment No. 9 on February 28, 1996, and is hereby
incorporated by reference.
- (b) 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.
- (c) Addendum No. 2, dated October 12, 1995, 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. 9 on February 28, 1996, and
is hereby incorporated by reference.
- (d) Amendment No. 3, dated as of February 1, 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. 12 on August 4, 1997, and is
hereby incorporated by reference.
- (e) Amendment No. 4, dated 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.
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- (f) 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.
- (g) 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.
- (h) 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.
(4) - 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.
(5) - Agreement and Plan of Reorganization, dated December 7,
1999, between AIM International Funds, Inc., a Maryland
corporation, and AIM International Mutual Funds, a Delaware
business trust, was filed electronically as an Exhibit to
Post-Effective Amendment No. 17 on February 23, 2000, and is
hereby incorporated by reference.
(6) - 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.
(7) - 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.
(8) - 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.
(9) - (a) 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.
- (b) 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.
- (c) 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.
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<PAGE> 268
- (d) 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.
(10) - (a) 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.
- (b) 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.
(11) - (a) 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.
- (b) 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.
(12) - (a) 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.
- (b) 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.
- (c) 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.
- (d) 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.
- (e) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated March 1, 1999,
among Registrant, First Data Investor Services Group, Inc.,
and Merrill Lynch, Pierce, Fenner & Smith Incorporated was
filed electronically as an Exhibit to Post
C-8
<PAGE> 269
-Effective Amendment No. 17 on February 23, 2000, and is
hereby incorporated by reference.
- (f) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated May 12, 1999, among
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.
- (g) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated November 1, 1999,
among 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.
- (h) Notice of Addition of Funds to Shareholder
Sub-Accounting Services Agreement, dated December 31, 1999,
among 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.
i (1) - Opinion and Consent of Ballard Spahr Andrews &
Ingersoll, LLP relating to AIM Asian Growth Fund and AIM
European Development Fund was filed electronically as an
Exhibit to Post-Effective Amendment No. 13 on October 17,
1997, and is hereby incorporated by reference.
(2) - Opinion and Consent of Ballard Spahr Andrews &
Ingersoll, LLP was filed electronically as an Exhibit to
Post-Effective Amendment No 18 on March 23, 2000 and is
hereby incorporated by reference.
(3) - Consent of Ballard Spahr Andrews & Ingersoll, LLP is
filed herewith electronically.
j - Consent of KPMG LLP is filed herewith electronically.
k - Financial Statements - None.
l (1) - (a) Agreement Concerning Initial Capitalization of the
Registrant's AIM Global Aggressive Growth Fund, AIM Global
Growth Fund and AIM Global Income Fund, dated as of July 1,
1994, was filed electronically 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.
- (b) Agreement concerning Initial Capitalization of the
Registrant"s AIM Asian Growth Fund and AIM European
Development Fund, dated November 3, 1997, was filed
electronically as an Exhibit to Post-Effective Amendment No.
14 on February 20, 1998, and is hereby incorporated by
reference.
m (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.
C-9
<PAGE> 270
(3) - Master Distribution Plan, and related forms of agreements,
for Registrant's Class A shares were filed as Exhibits to
Registrant's Post-Effective Amendment No. 7 on February 23,
1995.
(4) - Master Distribution Plan, and related forms of agreements,
for Registrant's Class B shares were filed as Exhibits to
Registrant's Post-Effective Amendment No. 7 on February 23,
1995.
(5) - Amended Master Distribution Plan, dated September 10, 1994,
for Registrant's Class A shares was electronically filed as
an Exhibit to Post-Effective Amendment No. 8 on December 1,
1995.
(6) - Amended Master Distribution Plan, dated September 10, 1994,
for Registrant's Class B shares was electronically filed as
an Exhibit to Post-Effective Amendment No. 8 on December 1,
1995.
(7) - Amended and Restated Master Distribution Plan, dated as of
September 10, 1994, as amended as of September 10, 1994, and
as amended and restated as of May 2, 1995, for Registrant's
Class B shares was electronically filed as an Exhibit to
Post-Effective Amendment No. 8 on December 1, 1995.
(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) - (a) 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.
- (b) 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) - (a) 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.
- (b) Amendment No. 1, dated November 1, 1997, to Second
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.
13 on October 17, 1997.
(11) - 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.
(12) - 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-10
<PAGE> 271
(13) - 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.
(14) - 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.
(15) - 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.
(16) - 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 was
filed electronically as an Exhibit to Post-Effective
Amendment No. 16 on February 19, 1999, and is hereby
incorporated by reference.
(17) - 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.
n (1) - Amended and Restated Multiple Class Plan (Rule 18f-3 Plan),
effective as of July 1, 1997, was filed electronically as an
Exhibit to Post-Effective Amendment No. 12 on August 12,
1997.
(2) - Second Amended and Restated Multiple Class Plan (Rule 18f-3
Plan), effective September 1, 1997, was filed electronically
as an Exhibit to Post-Effective Amendment No. 13 on October
17, 1997.
(3) - 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.
o (1) - The AIM Management Group Code of Ethics, as amended August
17, 1999, relating to A I M Management Group Inc. and A I M
Advisors, Inc., was filed electronically as an Exhibit to
Post-Effective Amendment No. 17 on February 23, 2000, and
is hereby incoporated by reference.
(2) - The AIM Management Group Inc. Code of Ethics, as amended
February 24, 2000, relating to A I M Management Group Inc.
and A I M Advisors, Inc., was filed electronically as an
Exhibit to Post-Effective Amendment No. 18 on March 23, 2000
and is hereby incorporated by reference.
(3) - Code of Ethics of AIM International Funds, Inc., effective
November 1, 1991, was filed electronically as an Exhibit to
Post-Effective Amendment No. 17 on February 23, 2000, and is
hereby incorporated by reference.
Item 24. Persons Controlled by or Under Common Control with Registrant
Provide a list or diagram of all persons directly or indirectly controlled
by or under common control with the Registrant. For any person controlled by
another person, disclose the percentage of voting securities owned by the
immediately controlling person or other basis of that person"s control. For each
company, also provide the state or other sovereign power under the laws of which
the company is organized.
Not Applicable
C-11
<PAGE> 272
Item 25. Indemnification
State the general effect of any contract, arrangements or statute under
which any director, officer, underwriter or affiliated person of the Registrant
is insured or indemnified against any liability incurred in their official
capacity, other than insurance provided by any director, officer, affiliated
person, or underwriter for their own protection.
The Registrant's Agreement and Declaration of Trust, dated December 6, 1999,
provides, among other things (i) that trustees and officers of the
Registrant, when acting as such, shall not be personally liable for any act,
omission or obligation of the Registrant or any trustee or officer (except
for liabilities to the Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty);
(ii) for the indemnification by the Registrant of the trustees, officers,
employees and agents of the Registrant to the fullest extent permitted by
the Delaware Business Trust Act and Bylaws and other applicable law; (iii)
that shareholders of the Registrant shall not be personally liable for the
debts, liabilities, obligations or expenses of the Registrant or any
portfolio or class; and (iv) for the indemnification by the Registrant, out
of the assets belonging to the applicable portfolio, of shareholders and
former shareholders of the Registrant in case they are held personally
liable solely by reason of being or having been shareholders of the
Registrant or any portfolio or class and not because of their acts or
omissions or for some other reason.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to trustees, 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 trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, 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 26. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature that each investment advisor of the Registrant, and each
director, officer or partner of the advisor, is or has been engaged within the
last two fiscal years for his or her own account or in the capacity of director,
officer, employee, partner, or trustee.
The only employment of a substantial nature of the Advisor's directors and
officers is with the Advisor and its affiliated companies. Reference is also
made to the caption "Management--Investment Advisor" of the Prospectus which
comprises Part A of the Registration Statement, and to the caption
"Management" of the Statement of Additional Information which comprises Part
B of the Registration Statement, and to Item 27(b) of this Part C.
Item 27. Principal Underwriters
(a) State the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the Registrant"s
securities also act as a principal underwriter, depositor, or investment
advisor.
C-12
<PAGE> 273
A I M Distributors, Inc., the Registrant's principal underwriter, also
acts as a principal underwriter to the following investment companies:
AIM Advisor Funds, Inc.
AIM Equity Funds (Retail Classes)
AIM Floating Rate Fund
AIM Funds Group
AIM Growth Series
AIM Investment Funds
AIM Investment Securities Funds (Retail Classes)
AIM Series Trust
AIM Special Opportunities Funds
AIM Summit Fund
AIM Tax-Exempt Funds
AIM Variable Insurance Funds
(b) Provide the information required by the following table for each
director, officer, or partner of each principal underwriter named in the
response to Item 20:
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
Charles T. Bauer Chairman & Director Chairman & Trustee
Michael J. Cemo President & Director None
Gary T. Crum Director Senior Vice President
Robert H. Graham Senior Vice President President & Trustee
& Director
W. Gary Littlepage Senior Vice President None
& Director
James L. Salners Executive Vice President None
John Caldwell Senior Vice President None
Marilyn M. Miller Senior Vice President None
Gene L. Needles Senior Vice President None
Gordon J. Sprague Senior Vice President None
Michael C. Vessels Senior Vice President None
</TABLE>
- -----------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-13
<PAGE> 274
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
B. J. Thompson First Vice President None
Kathleen J. Pflueger Secretary Assistant Secretary
Dawn M. Hawley Vice President & Treasurer None
Ofelia M. Mayo Vice President, Assistant Assistant Secretary
Secretary & General Counsel
Melville B. Cox Vice President & Vice President
Chief Compliance Officer
James R. Anderson Vice President None
Mary K. Coleman Vice President None
Mary A. Corcoran Vice President None
Glenda A. Dayton Vice President None
Sidney M. Dilgren Vice President None
Tony D. Green Vice President None
Charles H. McLaughlin Vice President None
Ivy B. McLemore Vice President None
Terri L. Ransdell Vice President None
Carol F. Relihan Vice President Senior Vice President
& Secretary
Kamala C. Sachidanandan Vice President None
Frank V. Serebrin Vice President None
Christopher T. Simutis Vice President None
Gary K. Wendler Vice President None
Norman W. Woodson Vice President None
David E. Hessel Assistant Vice President, None
Controller & Assistant Treasurer
</TABLE>
- --------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-14
<PAGE> 275
<TABLE>
<CAPTION>
Name and Principal Position and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- ---------------- ---------------- ---------------
<S> <C> <C>
Luke P. Beausoleil Assistant Vice President None
Sheila R. Brown Assistant Vice President None
Scott E. Burman Assistant Vice President None
Tisha B. Christopher Assistant Vice President None
Mary E. Gentempo Assistant Vice President None
Simon R. Hoyle Assistant Vice President None
Kathryn A. Jordan Assistant Vice President None
Kim T. McAuliffe Assistant Vice President None
David B. O'Neil Assistant Vice President None
Rebecca Starling-Klatt Assistant Vice President None
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
P. Michelle Grace Assistant Secretary Assistant Secretary
Lisa A. Moss Assistant Secretary Assistant Secretary
Stephen I. Winer Assistant Secretary Assistant Secretary
</TABLE>
(c) Provide information required by the following table for all commissions
and other compensation received, directly or indirectly, from the
Registrant during the last fiscal year by each principal underwriter who
is not an affiliated person of the Registrant or any affiliated person of
an affiliated person:
Not Applicable
- ----------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-15
<PAGE> 276
Item 28. Location of Accounts and Records
State the name and address of each person maintaining physical possession
of each account, book, or other document required to be maintained by section
31(a) [15 U.S.C. 80a-30(a)] and the rules under that section.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, maintains physical possession of each such account, book or
other document of the Registrant at its principal executive offices,
except for those maintained by the Registrant's Custodian, State Street
Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110,
and the Registrant's Transfer Agent and Dividend Paying Agent, A I M Fund
Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739.
Item 29. Management Services
Provide a summary of the substantive provisions of any management-related
service contract not discussed in Part A or B, disclosing the parties to the
contract and the total amount paid and by whom for the Registrant"s last three
fiscal years.
Not Applicable
Item 30. Undertakings
In initial registration statements filed under the Securities Act, provide
an undertaking to file an amendment to the registration statement with certified
financial statements showing the initial capital received before accepting
subscriptions from more than 25 persons if the Registrant intends to raise its
initial capital under section 14(a)(3) [15 U.S.C. 80a-14(a)(3)].
Not Applicable
C-16
<PAGE> 277
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 19th day of
May, 2000.
REGISTRANT: AIM INTERNATIONAL MUTUAL FUNDS
By: /s/ROBERT H. GRAHAM
----------------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ CHARLES T. BAUER Chairman & Trustee May 19, 2000
- ------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Trustee & President May 19, 2000
- ------------------------ (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee May 19, 2000
- ------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee May 19, 2000
- ------------------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Trustee May 19, 2000
- ------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Trustee May 19, 2000
- ------------------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee May 19, 2000
- ------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee May 19, 2000
- ------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee May 19, 2000
- ------------------------
(Lewis F. Pennock)
/s/ LOUIS S. SKLAR Trustee May 19, 2000
- ------------------------
(Louis S. Sklar)
/s/ DANA R. SUTTON Vice President & May 19, 2000
- ------------------------ Treasurer (Principal Financial
(Dana R. Sutton) and Accounting Officer)
<PAGE> 278
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
a(3)(b) Amendment No. 1 to Agreement and Declaration of Trust of AIM
International Mutual Funds, dated May 10, 2000
b(3) Bylaws of AIM International Mutual Funds, dated effective
December 6, 1999
i(3) Consent of Ballard Spahr Andrews & Ingersoll, LLP
j Consent of KPMG LLP
<PAGE> 1
EXHIBIT a(3)(b)
AMENDMENT NO. 1
TO
AGREEMENT AND DECLARATION OF TRUST
OF
AIM INTERNATIONAL MUTUAL FUNDS
This Amendment No. 1 to the Agreement and Declaration of Trust of
AIM International Mutual Funds (this "Amendment") amends, effective as of May
10, 2000, the Agreement and Declaration of Trust of AIM International Mutual
Funds dated as of December 6, 1999 (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed
by a duly authorized officer of the Trust.
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Unless defined herein, each capitalized term used in this
Amendment shall have the meaning given it in the Agreement.
2. A new Section 1.2(j) is hereby added to the Agreement to read
in full as follows:
"(j) `fund complex' has the meaning specified in
Regulation 14A under the Securities Exchange Act of
1934, as amended from time to time;"
With the addition of new Section 1.2(j) above, existing
Sections 1.2(j) through 1.2(z) are hereby renumbered as Sections 1.2(k) through
1.2(aa), respectively.
3. Section 2.6(a) is hereby amended and restated in its entirety to
read as follows:
"(a) Subject to the provisions of paragraph (c)
below, all Class B Shares other than those
purchased through the reinvestment of dividends
and distributions shall automatically convert to
Class A Shares at the end of the month which is
eight (8) years after the date on which a
shareholder's order to purchase such shares was
accepted."
4. The first sentence of Section 4.3 is hereby amended and restated
in its entirety to read as follows:
"The Board of Trustees or any committee thereof shall act
by majority vote of those present at a meeting duly called
(including a meeting by telephonic or other electronic
means, unless the 1940 Act requires that a particular
action be taken only at a meeting of the Trustees in
person) at which a quorum required by the Bylaws is
present or by written consent of at least seventy-five
percent (75%) of
<PAGE> 2
the Trustees or committee, as the case may be, without a
meeting, provided that the writing or writings are filed
with the minutes of proceedings of the Board or committee."
5. A new Section 4.7 is hereby added to the Agreement to read in
its entirety as follows:
"Section 4.7. Independent or Disinterested Trustee. A
Trustee who is not an interested person of the Trust shall
be deemed to be independent and disinterested under the
Delaware Act and other applicable Delaware law when making
any determinations or taking any action as a Trustee.
Service by a person as a trustee or a director of one or
more trusts, corporations or other entities of a fund
complex shall not be considered in determining whether a
trustee is independent or disinterested under the Delaware
Act and other applicable Delaware law."
6. All references in the Agreement to "this Agreement" shall mean
the Agreement as amended by this Amendment.
7. Except as specifically amended by this Amendment, the Agreement
is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of
the Trust, has executed this Amendment as of May 10, 2000.
/s/ROBERT H. GRAHAM
-------------------
Name: Robert H. Graham
Title: President
<PAGE> 1
EXHIBIT b(3)
BYLAWS OF AIM INTERNATIONAL MUTUAL FUNDS,
A DELAWARE BUSINESS TRUST
Adopted effective December 6, 1999.
Capitalized terms not specifically defined herein
shall have the meanings ascribed to them in the Trust's
Agreement and Declaration of Trust (the "Agreement").
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of AIM
International Mutual Funds (the "Trust") shall be at the offices of The
Corporation Trust Company in the County of New Castle, State of Delaware.
Section 2. Other Offices. The Trust may also have offices at such
other places both within and without the State of Delaware as the Trustees may
from time to time determine or the business of the Trust may require.
ARTICLE II
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees of the Trust may
hold meetings, both regular and special, either within or without the State of
Delaware. Meetings of the Trustees may be called orally or in writing by the
President of the Trust or by any two Trustees.
Section 2. Regular Meetings. Regular meetings of the Board of
Trustees shall be held each year, at such time and place as the Board of
Trustees may determine.
Section 3. Notice of Meetings. Notice of the time, date, and place of
all meetings of the Trustees shall be given to each Trustee (i) by telephone,
telex, telegram, facsimile, electronic-mail, or other electronic mechanism sent
to his or her home or business address at least twenty-four hours in advance of
the meeting or (ii) in person at another meeting of the Trustees or (iii) by
written notice mailed or sent via overnight courier to his or her home or
business address at least seventy-two hours in advance of the meeting. Notice
need not be given to any Trustee who attends the meeting without objecting to
the lack of notice or who signs a waiver of notice either before or after the
meeting.
Section 4. Quorum. At all meetings of the Trustees, one-third of the
Trustees then in office (but in no event less than two Trustees) shall
constitute a quorum for the transaction of business and the act of a majority
of the Trustees present at any meeting at which there is a quorum shall be the
act of the Board of Trustees, except as may be otherwise specifically
<PAGE> 2
provided by applicable law or by the Agreement or these Bylaws. If a quorum
shall not be present at any meeting of the Board of Trustees, the Trustees
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 5. Designation, Powers, and Names of Committees.
(a) The Board of Trustees shall initially have the
following three committees: (1) an Audit Committee; (2) a Nominating and
Compensation Committee; and (3) an Investments Committee. Each such Committee
shall consist of two or more of the Trustees of the Trust and the Board may
designate one or more Trustees as alternate members of any Committee, who may
replace any absent or disqualified member at any meeting of such Committee;
provided, however, that under no circumstances shall a member of the Audit
Committee or the Nominating and Compensation Committee be an "interested
person," as such term is defined in the 1940 Act, of the Trust. The Board shall
designate the powers and duties of each such Committee and may terminate any
such Committee by an amendment to these Bylaws.
(b) The Board of Trustees may, by resolution passed by a
majority of the whole Board, designate one or more additional committees, each
committee to consist of two or more of the Trustees of the Trust. The Board may
designate one or more Trustees as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee.
Each committee, to the extent provided in the resolution, shall have and may
exercise the powers of the Board of Trustees in the management of the business
and affairs of the Trust; provided, however, that in the absence or
disqualification of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not such members constitute a quorum, may unanimously appoint
another member of the Board of Trustees to act at the meeting in the place of
any such absent or disqualified member. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Trustees.
Section 6. Minutes of Committee. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Trustees when
required.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive officers of the
Trust shall be elected by the Board of Trustees as soon as practicable after
the organization of the Trust. The executive officers may include a Chairman of
the Board, and shall include a President, one or more Vice Presidents (the
number thereof to be determined by the Board of Trustees), a Secretary and a
Treasurer. The Chairman of the Board, if any, shall be selected from among the
Trustees. The Board of Trustees may also in its discretion appoint Assistant
Vice Presidents,
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Assistant Secretaries, Assistant Treasurers, and other officers, agents and
employees, who shall have such authority and perform such duties as the Board
may determine. The Board of Trustees may fill any vacancy which may occur in
any office. Any two offices, except for those of President and Vice President,
may be held by the same person, but no officer shall execute, acknowledge or
verify any instrument on behalf of the Trust in more than one capacity, if such
instrument is required by law or by these Bylaws to be executed, acknowledged
or verified by two or more officers.
Section 2. Term of Office. Unless otherwise specifically determined
by the Board of Trustees, the officers shall serve at the pleasure of the Board
of Trustees. If the Board of Trustees in its judgment finds that the best
interests of the Trust will be served, the Board of Trustees may remove any
officer of the Trust at any time with or without cause. The Trustees may
delegate this power to the President (without supervision by the Trustees) with
respect to any other officer. Such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Any officer may resign from
office at any time by delivering a written resignation to the Trustees or the
President. Unless otherwise specified therein, such resignation shall take
effect upon delivery.
Section 3. President. The President shall be the chief executive
officer of the Trust and, subject to the Board of Trustees, shall generally
manage the business and affairs of the Trust. If there is no Chairman of the
Board, or if the Chairman of the Board has been appointed but is absent, the
President shall, if present, preside at all meetings of the Shareholders and
the Board of Trustees.
Section 4. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Shareholders and the Board of Trustees, if
the Chairman of the Board is present. The Chairman of the Board shall have such
other powers and duties as shall be determined by the Board of Trustees, and
shall undertake such other assignments as may be requested by the President.
Section 5. Chairman, Vice Presidents. The Chairman of the Board or
one or more Vice Presidents shall have and exercise such powers and duties of
the President in the absence or inability to act of the President, as may be
assigned to them, respectively, by the Board of Trustees or, to the extent not
so assigned, by the President. In the absence or inability to act of the
President, the powers and duties of the President not otherwise assigned by the
Board of Trustees or the President shall devolve upon the Chairman of the
Board, or in the Chairman's absence, the Vice Presidents in the order of their
election.
Section 6. Secretary. The Secretary shall (a) have custody of the
seal of the Trust; (b) attend meetings of the Shareholders, the Board of
Trustees, and any committees of Trustees and keep the minutes of such meetings
of Shareholders, the Board of Trustees and any committees thereof, and (c)
issue all notices of the Trust. The Secretary shall have charge of the
Shareholder records and such other books and papers as the Board may direct,
and shall perform such other duties as may be incidental to the office or which
are assigned by the Board of Trustees. The Secretary shall also keep or cause
to be kept a Shareholder book, which may
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be maintained by means of computer systems, containing the names,
alphabetically arranged, of all persons who are Shareholders of the Trust,
showing their places of residence, the number and series and class of any
Shares held by them, respectively, and the dates when they became the record
owners thereof.
Section 7. Treasurer. The Treasurer shall have the care and custody
of the funds and securities of the Trust and shall deposit the same in the name
of the Trust in such bank or banks or other depositories, subject to withdrawal
in such manner as these Bylaws or the Board of Trustees may determine. The
Treasurer shall, if required by the Board of Trustees, give such bond for the
faithful discharge of duties in such form as the Board of Trustees may require.
Section 8. Assistant Officers. Assistant officers, which may include
one or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, shall perform such functions and have such responsibilities as the
Board of Trustees may determine.
Section 9. Surety Bond. The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond
required by the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "Commission") to the Trust in such sum and with such
surety or sureties as the Trustees may determine, conditioned upon the faithful
performance of his or her duties to the Trust, including responsibility for
negligence and for the accounting of any of the Trust's property, funds, or
securities that may come into his or her hands.
Section 10. Authorized Signatories. Unless a specific officer is
otherwise designated in a resolution adopted by the Board of Trustees, the
proper officers of the Trust for executing agreements, documents and
instruments other than Internal Revenue Service forms shall be the President,
any Vice President, the Secretary or any Assistant Secretary. Unless a specific
officer is otherwise designated in a resolution adopted by the Board of
Trustees, the proper officers of the Trust for executing any and all Internal
Revenue Service forms shall be the President, any Vice President, the
Secretary, any Assistant Secretary, or the Treasurer.
ARTICLE IV
MEETINGS OF SHAREHOLDERS
Section 1. Purpose. All meetings of the Shareholders for the election
of Trustees shall be held at such place as may be fixed from time to time by
the Trustees, or at such other place either within or without the State of
Delaware as shall be designated from time to time by the Trustees and stated in
the notice indicating that a meeting has been called for such purpose. Meetings
of Shareholders may be held for any purpose determined by the Trustees and may
be held at such time and place, within or without the State of Delaware as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof. At all meetings of the Shareholders, every shareholder of
record entitled to vote thereat shall be entitled to vote at such meeting
either in person or by written proxy signed by the Shareholder or by his duly
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authorized attorney in fact. A Shareholder may duly authorize such attorney in
fact through written, electronic, telephonic, computerized, facsimile,
telecommunication, telex or oral communication or by any other form of
communication. Unless a proxy provides otherwise, such proxy is not valid more
than eleven months after its date. A proxy with respect to shares held in the
name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger.
Section 2. Nomination of Trustees. So long as the Trust has adopted
and maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a
"Rule 12b-1 Plan"), the nomination of Trustees who are not "interested
persons," as defined in the 1940 Act, of the Trust shall be made by the
Nominating and Compensation Committee. In addition, so long as the Trust
maintains a Nominating and Compensation Committee, the nomination of all other
Trustees shall also be made by the Nominating and Compensation Committee. If
the Trust no longer maintains a Rule 12b-1 Plan and no longer maintains a
Nominating and Compensation Committee, the nomination of all Trustees shall be
made by the Board of Trustees. Any Shareholder may submit names of individuals
to be considered by the Nominating and Compensation Committee or the Board of
Trustees, as applicable, provided, however, (i) that such person was a
shareholder of record at the time of submission of such names and is entitled
to vote at the meeting, and (ii) that the Nominating and Compensation Committee
or the Board of Trustees, as applicable, shall make the final determination of
persons to be nominated.
Section 3. Election of Trustees. All meetings of Shareholders for the
purpose of electing Trustees shall be held on such date and at such time as
shall be designated from time to time by the Trustees and stated in the notice
of the meeting, at which the Shareholders shall elect by a plurality vote any
number of Trustees as the notice for such meeting shall state are to be
elected, and transact such other business as may properly be brought before the
meeting in accordance with Section 1 of this Article IV.
Section 4. Notice of Meetings. Written notice of any meeting stating
the place, date, and hour of the meeting shall be given to each Shareholder
entitled to vote at such meeting not less than ten days before the date of the
meeting in accordance with Article V hereof.
Section 5. Special Meetings. Special meetings of the Shareholders,
for any purpose or purposes, unless otherwise prescribed by applicable law or
by the Agreement, may be called by any Trustee; provided, however, that the
Trustees shall promptly call a meeting of the Shareholders solely for the
purpose of removing one or more Trustees, when requested in writing to do so by
the record holders of not less than ten percent of the Outstanding Shares of
the Trust.
Section 6. Notice of Special Meeting. Written notice of a special
meeting stating the place, date, and hour of the meeting and the purpose or
purposes for which the meeting is
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called, shall be given not less than ten days before the date of the meeting,
to each Shareholder entitled to vote at such meeting.
Section 7. Conduct of Special Meeting. Business transacted at any
special meeting of Shareholders shall be limited to the purpose stated in the
notice.
Section 8. Quorum. The holders of one-third of the Outstanding Shares
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the Shareholders for the transaction of
business except as otherwise provided by applicable law or by the Agreement.
If, however, such quorum shall not be present or represented at any meeting of
the Shareholders, the vote of the holders of a majority of Shares cast shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting, at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 9. Organization of Meetings.
(a) The meetings of the Shareholders shall be presided
over by the Chairman of the Board, or if the Chairman shall not be present or
if there is no Chairman, by the President, or if the President shall not be
present, by a Vice President, or if no Vice President is present, by a chairman
appointed for such purpose by the Board of Trustees or, if not so appointed, by
a chairman appointed for such purpose by the officers and Trustees present at
the meeting. The Secretary of the Trust, if present, shall act as Secretary of
such meetings, or if the Secretary is not present, an Assistant Secretary of
the Trust shall so act, and if no Assistant Secretary is present, then a person
designated by the Secretary of the Trust shall so act, and if the Secretary has
not designated a person, then the meeting shall elect a secretary for the
meeting.
(b) The Board of Trustees of the Trust shall be entitled
to make such rules and regulations for the conduct of meetings of Shareholders
as it shall deem necessary, appropriate or convenient. Subject to such rules
and regulations of the Board of Trustees, if any, the chairman of the meeting
shall have the right and authority to prescribe such rules, regulations and
procedures and to do all such acts as, in the judgment of such chairman, are
necessary, appropriate or convenient for the proper conduct of the meeting,
including, without limitation, establishing: an agenda or order of business for
the meeting; rules and procedures for maintaining order at the meeting and the
safety of those present; limitations on participation in such meeting to
shareholders of record of the Trust and their duly authorized and constituted
proxies, and such other persons as the chairman shall permit; restrictions on
entry to the meeting after the time fixed for the commencement thereof,
limitations on the time allotted to questions or comments by participants; and
regulation of the opening and closing of the polls for balloting on matters
which are to be voted on by ballot, unless and to the extent the Board of
Trustees or the chairman of the meeting determines that meetings of
Shareholders shall not be required to be held in accordance with the rules of
parliamentary procedure.
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Section 10. Voting Standard. When a quorum is present at any
meeting, the vote of the holders of a majority of the Shares cast shall decide
any question brought before such meeting, unless the question is one on which,
by express provision of applicable law, the Agreement, these Bylaws, or
applicable contract, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 11. Voting Procedure. Each whole Share shall be entitled to
one vote, and each fractional Share shall be entitled to a proportionate
fractional vote. On any matter submitted to a vote of the Shareholders, all
Shares shall be voted together, except when required by applicable law or when
the Trustees have determined that the matter affects the interests of one or
more Portfolios (or Classes), then only the Shareholders of such Portfolios (or
Classes) shall be entitled to vote thereon.
Section 12. Action Without Meeting. Unless otherwise provided in the
Agreement or applicable law, any action required to be taken at any meeting of
the Shareholders, or any action which may be taken at any meeting of the
Shareholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of Outstanding Shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Shares entitled to vote thereon were present and voted.
Prompt notice of the taking of any such action without a meeting by less than
unanimous written consent shall be given to those Shareholders who have not
consented in writing.
Section 13. Broker Non-Votes. At any meeting of Shareholders the
Trust will consider broker non-votes as present for purposes of determining
whether a quorum is present at the meeting. Broker non-votes will not count as
votes cast.
ARTICLE V
NOTICES
Section 1. Methods of Giving Notice. Whenever, under the provisions
of applicable law or of the Agreement or of these Bylaws, notice is required to
be given to any Trustee or Shareholder, it shall not, unless otherwise provided
herein, be construed to mean personal notice, but such notice may be given
orally in person, or by telephone (promptly confirmed in writing) or in
writing, by mail addressed to such Trustee at his or her last given address or
to such Shareholder at his address as it appears on the records of the Trust,
with postage thereon prepaid, and such notice shall be deemed to be given at
the time when the same shall be deposited in the United States mail. Notice to
Trustees or members of a committee may also be
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given by telex, telegram, facsimile, electronic-mail or via overnight courier.
If sent by telex or facsimile, notice to a Trustee or member of a committee
shall be deemed to be given upon transmittal; if sent by telegram, notice to a
Trustee or member of a committee shall be deemed to be given when the telegram,
so addressed, is delivered to the telegraph company; if sent by
electronic-mail, notice to a Trustee or member of a committee shall be deemed
to be given and shall be presumed valid when the Trust's electronic-mail server
reflects the electronic-mail message as having been sent; and if sent via
overnight courier, notice to a Trustee or member of a committee shall be deemed
to be given when delivered against a receipt therefor.
Section 2. Written Waiver. Whenever any notice is required to be
given under the provisions of applicable law or of the Agreement or of these
Bylaws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Issuance. The Trust may, in its sole discretion, issue a
certificate to any Shareholder, signed by, or in the name of the Trust by, the
President, certifying the number of Shares owned by him, her or it in a Class
or Portfolio of the Trust. No Shareholder shall have the right to demand or
require that a certificate be issued to him, her or it.
Section 2. Countersignature. Where a certificate is countersigned (1)
by a transfer agent other than the Trust or its employee, or (2) by a registrar
other than the Trust or its employee, the signature of the President may be a
facsimile.
Section 3. Lost Certificates. The Board of Trustees may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Trust alleged to have been lost, stolen
or destroyed, upon the making of an affidavit of the fact by the person
claiming the certificate to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Trustees may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Trust a bond in such sum as it may direct as indemnity
against any claim that may be made against the Trust with respect to the
certificate alleged to have been lost, stolen or destroyed.
Section 4. Transfer of Shares. The Trustees shall make such rules as
they consider appropriate for the transfer of Shares and similar matters. To
the extent certificates are issued in accordance with Section 1 of this Article
VI, upon surrender to the Trust or the transfer agent of the Trust of such
certificate for Shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Trust to issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
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Section 5. Fixing Record Date. In order that the Trustees may
determine the Shareholders entitled to notice of or to vote at any meeting of
Shareholders or any adjournment thereof, or to express consent to action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution of allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of beneficial interests
or for the purpose of any other lawful action, the Board of Trustees may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Trustees, and
which record date shall not be more than ninety nor less than ten days before
the date of such meeting, nor more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Trustees for
action by Shareholder consent in writing without a meeting, nor more than
ninety days prior to any other action. A determination of shareholders of
record entitled to notice of or to vote at a meeting of Shareholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Trustees may fix a new record date for the adjourned meeting.
Section 6. Registered Shareholders. The Trust shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of Shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim of interest in such Share or
Shares on the part of any other person, whether or not it shall have express or
other notice hereof.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Seal. The business seal shall have inscribed thereon the
name of the business trust, the year of its organization and the word "Business
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or otherwise reproduced. Any officer or Trustee of the
Trust shall have authority to affix the seal of the Trust to any document
requiring the same.
Section 2. Severability. The provisions of these Bylaws are
severable. If any provision hereof shall be held invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall attach only to such
provision only in such jurisdiction and shall not affect any other provision of
these Bylaws.
Section 3. Headings. Headings are placed in these Bylaws for
convenience of reference only and in case of any conflict, the text of these
Bylaws rather than the headings shall control.
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ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification. For the purpose of this Section 1,
"Trust" includes any domestic or foreign predecessor entity of this Trust in a
merger, consolidation, or other transaction in which the predecessor's
existence ceased upon consummation of the transaction; "proceeding" means any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative, or investigative; and "expenses" includes without
limitation attorney's fees and any expenses of establishing a right to
indemnification under this Section 1.
(a) The Trust shall indemnify any person who was or is a
party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the Trust) by reason of the fact that such person
is or was a Covered Person, against expenses, judgments, fines and amounts paid
in settlements actually and reasonably incurred by such person in connection
with such proceeding, if it is determined that person acted in good faith and
reasonably believed: (a) in the case of conduct in his official capacity as a
Covered Person, that his conduct was in the Trust's best interests and (b) in
all other cases, that his conduct was at least not opposed to the Trust's best
interests and (c) in the case of a criminal proceeding, that he had no
reasonable cause to believe that his conduct was unlawful. The termination of
any proceeding by judgment, order or settlement shall not, of itself, create a
presumption that the person did not meet the requisite standard of conduct set
forth in this Section 1. The termination of any proceeding by conviction, or a
plea of nolo contendere or its equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption that the person did not
meet the requisite standard of conduct set forth in this Section 1.
(b) The Trust shall indemnify any person who was or is a
party or is threatened to be made a party to any proceeding by or in the right
of the Trust to procure a judgment in its favor by reason of the fact that
person is or was a Covered Person, against expenses actually and reasonably
incurred by that person in connection with the defense or settlement of such
action or suit if that person acted in good faith, in a manner that person
believed to be in the best interests of the Trust and with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position would
use under similar circumstances.
(c) Notwithstanding any provision to the contrary
contained herein, there shall be no right to indemnification for any liability
arising by reason of willful misfeasance, bad faith, gross negligence, or the
reckless disregard of the duties involved in the conduct of the Covered
Person's office with the Trust.
Section 2. Advance Payments of Indemnifiable Expenses. To the maximum
extent permitted by law, the Trust or applicable Portfolio may advance to a
Covered Person, in connection with the preparation and presentation of a
defense to any claim, action, suit, or proceeding, expenses for which the
Covered Person would ultimately be entitled to indemnification; provided that
the Trust or applicable Portfolio has received an undertaking by
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or on behalf of such Covered Person that such amount will be paid over by him
to the Trust or applicable Portfolio if it is ultimately determined that he is
not entitled to indemnification for such expenses, and further provided that
(i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments, or (iii) either a majority of the Trustees who are not
interested persons (as defined in the 1940 Act) of the Trust nor parties to the
matter, or independent legal counsel in a written opinion shall have
determined, based upon a review of readily available facts (as opposed to a
full trial-type inquiry) that there is reason to believe that such Covered
Person will not be disqualified from indemnification for such expenses.
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These Bylaws may be altered or repealed at
any regular or special meeting of the Board of Trustees without prior notice.
These Bylaws may also be altered or repealed at any special meeting of the
Shareholders, but only if the Board of Trustees resolves to put a proposed
alteration or repealer to the vote of the Shareholders and notice of such
alteration or repealer is contained in a notice of the special meeting being
held for such purpose.
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EXHIBIT i(3)
CONSENT OF COUNSEL
AIM INTERNATIONAL MUTUAL FUNDS
We hereby consent to the use of our name and to the reference to our firm under
the caption "Miscellaneous Information - Legal Matters" in the Statement of
Additional Information for AIM Asian Growth Fund, AIM European Development
Fund, AIM Global Aggressive Growth Fund, AIM Global Growth Fund, AIM Global
Income Fund and AIM International Equity Fund, which is included in
Post-Effective Amendment No. 19 to the Registration Statement under the
Securities Act of 1933, as amended (No. 33-44611), and Amendment No. 21 to the
Registration Statement under the Investment Company Act of 1940, as amended
(No. 811-6463), on Form N-1A of AIM International Mutual Funds.
/s/ Ballard Spahr Andrews & Ingersoll, LLP
------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
May 16, 2000
<PAGE> 1
EXHIBIT j
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees and Shareholders
AIM International Mutual Funds
We consent to the use of our reports on the AIM Asian Growth Fund, AIM European
Development Fund, AIM Global Aggressive Growth Fund, AIM Global Growth, AIM
Global Income Fund and AIM International Equity Fund (series portfolios of AIM
International Mutual Funds) dated December 3, 1999 included herein and the
references to our firm under the headings "Financial Highlights" in the
Prospectuses and "Audit Reports" in the Statement of Additional Information.
/s/ KPMG LLP
- ------------------
KPMG LLP
Houston, Texas
May 19, 2000
