<PAGE> 1
ANNUAL REPORT / OCTOBER 31 2000
AIM INTERNATIONAL EQUITY FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
--Registered Trademark--
<PAGE> 2
[COVER IMAGE]
-------------------------------------
HUMAN ACHIEVEMENT BY TSING-FANG CHEN
FOR THIS STUDY IN MODERN ICONOGRAPHY, TSING-FANG CHEN CREAT-
ED A MULTICULTURAL COLLAGE OF SYMBOLS REPRESENTING THE FINEST
ACHIEVEMENTS OF PEOPLE AROUND THE WORLD. TODAY, THE INTERNA-
TIONAL MARKETPLACE HELPS PUT MANY OF THE WORLD'S GREAT IDEAS
INTO ACTION--IDEAS THAT COULD BECOME THE SYMBOLS OF HUMAN
ACHIEVEMENT FOR THE 21ST CENTURY.
-------------------------------------
AIM International Equity Fund is for shareholders who seek long-term growth of
capital. The fund invests in a diversified portfolio of international equity
securities of companies with strong earnings momentum.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM International Equity Fund's performance figures are historical, and they
reflect the reinvestment of distributions and changes in net asset value.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of its Class A shares due to different sales-charge structure and class
expenses.
o The fund's average annual total returns (including sales charges) for
periods ended 9/30/00 (the most recent calendar quarter-end) are as follows:
Class A shares, one year, 12.77%; five years, 12.36%; inception (4/7/92),
13.53%. Class B shares, one year, 13.53%; five years, 12.53%; inception
(9/15/94), 11.46%. Class C shares, one year, 17.45%; inception (8/4/97),
9.54%.
o International investing presents certain risks not associated with investing
solely in the United States. These include risks relating to fluctuations in
the value of the U.S. dollar relative to the values of other currencies, the
custody arrangements made for the fund's foreign holdings, differences in
accounting, political risks and the lesser degree of public information
required to be provided by non-U.S. companies.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper International Fund Index represents an average of the
30 largest international funds tracked by Lipper, Inc., an independent
mutual fund performance monitor.
o The unmanaged MSCI EAFE--Registered Trademark-- (Europe, Australasia, and
the Far East) Index is a group of foreign securities tracked by Morgan
Stanley Capital International.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
represents the performance of the U.S. stock market.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends, and they do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM INTERNATIONAL EQUITY FUND
<PAGE> 3
ANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
It's an honor to address you as the AIM Funds' new chairman.
[PHOTO OF I feel privileged to succeed Ted Bauer, who recently retired
Robert H. from the funds' board and will soon retire as A I M
Graham Management Group's chairman after a long, successful career
APPEARS HERE] in the investment industry. Ted has always shown the highest
degree of integrity and commitment to excellence, and I have
always admired him. I'm also proud to be part of the team
that launched AIM almost 25 years ago. From the beginning,
AIM has been a very people-oriented, service-minded company,
and I plan to carry on the tradition for our shareholders,
financial advisors and employees.
UNCERTAIN MARKETS
The markets this year have been particularly volatile and
confusing for many investors, especially for those who have
only experienced the bull market of the 1990s. After almost
a decade of double-digit returns, the S&P 500 was down 1.81% year-to-date as of
October 31, 2000. But market returns in the 20% to 30% range, such as we have
seen in recent years, are not typical. If you expect these kinds of returns
every year, you'll be disappointed. Historically, markets decline in one out of
every four years. What we're seeing now is a normal downturn.
This appears to be a worldwide trend. Throughout 2000, overseas markets
generally have been more turbulent than their U.S. counterpart.
REASONS FOR OPTIMISM
While investors may need to temper their expectations, there are plenty of
reasons to be optimistic. Economic fundamentals remain strong, and many believe
that the Federal Reserve Board may have succeeded in bringing the economy to a
"soft landing." Gross domestic product growth slowed to 2.4% in the third
quarter from the rapid pace of about 7% a year ago. With this slowdown, it seems
unlikely that the Fed will raise interest rates in the near future, and stable
interest rates provide a solid environment for both stocks and bonds.
In Europe, the region's economic and investment future continues to look
bright despite the weak euro. Restructuring, merger activity and tax reform bode
well for European economies. In Asia, most analysts think the continuing
strength of the U.S. economy will help boost Asian stock markets.
THE VALUE OF ADVICE
The current environment illustrates the value of professional money management.
Knowing when to buy and sell takes expertise and discipline even in the best of
markets. During downturns, many investors may be tempted to make decisions based
on emotions instead of strategy. The wisest choice is to rely on a professional
money manager to make these decisions for you.
In these uncertain times, it's important to keep market volatility in
perspective. Mutual fund investing should be a long-term endeavor. Remember why
you're investing, whether it's for your retirement or your child's education,
and think about your time frame. If you're unsure about whether your investments
can meet your goals, visit your financial advisor for help.
In the following pages, your fund's portfolio managers discuss market
activity, how they managed your fund during the fiscal year and their near-term
outlook. If you have any questions or comments, please contact us through our
Web site, www.aimfunds.com, or call our Client Services Department at
800-959-4246 during normal business hours. Information about your account is
available at our Web site and on our automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ ROBERT H. GRAHAM
Robert H. Graham
Chairman
-------------------------------------
THE CURRENT
ENVIRONMENT
ILLUSTRATES THE VALUE
OF PROFESSIONAL
MONEY MANAGEMENT.
KNOWING WHEN TO BUY
AND SELL TAKES
EXPERTISE AND
DISCIPLINE EVEN IN THE
BEST OF MARKETS.
-------------------------------------
AIM INTERNATIONAL EQUITY FUND
<PAGE> 4
ANNUAL REPORT / MANAGERS' OVERVIEW
AIM INTERNATIONAL EQUITY FUND WEATHERS GLOBAL TURBULENCE
HOW DID AIM INTERNATIONAL EQUITY FUND PERFORM OVER THE REPORTING PERIOD?
The fund faced a difficult market during the fiscal year ended October 31, 2000.
Class A shares reported a total return of 3.16%, Class B shares 2.42% and Class
C shares 2.37%. These returns are at net asset value, excluding sales charges.
The fund outperformed the MSCI EAFE--Registered Trademark-- Index, which
produced a -2.90% total return over the same time frame.
WHAT WERE THE MAJOR TRENDS IN INTERNATIONAL MARKETS OVER THE REPORTING PERIOD?
Stock markets worldwide entered 2000 with a roar, led by technology, media and
telecommunications (TMT) stocks. This rally lasted until March, when inflation
fears, rising interest rates and high stock prices sparked a worldwide tech
sell-off.
Since spring, volatility has been the watchword. In May and June, global
markets improved amid mounting evidence that the U.S. economy was slowing,
reducing the chance that the U.S. Federal Reserve Board (the Fed) would continue
to raise interest rates. But the market upturn was short-lived. In late summer
and early fall, the markets plunged again as investors worried about rising oil
prices, unrest in the Middle East and lower corporate earnings.
In September and October, a number of corporate heavyweights like Intel and
Du Pont (not fund holdings) reported earnings disappointments, as rising oil
prices and a weak euro crimped profit margins. These earnings dips rattled
markets worldwide.
WHAT HAPPENED IN EUROPE OVER THE FISCAL YEAR?
Europe's common currency, the euro, hit a record low in October. Since its
launch in January 1999 at $1.15, the currency has spent most of its existence
below parity with the U.S. dollar. During the reporting period, European
investors bought dollar-based assets, and U.S. investors tended to keep their
money in U.S. markets.
Near the end of the fiscal year, the European Central Bank increased
interest rates to 4.5%, spurred by rising oil prices, a higher-than-expected
rise in producer prices and employment increases in Germany and France.
WHAT WERE THE MAJOR MARKET DEVELOPMENTS IN ASIA?
The Japanese stock market has mirrored its U.S. counterpart in terms of
volatility following the spring technology sell-off. Japan's economy, the
world's second-largest, threatened to slip back into recession near the end of
the fiscal year. However, there are signs that corporate Japan is beginning to
take a more aggressive stance toward cost-cutting to bolster profits. Outside
Japan, investment in Asia has weakened because of political turmoil in many
countries and interest-rate concerns. Even Hong Kong, one of the best-performing
Asian countries, has showed signs of slowing.
HOW DID YOU MANAGE THE FUND IN THIS ENVIRONMENT?
Despite market volatility, we maintained our earnings-driven investment
strategy, focusing on the stocks of industry leaders with accelerating earnings
growth. This strategy led us to invest in TMT stocks. While these stocks were
out of favor with the market for much of the fiscal year, we still believe that
they show the best prospects for growth and capital appreciation. The fund also
held stocks in the health-care and financial industries, among the best-
performing areas of the stock market. In terms of market capitalization, the
fund maintained its emphasis on large-cap stocks.
--------------------------------------------------------------------------------
READ THIS REPORT ONLINE!
Early in 2001, a new service will be available--electronic delivery of fund
reports and prospectuses. Soon, you can read the same AIM report you are
reading now--online. Once you sign up for the service, we will send you a link
to the report via e-mail. If you choose to receive your reports online, you will
not receive a paper copy by mail. You may cancel the service at any time by
visiting our Web site.
Please visit our Web site at www.aimfunds.com and go to "Your AIM Account."
Log into your account and then click on the "View Other Account Options"
dropdown menu and select "eDelivery."
--------------------------------------------------------------------------------
-------------------------------------
THE FUND'S COUNTRY ALLOCATION IS DIC-
TATED BY OUR STOCK-SELECTION PROCESS,
WHICH LED US TO INVEST IN STOCKS IN
FRANCE, CANADA AND SWITZERLAND.
-------------------------------------
See important fund and index disclosures inside front cover.
AIM INTERNATIONAL EQUITY FUND
2
<PAGE> 5
ANNUAL REPORT / MANAGERS' OVERVIEW
IN WHAT COUNTRIES DID THE FUND HAVE INVESTMENTS?
The fund's country allocation is dictated by our stock-selection process, which
led us to invest in stocks in France, Canada and Switzerland. In fact, Canada
had one of the best-performing stock markets during the fiscal year.
We reduced holdings in Japan, Germany and the United Kingdom because we did
not find many stocks in these countries that produced accelerated earnings
growth. As of October 31, 2000, European holdings made up 61% of the fund, Asian
holdings about 20%, Canadian 8.71% and Latin American 5.1%.
WHAT WERE SOME OF THE FUND'S TOP HOLDINGS AS OF OCTOBER 31, 2000?
The fund's top holdings represent a fairly diversified portfolio:
o Novo Nordisk, based in Denmark, is the world's leading producer of insulin.
Its other health-care products include women's hormone-replacement drugs, human
growth hormones and drugs for hemophilia. The company has subsidiaries and
offices in nearly 70 countries, and nearly half its sales are in Europe.
o RAS (Riunione Adriatica di Sicurta) sells insurance through about 1,500
agencies in Italy. Founded in 1838, RAS consists of a group of about 100
insurance, financial and real estate companies.
o Celestica makes printed circuit assemblies and systems for companies such as
Cisco, IBM and Hewlett-Packard. Its products are used in computer servers,
workstations and communications devices. Based in Canada, Celestica was formerly
IBM's Toronto factory, spun off from Big Blue in 1996.
o BNP Paribas is one of Europe's largest banks, formed in 1999 by the merger
of Banque Nationale de Paris and Paribas. In the United States, it owns regional
bank holding company BancWest.
o TotalFinaElf explores for, produces, refines, markets and trades petroleum.
WHAT'S YOUR OUTLOOK FOR THE NEAR TERM?
We expect global markets to remain volatile for the foreseeable future.
However, we believe that global economic expansion is likely to continue, and
that earnings potential for TMT stocks remains strong.
Despite volatility in Europe, the region's economic and investment future
continues to look bright. Spending on technology and communications continues to
increase. In addition, restructuring, merger activity and tax reform bode well
for European economies.
In Asia, most analysts think that the continuing strength of the U.S.
economy will help boost Asian stock markets. The region benefits not only from
exports but from increasing local consumption--half of the world's population
lives in Asia. While the long-term outlook for Asia is favorable, markets are in
a holding pattern waiting for a catalyst to grow further.
In general, we have a positive outlook for the fund, our growth investment
style and international investing.
================================================================================
PORTFOLIO COMPOSITION
As of 10/31/00, based on total net assets
<TABLE>
<CAPTION>
==================================================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES TOP 10 COUNTRIES
----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <S> <C>
1. Novo Nordisk AS-Class B (Denmark) 1.98% 1. Communications Equipment 10.13% 1. France 18.94%
2. RAS S.p.A (Italy) 1.93 2. Electronics (Semiconductors) 6.33 2. United Kingdom 14.62
3. Celestica Inc. (Canada) 1.91 3. Health Care (Drugs-Generic & Other) 6.05 3. Japan 11.68
4. BNP Paribas (France) 1.88 4. Banks (Major Regional) 4.91 4. Canada 8.71
5. Total Fina Elf S.A. (France) 1.86 5. Oil (International Integrated) 4.81 5. Switzerland 5.91
6. STMicroelectronics N.V. (Netherlands) 1.84 6. Electronics (Component Distributors) 4.70 6. Denmark 4.28
7. Vodafone AirTouch PLC (U.K.) 1.82 7. Telecommunications (Cellular/Wireless) 4.57 7. Germany 4.19
8. Aventis S.A. (Spain) 1.79 8. Services (Commercial & Consumer) 4.38 8. Netherlands 3.76
9. Nokia Oyj (Finland) 1.78 9. Telephone 3.81 9. Mexico 3.40
10. Alcatel S.A. (France) 1.73 10. Computers (Software & Services) 3.24 10. Hong Kong 3.23
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
==================================================================================================================================
</TABLE>
[ART WORK]
See important fund and index disclosures inside front cover.
AIM INTERNATIONAL EQUITY FUND
3
<PAGE> 6
ANNUAL REPORT / PERFORMANCE HISTORY
YOUR FUND'S LONG-TERM PERFORMANCE
RESULTS OF A $10,000 INVESTMENT
AIM INTERNATIONAL EQUITY FUND VS. BENCHMARK INDEXES
4/7/92-10/31/00
in thousands
<TABLE>
<CAPTION>
=====================================================================================
AIM International
Equity Fund, Class MSCI EAFE--Registered Lipper International
A Shares Trademark-- Index Fund Index
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
4/7/92 9454 10000 10000
10/92 9610 9821.64 9600.06
10/93 13200 13500.6 12869.9
10/94 14644 14863.3 14350.9
10/95 15411 14808.1 14283.9
10/96 17844 16358.7 16087.3
10/97 19884 17116 18237.5
10/98 21099 18766.9 19084.8
10/99 26529 23089.5 23483.4
10/00 27366 22421 24293.7
$27,337 $22,421 $24,294
Source: Lipper, Inc.
Past performance does not guarantee comparable future results.
=====================================================================================
</TABLE>
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
ABOUT THIS CHART
The chart compares your fund's Class A shares to benchmark indexes. It is
important to understand the difference between your fund and an index. An index
measures the performance of a hypothetical portfolio. Your fund's total return,
shown with the applicable sales charge, includes fund expenses and management
fees. A market index such as the EAFE--Registered Trademark-- is not managed,
incurring no sales charges, expenses or fees. An index of funds, such as the
Lipper International Fund Index, includes a number of mutual funds grouped by
investment objective or style. Each of those funds interprets its objective
differently, and each employs a different management approach and investment
strategy. (Please note that the results for these indexes are for the period
3/31/92-10/31/00.) If you could buy all the securities that make up a market
index, you would incur expenses that would affect your investment's return. Use
of these indexes is intended to give you a general idea of how your fund
performed compared to the stock market.
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/00, including sales charges
================================================================================
CLASS A SHARES
Inception (4/7/92) 12.46%
5 years 10.91
1 year -2.50*
*3.16% excluding sales charges
CLASS B SHARES
Inception (9/15/94) 10.00%
5 years 11.05
1 year -2.51*
*2.42% excluding CDSC
CLASS C SHARES
Inception (8/4/97) 6.89%
1 year 1.38*
*2.37% excluding CDSC
================================================================================
Your fund's total return includes sales charges, expenses and management fees.
The performance of the fund's Class B and Class C shares will differ from that
of its Class A shares due to differing fees and expenses. For fund performance
calculations and descriptions of the indexes on this page, please see the inside
front cover.
AIM INTERNATIONAL EQUITY FUND
4
<PAGE> 7
ANNUAL REPORT / FOR CONSIDERATION
[ART WORK]
CHOOSE YOUR INVESTMENT PALETTE
No two pieces of art are exactly alike. Just as an artist may use different
paints to create a piece, so does an investor use different kinds of investments
to create a portfolio. And as with art, tastes can change over time--most
investors have different goals at different stages in their lives, as well as
varying tolerance for risk. The biggest advantage mutual funds offer is the
potential for diversification. Providing funds with assorted objectives and
goals allows investors to shape their portfolios to their specific needs and to
spread their risk over several different funds, rather than painting their
portfolios all one color.
GROWTH VS. INCOME
If you look at the list of AIM's retail mutual funds on the back of your fund
report, you'll notice that they are divided into different types. Two that
frequently appear are growth and income. Common stock is normally the growth
component of a mutual fund with growth as a primary or secondary objective.
Bonds are typically the income components of a mutual fund with income as a
primary or secondary objective.
Let's take a closer look at the categories into which AIM's retail mutual
funds are divided. Keep in mind that funds listed under the same category don't
necessarily have the same kind of investment strategy or portfolio, even if they
have the same objective.
DOMESTIC MUTUAL FUNDS
GROWTH FUNDS
Growth funds typically invest in common stocks of companies whose businesses are
growing. Growth companies tend to reinvest their profits toward expansion of
their potential to produce greater returns instead of paying dividends. So
growth mutual funds focus on generating capital gains--increasing the value of
the stocks they hold--rather than current income, which means they generally
don't pay regular income dividends. Growth funds usually do, however, make one
capital-gains distribution per year, when there are gains.
An increase over time in the value of a growth fund's portfolio means the
fund's value, or share price, increases over time also. Shareholders in a growth
fund, then, make money by selling their shares for more than they paid for them.
Of course, the opposite is also true--shareholders can lose money by selling
their shares for less than they paid for them. Growth funds usually range from
moderate to very aggressive, depending on the size and types of companies in
which they invest.
GROWTH AND INCOME FUNDS
A growth and income fund generally invests in common and preferred stocks and
bonds of older, more established companies that have a longer track record of
growth and paying dividends.
A typical growth and income mutual fund will pay quarterly or annual income
dividends to its shareholders. (Monthly dividends are not common.) In this way,
growth and income funds can potentially provide long-term growth of investments
and also current income. These funds tend to be more conservative than growth
funds.
INCOME FUNDS
Income funds are generally designed to provide high current income rather than
long-term growth. To that end, income funds usually invest chiefly in
interest-paying corporate and government bonds. They may also own stocks of
companies that pay regular dividends. Some income funds are more aggressive than
others. The aggressiveness of a particular fund depends not only on the kinds of
securities in which it invests, but also on the fund's sector allocation and
maturity structure.
For example, Treasury securities are considered a relatively safe investment
because they are guaranteed by the U.S. government. However, lower risk also
means lower return potential. On the other hand, lower-rated corporate bonds,
often called junk bonds, involve more risk because they are not guaranteed--they
are only as good as the companies that
[ART WORK]
AIM INTERNATIONAL EQUITY FUND
5
<PAGE> 8
ANNUAL REPORT / FOR CONSIDERATION
issue them. But the added risk also means higher return potential.
Income funds are considered more conservative and are suited for investors
seeking income rather than growth.
TAX-FREE INCOME OR MUNICIPAL FUNDS
These funds provide shareholders with current income that is tax-exempt at some
level, depending on the securities in which they invest. So municipal mutual
funds appeal to investors who are looking to reduce income that would otherwise
be subject to tax. Municipal bonds or notes, which are issued by state or local
governments, are generally exempt from federal taxes. Federal securities, like
Treasury bonds, are usually exempt from state taxes. And then there are some
securities that are exempt from both federal and state taxes.(1)
MONEY MARKET FUNDS
A money market fund is one of the safest types of mutual funds available because
its main goal is preserving your investment while paying current income in the
form of interest. As a result, these funds tend to appeal to investors looking
for safety, liquidity and some income from their investment. Money market funds
invest in high-quality short-term securities such as commercial paper and U.S.
government agency securities. Although money market funds are not guaranteed or
insured by the U.S. government, the securities they hold are less risky than
other types of fixed-income securities. The trade-off for safety of principal
investment is a lower rate of return.(2)
INTERNATIONAL AND GLOBAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
An international growth fund has the same objective as a domestic growth fund,
except it invests in stocks of companies located outside the United States. Like
their domestic counterparts, international growth funds tend to pay
distributions in the form of capital gains rather than dividends. An
international growth mutual fund might invest in a particular country, region or
continent depending on the investment strategy shown in its prospectus.
International funds carry different risks than domestic funds because most
foreign markets are not as established as the markets in the United States.
Other risks include changes in the value of the U.S. dollar compared to foreign
currencies, accounting differences, political risks and foreign regulatory
differences.
GLOBAL GROWTH, GLOBAL GROWTH AND INCOME, AND GLOBAL INCOME FUNDS
These funds are similar to their domestic equivalents in terms of their goals
and the income distributions they pay. Global funds are comparable to
international funds in that they can invest in stocks of companies outside the
United States. But global funds can also invest substantially in U.S. stocks;
international funds generally do not. The amount of a global fund's portfolio
that can be invested in the United States varies greatly from fund to fund,
according to a fund's prospectus. Global funds carry the same risks as
international funds.
SPECIALIZED FUNDS
THEME FUNDS
Theme or sector funds invest primarily in a particular industry or sector of the
economy, either domestically or globally. Theme funds are required by prospectus
to invest a certain percentage of their assets in their industry or sector of
choice under normal market conditions. As a result, theme funds present greater
risk and potential reward than more diversified funds. The types of securities
held by a theme fund determine its goal of growth and/or income.
--------------------------------------------------------------------------------
TYPES OF FUND DISTRIBUTIONS
INCOME DIVIDENDS are paid from dividends and/or interest from securities in a
fund's portfolio. For example, if a company in which a mutual fund owns stock
distributes some of its earnings to its shareholders as a dividend, the fund
passes on those earnings to its own shareholders. Income dividends are usually
taxed as ordinary income.
CAPITAL GAINS represent the net profit realized from the growth in value of the
holdings in a fund's portfolio. These distributions are usually made once per
year. There are two types of capital gains:
o Short-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for less than a year. Short-term capital gains
are taxed as ordinary income.
o Long-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for more than a year. Long-term capital gains
are usually taxed at the capital-gains rate, which is typically lower than
ordinary income-tax rates.
--------------------------------------------------------------------------------
(1) Investors in tax-free income funds still have a risk of incurring taxes on
capital-gains distributions, for example, so it's wise to see your tax advisor
before investing in such funds.
(2) There is no guarantee that a money market fund will be able to maintain a
stable net asset value of $1.00 per share.
See the back cover for a complete list of AIM's retail mutual funds. For more
information about your fund's objective, read your fund prospectus. For more
complete information about any AIM fund(s), including sales charges and
expenses, ask your financial advisor or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money.
AIM INTERNATIONAL EQUITY FUND
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
October 31, 2000
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-89.68%
AUSTRALIA-0.80%
AMP Ltd. (Insurance-Life/Health) 1,352,000 $ 12,187,072
---------------------------------------------------------------
Brambles Industries Ltd. (Air
Freight) 383,000 9,930,175
---------------------------------------------------------------
Cable & Wireless Optus Ltd.
(Telephone)(a) 3,103,700 6,573,569
===============================================================
28,690,816
===============================================================
BRAZIL-1.56%
Brasil Telecom Participacoes
S.A.-ADR (Telephone) 105,840 5,735,205
---------------------------------------------------------------
Companhia de Bebidas das
Americas-ADR
(Beverages-Alcoholic) 902,100 20,353,631
---------------------------------------------------------------
Embratel Participacoes S.A.-ADR
(Telephone) 492,800 7,977,200
---------------------------------------------------------------
Petroleo Brasileiro
S.A.-Petrobras-Pfd. (Oil &
Gas-Exploration & Production) 821,314 21,768,369
---------------------------------------------------------------
Tele Centro Oeste Celular
Participacoes S.A.-ADR
(Telecommunication-Cellular/
Wireless) 1 10
===============================================================
55,834,415
===============================================================
CANADA-8.71%
360networks Inc.
(Telecommunications-Long
Distance)(a) 811,500 14,708,437
---------------------------------------------------------------
Bombardier Inc.-Class B
(Aerospace/Defense) 3,853,400 60,426,197
---------------------------------------------------------------
C-MAC Industries, Inc.
(Electronics-Component
Distributors)(a) 703,600 39,618,673
---------------------------------------------------------------
Celestica Inc.
(Electronics-Semiconductors)(a) 959,500 68,351,732
---------------------------------------------------------------
Cognos, Inc. (Computer Software &
Services)(a) 839,200 34,826,800
---------------------------------------------------------------
Mitel Corp. (Communications
Equipment)(a) 466,000 7,627,840
---------------------------------------------------------------
Nortel Networks Corp.
(Communications Equipment) 921,828 41,943,174
---------------------------------------------------------------
Rogers Communications, Inc.-Class B
(Telecommunications-Cellular/Wireless) 911,200 17,659,608
---------------------------------------------------------------
Shaw Communications Inc.-Class B
(Broadcasting-Television, Radio &
Cable) 1,298,700 26,572,628
===============================================================
311,735,089
===============================================================
DENMARK-4.28%
GN Store Nord A.S. (Communications
Equipment) 2,018,100 39,122,061
---------------------------------------------------------------
Novo Nordisk A.S.-Class B (Health
Care-Drugs-Generic & Other)(a) 333,500 70,735,740
---------------------------------------------------------------
Vestas Wind Systems A.S.
(Manufacturing-Specialized) 798,300 43,240,416
===============================================================
153,098,217
===============================================================
FINLAND-1.78%
Nokia Oyj (Communications
Equipment) 1,550,000 63,784,110
===============================================================
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-18.94%
Alcatel S.A. (Communications
Equipment) 1,011,400 $ 61,713,539
---------------------------------------------------------------
Altran Technologies S.A.
(Services-Commercial & Consumer) 279,600 57,161,364
---------------------------------------------------------------
Assurances Generales de France
(Insurance-Multi-Line) 617,700 33,811,616
---------------------------------------------------------------
Aventis S.A.
(Chemicals-Diversified)(a) 888,700 64,106,597
---------------------------------------------------------------
BNP Paribas (Banks-Major Regional) 778,250 67,102,925
---------------------------------------------------------------
Havas Advertising S.A.
(Services-Advertising/Marketing) 1,943,450 31,320,375
---------------------------------------------------------------
M6 Metropole Television
(Broadcasting-Television, Radio
& Cable) 176,000 7,766,845
---------------------------------------------------------------
Pinault-Printemps-Redoute S.A.
(Retail-General Merchandise) 210,300 37,532,471
---------------------------------------------------------------
PSA Peugeot Citroen (Automobiles) 150,900 27,789,299
---------------------------------------------------------------
Publicis Groupe
(Services-Advertising/
Marketing)(a) 1,075,600 35,188,746
---------------------------------------------------------------
Sanofi-Synthelabo S.A. (Health
Care-Drugs-Generic & Other) 577,500 30,385,913
---------------------------------------------------------------
Schneider Electric S.A.
(Housewares)(a) 240,100 15,638,646
---------------------------------------------------------------
Societe Generale-Class A
(Banks-Major Regional) 737,050 41,845,782
---------------------------------------------------------------
Societe Television Francaise 1
(Broadcasting-Television, Radio
& Cable) 617,650 33,704,046
---------------------------------------------------------------
STMicroelectronics N.V.
(Electronics-Semiconductors) 1,303,500 65,764,498
---------------------------------------------------------------
Total Fina Elf S.A.
(Oil-International Integrated) 466,144 66,696,998
===============================================================
677,529,660
===============================================================
GERMANY-4.19%
ADVA A.G. Optical Networking
(Communications Equipment)(a) 153,700 11,282,844
---------------------------------------------------------------
Altana A.G. (Health
Care-Drugs-Generic & Other) 261,540 31,739,697
---------------------------------------------------------------
MLP A.G.-Pfd. (Services-Commercial
& Consumer) 216,900 29,267,477
---------------------------------------------------------------
Porsche A.G.-Pfd. (Automobiles) 15,000 50,282,512
---------------------------------------------------------------
Siemens A.G.
(Manufacturing-Diversified) 213,300 27,152,557
===============================================================
149,725,087
===============================================================
HONG KONG-3.23%
China Mobile Ltd.
(Telecommunications-
Cellular/Wireless)(a) 9,104,000 58,366,457
---------------------------------------------------------------
Dao Heng Bank Group Ltd.
(Banks-Regional) 3,880,000 19,601,487
---------------------------------------------------------------
Hutchison Whampoa Ltd. (Retail-Food
Chains) 3,018,400 37,541,326
===============================================================
115,509,270
===============================================================
ITALY-2.17%
Gruppo Editoriale L'Espresso
(Publishing) 802,600 8,779,720
---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ITALY-(CONTINUED)
Riunione Adriatica di Sicurta S.P.A
(Insurance Brokers) 5,257,600 $ 69,025,009
===============================================================
77,804,729
===============================================================
JAPAN-11.68%
Advantest Corp.
(Electronics-Instrumentation) 168,000 21,909,362
---------------------------------------------------------------
Crayfish Co. Ltd.-ADR
(Computers-Software &
Services)(a) 894,300 1,397,344
---------------------------------------------------------------
Hirose Electric Co. Ltd.
(Electronics-Component
Distributors) 153,200 17,690,693
---------------------------------------------------------------
Hoya Corp.
(Manufacturing-Specialized) 270,000 22,319,571
---------------------------------------------------------------
Matsushita Communication Industrial
Co., Ltd. (Telephone) 199,000 26,079,824
---------------------------------------------------------------
Murata Manufacturing Co., Ltd.
(Electronics-Component
Distributors) 147,000 17,594,465
---------------------------------------------------------------
NEC Corp. (Computers-Hardware) 1,446,000 27,564,313
---------------------------------------------------------------
Nippon Telegraph & Telephone Corp.
(Telecommunications-Long
Distance) 2,573 23,415,562
---------------------------------------------------------------
NTT Data Corp. (Computers-Software
& Services)(a) 1,984 15,455,254
---------------------------------------------------------------
NTT DoCoMo, Inc.
(Telecommunications-
Cellular/Wireless) 903 22,261,559
---------------------------------------------------------------
Ricoh Co., Ltd. (Office Equipment &
Supplies) 1,141,000 17,567,521
---------------------------------------------------------------
Rohm Co. Ltd.
(Electronics-Component
Distributors) 63,000 15,883,517
---------------------------------------------------------------
Sanix Inc. (Services-Commercial &
Consumer) 265,200 13,586,290
---------------------------------------------------------------
Sanyo Electric Co., Ltd.
(Electronics-Component
Distributors) 7,152,000 54,402,786
---------------------------------------------------------------
Sharp Corp. (Electrical Equipment) 918,000 11,694,268
---------------------------------------------------------------
Sony Corp. (Electrical Equipment) 335,800 26,835,687
---------------------------------------------------------------
Takeda Chemical Industries Ltd.
(Health Care-Drugs-Generic &
Other) 642,000 42,303,808
---------------------------------------------------------------
Tokyo Electron Ltd. (Electronics-
Semiconductors) 272,000 21,288,365
---------------------------------------------------------------
Trend Micro Inc.
(Computers-Software &
Services)(a) 196,700 18,567,658
===============================================================
417,817,847
===============================================================
MEXICO-3.40%
Coca-Cola Femsa S.A.-ADR
(Beverages-Non-Alcoholic) 796,800 15,288,600
---------------------------------------------------------------
Fomento Economico Mexicano, S.A. de
C.V.-ADR (Beverages-Alcoholic) 669,970 25,584,479
---------------------------------------------------------------
Grupo Modelo S.A. de C.V.-Series C
(Beverages-Alcoholic) 4,538,900 12,104,366
---------------------------------------------------------------
Grupo Televisa S.A.-GDR
(Entertainment)(a) 536,200 29,021,825
---------------------------------------------------------------
Kimberly-Clark de Mexico, S.A. de
C.V.-Class A (Paper & Forest
Products) 1,979,000 5,060,296
---------------------------------------------------------------
Telefonos de Mexico S.A. de
C.V.-Class L-ADR (Telephone) 269,900 14,557,731
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEXICO-(CONTINUED)
Wal-Mart de Mexico S.A. de
C.V.-Series C (Retail-General
Merchandise)(a) 8,782,000 $ 20,021,711
===============================================================
121,639,008
===============================================================
NETHERLANDS-3.76%
Koninklijke (Royal) Philips
Electronics N.V. (Electrical
Equipment) 1,363,700 53,594,748
---------------------------------------------------------------
Koninklijke Numico N.V. (Foods) 743,400 34,761,841
---------------------------------------------------------------
VNU N.V. (Publishing) 978,600 46,092,133
===============================================================
134,448,722
===============================================================
NORWAY-0.22%
Tomra Systems A.S.A.
(Manufacturing-Specialized) 194,650 7,825,526
===============================================================
SINGAPORE-1.27%
Chartered Semiconductor
Manufacturing Ltd.-ADR
(Electronics-Semiconductors)(a) 117,900 5,482,350
---------------------------------------------------------------
Datacraft Asia Ltd. (Communications
Equipment) 1,475,136 10,104,682
---------------------------------------------------------------
DBS Group Holdings Ltd.
(Banks-Money Center) 1,393,274 16,421,324
---------------------------------------------------------------
Keppel Corp. Ltd. (Engineering &
Construction) 3,901,900 7,775,807
---------------------------------------------------------------
Singapore Press Holdings Ltd.
(Publishing-Newspapers) 386,000 5,516,484
===============================================================
45,300,647
===============================================================
SOUTH KOREA-0.91%
Korea Telecom Corp.-ADR (Telephone) 464,000 17,110,000
---------------------------------------------------------------
Pohang Iron & Steel Co. Ltd.-ADR
(Iron & Steel) 387,800 6,132,088
---------------------------------------------------------------
Samsung Electronics N.V.
(Electronics-Component
Distributors) 74,600 9,345,495
===============================================================
32,587,583
===============================================================
SPAIN-1.63%
Telefonica S.A. (Telephone)(a) 2,684,827 51,197,410
---------------------------------------------------------------
Telefonica S.A.-ADR (Telephone)(a) 123,805 7,172,952
===============================================================
58,370,362
===============================================================
SWEDEN-0.11%
Assa Abloy A.B.-Class B (Metal
Fabricators) 104,150 1,917,952
---------------------------------------------------------------
OM Grupppen A.B. (Investment
Banking/Brokerage) 57,050 2,038,377
===============================================================
3,956,329
===============================================================
SWITZERLAND-5.91%
Adecco S.A. (Services-Commercial &
Consumer) 28,391 19,635,015
---------------------------------------------------------------
Compagnie Financiere Richemont
A.G.-Units (Tobacco)(b) 20,000 55,639,014
---------------------------------------------------------------
Julius Baer Holding Ltd.-Class B
(Banks-Major Regional) 1,835 9,086,686
---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SWITZERLAND-(CONTINUED)
Kudelski S.A.
(Electronics-Component
Distributors)(a) 10,000 $ 13,464,641
---------------------------------------------------------------
Nestle S.A. (Foods)(a) 18,000 37,305,959
---------------------------------------------------------------
Serono S.A.-Class B (Health
Care-Drugs-Generic & Other) 45,720 41,133,500
---------------------------------------------------------------
Swatch Group A.G. (The)-Class B
(Consumer-Jewelry, Novelties &
Gifts) 26,600 35,223,947
===============================================================
211,488,762
===============================================================
TAIWAN-0.51%
Far Eastern Textile Ltd.
(Textiles-Apparel) 1,120,246 921,842
---------------------------------------------------------------
Taiwan Semiconductor Manufacturing
Co. Ltd.
(Electronics-Semiconductors)(a) 5,706,240 17,299,660
===============================================================
18,221,502
===============================================================
UNITED KINGDOM-14.62%
ARM Holdings PLC (Electronics-
Semiconductors)(a) 4,900,850 48,369,037
---------------------------------------------------------------
Bookham Technology PLC
(Communications Equipment)(a) 166,300 5,476,636
---------------------------------------------------------------
BP Amoco PLC (Oil-International
Integrated) 5,686,300 48,239,345
---------------------------------------------------------------
Capita Group PLC
(Services-Commercial & Consumer) 4,869,600 37,105,622
---------------------------------------------------------------
CMG PLC (Computers-Software &
Services) 959,400 15,998,928
---------------------------------------------------------------
Logica PLC (Computers-Software &
Services) 997,900 29,531,899
---------------------------------------------------------------
Marconi PLC (Communications
Equipment) 4,286,300 54,123,882
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Pace Micro Technology PLC
(Communications Equipment) 1,618,300 $ 11,556,099
---------------------------------------------------------------
Royal Bank of Scotland Group PLC
(Banks-Major Regional) 2,568,300 57,666,446
---------------------------------------------------------------
Shell Transport & Trading Co. (Oil-
International Integrated) 7,119,800 57,300,243
---------------------------------------------------------------
Spirent PLC (Communications
Equipment) 6,011,250 55,751,014
---------------------------------------------------------------
Vodafone Group PLC
(Telecommunications-
Cellular/Wireless) 15,651,928 65,141,595
---------------------------------------------------------------
WPP Group PLC
(Services-Advertising/Marketing) 2,725,550 36,591,735
===============================================================
522,852,481
===============================================================
Total Foreign Stocks & Other
Equity Interests (Cost
$2,588,322,261) 3,208,220,162
===============================================================
MONEY MARKET FUNDS-13.31%
STIC Liquid Assets Portfolio(c) 238,167,382 238,167,382
---------------------------------------------------------------
STIC Prime Portfolio(c) 238,167,382 238,167,382
===============================================================
Total Money Market Funds (Cost
$476,334,764) 476,334,764
===============================================================
TOTAL INVESTMENTS-102.99% (Cost
$3,064,657,025) 3,684,554,926
===============================================================
LIABILITIES LESS OTHER
ASSETS-(2.99%) (107,078,104)
===============================================================
NET ASSETS-100.00% $3,577,476,822
_______________________________________________________________
===============================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
Ltd. - Limited
Pfd. - Preferred
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit includes common or preferred
shares of the issuer.
(c) The money market fund and the Fund are affiliated by having the same
investment advisor.
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
October 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$3,064,657,025) $3,684,554,926
-------------------------------------------------------------
Foreign currencies, at value (cost
$50,104,560) 50,273,027
-------------------------------------------------------------
Receivables for:
Investments sold 7,861,206
-------------------------------------------------------------
Capital stock sold 35,370,022
-------------------------------------------------------------
Dividends and interest 6,355,882
-------------------------------------------------------------
Collateral for securities loaned 181,195,014
-------------------------------------------------------------
Investment for deferred compensation plan 65,629
-------------------------------------------------------------
Other assets 428,891
=============================================================
Total assets $3,966,104,597
=============================================================
LIABILITIES:
Payables for:
Investments purchased 185,702,331
-------------------------------------------------------------
Capital stock reacquired 14,641,659
-------------------------------------------------------------
Collateral upon return of securities loaned 181,195,014
-------------------------------------------------------------
Deferred compensation plan 65,629
-------------------------------------------------------------
Accrued advisory fees 2,611,826
-------------------------------------------------------------
Accrued administrative services fees 18,490
-------------------------------------------------------------
Accrued distribution fees 2,562,271
-------------------------------------------------------------
Accrued directors' fees 741
-------------------------------------------------------------
Accrued transfer agent fees 1,024,349
-------------------------------------------------------------
Accrued operating expenses 805,465
=============================================================
Total liabilities 388,627,775
=============================================================
Net assets applicable to shares outstanding $3,577,476,822
_____________________________________________________________
=============================================================
NET ASSETS:
Class A $2,325,635,811
_____________________________________________________________
=============================================================
Class B $ 997,842,582
_____________________________________________________________
=============================================================
Class C $ 253,998,429
_____________________________________________________________
=============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 400,000,000
-------------------------------------------------------------
Outstanding 107,655,983
_____________________________________________________________
=============================================================
Class B:
Authorized 200,000,000
-------------------------------------------------------------
Outstanding 47,952,089
_____________________________________________________________
=============================================================
Class C:
Authorized 200,000,000
-------------------------------------------------------------
Outstanding 12,196,926
_____________________________________________________________
=============================================================
Class A:
Net asset value and redemption price per
share $ 21.60
-------------------------------------------------------------
Offering price per share:
(Net asset value of $21.60 divided by
94.50%) $ 22.86
_____________________________________________________________
=============================================================
Class B:
Net asset value and offering price per
share $ 20.81
_____________________________________________________________
=============================================================
Class C:
Net asset value and offering price per
share $ 20.82
_____________________________________________________________
=============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of
$3,540,954) $ 51,813,671
------------------------------------------------------------
Dividends from affiliated money market funds 15,111,834
------------------------------------------------------------
Interest 412,303
------------------------------------------------------------
Security lending income 391,360
============================================================
Total investment income 67,729,168
============================================================
EXPENSES:
Advisory fees 35,553,208
------------------------------------------------------------
Administrative services fees 222,616
------------------------------------------------------------
Custodian fees 2,535,839
------------------------------------------------------------
Distribution fees -- Class A 7,664,862
------------------------------------------------------------
Distribution fees -- Class B 11,204,523
------------------------------------------------------------
Distribution fees -- Class C 2,193,948
------------------------------------------------------------
Transfer agent fees -- Class A 4,136,260
------------------------------------------------------------
Transfer agent fees -- Class B 2,203,596
------------------------------------------------------------
Transfer agent fees -- Class C 431,484
------------------------------------------------------------
Directors' fees 13,946
------------------------------------------------------------
Other 1,505,292
============================================================
Total expenses 67,665,574
============================================================
Less: Fees waived (1,697,400)
------------------------------------------------------------
Expenses paid indirectly (57,572)
============================================================
Net expenses 65,910,602
============================================================
Net investment income 1,818,566
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 307,049,154
------------------------------------------------------------
Foreign currencies (16,252,477)
============================================================
290,796,677
============================================================
Change in net unrealized appreciation
(depreciation) of:
Investment securities (272,160,867)
------------------------------------------------------------
Foreign currencies (2,268,302)
============================================================
(274,429,169)
============================================================
Net gain on investment securities and foreign
currencies 16,367,508
============================================================
Net increase in net assets resulting from
operations $ 18,186,074
____________________________________________________________
============================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended October 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 1,818,566 $ (10,949,841)
----------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 290,796,677 182,790,856
----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities and foreign currencies (274,429,169) 474,142,542
==============================================================================================
Net increase in net assets resulting from operations 18,186,074 645,983,557
==============================================================================================
Distributions to shareholders from net investment income:
Class A -- (10,410,630)
----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (86,520,783) (20,381,375)
----------------------------------------------------------------------------------------------
Class B (38,910,409) (9,045,542)
----------------------------------------------------------------------------------------------
Class C (5,375,907) (756,877)
----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 313,494,138 (80,693,853)
----------------------------------------------------------------------------------------------
Class B 148,996,045 (28,456,976)
----------------------------------------------------------------------------------------------
Class C 163,874,554 39,293,753
==============================================================================================
Net increase in net assets 513,743,712 535,532,057
==============================================================================================
NET ASSETS:
Beginning of year 3,063,733,110 2,528,201,053
==============================================================================================
End of year $3,577,476,822 $3,063,733,110
______________________________________________________________________________________________
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $2,727,015,413 $2,002,598,882
----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (137,143) (8,098,861)
----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities
and foreign currencies 233,356,824 177,562,192
----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
foreign currencies 617,241,728 891,670,897
==============================================================================================
$3,577,476,822 $3,063,733,110
______________________________________________________________________________________________
==============================================================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS
October 31, 2000
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.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 as of the close of the
customary trading session 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 as of the close of
the customary trading session 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 option
contracts generally will be valued 15 minutes after the close of the
customary trading session 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 customary
trading session 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 and Investment Income -- 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 on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
On October 31, 2000, undistributed net investment income was increased by
$6,143,152, undistributed net realized gains decreased by $104,194,946 and
paid in capital increased by $98,051,794 as a result of book/tax differences
due to utilization of a portion of the proceeds from redemptions as
distributions for federal income tax purposes, foreign currency transactions
and net operating loss reclassifications. Net assets of the Fund were
unaffected by the reclassification discussed above.
C. Distributions -- Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date. The Fund
may elect to use a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
D. 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.
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 the portion of the results of operations resulting
from changes in
12
<PAGE> 15
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. Bond Premiums -- It has been the policy of the Fund not to amortize market
premiums on bonds for financial reporting purposes. In November 2000, a
revised AICPA Audit and Accounting Guide, Audits of Investment Companies, was
issued and is effective for fiscal years beginning after December 15, 2000.
The revised Guide will require the Fund to amortize premium and discount on
all fixed-income securities. Upon initial adoption, the Fund will be required
to adjust the cost of its fixed-income securities by the cumulative amount of
amortization that would have been recognized had amortization been in effect
from the purchase date of each holding. Adopting this accounting principle
will not effect the Fund's net asset value, but will change the
classification of certain amounts between interest income and realized and
unrealized gain/loss in the Statement of Operations. The Fund expects that
the impact of the adoption of this principle will not be material to the
financial statements.
H. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
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 agreed to waive advisory fees
payable by the Fund to AIM at the annual rate of 0.05% on net assets in excess
of $500 million. During the year ended October 31, 2000, AIM waived fees of
$1,697,400.
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. For the year ended October 31, 2000, AIM was
paid $222,616 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the Fund. For the year ended October 31, 2000, AFS was
paid $2,661,410 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 plans
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,
2000, the Class A, Class B and Class C shares paid AIM Distributors $7,664,862,
$11,204,523 and $2,193,948, respectively, as compensation under the Plans.
AIM Distributors received commissions of $735,919 from sales of the Class A
shares of the Fund during the year ended October 31, 2000. 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, 2000,
AIM Distributors received $263,758 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, 2000, the Fund paid legal fees of $10,103
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
For the year ended October 31, 2000, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $52,626 and reductions in
custodian fees of $4,946 under expense offset arrangements which resulted in a
reduction of the Fund's total expenses of $57,572.
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.
13
<PAGE> 16
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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,
2000, 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. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6-PORTFOLIO SECURITIES LOANED
The Fund may lend portfolio securities to the extent of one-third of the Fund's
total assets. Such loans are 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. Cash collateral pursuant to these loans is invested in short-term
money market instruments or affiliated money market funds. Lending securities
entails a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase the
collateral accordingly and failed to return the securities.
At October 31, 2000, securities with an aggregate value of $172,157,948 were
on loan to brokers. The loans were secured by cash collateral of $181,195,014
received by the Fund. For the year ended October 31, 2000, the Fund received
fees of $391,360 for securities lending.
NOTE 7-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, 2000 was
$3,388,830,409 and $3,103,179,568, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of October 31, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 773,072,876
---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (165,458,341)
---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 607,614,535
_________________________________________________________
=========================================================
Cost of investments for tax purposes is $3,076,940,391.
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in capital stock outstanding during the years October 31, 2000 and 1999
were as follows:
<TABLE>
<CAPTION>
2000 1999
------------------------------ -------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 74,959,702 $ 1,884,430,622 144,897,083 $ 2,695,101,630
-----------------------------------------------------------------------------------------------------------------------------
Class B 10,706,006 266,318,794 11,600,846 212,065,890
-----------------------------------------------------------------------------------------------------------------------------
Class C 11,663,828 288,872,717 9,254,771 168,733,197
=============================================================================================================================
Issued as reinvestment of dividends:
Class A 3,304,133 80,984,287 1,596,985 28,282,611
-----------------------------------------------------------------------------------------------------------------------------
Class B 1,485,236 35,304,035 482,230 8,356,948
-----------------------------------------------------------------------------------------------------------------------------
Class C 214,163 5,094,930 39,786 689,883
=============================================================================================================================
Issued in connection with acquisitions:*
Class A -- -- 5,974,789 108,110,501
-----------------------------------------------------------------------------------------------------------------------------
Class B -- -- 2,061,255 36,453,921
=============================================================================================================================
Reacquired:
Class A (65,335,468) (1,651,920,771) (155,781,747) (2,912,188,595)
-----------------------------------------------------------------------------------------------------------------------------
Class B (6,258,901) (152,626,784) (15,614,562) (285,333,735)
-----------------------------------------------------------------------------------------------------------------------------
Class C (5,276,103) (130,093,093) (7,117,246) (130,129,327)
=============================================================================================================================
25,462,596 $ 626,364,737 (2,605,810) $ (69,857,076)
_____________________________________________________________________________________________________________________________
=============================================================================================================================
</TABLE>
* The Fund acquired AIM International Growth Fund on February 12, 1999. The
acquired fund's net assets as of the closing date were $144,564,422. The net
assets of the Fund immediately prior to acquisition were $2,655,808,540.
14
<PAGE> 17
NOTE 9-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------
2000(a) 1999 1998(a) 1997(a) 1996(a)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.73 $ 17.59 $ 16.64 $ 15.37 $ 13.65
--------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) 0.08 (0.03) 0.05 0.04 0.04
--------------------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.72 4.49 0.96 1.68 2.07
================================================================================================================================
Total from investment operations 0.80 4.46 1.01 1.72 2.11
================================================================================================================================
Less distributions:
Dividends from net investment income -- (0.11) (0.06) (0.02) (0.01)
--------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains (0.93) (0.21) -- (0.43) (0.38)
================================================================================================================================
Total distributions (0.93) (0.32) (0.06) (0.45) (0.39)
================================================================================================================================
Net asset value, end of period $ 21.60 $ 21.73 $ 17.59 $ 16.64 $ 15.37
________________________________________________________________________________________________________________________________
================================================================================================================================
Total return(b) 3.16% 25.73% 6.11% 11.43% 15.79%
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,325,636 $2,058,419 $1,724,635 $1,577,390 $1,108,395
________________________________________________________________________________________________________________________________
================================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 1.44%(c) 1.48% 1.45% 1.47% 1.58%
--------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.48%(c) 1.52% 1.49% 1.51% 1.60%
================================================================================================================================
Ratio of net investment income to average net assets 0.30%(c) (0.14)% 0.28% 0.24% 0.25%
________________________________________________________________________________________________________________________________
================================================================================================================================
Portfolio turnover rate 87% 86% 78% 50% 66%
________________________________________________________________________________________________________________________________
================================================================================================================================
</TABLE>
(a)Calculated using average shares outstanding.
(b)Does not include sales charges.
(c)Ratios are based on average daily net assets of $2,554,953,820.
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
2000(a) 1999(a) 1998(a) 1997(a) 1996(a)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.11 $ 17.13 $ 16.27 $ 15.13 $ 13.54
----------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.17) (0.09) (0.09) (0.07)
----------------------------------------------------------------------------------------------------------------------
Net gains on securities (both realized and unrealized) 0.74 4.36 0.95 1.66 2.04
======================================================================================================================
Total from investment operations 0.63 4.19 0.86 1.57 1.97
======================================================================================================================
Less distributions from net realized gains (0.93) (0.21) -- (0.43) (0.38)
======================================================================================================================
Net asset value, end of period $ 20.81 $ 21.11 $ 17.13 $ 16.27 $ 15.13
______________________________________________________________________________________________________________________
======================================================================================================================
Total return(b) 2.42% 24.72% 5.29% 10.61% 14.88%
______________________________________________________________________________________________________________________
======================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $997,843 $887,106 $744,987 $678,809 $368,355
______________________________________________________________________________________________________________________
======================================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.18%(c) 2.27% 2.22% 2.25% 2.35%
----------------------------------------------------------------------------------------------------------------------
Without fee waivers 2.22%(c) 2.31% 2.26% 2.28% 2.37%
======================================================================================================================
Ratio of net investment income (loss) to average net assets (0.44)%(c) (0.93)% (0.49)% (0.53)% (0.53)%
______________________________________________________________________________________________________________________
======================================================================================================================
Portfolio turnover rate 87% 86% 78% 50% 66%
______________________________________________________________________________________________________________________
======================================================================================================================
</TABLE>
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges.
(c)Ratios are based on average daily net assets of $1,120,452,259.
15
<PAGE> 18
NOTE 9-FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CLASS C
---------------------------------------------------
AUGUST 4,
1997
(DATE SALES
YEAR ENDED OCTOBER 31, COMMENCED) TO
---------------------------------- OCTOBER 31,
2000(a) 1999(a) 1998(a) 1997(a)
------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.13 $ 17.14 $ 16.27 $ 17.64
--------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.11) (0.17) (0.09) (0.02)
--------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and
unrealized) 0.73 4.37 0.96 (1.35)
==============================================================================================================
Total from investment operations 0.62 4.20 0.87 (1.37)
==============================================================================================================
Less distributions from net realized gains (0.93) (0.21) -- --
==============================================================================================================
Net asset value, end of period $ 20.82 $ 21.13 $ 17.14 $ 16.27
______________________________________________________________________________________________________________
==============================================================================================================
Total return(b) 2.37% 24.76% 5.35% 7.77%
______________________________________________________________________________________________________________
==============================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $253,998 $118,208 $ 58,579 $ 12,829
______________________________________________________________________________________________________________
==============================================================================================================
Ratio of expenses to average net assets:
With fee waivers 2.18%(c) 2.27% 2.22% 2.27%(d)
--------------------------------------------------------------------------------------------------------------
Without fee waivers 2.22%(c) 2.31% 2.26% 2.30%(d)
==============================================================================================================
Ratio of net investment income (loss) to average net assets (0.44)%(c) (0.93)% (0.49)% (0.55)%(d)
______________________________________________________________________________________________________________
==============================================================================================================
Portfolio turnover rate 87% 86% 78% 50%
______________________________________________________________________________________________________________
==============================================================================================================
</TABLE>
(a)Calculated using average shares outstanding.
(b)Does not include contingent deferred sales charges and is not annualized for
periods less than one year.
(c)Ratios are based on average daily net assets of $219,394,811.
(d)Annualized.
16
<PAGE> 19
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, 2000, 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 periods in the five-year
period then ended. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion
on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States of
America. 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, 2000, 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, 2000, 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 periods in the five-year period then
ended, in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
December 6, 2000
Houston, Texas
17
<PAGE> 20
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM International Equity Fund (the "Fund"),
a portfolio of AIM International Funds, Inc., a Maryland corporation (the
"Company"), was held on May 3, 2000. The meeting was held for the following
purposes:
(1)* To elect the following Directors: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert H.
Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S. Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provides for the
reorganization of the Company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of KPMG LLP as independent accountants of the Fund
for the fiscal year ending in 2000.
The results of the voting on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES WITHHELD/
DIRECTORS/MATTER VOTES FOR AGAINST ABSTENTIONS
---------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
(1)* Charles T. Bauer............................................ 158,870,829 N/A 4,812,986
Bruce L. Crockett........................................... 159,101,349 N/A 4,582,466
Owen Daly II................................................ 158,885,093 N/A 4,798,722
Edward K. Dunn, Jr. ........................................ 159,073,001 N/A 4,610,814
Jack M. Fields.............................................. 159,065,031 N/A 4,618,784
Carl Frischling............................................. 158,952,763 N/A 4,731,052
Robert H. Graham............................................ 159,111,735 N/A 4,572,080
Prema Mathai-Davis.......................................... 159,002,065 N/A 4,681,750
Lewis F. Pennock............................................ 159,038,704 N/A 4,645,111
Louis S. Sklar.............................................. 159,052,236 N/A 4,631,579
(2)* Adjournment of approval of an Agreement and Plan of
Reorganization which provides for the reorganization of the
Company as a Delaware business trust........................ 114,017,566 1 49,666,248**
(3) Adjournment of approval of a new Master Investment Advisory
Agreement with A I M Advisors, Inc.......................... 49,677,300 1,111,271 24,067,772**
(4)(a) Adjournment of approval of changing or eliminating the
Fundamental Restrictions on Issuer Diversification.......... 48,653,608 1,743,944 24,458,791**
(4)(b) Adjournment of approval of changing the Fundamental
Restriction on Borrowing Money and Issuing Senior
Securities.................................................. 48,363,694 2,073,330 24,419,319**
(4)(c) Adjournment of approval of changing the Fundamental
Restriction on Underwriting Securities...................... 48,524,033 1,840,545 24,491,765**
(4)(d) Adjournment of approval of changing the Fundamental
Restriction on Industry Concentration....................... 48,703,202 1,742,167 24,410,974**
(4)(e) Adjournment of approval of changing the Fundamental
Restriction on Purchasing or Selling Real Estate............ 48,402,560 2,068,634 24,385,149**
(4)(f) Adjournment of approval of changing the Fundamental
Restriction on Purchasing or Selling Commodities............ 48,152,375 2,179,668 24,524,300**
(4)(g) Adjournment of approval of changing the Fundamental
Restriction on Making Loans................................. 47,919,662 2,385,168 24,551,513**
(4)(h) Adjournment of approval of a new Fundamental Investment
Restriction on Investing all of the Fund's Assets in an
Open-End Fund............................................... 48,272,184 1,981,265 24,602,894**
(4)(i) Adjournment of approval of Eliminating the Fundamental
Restriction on Margin Transactions.......................... 47,539,100 2,750,845 24,566,398**
(4)(j) Adjournment of approval of Eliminating the Fundamental
Restriction on Investments in Oil, Gas or Other Mineral
Exploration or Development Programs......................... 48,271,550 2,150,606 24,434,187**
(5) Adjournment of approval of changing the Investment Objective
and making it Non-Fundamental............................... 47,992,499 2,312,460 24,551,384**
(6) Ratification of the selection of KPMG LLP as Independent
Accountants of the Fund..................................... 71,368,494 638,413 2,849,436
</TABLE>
18
<PAGE> 21
The Special Meeting of Shareholders of the Company was reconvened on May
31, 2000. The following matters were then considered:
<TABLE>
<CAPTION>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
(2)* Adjournment of approval of an Agreement and Plan of
Reorganization which provides for the reorganization of the
Company as a Delaware business trust........................ 133,442,713 3,500,075 36,919,454**
(3) Approval of a new Master Investment Advisory Agreement with
A I M Advisors, Inc......................................... 63,478,216 1,357,910 18,293,324**
(4)(a) Approval of changing or eliminating the Fundamental
Restrictions on Issuer Diversification...................... 62,287,405 2,094,488 18,747,557**
(4)(b) Approval of changing the Fundamental Restriction on
Borrowing Money and Issuing Senior Securities............... 61,921,308 2,495,150 18,712,992**
(4)(c) Approval of changing the Fundamental Restriction on
Underwriting Securities..................................... 62,142,222 2,207,202 18,780,026**
(4)(d) Approval of changing the Fundamental Restriction on Industry
Concentration............................................... 62,313,008 2,121,477 18,694,965**
(4)(e) Approval of changing the Fundamental Restriction on
Purchasing or Selling Real Estate........................... 61,992,579 2,473,651 18,663,220**
(4)(f) Approval of changing the Fundamental Restriction on
Purchasing or Selling Commodities........................... 61,741,368 2,589,882 18,798,200**
(4)(g) Approval of changing the Fundamental Restriction on Making
Loans....................................................... 61,486,196 2,813,173 18,830,081**
(4)(h) Approval of a new Fundamental Investment Restriction on
Investing all of the Fund's Assets in an Open-End Fund...... 61,896,654 2,331,818 18,900,978**
(4)(i) Approval of Eliminating the Fundamental Restriction on
Margin Transactions......................................... 61,004,066 3,272,216 18,853,168**
(4)(j) Approval of Eliminating the Fundamental Restriction on
Investments in Oil, Gas or Other Mineral Exploration or
Development Programs........................................ 61,632,688 2,775,429 18,721,333**
(5) Approval of changing the Investment Objective and making it
Non-Fundamental............................................. 61,313,299 2,952,340 18,863,811**
</TABLE>
The Special Meeting of Shareholders of the Company was reconvened on June
16, 2000. The following matter was then considered:
<TABLE>
<CAPTION>
VOTES WITHHELD/
MATTER VOTES FOR AGAINST ABSTENTIONS
------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
(2)* Approval of an Agreement and Plan of Reorganization which
provides for the reorganization of the Company as a Delaware
business trust.............................................. 148,826,209 4,003,592 28,921,784**
</TABLE>
This matter was not approved by Shareholders.
----------
* Proposals 1 and 2 required approval by a combined vote of all the portfolios
of AIM International Funds, Inc.
** Includes Broker Non-Votes
----------
Effective September 30, 2000, Charles T. Bauer retired from his positions as an
officer and director of the Company and Robert H. Graham succeeded Mr. Bauer as
Chairman of the Board.
19
<PAGE> 22
ABOUT YOUR FUND'S BOARD
The board of directors is elected by you to look after your interests as a
mutual-fund shareholder. Directors' responsibilities include choosing investment
advisors for your fund; keeping an eye on performance, operations and expenses;
making decisions regarding dividends and other duties.
Nine of your fund's 10 directors are independent. In other words, they have
no affiliation with AIM except as independent fund directors charged with
representing the interest of fund investors. Representing a cross section of
businesses and industries, they have achieved success and recognition in their
respective fields. They bring their considerable expertise and experience to
their positions as directors.
Listed below are the members of the board of directors of your mutual fund
and their respective titles.
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Robert H. Graham Robert H. Graham 11 Greenway Plaza
Chairman, President and Chairman and President Suite 100
Chief Executive Officer Houston, TX 77046
A I M Management Group Inc. Carol F. Relihan
Senior Vice President and Secretary INVESTMENT ADVISOR
Bruce L. Crockett
Director Gary T. Crum A I M Advisors, Inc.
ACE Limited; Senior Vice President 11 Greenway Plaza
Formerly Director, President, and Suite 100
Chief Executive Officer Edgar M. Larsen Houston, TX 77046
COMSAT Corporation Vice President
TRANSFER AGENT
Owen Daly II Dana R. Sutton
Formerly Director Vice President and Treasurer A I M Fund Services, Inc.
Cortland Trust Inc. P.O. Box 4739
Robert G. Alley Houston, TX 77210-4739
Albert R. Dowden Vice President
Chairman of the Board of Directors, CUSTODIAN
The Cortland Trust and DHJ Media, Inc.; and Melville B. Cox
Director, Magellan Insurance Company, Vice President State Street Bank and Trust Company
Formerly Director, President and 225 Franklin Street
Chief Executive Officer, Mary J. Benson Boston, MA 02110
Volvo Group North America, Inc.; and Assistant Vice President and
Senior Vice President, AB Volvo Assistant Treasurer COUNSEL TO THE FUND
Edward K. Dunn Jr. Sheri Morris Ballard Spahr
Chairman, Mercantile Mortgage Corp.; Assistant Vice President and Andrews & Ingersoll, LLP
Formerly Vice Chairman and President, Assistant Treasurer 1735 Market Street
Mercantile-Safe Deposit & Trust Co.; and Philadelphia, PA 19103
President, Mercantile Bankshares Jim A. Coppedge
Assistant Secretary COUNSEL TO THE DIRECTORS
Jack Fields
Chief Executive Officer Renee A. Friedli Kramer, Levin, Naftalis & Frankel LLP
Twenty First Century, Inc.; Assistant Secretary 919 Third Avenue
Formerly Member New York, NY 10022
of the U.S. House of Representatives P. Michelle Grace
Assistant Secretary DISTRIBUTOR
Carl Frischling
Partner Nancy L. Martin A I M Distributors, Inc.
Kramer, Levin, Naftalis & Frankel LLP Assistant Secretary 11 Greenway Plaza
Suite 100
Prema Mathai-Davis Ofelia M. Mayo Houston, TX 77046
Formerly Chief Executive Officer, Assistant Secretary
YWCA of the U.S.A. AUDITORS
Lisa A. Moss
Lewis F. Pennock Assistant Secretary KPMG LLP
Partner 700 Louisiana
Pennock & Cooper Kathleen J. Pflueger Houston, TX 77002
Assistant Secretary
Louis S. Sklar
Executive Vice President
Hines Interests
Limited Partnership
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION (UNAUDITED)
Of ordinary dividends paid to shareholders during the Fund's tax year ended
October 31, 2000, 0% is eligible for the dividends received deduction of
corporations. The Fund distributed long-term capital gains of $241,307,100 for
the Fund's tax year ended October 31, 2000 of which 100% is 20% rate gain.
20
<PAGE> 23
-------------------------------------
THE AMOUNT OF INVESTMENT
RISK YOU UNDERTAKE DEPENDS
ON SEVERAL FACTORS: YOUR
FINANCIAL OBJECTIVES, YOUR
RISK TOLERANCE AND YOUR
TIME HORIZON.
-------------------------------------
THE AIM FUNDS RISK SPECTRUM
On the back cover of this fund report, you'll find the funds in the AIM family
divided into the following categories: sector, international/global, domestic,
taxable and tax-free. You'll also notice that the funds in each category are
listed from more aggressive to more conservative.
Within each category of this risk spectrum, we assessed each fund on the
basis of three factors: its holdings, volatility patterns and diversification.
From that assessment, we assigned a degree of risk to each fund and ordered them
accordingly.
Mutual funds typically invest in stocks, bonds or money market instruments,
each with varying levels of potential risk and reward. Generally, the riskier
the investment, the greater the potential reward.
o Stock funds usually offer the most upside potential, but they also carry the
greatest risk. Funds that invest in large, well-established companies
generally have lower risk/reward potential than funds that invest in small,
fast-growing companies.
o Funds that invest in a broad range of industries are considered more
diversified and less risky--and potentially less rewarding--than funds that
invest in a single sector, such as technology.
o Funds that invest in international markets tend to have higher risk/reward
potential than those that invest solely in domestic securities.
o Bond funds are generally considered safer and therefore potentially less
rewarding than stock funds. Funds that invest in U.S. Treasury securities
typically have lower risk/reward potential than funds that invest in
higher-yielding junk bonds.
o Money market funds, while considered extremely safe, typically produce lower
returns than stock and bond funds. Moreover, it is possible that a money
market fund's returns will not keep pace with inflation.
The amount of investment risk you undertake depends on several factors: your
financial objectives, your risk tolerance and your time horizon. Are you saving
for your later years or are you investing to buy a large item, like a car or a
house, soon? Are you a young adult early in your work life, or are you
approaching retirement?
If your investment plan has a rather long time horizon, you may be able to
invest more aggressively because you could have time to recoup should you
experience losses. If your needs are more immediate, you may need to be more
conservative to meet your goal.
Because these factors change over time, it's a good idea to reassess your
portfolio periodically to make sure it still meets your needs. Your financial
advisor can help you figure out if your portfolio is right where it should be or
if it could use some fine-tuning.
In assessing your investments, remember to keep diversification in mind.
Such a strategy, where you spread your investments over several types of mutual
funds, may help mitigate volatility and/or risk in your portfolio because not
all investments behave the same way at the same time.
AIM has a large selection of mutual funds to choose from. See your financial
advisor for insight into which ones would best fit in your portfolio.
<PAGE> 24
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<CAPTION>
EQUITY FUNDS
DOMESTIC EQUITY FUNDS INTERNATIONAL/GLOBAL EQUITY FUNDS
<S> <C> <C>
MORE AGGRESSIVE MORE AGGRESSIVE
AIM Small Cap Opportunities(1) AIM Latin American Growth A I M Management Group Inc. has
AIM Mid Cap Opportunities(2) AIM Developing Markets provided leadership in the mutual fund
AIM Large Cap Opportunities(3) AIM European Small Company industry since 1976 and managed
AIM Emerging Growth AIM Asian Growth approximately $183 billion in assets for
AIM Small Cap Growth(4) AIM Japan Growth more than eight million shareholders,
AIM Aggressive Growth AIM International Emerging Growth including individual investors,
AIM Mid Cap Growth AIM European Development corporate clients and financial
AIM Small Cap Equity AIM Euroland Growth institutions, as of September 30, 2000.
AIM Capital Development AIM Global Aggressive Growth The AIM Family of Funds--Registered
AIM Constellation AIM International Equity Trademark-- is distributed nationwide, and
AIM Dent Demographic Trends AIM Advisor International Value AIM today is the eighth-largest mutual fund
AIM Select Growth AIM Global Trends complex in the United States in assets under
AIM Large Cap Growth AIM Global Growth management, according to Strategic
AIM Weingarten Insight, an independent mutual fund
AIM Mid Cap Equity MORE CONSERVATIVE monitor.
AIM Value II AIM is a subsidiary of AMVESCAP PLC,
AIM Charter SECTOR EQUITY FUNDS one of the world's largest independent
AIM Value financial services companies with $414
AIM Blue Chip MORE AGGRESSIVE billion in assets under management as of
AIM Basic Value September 30, 2000.
AIM Large Cap Basic Value AIM New Technology
AIM Balanced AIM Global Telecommunications and Technology
AIM Advisor Flex AIM Global Resources
AIM Global Financial Services
MORE CONSERVATIVE AIM Global Health Care
AIM Global Consumer Products and Services
AIM Global Infrastructure
AIM Advisor Real Estate
AIM Global Utilities
MORE CONSERVATIVE
FIXED-INCOME FUNDS
TAXABLE FIXED-INCOME FUNDS TAX-FREE FIXED-INCOME FUNDS
MORE AGGRESSIVE MORE AGGRESSIVE
AIM Strategic Income AIM High Income Municipal
AIM High Yield II AIM Tax-Exempt Bond of Connecticut
AIM High Yield AIM Municipal Bond
AIM Income AIM Tax-Free Intermediate
AIM Global Income AIM Tax-Exempt Cash
AIM Floating Rate(5)
AIM Intermediate Government MORE CONSERVATIVE
AIM Limited Maturity Treasury
AIM Money Market
MORE CONSERVATIVE
</TABLE>
The AIM Risk Spectrum illustrates equity and fixed-income funds from more
aggressive to more conservative. When assessing the degree of risk, three
factors were considered: the funds' portfolio holdings, volatility patterns over
time and diversification permitted within the fund. Fund rankings are relative
to one another within The AIM Family of Funds--Registered Trademark-- and should
not be compared with other investments. There is no guarantee that any one AIM
fund will be less volatile than any other. (1) AIM Small Cap Opportunities Fund
closed to new investors Nov. 4, 1999. (2) AIM Mid Cap Opportunities Fund closed
to new investors March 21, 2000. (3) AIM Large Cap Opportunities Fund closed to
new investors Sept. 29, 2000. (4) AIM Small Cap Growth Fund closed to new
investors Nov. 8, 1999. (5) AIM Floating Rate Fund was restructured to offer
multiple share classes April 3, 2000. Existing shares were converted to Class B
shares, and Class C shares commenced offering.
FOR MORE COMPLETE INFORMATION ABOUT ANY AIM FUND, INCLUDING SALES CHARGES
AND EXPENSES, OBTAIN THE APPROPRIATE PROSPECTUS(ES) FROM YOUR FINANCIAL ADVISOR.
PLEASE READ THE PROSPECTUS(ES) CAREFULLY BEFORE YOU INVEST OR SEND MONEY. This
report is not authorized for distribution to prospective investors unless
preceded or accompanied by a currently effective fund prospectus. If used as
sales material after Jan. 20, 2001, this report must be accompanied by a fund
Performance & Commentary or by an AIM Quarterly Review of Performance for the
most recent quarter end.
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--Registered Trademark--
INVEST WITH DISCIPLINE
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A I M Distributors, Inc. INT-AR-1
