-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J0H0pg8ssMElaagqgAVXdN++NHMytM6iUaZeyb0IgrD2F7QjnFudoEc3T5jM3IZ2 EmuxGGItZJShLJzeMzpAwQ== 0000950129-00-001351.txt : 20000324 0000950129-00-001351.hdr.sgml : 20000324 ACCESSION NUMBER: 0000950129-00-001351 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20000323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIM INTERNATIONAL MUTUAL FUNDS CENTRAL INDEX KEY: 0000880859 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 760352823 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 033-44611 FILM NUMBER: 576877 FILING VALUES: FORM TYPE: 485APOS SEC ACT: SEC FILE NUMBER: 811-06463 FILM NUMBER: 576878 BUSINESS ADDRESS: STREET 1: 11 GREENWAY PLAZA STE 100 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7136261919 MAIL ADDRESS: STREET 1: AIM INTERNATIONAL FUNDS INC STREET 2: 11 GREENWAY PLAZA SUITE 100 CITY: HOUSTON STATE: TX ZIP: 77046 FORMER COMPANY: FORMER CONFORMED NAME: AIM INTERNATIONAL FUNDS INC DATE OF NAME CHANGE: 19920909 485APOS 1 AIM INTERNATIONAL MUTUAL FUNDS - P.E. AMEND. #18 1 As filed with the Securities and Exchange Commission on March 23, 2000 1933 Act Reg. No. 33-44611 1940 Act Reg. No. 811-6463 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X Pre-Effective Amendment No. --- --- Post-Effective Amendment No. 18 X ------ --- and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 20 X ------ --- (Check appropriate box or boxes.) AIM INTERNATIONAL MUTUAL FUNDS ------------------------------ (Exact Name of Registrant as Specified in Charter) 11 Greenway Plaza, Suite 100, Houston, TX 77046 ----------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code (713) 626-1919 -------------- Charles T. Bauer 11 Greenway Plaza, Suite 100, Houston, TX 77046 ----------------------------------------------- (Name and Address of Agent for Service) Copy to: P. Michelle Grace, Esquire Martha J. Hays, Esquire A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP 11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599 Approximate Date of Proposed As soon as practicable Public Offering: after the effective date of this Amendment It is proposed that this filing will become effective (check appropriate box) - ----- immediately upon filing pursuant to paragraph (b) - ----- on (date) pursuant to paragraph (b) X - ----- 60 days after filing pursuant to paragraph (a)(1) - ----- on May 22, 2000 pursuant to paragraph (a)(1) - ----- 75 days after filing pursuant to paragraph (a)(2) - ----- on (date) pursuant to paragraph (a)(2) of rule 485 If appropriate, check the following box: this post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title of Securities Being Registered: Shares of beneficial interest THE REGISTRANT IS THE SUCCESSOR ISSUER TO AIM INTERNATIONAL FUNDS, INC. (THE "PREDECESSOR FUND"). PURSUANT TO RULE 414 UNDER THE SECURITIES ACT OF 1933, BY FILING THIS POST-EFFECTIVE AMENDMENT TO CURRENTLY EFFECTIVE REGISTRATION STATEMENT NO. 33-44611 OF THE PREDECESSOR FUND, THE REGISTRANT EXPRESSLY ADOPTS THE REGISTRATION STATEMENT OF THE PREDECESSOR FUND AS ITS OWN REGISTRATION STATEMENT FOR ALL PURPOSES OF THE SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934. 2 AIM ASIAN GROWTH FUND ----------------------------------------------------------------------- AIM Asian Growth Fund seeks to provide long-term growth of capital. PROSPECTUS AIM -- Registered Trademark -- MAY 22, 2000 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- 3 --------------------- AIM ASIAN GROWTH FUND --------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 2 - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with Discipline are registered service marks and AIM Bank Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM Investor are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 4 --------------------- AIM ASIAN GROWTH FUND --------------------- INVESTMENT OBJECTIVE AND STRATEGIES - -------------------------------------------------------------------------------- The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval. The fund seeks to meet its objective by investing, normally, at least 65% of its assets in marketable equity securities issued by Asian companies (except Japanese companies), including companies with market capitalizations of less than $1 billion. The fund considers Asian companies to be those (1) organized under the laws of a country in Asia and having a principal office in a country in Asia; (2) that derive 50% or more of their total revenues from business in Asia; or (3) whose equity securities are traded principally on a stock exchange, or in an over-the-counter market, in Asia. The fund may invest up to 20% of its total assets in securities exchangeable for or convertible into equity securities of Asian companies. The fund may also invest up to 35% of its total assets in securities of non-Asian companies. The fund may also invest up to 35% of its total assets in high-grade short-term securities and debt securities, including U.S. Government obligations, investment grade corporate bonds or taxable municipal securities, whether denominated in U.S. dollars or foreign currencies. The fund will normally invest in companies located in at least three countries, including countries in Asia as well as Australia and New Zealand. The fund may also invest up to 100% of its total assets in companies in developing countries, i.e., those that are in the initial stages of their industrial cycles. Any percentage limitations with respect to assets of the fund are applied at the time of purchase. The portfolio managers focus on companies that have experienced above-average long-term growth in earnings and have strong prospects for future growth. In selecting countries in which the fund will invest, the portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The portfolio managers consider whether to sell a particular security when any of those factors materially changes. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective. The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay. 1 5 --------------------- AIM ASIAN GROWTH FUND --------------------- PRINCIPAL RISKS OF INVESTING IN THE FUND - -------------------------------------------------------------------------------- There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small and micro-cap companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small and micro-cap companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price. The prices of foreign securities may be further affected by other factors, including: - - Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. - - Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries. - - Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. - - Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities. These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures. The fund may participate in the initial public offering (IPO) market. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly increase the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the fund's total return. An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 2 6 --------------------- AIM ASIAN GROWTH FUND --------------------- PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance. ANNUAL TOTAL RETURNS - -------------------------------------------------------------------------------- The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower. [GRAPH]
ANNUAL YEAR ENDED TOTAL DECEMBER 31 RETURNS - ----------- ------- 1998 ................................. -8.54% 1999 ................................. 67.98%
The Class A shares' year-to-date total return as of March 31, 2000 was -----%. During the periods shown in the bar chart, the highest quarterly return was 40.89% (quarter ended June 30, 1999) and the lowest quarterly return was -25.67% (quarter ended June 30, 1998). PERFORMANCE TABLE The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR INCEPTION DATE - ----------------------------------------------------------------------- Class A 58.70% 11.14% 11/03/97 Class B 61.58 12.02 11/03/97 Class C 65.84 13.11 11/03/97 MSCI AC Asia Pacific Free ex-Japan Index(1) 49.83 13.75(2) 10/31/97(2) - -----------------------------------------------------------------------
(1) The Morgan Stanley Capital International All Country Asia Pacific Free ex-Japan Index measures the performance of 12 of both developed and emerging markets in this region. The index excludes shares that are not readily purchased by non-local investors. (2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history. 3 7 --------------------- AIM ASIAN GROWTH FUND --------------------- FEE TABLE AND EXPENSE EXAMPLE - -------------------------------------------------------------------------------- FEE TABLE This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C - ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% - -------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C - ------------------------------------------------------- Management Fees 0.95% 0.95% 0.95% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses 1.42 1.64 1.64 Total Annual Fund Operating Expenses 2.72 3.59 3.59 Fee Waivers and Reimbursements(2) 0.80 0.80 0.80 Net Expenses 1.92 2.79 2.79 - -------------------------------------------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption. (2) The investment advisor has contractually agreed to limit Total Annual Fund Operating Expenses of Class A, Class B and Class C to 1.92%, 2.80% and 2.80%, respectively. As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge. EXPENSE EXAMPLE This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. To the extent fees are waived, the expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $810 $1,348 $1,910 $3,433 Class B 862 1,400 2,059 3,662 Class C 462 1,100 1,859 3,854 - ----------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $810 $1,348 $1,910 $3,433 Class B 362 1,100 1,859 3,662 Class C 362 1,100 1,859 3,854 - ----------------------------------------------
4 8 --------------------- AIM ASIAN GROWTH FUND --------------------- FUND MANAGEMENT - -------------------------------------------------------------------------------- THE ADVISOR A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 1999, the advisor received compensation of 0.15% of average daily net assets. PORTFOLIO MANAGERS The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio, both of whom are officers of A I M Capital Management, Inc., a wholly owned subsidiary of the advisor, are - - Shuxin Cao, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1997. Prior to 1997, Mr. Cao was an international equity analyst for Boatmen's Trust Company. - - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1997 and has been associated with the advisor and/or its affiliates since 1989. - - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since its inception in 1997 and has been associated with the advisor and/or its affiliates since 1990. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM Asian Growth Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 5 9 --------------------- AIM ASIAN GROWTH FUND --------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A CLASS B CLASS C -------------------------- -------------------------- -------------------------- NOVEMBER 3, NOVEMBER 3, NOVEMBER 3, 1997 1997 1997 YEAR ENDED THROUGH YEAR ENDED THROUGH YEAR ENDED THROUGH OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 1999(A) 1998 1999(A) 1998 1999(A) 1998 - --------------------------------------------------------- -------------------------- -------------------------- Net asset value, beginning of period $ 7.69 $ 10.00 $ 7.63 $ 10.00 $ 7.61 $ 10.00 Income from investment operations: Net investment income (loss) (0.03) 0.05 (0.13) (0.01) (0.13) (0.01) Net gains (losses) on securities (both realized and unrealized) 3.14 (2.36) 3.16 (2.36) 3.16 (2.38) Total from investment operations 3.11 (2.31) 3.03 (2.37) 3.03 (2.39) Less distributions: Dividends from net investment income (0.04) -- (0.01) -- (0.01) -- Net asset value, end of period $ 10.76 $ 7.69 $ 10.65 $ 7.63 $ 10.63 $ 7.61 Total return(b) 40.66% (23.10)% 39.76% (23.70)% 39.86% (23.90)% - --------------------------------------------------------- -------------------------- -------------------------- Ratios/supplemental data: - --------------------------------------------------------- -------------------------- -------------------------- Net assets, end of period (000s omitted) $25,420 $ 7,716 $12,070 $ 3,030 $ 5,008 $ 686 Ratio of expenses to average net assets(c) 1.92%(d) 1.92%(e) 2.79%(d) 2.80%(e) 2.79%(d) 2.80%(e) Ratio of net investment income (loss) to average net assets(f) (0.50)%(d) 0.70%(e) (1.37)%(d) (0.18)%(e) (1.37)%(d) (0.18)%(e) Portfolio turnover rate 142% 79% 142% 79% 142% 79% - --------------------------------------------------------- -------------------------- --------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and is not annualized for periods less than one year. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.72% and 4.88% (annualized) for Class A for 1999-1998, 3.59% and 5.75% (annualized) for Class B for 1999-1998, and 3.59% and 5.75% (annualized) for Class C for 1999-1998. (d) Ratios are based on average net assets of $17,430,236, $6,408,688 and $2,061,860 for Class A, Class B and Class C, respectively. (e) Annualized. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (1.30)% and (2.27)% (annualized) for Class A for 1999-1998, (2.17)% and (3.15)% (annualized) for Class B for 1999-1998, (2.17)% and (3.15)% (annualized), for Class C for 1999-1998. 6 10 ------------- THE AIM FUNDS ------------- SHAREHOLDER INFORMATION - -------------------------------------------------------------------------------- In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds. CHOOSING A SHARE CLASS Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C - --------------------------------------------------------------------------------------------------------- - - Initial sales charge - No initial sales charge - No initial sales charge - - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales charge for certain purchases charge on redemptions within charge on redemptions within six years one year - - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00% (12b-1) fee than Class B or Class C shares (See "Fee Table and Expense Example") - Converts to Class A shares - Does not convert to Class A after eight years along with a shares pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares. AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund seven years after the end of the month in which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until eight years after the end of the month in which you purchased your original shares. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. SALES CHARGES Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge. INITIAL SALES CHARGES The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 25,000 5.50% 5.82% $ 25,000 but less than $ 50,000 5.25 5.54 $ 50,000 but less than $ 100,000 4.75 4.99 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 3.00 3.09 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
A-1 MCF--03/00 11 ------------- THE AIM FUNDS -------------
CATEGORY II INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 50,000 4.75% 4.99% $ 50,000 but less than $ 100,000 4.00 4.17 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 2.50 2.56 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
CATEGORY III INITIAL SALES CHARGES - ------------------------------------------------------------- INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 100,000 1.00% 1.01% $100,000 but less than $ 250,000 0.75 0.76 $250,000 but less than $1,000,000 0.50 0.50 - -------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more. CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE PURCHASE MADE CLASS B CLASS C - ---------------------------------------------------------- First 5% 1% Second 4 None Third 3 None Fourth 3 None Fifth 2 None Sixth 1 None Seventh and following None None - ----------------------------------------------------------
COMPUTING A CDSC The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase. REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment. REDUCED SALES CHARGES You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances. Rights of Accumulation You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own. Letters of Intent Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested. INITIAL SALES CHARGE EXCEPTIONS You will not pay initial sales charges - - on shares purchased by reinvesting dividends and distributions; - - when exchanging shares among certain AIM Funds; - - when using the reinstatement privilege; and - - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs. CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS You will not pay a CDSC - - if you redeem Class B shares you held for more than six years; - - if you redeem Class C shares you held for more than one year; - - if you redeem shares acquired through reinvestment of dividends and distributions; and - - on increases in the net asset value of your shares. There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details. MCF--03/00 A-2 12 -------------- THE AIM FUNDS -------------- PURCHASING SHARES MINIMUM INVESTMENTS PER AIM FUND ACCOUNT The minimum investments for AIM Fund accounts (except for investments in AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL TYPE OF ACCOUNT INVESTMENTS INVESTMENTS - ----------------------------------------------------------------------------------------------------------- Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25 plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans) (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 plans) Automatic Investment Plans 50 50 IRA, Education IRA or Roth IRA 250 50 All other accounts 500 50 - ----------------------------------------------------------------------------------------------------------
HOW TO PURCHASE SHARES You may purchase shares using one of the options below.
PURCHASE OPTIONS - --------------------------------------------------------------------------------------------------------- OPENING AN ACCOUNT ADDING TO AN ACCOUNT - --------------------------------------------------------------------------------------------------------- Through a Financial Consultant Contact your financial consultant. Same By Mail Mail completed account application Mail your check and the remittance and purchase payment to the slip from your confirmation transfer agent, statement to the transfer agent. A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. By Wire Mail completed account application Call the transfer agent to receive to the transfer agent. Call the a reference number. Then, use the transfer agent at (800) 959-4246 to wire instructions at left. receive a reference number. Then, use the following wire instructions: Beneficiary Bank ABA/Routing #: 113000609 Beneficiary Account Number: 00100366807 Beneficiary Account Name: A I M Fund Services, Inc. RFB: Fund Name, Reference # OBI: Your Name, Account # By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection methods described above. form to the transfer agent. Once the transfer agent has received the form, call the transfer agent to place your purchase order. By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect methods described above. option on your completed account application or complete an AIM Internet Connect Authorization Form. Mail the application or form to the transfer agent. Once your request for this option has been processed (which may take up to 10 days), you may place your purchase order at www.aimfunds.com. The maximum purchase amount per transaction is $100,000. You may not purchase shares in AIM prototype retirement accounts on the internet. - ----------------------------------------------------------------------------------------------------------
A-3 MCF--03/00 13 ------------- THE AIM FUNDS ------------- SPECIAL PLANS AUTOMATIC INVESTMENT PLAN You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal. DOLLAR COST AVERAGING Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50. AUTOMATIC DIVIDEND INVESTMENT All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa. You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund: (1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500; (2) Both accounts must have identical registration information; and (3) You must have completed an authorization form to reinvest dividends into another AIM Fund. PORTFOLIO REBALANCING PROGRAM If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice. RETIREMENT PLANS Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details. REDEEMING SHARES REDEMPTION FEES Generally, we will not charge you any fees to redeem your shares. However, if you acquired Class A shares of AIM Developing Markets Fund in connection with the reorganization of AIM Eastern Europe Fund, you will be charged a redemption fee of 2% of the net asset value of those shares, which will be paid to AIM Developing Markets Fund, if you redeem your shares within the first year after the reorganization. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC). REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC. REDEMPTION OF CLASS B SHARES OR CLASS C SHARES ACQUIRED BY EXCHANGE FROM AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares. REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares. MCF--03/00 A-4 14 ------------- THE AIM FUNDS ------------- HOW TO REDEEM SHARES - -------------------------------------------------------------------------------- Through a Financial Contact your financial consultant. Consultant By Mail Send a written request to the transfer agent. Requests must include (1) original signatures of all registered owners; (2) the name of the AIM Fund and your account number; (3) if the transfer agent does not hold your shares, endorsed share certificates or share certificates accompanied by an executed stock power; and (4) signature guarantees, if necessary (see below). The transfer agent may require that you provide additional information, such as corporate resolutions or powers of attorney, if applicable. If you are redeeming from an IRA account, you must include a statement of whether or not you are at least 59 1/2 years old and whether you wish to have federal income tax withheld from your proceeds. The transfer agent may require certain other information before you can redeem from an employer-sponsored retirement plan. Contact your employer for details. By Telephone Call the transfer agent. You will be allowed to redeem by telephone if (1) the proceeds are to be mailed to the address on record (if there has been no change communicated to us within the last 30 days) or transferred electronically to a pre-authorized checking account; (2) you do not hold physical share certificates; (3) you can provide proper identification information; (4) the proceeds of the redemption do not exceed $50,000; and (5) you have not previously declined the telephone redemption privilege. Certain accounts, including retirement accounts and 403(b) plans, may not be redeemed by telephone. The transfer agent must receive your call during the hours of the customary trading session of the New York Stock Exchange (NYSE) in order to effect the redemption at that day's closing price. By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will be allowed to redeem by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; (3) the proceeds of the redemption do not exceed $50,000; and (4) you have established the internet trading option. AIM prototype retirement accounts may not be redeemed on the internet. The transfer agent must confirm your transaction during the hours of the customary trading session of the NYSE in order to effect the redemption at that day's closing price.
- ------------------------------------------------------------------------------- TIMING AND METHOD OF PAYMENT We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared. REDEMPTION BY MAIL If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares. REDEMPTION BY TELEPHONE If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine. REDEMPTION BY INTERNET If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine. PAYMENT FOR SYSTEMATIC WITHDRAWALS You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent. EXPEDITED REDEMPTIONS (AIM Cash Reserve Shares of AIM Money Market Fund only) If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day. A-5 MCF--03/00 15 -------------- THE AIM FUNDS -------------- REDEMPTIONS BY CHECK (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only) You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts. SIGNATURE GUARANTEES We require a signature guarantee when you redeem by mail and (1) the amount is greater than $50,000; (2) you request that payment be made to someone other than the name registered on the account; (3) you request that payment be sent somewhere other than the bank of record on the account; or (4) you request that payment be sent to a new address or an address that changed in the last 30 days. The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution. REINSTATEMENT PRIVILEGE (Class A shares only) You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year. REDEMPTIONS BY THE AIM FUNDS If your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months, and the value of your account falls below $500 for three consecutive months due to redemptions or exchanges (excluding retirement accounts), the AIM Funds have the right to redeem the account after giving you 60 days' prior written notice. You may avoid having your account redeemed during the notice period by bringing the account value up to $500 or by utilizing the Automatic Investment Plan. If an AIM Fund determines that you have not provided a correct Social Security or other tax ID number on your account application, the AIM Fund may, at its discretion, redeem the account and distribute the proceeds to you. EXCHANGING SHARES You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. PERMITTED EXCHANGES Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange. YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING: (1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund; (2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for (a) one another; (b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or (c) Class A shares of another AIM Fund, but only if (i) you acquired the original shares before May 1, 1994; or (ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges; (3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for (a) one another; (b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares (i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge; MCF--03/00 A-6 16 -------------- THE AIM FUNDS -------------- (ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or (c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or (4) Class B shares for other Class B shares, and Class C shares for other Class C shares. (5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares. EXCHANGES NOT PERMITTED You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund. EXCHANGE CONDITIONS The following conditions apply to all exchanges: - - You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging; - - Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence; - - Exchanges must be made between accounts with identical registration information; - - The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9); - - Shares must have been held for at least one day prior to the exchange; - - If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and - - You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund. TERMS OF EXCHANGE Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time. BY MAIL If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made. BY TELEPHONE Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days. BY INTERNET You will be allowed to exchange by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; and (3) you have established the internet trading option. EXCHANGING CLASS B AND CLASS C SHARES If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares. - ------------------------------------------------------------------------------- EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO: - REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; - MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; - REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR - WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS. ------------------------------------------------------------------------------ A-7 MCF--03/00 17 -------------- THE AIM FUNDS -------------- PRICING OF SHARES DETERMINATION OF NET ASSET VALUE The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares. Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business. TIMING OF ORDERS You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading. TAXES In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year. Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax. INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS. The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing. MCF--03/00 A-8 18 --------------------- AIM ASIAN GROWTH FUND --------------------- OBTAINING ADDITIONAL INFORMATION - -------------------------------------------------------------------------------- More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us - --------------------------------------------------------- BY MAIL: A I M Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 BY TELEPHONE: (800) 347-4246 BY E-MAIL: general@aimfunds.com ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and semiannual reports only) - -----------------------------------------------------
You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room. - ----------------------------------- AIM Asian Growth Fund SEC 1940 Act file number: 811-6463 - ----------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com AAG-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- 19 AIM EUROPEAN DEVELOPMENT FUND -------------------------------------------------------------------------- AIM European Development Fund seeks to provide long-term growth of capital. PROSPECTUS AIM-- Registered Trademark -- MAY 22, 2000 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- 20 ----------------------------- AIM EUROPEAN DEVELOPMENT FUND ----------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 2 - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 3 - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 3 Performance Table 3 FEE TABLE AND EXPENSE EXAMPLE 4 - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 4 Expense Example 4 FUND MANAGEMENT 5 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 5 Advisor Compensation 5 Portfolio Managers 5 OTHER INFORMATION 5 - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 5 Dividends and Distributions 5 FINANCIAL HIGHLIGHTS 6 - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with Discipline, are registered service marks and AIM Bank Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM Investor are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 21 ----------------------------- AIM EUROPEAN DEVELOPMENT FUND ----------------------------- INVESTMENT OBJECTIVE AND STRATEGIES - -------------------------------------------------------------------------------- The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval. The fund seeks to meet its objective by investing, normally, at least 80% of its total assets in marketable equity securities of European companies, including companies with market capitalizations of less than $1 billion. The fund considers European companies to be those (1) organized under the laws of a country in Europe and having a principal office in a country in Europe; (2) that derive 50% or more of their total revenues from business in Europe; or (3) whose equity securities are traded principally in a stock exchange, or in an over-the-counter market, in Europe. The fund will normally invest in the securities of companies located in at least three European countries. The fund may invest up to 65% of its total assets in European companies located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund may invest up to 20% of its total assets in securities exchangeable for or convertible into equity securities of European securities. The fund may invest up to 20% of its total assets in securities of non-European companies. The fund may also invest up to 20% of its total assets in high-grade short-term securities and in debt securities, including U.S. Government obligations, investment-grade corporate bonds or taxable municipal securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase. The portfolio managers focus on companies that have experienced above-average long-term growth in earnings and have strong prospects for future growth. In selecting countries in which the fund will invest, the portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The portfolio managers consider whether to sell a particular security when any of these factors materially changes. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective. The fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If the fund does trade in this way, it may incur increased transaction costs, which can lower the actual return on your investment. Active trading may also increase short-term gains and losses, which may affect the taxes you have to pay. 1 22 ----------------------------- AIM EUROPEAN DEVELOPMENT FUND ----------------------------- PRINCIPAL RISKS OF INVESTING IN THE FUND - -------------------------------------------------------------------------------- There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small and micro-cap companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small and micro-cap companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price. The prices of foreign securities may be further affected by other factors, including: - - Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. - - Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries. - - Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. - - Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities. These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures. The fund may participate in the initial public offering (IPO) market. Because of the fund's small asset base, any investment the fund may make in IPOs may significantly increase the fund's total return. As the fund's assets grow, the impact of IPO investments will decline, which may reduce the fund's total return. An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 2 23 ----------------------------- AIM EUROPEAN DEVELOPMENT FUND ----------------------------- PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance. ANNUAL TOTAL RETURNS - -------------------------------------------------------------------------------- The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower. [GRAPH]
ANNUAL YEAR ENDED TOTAL DECEMBER 31 RETURNS - ----------- ------ 1998 ....................................... 40.62% 1999 ....................................... 66.62%
The Class A shares' year-to-date total return as of March 31, 2000 was %. During the periods shown in the bar chart, the highest quarterly return was 54.69% (quarter ended December 31, 1999) and the lowest quarterly return was - -14.53% (quarter ended September 30, 1998). PERFORMANCE TABLE The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR INCEPTION DATE - ----------------------------------------------------- Class A 57.46% 45.52% 11/03/97 Class B 60.32 47.40 11/03/97 Class C 64.28 48.32 11/03/97 MSCI AC Europe Index(1) 17.35 23.32(2) 10/31/97(2) MSCI Europe Index(3) 15.89 23.06(2) 10/31/97(2) - -----------------------------------------------------
(1) The Morgan Stanley Capital International All Country Europe Index is an unmanaged index that is designed to represent the performance of stock markets in Europe, including both developed and emerging countries. (2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history. (2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history. (3) The Morgan Stanley Capital International Europe Index is an unmanaged index that is designed to represent the performance of developed stock markets in Europe. The fund has elected to use the Morgan Stanley Capital International Europe Index because it more closely reflects the performance of stocks in which the fund invests. 3 24 ----------------------------- AIM EUROPEAN DEVELOPMENT FUND ----------------------------- FEE TABLE AND EXPENSE EXAMPLE - -------------------------------------------------------------------------------- FEE TABLE This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (paid directly from your investment) CLASS A CLASS B CLASS C - ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% - -------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C - ------------------------------------------------------- Management Fees 0.95% 0.95% 0.95% Distribution and/or Service (12b-1) Fees 0.35 1.00 1.00 Other Expenses 0.58 0.68 0.68 Total Annual Fund Operating Expenses 1.88 2.63 2.63 - -------------------------------------------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption. As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge. EXPENSE EXAMPLE This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $730 $1,108 $1,510 $2,630 Class B 766 1,117 1,595 2,782 Class C 366 817 1,395 2,964 - ----------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $730 $1,108 $1,510 $2,630 Class B 266 817 1,395 2,782 Class C 266 817 1,395 2,964 - ----------------------------------------------
4 25 ----------------------------- AIM EUROPEAN DEVELOPMENT FUND ----------------------------- FUND MANAGEMENT - -------------------------------------------------------------------------------- THE ADVISOR A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management including the fund's investment decisions and the execution of securities transactions. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 1999, the advisor received compensation of 0.95% of average daily net assets. PORTFOLIO MANAGERS The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio, both of whom are officers of A I M Capital Management, Inc., a wholly owned subsidiary of the advisor, are - - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996, he was an associate with JMB Realty. - - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1997 and has been associated with the advisor and/or its affiliates since 1994. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM European Development Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes any long-term and short-term capital gains, if any, annually. 5 26 ----------------------------- AIM EUROPEAN DEVELOPMENT FUND ----------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A CLASS B CLASS C --------------------------- --------------------------- --------------------------- NOVEMBER 3, NOVEMBER 3, NOVEMBER 3, 1997 1997 1997 YEAR ENDED THROUGH YEAR ENDED THROUGH YEAR ENDED THROUGH OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 1999 1998 1999 1998 1999 1998 - ---------------------------------------------------------- --------------------------- --------------------------- Net asset value, beginning of period $ 12.96 $ 10.00 $ 12.87 $ 10.00 $ 12.88 $10.00 Income from investment operations: Net investment income (loss) (0.11) (0.08)(a) (0.22) (0.18)(a) (0.23) (0.18)(a) Net gains on securities (both realized and unrealized) 3.58 3.04 3.55 3.05 3.56 3.06 Total from investment operations 3.47 2.96 3.33 2.87 3.33 2.88 Less distributions: Dividends from net investment income (0.01) -- -- -- -- -- Net asset value, end of period $ 16.42 $ 12.96 $ 16.20 $ 12.87 $ 16.21 $12.88 Total return(b) 26.81% 29.60% 25.87% 28.70% 25.85% 28.80% - ---------------------------------------------------------- --------------------------- --------------------------- Ratios/supplemental data: - ---------------------------------------------------------- --------------------------- --------------------------- Net assets, end of period (000s omitted) $99,148 $76,686 $67,074 $50,121 $11,938 $9,639 Ratio of expenses to average net assets 1.88%(c) 1.98%(d) 2.63%(c) 2.72%(d) 2.63%(c) 2.72%(d) Ratio of net investment income (loss) to average net assets (0.69)%(c) (0.58)%(e) (1.44)%(c) (1.32)%(e) (1.44)%(c) (1.32)%(e) Portfolio turnover rate 122% 93% 122% > 93% 122% 93% - ---------------------------------------------------------- --------------------------- ---------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and is not annualized for periods less than one year. (c) Ratios are based on average net assets of $94,875,922, $62,512,593 and $11,842,849, for Class A, Class B and Class C shares, respectively. (d) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.15% (annualized), 2.89% (annualized) and 2.89% (annualized) for Class A, Class B and Class C, respectively, for 1998. (e) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.75)% (annualized), (1.49)% (annualized) and (1.49)% (annualized), for Class A, Class B and Class C, respectively, for 1998. 6 27 ------------- THE AIM FUNDS ------------- SHAREHOLDER INFORMATION - -------------------------------------------------------------------------------- In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds. CHOOSING A SHARE CLASS Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C - --------------------------------------------------------------------------------------------------------- - - Initial sales charge - No initial sales charge - No initial sales charge - - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales charge for certain purchases charge on redemptions within charge on redemptions within six years one year - - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00% (12b-1) fee than Class B or Class C shares (See "Fee Table and Expense Example") - Converts to Class A shares - Does not convert to Class A after eight years along with a shares pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares. AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund seven years after the end of the month in which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until eight years after the end of the month in which you purchased your original shares. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. SALES CHARGES Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge. INITIAL SALES CHARGES The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 25,000 5.50% 5.82% $ 25,000 but less than $ 50,000 5.25 5.54 $ 50,000 but less than $ 100,000 4.75 4.99 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 3.00 3.09 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
A-1 MCF--03/00 28 ------------- THE AIM FUNDS -------------
CATEGORY II INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 50,000 4.75% 4.99% $ 50,000 but less than $ 100,000 4.00 4.17 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 2.50 2.56 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
CATEGORY III INITIAL SALES CHARGES - ------------------------------------------------------------- INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 100,000 1.00% 1.01% $100,000 but less than $ 250,000 0.75 0.76 $250,000 but less than $1,000,000 0.50 0.50 - -------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more. CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE PURCHASE MADE CLASS B CLASS C - ---------------------------------------------------------- First 5% 1% Second 4 None Third 3 None Fourth 3 None Fifth 2 None Sixth 1 None Seventh and following None None - ----------------------------------------------------------
COMPUTING A CDSC The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase. REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment. REDUCED SALES CHARGES You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances. Rights of Accumulation You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own. Letters of Intent Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested. INITIAL SALES CHARGE EXCEPTIONS You will not pay initial sales charges - - on shares purchased by reinvesting dividends and distributions; - - when exchanging shares among certain AIM Funds; - - when using the reinstatement privilege; and - - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs. CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS You will not pay a CDSC - - if you redeem Class B shares you held for more than six years; - - if you redeem Class C shares you held for more than one year; - - if you redeem shares acquired through reinvestment of dividends and distributions; and - - on increases in the net asset value of your shares. There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details. MCF--03/00 A-2 29 -------------- THE AIM FUNDS -------------- PURCHASING SHARES MINIMUM INVESTMENTS PER AIM FUND ACCOUNT The minimum investments for AIM Fund accounts (except for investments in AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL TYPE OF ACCOUNT INVESTMENTS INVESTMENTS - ----------------------------------------------------------------------------------------------------------- Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25 plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans) (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 plans) Automatic Investment Plans 50 50 IRA, Education IRA or Roth IRA 250 50 All other accounts 500 50 - ----------------------------------------------------------------------------------------------------------
HOW TO PURCHASE SHARES You may purchase shares using one of the options below.
PURCHASE OPTIONS - --------------------------------------------------------------------------------------------------------- OPENING AN ACCOUNT ADDING TO AN ACCOUNT - --------------------------------------------------------------------------------------------------------- Through a Financial Consultant Contact your financial consultant. Same By Mail Mail completed account application Mail your check and the remittance and purchase payment to the slip from your confirmation transfer agent, statement to the transfer agent. A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. By Wire Mail completed account application Call the transfer agent to receive to the transfer agent. Call the a reference number. Then, use the transfer agent at (800) 959-4246 to wire instructions at left. receive a reference number. Then, use the following wire instructions: Beneficiary Bank ABA/Routing #: 113000609 Beneficiary Account Number: 00100366807 Beneficiary Account Name: A I M Fund Services, Inc. RFB: Fund Name, Reference # OBI: Your Name, Account # By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection methods described above. form to the transfer agent. Once the transfer agent has received the form, call the transfer agent to place your purchase order. By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect methods described above. option on your completed account application or complete an AIM Internet Connect Authorization Form. Mail the application or form to the transfer agent. Once your request for this option has been processed (which may take up to 10 days), you may place your purchase order at www.aimfunds.com. The maximum purchase amount per transaction is $100,000. You may not purchase shares in AIM prototype retirement accounts on the internet. - ----------------------------------------------------------------------------------------------------------
A-3 MCF--03/00 30 ------------- THE AIM FUNDS ------------- SPECIAL PLANS AUTOMATIC INVESTMENT PLAN You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal. DOLLAR COST AVERAGING Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50. AUTOMATIC DIVIDEND INVESTMENT All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa. You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund: (1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500; (2) Both accounts must have identical registration information; and (3) You must have completed an authorization form to reinvest dividends into another AIM Fund. PORTFOLIO REBALANCING PROGRAM If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice. RETIREMENT PLANS Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details. REDEEMING SHARES REDEMPTION FEES Generally, we will not charge you any fees to redeem your shares. However, if you acquired Class A shares of AIM Developing Markets Fund in connection with the reorganization of AIM Eastern Europe Fund, you will be charged a redemption fee of 2% of the net asset value of those shares, which will be paid to AIM Developing Markets Fund, if you redeem your shares within the first year after the reorganization. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC). REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC. REDEMPTION OF CLASS B SHARES OR CLASS C SHARES ACQUIRED BY EXCHANGE FROM AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares. REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares. MCF--03/00 A-4 31 ------------- THE AIM FUNDS ------------- HOW TO REDEEM SHARES - -------------------------------------------------------------------------------- Through a Financial Contact your financial consultant. Consultant By Mail Send a written request to the transfer agent. Requests must include (1) original signatures of all registered owners; (2) the name of the AIM Fund and your account number; (3) if the transfer agent does not hold your shares, endorsed share certificates or share certificates accompanied by an executed stock power; and (4) signature guarantees, if necessary (see below). The transfer agent may require that you provide additional information, such as corporate resolutions or powers of attorney, if applicable. If you are redeeming from an IRA account, you must include a statement of whether or not you are at least 59 1/2 years old and whether you wish to have federal income tax withheld from your proceeds. The transfer agent may require certain other information before you can redeem from an employer-sponsored retirement plan. Contact your employer for details. By Telephone Call the transfer agent. You will be allowed to redeem by telephone if (1) the proceeds are to be mailed to the address on record (if there has been no change communicated to us within the last 30 days) or transferred electronically to a pre-authorized checking account; (2) you do not hold physical share certificates; (3) you can provide proper identification information; (4) the proceeds of the redemption do not exceed $50,000; and (5) you have not previously declined the telephone redemption privilege. Certain accounts, including retirement accounts and 403(b) plans, may not be redeemed by telephone. The transfer agent must receive your call during the hours of the customary trading session of the New York Stock Exchange (NYSE) in order to effect the redemption at that day's closing price. By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will be allowed to redeem by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; (3) the proceeds of the redemption do not exceed $50,000; and (4) you have established the internet trading option. AIM prototype retirement accounts may not be redeemed on the internet. The transfer agent must confirm your transaction during the hours of the customary trading session of the NYSE in order to effect the redemption at that day's closing price.
- ------------------------------------------------------------------------------- TIMING AND METHOD OF PAYMENT We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared. REDEMPTION BY MAIL If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares. REDEMPTION BY TELEPHONE If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine. REDEMPTION BY INTERNET If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine. PAYMENT FOR SYSTEMATIC WITHDRAWALS You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent. EXPEDITED REDEMPTIONS (AIM Cash Reserve Shares of AIM Money Market Fund only) If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day. A-5 MCF--03/00 32 -------------- THE AIM FUNDS -------------- REDEMPTIONS BY CHECK (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only) You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts. SIGNATURE GUARANTEES We require a signature guarantee when you redeem by mail and (1) the amount is greater than $50,000; (2) you request that payment be made to someone other than the name registered on the account; (3) you request that payment be sent somewhere other than the bank of record on the account; or (4) you request that payment be sent to a new address or an address that changed in the last 30 days. The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution. REINSTATEMENT PRIVILEGE (Class A shares only) You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year. REDEMPTIONS BY THE AIM FUNDS If your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months, and the value of your account falls below $500 for three consecutive months due to redemptions or exchanges (excluding retirement accounts), the AIM Funds have the right to redeem the account after giving you 60 days' prior written notice. You may avoid having your account redeemed during the notice period by bringing the account value up to $500 or by utilizing the Automatic Investment Plan. If an AIM Fund determines that you have not provided a correct Social Security or other tax ID number on your account application, the AIM Fund may, at its discretion, redeem the account and distribute the proceeds to you. EXCHANGING SHARES You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. PERMITTED EXCHANGES Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange. YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING: (1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund; (2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for (a) one another; (b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or (c) Class A shares of another AIM Fund, but only if (i) you acquired the original shares before May 1, 1994; or (ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges; (3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for (a) one another; (b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares (i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge; MCF--03/00 A-6 33 -------------- THE AIM FUNDS -------------- (ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or (c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or (4) Class B shares for other Class B shares, and Class C shares for other Class C shares. (5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares. EXCHANGES NOT PERMITTED You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund. EXCHANGE CONDITIONS The following conditions apply to all exchanges: - - You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging; - - Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence; - - Exchanges must be made between accounts with identical registration information; - - The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9); - - Shares must have been held for at least one day prior to the exchange; - - If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and - - You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund. TERMS OF EXCHANGE Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time. BY MAIL If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made. BY TELEPHONE Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days. BY INTERNET You will be allowed to exchange by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; and (3) you have established the internet trading option. EXCHANGING CLASS B AND CLASS C SHARES If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares. - ------------------------------------------------------------------------------- EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO: - REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; - MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; - REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR - WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS. ------------------------------------------------------------------------------ A-7 MCF--03/00 34 -------------- THE AIM FUNDS -------------- PRICING OF SHARES DETERMINATION OF NET ASSET VALUE The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares. Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business. TIMING OF ORDERS You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading. TAXES In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year. Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax. INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS. The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing. MCF--03/00 A-8 35 ----------------------------- AIM EUROPEAN DEVELOPMENT FUND ----------------------------- OBTAINING ADDITIONAL INFORMATION - -------------------------------------------------------------------------------- More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us - --------------------------------------------------------- BY MAIL: A I M Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 BY TELEPHONE: (800) 347-4246 BY E-MAIL: general@aimfunds.com ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and semiannual reports only)
- --------------------------------------------------------- You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room. - ----------------------------------- AIM European Development Fund SEC 1940 Act file number: 811-6463 - ----------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com EDF-PRO-1 INVEST WITH DISCIPLINE -- Registered Trademark -- 36 AIM GLOBAL AGGRESSIVE GROWTH FUND ------------------------------------------------------------------------ AIM Global Aggressive Growth Fund seeks to provide above-average long-term growth of capital. AIM-- Registered Trademark -- PROSPECTUS MAY 22, 2000 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- 37 --------------------------------- AIM GLOBAL AGGRESSIVE GROWTH FUND --------------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with Discipline are registered service marks and AIM Bank Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM Investor are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 38 --------------------------------- AIM GLOBAL AGGRESSIVE GROWTH FUND --------------------------------- INVESTMENT OBJECTIVE AND STRATEGIES - -------------------------------------------------------------------------------- The fund's investment objective is above-average long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval. The fund seeks to meet its objective by investing, normally, at least 65% of its total assets in marketable equity securities of domestic and foreign issuers. The fund will normally invest in the securities of small- and medium-sized growth companies located in at least four countries, including the United States, and will usually maintain at least 20% of its total assets in U.S. dollar denominated securities. The fund emphasizes investment in companies in developed countries such as the United States, the countries of Western Europe and certain countries in the Pacific Basin. The fund may also invest in companies located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund may invest up to 20% of its total assets in securities exchangeable for or convertible into marketable equity securities of foreign and domestic issuers. The fund may also invest up to 35% of its total assets in high-grade short-term securities and in debt securities, including U.S. Government obligations, investment grade corporate bonds or taxable municipal securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase. The portfolio managers focus on companies that have experienced above-average long-term growth in earnings and have excellent prospects for future growth. In selecting countries in which the fund will invest, the portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The portfolio managers consider whether to sell a particular security when any of these factors materially changes. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective. PRINCIPAL RISKS OF INVESTING IN THE FUND - -------------------------------------------------------------------------------- There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. This is especially true with respect to equity securities of small- and medium-sized companies, whose prices may go up and down more than the prices of equity securities of larger, more established companies. Also, since equity securities of small- and medium-sized companies may not be traded as often as equity securities of larger, more established companies, it may be difficult or impossible for the fund to sell securities at a desired price. The prices of foreign securities may be further affected by other factors, including: - - Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. - - Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries. - - Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. - - Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities. These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures. An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 1 39 --------------------------------- AIM GLOBAL AGGRESSIVE GROWTH FUND --------------------------------- PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance. ANNUAL TOTAL RETURNS - -------------------------------------------------------------------------------- The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower. [GRAPH]
ANNUAL YEAR ENDED TOTAL DECEMBER 31 RETURNS - ----------- ------- 1995 ........................................... 32.15% 1996 ........................................... 23.53% 1997 ........................................... 4.03% 1998 ........................................... 3.93% 1999 ........................................... 70.58%
The Class A shares' year-to-date total return as of March 31, 2000 was %. During the periods shown in the bar chart, the highest quarterly return was 49.33% (quarter ended December 31, 1999) and the lowest quarterly return was - -20.76% (quarter ended September 30, 1998). PERFORMANCE TABLE The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - ------------------------------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS INCEPTION DATE - ------------------------------------------------------------------------------------ Class A 62.50% 23.46% 22.18% 09/15/94 Class B 64.64 23.80 22.56 09/15/94 Class C 68.64 -- 21.42 08/04/97 MSCI AC World Index(1) 27.31 18.90 16.78 08/31/94(2) - ------------------------------------------------------------------------------------
(1) The Morgan Stanley Capital International All Country World Index measures the performance of securities listed on the major world stock exchanges of 47 markets, including both developed and emerging markets. (2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history. 2 40 --------------------------------- AIM GLOBAL AGGRESSIVE GROWTH FUND --------------------------------- FEE TABLE AND EXPENSE EXAMPLE - -------------------------------------------------------------------------------- FEE TABLE This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - --------------------------------------------------------- (fees paid directly from your investment) CLASS A CLASS B CLASS C - --------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.75% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% - ---------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES - ------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C - ------------------------------------------------------- Management Fees 0.88% 0.88% 0.88% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.42 0.49 0.49 Total Annual Fund Operating Expenses 1.80 2.37 2.37 - -------------------------------------------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption. As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge. EXPENSE EXAMPLE This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $649 $1,014 $1,404 $2,490 Class B 740 1,039 1,465 2,565 Class C 340 739 1,265 2,706 - ----------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $649 $1,014 $1,404 $2,490 Class B 240 739 1,265 2,565 Class C 240 739 1,265 2,706 - ----------------------------------------------
3 41 --------------------------------- AIM GLOBAL AGGRESSIVE GROWTH FUND --------------------------------- FUND MANAGEMENT - -------------------------------------------------------------------------------- THE ADVISOR A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 1999, the advisor received compensation of 0.88% of average daily net assets. PORTFOLIO MANAGERS The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio, all of whom are officers of A I M Capital Management, Inc., a wholly owned subsidiary of the advisor, are - - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1994 and has been associated with the advisor and/or its affiliates since 1989. - - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996, he was an associate with JMB Realty. - - Robert M. Kippes, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1994 and has been associated with the advisor and/or its affiliates since 1989. - - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1994. - - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1990. - - Kenneth A. Zschappel, Senior Portfolio Manager, who has been responsible for the fund since 1998 and has been associated with the advisor and/or its affiliates since 1990. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM Global Aggressive Growth Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 4 42 --------------------------------- AIM GLOBAL AGGRESSIVE GROWTH FUND --------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A --------------------------------------------------------------------- YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 15.87 $ 17.28 $ 15.76 $ 13.09 $ 10.22 Income from investment operations: Net investment income (loss)(a) (0.17) (0.10) (0.15) (0.09) (0.09) Net gains (losses) on securities (both realized and unrealized) 6.25 (1.31) 1.67 2.81 2.96 Total from investment operations 6.08 (1.41) 1.52 2.72 2.87 Less distributions: Distributions from net realized gains -- -- -- (0.05) -- Net asset value, end of period $ 21.95 $ 15.87 $ 17.28 $ 15.76 $ 13.09 Total return(b) 38.31% (8.16)% 9.65% 20.83% 28.08% - ---------------------------------------------------------------------------------------------------------------------------- Ratios/supplemental data: - ---------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $852,198 $937,587 $1,242,505 $919,319 $186,029 Ratio of expenses to average net assets 1.80%(c) 1.75% 1.75% 1.83% 2.11% Ratio of net investment income (loss) to average net assets (0.95)%(c) (0.55)% (0.88)% (0.62)% (0.68)% Portfolio turnover rate 60% 50% 57% 44% 64% - ----------------------------------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges. (c) Ratios are based on average net assets of $841,985,823. 5 43 --------------------------------- AIM GLOBAL AGGRESSIVE GROWTH FUND --------------------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS B ----------------------------------------------------------- YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995 - -------------------------------------------------------------------------------------------------------- Net asset value, beginning of per $ 15.52 $ 17.00 $ 15.58 $ 13.02 $ 10.21 Income from investment operations: Net investment income (loss) (0.27)(a) (0.19)(a) (0.24)(a) (0.17)(a) (0.14)(a) Net gains (losses) on securities (both realized and unrealized) 6.10 (1.29) 1.66 2.78 2.95 Total from investment operations 5.83 (1.48) 1.42 2.61 2.81 Less distributions: Distributions from net realized gains -- -- -- (0.05) -- Net asset value, end of period $ 21.35 $ 15.52 $ 17.00 $ 15.58 $ 13.02 Total return(b) 37.56% (8.71)% 9.11% 20.09% 27.52% - -------------------------------------------------------------------------------------------------------- Ratios/supplement data: - -------------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $926,972 $947,293 $1,241,999 $807,215 $118,199 Ratio of expenses to average net assets 2.37%(c) 2.32% 2.30% 2.37% 2.62% Ratio of net investment income (loss) to average net assets (1.52)%(c) (1.11)% (1.44)% (1.16)% (1.19)% Portfolio turnover rate 60% 50% 57% 44% 64% - --------------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average net assets of $898,782,589.
CLASS C ---------------------------------------------- FOR THE PERIOD YEAR ENDED AUGUST 4, OCTOBER 31, THROUGH -------------------- OCTOBER 31, 1999 1998 1997 - -------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 15.52 $ 17.00 $18.39 Income from investment operations: Net investment income (loss) (0.27)(a) (0.19)(a) (0.04)(a) Net gains (losses) on securities (both realized and 6.10 (1.29) (1.35) unrealized) Total from investment operations 5.83 (1.48) (1.39) Less distributions: Distributions from net realized gains -- -- -- Net asset value, end of period $ 21.35 $ 15.52 $17.00 Total return(b) 37.56% (8.71)% (7.56)% - -------------------------------------------------------------------------------------------------------------- Ratios/supplement data: - -------------------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $16,325 $13,186 $4,676 Ratio of expenses to average net assets 2.37%(c) 2.34% 2.36%(d) Ratio of net investment income (loss) to average net assets (1.52)%(c) (1.13)% (1.50)%(d) Portfolio turnover rate 60% 50% 57% - --------------------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average net assets of $14,098,451. (d) Annualized. 6 44 ------------- THE AIM FUNDS ------------- SHAREHOLDER INFORMATION - -------------------------------------------------------------------------------- In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds. CHOOSING A SHARE CLASS Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C - --------------------------------------------------------------------------------------------------------- - - Initial sales charge - No initial sales charge - No initial sales charge - - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales charge for certain purchases charge on redemptions within charge on redemptions within six years one year - - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00% (12b-1) fee than Class B or Class C shares (See "Fee Table and Expense Example") - Converts to Class A shares - Does not convert to Class A after eight years along with a shares pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares. AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund seven years after the end of the month in which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until eight years after the end of the month in which you purchased your original shares. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. SALES CHARGES Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge. INITIAL SALES CHARGES The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 25,000 5.50% 5.82% $ 25,000 but less than $ 50,000 5.25 5.54 $ 50,000 but less than $ 100,000 4.75 4.99 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 3.00 3.09 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
A-1 MCF--03/00 45 ------------- THE AIM FUNDS -------------
CATEGORY II INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 50,000 4.75% 4.99% $ 50,000 but less than $ 100,000 4.00 4.17 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 2.50 2.56 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
CATEGORY III INITIAL SALES CHARGES - ------------------------------------------------------------- INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 100,000 1.00% 1.01% $100,000 but less than $ 250,000 0.75 0.76 $250,000 but less than $1,000,000 0.50 0.50 - -------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more. CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE PURCHASE MADE CLASS B CLASS C - ---------------------------------------------------------- First 5% 1% Second 4 None Third 3 None Fourth 3 None Fifth 2 None Sixth 1 None Seventh and following None None - ----------------------------------------------------------
COMPUTING A CDSC The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase. REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment. REDUCED SALES CHARGES You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances. Rights of Accumulation You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own. Letters of Intent Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested. INITIAL SALES CHARGE EXCEPTIONS You will not pay initial sales charges - - on shares purchased by reinvesting dividends and distributions; - - when exchanging shares among certain AIM Funds; - - when using the reinstatement privilege; and - - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs. CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS You will not pay a CDSC - - if you redeem Class B shares you held for more than six years; - - if you redeem Class C shares you held for more than one year; - - if you redeem shares acquired through reinvestment of dividends and distributions; and - - on increases in the net asset value of your shares. There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details. MCF--03/00 A-2 46 -------------- THE AIM FUNDS -------------- PURCHASING SHARES MINIMUM INVESTMENTS PER AIM FUND ACCOUNT The minimum investments for AIM Fund accounts (except for investments in AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL TYPE OF ACCOUNT INVESTMENTS INVESTMENTS - ----------------------------------------------------------------------------------------------------------- Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25 plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans) (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 plans) Automatic Investment Plans 50 50 IRA, Education IRA or Roth IRA 250 50 All other accounts 500 50 - ----------------------------------------------------------------------------------------------------------
HOW TO PURCHASE SHARES You may purchase shares using one of the options below.
PURCHASE OPTIONS - --------------------------------------------------------------------------------------------------------- OPENING AN ACCOUNT ADDING TO AN ACCOUNT - --------------------------------------------------------------------------------------------------------- Through a Financial Consultant Contact your financial consultant. Same By Mail Mail completed account application Mail your check and the remittance and purchase payment to the slip from your confirmation transfer agent, statement to the transfer agent. A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. By Wire Mail completed account application Call the transfer agent to receive to the transfer agent. Call the a reference number. Then, use the transfer agent at (800) 959-4246 to wire instructions at left. receive a reference number. Then, use the following wire instructions: Beneficiary Bank ABA/Routing #: 113000609 Beneficiary Account Number: 00100366807 Beneficiary Account Name: A I M Fund Services, Inc. RFB: Fund Name, Reference # OBI: Your Name, Account # By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection methods described above. form to the transfer agent. Once the transfer agent has received the form, call the transfer agent to place your purchase order. By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect methods described above. option on your completed account application or complete an AIM Internet Connect Authorization Form. Mail the application or form to the transfer agent. Once your request for this option has been processed (which may take up to 10 days), you may place your purchase order at www.aimfunds.com. The maximum purchase amount per transaction is $100,000. You may not purchase shares in AIM prototype retirement accounts on the internet. - ----------------------------------------------------------------------------------------------------------
A-3 MCF--03/00 47 ------------- THE AIM FUNDS ------------- SPECIAL PLANS AUTOMATIC INVESTMENT PLAN You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal. DOLLAR COST AVERAGING Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50. AUTOMATIC DIVIDEND INVESTMENT All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa. You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund: (1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500; (2) Both accounts must have identical registration information; and (3) You must have completed an authorization form to reinvest dividends into another AIM Fund. PORTFOLIO REBALANCING PROGRAM If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice. RETIREMENT PLANS Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details. REDEEMING SHARES REDEMPTION FEES Generally, we will not charge you any fees to redeem your shares. However, if you acquired Class A shares of AIM Developing Markets Fund in connection with the reorganization of AIM Eastern Europe Fund, you will be charged a redemption fee of 2% of the net asset value of those shares, which will be paid to AIM Developing Markets Fund, if you redeem your shares within the first year after the reorganization. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC). REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC. REDEMPTION OF CLASS B SHARES OR CLASS C SHARES ACQUIRED BY EXCHANGE FROM AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares. REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares. MCF--03/00 A-4 48 ------------- THE AIM FUNDS ------------- HOW TO REDEEM SHARES - -------------------------------------------------------------------------------- Through a Financial Contact your financial consultant. Consultant By Mail Send a written request to the transfer agent. Requests must include (1) original signatures of all registered owners; (2) the name of the AIM Fund and your account number; (3) if the transfer agent does not hold your shares, endorsed share certificates or share certificates accompanied by an executed stock power; and (4) signature guarantees, if necessary (see below). The transfer agent may require that you provide additional information, such as corporate resolutions or powers of attorney, if applicable. If you are redeeming from an IRA account, you must include a statement of whether or not you are at least 59 1/2 years old and whether you wish to have federal income tax withheld from your proceeds. The transfer agent may require certain other information before you can redeem from an employer-sponsored retirement plan. Contact your employer for details. By Telephone Call the transfer agent. You will be allowed to redeem by telephone if (1) the proceeds are to be mailed to the address on record (if there has been no change communicated to us within the last 30 days) or transferred electronically to a pre-authorized checking account; (2) you do not hold physical share certificates; (3) you can provide proper identification information; (4) the proceeds of the redemption do not exceed $50,000; and (5) you have not previously declined the telephone redemption privilege. Certain accounts, including retirement accounts and 403(b) plans, may not be redeemed by telephone. The transfer agent must receive your call during the hours of the customary trading session of the New York Stock Exchange (NYSE) in order to effect the redemption at that day's closing price. By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will be allowed to redeem by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; (3) the proceeds of the redemption do not exceed $50,000; and (4) you have established the internet trading option. AIM prototype retirement accounts may not be redeemed on the internet. The transfer agent must confirm your transaction during the hours of the customary trading session of the NYSE in order to effect the redemption at that day's closing price.
- ------------------------------------------------------------------------------- TIMING AND METHOD OF PAYMENT We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared. REDEMPTION BY MAIL If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares. REDEMPTION BY TELEPHONE If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine. REDEMPTION BY INTERNET If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine. PAYMENT FOR SYSTEMATIC WITHDRAWALS You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent. EXPEDITED REDEMPTIONS (AIM Cash Reserve Shares of AIM Money Market Fund only) If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day. A-5 MCF--03/00 49 -------------- THE AIM FUNDS -------------- REDEMPTIONS BY CHECK (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only) You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts. SIGNATURE GUARANTEES We require a signature guarantee when you redeem by mail and (1) the amount is greater than $50,000; (2) you request that payment be made to someone other than the name registered on the account; (3) you request that payment be sent somewhere other than the bank of record on the account; or (4) you request that payment be sent to a new address or an address that changed in the last 30 days. The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution. REINSTATEMENT PRIVILEGE (Class A shares only) You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year. REDEMPTIONS BY THE AIM FUNDS If your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months, and the value of your account falls below $500 for three consecutive months due to redemptions or exchanges (excluding retirement accounts), the AIM Funds have the right to redeem the account after giving you 60 days' prior written notice. You may avoid having your account redeemed during the notice period by bringing the account value up to $500 or by utilizing the Automatic Investment Plan. If an AIM Fund determines that you have not provided a correct Social Security or other tax ID number on your account application, the AIM Fund may, at its discretion, redeem the account and distribute the proceeds to you. EXCHANGING SHARES You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. PERMITTED EXCHANGES Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange. YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING: (1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund; (2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for (a) one another; (b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or (c) Class A shares of another AIM Fund, but only if (i) you acquired the original shares before May 1, 1994; or (ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges; (3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for (a) one another; (b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares (i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge; MCF--03/00 A-6 50 -------------- THE AIM FUNDS -------------- (ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or (c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or (4) Class B shares for other Class B shares, and Class C shares for other Class C shares. (5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares. EXCHANGES NOT PERMITTED You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund. EXCHANGE CONDITIONS The following conditions apply to all exchanges: - - You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging; - - Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence; - - Exchanges must be made between accounts with identical registration information; - - The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9); - - Shares must have been held for at least one day prior to the exchange; - - If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and - - You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund. TERMS OF EXCHANGE Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time. BY MAIL If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made. BY TELEPHONE Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days. BY INTERNET You will be allowed to exchange by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; and (3) you have established the internet trading option. EXCHANGING CLASS B AND CLASS C SHARES If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares. - ------------------------------------------------------------------------------- EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO: - REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; - MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; - REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR - WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS. ------------------------------------------------------------------------------ A-7 MCF--03/00 51 -------------- THE AIM FUNDS -------------- PRICING OF SHARES DETERMINATION OF NET ASSET VALUE The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares. Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business. TIMING OF ORDERS You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading. TAXES In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year. Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax. INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS. The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing. MCF--03/00 A-8 52 --------------------------------- AIM GLOBAL AGGRESSIVE GROWTH FUND --------------------------------- OBTAINING ADDITIONAL INFORMATION - -------------------------------------------------------------------------------- More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us - --------------------------------------------------------- BY MAIL: A I M Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 BY TELEPHONE: (800) 347-4246 BY E-MAIL: general@aimfunds.com ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and semiannual reports only)
- --------------------------------------------------------- You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room. ----------------------------------- AIM Global Aggressive Growth Fund SEC 1940 Act file number: 811-6463 ----------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com GLA-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- 53 AIM GLOBAL GROWTH FUND ------------------------------------------------------------------------ AIM Global Growth Fund seeks to provide long-term growth of capital. AIM--Registered Trademark-- PROSPECTUS MAY 22, 2000 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE --Registered Trademark-- 54 ----------------------- AIM GLOBAL GROWTH FUND ----------------------- TABLE OF CONTENTS - ----------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGIES 1 - ----------------------------------------------- PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - ----------------------------------------------- PERFORMANCE INFORMATION 2 - ----------------------------------------------- Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - ----------------------------------------------- Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - ----------------------------------------------- The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 - ----------------------------------------------- Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 - ----------------------------------------------- SHAREHOLDER INFORMATION A-1 - ----------------------------------------------- Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - -----------------------------------------------
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with Discipline are registered service marks and AIM Bank Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM Investor are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 55 ----------------------- AIM GLOBAL GROWTH FUND ----------------------- INVESTMENT OBJECTIVE AND STRATEGIES - -------------------------------------------------------------------------------- The fund's investment objective is long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval. The fund seeks to meet its objective by investing, normally, at least 65% of its total assets in marketable equity securities of domestic and foreign issuers. The fund will normally invest in the securities of medium- and large-sized growth companies located in at least four countries, including the United States, and will usually maintain at least 20% of its total assets in U.S. dollar denominated securities. The fund emphasizes investment in companies in developed countries such as the United States, the countries of Western Europe and certain countries in the Pacific Basin. The fund may also invest in companies located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund may invest up to 20% of its total assets in securities exchangeable for or convertible into marketable equity securities of foreign and domestic issuers. The fund may also invest up to 35% of its total assets in high-grade short-term securities and in debt securities, including U.S. Government obligations, investment-grade corporate bonds or taxable municipal securities. Any percentage limitations with respect to assets of the fund are applied at the time of purchase. The portfolio managers focus on companies that have experienced above-average long-term growth in earnings and have excellent prospects for future growth. In selecting countries in which the fund will invest, the fund's portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The fund's portfolio managers consider whether to sell a particular security when any of these factors materially changes. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective. PRINCIPAL RISKS OF INVESTING IN THE FUND - -------------------------------------------------------------------------------- There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. The prices of foreign securities may be further affected by other factors, including: - - Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. - - Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries. - - Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. - - Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities. These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures. An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 1 56 ----------------------- AIM GLOBAL GROWTH FUND ----------------------- PERFORMANCE INFORMATION - ------------------------------------------------------------------------------- The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance. ANNUAL TOTAL RETURNS - ------------------------------------------------------------------------------- The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower. [GRAPH]
ANNUAL YEAR ENDED TOTAL DECEMBER 31 RETURNS - ----------- ------- 1995 ........................................... 30.09% 1996 ........................................... 19.87% 1997 ........................................... 13.85% 1998 ........................................... 22.08% 1999 ........................................... 52.20%
The Class A shares' year-to-date total return as of March 31, 2000 was %. During the periods shown in the bar chart, the highest quarterly return was 38.05% (quarter ended December 31, 1999) and the lowest quarterly return was - -12.38% (quarter ended September 30, 1998). PERFORMANCE TABLE The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - ---------------------------------------------------------------------- (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS INCEPTION DATE - ---------------------------------------------------------------------- Class A 44.99% 25.72% 23.59% 09/15/94 Class B 46.36 26.12 23.99 09/15/94 Class C 50.34 -- 26.76 08/04/97 MSCI AC World Index(1) 27.31 18.90 16.78 08/31/94(2) - ----------------------------------------------------------------------
(1) The Morgan Stanley Capital International All Country World Index measures the performance of securities listed on the major world stock exchanges of 47 markets, including both developed and emerging markets. (2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history. 2 57 ----------------------- AIM GLOBAL GROWTH FUND ----------------------- FEE TABLE AND EXPENSE EXAMPLE - -------------------------------------------------------------------------------- FEE TABLE This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - ------------------------------------------------------------ (fees paid directly from your investment) CLASS A CLASS B CLASS C - ------------------------------------------------------------ Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.75% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% - ------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES - ----------------------------------------------------------- (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C - ----------------------------------------------------------- Management Fees 0.85% 0.85% 0.85% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.32 0.38 0.38 Total Annual Fund Operating Expenses 1.67 2.23 2.23 - -----------------------------------------------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption. As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge. EXPENSE EXAMPLE This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's operating expenses remain the same. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - -------------------------------------------------- Class A $637 $ 976 $1,339 $2,357 Class B 726 997 1,395 2,424 Class C 326 697 1,195 2,565 - --------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - -------------------------------------------------- Class A $637 $976 $1,339 $2,357 Class B 226 697 1,195 2,424 Class C 226 697 1,195 2,565 - --------------------------------------------------
3 58 ---------------------- AIM GLOBAL GROWTH FUND ---------------------- FUND MANAGEMENT - -------------------------------------------------------------------------------- THE ADVISOR A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 1999, the advisor received compensation of 0.85% of average daily net assets. PORTFOLIO MANAGERS The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio, all of whom are officers of A I M Capital Management, Inc., a wholly owned subsidiary of the advisor, are - - Monika H. Degan, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1995. From 1991 to 1995, she was Senior Financial Analyst for Shell Oil Co. Pension Trust. - - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1994 and has been associated with the advisor and/or its affiliates since 1989. - - Benjamin A. Hock, Jr., Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1994 to 1999, he was, among other offices, head of equity research at John Hancock Advisers, Inc. - - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 2000 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996, he was an associate with JMB Realty. - - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1994. - - Jonathan C. Schoolar, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1994 and has been associated with the advisor and/or its affiliates since 1986. - - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1990. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM Global Growth Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 4 59 ---------------------- AIM GLOBAL GROWTH FUND ---------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A ----------------------------------------------------------- YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 17.91 $ 16.65 $ 14.20 $ 12.32 $ 10.23 Income from investment operations: Net investment income (loss) (0.10) (0.05) (0.04) (0.01) (0.02) Net gains on securities (both realized and unrealized) 6.12 1.74 2.49 2.11 2.11 Total from investment operations 6.02 1.69 2.45 2.10 2.09 Less distributions: Dividends from net investment income -- -- -- -- (0.004) Distributions from net realized gains (0.50) (0.43) -- (0.22) -- Total distributions (0.50) (0.43) -- (0.22) (0.004) Net asset value, end of period $ 23.43 $ 17.91 $ 16.65 $ 14.20 $ 12.32 Total return(a) 34.43% 10.43% 17.25% 17.26% 20.48% - ------------------------------------------------------------------------------------------------------------- Ratios/supplemental data: - ------------------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $388,549 $219,050 $178,917 $114,971 $23,754 Ratio of expenses to average net assets(b) 1.67%(c) 1.70% 1.76% 1.93% 2.12% Ratio of net investment income (loss) to average net assets(d) (0.57)%(c) (0.27)% (0.30)% (0.13)% (0.28)% Portfolio turnover rate 93% 97% 96% 82% 79% - -------------------------------------------------------------------------------------------------------------
(a) Does not deduct sales charges. (b) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.94% and 2.98% for 1996-1995. (c) Ratios are based on average net assets of $317,044,851. (d) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.14)% and (1.14)% for 1996-1995. 5 60 ---------------------- AIM GLOBAL GROWTH FUND ---------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS B ----------------------------------------------------------- YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 17.52 $ 16.39 $ 14.05 $ 12.26 $ 10.22 Income from investment operations: Net investment income (loss) (0.23)(a) (0.15)(a) (0.11) (0.05) (0.04) Net gains (losses) on securities (both realized and unrealized) 5.99 1.71 2.45 2.06 2.08 Total from investment operations 5.76 1.56 2.34 2.01 2.04 Less distributions: Distributions from net realized gains (0.50) (0.43) -- (0.22) -- Total distributions (0.50) (0.43) -- (0.22) -- Net asset value, end of period $ 22.78 $ 17.52 $ 16.39 $ 14.05 $ 12.26 Total return(b) 33.69% 9.78% 16.65% 16.60% 19.96% - --------------------------------------------------------------------------------------------------------------- Ratios/supplemental data: - --------------------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $425,345 $282,456 $224,225 $121,848 $17,157 Ratio of expenses to average net assets(d) 2.23%(c) 2.26% 2.29% 2.48% 2.64% Ratio of net investment income (loss) to average net assets(e) (1.13)%(c) (0.83)% (0.83)% (0.69)% (0.79)% Portfolio turnover rate 93% 97% 96% 82% 79% - ---------------------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges. (c) Ratios are based on average net assets of $356,402,709. (d) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.49% and 3.38% for 1996-1995. (e) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.69)% and (1.54)% for 1996-1995. 6 61 ---------------------- AIM GLOBAL GROWTH FUND ---------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS C - ------------------------------------------------------------------------------------------------------- FOR THE PERIOD AUGUST 4, YEAR ENDED OCTOBER 31, THROUGH ----------------------- OCTOBER 31, 1999 1998 1997 - ------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 17.52 $ 16.39 $17.39 Income from investment operations: Net investment income (loss) (0.23)(a) (0.15)(a) (0.03) Net gains (losses) on securities (both realized and unrealized) 6.00 1.71 (0.97) Total from investment operations 5.77 1.56 (1.00) Less distributions: Distributions from net realized gains (0.50) (0.43) -- Total distributions (0.50) (0.43) -- Net asset value, end of period $ 22.79 $ 17.52 $16.39 Total return(b) 33.69% 9.78% (5.75)% - ------------------------------------------------------------------------------------------------------- Ratios/supplemental data: - ------------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $31,356 $11,765 $1,100 Ratio of expenses to average net assets 2.23%(c) 2.26% 2.29%(d) Ratio of net investment income (loss) to average net assets (1.13)%(c) (0.83)% (0.83)%(d) Portfolio turnover rate 93% 97% 96% - -------------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average net assets of $20,512,721. (d) Annualized. 7 62 ------------- THE AIM FUNDS ------------- SHAREHOLDER INFORMATION - -------------------------------------------------------------------------------- In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds. CHOOSING A SHARE CLASS Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C - --------------------------------------------------------------------------------------------------------- - - Initial sales charge - No initial sales charge - No initial sales charge - - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales charge for certain purchases charge on redemptions within charge on redemptions within six years one year - - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00% (12b-1) fee than Class B or Class C shares (See "Fee Table and Expense Example") - Converts to Class A shares - Does not convert to Class A after eight years along with a shares pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares. AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund seven years after the end of the month in which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until eight years after the end of the month in which you purchased your original shares. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. SALES CHARGES Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge. INITIAL SALES CHARGES The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 25,000 5.50% 5.82% $ 25,000 but less than $ 50,000 5.25 5.54 $ 50,000 but less than $ 100,000 4.75 4.99 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 3.00 3.09 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
A-1 MCF--03/00 63 ------------- THE AIM FUNDS -------------
CATEGORY II INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 50,000 4.75% 4.99% $ 50,000 but less than $ 100,000 4.00 4.17 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 2.50 2.56 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
CATEGORY III INITIAL SALES CHARGES - ------------------------------------------------------------- INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 100,000 1.00% 1.01% $100,000 but less than $ 250,000 0.75 0.76 $250,000 but less than $1,000,000 0.50 0.50 - -------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more. CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE PURCHASE MADE CLASS B CLASS C - ---------------------------------------------------------- First 5% 1% Second 4 None Third 3 None Fourth 3 None Fifth 2 None Sixth 1 None Seventh and following None None - ----------------------------------------------------------
COMPUTING A CDSC The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase. REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment. REDUCED SALES CHARGES You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances. Rights of Accumulation You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own. Letters of Intent Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested. INITIAL SALES CHARGE EXCEPTIONS You will not pay initial sales charges - - on shares purchased by reinvesting dividends and distributions; - - when exchanging shares among certain AIM Funds; - - when using the reinstatement privilege; and - - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs. CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS You will not pay a CDSC - - if you redeem Class B shares you held for more than six years; - - if you redeem Class C shares you held for more than one year; - - if you redeem shares acquired through reinvestment of dividends and distributions; and - - on increases in the net asset value of your shares. There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details. MCF--03/00 A-2 64 -------------- THE AIM FUNDS -------------- PURCHASING SHARES MINIMUM INVESTMENTS PER AIM FUND ACCOUNT The minimum investments for AIM Fund accounts (except for investments in AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL TYPE OF ACCOUNT INVESTMENTS INVESTMENTS - ----------------------------------------------------------------------------------------------------------- Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25 plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans) (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 plans) Automatic Investment Plans 50 50 IRA, Education IRA or Roth IRA 250 50 All other accounts 500 50 - ----------------------------------------------------------------------------------------------------------
HOW TO PURCHASE SHARES You may purchase shares using one of the options below.
PURCHASE OPTIONS - --------------------------------------------------------------------------------------------------------- OPENING AN ACCOUNT ADDING TO AN ACCOUNT - --------------------------------------------------------------------------------------------------------- Through a Financial Consultant Contact your financial consultant. Same By Mail Mail completed account application Mail your check and the remittance and purchase payment to the slip from your confirmation transfer agent, statement to the transfer agent. A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. By Wire Mail completed account application Call the transfer agent to receive to the transfer agent. Call the a reference number. Then, use the transfer agent at (800) 959-4246 to wire instructions at left. receive a reference number. Then, use the following wire instructions: Beneficiary Bank ABA/Routing #: 113000609 Beneficiary Account Number: 00100366807 Beneficiary Account Name: A I M Fund Services, Inc. RFB: Fund Name, Reference # OBI: Your Name, Account # By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection methods described above. form to the transfer agent. Once the transfer agent has received the form, call the transfer agent to place your purchase order. By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect methods described above. option on your completed account application or complete an AIM Internet Connect Authorization Form. Mail the application or form to the transfer agent. Once your request for this option has been processed (which may take up to 10 days), you may place your purchase order at www.aimfunds.com. The maximum purchase amount per transaction is $100,000. You may not purchase shares in AIM prototype retirement accounts on the internet. - ----------------------------------------------------------------------------------------------------------
A-3 MCF--03/00 65 ------------- THE AIM FUNDS ------------- SPECIAL PLANS AUTOMATIC INVESTMENT PLAN You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal. DOLLAR COST AVERAGING Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50. AUTOMATIC DIVIDEND INVESTMENT All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa. You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund: (1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500; (2) Both accounts must have identical registration information; and (3) You must have completed an authorization form to reinvest dividends into another AIM Fund. PORTFOLIO REBALANCING PROGRAM If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice. RETIREMENT PLANS Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details. REDEEMING SHARES REDEMPTION FEES Generally, we will not charge you any fees to redeem your shares. However, if you acquired Class A shares of AIM Developing Markets Fund in connection with the reorganization of AIM Eastern Europe Fund, you will be charged a redemption fee of 2% of the net asset value of those shares, which will be paid to AIM Developing Markets Fund, if you redeem your shares within the first year after the reorganization. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC). REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC. REDEMPTION OF CLASS B SHARES OR CLASS C SHARES ACQUIRED BY EXCHANGE FROM AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares. REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares. MCF--03/00 A-4 66 ------------- THE AIM FUNDS ------------- HOW TO REDEEM SHARES - -------------------------------------------------------------------------------- Through a Financial Contact your financial consultant. Consultant By Mail Send a written request to the transfer agent. Requests must include (1) original signatures of all registered owners; (2) the name of the AIM Fund and your account number; (3) if the transfer agent does not hold your shares, endorsed share certificates or share certificates accompanied by an executed stock power; and (4) signature guarantees, if necessary (see below). The transfer agent may require that you provide additional information, such as corporate resolutions or powers of attorney, if applicable. If you are redeeming from an IRA account, you must include a statement of whether or not you are at least 59 1/2 years old and whether you wish to have federal income tax withheld from your proceeds. The transfer agent may require certain other information before you can redeem from an employer-sponsored retirement plan. Contact your employer for details. By Telephone Call the transfer agent. You will be allowed to redeem by telephone if (1) the proceeds are to be mailed to the address on record (if there has been no change communicated to us within the last 30 days) or transferred electronically to a pre-authorized checking account; (2) you do not hold physical share certificates; (3) you can provide proper identification information; (4) the proceeds of the redemption do not exceed $50,000; and (5) you have not previously declined the telephone redemption privilege. Certain accounts, including retirement accounts and 403(b) plans, may not be redeemed by telephone. The transfer agent must receive your call during the hours of the customary trading session of the New York Stock Exchange (NYSE) in order to effect the redemption at that day's closing price. By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will be allowed to redeem by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; (3) the proceeds of the redemption do not exceed $50,000; and (4) you have established the internet trading option. AIM prototype retirement accounts may not be redeemed on the internet. The transfer agent must confirm your transaction during the hours of the customary trading session of the NYSE in order to effect the redemption at that day's closing price.
- ------------------------------------------------------------------------------- TIMING AND METHOD OF PAYMENT We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared. REDEMPTION BY MAIL If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares. REDEMPTION BY TELEPHONE If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine. REDEMPTION BY INTERNET If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine. PAYMENT FOR SYSTEMATIC WITHDRAWALS You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent. EXPEDITED REDEMPTIONS (AIM Cash Reserve Shares of AIM Money Market Fund only) If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day. A-5 MCF--03/00 67 -------------- THE AIM FUNDS -------------- REDEMPTIONS BY CHECK (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only) You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts. SIGNATURE GUARANTEES We require a signature guarantee when you redeem by mail and (1) the amount is greater than $50,000; (2) you request that payment be made to someone other than the name registered on the account; (3) you request that payment be sent somewhere other than the bank of record on the account; or (4) you request that payment be sent to a new address or an address that changed in the last 30 days. The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution. REINSTATEMENT PRIVILEGE (Class A shares only) You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year. REDEMPTIONS BY THE AIM FUNDS If your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months, and the value of your account falls below $500 for three consecutive months due to redemptions or exchanges (excluding retirement accounts), the AIM Funds have the right to redeem the account after giving you 60 days' prior written notice. You may avoid having your account redeemed during the notice period by bringing the account value up to $500 or by utilizing the Automatic Investment Plan. If an AIM Fund determines that you have not provided a correct Social Security or other tax ID number on your account application, the AIM Fund may, at its discretion, redeem the account and distribute the proceeds to you. EXCHANGING SHARES You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. PERMITTED EXCHANGES Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange. YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING: (1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund; (2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for (a) one another; (b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or (c) Class A shares of another AIM Fund, but only if (i) you acquired the original shares before May 1, 1994; or (ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges; (3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for (a) one another; (b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares (i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge; MCF--03/00 A-6 68 -------------- THE AIM FUNDS -------------- (ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or (c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or (4) Class B shares for other Class B shares, and Class C shares for other Class C shares. (5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares. EXCHANGES NOT PERMITTED You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund. EXCHANGE CONDITIONS The following conditions apply to all exchanges: - - You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging; - - Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence; - - Exchanges must be made between accounts with identical registration information; - - The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9); - - Shares must have been held for at least one day prior to the exchange; - - If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and - - You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund. TERMS OF EXCHANGE Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time. BY MAIL If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made. BY TELEPHONE Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days. BY INTERNET You will be allowed to exchange by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; and (3) you have established the internet trading option. EXCHANGING CLASS B AND CLASS C SHARES If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares. - ------------------------------------------------------------------------------- EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO: - REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; - MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; - REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR - WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS. ------------------------------------------------------------------------------ A-7 MCF--03/00 69 -------------- THE AIM FUNDS -------------- PRICING OF SHARES DETERMINATION OF NET ASSET VALUE The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares. Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business. TIMING OF ORDERS You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading. TAXES In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year. Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax. INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS. The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing. MCF--03/00 A-8 70 ---------------------- AIM GLOBAL GROWTH FUND ---------------------- OBTAINING ADDITIONAL INFORMATION - -------------------------------------------------------------------------------- More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us - --------------------------------------------------------- BY MAIL: A I M Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 BY TELEPHONE: (800) 347-4246 BY E-MAIL: general@aimfunds.com ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and semiannual reports only)
- --------------------------------------------------------- You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room. - ----------------------------------- AIM Global Growth Fund SEC 1940 Act file number: 811-6463 - ----------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com GLG-PRO-1 INVEST WITH DISCIPLINE --Registered Trademark-- 71 AIM GLOBAL INCOME FUND -------------------------------------------------------------------------- AIM Global Income Fund seeks to provide high current income, with a secondary objective of protection of principal and growth of capital. PROSPECTUS AIM-- Registered Trademark -- MAY 22, 2000 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE -- Registered Trademark -- 72 ---------------------- AIM GLOBAL INCOME FUND ---------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVES AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with Discipline are registered service marks and AIM Bank Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM Investor are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 73 ---------------------- AIM GLOBAL INCOME FUND ---------------------- INVESTMENT OBJECTIVES AND STRATEGIES - -------------------------------------------------------------------------------- The fund's primary investment objective is high current income. Its secondary objective is protection of principal and growth of capital. The investment objectives of the fund may be changed by the Board of Trustees without shareholder approval. The fund seeks to meet its objectives by investing at least 65% of its total assets in government and non-convertible corporate debt securities, both foreign and domestic, including securities issued by supranational organizations, such as the World Bank. The fund emphasizes investment in securities issued by governments and companies in developed countries such as the United States, the countries of Western Europe, Canada, Japan, Australia and New Zealand. The fund may also invest up to 20% of its total assets in securities of issuers located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund will normally invest in the securities of companies located in at least four different countries, including the United States, and will normally maintain at least 20% of its total assets in securities of U.S. issuers. The fund may invest up to 10% of its total assets in common stocks, preferred stocks and similar equity securities of foreign and domestic issuers and up to 10% of its total assets in convertible debt securities of foreign and domestic issuers. The fund may also invest up to 35% of its total assets in lower-quality debt securities, i.e., "junk bonds." Any percentage limitations with respect to assets of the fund are applied at the time of purchase. The fund is non-diversified. With respect to 50% of its assets, it is permitted to invest more than 5% of its assets in the securities of any one issuer. However, the fund will invest no more than 5% of its total assets in the securities of any one corporate issuer, and will invest no more than 25% of its total assets in securities of any one foreign government or supranational organization. The portfolio managers focus on debt securities throughout the world that they believe have favorable prospects for current income or growth of capital. The portfolio managers consider whether to sell a particular security when any of those factors materially changes. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objectives. PRINCIPAL RISKS OF INVESTING IN THE FUND - -------------------------------------------------------------------------------- There is a risk that you could lose all or a portion of your investment in the fund and that the income you may receive from your investment may vary. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. Interest rate increases can cause the price of a debt security to decrease; the longer a debt security's duration, the more sensitive it is to this risk. Junk bonds are less sensitive to this risk than are higher-quality bonds. The issuer of a security may default or otherwise be unable to honor a financial obligation. Compared to higher-quality debt securities, junk bonds involve greater risk of default or price changes due to changes in the credit quality of the issuer and because they are generally unsecured and may be subordinated to other creditors' claims. The value of junk bonds often fluctuates in response to company, political or economic developments and can decline significantly over short periods of time or during periods of general or regional economic difficulty. During those times, the bonds could be difficult to value or to sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market risk. Because it is non-diversified, the fund may invest in fewer issuers than if it was a diversified fund. The value of the fund's shares may vary more widely, and the fund may be subject to greater investment and credit risk, than if the fund invested more broadly. The prices of foreign securities may be further affected by other factors, including: - - Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. - - Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries. - - Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. - - Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities. These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures. An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 1 74 ---------------------- AIM GLOBAL INCOME FUND ---------------------- PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance. ANNUAL TOTAL RETURNS - ------------------------------------------------------------------------------- The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower. [GRAPH]
ANNUAL YEAR ENDED TOTAL DECEMBER 31 RETURNS - ----------- ------- 1995 ....................................... 19.39% 1996 ....................................... 10.30% 1997 ....................................... 7.68% 1998 ....................................... 4.76% 1999 ....................................... -3.62%
The Class A shares' year-to-date total return as of March 31, 2000 was %. During the periods shown in the bar chart, the highest quarterly return was 6.26% (quarter ended March 31, 1995) and the lowest quarterly return was -2.40% (quarter ended June 30, 1999). PERFORMANCE TABLE The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS INCEPTION DATE - --------------------------------------------------------------------------------------- Class A (8.18)% 6.40% 6.11% 09/15/94 Class B (8.73) 6.59 6.39 09/15/94 Class C (5.04) -- 1.60 08/04/97 Salomon Bros. World Gov't Bond Market Index(1) (4.27) 6.42 6.24(2) 08/31/94(2) - ---------------------------------------------------------------------------------------
(1) The Salomon Brothers World Government Bond Market Index includes all fixed-rate bonds with a remaining maturity of one year or longer and with amounts outstanding of at least the equivalent of US $25 million. The index measures the performance of the domestic government bond markets in fourteen countries combined. (2) The average annual total return given is since the date closest to the inception date of the classes with the longest performance history. 2 75 ---------------------- AIM GLOBAL INCOME FUND ---------------------- FEE TABLE AND EXPENSE EXAMPLE - -------------------------------------------------------------------------------- FEE TABLE This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C - ------------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.75% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% - -------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C - ------------------------------------------------------- Management Fees 0.70% 0.70% 0.70% Distribution and/or Service (12b-1) Fees 0.50 1.00 1.00 Other Expenses 0.47 0.47 0.47 Total Annual Fund Operating Expenses 1.67 2.17 2.17 Fee Waivers(2) 0.42 0.42 0.42 Net Expenses 1.25 1.75 1.75 - -------------------------------------------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption. (2) The investment advisor has contractually agreed to limit Total Annual Fund operating expenses of Class A, Class B and Class C to 1.25%, 1.75% and 1.75%, respectively. As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge. EXPENSE EXAMPLE This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. To the extent fees are waived or expenses are reimbursed, the expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $637 $976 $1,339 $2,357 Class B 720 979 1,364 2,377 Class C 320 679 1,164 2,503 - ----------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ---------------------------------------------- Class A $637 $976 $1,339 $2,357 Class B 220 679 1,164 2,377 Class C 220 679 1,164 2,503 - ----------------------------------------------
3 76 ---------------------- AIM GLOBAL INCOME FUND ---------------------- FUND MANAGEMENT - -------------------------------------------------------------------------------- THE ADVISOR A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 1999, the advisor received compensation of 0.28% of average daily net assets. PORTFOLIO MANAGERS The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio, all of whom are officers of A I M Capital Management, Inc., a wholly owned subsidiary of the advisor, are - - Robert G. Alley, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1994 and has been associated with the advisor and/or its affiliates since 1992. - - Jan H. Friedli, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1999. From 1997 to 1999, he was global fixed-income portfolio manager for Nicholas-Applegate Capital Management. From 1994 to 1997, he was international fixed-income trader and analyst for Strong Capital Management. - - Carolyn L. Gibbs, Senior Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1992. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM Global Income Fund are subject to the maximum 4.75% initial sales charge as listed under the heading "CATEGORY II Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions will consist primarily of ordinary income. DIVIDENDS The fund generally declares dividends daily and pays dividends, if any, monthly. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 4 77 ---------------------- AIM GLOBAL INCOME FUND ---------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A ------------------------------------------------- YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.60 $ 10.93 $ 10.85 $ 10.74 $ 10.02 Income from investment operations: Net investment income 0.67 0.71 0.72 0.79(a) 0.79 Net gains (losses) on securities (both realized and unrealized) (0.86) (0.27) 0.21 0.25 0.75 Total from investment operations (0.19) 0.44 0.93 1.04 1.54 Less distributions: Dividends from investment income (0.61) (0.61) (0.72) (0.81) (0.82) Distributions from net realized gains -- (0.07) (0.13) (0.12) -- Return of capital (0.08) (0.09) -- -- -- Total distributions (0.69) (0.77) (0.85) (0.93) (0.82) Net asset value, end of period $ 9.72 $ 10.60 $ 10.93 $ 10.85 $ 10.73 Total return(b) (1.94)% 3.95% 9.05% 10.22% 16.07% - --------------------------------------------------------------------------------------------------- Ratios/supplemental data: - --------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $51,077 $58,115 $30,924 $21,926 $10,004 Ratio of expenses to average net assets(c) 1.25%(d) 1.23% 1.25% 1.25% 1.25% Ratio of net investment income to average net assets(e) 6.54%(d) 6.38% 6.54% 7.27% 7.38% Portfolio turnover rate 93% 47% 61% 83% 128% - ---------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges. (c) After fee waivers and/or expense reimbursements. The ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.67%, 1.73%, 1.86%, 2.02% and 3.03% for the periods 1999-1995. (d) Ratios are based on average net assets of $60,052,093. (e) After fee waivers and/or expense reimbursements. The ratios of net investment income to average net assets prior to fee waivers and/or expense reimbursements were 6.12%, 5.89%, 5.93%, 6.51% and 5.59% for the periods 1999-1995. 5 78 ---------------------- AIM GLOBAL INCOME FUND ---------------------- FINANCIAL HIGHLIGHTS (CONTINUED) - --------------------------------------------------------------------------------
CLASS B ----------------------------------------------- YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995 - ------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.59 $ 10.92 $ 10.84 $ 10.73 $10.01 Income from investment operations: Net investment income 0.62 0.65 0.67 0.74(a) 0.74 Net gains (losses) on securities (both realized and unrealized) (0.85) (0.27) 0.21 0.24 0.75 Total from investment operations (0.23) 0.38 0.88 0.98 1.49 Less distributions: Dividends from investment income (0.56) (0.55) (0.67) (0.75) (0.77) Distributions from net realized gains -- (0.07) (0.13) (0.12) -- Return of capital (0.08) (0.09) -- -- -- Total distributions (0.64) (0.71) (0.80) (0.87) (0.77) Net asset value, end of period $ 9.72 $ 10.59 $ 10.92 $ 10.84 $10.73 Total return(b) (2.37)% 3.38% 8.48% 9.66% 15.56% - -------------------------------------------------------------------------------------------------- Ratios/supplemental data: - -------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $34,423 $36,525 $25,121 $16,787 $4,207 Ratio of expenses to average net assets(c) 1.75%(d) 1.75% 1.76% 1.75% 1.73% Ratio of net investment income to average net assets(e) 6.04%(d) 5.87% 6.03% 6.77% 6.88% Portfolio turnover rate 93% 47% 61% 83% 128% - --------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges. (c) After fee waivers and/or expense reimbursements. The ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.17%, 2.25%, 2.37%, 2.53% and 3.57% for 1999-1995. (d) Ratios are based on average net assets of $38,526,539. (e) After fee waivers and/or expense reimbursements. The ratios of net investment income to average net assets prior to fee waivers and/or expense reimbursements were 5.62%, 5.37%, 5.42%, 6.00% and 5.05% for 1999-1995. 6 79 ---------------------- AIM GLOBAL INCOME FUND ---------------------- FINANCIAL HIGHLIGHTS (CONTINUED) - --------------------------------------------------------------------------------
CLASS C ---------------------------------------- FOR THE PERIOD YEAR ENDED AUGUST 4, OCTOBER 31, THROUGH ---------------------- OCTOBER 31, 1999 1998 1997 - ------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $10.59 $10.92 $10.76 Income from investment operations: Net investment income 0.62 0.66 0.15(a) Net gains (losses) on securities (both realized and unrealized) (0.86) (0.28) 0.17 Total from investment operations (0.24) 0.38 0.32 Less distributions: Dividends from investment income (0.56) (0.55) (0.13) Distributions from net realized gains -- (0.07) (0.03) Return of capital (0.08) (0.09) -- Total distributions (0.64) (0.71) (0.16) Net asset value, end of period $ 9.71 $10.59 $10.92 Total return(b) (2.47)% 3.39% 2.99% - ------------------------------------------------------------------------------------------------------ Ratios/supplemental data: - ------------------------------------------------------------------------------------------------------ Net assets, end of period (000s omitted) $1,884 $1,785 $ 242 Ratio of expenses to average net assets(c) 1.75%(d) 1.73% 1.76%(e) Ratio of net investment income to average net assets(f) 6.04%(d) 5.88% 6.03%(e) Portfolio turnover rate 93% 47% 61% - ------------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) After fee waivers and/or expense reimbursements. The ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.17%, 2.22% and 2.37% (annualized) for 1999-1997. (d) Ratios are based on average net assets of $1,924,739. (e) Annualized. (f) After fee waivers and/or expense reimbursements. The ratios of net investment income to average net assets prior to fee waivers and/or expense reimbursements were 5.62%, 5.40% and 5.42% (annualized) for 1999-1997. 7 80 ------------- THE AIM FUNDS ------------- SHAREHOLDER INFORMATION - -------------------------------------------------------------------------------- In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds. CHOOSING A SHARE CLASS Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C - --------------------------------------------------------------------------------------------------------- - - Initial sales charge - No initial sales charge - No initial sales charge - - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales charge for certain purchases charge on redemptions within charge on redemptions within six years one year - - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00% (12b-1) fee than Class B or Class C shares (See "Fee Table and Expense Example") - Converts to Class A shares - Does not convert to Class A after eight years along with a shares pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares. AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund seven years after the end of the month in which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until eight years after the end of the month in which you purchased your original shares. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. SALES CHARGES Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge. INITIAL SALES CHARGES The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 25,000 5.50% 5.82% $ 25,000 but less than $ 50,000 5.25 5.54 $ 50,000 but less than $ 100,000 4.75 4.99 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 3.00 3.09 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
A-1 MCF--03/00 81 ------------- THE AIM FUNDS -------------
CATEGORY II INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 50,000 4.75% 4.99% $ 50,000 but less than $ 100,000 4.00 4.17 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 2.50 2.56 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
CATEGORY III INITIAL SALES CHARGES - ------------------------------------------------------------- INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 100,000 1.00% 1.01% $100,000 but less than $ 250,000 0.75 0.76 $250,000 but less than $1,000,000 0.50 0.50 - -------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more. CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE PURCHASE MADE CLASS B CLASS C - ---------------------------------------------------------- First 5% 1% Second 4 None Third 3 None Fourth 3 None Fifth 2 None Sixth 1 None Seventh and following None None - ----------------------------------------------------------
COMPUTING A CDSC The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase. REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment. REDUCED SALES CHARGES You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances. Rights of Accumulation You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own. Letters of Intent Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested. INITIAL SALES CHARGE EXCEPTIONS You will not pay initial sales charges - - on shares purchased by reinvesting dividends and distributions; - - when exchanging shares among certain AIM Funds; - - when using the reinstatement privilege; and - - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs. CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS You will not pay a CDSC - - if you redeem Class B shares you held for more than six years; - - if you redeem Class C shares you held for more than one year; - - if you redeem shares acquired through reinvestment of dividends and distributions; and - - on increases in the net asset value of your shares. There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details. MCF--03/00 A-2 82 -------------- THE AIM FUNDS -------------- PURCHASING SHARES MINIMUM INVESTMENTS PER AIM FUND ACCOUNT The minimum investments for AIM Fund accounts (except for investments in AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL TYPE OF ACCOUNT INVESTMENTS INVESTMENTS - ----------------------------------------------------------------------------------------------------------- Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25 plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans) (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 plans) Automatic Investment Plans 50 50 IRA, Education IRA or Roth IRA 250 50 All other accounts 500 50 - ----------------------------------------------------------------------------------------------------------
HOW TO PURCHASE SHARES You may purchase shares using one of the options below.
PURCHASE OPTIONS - --------------------------------------------------------------------------------------------------------- OPENING AN ACCOUNT ADDING TO AN ACCOUNT - --------------------------------------------------------------------------------------------------------- Through a Financial Consultant Contact your financial consultant. Same By Mail Mail completed account application Mail your check and the remittance and purchase payment to the slip from your confirmation transfer agent, statement to the transfer agent. A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. By Wire Mail completed account application Call the transfer agent to receive to the transfer agent. Call the a reference number. Then, use the transfer agent at (800) 959-4246 to wire instructions at left. receive a reference number. Then, use the following wire instructions: Beneficiary Bank ABA/Routing #: 113000609 Beneficiary Account Number: 00100366807 Beneficiary Account Name: A I M Fund Services, Inc. RFB: Fund Name, Reference # OBI: Your Name, Account # By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection methods described above. form to the transfer agent. Once the transfer agent has received the form, call the transfer agent to place your purchase order. By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect methods described above. option on your completed account application or complete an AIM Internet Connect Authorization Form. Mail the application or form to the transfer agent. Once your request for this option has been processed (which may take up to 10 days), you may place your purchase order at www.aimfunds.com. The maximum purchase amount per transaction is $100,000. You may not purchase shares in AIM prototype retirement accounts on the internet. - ----------------------------------------------------------------------------------------------------------
A-3 MCF--03/00 83 ------------- THE AIM FUNDS ------------- SPECIAL PLANS AUTOMATIC INVESTMENT PLAN You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal. DOLLAR COST AVERAGING Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50. AUTOMATIC DIVIDEND INVESTMENT All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa. You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund: (1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500; (2) Both accounts must have identical registration information; and (3) You must have completed an authorization form to reinvest dividends into another AIM Fund. PORTFOLIO REBALANCING PROGRAM If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice. RETIREMENT PLANS Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details. REDEEMING SHARES REDEMPTION FEES Generally, we will not charge you any fees to redeem your shares. However, if you acquired Class A shares of AIM Developing Markets Fund in connection with the reorganization of AIM Eastern Europe Fund, you will be charged a redemption fee of 2% of the net asset value of those shares, which will be paid to AIM Developing Markets Fund, if you redeem your shares within the first year after the reorganization. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC). REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC. REDEMPTION OF CLASS B SHARES OR CLASS C SHARES ACQUIRED BY EXCHANGE FROM AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares. REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares. MCF--03/00 A-4 84 ------------- THE AIM FUNDS ------------- HOW TO REDEEM SHARES - -------------------------------------------------------------------------------- Through a Financial Contact your financial consultant. Consultant By Mail Send a written request to the transfer agent. Requests must include (1) original signatures of all registered owners; (2) the name of the AIM Fund and your account number; (3) if the transfer agent does not hold your shares, endorsed share certificates or share certificates accompanied by an executed stock power; and (4) signature guarantees, if necessary (see below). The transfer agent may require that you provide additional information, such as corporate resolutions or powers of attorney, if applicable. If you are redeeming from an IRA account, you must include a statement of whether or not you are at least 59 1/2 years old and whether you wish to have federal income tax withheld from your proceeds. The transfer agent may require certain other information before you can redeem from an employer-sponsored retirement plan. Contact your employer for details. By Telephone Call the transfer agent. You will be allowed to redeem by telephone if (1) the proceeds are to be mailed to the address on record (if there has been no change communicated to us within the last 30 days) or transferred electronically to a pre-authorized checking account; (2) you do not hold physical share certificates; (3) you can provide proper identification information; (4) the proceeds of the redemption do not exceed $50,000; and (5) you have not previously declined the telephone redemption privilege. Certain accounts, including retirement accounts and 403(b) plans, may not be redeemed by telephone. The transfer agent must receive your call during the hours of the customary trading session of the New York Stock Exchange (NYSE) in order to effect the redemption at that day's closing price. By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will be allowed to redeem by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; (3) the proceeds of the redemption do not exceed $50,000; and (4) you have established the internet trading option. AIM prototype retirement accounts may not be redeemed on the internet. The transfer agent must confirm your transaction during the hours of the customary trading session of the NYSE in order to effect the redemption at that day's closing price.
- ------------------------------------------------------------------------------- TIMING AND METHOD OF PAYMENT We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared. REDEMPTION BY MAIL If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares. REDEMPTION BY TELEPHONE If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine. REDEMPTION BY INTERNET If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine. PAYMENT FOR SYSTEMATIC WITHDRAWALS You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent. EXPEDITED REDEMPTIONS (AIM Cash Reserve Shares of AIM Money Market Fund only) If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day. A-5 MCF--03/00 85 -------------- THE AIM FUNDS -------------- REDEMPTIONS BY CHECK (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only) You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts. SIGNATURE GUARANTEES We require a signature guarantee when you redeem by mail and (1) the amount is greater than $50,000; (2) you request that payment be made to someone other than the name registered on the account; (3) you request that payment be sent somewhere other than the bank of record on the account; or (4) you request that payment be sent to a new address or an address that changed in the last 30 days. The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution. REINSTATEMENT PRIVILEGE (Class A shares only) You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year. REDEMPTIONS BY THE AIM FUNDS If your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months, and the value of your account falls below $500 for three consecutive months due to redemptions or exchanges (excluding retirement accounts), the AIM Funds have the right to redeem the account after giving you 60 days' prior written notice. You may avoid having your account redeemed during the notice period by bringing the account value up to $500 or by utilizing the Automatic Investment Plan. If an AIM Fund determines that you have not provided a correct Social Security or other tax ID number on your account application, the AIM Fund may, at its discretion, redeem the account and distribute the proceeds to you. EXCHANGING SHARES You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. PERMITTED EXCHANGES Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange. YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING: (1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund; (2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for (a) one another; (b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or (c) Class A shares of another AIM Fund, but only if (i) you acquired the original shares before May 1, 1994; or (ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges; (3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for (a) one another; (b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares (i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge; MCF--03/00 A-6 86 -------------- THE AIM FUNDS -------------- (ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or (c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or (4) Class B shares for other Class B shares, and Class C shares for other Class C shares. (5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares. EXCHANGES NOT PERMITTED You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund. EXCHANGE CONDITIONS The following conditions apply to all exchanges: - - You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging; - - Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence; - - Exchanges must be made between accounts with identical registration information; - - The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9); - - Shares must have been held for at least one day prior to the exchange; - - If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and - - You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund. TERMS OF EXCHANGE Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time. BY MAIL If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made. BY TELEPHONE Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days. BY INTERNET You will be allowed to exchange by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; and (3) you have established the internet trading option. EXCHANGING CLASS B AND CLASS C SHARES If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares. - ------------------------------------------------------------------------------- EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO: - REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; - MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; - REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR - WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS. ------------------------------------------------------------------------------ A-7 MCF--03/00 87 -------------- THE AIM FUNDS -------------- PRICING OF SHARES DETERMINATION OF NET ASSET VALUE The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares. Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business. TIMING OF ORDERS You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading. TAXES In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year. Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax. INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS. The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing. MCF--03/00 A-8 88 ---------------------- AIM GLOBAL INCOME FUND ---------------------- OBTAINING ADDITIONAL INFORMATION - -------------------------------------------------------------------------------- More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us - --------------------------------------------------------- BY MAIL: A I M Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 BY TELEPHONE: (800) 347-4246 BY E-MAIL: general@aimfunds.com ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and semiannual reports only)
- --------------------------------------------------------- You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room. - ----------------------------------- AIM Global Income Fund SEC 1940 Act file number: 811-6463 - ----------------------------------- [AIM LOGO APPEARS HERE] www.aimfunds.com GLI-PRO-1 INVEST WITH DISCIPLINE -- Registered Trademark -- 89 AIM INTERNATIONAL EQUITY FUND -------------------------------------------------------------------- AIM International Equity Fund seeks to provide long-term growth of capital. AIM--Registered Trademark-- PROSPECTUS MAY 22, 2000 This prospectus contains important information about the Class A, B and C shares of the fund. Please read it before investing and keep it for future reference. As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime. An investment in the fund: - is not FDIC insured; - may lose value; and - is not guaranteed by a bank. [AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE 90 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- INVESTMENT OBJECTIVE AND STRATEGIES 1 - - - - - - - - - - - - - - - - - - - - - - - - - PRINCIPAL RISKS OF INVESTING IN THE FUND 1 - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - Annual Total Returns 2 Performance Table 2 FEE TABLE AND EXPENSE EXAMPLE 3 - - - - - - - - - - - - - - - - - - - - - - - - - Fee Table 3 Expense Example 3 FUND MANAGEMENT 4 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisor 4 Advisor Compensation 4 Portfolio Managers 4 OTHER INFORMATION 4 - - - - - - - - - - - - - - - - - - - - - - - - - Sales Charges 4 Dividends and Distributions 4 FINANCIAL HIGHLIGHTS 5 - - - - - - - - - - - - - - - - - - - - - - - - - SHAREHOLDER INFORMATION A-1 - - - - - - - - - - - - - - - - - - - - - - - - - Choosing a Share Class A-1 Purchasing Shares A-3 Redeeming Shares A-4 Exchanging Shares A-6 Pricing of Shares A-8 Taxes A-8 OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - -
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM logo), AIM and Design, AIM, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con Disciplina and Invest with Discipline are registered service marks and AIM Bank Connection, AIM Funds, AIM Funds and Design, AIM Internet Connect and AIM Investor are service marks of A I M Management Group Inc. No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations. 91 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- INVESTMENT OBJECTIVE AND STRATEGIES - -------------------------------------------------------------------------------- The fund's investment objective is to provide long-term growth of capital. The investment objective of the fund may be changed by the Board of Trustees without shareholder approval. The fund seeks to meet its objective by investing in a diversified portfolio of international equity securities whose issuers are considered by the fund's portfolio managers to have strong earnings momentum. The fund invests, normally, at least 70% of its total assets in marketable equity securities of foreign companies that are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. The fund will normally invest in companies located in at least four countries outside of the United States, emphasizing investment in companies in the developed countries of Western Europe and the Pacific Basin. At the present time, the fund's portfolio managers intend to invest no more than 20% of the fund's total assets in foreign companies located in developing countries, i.e., those that are in the initial stages of their industrial cycles. The fund may invest up to 20% of its total assets in securities exchangeable for or convertible into marketable equity securities of foreign issuers. The fund may also invest up to 20% of its total assets in high-grade short-term securities and debt securities, including U.S. Government obligations, investment grade corporate bonds or taxable municipal securities, whether denominated in U.S. dollars or foreign currencies. Any percentage limitations with respect to assets of the fund are applied at the time of purchase. The portfolio managers focus on companies that have experienced above-average, long-term growth in earnings and have strong prospects for future growth. In selecting countries in which the fund will invest, the fund's portfolio managers also consider such factors as the prospect for relative economic growth among countries or regions, economic or political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. The fund's portfolio managers consider whether to sell a particular security when any of those factors materially changes. In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, the fund may temporarily hold all or a portion of its assets in cash, money market instruments, shares of affiliated money market funds, bonds or other debt securities. As a result, the fund may not achieve its investment objective. PRINCIPAL RISKS OF INVESTING IN THE FUND - -------------------------------------------------------------------------------- There is a risk that you could lose all or a portion of your investment in the fund. The value of your investment in the fund will go up and down with the prices of the securities in which the fund invests. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. The prices of foreign securities may be further affected by other factors, including: - - Currency exchange rates--The dollar value of the fund's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. - - Political and economic conditions--The value of the fund's foreign investments may be adversely affected by political and social instability in their home countries and by changes in economic or taxation policies in those countries. - - Regulations--Foreign companies generally are subject to less stringent regulations, including financial and accounting controls, than are U.S. companies. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. - - Markets--The securities markets of other countries are smaller than U.S. securities markets. As a result, many foreign securities may be less liquid and more volatile than U.S. securities. These factors may affect the prices of securities issued by foreign companies located in developing countries more than those in countries with mature economies. For example, many developing countries have, in the past, experienced high rates of inflation or sharply devaluated their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures. An investment in the fund is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 1 92 ----------------------------- AIM INTERNATIONAL EQUITY FUND ------------------------------ PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- The bar chart and table shown below provide an indication of the risks of investing in the fund. The fund's past performance is not necessarily an indication of its future performance. ANNUAL TOTAL RETURNS - -------------------------------------------------------------------------------- The following bar chart shows changes in the performance of the fund's Class A shares from year to year. The bar chart does not reflect sales loads. If it did, the annual total returns shown would be lower. [GRAPH]
ANNUAL YEAR ENDED TOTAL DECEMBER 31 RETURNS - ----------- ------- 1993 ...................................... 45.78% 1994 ...................................... -3.34 1995 ...................................... 16.41 1996 ...................................... 18.98 1997 ...................................... 5.70 1998 ...................................... 13.42 1999 ...................................... 55.08
The Class A shares' year-to-date total return as of March 31, 2000 was %. During the periods shown in the bar chart, the highest quarterly return was 43.09% (quarter ended December 31, 1999) and the lowest quarterly return was - -14.64% (quarter ended September 30, 1998). PERFORMANCE TABLE The following performance table compares the fund's performance to that of a broad-based securities market index. The fund's performance reflects payment of sales loads.
AVERAGE ANNUAL TOTAL RETURNS - ------------------------------------------------------------ (for the periods ended SINCE INCEPTION December 31, 1999) 1 YEAR 5 YEARS INCEPTION DATE - ------------------------------------------------------------ Class A 46.58% 19.46% 17.67% 04/07/92 Class B 48.76 19.67 17.15 09/15/94 Class C 52.79 -- 21.79 08/04/97 MSCI EAFE Index(1) 26.96 12.83 13.14(2) 03/31/92(2) - ------------------------------------------------------------
(1) The Morgan Stanley Capital International Europe, Australia and Far East Index measures performance of global stock markets in 20 developed countries. (2) The average annual total return given is since the date closest to the inception date of the class with the longest performance history. 2 93 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- FEE TABLE AND EXPENSE EXAMPLE - -------------------------------------------------------------------------------- FEE TABLE This table describes the fees and expenses that you may pay if you buy and hold shares of the fund:
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) CLASS A CLASS B CLASS C - ---------------------------------------------------- Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 5.50% None None Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or redemption proceeds, whichever is less) None(1) 5.00% 1.00% - -------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from fund assets) CLASS A CLASS B CLASS C - ------------------------------------------------------- Management Fees 0.92% 0.92% 0.92% Distribution and/or Service (12b-1) Fees 0.30 1.00 1.00 Other Expenses 0.30 0.39 0.39 Total Annual Fund Operating Expenses 1.52 2.31 2.31 Fee Waiver(2) 0.04 0.04 0.04 Net Expenses 1.48 2.27 2.27 - -------------------------------------------------------
(1) If you buy $1,000,000 or more of Class A shares and redeem these shares within 18 months from the date of purchase, you may pay a 1% contingent deferred sales charge (CDSC) at the time of redemption. (2) The investment advisor has contractually agreed to waive 0.05% on average net assets in excess of $500 million. As a result of 12b-1 fees, long-term shareholders in the fund may pay more than the maximum permitted initial sales charge. EXPENSE EXAMPLE This example is intended to help you compare the costs of investing in different classes of the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund's gross operating expenses remain the same. To the extent fees are waived, the expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ----------------------------------------------- Class A $696 $1,004 $1,333 $2,263 Class B 734 1,021 1,435 2,448 Class C 334 721 1,235 2,646 - ------------------------------------------------
You would pay the following expenses if you did not redeem your shares:
1 YEAR 3 YEARS 5 YEARS 10 YEARS - ------------------------------------------------ Class A $696 $1,004 $1,333 $2,263 Class B 234 721 1,235 2,448 Class C 234 721 1,235 2,646 - ----------------------------------------------
3 94 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- FUND MANAGEMENT - -------------------------------------------------------------------------------- THE ADVISOR A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and is responsible for its day-to-day management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all aspects of the fund's operations and provides investment advisory services to the fund, including obtaining and evaluating economic, statistical and financial information to formulate and implement investment programs for the fund. The advisor has acted as an investment advisor since its organization in 1976. Today, the advisor, together with its subsidiaries, advises or manages over 120 investment portfolios, including the fund, encompassing a broad range of investment objectives. ADVISOR COMPENSATION During the fiscal year ended October 31, 1999, the advisor received compensation of 0.88% of average daily net assets. PORTFOLIO MANAGERS The advisor uses a team approach to investment management. The individual members of the team who are primarily responsible for the day-to-day management of the fund's portfolio, all of whom are officers of A I M Capital Management, Inc., a wholly owned subsidiary of the advisor, are - - A. Dale Griffin, III, Senior Portfolio Manager, who has been responsible for the fund since its inception in 1992 and has been associated with the advisor and/or its affiliates since 1989. - - Jason T. Holzer, Portfolio Manager, who has been responsible for the fund since 1999 and has been associated with the advisor and/or its affiliates since 1996. From 1994 to 1996, he was an associate with JMB Realty. - - Clas G. Olsson, Senior Portfolio Manager, who has been responsible for the fund since 1997 and has been associated with the advisor and/or its affiliates since 1994. - - Barrett K. Sides, Portfolio Manager, who has been responsible for the fund since 1995 and has been associated with the advisor and/or its affiliates since 1990. OTHER INFORMATION - -------------------------------------------------------------------------------- SALES CHARGES Purchases of Class A shares of AIM International Equity Fund are subject to the maximum 5.50% initial sales charge as listed under the heading "CATEGORY I Initial Sales Charges" in the "Shareholder Information--Choosing a Share Class" section of this prospectus. Purchases of Class B and Class C shares are subject to the contingent deferred sales charges listed in that section. DIVIDENDS AND DISTRIBUTIONS The fund expects that its distributions will consist primarily of capital gains. DIVIDENDS The fund generally declares and pays dividends, if any, annually. CAPITAL GAINS DISTRIBUTIONS The fund generally distributes long-term and short-term capital gains, if any, annually. 4 95 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The financial highlights table is intended to help you understand the fund's financial performance. Certain information reflects financial results for a single fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the fund (assuming reinvestment of all dividends and distributions). This information has been audited by KPMG LLP, whose report, along with the fund's financial statements, is included in the fund's annual report, which is available upon request.
CLASS A -------------------------------------------------------------------- YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 17.59 $ 16.64 $ 15.37 $ 13.65 $ 13.50 Income from investment operations: Net investment income (loss) (0.03) 0.05(a) 0.04(a) 0.04(a) 0.01 Net gains on securities (both realized and unrealized) 4.49 0.96 1.68 2.07 0.62 Total from investment operations 4.46 1.01 1.72 2.11 0.63 Less distributions: Dividends from net investment income (0.11) (0.06) (0.02) (0.01) (0.04) Distributions from net realized gains (0.21) -- (0.43) (0.38) (0.44) Total distributions (0.32) (0.06) (0.45) (0.39) (0.48) Net asset value, end of period $ 21.73 $ 17.59 $ 16.64 $ 15.37 $ 13.65 Total return(b) 25.73% 6.11% 11.43% 15.79% 5.24% - ---------------------------------------------------------------------------------------------------------------- Ratios/supplemental data: - ---------------------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $2,058,419 $1,724,635 $1,577,390 $1,108,395 $654,764 Ratio of expenses to average net assets(c) 1.48%(d) 1.45% 1.47% 1.58% 1.67% Ratio of net investment income to average net assets(e) (0.14)%(d) 0.28% 0.24% 0.25% 0.10% Portfolio turnover rate 86% 78% 50% 66% 68% - --------------------------------------------------------------------------------- -------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.52%, 1.49%, 1.51%, 1.60% and 1.68% for 1999-1995. (d) Ratios are based on average net assets of $1,855,482,758. (e) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.18)%, 0.24%, 0.20%, 0.22% and 0.09% for 1999-1995. 5 96 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS B ----------------------------------------------------------------------- YEAR ENDED OCTOBER 31, 1999 1998 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 17.13 $ 16.27 $ 15.13 $ 13.54 $ 13.49 Income from investment operations: Net investment income (loss) (0.17)(a) (0.09)(a) (0.09)(a) (0.07)(a) (0.09) Net gains (losses) on securities (both realized and unrealized) 4.36 0.95 1.66 2.04 0.61 Total from investment operations 4.19 0.86 1.57 1.97 0.52 Less distributions: Dividends from net investment income -- -- -- -- (0.03) Distributions from net realized gains (0.21) -- (0.43) (0.38) (0.44) Total distributions (0.21) -- (0.43) (0.38) (0.47) Net asset value, end of period $ 21.11 $ 17.13 $ 16.27 $ 15.13 $ 13.54 Total return(b) 24.72% 5.29% 10.61% 14.88% 4.35% - --------------------------------------------------------------------------------------------------------------------------------- Ratios/supplemental data: - --------------------------------------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $887,106 $744,987 $678,809 $368,355 $51,964 Ratio of expenses to average net assets(c) 2.27%(d) 2.22% 2.25% 2.35% 2.55% Ratio of net investment income (loss) to average net assets(e) (0.93)%(d) (0.49)% (0.53)% (0.53)% (0.78)% Portfolio turnover rate 86% 78% 50% 66% 68% - ---------------------------------------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.31%, 2.26%, 2.28%, 2.37% and 2.56% for 1999-1995. (d) Ratios are based on average net assets of $802,480,523. (e) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.97)%, (0.53)%, (0.57)%, (0.55)% and (0.79)%, for 1999-1995. 6 97 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- FINANCIAL HIGHLIGHTS (continued) - --------------------------------------------------------------------------------
CLASS C ---------------------------------------- FOR THE PERIOD AUGUST 4, YEAR ENDED OCTOBER 31, THROUGH ---------------------- OCTOBER 31, 1999 1998 1997 - ------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 17.14 $ 16.27 $ 17.64 Income from investment operations: Net investment income (loss) (0.17)(a) (0.09)(a) (0.02)(a) Net gains (losses) on securities (both realized and unrealized) 4.37 0.96 (1.35) Total from investment operations 4.20 0.87 (1.37) Less distributions: Dividends from net investment income -- -- -- Distributions from net realized gains (0.21) -- -- Total distributions (0.21) -- -- Net asset value, end of period $ 21.13 $ 17.14 $ 16.27 Total return(b) 24.76% 5.35% (7.77)% - ------------------------------------------------------------------------------------------------------- Ratios/supplemental data: - ------------------------------------------------------------------------------------------------------- Net assets, end of period (000s omitted) $118,208 $58,579 $12,829 Ratio of expenses to average net assets(c) 2.27%(d) 2.22% 2.27%(e) Ratio of net investment income (loss) to average net assets(f) (0.93)%(d) (0.49)% (0.55)%(e) Portfolio turnover rate 86% 78% 50% - -------------------------------------------------------------------------------------------------------
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.31%, 2.26% and 2.30% (annualized) for 1999-1997. (d) Ratios are based on average net assets of $87,122,931. (e) Annualized. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.97)%, (0.53)% and (0.57)% (annualized) for 1999-1997. 7 98 ------------- THE AIM FUNDS ------------- SHAREHOLDER INFORMATION - -------------------------------------------------------------------------------- In addition to the fund, A I M Advisors, Inc. serves as investment advisor to many other mutual funds (the AIM Funds). The following information is about all the AIM Funds. CHOOSING A SHARE CLASS Many of the AIM Funds have multiple classes of shares, each class representing an interest in the same portfolio of investments. When choosing a share class, you should consider the factors below:
CLASS A CLASS B CLASS C - --------------------------------------------------------------------------------------------------------- - - Initial sales charge - No initial sales charge - No initial sales charge - - Reduced or waived initial sales - Contingent deferred sales - Contingent deferred sales charge for certain purchases charge on redemptions within charge on redemptions within six years one year - - Lower distribution and service - 12b-1 fee of 1.00% - 12b-1 fee of 1.00% (12b-1) fee than Class B or Class C shares (See "Fee Table and Expense Example") - Converts to Class A shares - Does not convert to Class A after eight years along with a shares pro rata portion of its reinvested dividends and distributions(1) - - Generally more appropriate for - Purchase orders limited to - Generally more appropriate long-term investors amounts less than $250,000 for short-term investors
(1) AIM Money Market Fund: Class B shares convert to AIM Cash Reserve Shares. AIM Global Trends Fund: If you held Class B shares on May 29, 1998 and continue to hold them, those shares will convert to Class A shares of that fund seven years after the end of the month in which shares were purchased. If you exchange those shares for Class B shares of another AIM Fund, the shares into which you exchanged will not convert to Class A shares until eight years after the end of the month in which you purchased your original shares. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE (12B-1) FEES Each AIM Fund (except AIM Tax-Free Intermediate Fund) has adopted 12b-1 plans that allow the AIM Fund to pay distribution fees to A I M Distributors, Inc. (the distributor) for the sale and distribution of its shares and fees for services provided to shareholders, all or a substantial portion of which are paid to the dealer of record. Because the AIM Fund pays these fees out of its assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. SALES CHARGES Generally, you will not pay a sales charge on purchases or redemptions of Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund. You may be charged a contingent deferred sales charge if you redeem AIM Cash Reserve Shares of AIM Money Market Fund acquired through certain exchanges. Sales charges on all other AIM Funds and classes of those Funds are detailed below. As used below, the term "offering price" with respect to all categories of Class A shares includes the initial sales charge. INITIAL SALES CHARGES The AIM Funds are grouped into three categories with respect to initial sales charges. The "Other Information" section of your prospectus will tell you in what category your particular AIM Fund is classified.
CATEGORY I INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 25,000 5.50% 5.82% $ 25,000 but less than $ 50,000 5.25 5.54 $ 50,000 but less than $ 100,000 4.75 4.99 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 3.00 3.09 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
A-1 MCF--03/00 99 ------------- THE AIM FUNDS -------------
CATEGORY II INITIAL SALES CHARGES - ------------------------------------------------------------ INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 50,000 4.75% 4.99% $ 50,000 but less than $ 100,000 4.00 4.17 $100,000 but less than $ 250,000 3.75 3.90 $250,000 but less than $ 500,000 2.50 2.56 $500,000 but less than $1,000,000 2.00 2.04 - -------------------------------------------------------------
CATEGORY III INITIAL SALES CHARGES - ------------------------------------------------------------- INVESTOR'S SALES CHARGE ---------------------------- AMOUNT OF INVESTMENT AS A % OF AS A % OF IN SINGLE TRANSACTION OFFERING PRICE INVESTMENT - ------------------------------------------------------------- Less than $ 100,000 1.00% 1.01% $100,000 but less than $ 250,000 0.75 0.76 $250,000 but less than $1,000,000 0.50 0.50 - -------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGES FOR CLASS A SHARES You can purchase $1,000,000 or more of Class A shares at net asset value. However, if you purchase shares of that amount in Categories I or II, they will be subject to a contingent deferred sales charge (CDSC) of 1% if you redeem them prior to 18 months after the date of purchase. The distributor may pay a dealer concession and/or a service fee for purchases of $1,000,000 or more. CONTINGENT DEFERRED SALES CHARGES FOR CLASS B AND CLASS C SHARES You can purchase Class B and Class C shares at their net asset value per share. However, when you redeem them, they are subject to a CDSC in the following percentages:
YEAR SINCE PURCHASE MADE CLASS B CLASS C - ---------------------------------------------------------- First 5% 1% Second 4 None Third 3 None Fourth 3 None Fifth 2 None Sixth 1 None Seventh and following None None - ----------------------------------------------------------
COMPUTING A CDSC The CDSC on redemptions of shares is computed based on the lower of their original purchase price or current market value, net of reinvested dividends and capital gains distributions. In determining whether to charge a CDSC, we will assume that you have redeemed shares on which there is no CDSC first and, then, shares in the order of purchase. REDUCED SALES CHARGES AND SALES CHARGE EXCEPTIONS You may qualify for reduced sales charges or sales charge exceptions. To qualify for these reductions or exceptions, you or your financial consultant must provide sufficient information at the time of purchase to verify that your purchase qualifies for such treatment. REDUCED SALES CHARGES You may be eligible to buy Class A shares at reduced initial sales charge rates under Rights of Accumulation or Letters of Intent under certain circumstances. Rights of Accumulation You may combine your new purchases of Class A shares with Class A shares currently owned for the purpose of qualifying for the lower initial sales charge rates that apply to larger purchases. The applicable initial sales charge for the new purchase is based on the total of your current purchase and the current value of all Class A shares you own. Letters of Intent Under a Letter of Intent (LOI), you commit to purchase a specified dollar amount of Class A shares of AIM Funds during a 13-month period. The amount you agree to purchase determines the initial sales charge you pay. If the full face amount of the LOI is not invested by the end of the 13-month period, your account will be adjusted to the higher initial sales charge level for the amount actually invested. INITIAL SALES CHARGE EXCEPTIONS You will not pay initial sales charges - - on shares purchased by reinvesting dividends and distributions; - - when exchanging shares among certain AIM Funds; - - when using the reinstatement privilege; and - - when a merger, consolidation, or acquisition of assets of an AIM Fund occurs. CONTINGENT DEFERRED SALES CHARGE (CDSC) EXCEPTIONS You will not pay a CDSC - - if you redeem Class B shares you held for more than six years; - - if you redeem Class C shares you held for more than one year; - - if you redeem shares acquired through reinvestment of dividends and distributions; and - - on increases in the net asset value of your shares. There may be other situations when you may be able to purchase or redeem shares at reduced or without sales charges. Consult the fund's Statement of Additional Information for details. MCF--03/00 A-2 100 -------------- THE AIM FUNDS -------------- PURCHASING SHARES MINIMUM INVESTMENTS PER AIM FUND ACCOUNT The minimum investments for AIM Fund accounts (except for investments in AIM Mid Cap Opportunities Fund and AIM Small Cap Opportunities Fund) are as follows:
INITIAL ADDITIONAL TYPE OF ACCOUNT INVESTMENTS INVESTMENTS - ----------------------------------------------------------------------------------------------------------- Savings Plans (money-purchase/profit sharing $ 0 ($25 per AIM Fund investment for $25 plans, 401(k) plans, Simplified Employee Pension salary deferrals from Savings Plans) (SEP) accounts, Salary Reduction (SARSEP) accounts, Savings Incentive Match Plans for Employee IRA (Simple IRA) accounts, 403(b) or 457 plans) Automatic Investment Plans 50 50 IRA, Education IRA or Roth IRA 250 50 All other accounts 500 50 - ----------------------------------------------------------------------------------------------------------
HOW TO PURCHASE SHARES You may purchase shares using one of the options below.
PURCHASE OPTIONS - --------------------------------------------------------------------------------------------------------- OPENING AN ACCOUNT ADDING TO AN ACCOUNT - --------------------------------------------------------------------------------------------------------- Through a Financial Consultant Contact your financial consultant. Same By Mail Mail completed account application Mail your check and the remittance and purchase payment to the slip from your confirmation transfer agent, statement to the transfer agent. A I M Fund Services, Inc., P.O. Box 4739, Houston, TX 77210-4739. By Wire Mail completed account application Call the transfer agent to receive to the transfer agent. Call the a reference number. Then, use the transfer agent at (800) 959-4246 to wire instructions at left. receive a reference number. Then, use the following wire instructions: Beneficiary Bank ABA/Routing #: 113000609 Beneficiary Account Number: 00100366807 Beneficiary Account Name: A I M Fund Services, Inc. RFB: Fund Name, Reference # OBI: Your Name, Account # By AIM Bank Connection(SM) Open your account using one of the Mail completed AIM Bank Connection methods described above. form to the transfer agent. Once the transfer agent has received the form, call the transfer agent to place your purchase order. By AIM Internet Connect(SM) Open your account using one of the Select the AIM Internet Connect methods described above. option on your completed account application or complete an AIM Internet Connect Authorization Form. Mail the application or form to the transfer agent. Once your request for this option has been processed (which may take up to 10 days), you may place your purchase order at www.aimfunds.com. The maximum purchase amount per transaction is $100,000. You may not purchase shares in AIM prototype retirement accounts on the internet. - ----------------------------------------------------------------------------------------------------------
A-3 MCF--03/00 101 ------------- THE AIM FUNDS ------------- SPECIAL PLANS AUTOMATIC INVESTMENT PLAN You can arrange for periodic investments in any of the AIM Funds by authorizing the AIM Fund to withdraw the amount of your investment from your bank account on a day or dates you specify and in an amount of at least $50. You may stop the Automatic Investment Plan at any time by giving the transfer agent notice ten days prior to your next scheduled withdrawal. DOLLAR COST AVERAGING Dollar Cost Averaging allows you to make automatic monthly or quarterly exchanges, if permitted, from one AIM Fund account to one or more other AIM Fund accounts with the identical registration. The account from which exchanges are to be made must have a minimum balance of $5,000 before you can use this option. Exchanges will occur on (or about) the 10th or 25th day of the month, whichever you specify, in the amount you specify. The minimum amount you can exchange to another AIM Fund is $50. AUTOMATIC DIVIDEND INVESTMENT All of your dividends and distributions may be paid in cash or invested in any AIM Fund at net asset value. Unless you specify otherwise, your dividends and distributions will automatically be reinvested in the same AIM Fund. You may invest your dividends and distributions (1) into another AIM Fund in the same class of shares; or (2) from Class A shares into AIM Cash Reserve Shares of AIM Money Market Fund, or vice versa. You must comply with the following requirements to be eligible to invest your dividends and distributions in shares of another AIM Fund: (1) Your account balance (a) in the AIM Fund paying the dividend must be at least $5,000; or (b) in the AIM Fund receiving the dividend must be at least $500; (2) Both accounts must have identical registration information; and (3) You must have completed an authorization form to reinvest dividends into another AIM Fund. PORTFOLIO REBALANCING PROGRAM If you have at least $5,000 in your account, you may participate in the Portfolio Rebalancing Program. Under this Program, you can designate how the total value of your AIM Fund holdings should be rebalanced, on a percentage basis, between two and ten of your AIM Funds on a quarterly, semiannual or annual basis. Your portfolio will be rebalanced through the exchange of shares in one or more of your AIM Funds for shares of the same class of one or more other AIM Funds in your portfolio. If you wish to participate in the Program, make changes or cancel the Program, the transfer agent must receive your request to participate, changes, or cancellation in good order at least five business days prior to the next rebalancing date, which is normally the 28th day of the last month of the period you choose. You may realize taxable gains from these exchanges. We may modify, suspend or terminate the Program at any time on 60 days' prior written notice. RETIREMENT PLANS Shares of most of the AIM Funds can be purchased through tax-sheltered retirement plans made available to corporations, individuals and employees of non-profit organizations and public schools. A plan document must be adopted to establish a retirement plan. You may use AIM Funds-sponsored retirement plans, which include IRAs, Education IRAs, Roth IRAs, 403(b) plans, 401(k) plans, SIMPLE IRA plans, SEP/SARSEP plans and Money Purchase/Profit Sharing plans, or another sponsor's retirement plan. The plan custodian of the AIM Funds-sponsored retirement plan assesses an annual maintenance fee of $10. Contact your financial consultant for details. REDEEMING SHARES REDEMPTION FEES Generally, we will not charge you any fees to redeem your shares. However, if you acquired Class A shares of AIM Developing Markets Fund in connection with the reorganization of AIM Eastern Europe Fund, you will be charged a redemption fee of 2% of the net asset value of those shares, which will be paid to AIM Developing Markets Fund, if you redeem your shares within the first year after the reorganization. Your broker or financial consultant may charge service fees for handling redemption transactions. Your shares also may be subject to a contingent deferred sales charge (CDSC). REDEMPTION OF AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND ACQUIRED BY EXCHANGE If you redeem AIM Cash Reserve Shares acquired by exchange from Class A shares subject to a CDSC within 18 months of the purchase of the Class A shares, you will be charged a CDSC. REDEMPTION OF CLASS B SHARES OR CLASS C SHARES ACQUIRED BY EXCHANGE FROM AIM CASH RESERVE SHARES OF AIM MONEY MARKET FUND We will begin the holding period for purposes of calculating the CDSC on Class B shares or Class C shares acquired by exchange from AIM Cash Reserve Shares of AIM Money Market Fund at the time of the exchange into Class B shares or Class C shares. REDEMPTION OF CLASS B SHARES ACQUIRED BY EXCHANGE FROM AIM FLOATING RATE FUND If you redeem Class B shares you acquired by exchange via a tender offer by AIM Floating Rate Fund, the early withdrawal charge applicable to shares of AIM Floating Rate Fund will be applied instead of the CDSC normally applicable to Class B shares. MCF--03/00 A-4 102 ------------- THE AIM FUNDS ------------- HOW TO REDEEM SHARES - -------------------------------------------------------------------------------- Through a Financial Contact your financial consultant. Consultant By Mail Send a written request to the transfer agent. Requests must include (1) original signatures of all registered owners; (2) the name of the AIM Fund and your account number; (3) if the transfer agent does not hold your shares, endorsed share certificates or share certificates accompanied by an executed stock power; and (4) signature guarantees, if necessary (see below). The transfer agent may require that you provide additional information, such as corporate resolutions or powers of attorney, if applicable. If you are redeeming from an IRA account, you must include a statement of whether or not you are at least 59 1/2 years old and whether you wish to have federal income tax withheld from your proceeds. The transfer agent may require certain other information before you can redeem from an employer-sponsored retirement plan. Contact your employer for details. By Telephone Call the transfer agent. You will be allowed to redeem by telephone if (1) the proceeds are to be mailed to the address on record (if there has been no change communicated to us within the last 30 days) or transferred electronically to a pre-authorized checking account; (2) you do not hold physical share certificates; (3) you can provide proper identification information; (4) the proceeds of the redemption do not exceed $50,000; and (5) you have not previously declined the telephone redemption privilege. Certain accounts, including retirement accounts and 403(b) plans, may not be redeemed by telephone. The transfer agent must receive your call during the hours of the customary trading session of the New York Stock Exchange (NYSE) in order to effect the redemption at that day's closing price. By AIM Internet Connect Place your redemption request at www.aimfunds.com. You will be allowed to redeem by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; (3) the proceeds of the redemption do not exceed $50,000; and (4) you have established the internet trading option. AIM prototype retirement accounts may not be redeemed on the internet. The transfer agent must confirm your transaction during the hours of the customary trading session of the NYSE in order to effect the redemption at that day's closing price.
- ------------------------------------------------------------------------------- TIMING AND METHOD OF PAYMENT We normally will send out checks within one business day, and in any event no more than seven days, after we accept your request to redeem. If you redeem shares recently purchased by check, you will be required to wait up to ten business days before we will send your redemption proceeds. This delay is necessary to ensure that the purchase check has cleared. REDEMPTION BY MAIL If you mail us a request in good order to redeem your shares, we will mail you a check in the amount of the redemption proceeds to the address on record with us. If your request is not in good order, you may have to provide us with additional documentation in order to redeem your shares. REDEMPTION BY TELEPHONE If you redeem by telephone, we will mail you a check in the amount of the redemption proceeds to your address of record (if there has been no change communicated to the transfer agent within the previous 30 days) or transmit them electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by telephone are genuine and are not liable for telephone instructions that are reasonably believed to be genuine. REDEMPTION BY INTERNET If you redeem by internet, we will transmit your redemption proceeds electronically to your pre-authorized bank account. We use reasonable procedures to confirm that instructions communicated by internet are genuine and are not liable for internet instructions that are reasonably believed to be genuine. PAYMENT FOR SYSTEMATIC WITHDRAWALS You may arrange for regular monthly or quarterly withdrawals from your account of at least $50. You also may make annual withdrawals if you own Class A shares. We will redeem enough shares from your account to cover the amount withdrawn. You must have an account balance of at least $5,000 to establish a Systematic Withdrawal Plan. You can stop this plan at any time by giving ten days prior notice to the transfer agent. EXPEDITED REDEMPTIONS (AIM Cash Reserve Shares of AIM Money Market Fund only) If we receive your redemption order before 11:30 a.m. Eastern Time, we will try to transmit payment of redemption proceeds on that same day. If we receive your redemption order after 11:30 a.m. Eastern Time and before the close of the customary trading session of the NYSE, we generally will transmit payment on the next business day. A-5 MCF--03/00 103 -------------- THE AIM FUNDS -------------- REDEMPTIONS BY CHECK (Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund only) You may redeem shares of these AIM Funds by writing checks in amounts of $250 or more if you have completed an authorization form. Redemption by check is not available for retirement accounts. SIGNATURE GUARANTEES We require a signature guarantee when you redeem by mail and (1) the amount is greater than $50,000; (2) you request that payment be made to someone other than the name registered on the account; (3) you request that payment be sent somewhere other than the bank of record on the account; or (4) you request that payment be sent to a new address or an address that changed in the last 30 days. The transfer agent will accept a guarantee of your signature by a number of financial institutions. Call the transfer agent for additional information. Some institutions have transaction amount maximums for these guarantees. Please check with the guarantor institution. REINSTATEMENT PRIVILEGE (Class A shares only) You may, within 90 days after you sell Class A shares (except Class A shares of AIM Tax-Exempt Cash Fund), reinvest all or part of your redemption proceeds in Class A shares of any AIM Fund at net asset value in an identically registered account. If you sold Class A shares of AIM Limited Maturity Treasury Fund or AIM Tax-Free Intermediate Fund, you will incur an initial sales charge reflecting the difference between the initial sales charges on those Funds and the ones in which you will be investing. In addition, if you paid a contingent deferred sales charge (CDSC) on any reinstated amount, you will not be subject to a CDSC if you later redeem that amount. You must notify the transfer agent in writing at the time you reinstate that you are exercising your reinstatement privilege. You may exercise this privilege only once per year. REDEMPTIONS BY THE AIM FUNDS If your account has been open at least one year, you have not made an additional purchase in the account during the past six calendar months, and the value of your account falls below $500 for three consecutive months due to redemptions or exchanges (excluding retirement accounts), the AIM Funds have the right to redeem the account after giving you 60 days' prior written notice. You may avoid having your account redeemed during the notice period by bringing the account value up to $500 or by utilizing the Automatic Investment Plan. If an AIM Fund determines that you have not provided a correct Social Security or other tax ID number on your account application, the AIM Fund may, at its discretion, redeem the account and distribute the proceeds to you. EXCHANGING SHARES You may, under certain circumstances, exchange shares in one AIM Fund for those of another AIM Fund. Before requesting an exchange, review the prospectus of the AIM Fund you wish to acquire. Exchange privileges also apply to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. PERMITTED EXCHANGES Except as otherwise stated below, you may exchange your shares for shares of the same class of another AIM Fund. You may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class A shares of another AIM Fund, or vice versa. You also may exchange AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares of another AIM Fund, but only if the AIM Cash Reserve Shares were purchased directly and not acquired by exchange. You may be required to pay an initial sales charge when exchanging from a Fund with a lower initial sales charge than the one into which you are exchanging. If you exchange from Class A shares not subject to a CDSC into Class A shares subject to those charges, you will be charged a CDSC when you redeem the exchanged shares. The CDSC charged on redemption of those shares will be calculated starting on the date you acquired those shares through exchange. YOU WILL NOT PAY A SALES CHARGE WHEN EXCHANGING: (1) Class A shares with an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund) for Class A shares of another AIM Fund or AIM Cash Reserve Shares of AIM Money Market Fund; (2) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund for (a) one another; (b) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund; or (c) Class A shares of another AIM Fund, but only if (i) you acquired the original shares before May 1, 1994; or (ii) you acquired the original shares on or after May 1, 1994 by way of an exchange from shares with higher sales charges; (3) AIM Cash Reserve Shares of AIM Money Market Fund or Class A shares of AIM Tax-Exempt Cash Fund for (a) one another; (b) Class A shares of an AIM Fund subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund), but only if you acquired the original shares (i) prior to May 1, 1994 by exchange from Class A shares subject to an initial sales charge; MCF--03/00 A-6 104 -------------- THE AIM FUNDS -------------- (ii) on or after May 1, 1994 by exchange from Class A shares subject to an initial sales charge (except for Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund); or (c) Class A shares of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund, but only if you acquired the original shares by exchange from Class A shares subject to an initial sales charge; or (4) Class B shares for other Class B shares, and Class C shares for other Class C shares. (5) AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares and Class C shares. EXCHANGES NOT PERMITTED You may not exchange Class A shares subject to contingent deferred sales charges for Class A shares of AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund or AIM Tax-Exempt Cash Fund. EXCHANGE CONDITIONS The following conditions apply to all exchanges: - - You must meet the minimum purchase requirements for the AIM Fund into which you are exchanging; - - Shares of the AIM Fund you wish to acquire must be available for sale in your state of residence; - - Exchanges must be made between accounts with identical registration information; - - The account you wish to exchange from must have a certified tax identification number (or the Fund has received an appropriate Form W-8 or W-9); - - Shares must have been held for at least one day prior to the exchange; - - If you have physical share certificates, you must return them to the transfer agent prior to the exchange; and - - You are limited to a maximum of 10 exchanges per calendar year, because excessive short-term trading or market-timing activity can hurt fund performance. If you exceed that limit, or if an AIM Fund or the distributor determines, in its sole discretion, that your short-term trading is excessive or that you are engaging in market-timing activity, it may reject any additional exchange orders. An exchange is the movement out of (redemption) one AIM Fund and into (purchase) another AIM Fund. TERMS OF EXCHANGE Under unusual market conditions, an AIM Fund may delay the purchase of shares being acquired in an exchange for up to five business days if it determines that it would be materially disadvantaged by the immediate transfer of exchange proceeds. There is no fee for exchanges. The exchange privilege is not an option or right to purchase shares. Any of the participating AIM Funds or the distributor may modify or discontinue this privilege at any time. BY MAIL If you wish to make an exchange by mail, you must include original signatures of each registered owner exactly as the shares are registered, the account registration and account number, the dollar amount or number of shares to be exchanged and the names of the AIM Funds from which and into which the exchange is to be made. BY TELEPHONE Conditions that apply to exchanges by telephone are the same as redemptions by telephone, including that the transfer agent must receive exchange requests during the hours of the customary trading session of the NYSE; however, you still will be allowed to exchange by telephone even if you have changed your address of record within the preceding 30 days. BY INTERNET You will be allowed to exchange by internet if (1) you do not hold physical share certificates; (2) you can provide proper identification information; and (3) you have established the internet trading option. EXCHANGING CLASS B AND CLASS C SHARES If you make an exchange involving Class B or Class C shares, the amount of time you held the original shares will be added to the holding period of the Class B or Class C shares, respectively, into which you exchanged for the purpose of calculating contingent deferred sales charges (CDSC) if you later redeem the exchanged shares. If you redeem Class B shares acquired by exchange via a tender offer by AIM Floating Rate Fund, you will be credited with the time period you held the shares of AIM Floating Rate Fund for the purpose of computing the early withdrawal charge applicable to those shares. - ------------------------------------------------------------------------------- EACH AIM FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO: - REJECT OR CANCEL ANY PART OF ANY PURCHASE OR EXCHANGE ORDER; - MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF ANY AIM FUND; - REJECT OR CANCEL ANY REQUEST TO ESTABLISH THE AUTOMATIC INVESTMENT PLAN AND SYSTEMATIC WITHDRAWAL PLAN OPTIONS ON THE SAME ACCOUNT; OR - WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS. ------------------------------------------------------------------------------ A-7 MCF--03/00 105 -------------- THE AIM FUNDS -------------- PRICING OF SHARES DETERMINATION OF NET ASSET VALUE The price of each AIM Fund's shares is the fund's net asset value per share. The AIM Funds value portfolio securities for which market quotations are readily available at market value. The AIM Funds value short-term investments maturing within 60 days at amortized cost, which approximates market value. AIM Money Market Fund and AIM Tax-Exempt Cash Fund value all of their securities at amortized cost. AIM High Income Municipal Fund, AIM Municipal Bond Fund, AIM Tax-Exempt Bond Fund of Connecticut and AIM Tax-Free Intermediate Fund value variable rate securities that have an unconditional demand or put feature exercisable within seven days or less at par, which reflects the market value of such securities. The AIM Funds value all other securities and assets at their fair value. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day. In addition, if, between the time trading ends on a particular security and the close of the customary trading session of the NYSE, events occur that materially affect the value of the security, the AIM Funds may value the security at its fair value as determined in good faith by or under the supervision of the Board of Directors or Trustees of the AIM Fund. The effect of using fair value pricing is that an AIM Fund's net asset value will be subject to the judgment of the Board of Directors or Trustees or its designee instead of being determined by the market. Because some of the AIM Funds may invest in securities that are primarily listed on foreign exchanges, the value of those funds' assets may change on days when you will not be able to purchase or redeem fund shares. Each AIM Fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or any earlier NYSE closing time that day. AIM Money Market Fund also determines its net asset value as of 12:00 noon Eastern Time on each day the NYSE is open for business. TIMING OF ORDERS You can purchase, exchange or redeem shares during the hours of the customary trading session of the NYSE. The AIM Funds price purchase, exchange and redemption orders at the net asset value calculated after the transfer agent receives an order in good form. An AIM Fund may postpone the right of redemption only under unusual circumstances, as allowed by the Securities and Exchange Commission, such as when the NYSE restricts or suspends trading. TAXES In general, dividends and distributions you receive are taxable as ordinary income or long-term capital gains for federal income tax purposes, whether you reinvest them in additional shares or take them in cash. Distributions are taxable to you at different rates depending on the length of time the fund holds its assets. Different tax rates apply to ordinary income and long-term capital gain distributions, regardless of how long you have held your shares. Every year, you will be sent information showing the amount of dividends and distributions you received from each AIM Fund during the prior year. Any long-term or short-term capital gains realized from redemptions of AIM Fund shares will be subject to federal income tax. Exchanges of shares for shares of another AIM Fund are treated as a sale, and any gain realized on the transaction will generally be subject to federal income tax. INVESTORS IN TAX-EXEMPT FUNDS SHOULD READ THE INFORMATION UNDER THE HEADING "OTHER INFORMATION -- SPECIAL TAX INFORMATION REGARDING THE FUND" IN THEIR PROSPECTUS. The foreign, state and local tax consequences of investing in AIM Fund shares may differ materially from the federal income tax consequences described above. You should consult your tax advisor before investing. MCF--03/00 A-8 106 ----------------------------- AIM INTERNATIONAL EQUITY FUND ----------------------------- OBTAINING ADDITIONAL INFORMATION - ------------------------------------------------------------------------------- More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of this prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. If you have questions about this fund, another fund in The AIM Family of Funds--Registered Trademark-- or your account, or wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact us - --------------------------------------------------------- BY MAIL: A I M Fund Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 BY TELEPHONE: (800) 347-4246 BY E-MAIL: general@aimfunds.com ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and semiannual reports only)
- --------------------------------------------------------- You also can review and obtain copies of the fund's SAI, reports and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplication fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942-8090 for information about the Public Reference Room. ------------------------------------ AIM International Equity Fund SEC 1940 Act file number: 811-6463 ------------------------------------ [AIM LOGO APPEARS HERE] www.aimfunds.com INT-PRO-1 INVEST WITH DISCIPLINE -- Registered Trademark -- 107 STATEMENT OF ADDITIONAL INFORMATION AIM ASIAN GROWTH FUND AIM EUROPEAN DEVELOPMENT FUND AIM GLOBAL AGGRESSIVE GROWTH FUND AIM GLOBAL GROWTH FUND AIM GLOBAL INCOME FUND AIM INTERNATIONAL EQUITY FUND (SERIES PORTFOLIOS OF AIM INTERNATIONAL MUTUAL FUNDS) 11 GREENWAY PLAZA SUITE 100 HOUSTON, TEXAS 77046-1173 (713) 626-1919 ------------------------- THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF THE ABOVE-NAMED FUNDS, A COPY OF WHICH MAY BE OBTAINED FREE OF CHARGE FROM AUTHORIZED DEALERS OR BY WRITING A I M DISTRIBUTORS, INC., P.O. BOX 4739, HOUSTON, TX 77210-4739 OR BY CALLING (800) 347-4246 ------------------------- STATEMENT OF ADDITIONAL INFORMATION DATED MAY 22, 2000, RELATING TO THE AIM ASIAN GROWTH FUND PROSPECTUS DATED MAY 22, 2000, THE AIM EUROPEAN DEVELOPMENT FUND PROSPECTUS DATED MAY 22, 2000, THE AIM GLOBAL AGGRESSIVE GROWTH FUND PROSPECTUS DATED MAY 22, 2000, THE AIM GLOBAL GROWTH FUND PROSPECTUS DATED MAY 22, 2000, THE AIM GLOBAL INCOME FUND PROSPECTUS DATED MAY 22, 2000, AND THE AIM INTERNATIONAL EQUITY FUND PROSPECTUS DATED MAY 22, 2000 108 TABLE OF CONTENTS
PAGE INTRODUCTION.......................................................................1 GENERAL INFORMATION ABOUT THE TRUST................................................1 The Trust and its Shares..................................................1 PERFORMANCE........................................................................3 Total Return Calculations.................................................4 Yield Quotations..........................................................5 Historical Portfolio Results..............................................5 PORTFOLIO TRANSACTIONS AND BROKERAGE...............................................8 General Brokerage Policy..................................................8 Allocation of Portfolio Transactions......................................9 Allocation of IPO Securities Transactions................................10 Section 28(e) Standards..................................................10 Transactions with Regular Brokers........................................11 Brokerage Commissions Paid...............................................11 Portfolio Turnover.......................................................12 INVESTMENT STRATEGIES AND RISKS...................................................12 All Funds (except Income Fund)...........................................13 Asian Fund...............................................................13 European Fund............................................................14 Aggressive Growth Fund and Growth Fund...................................16 Income Fund..............................................................17 Equity Fund..............................................................20 Real Estate Investment Trusts ("REITs")..................................20 Repurchase Agreements and Reverse Repurchase Agreements..................21 Lending of Portfolio Securities..........................................22 Interfund Loans..........................................................22 Securities Issued on a When-Issued or Delayed Delivery Basis.............22 Short Sales..............................................................22 Margin Transactions......................................................22 Illiquid Securities......................................................23 Rule 144A Securities.....................................................23 Foreign Securities.......................................................23 Foreign Exchange Transactions............................................26 Equity-Linked Derivatives................................................27 Investment in Other Investment Companies.................................27 Temporary Defensive Investments..........................................27 OPTIONS, FUTURES AND CURRENCY STRATEGIES..........................................27 Introduction.............................................................27 General Risks of Options, Futures and Currency Strategies................28 Cover....................................................................28 Writing Call Options.....................................................29 Writing Put Options......................................................29 Purchasing Put Options...................................................29 Purchasing Call Options..................................................30 Over-The-Counter Options.................................................30 Index Options............................................................31 Limitations on Options...................................................31
i 109 Interest Rate, Currency and Stock Index Futures Contracts.................31 Options on Futures Contracts..............................................32 Forward Contracts.........................................................33 Limitations on Use of Futures, Options on Futures and Certain Options on Currencies.............................................................33 INVESTMENT RESTRICTIONS............................................................33 Fundamental Restrictions..................................................33 Non-Fundamental Restrictions..............................................34 MANAGEMENT.........................................................................35 Trustees and Officers.....................................................35 Remuneration of Trustees..................................................39 AIM Funds Retirement Plan for Eligible Directors/Trustees.................40 Deferred Compensation Agreements..........................................41 Investment Advisory and Other Services....................................41 THE DISTRIBUTION PLANS.............................................................45 The Class A and C Plan....................................................45 The Class B Plan..........................................................46 Both Plans................................................................46 THE DISTRIBUTOR....................................................................50 SALES CHARGES AND DEALER CONCESSIONS...............................................52 REDUCTIONS IN INITIAL SALES CHARGES................................................55 CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS........................................58 HOW TO PURCHASE AND REDEEM SHARES..................................................60 Backup Withholding........................................................61 NET ASSET VALUE DETERMINATION......................................................63 DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS...........................................64 Reinvestment of Dividends and Distributions...............................64 Tax Matters...............................................................64 Qualification as a Regulated Investment Company...........................64 Fund Distributions........................................................65 Investment in Foreign Financial Instruments...............................65 Hedging Transactions......................................................65 PFIC Investments..........................................................66 Redemption or Exchange of Shares..........................................67 Foreign Income Taxes......................................................67 Backup Withholding........................................................68 Reinstatement Privilege...................................................68 Foreign Shareholders......................................................68 Miscellaneous Considerations; Effect of Future Legislation................69 SHAREHOLDER INFORMATION............................................................69 MISCELLANEOUS INFORMATION..........................................................72 Changes for Certain Account Information...................................72 Audit Reports.............................................................72 Legal Matters.............................................................72 Custodian and Transfer Agent..............................................72
ii 110 Principal Holders of Securities.......................................72 Other Information.....................................................76 APPENDIX A....................................................................A-1 APPENDIX B....................................................................B-1 APPENDIX C....................................................................C-1 FINANCIAL STATEMENTS...........................................................FS
iii 111 INTRODUCTION AIM International Mutual Funds (the "Trust") is a series mutual fund. The rules and regulations of the Securities and Exchange Commission (the "SEC") require all mutual funds to furnish prospective investors certain information concerning the activities of the fund being considered for investment. This information is included in the AIM Asian Growth Fund Prospectus dated May 22, 2000, the AIM European Development Fund Prospectus dated May 22, 2000, the AIM Global Aggressive Growth Fund Prospectus dated May 22, 2000, the AIM Global Growth Fund Prospectus dated May 22, 2000, the AIM Global Income Fund Prospectus dated May 22, 2000, and the AIM International Equity Fund Prospectus dated May 22, 2000 (individually, a "Prospectus" and collectively, the "Prospectuses"). Copies of each Prospectus and additional copies of this Statement of Additional Information may be obtained without charge by writing the principal distributor of the Funds' (hereinafter defined) shares, A I M Distributors, Inc. ("AIM Distributors"), P.O. Box 4739, Houston, Texas 77210-4739, or by calling (800) 347-4246. Investors must receive a Prospectus before they invest in the Funds. This Statement of Additional Information is intended to furnish prospective investors with additional information concerning the Funds. Some of the information required to be in this Statement of Additional Information is also included in each Fund's current Prospectus, and in order to avoid repetition, reference will be made herein to sections of the applicable Prospectus. Additionally, each Prospectus and this Statement of Additional Information omit certain information contained in the Trust's Registration Statement filed with the SEC. Copies of the Registration Statement, including items omitted from each Prospectus and this Statement of Additional Information, may be obtained from the SEC by paying the charges prescribed under its rules and regulations. GENERAL INFORMATION ABOUT THE TRUST THE TRUST AND ITS SHARES The Trust currently is organized as a Delaware business trust under an Agreement and Declaration of Trust, dated December 6, 1999 (the "Trust Agreement"). The Trust was previously organized as AIM International Funds, Inc. ("AIFI"), a Maryland corporation pursuant to Articles of Incorporation, dated October 30, 1991, as amended. Pursuant to an Agreement and Plan of Reorganization, the Funds were reorganized on May 22, 2000 as portfolios of the Trust which is registered under the Investment Company Act of 1940, as amended (the "1940 Act") as a diversified open-end series management investment company. Each Fund is a series of shares of the Trust. The Trust currently consists of six separate portfolios: AIM Asian Growth Fund (the "Asian Fund"), AIM European Development Fund ( the "European Fund"), AIM Global Aggressive Growth Fund (the "Aggressive Growth Fund"), AIM Global Growth Fund (the "Growth Fund"), AIM Global Income Fund ( the "Income Fund") and AIM International Equity Fund (the "Equity Fund") (individually, a "Fund" and collectively, the "Funds"). Each portfolio of the Trust offers Class A, Class B and Class C shares. Pursuant to the May 22, 2000 Agreement and Plan of Reorganization, the Funds succeeded to the assets and assumed the liabilities of the series portfolios with corresponding names (the "Predecessor Funds") of AIFI. All historical financial and other information contained in this Statement of Additional Information for periods prior to May 22, 2000 relating to the Funds (or a class thereof) is that of the Predecessor Funds (or the corresponding class thereof.) Shares of beneficial interest of the Trust are redeemable at their net asset value (subject, in certain circumstances, to a contingent deferred sales charge) at the option of the shareholder or at the option of the Trust in certain circumstances. For information concerning the methods of redemption, investors should consult the Prospectuses under the caption "Redeeming Shares." The assets received by the Trust from the issue or sale of shares of each of its series of shares, and all income, earnings, profits and proceeds thereof, subject only to the rights of creditors, are specifically allocated to the appropriate Fund. They constitute the underlying assets of each Fund, are required to be segregated on the Trust's books of account, and are to be charged with the expenses with respect to such Fund and its respective classes. Any general expenses of the Trust not readily identifiable as belonging to a 1 112 particular Fund are allocated by or under the direction of the Board of Trustees, primarily on the basis of relative net assets, or other relevant factors. Each share of each Fund represents an equal proportionate interest in that Fund with each other share and is entitled to such dividends and distributions out of the income belonging to such Fund as are declared by the Board. Each such class represents interests in the same portfolio of investments but, as further described in the Prospectuses, each such class is subject to differing sales charges and expenses, which differences will result in differing net asset values and dividends and distributions. Upon any liquidation of the Trust, shareholders of each class are entitled to share pro rata in the net assets belonging to the applicable Fund allocable to such class available for distribution after satisfaction of outstanding liabilities of the Fund allocable to such class. The Trust is not required to hold annual or regular meetings of shareholders. Meetings of shareholders of a Fund will be held from time to time to consider matters requiring a vote of such shareholders in accordance with the requirements of the 1940 Act, state law or the provisions of the Trust Agreement. It is not expected that shareholder meetings will be held annually. Class A shares, Class B shares and Class C shares of each Fund represent interests in the Fund's assets and have identical voting, dividend, liquidation and other rights on the same terms and conditions, except that each class of shares bears differing class-specific expenses (such as those associated with the shareholder servicing of their shares) and is subject to differing sales loads (which may affect performance), conversion features and exchange privileges, and has exclusive voting rights on matters pertaining to that class' distribution plan. Each share of a particular class is entitled to one vote, to participate equally in dividends and distributions declared by the Trust's Board of Trustees with respect to the class of such Fund and, upon liquidation of the Fund, to participate proportionately in the net assets of the Fund allocable to such class remaining after satisfaction of outstanding liabilities of the Fund allocable to such class. Class B shares automatically convert to Class A shares at the end of the month which is eight years after the date of purchase. A pro rata portion of shares from reinvested dividends and distributions convert at the same time. No other shares have conversion rights. Because Class B shares convert into Class A shares, the holders of Class B shares (as well as the holders of Class A shares) of each Fund must approve any material increase in fees payable with respect to that Fund under the Class A and C Plan or a new class of shares into which the Class B shares will convert must be created which will be identical in all material respects to the Class A shares prior to the material increase in fees. Except as specifically noted above, shareholders of each Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the different classes of shares, where applicable, of a Fund. However, on matters affecting one portfolio of the Trust or one class of shares, a separate vote of shareholders of that portfolio or class is required. Shareholders of a portfolio or class are not entitled to vote on any matter which does not affect that portfolio or class but which requires a separate vote of another portfolio or class. An example of a matter which would be voted on separately by shareholders of a portfolio is the approval of an advisory agreement, and an example of a matter which would be voted on separately by shareholders of a class of shares is approval of a distribution plan. When issued, shares of the Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are fully transferable. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect trustees, holders of more than 50% of the shares voting for the election of trustees can elect all of the trustees of the Trust, and the holders of less than 50% of the shares voting for the election of trustees will not be able to elect any trustees. The Trust Agreement provides that the trustees of the Trust shall hold office during the existence of the Trust, except as follows: (a) any trustee may resign or retire; (b) any trustee may be removed by a vote of at least two-thirds of the outstanding shares of the Trust, or at any time by written instrument signed by at least two-thirds of the trustees and specifying when such removal becomes effective; or (c) any trustee who has died or become incapacitated and is unable to serve may be retired by a written instrument signed by a majority of the trustees and specifying the date of his or her retirement. 2 113 Under Delaware law, shareholders of a Delaware business trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations, however, there is a remote possibility that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. However, the Trust Agreement disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Trust Agreement provides for indemnification out of the property of a Fund for all losses and expenses of any shareholder of such Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which a Fund would be unable to meet its obligations and wherein the complaining party was held not to be bound by the disclaimer. The Trust Agreement further provides that the trustees and officers will not be liable for any act, omission or obligation of the Trust or any trustee or officer. However, nothing in the Trust Agreement protects a trustee or officer against any liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office with the Trust. The Trust Agreement provides for indemnification by the Trust of the trustees, officers, employees and agents of the Trust, if it is determined that such person acted in good faith and reasonably believed: (1) in the case of conduct in his or her official capacity for the Trust, that his conduct was in the Trust's best interests, (2) in all other cases, that his or her conduct was at least not opposed to the Trust's best interests and (3) in a criminal proceeding, that he or she had no reason to believe that his or her conduct was unlawful. The Trust Agreement also authorizes the purchase of liability insurance on behalf of trustees and officers. PERFORMANCE Each Fund's performance may be quoted in advertising in terms of yield (Income Fund) or total return. All advertisements of the Funds will disclose the maximum sales charge (including deferred sales charge) to which investments in shares of the Funds may be subject. If any advertised performance data does not reflect the maximum sales charge (if any), such advertisement will disclose that the sales charge has not been deducted in computing the performance data, and that, if reflected, the maximum sales charge would reduce the performance quoted. From time to time, A I M Advisors, Inc. ("AIM") or its affiliates may waive all or a portion of their fees and/or assume certain expenses of any Fund. Voluntary fee waivers or reductions or commitments to assume expenses may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions or commitments to assume expenses, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions or reimbursement of expenses set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund. Fee waivers or reductions or commitments to reduce expenses will have the effect of increasing a Fund's yield and total return. The performance of each Fund will vary from time to time and past results are not necessarily indicative of future results. A Fund's performance is a function of its portfolio management in selecting the type and quality of portfolio securities and is affected by operating expenses of the Fund and market conditions. A shareholder's investment in a Fund is not insured or guaranteed. These factors should be carefully considered by the investor before making an investment in any Fund. Some or all of the Funds may participate in the Initial Public Offering ("IPO") market, and a significant portion of those Funds' returns may be attributable to their investment in IPOs, which can have a magnified impact if a Fund has a small asset base, such as Asian Fund and European Fund. There is no guarantee that 3 114 as the Funds' assets grow, they will continue to experience substantially similar performance by investing in IPOs. Additional performance information is contained in a Fund's Annual Report to Shareholders, which is available upon request without charge. Total return and yield figures for the Funds are neither fixed nor guaranteed, and no Fund's principal is insured. The Funds may provide performance information in reports, sales literature and advertisements. The Funds may also, from time to time, quote information about the Funds published or aired by publications or other media entities which contain articles or segments relating to investment results or other data about one or more of the Funds. The following is a list of such publications or media entities: Advertising Age Financial World Nation's Business Barron's Forbes New York Times Best's Review Fortune Pension World Broker World Hartford Courant Pensions & Investment Inc. Business Week Institutional Investor Personal Investor Changing Times Insurance Forum Philadelphia Inquirer Christian Science Monitor Insurance Week USA Today Consumer Reports Investor's Daily U.S. News & World Report Economist Journal of the American Wall Street Journal FACS of the Week Society of CLU & ChFC Washington Post Financial Planning Kiplinger Letter CNN Financial Product News Money CNBC Financial Services Week Mutual Fund Forecaster PBS Each Fund may also compare its performance to performance data of similar mutual funds as published by the following services: Bank Rate Monitor Stanger Donoghue's Weisenberger Mutual Fund Values (Morningstar) Lipper, Inc. Although performance data may be useful to prospective investors when comparing a Fund's performance with other funds and other potential investments, investors should note that the methods of computing performance of other potential investments are not necessarily comparable to the methods employed by a Fund. TOTAL RETURN CALCULATIONS Standardized total return for Class A shares of a Fund reflects the deduction of the maximum initial sales charge at the time of purchase. Standardized total return for Class B shares of a Fund reflects the deduction of the maximum applicable contingent deferred sales charge on a redemption of shares held for the period. Standardized total return for Class C shares of a Fund reflects the deduction of a 1% contingent deferred sales charge, if applicable, on a redemption of shares held for the period. Total returns quoted in advertising reflect all aspects of the applicable Fund's return, including the effect of reinvesting dividends and capital gain distributions, the deduction of charges and expenses and any change in such Fund's net asset value per share over the period. Average annual total returns are calculated by determining the growth or decline in value of a hypothetical investment in a particular Fund over a stated period of time, and then calculating the annually compounded percentage rate that would have produced the same result if the rate of growth or decline in value had been constant over the period. While average annual total returns are a convenient means of comparing investment alternatives, investors should realize that a Fund's performance is not constant over time, but changes from year to year, and that average annual total returns do not represent the actual year-to-year performance of such Fund. The stated period for quotations of average annual total 4 115 return will be for periods of one year and the life of a Fund (commencing as of the effective date of its registration statement). In addition to average annual total returns, each Fund may quote unaveraged or cumulative total returns reflecting the simple change in value of an investment over a stated period. Average annual and cumulative total returns may be quoted as a percentage or as a dollar amount, and may be calculated for a single investment, a series of investments, and/or a series of redemptions, over any time period. Total returns may be broken down into their components of income and capital (including capital gains and changes in share price) in order to illustrate the relationship of these factors and their contributions to total return. Total returns and other performance information may be quoted numerically or in tables, graphs or similar illustrations. For Asian Fund, European Fund and Equity Fund total returns may be quoted with or without taking the Class A shares' 5.50% maximum sales charge, the Class B shares' 5% maximum contingent deferred sales charge ("CDSC") or the Class C shares' 1% maximum CDSC into account. For Aggressive Growth Fund, Growth Fund and Income Fund total returns may be quoted with or without taking the Class A shares' 4.75% maximum sales charge, the Class B shares' 5% maximum CDSC or the Class C shares' 1% maximum CDSC into account. Excluding sales charges from a total return calculation produces a higher total return figure. YIELD QUOTATIONS Yield is computed in accordance with the standardized formula described below and can be expected to fluctuate from time to time and is not necessarily indicative of future results. Accordingly, yield information may not provide a basis for comparison with investments which pay a fixed rate of interest for a stated period of time. Yield reflects investment income net of expenses over the relevant period attributable to a share of Income Fund, expressed as an annualized percentage of the maximum offering price per share of Income Fund. Yield is a function of the type and quality of Income Fund's investments, the Fund's maturity and the Fund's operating expense ratio. The standard formula for calculating yield for the Income Fund, is as follows: 6 YIELD = 2[((a-b)/(c x d) + 1) - 1] Where a = dividends and interest earned during a stated 30-day period. For purposes of this calculation, dividends are accrued rather than recorded on the ex-dividend date. Interest earned under this formula must generally be calculated based on the yield to maturity of each obligation (or, if more appropriate, based on yield to call date). b = expenses accrued during period (net of reimbursement). c = the average daily number of shares outstanding during the period. d = the maximum offering price per share on the last day of the period. The yields for the Class A, Class B and Class C shares of Income Fund for the 30-day period ended October 31, 1999 were as follows:
With Without Waivers Waivers ------- ------- Class A........................... 6.68% 5.99% Class B........................... 6.53% 5.80% Class C........................... 6.53% 5.80%
HISTORICAL PORTFOLIO RESULTS Total returns for each of the Funds, with respect to its Class A shares, for the one-year and five-year (if applicable) periods ended October 31, 1999 and since inception (which include the maximum sales charge and reinvestment of all dividends and distributions), were as follows: 5 116
Average Annual Total Return Cumulative Return Periods ended October 31, 1999 Periods ended October 31, 1999 ------------------------------ ------------------------------ One Five Since One Five Since Class A Shares: Year Years Inception Year Years Inception - --------------- -------- ----- --------- -------- ----- --------- Aggressive Growth Fund 31.75% 15.47% 15.55%** 31.75% 105.30% 109.80%** Asian Fund 33.00% N/A 1.16%*** 33.00% N/A 2.33%*** European Fund 19.88% N/A 24.75%*** 19.88% N/A 55.34%*** Equity Fund 18.84% 11.35% 13.75%* 18.84% 71.14% 165.00%* Growth Fund 28.06% 18.56% 18.58%** 28.06% 134.23% 139.58%** Income Fund -6.61% 6.26% 6.29%** -6.61% 35.45% 36.70%**
* The inception date for the Class A shares of Equity Fund was April 7, 1992. ** The inception date for the Class A shares of each of Aggressive Growth Fund, Growth Fund and Income Fund was September 15, 1994. *** The inception date for the Class A shares of Asian Fund and European Fund was November 3, 1997. Total returns for each of the Funds, with respect to its Class B shares, for the one-year and five-year (if applicable) periods ended October 31, 1999 and since inception (which include the contingent deferred sales charge applicable to the period and reinvestment of all dividends and distributions) were as follows:
Average Annual Total Return Cumulative Return Periods ended October 31, 1999 Periods ended October 31, 1999 ------------------------------ ------------------------------ One Five Since One Five Since Class B Shares: Year Years Inception Year Years Inception - --------------- -------- ----- --------- -------- ----- --------- Aggressive Growth Fund 32.56% 15.76% 15.92%* 32.56% 107.86% 113.27%* Asian Fund 34.76% N/A 1.31%** 34.76% N/A 2.63%** European Fund 20.87% N/A 25.82%** 20.87% N/A 58.00%** Equity Fund 19.72% 11.47% 11.41%* 19.72% 72.13% 74.03%* Growth Fund 28.70% 18.89% 18.98%* 28.70% 137.50% 143.77%* Income Fund -6.94% 6.47% 6.62%* -6.94% 36.82% 38.89%*
* The inception date for the Class B shares of each of Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund was September 15, 1994. ** The inception date for the Class B shares of each of Asian Fund and European Fund was November 3, 1997. Total returns for each of the Funds, with respect to its Class C shares for the one-year period ended October 31, 1999 and since inception (which include the maximum contingent deferred sales charge and reinvestment of all dividends and distributions) were as follows: 6 117
Average Annual Total Return Cumulative Return Periods ended October 31, 1999 Periods ended October 31, 1999 ------------------------------ ------------------------------ One Since One Since Class C Shares: Year Inception Year Inception - --------------- -------- --------- -------- --------- Aggressive Growth Fund 36.56% 6.89%* 36.56% 16.09%* Asian Fund 38.86% 3.18%** 38.86% 6.43%** European Fund 24.85% 27.45%** 24.85% 62.10%** Equity Fund 23.76% 8.97%* 23.76% 21.22%* Growth Fund 32.69% 15.58%* 32.69% 38.33%* Income Fund -3.38% 1.70%* -3.38% 3.85%*
* The inception date for the Class C shares of each of Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund was August 4, 1997. ** The inception date for the Class C Shares of each of Asian Fund and European Fund was November 3, 1997. During the one-year period ended October 31, 1999, a hypothetical $1,000 investment in the Class A shares of Aggressive Growth Fund, Asian Fund, European Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,317.53, $1,330.04, $1,198.76, $1,188.44, $1,280.64 and $933.86, respectively, assuming the maximum sales charge was paid and all distributions were reinvested. For the period November 3, 1997 (inception date for Asian Fund and European Fund) through October 31, 1999, and the five-year period ended October 31, 1999, for Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund, a hypothetical $1,000 investment in the Class A shares of Aggressive Growth Fund, Asian Fund, European Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $2,052.98, $1,023.30, $1,553.41, $1,711.43, $2,342.27 and $1,354.46, respectively, assuming the maximum sales charge was paid and all distributions were reinvested. During the one-year period ended October 31, 1999, a hypothetical $1,000 investment in the Class B shares of Aggressive Growth Fund, Asian Fund, European Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,325.64, $1,347.56, $1,208.74, $1,197.16, $1,286.95 and $930.42, respectively, assuming the maximum contingent deferred sales charge was paid and all distributions were reinvested. For the period November 3, 1997 (inception date for Asian Fund and European Fund) through October 31, 1999, and the five-year period ended October 31, 1999, for Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund, a hypothetical $1,000 investment in the Class B shares of Aggressive Growth Fund, Asian Fund, European Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $2,078.62, $1,026.33, $1,580.00, $1,721.26, $2,374.96 and $1,367.99, respectively, assuming the maximum contingent deferred sales charge was paid and all distributions were reinvested. During the one-year period ended October 31, 1999, a hypothetical $1,000 investment in the Class C shares of Aggressive Growth Fund, Asian Fund, European Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,365.64, $1,388.60, $1,248.54, $1,237.62, $1,326.93 and $966.15, respectively, assuming the maximum contingent deferred sales charge was paid and all distributions were reinvested. For the period November 3, 1997 (inception date of Asian Fund and European Fund) through October 31, 1999, and for the period August 4, 1997 (inception date for Aggressive Growth Fund, Equity Fund, Growth Fund and Income Fund) through October 31, 1999, a hypothetical $1,000 investment in the Class C shares of Aggressive Growth Fund, Asian Fund, European Fund, Equity Fund, Growth Fund and Income Fund at the beginning of such period would have been worth $1,160.95, $1,064.33, $1,621.00, $1,212.25, $1,383.33, and $1,038.49, respectively, assuming the maximum contingent deferred sales charge was paid and all distributions were reinvested. 7 118 Each Fund's performance may be compared in advertising to the performance of other mutual funds in general, or of particular types of mutual funds, especially those with similar objectives. Such performance data may be prepared by Lipper, Inc. and other independent services which monitor the performance of mutual funds. The Funds may also advertise mutual fund performance rankings which have been assigned to each respective Fund by such monitoring services. Each Fund's performance may also be compared in advertising and other materials to the performance of comparative benchmarks such as indices of stocks comparable to those in which the Funds invest, as well as the following: [Standard & Poor's 400 Midcap Index] Dow Jones Industrial Average Standard & Poor's Composite Index [Lipper European Funds Index] of 500 Stocks [Lipper International Funds Index] Consumer Price Index Morgan Stanley Capital International Indices, Bond Buyer Index including: NASDAQ EAFE Index COFI AC Asia Free Ex-Japan First Boston High Yield Index Europe Index The Financial Times - Actuaries World Indices World Index (a wide range of comprehensive measures AC World Index of stock price performance for the world's [Lehman World Government Bond Fund] major stock markets and regional areas) Salomon Bros World Gov't Bond Index
Each Fund may also compare its performance to rates on Certificates of Deposit and other fixed rate investments such as the following: 10 year Treasuries 30 year Treasuries 90 Day Treasury Bills Advertising for the Income Fund may from time to time include discussions of general economic conditions and interest rates. From time to time, each Fund's advertising may include discussions of general domestic and international economic conditions and interest rates, and may make reference to international economic sources such as The Bundesbank (the German equivalent of the U.S. Federal Reserve Board). Each Fund's advertising may also include references to the use of the Fund as part of an individual's overall retirement investment program. From time to time, each Fund's sales literature and/or advertisements may discuss generic topics pertaining to the mutual fund industry. This includes, but is not limited to, literature addressing general information about mutual funds, variable annuities, dollar-cost averaging, stocks, bonds, money markets, certificates of deposit, retirement, retirement plans, asset allocation, tax-free investing, college planning and inflation. Also from time to time, sales literature and/or advertisements for the Funds may disclose (i) the largest holdings in the Funds' portfolios, (ii) certain selling group members and/or (iii) certain institutional shareholders. PORTFOLIO TRANSACTIONS AND BROKERAGE GENERAL BROKERAGE POLICY AIM makes decisions to buy and sell securities for the Funds, selects broker-dealers, effects the Funds' investment transactions, allocates brokerage fees in such transactions, and where applicable, negotiates commissions and spreads on transactions. Since purchases and sales of portfolio securities by the Funds are usually principal transactions, the Funds incur little or no brokerage commission. AIM's primary consideration in effecting a security transaction is to obtain the most favorable execution of the order, which includes the best 8 119 price on the security and a low commission rate (as applicable). While AIM seeks reasonably competitive commission rates, the Funds may not pay the lowest commission or spread available. See "Section 28(e) Standards" below. In the event a Fund purchases securities traded over-the-counter, the Fund deals directly with dealers who make markets in the securities involved, except when better prices are available elsewhere. Fund transactions placed through dealers who are primary market makers are effected at net prices without commissions, but which include compensation in the form of a mark up or mark down. AIM may determine target levels of commission business with various brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be based upon the following factors, among others: (1) the execution services provided by the broker; (2) the research services provided by the broker; and (3) the broker's interest in mutual funds in general and in the Funds and other mutual funds advised by AIM or A I M Capital Management, Inc. (collectively, the "AIM Funds") in particular, including sales of the Funds and of the other AIM Funds. In connection with (3) above, the Funds' trades may be executed directly by dealers which sell shares of the AIM Funds or by other broker-dealers with which such dealers have clearing arrangements. AIM will not use a specific formula in connection with any of these considerations to determine the target levels. The Funds may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an exemptive order received by the Funds from the SEC are met. In addition, the Funds may purchase or sell a security from or to another AIM Fund or account and may invest in affiliated money market funds, provided the Funds follow procedures adopted by the Board of Directors/Trustees of the various AIM Funds, including the Trust. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses. Under the 1940 Act, certain persons affiliated with the Trust are prohibited from dealing with the Trust as principal in any purchase or sale of securities unless an exemptive order allowing such transactions is obtained from the SEC. The 1940 Act also prohibits the Trust from purchasing a security being publicly underwritten by a syndicate of which certain persons affiliated with the Trust are members except in accordance with certain conditions. These conditions may restrict the ability of the Funds to purchase municipal securities being publicly underwritten by such syndicate, and the Funds may be required to wait until the syndicate has been terminated before buying such securities. At such time, the market price of the securities may be higher or lower than the original offering price. A person affiliated with the Trust may, from time to time, serve as placement agent or financial advisor to an issuer of Municipal Securities and be paid a fee by such issuer. The Funds may purchase such Municipal Securities directly from the issuer, provided that the purchase is reviewed by the Trust's Board of Trustees and a determination is made that the placement fee or other remuneration paid by the issuer to a person affiliated with the Trust is fair and reasonable in relation to the fees charged by others performing similar services. ALLOCATION OF PORTFOLIO TRANSACTIONS AIM and its affiliates manage numerous other investment accounts. Some of these accounts may have investment objectives similar to the Funds. Occasionally, identical securities will be appropriate for investment by a Fund and one or more of these investment accounts. However, the position of each account in the same securities and the length of time that each account may hold its investment in the same securities may vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of a Fund and one or more of these accounts, and is considered at or about the same time, AIM will fairly allocate transactions in such securities among such Fund and these accounts. AIM may combine such transactions, in accordance with applicable laws and regulations, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect the Funds' ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell. 9 120 Sometimes the procedure for allocating portfolio transactions among the various investment accounts advised by AIM could have an adverse effect on the price or amount of securities available to the Funds. In making such allocations, AIM considers the investment objectives and policies of its advisory clients, the relative size of portfolio holdings of the same or comparable securities, the availability of cash for investment, the size of investment commitments generally held, and the judgments of the persons responsible for recommending the investment. ALLOCATION OF IPO SECURITIES TRANSACTIONS From time to time, certain of the AIM Funds or other accounts managed by AIM may become interested in participating in security distributions that are available in an IPO, and occasions may arise when purchases of such securities by one AIM Fund or account may also be considered for purchase by one or more other AIM Funds or accounts. In such cases, it shall be AIM's practice to specifically combine or otherwise bunch indications of interest for IPO securities for all AIM Funds and accounts participating in purchase transactions for that security, and to allocate such transactions in accordance with the following procedures: AIM will determine the eligibility of each AIM Fund and account that seeks to participate in a particular IPO by reviewing a number of factors, including suitability of the investment with the AIM Fund's or account's investment objective, policies and strategies, the liquidity of the AIM Fund or account if such investment is purchased, and whether the portfolio manager intends to hold the security as a long-term investment. The allocation of limited supply securities issued in IPOs will be made to eligible AIM Funds and accounts in a manner designed to be fair and equitable for the eligible AIM Funds and accounts, and so that there is equal allocation of IPOs over the longer term. Where multiple funds or accounts are eligible, rotational participation may occur, based on the extent to which an AIM Fund or account has participated in previous IPOs as well as the size of the AIM Fund or account. Each eligible AIM Fund or account with an asset level of less than $500 million will be placed in one of three tiers, depending upon its asset level. The AIM Funds and accounts in the tier containing funds and accounts with the smallest asset levels will participate first, each receiving a 40 basis point allocation (rounded to the nearest share round lot that approximates 40 basis points) (the "Allocation"), based on that AIM Fund's or account's net assets. This process continues until all of the AIM Funds or accounts in the three tiers receive their Allocation, or until the shares are all allocated. Should securities remain after this process, eligible AIM Funds and accounts will receive their Allocation on a straight pro rata basis. For the tier of AIM Funds and accounts not receiving a full Allocation, the Allocation may be made only to certain AIM Funds or accounts so that each may receive close to or exactly 40 basis points. When AIM Funds and/or accounts with substantially identical investment objectives and policies participate in syndicates, they will do so in amounts that are substantially proportionate to each other. In these cases, the net assets of the largest AIM Fund will be used to determine in which tier, as described in the paragraph above, such group of AIM Funds or accounts will be placed. If no AIM Fund participates, then the net assets of the largest account will be used to determine tier placement. The price per share of securities purchased in such syndicate transactions will be the same for each AIM Fund and account. SECTION 28(e) STANDARDS Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under certain circumstances, lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e), AIM must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided viewed in terms of either that particular transaction or [AIM's] overall responsibilities with respect to the accounts as to which it exercises investment discretion." The services provided by the broker also must lawfully and appropriately assist AIM in the performance of its investment decision-making responsibilities. Accordingly, in recognition of research services provided to them, Funds may pay a broker higher commissions than those available from another broker. Research services received from broker-dealers supplement AIM's own research (and the research of its affiliates), and may include the following types of information: statistical and background information on the U.S. and foreign economies, industry groups and individual companies; forecasts and interpretations with 10 121 respect to the U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on federal, state, local and foreign political developments; portfolio management strategies; performance information on securities, indexes and investment accounts; information concerning prices of securities; and information supplied by specialized services to AIM and to the Trust's trustees with respect to the performance, investment activities, and fees and expenses of other mutual funds. Broker-dealers may communicate such information electronically, orally, in written form or on computer software. Research services may also include the providing of custody services, as well as the providing of equipment used to communicate research information, the providing of specialized consultations with AIM personnel with respect to computerized systems and data furnished to AIM as a component of other research services, the arranging of meetings with management of companies, and the providing of access to consultants who supply research information. The outside research assistance is useful to AIM since the broker-dealers used by AIM tend to follow a broader universe of securities and other matters than AIM's staff can follow. In addition, the research provides AIM with a diverse perspective on financial markets. Research services provided to AIM by broker-dealers are available for the benefit of all accounts managed or advised by AIM or by its affiliates. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by AIM's clients, including the Funds. However, the Funds are not under any obligation to deal with any broker-dealer in the execution of transactions in portfolio securities. In some cases, the research services are available only from the broker-dealer providing them. In other cases, the research services may be obtainable from alternative sources in return for cash payments. AIM believes that the research services are beneficial in supplementing AIM's research and analysis and that they improve the quality of AIM's investment advice. The advisory fees paid by the Funds are not reduced because AIM receives such services. However, to the extent that AIM would have purchased research services had they not been provided by broker-dealers, the expenses to AIM could be considered to have been reduced accordingly. TRANSACTIONS WITH REGULAR BROKERS As of October 31, 1999, European Fund had common stock holdings in Deutsche Bank Securities Inc. having a market value of $1,721,995. As of October 31, 1999, Growth Fund had common stock holdings in Deutsche Bank Securities Inc. having a market value of $1,578,496. As of October 31, 1999, Equity Fund had common stock holdings in Deutsche Bank Securities Inc. having a market value of $29,776,171. Deutsche Bank Securities Inc. is a regular broker/dealer of the Trust, as defined in Rule 10b-1. As of October 31, 1999, Growth Fund had common stock holdings in Morgan Stanley, Dean Witter, Discovery & Co. having a market value of $4,853,750. Morgan Stanley, Dean Witter, Discovery & Co. is a regular broker/dealer of the Trust, as defined in rule 10b-1. As of October 31, 1999, Income Fund had common stock holdings in Dresdner Finance B.V. having a market value of $1,047,839. Dresdner Finance B.V. is a regular broker/dealer of the Trust, as defined in Rule 10b-1. As of October 31, 1999, Income Fund had common stock holdings in Lehman Brothers Inc. having a market value of $523,667. Lehman Brothers Inc. is a regular broker/dealer of the Trust, as defined in Rule 10b-1. As of October 31, 1999, Income Fund had common stock holdings in Societe Generale having a market value of $76,221. Societe Generale is a regular broker/dealer of the Trust, as defined in Rule 10b-1. BROKERAGE COMMISSIONS PAID For the fiscal years ended October 31, 1999, 1998 and 1997, Aggressive Growth Fund paid brokerage commissions of $4,648,141, $5,519,840 and $6,227,671, respectively. For the fiscal year ended October 31, 1999, 11 122 AIM allocated certain of Aggressive Growth Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $132,746,868 and the related brokerage commissions were $193,563. For the fiscal years ended October 31, 1999, 1998 and 1997, Equity Fund paid brokerage commissions of $9,975,166, $8,743,049 and $6,002,915, respectively. The increase in brokerage commissions from October 31, 1996 through October 31, 1998 was due to the increase in Equity Fund's net assets during such period. For the fiscal year ended October 31, 1999, AIM allocated certain of Equity Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $93,942,068 and the related brokerage commissions were $161,641. For the fiscal years ended October 31, 1999, 1998 and 1997, Growth Fund paid brokerage commissions of $1,919,718, $1,482,482 and $1,249,946, respectively. The increase in brokerage commissions from October 31, 1996 through October 31, 1998 was due to the increase in Growth Fund's net assets during such period. For the fiscal year ended October 31, 1999, AIM allocated certain of Growth Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $89,020,581 and the related brokerage commissions were $116,369. For the fiscal years ended October 31, 1999, 1998, and 1997, Income Fund paid brokerage commissions of $813, $2,638 and $162, respectively. For the fiscal year ended October 31, 1999, AIM allocated certain of Income Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $112,170 and the related brokerage commissions were $208. For the fiscal year ended October 31, 1999, and the period November 3, 1997 to October 31, 1998, European Fund paid brokerage commissions of $915,158 and $563,626, respectively. For the fiscal year ended October 31, 1999, AIM allocated certain of European Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $8,610,037 and the related brokerage commissions were $15,829. For the fiscal year ended October 31, 1999, and the period November 3,1997 to October 31, 1998, Asian Fund paid brokerage commissions of $327,148 and $75,694, respectively. For the fiscal year ended October 31, 1999, AIM allocated certain of Asian Fund's brokerage transactions to certain broker-dealers that provided AIM with certain research, statistical and other information. Such transactions amounted to $95,394 and the related brokerage commissions were $270. PORTFOLIO TURNOVER Any particular security will be sold, and the proceeds reinvested, whenever such action is deemed prudent from the viewpoint of a Fund's investment objective(s), regardless of the holding period of that security. Each Fund's historical portfolio turnover rates are included in the Financial Highlights tables of the Fund's prospectus. A high rate of portfolio turnover may result in higher transaction costs, including brokerage commissions. Also, to the extent that higher portfolio turnover results in a higher rate of net realized capital gains to a Fund, the portion of the Fund's distributions constituting taxable capital gains may increase. See "Tax Matters." INVESTMENT STRATEGIES AND RISKS Information concerning each Fund's non-fundamental investment objective(s) is set forth in the Prospectuses under the heading "Investment Objective and Strategies." There can be no assurance that any Fund will achieve its objective. The principal features of each Fund's investment program and the principal risks associated with that investment program are discussed in the Prospectuses under the heading "Investment Objective and Strategies" and "Principal Risks of Investing in the Fund." 12 123 Set forth in this section is a description of each Fund's investment policies, strategies and practices. The investment objective(s) of each Fund are non-fundamental policies and may be changed by the Board of Trustees without shareholder approval. Each Fund's investment policies, strategies and practices are also non-fundamental. The Board of Trustees of the Trust reserves the right to change any of these non-fundamental investment policies, strategies or practices without shareholder approval. However, shareholders will be notified before any material change in the investment policies becomes effective. Each Fund has adopted certain investment restrictions, some of which are fundamental and cannot be changed without shareholder approval. See "Investment Restrictions" in this Statement of Additional Information. Individuals considering the purchase of shares of any Fund should recognize that there are risks in the ownership of any security. Any percentage limitations with respect to assets of a Fund will be applied at the time of purchase. ALL FUNDS (EXCEPT INCOME FUND) In managing the Funds, AIM seeks to apply to each of the diversified portfolios of equity securities the same investment strategy which it applies to several of its other managed portfolios which have similar investment objectives but which invest primarily in United States equities markets. Each of the Funds will utilize to the extent practicable a fully managed investment policy providing for the selection of securities which meet certain quantitative standards determined by AIM. AIM reviews carefully the earnings history and prospects for growth of each company considered for investment by each of the Funds. It is anticipated that common stocks will be the principal form of investment of the Funds. The portfolio of each of the Funds is primarily comprised of securities of two basic categories of companies: (a) "core" companies, which AIM considers to have experienced above-average and consistent long-term growth in earnings and to have excellent prospects for outstanding future growth, and (b) "earnings acceleration" companies which AIM believes are currently enjoying a dramatic increase in earnings. If a particular foreign company meets the quantitative standards determined by AIM, its securities may be acquired by a Fund regardless of the location of the company or their percentage of the Fund's investments in the company's country or region. However, AIM will also consider other factors in making investment decisions for these Funds including such factors as the prospects for relative economic growth among countries or regions, economic and political conditions, currency exchange fluctuations, tax considerations and the liquidity of a particular security. AIM recognizes that often there is less public information about foreign companies than is available in reports supplied by domestic companies, that foreign companies are not subject to uniform accounting and financial reporting standards, and that there may be greater delays experienced by a Fund in receiving financial information supplied by foreign companies than comparable information supplied by domestic companies. In addition, the value of the Fund's investments that are denominated in a foreign currency may be affected by changes in currency exchange rates. For these and other reasons, AIM from time to time may encounter greater difficulty applying its disciplined stock selection strategy to an international equity investment portfolio than to a portfolio of domestic equity securities. ASIAN FUND The investment objective of the Asian Fund is to provide long-term growth of capital. The Asian Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity securities, the issuers of which are located in Asia, and which are considered by AIM to have strong earnings momentum or demonstrate other potential for capital appreciation. Any income realized by the Asian Fund will be incidental and will not be an important criterion in the selection of portfolio securities. Under normal market conditions the Asian Fund will invest at least 65% of its total assets in marketable equity securities, including common stock, preferred stock, depositary receipts for stock and other securities having the characteristics of stock (such as an equity or ownership interest in a company) of Asian companies. The Asian Fund may satisfy the foregoing requirement in part by investing in the securities of foreign issuers which are in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or 13 124 other securities representing underlying securities of Asian issuers. The Asian Fund may also satisfy such requirement by investing up to 20% of its total assets in securities exchangeable for or convertible into equity securities of Asian companies. The Asian Fund will not invest in Japanese securities. Any change to such policy must be submitted by AIM to the Trust's Board of Trustees prior to the effectiveness of such change. The Asian Fund considers an issuer of securities to be an Asian company if: (i) it is organized under the laws of a country in Asia and has a principal office in a country in Asia; (ii) it derives a significant portion (i.e., 50% or more) of its total revenues from business in Asia; or (iii) its equity securities are traded principally on a stock exchange in Asia or in an over-the-counter market in Asia. The Asian Fund also considers shares of Asian closed-end management investment companies, the assets of which are invested primarily in Asian equity securities, to be securities of Asian companies. There are no prescribed limits on geographic asset distribution within Asia. Under normal market conditions, at least three countries will be represented in the Asian Fund's portfolio of investments. The Asian Fund intends to invest in securities of issuers in Asia as well as countries such as Australia and New Zealand. The Asian Fund may invest, without limit, in "developing" countries or "emerging markets." For a description of the risk factors associated with investment in emerging markets, see "Investment Strategies and Risks - Foreign Securities-Emerging Markets.". A description of other investment strategies Asian Fund may pursue follows after the section entitled "Investment Strategies and Risks " Equity Fund." The Asian Fund considers issuers of securities located in the following countries to be Asian issuers: Bangladesh Indonesia Philippines Thailand China Korea Singapore Vietnam Hong Kong Malaysia Sri Lanka India Pakistan Taiwan
In addition to Asian issuers, Asian Fund may invest up to 35% of its total assets in securities of non-Asian issuers. The following is a list of some of the non-Asian countries in which Asian Fund may invest from time to time: Australia New Zealand EUROPEAN FUND The investment objective of the European Fund is to provide long-term growth of capital. The European Fund seeks to achieve its investment objective by investing in a diversified portfolio of European equity securities, the issuers of which are considered by AIM to have strong earnings momentum or demonstrate other potential for capital appreciation. Any income realized by the European Fund will be incidental and will not be an important criterion in the selection of portfolio securities. Under normal market conditions the European Fund will invest at least 80% of its total assets in marketable equity securities, including common stock, preferred stock, depositary receipts for stock and other securities having the characteristics of stock (such as an equity or ownership interest in a company) of European companies. The European Fund may satisfy the foregoing requirement in part by investing in the securities of European issuers which are in the form of ADRs, EDRs, or other securities representing underlying securities of European issuers. The European Fund may also satisfy such requirement by investing up to 20% of its total assets in securities exchangeable for or convertible into equity securities of European issuers. Investments in foreign securities may include securities issued by enterprises that have undergone or are currently undergoing privatization. 14 125 The European Fund considers an issuer of securities to be a European company if; (i) it is organized under the laws of a European country and has a principal office in a European country; (ii) it derives a significant portion (i.e., 50% or more) of its total revenues from business in Europe; or (iii) its equity securities are traded principally on a stock exchange in Europe or in an over-the-counter market in Europe. The European Fund also considers European equity securities of closed-end management investment companies, the assets of which are invested primarily in European equity securities, to be securities of European companies. There are no prescribed limits on geographic asset distribution within the European community. Under normal market conditions, at least three European countries will be represented in the European Fund's portfolio of investments. The European Fund intends to invest in securities of issuers in Western Europe (such as the United Kingdom, Germany and the Netherlands) as well as companies of issuers in Eastern Europe (such as Croatia, the Czech Republic, Russia and Turkey). Many of the countries in Eastern Europe are "developing" countries or "emerging markets." The European Fund may invest up to 65% of its total assets in securities of European issuers located in "developing" countries or "emerging markets." The European Fund may invest up to 20% of its total assets in securities of non-European companies. A description of other investment strategies European Fund may pursue follows after the section entitled "Investment Strategies and Risks " Equity Fund." European Fund considers issuers of securities located in the following countries to be European issuers: Austria Germany Netherlands Slovenia Belgium Greece Norway Spain Croatia Hungary Poland Sweden Czech Republic Ireland Portugal Switzerland Denmark Italy Romania Turkey Finland Liechtenstein Russia Ukraine France Luxembourg Slovakia United Kingdom
In addition to European issuers, European Fund may invest up to 20% of its total assets in securities of non-European issuers. The following is a list of some of the non-European countries in which European Fund may invest from time to time: Bermuda Egypt Israel South Africa United States
The above lists may include foreign countries that have not yet been approved by the Trust's advisor. European Fund will only invest in foreign countries that have been approved by the advisor. The word "Development" in European Fund's name is designed to address the general restructuring taking place in Europe as well as a more dramatic political and economic restructuring taking place in regions such as Eastern Europe. Also consistent with the name, the Fund has the ability to invest a significant portion of its total assets in securities issued in emerging markets. PRIVATIZED ENTERPRISES. The governments of certain foreign countries have, to varying degrees, embarked on privatization programs contemplating the sale of all or part of their interests in state enterprises. European Fund's investments in the securities of privatized enterprises include privately negotiated investments in a government- or state-owned or controlled company or enterprise that has not yet conducted an initial equity offering, investments in the initial offering of equity securities of a state enterprise or former state enterprise and investments in the securities of a state enterprise following its initial equity offering. 15 126 In certain jurisdictions, the ability of foreign entities, such as European Fund, to participate in privatizations may be limited by local law, or the price or terms on which European Fund may be able to participate may be less advantageous than for local investors. Moreover, there can be no assurance that governments that have embarked on privatization programs will continue to divest their ownership of state enterprises, that proposed privatizations will be successful or that governments will not re-nationalize enterprises that have been privatized. In the case of the enterprises in which European Fund may invest, large blocks of the stock of those enterprises may be held by a small group of stockholders, even after the initial equity offerings by those enterprises. The sale of some portion or all of those blocks could have an adverse effect on the price of the stock of any such enterprise. Prior to making an initial equity offering, most state enterprises or former state enterprises go through an internal reorganization or management changes. Such reorganizations are made in an attempt to better enable these enterprises to compete in the private sector. However, certain reorganizations could result in a management team that does not function as well as the enterprise's prior management and may have a negative effect on such enterprise. In addition, the privatization of an enterprise by its government may occur over a number of years, with the government continuing to hold a controlling position in the enterprise even after the initial equity offering for the enterprise. Prior to privatization, most of the state enterprises in which European Fund may invest enjoy the protection of and receive preferential treatment from the respective sovereigns that own or control them. After making an initial equity offering these enterprises may no longer have such protection or receive such preferential treatment and may become subject to market competition from which they were previously protected. Some of these enterprises may not be able to effectively operate in a competitive market and may suffer losses or experience bankruptcy due to such competition. AGGRESSIVE GROWTH FUND AND GROWTH FUND Aggressive Growth Fund and Growth Fund have their own investment objective and investment program as discussed herein. The investment objective of Aggressive Growth Fund is to provide above-average long-term growth of capital appreciation. Aggressive Growth Fund seeks to achieve its objective by investing in a portfolio of global equity securities including securities of selected companies with relatively small market capitalization. The Aggressive Growth Fund will invest in companies throughout the world which AIM believes possess exceptional growth potential that should enhance such companies' prospects for future growth in earnings. As a result of this policy, the market prices of many of the securities purchased and held by Aggressive Growth Fund may fluctuate widely. Any income received from securities held by Aggressive Growth Fund will be incidental, and an investor should not consider a purchase of shares of Aggressive Growth Fund as equivalent to a complete investment program. Aggressive Growth Fund will emphasize investment in small to medium-sized companies, but its strategy does not preclude investment in large, seasoned companies which in AIM's judgment possess superior potential returns similar to companies with formative growth profiles. Aggressive Growth Fund will also invest in established smaller companies (under $1 billion in market capitalization) which in AIM's judgment offer exceptional value based upon substantially above average earnings growth potential relative to market value. Investors should realize that equity securities of small to medium-sized companies may involve greater risk than is associated with investing in more established companies. Small to medium-sized companies often have limited product and market diversification, fewer financial and managerial resources or may be dependent on a few key managers. Also, because smaller companies normally have fewer shares outstanding than larger companies and trade less frequently, it may be more difficult for Aggressive Growth Fund to buy and sell shares without an unfavorable impact on prevailing market prices. Some of the companies in which Aggressive Growth Fund may invest may distribute, sell or produce products which have recently been brought to market. Any of the foregoing may 16 127 change suddenly and have an immediate impact on the value of Aggressive Growth Fund's investments. Furthermore, whenever the securities markets have experienced rapid price changes due to national economic trends, secondary growth securities have historically been subject to exaggerated price changes. The investment objective of Growth Fund is to provide long-term growth of capital. Growth Fund seeks to achieve its objective by investing in a portfolio of global equity securities of selected companies that are considered by AIM to have strong earnings momentum. Current income will not be an important criterion of investment section, and any such income should be considered incidental. Under normal market conditions, Aggressive Growth Fund and Growth Fund will invest 65% of their respective total assets in marketable equity securities (including common and preferred stock and other securities having the characteristics of stock (such as an equity or ownership interest in a company)) of companies which are listed on a recognized securities exchange or traded in an over-the-counter market. Each of these Funds may satisfy the foregoing requirement in part by investing in the securities of issuers which are in the form of ADRs, EDRs, or other securities representing underlying securities of foreign issuers. Each of Aggressive Growth Fund and Growth Fund may invest up to 20% of its total assets in securities convertible into or exchangeable for equity securities of foreign and domestic issuers which (except in the case of ADRs, EDRs and other securities representing underlying securities of foreign issuers) are listed on a recognized securities exchange or traded in an over-the-counter market. Under normal market conditions, the assets of each of Growth Fund and Aggressive Growth Fund will be invested in the securities of companies located in at least four different countries, including the United States. Aggressive Growth Fund and Growth Fund will each emphasize investment in companies in developed countries such as the United States, the countries of Western Europe and certain countries in the Pacific Basin (such as Japan, Hong Kong and Australia). Growth Fund and Aggressive Growth Fund may also invest in the securities of companies located in developing countries (such as Turkey, Poland and Mexico) in various regions of the world. A "developing country" is a country in the initial stages of this industrial cycle. Investment in the equity markets of developing countries involves exposure to securities exchanges that may have substantially less trading volume and greater price volatility, economic structures that are less diverse and mature, and political systems that may be less stable than the equity markets of developed countries. A description of other investment strategies Aggressive Growth Fund and Growth Fund may pursue follows the section entitled "Investment Strategies and Risks." INCOME FUND Income Fund's primary investment objective is to provide a high level of current income. As a secondary objective the Fund seeks preservation of principal and capital appreciation. The Fund seeks to achieve its objectives by investing in a portfolio of U.S. and foreign government and corporate debt securities. Income Fund intends to invest in (i) foreign government securities, (ii) securities issued by supranational organizations (such as the World Bank), (iii) foreign and domestic corporate debt securities, including lower-rated or unrated U.S. dollar-denominated high yield corporate debt securities, commonly known as "junk bonds" and (iv) U.S. Government securities, including U.S. Government Agency mortgage-backed securities. Income Fund will invest no more than 5% of its total assets in the securities of any one corporate issuer, and will invest no more than 25% of its total assets in securities of any one foreign government or supranational issuer. Income Fund will generally invest in the securities of issuers located in at least four countries, including the United States. Income Fund will invest in securities issued by governments and companies throughout the world, but expects that it will invest primarily in securities of issuers in industrialized countries with established securities 17 128 markets, such as Western European countries, Canada, Japan, Australia, New Zealand and the United States. Income Fund may, however, invest up to 20% of its total assets in securities of issuers in developing countries such as Turkey, Poland and Mexico. Although Income Fund will invest at least 65% of its total assets in non-convertible debt securities of foreign and domestic issuers, it may invest up to 10% of its total assets in common stocks, preferred stocks and similar equity securities of foreign and domestic issuers. Income Fund may also invest up to 10% of its total assets in convertible debt securities of foreign and domestic issuers. Income Fund may invest less than 35% of its total assets in high yield debt securities (i.e., "junk bonds"). Such securities, at the time of purchase, are rated below investment grade or are determined by AIM to be non-investment grade quality. For a description of the various rating categories of corporate debt securities in which Income Fund may invest, see Appendix B. While generally providing greater income and opportunity for gain, non-investment grade debt securities may be subject to greater risks than higher-rated securities. Economic downturns tend to disrupt the market for junk bonds and adversely affect their values. Such economic downturns may be expected to result in increased price volatility for junk bonds and of the value of shares of the Fund, and increased issuer defaults on junk bonds. In addition, many issuers of junk bonds are substantially leveraged, which may impair their ability to meet their obligations. In some cases, junk bonds are subordinated to the prior payment of senior indebtedness, which potentially limits a Fund's ability to fully recover principal or to receive payments when senior securities are subject to a default. The credit rating of a debt security does not necessarily address its market value risk, and ratings may from time to time change to reflect developments regarding the issuer's financial condition. Junk bonds have speculative characteristics which are likely to increase in number and significance with each successive lower rating category. Credit ratings evaluate the safety of principal and interest payments, not market value risk of high yield bonds. Also, since credit rating agencies may fail to timely change the credit ratings to reflect subsequent events, AIM continuously monitors the issuers of high yield bonds in Income Fund's portfolio to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments, and to attempt to assure the bonds' liquidity so that Income Fund can meet redemption requests. The achievement of Income Fund's investment objective may be more dependent on AIM's own credit analysis than might be the case for a fund which invests in higher quality bonds. Income Fund may retain a portfolio security whose ratings has been changed. When the secondary market for junk bonds becomes more illiquid, or in the absence of readily available market quotations for such securities, the relative lack of reliable objective data makes it more difficult for the trustees to value a Fund's securities, and judgment plays a more important role in determining such valuations. Increased illiquidity in the junk bond market also may affect a Fund's ability to dispose of such securities at desirable prices. In the event the Fund experiences an unexpected level of net redemptions, the Fund could be forced to sell its junk bonds without regard to their investment merits, thereby decreasing the asset base upon which the Fund's expenses can be spread and possibly reducing the Fund's rate of return. Prices of junk bonds have been found to be less sensitive to fluctuations in interest rates, and more sensitive to adverse economic changes and individual corporate developments, than those of higher-rated debt securities. Securities issued by the U.S. Treasury (notes, bonds and bills) are supported by the full faith and credit of the United States government, while certain securities issued or guaranteed by agencies or instrumentalities of the U.S. Government may not be supported by the full faith and credit of the United States. These agency securities include both obligations supported by the right of the issuer to borrow from the U.S. Treasury (such as obligations of the Federal Home Loan Bank) and obligations supported by the credit of the agency or instrumentality (such as Federal National Mortgage Association bonds). Similarly, obligations of foreign governments include obligations issued by national, provincial, state or other governments that have taxing 18 129 authority over their local populations, or by agencies of such governments that may be supported by the full faith and credit of the governmental entity, or solely by the credit of such agency. Supranational organizations include organizations formed and supported by governmental entities to promote economic growth and development, or international banking institutions, such as the International Bank of Reconstruction and Development (the World Bank), the European Coal and Steel Community, the Asian Development Bank and the Inter-American Development Bank. Supranational organizations are generally formed and supported by the capital contributions of governmental entities and, in their lending and other activities, carry out the particular purposes designated by their member governmental entities. The value of the debt securities in which Income Fund invests will change in response to interest rate changes and other factors. During periods of rising interest rates, the values of outstanding long-term debt securities will generally decline, and during periods of falling interest rates, the values of such securities will generally rise. Such changes will affect the net asset value per share of Income Fund. Longer-term fixed income securities tend to be subject to greater fluctuations in price than shorter-term securities. For a discussion of certain risks associated with investments in high yield securities (i.e., "junk bonds"), foreign securities and non-diversified funds, see "Principal Risks of Investing in the Fund" in the Fund's Prospectus. A description of other investment strategies Income Fund may pursue follows after the section below entitled "Investment Strategies and Risks " Equity Fund." DOLLAR ROLL TRANSACTIONS. In order to enhance portfolio returns and manage prepayment risk, Income Fund may engage in dollar roll transactions with respect to mortgage securities issued by GNMA, FNMA and FHLMC. In a dollar roll transaction, a Fund sells a mortgage security held in the portfolio to a financial institution such as a bank or broker-dealer, and simultaneously agrees to repurchase a substantially similar security (same type, coupon and maturity) from the institution at a later date at an agreed upon price. The mortgage securities that are repurchased will bear the same interest rate as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. During the period between the sale and repurchase, the Fund will not be entitled to receive interest and principal payments on the securities sold. Proceeds of the sale will be invested in short-term instruments, and the income from these investments, together with any additional fee income received on the sale, could generate income for the Fund exceeding the yield on the sold security. Dollar roll transactions involve the risk that the market value of the securities retained by a Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event the buyer of securities under a dollar roll transaction files for bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities. Dollar roll transactions are considered to be borrowings under the 1940 Act. U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES. Income Fund may invest in U.S. Government Agency Mortgage Backed Securities. These securities are obligations issued or guaranteed by the United States Government or by one of its agencies or instrumentalities, including but not limited to the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association ("FNMA"), or the Federal Home Loan Mortgage Corporation ("FHLMC"). U.S. Government Agency Mortgage-Backed Certificates provide for the pass-through to investors of their pro-rata share of monthly payments (including any principal prepayments) made by the individual borrowers on the pooled mortgage loans, net of any fees paid to the guarantor of such securities and the services of the underlying mortgage loans. GNMA, FNMA, and FHLMC each guarantee timely distributions of interest to certificate holders. GNMA and FNMA guarantee timely distributions of scheduled principal. FHLMC has in the past guaranteed only the ultimate collection of principal of the underlying mortgage loan; however, FHLMC Gold Participation Certificates now guarantee timely payment of monthly principal reductions. Although their close relationship with the U.S. Government is believed to make them high-quality securities with minimal credit risks, the U.S. Government is not obligated by law to support either FNMA or FHLMC. However, historically there have not been any defaults of FNMA or FHLMC issues. See Appendix C for a more complete description of these securities. 19 130 Mortgage-backed securities consist of interests in underlying mortgages generally with maturities of up to thirty years. However, due to early unscheduled payments of principal on the underlying mortgages, the securities have a shorter average life and, therefore, less volatility than a comparable thirty-year bond. The value of U.S. Government Agency Mortgage-Backed Securities, like other traditional debt instruments, will tend to decline as interest rates rise and increase as interest rates decline. NON-DIVERSIFIED PORTFOLIO. Income Fund is a non-diversified portfolio, which means that it may invest a greater proportion of its assets in the securities of a smaller number of issuers and therefore may be subject to greater market and credit risk than a more broadly diversified portfolio. The Fund is subject to the issuer diversification requirements of the Internal Revenue Code of 1986, as amended, that are applicable to regulated investment companies. To qualify as a regulated investment company, the Fund must diversify its holdings so that, at the end of each fiscal quarter: (i) at least 50% of the market value of the Fund's assets is represented by cash and cash items, U.S. Government securities, securities of other regulated investment companies and other securities, with such other securities limited, with respect to any one issuer, to an amount not greater than 5% of the Fund's total assets and not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the Fund's total assets is invested in the securities (other than U.S. Government securities or securities of other regulated investment companies) of any one issuer, or of two or more issuers which the Fund controls and which are determined to be engaged in the same, similar or related trades or businesses. EQUITY FUND The investment objective of the Equity Fund is to provide long-term growth of capital. Any income realized by the Equity Fund will be incidental and will not be an important criterion in the selection of portfolio securities. Under normal market conditions the Equity Fund will invest at least 70% of its total assets in marketable equity securities, including common stock, preferred stock, depositary receipts for stock and other securities having the characteristics of stock (such as an equity or ownership interest in a company) of foreign companies which are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter-market. The Equity Fund may also invest up to 20% of its total assets in securities exchangeable for or convertible into equity securities of foreign companies which are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. The Equity Fund may satisfy the foregoing requirements in part by investing in the securities of foreign issuers which are in the form of ADRs, EDRs, or other securities representing underlying securities of foreign issuers. Under normal market conditions, the Equity Fund intends to invest in the securities of foreign companies located in at least four countries outside the United States. The Equity Fund will emphasize investment in foreign companies in the developed countries of Western Europe (such as Germany, France, Switzerland, the Netherlands and the United Kingdom) and the Pacific Basin (such as Japan, Hong Kong and Australia), and the Equity Fund may also invest in the securities of companies located in developing countries (such as Turkey, Malaysia and Mexico) in various regions of the world. A "developing country" is a country in the initial stages of its industrial cycle. Investment in the equity markets of developing countries involves exposure to securities exchanges that may have substantially less trading volume and greater price volatility, economic structures that are less diverse and mature, and political systems that may be less stable than the equity markets of developed countries. At the present time, AIM does not intend to invest more than 20% of the Equity Fund's total assets in foreign companies in developing countries. 20 131 REAL ESTATE INVESTMENT TRUSTS ("REITS") To the extent consistent with the Funds' investment objectives and policies, the Funds may invest in equity and/or debt securities issued by REITs. Such investments will not exceed 5% of the total assets of any of the Funds. REITs are trusts which sell equity or debt securities to investors and use the proceeds to invest in real estate or interests therein. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as the southeastern United States, or both. To the extent that a Fund has the ability to invest in REITs, such Fund could conceivably own real estate directly as a result of a default on the securities it owns. A Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, environmental liability risks, risks related to general and local economic condition, adverse change in the climate for real estate, increases in property taxes and operating expense, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates. In addition to the risks described above, equity REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Equity and mortgage REITs are dependent upon management skill, are not diversified, and are therefore subject to the risk of financing single or a limited number of projects. Such trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to maintain exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities held by a Fund. By investing in REITs indirectly through a Fund, a shareholder will bear not only his/her proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the REITs. REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS Each Fund may enter into repurchase agreements and reverse repurchase agreements. The Fund may enter into repurchase agreements with institutions believed by the Trust's Board of Trustees to present minimal credit risk. A repurchase agreement is an instrument under which a Fund acquires ownership of a debt security and the seller (usually a broker or bank) agrees, at the time of the sale, to repurchase the obligation at a mutually agreed upon time and price, thereby determining the yield during the Fund's holding period. In the event of bankruptcy or other default of a seller of a repurchase agreement, the Fund may experience both delays in liquidating the underlying securities and losses, including: (a) a possible decline in the value of the underlying security during the period in which the Fund seeks to enforce its rights thereto; (b) a possible reduced levels of income and lack of access to income during this period; and (c) expenses of enforcing its rights. A repurchase agreement is collateralized by the security acquired by the Fund and its value is marked to market daily in order to minimize the Fund's risk. Repurchase agreements usually are for short periods, such as one or two days, but may be entered into for longer periods of time. Repurchase agreements are considered to be loans by the Funds under the 1940 Act. Repurchase agreements will be secured by U.S. Treasury securities, U.S. Government agency securities (including, but not limited to those which have been stripped of their interest payments and mortgage backed securities) and commercial paper. A reverse repurchase agreement involves the sale of securities held by a Fund, with an agreement that the Fund will repurchase such securities at an agreed-upon price, date, and interest payment. Each Fund may employ reverse repurchase agreements (i) for temporary emergency purposes, such as to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. During the time a reverse repurchase agreement is outstanding, the applicable Fund will segregate liquid assets having a value equal to the repurchase price under such reverse repurchase agreement. Any investment gains made by a Fund with monies borrowed through reverse repurchase agreements will cause the net asset value of the Fund's shares 21 132 to rise faster than would be the case if the Fund had no such borrowings. On the other hand, if the investment performance resulting from the investment of borrowings obtained through reverse repurchase agreements fails to cover the cost of such borrowings to the Fund, the net asset value of the Fund will decrease faster than would otherwise be the case. Each of the Funds may enter into reverse repurchase agreements in amounts not exceeding 33-1/3% of the value of its total assets. Reverse repurchase agreements involve the risk that the market value of securities retained by the Fund in lieu of liquidation may decline below the repurchase price of the securities sold by the Fund which it is obligated to repurchase. This risk, if encountered, could cause a reduction in the net asset value of the Fund's shares. Reverse repurchase agreements are considered to be borrowings under the 1940 Act. LENDING OF PORTFOLIO SECURITIES Consistent with applicable regulatory requirements, the Funds may lend their portfolio securities (principally to broker-dealers) to the extent of one-third of their respective total assets. Such loans would be callable at any time and would be continuously secured by collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its agencies. The Funds would continue to receive the income on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of the loan collateral if it were cash. Any cash collateral pursuant to these loans would be invested in short-term money market instruments or affiliated money market funds. Where voting or consent rights with respect to loaned securities pass to the borrower, the Funds will follow the policy of calling the loan, in whole or in part as may be appropriate, to permit the exercise of such voting or consent rights if the matters involved are expected to have a material effect on the Funds' investment in the loaned securities. Lending securities entails a risk of loss to the Funds if and to the extent that the market value of the securities loaned were to increase and the lender did not increase the collateral accordingly. INTERFUND LOANS Each Fund may lend up to 33 1/3% of its total assets to another AIM Fund, on such terms and conditions as the SEC may require in an exemptive order. An application for exemptive relief has been filed with the SEC on behalf of the Funds and others. Each Fund may also borrow from another AIM Fund to satisfy redemption requests or to cover unanticipated cash shortfalls due to a delay in the delivery of cash to the Fund's custodian or improper delivery instructions by a broker effectuating a transaction. SECURITIES ISSUED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS Each Fund may purchase securities on a "when-issued" basis, that is, delivery of and payment of the securities is not fixed at the date of purchase, but is set after the securities are issued (normally within forty-five days after the date of the transaction). Each Fund also may purchase or sell securities on a delayed delivery basis. The payment obligation and the interest rate that will be received on the delayed delivery securities are fixed at the time the buyer enters into the commitment. Each Fund will only make commitments to purchase when-issued or delayed delivery securities with the intention of actually acquiring such securities, but each Fund may sell these securities before the settlement date if it is deemed advisable. If a Fund purchases a when-issued security or enters into a delayed delivery agreement, the Fund's custodian bank will segregate cash or liquid securities in an amount at least equal to the when-issued commitment or delayed delivery agreement commitment. SHORT SALES Each Fund may from time to time make short sales "against the box." A short sale is a transaction in which a party sells a security it does not own in anticipation of a decline in the market value of that security. A Fund will not make short sales of securities or maintain a short position unless at all times when a short position is open, the Fund owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short. This is a technique known as selling short "against the box." Such short sales will be used 22 133 by the Funds for the purpose of deferring recognition of gain or loss for federal income tax purposes. In no event may more than 10% of the value of a Fund's total assets be deposited or pledged as collateral for such sales at any time. MARGIN TRANSACTIONS None of the Funds will purchase any security on margin, except that each Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by a Fund of initial or variation margin in connection with futures or related options transactions will not be considered the purchase of a security on margin. ILLIQUID SECURITIES Each Fund may invest up to 15% of its net assets in securities that are illiquid, including restricted securities which are illiquid. Illiquid securities include securities that cannot be disposed of promptly (within seven days) in the normal course of business at a price at which they are valued. Illiquid securities may include securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933. Although securities which may be resold only to "qualified institutional buyers" in accordance with the provisions of Rule 144A under the Securities Act of 1933 are unregistered securities, each Fund may purchase Rule 144A securities without regard to the 15% limitation described above provided that a determination is made that such securities have a readily available trading market. RULE 144A SECURITIES The Funds may purchase privately placed securities that are eligible for purchase and sale pursuant to Rule 144A under the Securities Act of 1933 (the "1933 Act"). This Rule permits certain qualified institutional buyers, such as the Funds, to trade in securities that have not been registered under the 1933 Act. AIM, under the supervision of the Trust's Board of Trustees, will consider whether securities purchased under Rule 144A are illiquid and thus subject to each Fund's restriction of investing no more than 15% of its net assets in illiquid securities. Determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination AIM will consider the trading markets for the specific security taking into account the unregistered nature of a Rule 144A security. In addition, AIM could consider the (i) frequency of trades and quotes, (ii) number of dealers and potential purchasers, (iii) dealer undertakings to make a market, and (iv) nature of the security and of marketplace trades (for example, the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). The liquidity of Rule 144A securities will also be monitored by AIM and, if as a result of changed conditions, it is determined that a Rule 144A security is no longer liquid, a Fund's holdings of illiquid securities will be reviewed to determine what, if any, action is required to assure that the Fund does not invest more than 15% of its net assets in illiquid securities. Investing in Rule 144A securities could have the effect of increasing the amount of the Fund's investments in illiquid securities if qualified institutional buyers are unwilling to purchase such securities. FOREIGN SECURITIES Each of the Funds may invest in foreign securities. ADRs, EDRs and other securities representing underlying securities of foreign issuers are treated as foreign securities. These securities may not necessarily be denominated in the same currency as the securities into which they may be converted. ADRs are receipts typically issued by a United States bank or trust company which evidence ownership of underlying securities issued by a foreign corporation. EDRs are receipts issued in Europe which evidence a similar ownership arrangement. Generally, ADRs, in registered form, are designed for use in the United States securities markets, and EDRs, in bearer form, are designed for use in European securities markets. ADRs and EDRs may be listed on stock exchanges, or traded in OTC markets in the United States or Europe, as the case may be. ADRs, like other securities traded in the United States, will be subject to negotiated commission rates. 23 134 To the extent a Fund invests in securities denominated in foreign currencies, each Fund bears the risk of changes in the exchange rates between U.S. currency and the foreign currency, as well as the availability and status of foreign securities markets. These securities will be marketable equity securities (including common and preferred stock, depositary receipts for stock and fixed income or equity securities exchangeable for or convertible into stock) of foreign companies which generally are listed on a recognized foreign securities exchange or traded in a foreign over-the-counter market. Each of the Funds may also invest in foreign securities listed on recognized U.S. securities exchanges or traded in the U.S. over-the-counter market. Such foreign securities may be issued by foreign companies located in developing countries in various regions of the world. A "developing country" is a country in the initial stages of its industrial cycle. As compared to investment in the securities markets of developed countries, investment in the securities markets of developing countries involves exposure to markets that may have substantially less trading volume and greater price volatility, economic structures that are less diverse and mature, and political systems that may be less stable. Each Fund's ability and decisions to purchase or sell portfolio securities may be affected by laws or regulations relating to the convertibility and repatriation of assets. Because the shares of a Fund are redeemable on a daily basis in U.S. dollars, the Funds intend to manage their portfolios so as to give reasonable assurance that they will be able to obtain U.S. dollars to the extent necessary to meet anticipated redemptions. Under present conditions, it is not believed that these considerations will have any significant effect on the Funds' portfolio strategies. Investments by a Fund in foreign securities, whether denominated in U.S. currencies or foreign currencies, may entail all of the risks set forth below. Investments by a Fund in ADRs, EDRs or similar securities also may entail some or all of the risks as set forth below. Currency Risk. The value of each Fund's foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and increases when the value of the U.S. dollar falls against such currency. On January 1, 1999, certain members of the European Economic and Monetary Union ("EMU"), namely Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain established a common European currency known as the "euro" and each member's local currency became a denomination of the euro. It is anticipated that each participating country will replace its local currency with the euro on July 1, 2002. Any other European country that is a member of the European Union and satisfies the criteria for participation in the EMU may elect to participate in the EMU and may supplement its existing currency with the euro. The anticipated replacement of existing currencies with the euro on July 1, 2002 could cause market disruptions before or after July 1, 2002 and could adversely affect the value of securities held by the Fund. Political and Economic Risk. The economies of many of the countries in which the Funds may invest are not as developed as the United States economy and may be subject to significantly different forces. Political or social instability, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of each Fund's investments. Individual foreign economies may also differ favorably or unfavorably from the United States economy in areas such as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency, and balance of payments position, which may likewise affect the Fund's investments. Moreover, foreign legal systems may be affected by the prevailing political climate and the Fund may not be able to obtain legal remedies or enforce judgments in those courts. Regulatory Risk. Foreign companies are not registered with the SEC and are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Foreign companies are not subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those applicable to domestic companies. Income from foreign securities owned by the Funds may be reduced by a withholding tax at the source, which tax would reduce dividend income payable to the Funds' shareholders. 24 135 Market Risk. The securities markets in many of the countries in which the Funds invest will have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. Increased custodian costs as well as administrative costs (such as the need to use foreign custodians) may be associated with the maintenance of assets in foreign jurisdictions. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. In addition, transaction costs in foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States. Further, the settlement period of securities transactions in foreign markets may be longer than in domestic markets. These considerations generally are more of a concern in developing countries. For example, the possibility of revolution and the dependence on foreign economic assistance may be greater in these countries than in developed countries. The management of the Funds seeks to mitigate the risks associated with these considerations through diversification and active professional management. EMERGING MARKETS. General. A developing country or emerging market country can be considered to be a country that is in the initial stages of its industrialization cycle. Currently, emerging markets generally include every country in the world other than the developed European countries (primarily in Western Europe), the United States, Canada, Japan, Australia, New Zealand, Hong Kong and Singapore. The characteristics of markets can change over time. Currently, investing in many emerging markets may not be desirable or feasible because of the lack of adequate custody arrangements for the Funds' assets, overly burdensome repatriation and similar restrictions, the lack of organized and liquid securities markets, unacceptable political risks or other reasons. As desirable opportunities to invest in securities in emerging markets develop, the Funds may expand and further broaden the group of emerging markets in which it invests. In the past, markets of developing countries have been more volatile than the markets of developed countries; however, such markets often have provided higher rates of return to investors. AIM believes that these characteristics can be expected to continue in the future. Many of the risks described above relating to foreign securities generally will be greater for emerging markets than for developed countries. Many emerging markets have experienced substantial rates of inflation for many years. Inflation and rapid fluctuations in inflation rates have had and may continue to have very negative effects on the economies and securities markets for certain developing markets. Economies in emerging markets generally are heavily dependent upon international trade and accordingly, have been and may continue to be affected adversely by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be affected adversely by economic conditions in the countries with which they trade. Also, the securities markets of developing countries are substantially smaller, less developed, less liquid and more volatile than the securities markets of the United States and other more developed countries. Disclosure, regulatory and accounting standards in many respects are less stringent than in the United States and other developed markets. There also may be a lower level of monitoring and regulation of developing markets and the activities of investors in such markets, and enforcement of existing regulations has been extremely limited. In addition, brokerage commissions, custodial services and other costs relating to investment in foreign markets generally are more expensive than in the United States; this is particularly true with respect to emerging markets. Such markets have different settlement and clearance procedures. In certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Such settlement problems may cause emerging market securities to be illiquid. The inability of the Funds to make intended securities purchases due to settlement problems could cause the Funds to miss attractive investment opportunities. Inability to dispose of a portfolio security caused by settlement problems could result either in losses to the Funds due to subsequent declines in value of the portfolio security or, if the Funds have entered into contract to sell the security, could result in possible liability to the purchaser. Certain emerging markets may lack clearing facilities equivalent to those in 25 136 developed countries. Accordingly, settlements can pose additional risks in such markets and ultimately can expose the Funds to the risk of losses resulting from the Funds' inability to recover from a counterparty. The risk also exists that an emergency situation may arise in one or more emerging markets as a result of which trading of securities may cease or may be substantially curtailed and prices for the Funds' portfolio securities in such markets may not be readily available. The Funds' portfolio securities in the affected markets will be valued at fair value determined in good faith by or under the direction of the Board of Trustees. Investment in certain emerging markets securities is restricted or controlled to varying degrees. These restrictions or controls may at times limit or preclude foreign investment in certain emerging market securities and increase the costs and expenses of the Fund. Emerging markets may require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if a deterioration occurs in an emerging market's balance of payments, the market could impose temporary restrictions on foreign capital remittances. Eastern European Markets. European Fund intends to invest in the securities of issuers domiciled in Eastern European countries. Investment in the securities of issuers in Eastern European markets involves certain additional risks not involved in investment in securities of issuers in more developed markets, such as (i) low or non-existent trading volume, resulting in a lack of liquidity and increased volatility in prices for such securities, as compared to securities of comparable issuers in more developed capital markets, (ii) uncertain national policies and social, political and economic instability (including the possibility that such countries could revert to a centralist planned government), increasing the potential for expropriation of assets, confiscatory taxation, high rates of inflation or unfavorable diplomatic developments, (iii) possible fluctuations in exchange rates, differing legal systems and the existence or possible imposition of exchange controls, custodial restrictions or other foreign or U.S. governmental laws or restrictions applicable to such investments, (iv) national policies which may limit European Fund's investment opportunities such as restrictions on investment in issuers or industries deemed sensitive to national interests, and (v) the lack of developed legal structures governing private and foreign investments and private property. Eastern European capital markets are emerging in a dynamic political and economic environment brought about by the recent events there that have reshaped political boundaries and traditional ideologies. In such a dynamic environment, there can be no assurance that the Eastern Europe capital markets will continue to present viable investment opportunities for European Fund. In the past, Eastern European governments have expropriated substantial amounts of private property, and most claims of the property owners have never been fully settled. There is no assurance that such expropriations will not recur. In such an event, it is possible that European Fund could lose the entire value of its investments in the affected Eastern European markets. The currencies of Eastern European countries are not, at present, freely convertible into other currencies. Also, certain Eastern European authorities presently require that securities of certain Eastern European issuers be held by custodians in Eastern Europe. At this time, it is possible that certain Eastern European countries may not have available institutions qualified under the 1940 Act to hold European Fund assets. Therefore, European Fund may need to seek an exemptive order from the SEC prior to investing in certain Eastern European countries. There is no assurance that the SEC would issue such an order. Reforms currently underway and anticipated throughout Eastern Europe are directed at political and economic liberalization, with efforts to develop increasingly market-oriented economies and to decentralize the economic and political decision-making processes currently in the forefront. There can be no assurance that these reforms will continue or, if continued, will achieve their goals; in addition, there is the possibility that reforms may be reversed in the future. FOREIGN EXCHANGE TRANSACTIONS Purchases and sales of foreign securities are usually made with foreign currencies, and consequently the Funds may from time to time hold cash balances in the form of foreign currencies, and multinational currency units. Such foreign currencies and multinational currency units will usually be acquired on a spot (i.e. 26 137 cash) basis at the spot rate prevailing in foreign exchange markets and will result in currency conversion costs to the Funds. The Funds attempt to purchase and sell foreign currencies on as favorable a basis as practicable; however, some price spread on foreign exchange transactions (to cover service charges) may be incurred, particularly when the Funds change investments from one country to another, or when U.S. dollars are used to purchase foreign securities. Certain countries could adopt policies which would prevent the Funds from transferring cash out of such countries, and the Funds may be affected either favorably or unfavorably by fluctuations in relative exchange rates while the Funds hold foreign currencies. Each Fund has authority to deal in foreign exchange between currencies of the different countries in which it will invest either for the settlement of transactions or as a hedge against possible variations in the foreign exchange rates between those currencies. This may be accomplished through direct purchases or sales of foreign currency, purchases of futures contracts with respect to foreign currency (and options thereon), and contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) at a price set at the time of the contract. For hedging purposes, Asian Fund, European Fund and Equity Fund may also purchase foreign currencies in the form of bank deposits as well as other foreign money market instruments, including, but not limited to, bankers' acceptances, certificates of deposit, commercial paper, short-term government and corporate obligations and repurchase agreements. EQUITY-LINKED DERIVATIVES Each of the funds other than Income Fund may invest in equity-linked derivative products designed to replicate the composition and performance of particular indices. Examples of such products include S&P Depositary Receipts ("SPDRs"), World Equity Benchmark Series ("WEBs"), NASDAQ 100 tracking shares ("QQQs"), Dow Jones Industrial Average Instruments ("DIAMONDS") and Optimised Portfolios as Listed Securities ("OPALS"). Investments in equity-linked derivatives involve the same risks associated with a direct investment in the types of securities included in the indices such products are designed to track. There can be no assurance that the trading price of the equity-linked derivatives will equal the underlying value of the basket of securities purchased to replicate a particular index or that such basket will replicate the index. Investments in equity-linked derivatives may constitute investment in other investment companies. See "Investment in Other Investment Companies." INVESTMENT IN OTHER INVESTMENT COMPANIES Each of the Funds may invest in other investment companies, to the extent permitted by the 1940 Act, and rules and regulations thereunder, and, if applicable, exemptive orders granted by the SEC. The following restrictions apply to investments in other investment companies other than Affiliated Money Market Funds (defined below): (i) a Fund may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) a Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) a Fund may not invest more than 10% of its total assets in securities issued by other investment companies other than Affiliated Money Market Funds. With respect to a Fund's purchase of shares of another investment company, including Affiliated Money Market Funds, the Fund will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company. The Funds have obtained an exemptive order from the SEC allowing them to invest in money market funds that have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money Market Funds"), provided that investments in Affiliated Money Market Funds do not exceed 25% of the total assets of such Fund. TEMPORARY DEFENSIVE INVESTMENTS In anticipation of or in response to adverse market conditions, for cash management purposes, or for defensive purposes, each of the Funds may temporarily hold all or a portion of its assets in cash, money market instruments, bonds, or other debt securities. Each of the Funds may also invest up to 25% of its total assets in Affiliated Money Market Funds for these purposes. For a description of the various rating categories of corporate bonds and commercial paper in which the Funds may invest, see Appendix B to this Statement of Additional Information. 27 138 OPTIONS, FUTURES AND CURRENCY STRATEGIES INTRODUCTION The Funds may each use forward contracts, futures contracts, options on securities, options on indices, options on currencies, and options on futures contracts to attempt to hedge against the overall level of investment and currency risk normally associated with each Fund's investments. These instruments are often referred to as "derivatives," which may be defined as financial instruments whose performance is derived, at least in part, from the performance of another asset (such as security, currency or an index of securities). GENERAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES The use by the Funds of options, futures contracts and forward currency contracts involves special considerations and risks, as described below. Risks pertaining to particular strategies are described in the sections that follow. (1) Successful use of hedging transactions depends upon AIM's ability to correctly predict the direction of changes in the value of the applicable markets and securities, contracts and/or currencies. While AIM is experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed. (2) There might be imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option contract) and the price movements of the investments being hedged. For example, if a "protective put" is used to hedge a potential decline in a security and the security does decline in price, the put option's increased value may not completely offset the loss in the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded. (3) Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments. (4) There is no assurance that a liquid secondary market will exist for any particular option, futures contract, forward contract or option thereon at any particular time. (5) As described below, a Fund might be required to maintain assets as "cover," maintain segregated accounts or make margin payments when it takes positions in instruments involving obligations to third parties. If a Fund were unable to close out its positions in such instruments, it might be required to continue to maintain such assets or accounts or make such payments until the position expired or matured. The requirements might impair the Fund's ability to sell a portfolio security or make an investment at a time when it would otherwise be favorable to do so, or require that the Fund sell a portfolio security at a disadvantageous time. (6) There is no assurance that a Fund will use hedging transactions. For example, if a Fund determines that the cost of hedging will exceed the potential benefit to the Fund, the Fund will not enter into such transaction. COVER Transactions using forward contracts, futures contracts and options (other than options purchased by a Fund) expose a Fund to an obligation to another party. A Fund will not enter into any such transactions unless it owns either (1) an offsetting ("covered") position in securities, currencies, or other options, forward contracts or futures contracts or (2) cash, liquid assets and/or short-term debt securities with a value sufficient at all times 28 139 to cover its potential obligations not covered as provided in (1) above. Each Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid securities. To the extent that a futures contract, forward contract or option is deemed to be illiquid, the assets used to "cover" the Fund's obligation will also be treated as illiquid for purposes of determining the Fund's maximum allowable investment in illiquid securities. Even though options purchased by the Funds do not expose the Funds to an obligation to another party, but rather provide the Funds with a right to exercise, the Funds intend to "cover" the cost of any such exercise. To the extent that a purchased option is deemed illiquid, the Fund will treat the market value of the option (i.e., the amount at risk to the Fund) as illiquid, but will not treat the assets used as cover on such transactions as illiquid. Assets used as cover cannot be sold while the position in the corresponding forward contract, futures contract or option is open, unless they are replaced with other appropriate assets. If a large portion of a Fund's assets is used for cover or otherwise set aside, it could affect portfolio management or the Fund's ability to meet redemption requests or other current obligations. WRITING CALL OPTIONS Each of the Funds may write (sell) covered call options on securities, futures contracts, forward contracts, indices and currencies. As the writer of a call option, a Fund would have the obligation to deliver the underlying security, cash or currency (depending on the type of derivative) to the holder (buyer) at a specified price (the exercise price) at any time until (American style) or on (European style) a certain date (the expiration date). So long as the obligation of a Fund continues, it may be assigned an exercise notice, requiring it to deliver the underlying security, cash or currency against payment of the exercise price. This obligation terminates upon the expiration of the call option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option identical to that previously sold. When writing a call option a Fund, in return for the premium, gives up the opportunity for profit from a price increase in the underlying security, contract or currency above the exercise price, and retains the risk of loss should the price of the security, contract or currency decline. Unlike one who owns securities, contracts or currencies not subject to an option, a Fund has no control over when it may be required to sell the underlying securities, contracts or currencies, since most options may be exercised at any time prior to the option's expiration. If a call option that a Fund has written expires, it will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security, contract or currency during the option period. If the call option is exercised, a Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset by the premium received. Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. Closing transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit a Fund to write another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both. WRITING PUT OPTIONS Each of the Funds may write (sell) covered put options on securities, futures contracts, forward contracts, indices and currencies. As the writer of a put option, a Fund would have the obligation to buy the underlying security, contract or currency (depending on the type of derivative) at the exercise price at any time until (American style) or on (European style) the expiration date. This obligation terminates upon the expiration of the put option, or such earlier time at which a Fund effects a closing purchase transaction by purchasing an option identical to that previously sold. 29 140 A Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the lower price it is willing to pay for the underlying security, contract or currency. The risk in such a transaction would be that the market price of the underlying security, contract or currency would decline below the exercise price less the premium received. PURCHASING PUT OPTIONS Each of the Funds may purchase covered put options on securities, futures contracts, forward contracts, indices and currencies. As the holder of a put option, a Fund would have the right to sell the underlying security, contract or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Fund may enter into closing sale transactions with respect to such options, exercise such option or permit such option to expire. A Fund may purchase a put option on an underlying security, contract or currency ("protective put") owned by the Fund in order to protect against an anticipated decline in the value of the security, contract or currency. Such hedge protection is provided only during the life of the put option. The premium paid for the put option and any transaction costs would reduce any profit realized when the security, contract or currency is delivered upon exercise of said option. Conversely, if the underlying security, contract or currency does not decline in value, the option may expire worthless and the premium paid for the protective put would be lost. A Fund may also purchase put options on underlying securities, contracts or currencies against which it has written other put options. For example, where a Fund has written a put option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a put option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations, these strategies are commonly referred to as "put spreads." Likewise, a Fund may write call options on underlying securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar." PURCHASING CALL OPTIONS Each of the Funds may purchase covered call options on securities, futures contracts, forward contracts, indices and currencies. As the holder of a call option, a Fund would have the right to purchase the underlying security, contract or currency at the exercise price at any time until (American style) or on (European style) the expiration date. A Fund may enter into closing sale transactions with respect to such options, exercise such options or permit such options to expire. Call options may be purchased by a Fund for the purpose of acquiring the underlying security, contract or currency for its portfolio. Utilized in this fashion, the purchase of call options would enable a Fund to acquire the security, contract or currency at the exercise price of the call option plus the premium paid. So long as it holds such a call option, rather than the underlying security or currency itself, the Fund is partially protected from any unexpected decline in the market price of the underlying security, contract or currency and, in such event, could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. Each of the Funds may also purchase call options on underlying securities, contracts or currencies against which it has written other call options. For example, where a Fund has written a call option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a call option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations, these strategies are commonly referred to as "call spreads." OVER-THE-COUNTER OPTIONS Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are third-party contracts (i.e., performance of the obligations of the purchaser and seller is guaranteed by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with negotiated strike prices and expiration dates. A Fund will not purchase an OTC 30 141 option unless it believes that daily valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's price will be used. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. Although a Fund will enter into OTC options only with dealers that are expected to be capable of entering into closing transactions with it, there is no assurance that the Fund will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the dealer, a Fund might be unable to close out an OTC option position at any time prior to its expiration. The staff of the SEC considers purchased OTC options (i.e., the market value of the option) to be illiquid securities. A Fund may also sell OTC options and, in connection therewith, segregate assets or cover its obligations with respect to OTC options written by it. The assets used as cover for OTC options written by the Fund will be considered illiquid unless the OTC options are sold to qualified dealers who agree that the Fund may repurchase any OTC option it writes at a maximum price to be calculated by a formula set forth in the option agreement. The cover for an OTC option written subject to this procedure would be considered illiquid only to the extent that the maximum repurchase price under the formula exceeds the intrinsic value of the option. INDEX OPTIONS Puts and calls on indices are similar to puts and calls on securities or futures contracts except that all settlements are in cash and gain or loss depends on changes in the index in question (and thus on price movements in the securities market or a particular market sector generally) rather than on price movements in individual securities or futures contracts. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call or put times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference. The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when a Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. A Fund can offset some of the risk of writing a call index option position by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Fund cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will not be perfectly correlated with the value of the index. LIMITATIONS ON OPTIONS A Fund will not write options if, immediately after such sale, the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the Fund's total assets. A Fund will not purchase options if, at any time of the investment, the aggregate premiums paid for the options will exceed 5% of the Fund's total assets. INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS Each of the Funds may enter into interest rate, currency or stock index futures contracts (collectively, "Futures" or "Futures Contracts") as a hedge against changes in prevailing levels of interest rates, currency exchange rates or stock price levels, respectively, in order to establish more definitely the effective return on securities or currencies held or intended to be acquired by it. A Fund's hedging may include sales of Futures as an offset against the effect of expected increases in interest rates, and decreases in currency exchange rates and stock prices, and purchases of Futures as an offset against the effect of expected declines in interest rates, and increases in currency exchange rates or stock prices. 31 142 A Futures Contract is a two party agreement to buy or sell a specified amount of a specified security or currency (or delivery of a cash settlement price, in the case of an index future) for a specified price at a designated date, time and place. A stock index future provides for the delivery, at a designated date, time and place, of an amount of cash equal to a specified dollar amount times the difference between the stock index value at the close of trading on the contract and the price agreed upon in the Futures Contract; no physical delivery of stocks comprising the index is made. Brokerage fees are incurred when a Futures Contract is bought or sold, and margin deposits must be maintained at all times the Future is outstanding. The Funds will only enter into Futures Contracts that are traded (either domestically or internationally) on futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading thereon in the United States are regulated under the Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges and trading thereon are not regulated by the CFTC and are not subject to the same regulatory controls. For a further discussion of the risks associated with investments in foreign securities, see "Foreign Securities" in this Statement of Additional Information. Closing out an open Future is effected by entering into an offsetting Future for the same aggregate amount of the identical financial instrument or currency and the same delivery date. There can be no assurance, however, that a Fund will be able to enter into an offsetting transaction with respect to a particular Future at a particular time. If a Fund is not able to enter into an offsetting transaction, it will continue to be required to maintain the margin deposits on the Future. A Fund's Futures transactions will be entered into for hedging purposes only; that is, Futures will be sold to protect against a decline in the price of securities or currencies that the Fund owns, or Futures will be purchased to protect the Fund against an increase in the price of securities or currencies it has committed to purchase or expects to purchase. "Margin" with respect to Futures is the amount of funds that must be deposited by a Fund in order to initiate Futures trading and maintain its open positions in Futures. A margin deposit made when the Futures Contract is entered ("initial margin") is intended to ensure the Fund's performance under the Futures Contract. The margin required for a particular Future is set by the exchange on which the Future is traded and may be significantly modified from time to time by the exchange during the term of the Futures Contract. Subsequent payments, called "variation margin," to and from the futures commission merchant through which a Fund entered into the Futures Contract will be made on a daily basis as the price of the underlying security, currency or index fluctuates making the Futures more or less valuable, a process known as marking-to-market. If a Fund were unable to liquidate a Future or an option on a Futures position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the Future or option or to maintain cash or securities in a segregated account. OPTIONS ON FUTURES CONTRACTS Options on Futures Contracts are similar to options on securities or currencies except that options on Futures Contracts give the purchaser the right, in return for the premium paid, to assume a position in a Futures Contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the Futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's Futures margin account. 32 143 FORWARD CONTRACTS A forward contract is an obligation, usually arranged with a commercial bank or other currency dealer, to purchase or sell a currency against another currency at a future date and price as agreed upon by the parties. A Fund either may accept or make delivery of the currency at the maturity of the forward contract. A Fund may also, if its contra party agrees prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Forward contracts are traded over-the-counter, and not on organized commodities or securities exchanges. As a result, it may be more difficult to value such contracts, and it may be difficult to enter into closing transactions. Each of the Funds may engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A Fund may enter into forward contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When a Fund purchases a security denominated in a foreign currency for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. By entering into a forward contract with respect to the specific purchase or sale of a security denominated in a foreign currency, the Fund can secure an exchange rate between the trade and settlement dates for that purchase or sale transactions. This practice is sometimes referred to as "transaction hedging." Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions denominated or quoted in a foreign currency. The cost to a Fund of engaging in forward contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward contracts does not eliminate fluctuations in the prices of the underlying securities a Fund owns or intends to acquire, but it does establish a rate of exchange in advance. In addition, while forward contract sales limit the risk of loss due to a decline in the value of the hedged currencies, they also limit any potential gain that might result should the value of the currencies increase. LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON CURRENCIES To the extent that a Fund enters into Futures Contracts, options on Futures Contracts and options on foreign currencies traded on an CFTC-regulated exchange, in each case other than for bona fide hedging purposes (as defined by the CFTC), the aggregate initial margin and premiums required to establish those positions (excluding the amount by which options are "in-the-money") will not exceed 5% of the total assets of the Fund, after taking into account unrealized profits and unrealized losses on any contracts it has entered into. This guideline may be modified by the Board, without a shareholder vote. This limitation does not limit the percentage of the Fund's assets at risk to 5%. INVESTMENT RESTRICTIONS FUNDAMENTAL RESTRICTIONS Each Fund is subject to the following investment restrictions, which may be changed only by a vote of a majority of such Fund's outstanding shares, except that Income Fund is not subject to restriction (1). Fundamental restrictions may be changed only by a vote of the lesser of (i) 67% of more of the Fund's shares present at a meeting if the holders of more than 50% of the outstanding shares are present in person or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares. Any investment restriction that involves a maximum or minimum percentage of securities or assets shall not be considered to be violated unless an excess over or a deficiency under the percentage occurs immediately after, and is caused by, an acquisition or disposition of securities or utilization of assets by the Fund. 33 144 (1) The Fund is a "diversified company" as defined in the 1940 Act. The Fund will not purchase the securities of any issuer if, as a result, the Fund would fail to be a diversified company within the meaning of the 1940 Act, and the rules and regulations promulgated thereunder, as such statute, rules and regulations are amended from time to time or are interpreted from time to time by the SEC staff (collectively, the "1940 Act Laws and Interpretations") or except to the extent that the Fund may be permitted to do so by exemptive order or similar relief (collectively, with the 1940 Act Laws and Interpretations, the "1940 Act Laws, Interpretations and Exemptions"). In complying with this restriction, however, the Fund may purchase securities of other investment companies to the extent permitted by the 1940 Act Laws, Interpretations and Exemptions. (This restriction does not apply to Income Fund.) (2) The Fund may not borrow money or issue senior securities, except as permitted by the 1940 Act Laws, Interpretations and Exemptions. (3) The Fund may not underwrite the securities of other issuers. This restriction does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the 1933 Act. (4) The Fund will not make investments that will result in the concentration (as that term may be defined or interpreted by the 1940 Act Laws, Interpretations and Exemptions) of its investments in the securities of issuers primarily engaged in the same industry. This restriction does not limit the Fund's investments in (i) obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, or (ii) tax-exempt obligations issued by governments or political subdivisions of governments. In complying with this restriction, the Fund will not consider a bank-issued guaranty or financial guaranty insurance as a separate security. (5) The Fund may not purchase real estate or sell real estate unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein, or investing in securities that are secured by real estate or interests therein. (6) The Fund may not purchase physical commodities or sell physical commodities unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities. (7) The Fund may not make personal loans or loans of its assets to persons who control or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers or institutional investors, or investing in loans, including assignments and participation interests. (8) The Fund may, notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies and restrictions as the Fund. The investment restrictions set forth above provide each of the Funds with the ability to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without receiving prior shareholder approval of the change. Even though each of the Funds has this flexibility, the Board of Trustees has adopted non-fundamental restrictions for each of the Funds relating to certain of these restrictions which the advisor must follow in managing the Funds. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board of Trustees. NON-FUNDAMENTAL RESTRICTIONS The following non-fundamental investment restrictions apply to each of the Funds, except that Income Fund is not subject to restriction (1). They may be changed for any Fund without approval of that Fund's voting securities. 34 145 (1) In complying with the fundamental restriction regarding issuer diversification, the Fund will not, with respect to 75% of its total assets, purchase securities of any issuer (other than securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities), if, as a result, (i) more than 5% of the Fund's total assets would be invested in the securities of that issuer, or (ii) the Fund would hold more than 10% of the outstanding voting securities of that issuer. The Fund may (i) purchase securities of other investment companies as permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in securities of other money market funds and lend money to other investment companies and their series portfolios that have AIM or an affiliate of AIM as an investment advisor (an "AIM Advised Fund"), subject to the terms and conditions of any exemptive orders issued by the SEC. (This restriction does not apply to Income Fund.) (2) In complying with the fundamental restriction regarding borrowing money and issuing senior securities, the Fund may borrow money in an amount not exceeding 33 1/3% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker-dealers or an AIM Advised Fund. The Fund may not borrow for leveraging, but may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. The Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund's total assets. (3) In complying with the fundamental restriction regarding industry concentration, the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry. (4) In complying with the fundamental restriction with regard to making loans, the Fund may lend up to 33 1/3% of its total assets and may lend money to another AIM Advised Fund, on such terms and conditions as the SEC may require in an exemptive order. (5) Notwithstanding the fundamental restriction with regard to investing all assets in an open-end fund, the Fund may not invest all of its assets in the securities of a single open-end management investment company with the same fundamental investment objectives, policies and restrictions as the Fund. If a percentage restriction is adhered to at the time of investment, a later change in percentage resulting from changes in values of assets will not be considered a violation of the restriction. MANAGEMENT The overall management of the business and affairs of the Funds and the Trust is vested in the Trust's Board of Trustees. The Board of Trustees approves all significant agreements between the Trust on behalf of one or more of the Funds, and persons or companies furnishing services to a Fund. The day-to-day operations of each Fund are delegated to its officers of the Trust and to AIM, subject always to the objectives, restrictions and policies of the applicable Fund and to the general supervision of the Trust's Board of Trustees. Certain trustees and officers of the Trust are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the parent corporation of AIM. TRUSTEES AND OFFICERS The trustees and officers of the Trust and their principal occupations during at least the last five years are set forth below. Unless otherwise indicated, the address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. All of the Trust's executive officers hold similar offices with some or all of the other AIM Funds. 35 146
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 NAME, ADDRESS AND AGE REGISTRANT YEARS - ----------------------------------------- ---------------------- --------------------------------------------------- *CHARLES T. BAUER (81) Trustee and Chairman Director and Chairman, A I M Management Group Inc., A I M Advisors, Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management Company; and Executive Vice Chairman and Director, AMVESCAP PLC. BRUCE L. CROCKETT (56) Trustee Director, ACE Limited (insurance company). 906 Frome Lane Formerly, Director, President and Chief Executive McLean, VA 22102 Officer, COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company). OWEN DALY II (75) Trustee Formerly, Director, Cortland Trust Inc. Six Blythewood Road (investment company), CF & I Steel Corp., Baltimore, MD 21210 Monumental Life Insurance Company and Monumental General Insurance Company; and Chairman of the Board of Equitable Bancorporation. EDWARD K. DUNN, JR. (64) Trustee Chairman of the Board of Directors, Mercantile 2 Hopkins Plaza, 8th Floor, Mortgage Corp.; Formerly, Vice Chairman of the Suite 805 Board of Directors, President and Chief Operating Baltimore, MD 21201 Officer, Mercantile - Safe Deposit & Trust Co.; and President, Mercantile Bankshares. JACK FIELDS (48) Trustee Chief Executive Officer, Texana Global, Inc. Jetero Plaza, Suite E (foreign trading company) and Twenty First 8810 Will Clayton Parkway Century, Inc. (a governmental affairs company). Humble, TX 77338 Formerly, Member of the U.S. House of Representatives. **CARL FRISCHLING (63) Trustee Partner, Kramer, Levin, Naftalis & Frankel LLP 919 Third Avenue (law firm). New York, NY 10022
- ------------------------ * A trustee who is an "interested person" of A I M Advisors, Inc. and the Trust as defined in the 1940 Act. ** A trustee who is an "interested person" of the Trust as defined in the 1940 Act. 36 147
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 NAME, ADDRESS AND AGE REGISTRANT YEARS - ----------------------------------------- ---------------------- --------------------------------------------------- *ROBERT H. GRAHAM (53) Trustee and Director, President and Chief Executive Officer, President A I M Management Group Inc.; Director and President, A I M Advisors, Inc.; Director and Senior Vice President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management Company; and Director, AMVESCAP PLC. PREMA MATHAI-DAVIS (49) Trustee Chief Executive Officer, YWCA of the USA. 350 Fifth Avenue, Suite 301 New York, NY 10118 LEWIS F. PENNOCK (57) Trustee Partner, Pennock & Cooper (law firm). 6363 Woodway, Suite 825 Houston, TX 77057 LOUIS S. SKLAR (60) Trustee Executive Vice President, Development and The Williams Tower, 50th Floor Operations, Hines Interests Limited Partnership 2800 Post Oak Blvd. (real estate development). Houston, TX 77056 GARY T. CRUM (52) Senior Vice President Director and President, A I M Capital Management, Inc.; Director and Executive Vice President, A I M Management Group Inc.; Director and Senior Vice President, A I M Advisors, Inc.; and Director, A I M Distributors, Inc. and AMVESCAP PLC. CAROL F. RELIHAN (45) Senior Vice Director, Senior Vice President, General Counsel President and and Secretary, A I M Advisors, Inc.; Senior Vice Secretary President, General Counsel and Secretary, A I M Management Group Inc.; Director, Vice President and General Counsel, Fund Management Company; Vice President, A I M Capital Management, Inc. and A I M Distributors, Inc.; and General Counsel and Vice President, A I M Fund Services, Inc.
- ------------------------ * A trustee who is an "interested person" of A I M Advisors, Inc. and the Trust as defined in the 1940 Act. 37 148
POSITIONS HELD WITH PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 NAME, ADDRESS AND AGE REGISTRANT YEARS - ----------------------------------------- ---------------------- --------------------------------------------------- DANA R. SUTTON (41) Vice President and Vice President and Fund Controller, Treasurer A I M Advisors, Inc.; and Assistant Vice President and Assistant Treasurer, Fund Management Company. ROBERT G. ALLEY (51) Vice President Senior Vice President, A I M Capital Management, Inc.; and Vice President, A I M Advisors, Inc. MELVILLE B. COX (56) Vice President Vice President and Chief Compliance Officer, A I M Advisors, Inc., A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc. and Fund Management Company. EDGAR M. LARSEN (59) Vice President Vice President, A I M Capital Management, Inc.
The standing committees of the Board of Trustees are the Audit Committee, the Investments Committee and the Nominating and Compensation Committee. The members of the Audit Committee are Messrs. Crockett, Daly, Dunn (Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. The Audit Committee is responsible for: (i) considering management's recommendations of independent accountants for each Fund and evaluating such accountants' performance, costs and financial stability; (ii) with AIM, reviewing and coordinating audit plans prepared by the Funds' independent accountants and management's internal audit staff; and (iii) reviewing financial statements contained in periodic reports to shareholders with the Funds' independent accountants and management. The members of the Investments Committee are Messrs. Bauer, Crockett, Daly, Dunn, Fields, Frischling, Pennock and Sklar (Chairman) and Dr. Mathai-Davis. The Investments Committee is responsible for: (i) overseeing AIM's investment-related compliance systems and procedures to ensure their continued adequacy; and (ii) considering and acting, on an interim basis, between meetings of the full Board, on investment-related matters requiring Board consideration, including dividends and distributions, brokerage policies and pricing matters. The members of the Nominating and Compensation Committee are Messrs. Crockett (Chairman), Daly, Dunn, Fields, Pennock and Sklar and Dr. Mathai-Davis. The Nominating and Compensation Committee is responsible for: (i) considering and nominating individuals to stand for election as independent trustees as long as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act; (ii) reviewing from time to time the compensation payable to the independent trustees; and (iii) making recommendations to the Board regarding matters related to compensation, including deferred compensation plans and retirement plans for the independent trustees. The Nominating and Compensation Committee will consider nominees recommended by a shareholder to serve as trustees, provided (i) that such person is a shareholder of record at the time he or she submits such names and is entitled to vote at the meeting of shareholders at which trustees will be elected, and (ii) that the 38 149 Nominating and Compensation Committee or the Board of Trustees, as applicable, shall make the final determination of persons to be nominated. All of the Trust's trustees also serve as directors or trustees of some or all of the investment companies managed or advised by AIM. All of the Trust's executive officers hold similar offices with some or all of the other investment companies managed or advised by AIM. REMUNERATION OF TRUSTEES Each trustee is reimbursed for expenses incurred in connection with each meeting of the Board of Trustees or any committee thereof. Each trustee who is not also an officer of the Trust is compensated for his or her services according to a fee schedule which recognizes the fact that such trustee also serves as a director or trustee of other AIM Funds. Each such trustee receives a fee, allocated among the AIM Funds for which he or she serves as a director or trustee, which consists of an annual retainer component and a meeting fee component. Set forth below is information regarding compensation paid or accrued for each trustee of the Trust:
RETIREMENT BENEFITS TOTAL AGGREGATE COMPENSATION ACCRUED COMPENSATION FROM TRUST(1) BY ALL APPLICABLE FROM ALL APPLICABLE TRUSTEE AIM FUNDS(2) AIM FUNDS(3) - ----------------------------------- ------------------------ ----------------------- ------------------------------- Charles T. Bauer $ 0 $ 0 $ 0 Bruce L. Crockett 8,166 37,485 103,500 Owen Daly II 8,166 122,898 103,500 Edward K. Dunn, Jr. 8,166 55,565 103,500 Jack Fields 8,009 15,826 101,500 Carl Frischling(4) 8,122 97,791 103,500 Robert H. Graham 0 0 0 John F. Kroeger(5) 0 40,461 0 Prema Mathai-Davis 8,166 11,870 101,500 Lewis F. Pennock 8,122 45,766 103,500 Ian W. Robinson(6) 3,557 94,442 25,000 Louis S. Sklar 8,122 90,232 101,500
(1) The total amount of compensation deferred by all trustees of the Trust's predecessor during the fiscal year ended October 31, 1999, including earnings thereon, was $51,056. (2) During the fiscal year ended October 31, 1999, the total amount of expenses allocated to the Trust's predecessor in respect of such retirement benefits was $31,707. Data reflect compensation earned for the calendar year ended December 31, 1999. 39 150 (3) Each trustee serves as director or trustee of at least 12 registered investment companies advised by AIM. Data reflects total compensation earned during the calendar year ended December 31, 1999. (4) The Trust's predecessor paid the law firm of Kramer Levin Naftalis & Frankel LLP $28,914 in legal fees for services provided to the Funds during the fiscal year ended October 31, 1999. Mr. Frischling, a trustee of the Trust, is a partner in such firm. (5) Mr. Kroeger was a director of the Trust's predecessor until June 11, 1998. Mr. Kroeger passed away on November 26, 1998. Mr. Kroeger's widow will receive his pension as described below under "AIM Funds Retirement Plan for Eligible Directors/Trustees." (6) Mr. Robinson was a director of the Trust's predecessor until March 12, 1999, when he retired. AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES Under the terms of the AIM Funds Retirement Plan for Eligible Directors/Trustees (the "Plan"), each trustee (who is not an employee of any of the AIM Funds, AIM Management or any of their affiliates) may be entitled to certain benefits upon retirement from the Board of Trustees. Pursuant to the Plan, a trustee becomes eligible to retire and to receive full benefits under the Plan when he or she has attained age 65 and has completed at least five years of continuous service with one or more of the regulated investment companies managed, administered or distributed by AIM or its affiliates (the "Applicable AIM Funds"). Each eligible trustee is entitled to receive an annual benefit from the Applicable AIM Funds commencing on the first day of the calendar quarter coincident with or following his or her date of retirement equal to a maximum of 75% of the annual retainer paid or accrued by the Applicable AIM Funds for such trustee during the twelve-month period immediately preceding the trustee's retirement (including amounts deferred under a separate agreement between the Applicable AIM Funds and the trustee) and based on the number of such trustee's years of service (not in excess of 10 years of service) completed with respect to any of the Applicable AIM Funds. Such benefit is payable to each eligible trustee in quarterly installments. If an eligible trustee dies after attaining the normal retirement date but before receipt of all benefits under the Plan, the trustee's surviving spouse (if any) shall receive a quarterly survivor's benefit equal to 50% of the amount payable to the deceased trustee for no more than ten years beginning the first day of the calendar quarter following the date of the trustee's death. Payments under the plan are not secured or funded by any Applicable AIM Fund. Set forth below is a table that shows the estimated annual benefits payable to an eligible trustee upon retirement assuming the retainer amount reflected below and various years of service. The estimated credited years of service for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and Sklar and Dr. Mathai-Davis are 13,13, 2, 3, 23, 20, 18, 11, 10 and 1 years, respectively. 40 151 ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
Number of Years of Service with the Applicable AIM Annual Retirement Compensation Funds Paid by All Applicable AIM Funds ------------------ -------------------------------- 10 $ 67,500 9 $ 60,750 8 $ 54,000 7 $ 47,250 6 $ 40,500 5 $ 33,750
DEFERRED COMPENSATION AGREEMENTS Messrs. Daly, Dunn, Fields, Frischling and Sklar and Dr. Mathai-Davis (the "Deferring Trustees") have each executed a Deferred Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant to the Compensation Agreements, the Deferring Trustees may elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account. Currently, the Deferring Trustees may select various AIM Funds in which all or part of their deferral accounts shall be deemed to be invested. Distributions from the Deferring Trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of five (5) or ten (10) years (depending on the Compensation Agreement) beginning on the date the Deferring Trustee's retirement benefits commence under the Plan. The Trust's Board of Trustees, in its sole discretion, may accelerate or extend the distribution of such deferral accounts after the Deferring Trustee's termination of service as a trustee of the Trust. If a Deferring Trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary in a single lump sum payment as soon as practicable after such Deferring Trustee's death. The Compensation Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation. INVESTMENT ADVISORY AND OTHER SERVICES AIM serves as the investment advisor to each Fund pursuant to a Master Investment Advisory Agreement dated May 22, 2000 (the "Investment Advisory Agreement"). AIM was organized in 1976, and together with its subsidiaries, advises or manages approximately 120 investment portfolios encompassing a broad range of investment objectives. AIM is a direct wholly owned subsidiary of AIM Management, a holding company that has been engaged in the financial services business since 1976. The address of AIM is 11 Greenway Plaza, Suite 100, Houston, Texas 77046. AIM Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, England. AMVESCAP PLC and its subsidiaries are an independent investment management group engaged in institutional investment management and retail mutual fund businesses in the United States, Europe and the Pacific region. Certain of the trustees and officers of AIM are also executive officers of the Trust and their affiliations are shown under "Management" herein. AIM and the Trust have adopted a Code of Ethics which requires investment personnel and certain other employees to (a) pre-clear all personal securities transactions subject to the Code of Ethics; (b) file reports regarding such transactions; (c) refrain from personally engaging in (i) short-term trading of a security, 41 152 (ii) transactions involving a security within seven days of an AIM Fund transaction involving the same security (subject to a de minimis exception), and (iii) transactions involving securities being considered for investment by an AIM Fund (subject to the de minimis exception); and (d) abide by certain other provisions of the Code of Ethics. The de minimis exception under the Code of Ethics covers situations where there is no material conflict of interest because of the large market capitalization of a security and the relatively small number of shares involved in a personal transaction. The Code of Ethics also generally prohibits AIM employees from purchasing securities in initial public offerings. Personal trading reports are periodically reviewed by AIM, and the Board of Trustees reviews quarterly and annual reports (which summarize any significant violations of the Code of Ethics). Sanctions for violating the Code of Ethics may include censure, monetary penalties, suspension or termination of employment. The Trust, on behalf of the Funds, has entered into the Investment Advisory Agreement and a Master Administrative Services Agreement dated May 22, 2000 ("Administrative Services Agreement"), with AIM. [A prior investment advisory agreement with substantially similar terms to the Investment Advisory Agreement and a prior administrative services agreement with substantially similar terms to the Administrative Services Agreement, were in effect prior to May 22, 2000.] Under the terms of the Investment Advisory Agreement, AIM supervises aspects of the Funds' operations and provides investment advisory services to the Funds. The Investment Advisory Agreement provides that each Fund will pay or cause to be paid all expenses of the Fund not assumed by AIM, including, without limitation: brokerage commissions; taxes, legal, accounting, auditing or governmental fees; the cost of preparing share certificates; custodian, transfer and shareholder service agent costs; expenses of issue, sale, redemption and repurchase of shares; expenses of registering and qualifying shares for sale; expenses relating to trustees and shareholders meetings; the cost of preparing and distributing reports and notices to shareholders; the fees and other expenses incurred by the Trust on behalf of each Fund in connection with membership in investment company organizations; and the cost of printing copies of prospectuses and statements of additional information distributed to each Fund's shareholders. The Investment Advisory Agreement will continue in effect from year to year only if such continuance is specifically approved at least annually (i) (a) by the Trust's Board of Trustees or (b) by the vote of a majority of the outstanding voting securities of each Fund and (ii) by the affirmative vote of a majority of the trustees who are not parties to the Investment Advisory Agreement or "interested persons" of any such party (the "Non-Interested Trustees") by votes cast in person at a meeting called for such purpose. Each Fund or AIM may terminate the Investment Advisory Agreement with respect to that Fund on sixty (60) days' written notice without penalty. The Investment Advisory Agreement automatically terminates in the event of its assignment. Under the Investment Advisory Agreement, AIM is entitled to receive from each Fund a fee calculated at the following annual rates based on the average daily net assets of the Fund: AIM ASIAN GROWTH FUND AIM EUROPEAN DEVELOPMENT FUND
Net Assets Annual Rate ---------- ----------- First $ 500 million................................................. 0.95% Over $ 500 million.................................................. 0.90%
42 153 AIM GLOBAL AGGRESSIVE GROWTH FUND
Net Assets Annual Rate ---------- ----------- First $1 billion.................................................... 0.90% Over $1 billion..................................................... 0.85%
AIM GLOBAL GROWTH FUND
Net Assets Annual Rate ---------- ----------- First $1 billion.................................................... 0.85% Over $1 billion..................................................... 0.80%
AIM GLOBAL INCOME FUND
Net Assets Annual Rate ---------- ----------- First $1 billion.................................................... 0.70% Over $1 billion..................................................... 0.65%
AIM INTERNATIONAL EQUITY FUND
Net Assets Annual Rate ---------- ----------- First $1 billion.................................................... 0.95% Over $1 billion..................................................... 0.90%
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM and the Fund. AIM has agreed to waive advisory fees under the Investment Advisory Agreement in order to achieve the following annual fee structure for Equity Fund: 0.95% of the first $500 million of Equity Fund's average daily net assets; 0.90% of the next $500 million of Equity Fund's average daily net assets; and 0.85% of Equity Fund's average daily net assets exceeding $1 billion. For the fiscal years ended October 31, 1999, 1998 and 1997, and for the fiscal year ended October 31, 1999 and the period November 3, 1997 (inception date) through October 31, 1998 relating to Asian Fund and European Fund, AIM received advisory fees, net of advisory fee waivers, from each Fund pursuant to the prior investment advisory agreement then in effect as follows:
1999 1998 1997 ---- ---- ---- Aggressive Growth Fund $ 15,416,368 $ 20,126,609 $ 19,996,061 Asian Fund $ 39,283 $ 11,388 $ -0- Equity Fund $ 24,083,233 $ 21,628,803 $ 17,546,102 European Fund $ 1,607,698 $ 410,537 $ -0- Growth Fund $ 5,898,665 $ 4,042,472 $ 2,895,282 Income Fund $ 280,344 $ 152,633 $ 44,375
43 154 Under a former Master Sub-Advisory Agreement terminated effective _________, 2000, between AIM and INVESCO Global Asset Management Limited ("IGAM") with respect to Asian Fund and European Fund, IGAM was entitled to receive from AIM with respect to each of Asian Fund and European Fund, a fee calculated at the following annual rates based on the average daily net assets of the Fund:
Net Assets Annual Rate ---------- ----------- First $500 million.................................................. 0.20% Over $500 million................................................... 0.175%
Under former Sub-Sub-Advisory Agreements terminated effective _________, 2000, between (i) IGAM and INVESCO Asian Limited ("IAL"), with respect to Asian Fund, and (ii) IGAM and INVESCO Asset Management Limited ("IAML"), with respect to European Fund, were each entitled to receive from IGAM an annual fee equal to 100% of the fee received by IGAM with respect to the applicable Fund. For the fiscal years ended October 31, 1999, 1998 and 1997 and for the fiscal year ended October 31, 1999 and the period November 3, 1997 (inception date) through October 31, 1998 relating to Asian Fund and European Fund, AIM waived advisory fees for each Fund as follows:
1999 1998 1997 ----------- ----------- ----------- Aggressive Growth Fund $ -0- $ -0- $ -0- Asian Fund $ 207,130 $ 51,040 $ -0- Equity Fund $ 1,122,543 $ 978,165 $ 738,005 European Fund $ -0- $ 114,120 $ -0- Growth Fund $ -0- $ -0- $ -0- Income Fund $ 423,180 $ 365,730 $ 302,278
Although these fees are higher than those paid by most mutual funds which invest in domestic securities, they are competitive with such fees paid by mutual funds which invest primarily in foreign securities. The Trust believes such fees are justified due to the higher costs and additional expenses associated with managing and operating funds holding primarily foreign securities. For the fiscal year ended October 31, 1999, AIM waived advisory fees for Asian Fund, Equity Fund and Income Fund which represented 0.80%, 0.04% and 0.42% of such Fund's average daily net assets. In addition, if a Fund engages in securities lending, AIM will provide the Fund investment advisory services and related administrative services. The Master Investment Advisory Agreement describes the administrative services to be rendered by AIM if a Fund engages in securities lending activities, as well as the compensation AIM may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal (the agent) in determining which specific securities are available for loan; (c) monitoring the agent to ensure that securities loans are effected in accordance with AIM's instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board with respect to securities lending activities; (e) responding to agent inquiries; and (f) performing such other duties as may be necessary. AIM's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services AIM will provide, a lending Fund will pay AIM a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. AIM currently intends to waive such fees, and has agreed to seek Board approval prior to its receipt of all or a portion of such fee. 44 155 For the fiscal year ended October 31, 1999, each Fund reimbursed AIM for administrative services in the following amounts pursuant to the prior administrative services agreement then in effect, stated as a percentage of the Fund's average daily net assets:
Reimbursement Payments -------- Aggressive Growth Fund........................... 0.01% Asian Fund....................................... 0.29% Equity Fund...................................... 0.01% European Fund.................................... 0.04% Growth Fund...................................... 0.01% Income Fund...................................... 0.07%
Under the terms of the Administrative Services Agreement, AIM is entitled to receive from each Fund reimbursement of its costs or such reasonable compensation as may be approved by the Board of Trustees. Currently, AIM is reimbursed for the services of the Funds' principal financial officer and her staff, and any expenses related to fund accounting services. The Administrative Services Agreement for the Funds provides that AIM may perform, or arrange for the performance of, certain accounting and other administrative services to each Fund. For such services, AIM is entitled to receive from each Fund reimbursement of AIM's costs or such reasonable compensation as may be approved by the Trust's Board of Trustees. The Administrative Services Agreement will continue in effect from year to year only if such continuance is specifically approved at least annually (i)(a) by the Trust's Board of Trustees or (b) by the vote of a majority of the outstanding voting securities of each Fund and (ii) by the affirmative vote of the Non-Interested Trustees, by votes cast in person at a meeting called for such purpose. For the fiscal years ended October 31, 1999, 1998 and 1997 and for the fiscal year ended October 31, 1999 and the period November 3, 1997 (inception date) through October 31, 1998 relating to Asian Fund and European Fund, AIM received reimbursement of administrative service costs from each Fund pursuant to the prior administrative services agreement then in effect as follows:
1999 1998 1997 ---- ---- ---- Aggressive Growth Fund $ 127,117 $ 116,964 $ 109,161 Asian Fund $ 74,007 $ 74,604 $ -- Equity Fund $ 150,312 $ 115,146 $ 105,163 European Fund $ 75,332 $ 69,060 $ -- Growth Fund $ 97,142 $ 80,267 $ 87,673 Income Fund $ 66,799 $ 81,456 $ 74,031
In addition, the Transfer Agency and Service Agreement for the Funds provides that A I M Fund Services, Inc. ("AFS" or the "Transfer Agent"), P.O. Box 4739, Houston, Texas 77210-4739, a registered transfer agent and wholly owned subsidiary of AIM, will perform certain shareholder services for the Funds for a fee per account serviced. The Transfer Agency and Service Agreement provides that AFS will receive a per account fee plus out-of-pocket expenses to process orders for purchases, redemptions and exchanges of shares, prepare and transmit payments for dividends and distributions declared by the Funds, maintain shareholder accounts and provide shareholders with information regarding the Funds and their accounts. 45 156 THE DISTRIBUTION PLANS THE CLASS A AND C PLAN The Trust has adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to the Class A and Class C shares of the Funds (the "Class A and C Plan"). The Class A and C Plan provides that for Aggressive Growth Fund, Growth Fund and Income Fund the Class A shares pay 0.50% per annum of their average daily net assets, for Equity Fund the Class A shares pay 0.30% per annum of their average daily net assets and for Asian Fund and European Fund the Class A shares pay 0.35% per annum of their average daily net assets as compensation to AIM Distributors for the purpose of financing any activity which is primarily intended to result in the sale of Class A shares. Under the Class A and C Plan, Class C shares of each Fund pay compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class C shares. The Class A and C Plan is designed to compensate AIM Distributors, on a quarterly basis, for certain promotional and other sales-related costs, and to implement a dealer incentive program which provides for periodic payments to selected dealers who furnish continuing personal shareholder services to their customers who purchase and own Class A or Class C shares of a Fund. Payments can also be directed by AIM Distributors to selected institutions who have entered into service agreements with respect to Class A and Class C shares of each Fund and who provide continuing personal services to their customers who own Class A and Class C shares of each Fund and who provide continuing personal services to their customers who own Class A and Class C shares of the Fund. Activities appropriate for financing under the Class A and C Plan include, but are not limited to, the following: printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Class A and C Plan. Of the aggregate amount payable under the Class A and C Plan, payments to dealers and other financial institutions that provide continuing personal shareholder services to their customers who purchase and own shares of the Fund, in amounts of up to 25% of the average net assets of the Fund attributable to the customers of such dealers or financial institutions are characterized as a service fee, and payments to dealers and other financial institutions in excess of such amount and payments to AIM Distributors would be characterized as an asset-based sales charge pursuant to the Class A and C Plan. The Class A and C Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Trust with respect to the Fund. THE CLASS B PLAN The Trust has also adopted a Master Distribution Plan pursuant to Rule 12b-1 under the 1940 Act relating to Class B shares of the Funds (the "Class B Plan", and collectively with the Class A and C Plan, the "Plans"). Under the Class B Plan, each Fund pays compensation to AIM Distributors at an annual rate of 1.00% of the average daily net assets attributable to Class B shares. Of such amount, each Fund pays a service fee of 0.25% of the average daily net assets attributable to Class B shares to selected dealers and other institutions which furnish continuing personal shareholder services to their customers who purchase and own Class B shares. Any amounts not paid as a service fee would constitute an asset-based sales charge. Amounts paid in accordance with the Class B Plan may be used to finance any activity primarily intended to result in the sale of Class B shares, including but not limited to printing of prospectuses and statements of additional information and reports for other than existing shareholders; overhead; preparation and distribution of advertising material and sales literature; expenses of organizing and conducting sales seminars; supplemental payments to dealers and other institutions such as asset-based sales charges or as payments of service fees under shareholder service arrangements; and costs of administering the Class B Plan. BOTH PLANS Pursuant to an incentive program, AIM Distributors may enter into agreements ("Shareholder Service Agreements") with investment dealers selected from time to time by AIM Distributors for the provision of 46 157 distribution assistance in connection with the sale of the Funds' shares to such dealers' customers, and for the provision of continuing personal shareholder services to customers who may from time to time directly or beneficially own shares of the Funds. The distribution assistance and continuing personal shareholder services to be rendered by dealers under the Shareholder Service Agreements may include, but shall not be limited to, the following: distributing sales literature; answering routine customer inquiries concerning the Funds; assisting customers in changing dividend options, account designations and addresses, and in enrolling in any of several special investment plans offered in connection with the purchase of the Funds' shares; assisting in the establishment and maintenance of customer accounts and records and in the processing of purchase and redemption transactions; investing dividends and any capital gains distributions automatically in the Funds' shares; and providing such other information and services as the Funds or the customer may reasonably request. Under the Plans, in addition to the Shareholder Service Agreements authorizing payments to selected dealers, banks may enter into Shareholder Service Agreements authorizing payments under the Plans to be made to banks which provide services to their customers who have purchased shares. Services provided pursuant to Shareholder Service Agreements with banks may include some or all of the following: answering shareholder inquiries regarding a Fund and the Trust; performing sub-accounting; establishing and maintaining shareholder accounts and records; processing customer purchase and redemption transactions; providing periodic statements showing a shareholder's account balance and the integration of such statements with those of other transactions and balances in the shareholder's other accounts serviced by the bank; forwarding applicable prospectuses, proxy statements, reports and notices to bank clients who hold Fund shares; and such other administrative services as a Fund reasonably may request, to the extent permitted by applicable statute, rule or regulation. Similar agreements may be permitted under the Plans for institutions which provide recordkeeping for and administrative services to 401(k) plans. Financial intermediaries and any other person entitled to receive compensation for selling Fund shares may receive different compensation for selling shares of one particular class over another. Under a Shareholder Service Agreement, a Fund agrees to pay periodically fees to selected dealers and other institutions who render the foregoing services to their customers. The fees payable under a Shareholder Service Agreement generally will be calculated at the end of each payment period for each business day of the Funds during such period at the annual rate of 0.25% of the average daily net asset value of the Funds' shares purchased or acquired through exchange. Fees calculated in this manner shall be paid only to those selected dealers or other institutions who are dealers or institutions of record at the close of business on the last business day of the applicable payment period for the account in which the Fund's shares are held. Payments pursuant to the Plans are subject to any applicable limitations imposed by rules of the National Association of Securities Dealers, Inc. ("NASD"). The Plans conform to rules of the NASD by limiting payments made to dealers and other financial institutions who provide continuing personal shareholder services to their customers who purchase and own shares of the Funds to no more than 0.25% per annum of the average daily net assets of the funds attributable to the customers of such dealers or financial institutions, and by imposing a cap on the total sales charges, including asset based sales charges, that may be paid by the Funds and their respective classes. AIM Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Class A and Class C shares. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, AIM Distributors will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Funds' detriment during the period stated in the agreement between AIM Distributors and the Fund. Under the Plans, certain financial institutions which have entered into service agreements and which sell shares of the Funds on an agency basis, may receive payments from the Funds pursuant to the respective Plans. AIM Distributors does not act as principal, but rather as agent for the Funds, in making dealer incentive 47 158 and shareholder servicing payments under the Plans. These payments are an obligation of the Fund and not of AIM Distributors. For the fiscal year ended October 31, 1999, the Funds paid the following amounts under the Class A and C Plan and the Class B Plan adopted by the Trust's predecessor:
% of Class Average Daily Net Assets ------------------------------- Class A Class B Class C Class A Class B Class C ------- ------- ------- -------- ------- ------- Aggressive Growth Fund $ 4,209,929 $ 8,987,826 $ 140,985 0.50% 1.00% 1.00% Asian Fund $ 61,006 $ 64,087 $ 20,619 0.35% 1.00% 1.00% Equity Fund $ 5,566,448 $ 8,024,805 $ 871,229 0.30% 1.00% 1.00% European Fund $ 332,066 $ 625,126 $ 118,428 0.35% 1.00% 1.00% Growth Fund $ 1,585,224 $ 3,564,027 $ 205,127 0.50% 1.00% 1.00% Income Fund $ 300,260 $ 385,265 $ 19,247 0.50% 1.00% 1.00%
An estimate by category of actual fees paid by the Funds with regard to the Class A shares under the Class A and C Plan during the year ended October 31, 1999 follows:
AGGRESSIVE ASIAN EQUITY EUROPEAN GROWTH INCOME GROWTH FUND FUND FUND FUND FUND FUND ----------- ---- ---- ---- ---- ---- CLASS A Advertising .......................... $ 71,446 $ 7,880 $ 455,333 $ 63,247 $ 33,812 $ 1,993 Printing and mailing prospectuses, semi-annual reports and annual reports (other than to current shareholders) ........................ $ 6,820 $ 756 $ 43,412 $ 6,135 $ 3,252 $ 185 Seminars ............................. $ 19,801 $ 2,568 $ 128,153 $ 18,258 $ 9,967 $ 605 Compensation to Underwriters to partially offset other marketing costs ................................ $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Compensation to Dealers .............. $ 4,111,862 $ 49,802 $ 4,939,550 $ 244,426 $ 1,538,194 $ 297,478 (includes Finder's Fees) Compensation to Sales Personnel ...... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Annual Report Total .................. $ 4,209,929 $ 61,006 $ 5,566,448 $ 332,066 $ 1,585,225 $ 300,261
An estimate by category of actual fees paid by the Funds under the Class B Plan during the year ended October 31, 1999 as follows: 48 159
AGGRESSIVE ASIAN EQUITY EUROPEAN GROWTH INCOME GROWTH FUND FUND FUND FUND FUND FUND ----------- ---- ---- ---- ---- ---- CLASS B Advertising ............................. $ 190,907 $ 5,128 $ 219,428 $ 47,290 $ 96,312 $ 15,684 Printing and mailing prospectuses, semi-annual reports and annual reports (other than to current shareholders) ........................... $ 17,786 $ 327 $ 20,589 $ 4,058 $ 9,087 $ 1,652 Seminars ................................ $ 51,109 $ 909 $ 60,004 $ 11,272 $ 27,457 $ 4,079 Compensation to Underwriters to partially offset other marketing costs ............ $6,740,869 $ 48,065 $6,018,604 $ 468,844 $2,673,020 $ 288,949 Compensation to Dealers ................. $1,987,155 $ 9,657 $1,706,180 $ 93,661 $ 758,151 $ 74,902 Compensation to Sales Personnel ......... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Annual Report Total ..................... $8,987,826 $ 64,086 $8,024,805 $ 625,125 $3,564,027 $ 385,266
An estimate by category of actual fees paid by the Funds with regard to the Class C shares under the Class A and C Plan during the year ended October 31, 1999 as follows:
AGGRESSIVE ASIAN EQUITY EUROPEAN GROWTH INCOME GROWTH FUND FUND FUND FUND FUND FUND ----------- ---- ---- ---- ---- ---- CLASS C Advertising ............................. $ 0 $ 396 $ 0 $ 4,827 $ 0 $ 64 Printing and mailing prospectuses, semi-annual reports and annual reports (other than to current shareholders) ........................... $ 0 $ 39 $ 0 $ 420 $ 0 $ 0 Seminars ................................ $ 0 $ 0 $ 0 $ 1,166 $ 0 $ 0 Compensation to Underwriters to partially offset other marketing costs ............ $ 64,526 $ 15,408 $510,473 $ 83,930 $116,390 $ 11,019 Compensation to Dealers ................. $ 76,458 $ 4,776 $360,757 $ 28,085 $ 88,737 $ 8,163 Compensation to Sales Personnel ......... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Annual Report Total ..................... $140,984 $ 20,619 $871,230 $118,428 $205,127 $ 19,246
The Plans require AIM Distributors to provide the Board of Trustees at least quarterly with a written report of the amounts expended pursuant to the Plans and the purposes for which such expenditures were made. The Board of Trustees reviews these reports in connection with their decisions with respect to the Plans. As required by Rule 12b-1, the Plans and related forms of Shareholder Service Agreements were approved by the Board of Trustees, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plans or in any agreements related to the Plans ("Qualified Trustees"). In approving the Plans in accordance with the requirements of Rule 12b-1, the trustees considered various factors and determined that there is a reasonable likelihood that the Plans would benefit each class of the Funds and their respective shareholders. 49 160 The Plans do not obligate the Funds to reimburse AIM Distributors for the actual expenses AIM Distributors may incur in fulfilling its obligations under the Plans. Thus, even if AIM Distributors' actual expenses exceed the fee payable to AIM Distributors thereunder at any given time, the Funds will not be obligated to pay more than that fee. If AIM Distributors' expenses are less than the fee it receives, AIM Distributors will retain the full amount of the fee. Unless the Plans are terminated earlier in accordance with their terms, the Plans continue in effect as long as such continuance is specifically approved at least annually by the Board of Trustees, including a majority of the Qualified Trustees. The Plans may be terminated by the vote of a majority of the Independent Trustees, or, with respect to a particular class, by the vote of a majority of the outstanding voting securities of that class. Any change in the Plans that would increase materially the distribution expenses paid by the applicable class requires shareholder approval; otherwise, it may be amended by the trustees, including a majority of the Qualified Trustees, by votes cast in person at a meeting called for the purpose of voting upon such amendment. As long as the Plans are in effect, the selection or nomination of the Qualified Trustees is committed to the discretion of the Qualified Trustees. In the event the Class A and C Plan is amended in a manner which the Board of Trustees determines would materially increase the charges paid under the Class A and C Plan, the Class B shares of the Funds will no longer convert into Class A shares of the same Funds unless the Class B shares, voting separately, approve such amendment. If the Class B shareholders do not approve such amendment, the Board of Trustees will (i) create a new class of shares of the Funds which is identical in all material respects to the Class A shares as they existed prior to the implementation of the amendment and (ii) ensure that the existing Class B shares of the Funds will be exchanged or converted into such new class of shares no later than the date the Class B shares were scheduled to convert into Class A shares. The principal differences between the Class A and C Plan, on the one hand, and the Class B Plan, on the other hand, are: (i) the Class A and C Plan allows payment to AIM Distributors or to dealers or financial institutions of up to 0.50% of average daily net assets of the Class A shares of Aggressive Growth Fund, Income Fund, and Growth Fund, of up to 0.35% of average daily net assets of the Class A shares of Asian Fund and European Fund, and of up to 0.30% of average daily net assets of the Class A shares of Equity Fund, as compared to 1.00% of such assets of each Fund's Class B shares; (ii) the Class B Plan obligates the Class B shares to continue to make payments to AIM Distributors following termination of the Class B shares Distribution Agreement with respect to Class B shares sold by or attributable to the distribution efforts of AIM Distributors unless there has been a complete termination of the Class B Plan (as defined in such Plan) and (iii) the Class B Plan expressly authorizes AIM Distributors to assign, transfer or pledge its rights to payments pursuant to the Class B Plan. THE DISTRIBUTOR The Trust has entered into distribution arrangements with AIM Distributors, P. O. Box 4739, Houston, Texas 77210-4739, a registered broker-dealer and a wholly owned subsidiary of AIM, to act as the distributor in the continuous offering of Class A, Class B and Class C shares of the Funds. Certain trustees and officers of the Trust are affiliated with AIM Distributors. A Master Distribution Agreement with AIM Distributors relating to the Class A and Class C shares of the Funds was approved by the Board of Trustees on February 3, 2000. A Master Distribution Agreement with AIM Distributors relating to the Class B shares of the Funds was also approved by the Board of Trustees on February 3, 2000. Both such Master Distribution Agreements are hereinafter collectively referred to as the "Distribution Agreements." The Distribution Agreements provide AIM Distributors with the exclusive right to distribute shares of the Funds directly and through institutions with whom AIM Distributors has entered into selected dealer agreements. Under the Distribution Agreement for the Class B shares, AIM Distributors sells Class B shares at net asset value subject to a contingent deferred sales charge established by AIM Distributors. AIM Distributors is authorized to advance to institutions through whom Class B shares are sold a sales commission under 50 161 schedules established by AIM Distributors. The Distribution Agreement for the Class B shares provides that AIM Distributors (or its assignee or transferee) will receive 0.75% (of the total 1.00% payable under the distribution plan applicable to Class B shares) of the Fund's average daily net assets attributable to Class B shares attributable to the sales efforts of AIM Distributors. The Distribution Agreements provide that AIM Distributors will bear the expenses of printing from the final proof and distributing the Funds' prospectuses and statements of additional information relating to public offerings made by AIM Distributors pursuant to the Distribution Agreements (other than those prospectuses and statements of additional information distributed to existing shareholders of the Funds), and any promotional or sales literature used by AIM Distributors or furnished by AIM Distributors to dealers in connection with the public offering of the Funds' shares, including expenses of advertising in connection with such public offerings. AIM Distributors has not undertaken to sell any specified number of shares of any classes of the Funds. AIM Distributors expects to pay sales commissions from its own resources to dealers and institutions who sell Class B and Class C shares of the Funds at the time of such sales. Payments with respect to Class B shares will equal 4.0% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. AIM Distributors anticipates that it will require a number of years to recoup from Class B Plan payments the sales commissions paid to dealers and institutions in connection with sales of Class B shares. In the future, if multiple distributors serve a Fund, each such distributor (or its assignee or transferee) would receive a share of the payments under the Class B Plan based on the portion of the Fund's Class B shares sold by or attributable to the distribution efforts of that distributor. AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make such payments quarterly to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. The Trust (on behalf of any class of the Funds) or AIM Distributors may terminate the Distribution Agreements on sixty (60) days' written notice without penalty. The Distribution Agreements will terminate automatically in the event of their assignment. In the event the Class B shares Distribution Agreement is terminated, AIM Distributors would continue to receive payments of asset based distribution fees in respect of the outstanding Class B shares attributable to the distribution efforts of AIM Distributors; provided, however, that a complete termination of the Class B Plan (as defined in such Plan) would terminate all payments to AIM Distributors. Termination of the Class B Plan or Distribution Agreement does not affect the obligation of the Funds and their Class B shareholders to pay contingent deferred sales charges. From time to time, AIM Distributors may transfer and sell its right to payments under the Distribution Agreements relating to Class B shares in order to finance distribution expenditures in respect of Class B shares. The following chart reflects the total sales charges paid in connection with the sale of Class A shares of each Fund and the amount retained by AIM Distributors for the fiscal years ended October 31, 1999, 1998 and 1997: 51 162
1999 1998 1997 ------------------- ---------------------- ------------------------ Sales Amount Sales Amount Sales Amount Charges Retained Charges Retained Charges Retained ------- -------- ------- -------- ------- -------- Aggressive Growth Fund $ 1,335,400 $ 267,534 $ 3,546,968 $ 622,054 $12,462,271 $ 2,200,552 Asian Fund* $ 251,652 $ 43,007 $ 180,148 $ 27,913 $ 0 $ 0 Equity Fund $ 2,227,910 $ 446,482 $ 3,608,107 $ 592,247 $ 7,481,513 $ 1,172,508 European Fund* $ 870,792 $ 143,067 $ 1,357,500 $ 207,603 $ 0 $ 0 Growth Fund $ 1,035,250 $ 195,571 $ 1,200,898 $ 208,115 $ 1,621,736 $ 286,414 Income Fund $ 159,748 $ 28,250 $ 285,983 $ 50,768 $ 348,033 $ 59,763
- --------------------- * Asian Fund and European Fund commenced operations November 3, 1997. The following chart reflects the contingent deferred sales charges paid by Class A, Class B and Class C shareholders for the fiscal years ended October 31, 1999, 1998 and 1997 for Class A, Class B and Class C shares:
1999 1998 1997 ------------ ----------- --------- Aggressive Growth Fund $ 101,594 $ 200,802 $ 133,018 Asian Fund* $ 240,319 $ 496 $ 0 Equity Fund $ 157,129 $ 208,603 $ 91,984 European Fund* $ 50,219 $ 7,299 $ 0 Growth Fund $ 24,812 $ 29,133 $ 25,870 Income Fund $ 3,743 $ 9,510 $ 3,397
- --------------------- * Asian Fund and European Fund commenced operations November 3, 1997. SALES CHARGES AND DEALER CONCESSIONS CATEGORY I. Certain AIM Funds are currently sold with a sales charge ranging from 5.50% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds include Class A shares of each of AIM Advisor Flex Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap Value Fund, AIM Aggressive Growth Fund, AIM Asian Growth Fund, AIM Basic Value Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund, AIM Dent Demographic Trends Fund, AIM Emerging Growth Fund, AIM European Development Fund, AIM Euroland Growth Fund, AIM Global Utilities Fund, AIM Global Growth & Income Fund, AIM International Equity Fund, AIM Japan Growth Fund, AIM Large Cap Basic Value Fund, AIM Large Cap Growth Fund, AIM Large Cap Opportunities Fund, AIM Mid Cap Equity Fund, AIM Mid Cap Growth Fund, AIM Mid Cap Opportunities Fund, AIM New Pacific Growth Fund, AIM Select Growth Fund, AIM Small Cap Growth Fund, AIM Small Cap Opportunities Fund, AIM Value Fund and AIM Weingarten Fund. 52 163
Dealer Investor's Sales Charge Concession ----------------------------- ---------- As a As a As a Percentage Percentage Percentage of the Amount of Investment in of the Public of the Net Public Single Transaction(1) Offering Amount Offering ----------------------- Price Invested Price ------------- ---------- --------- Less than $ 25,000 5.50% 5.82% 4.75% $ 25,000 but less than $ 50,000 5.25 5.54 4.50 $ 50,000 but less than $ 100,000 4.75 4.99 4.00 $100,000 but less than $ 250,000 3.75 3.90 3.00 $250,000 but less than $ 500,000 3.00 3.09 2.50 $500,000 but less than $1,000,000 2.00 2.04 1.60
- ----------------- * AIM Small Cap Opportunities Fund will not accept any single purchase in excess of $250,000. CATEGORY II. Certain AIM Funds are currently sold with a sales charge ranging from 4.75% to 2.00% of the offering price on purchases of less than $1,000,000. These AIM Funds are: the Class A shares of each of AIM Advisor Real Estate Fund, AIM Balanced Fund, AIM Developing Markets Fund, AIM Emerging Markets Debt Fund, AIM Global Aggressive Growth Fund, AIM Global Consumer Products and Services Fund, AIM Global Financial Services Fund, AIM Global Government Income Fund, AIM Global Growth Fund, AIM Global Health Care Fund, AIM Global Income Fund, AIM Global Infrastructure Fund, AIM Global Resources Fund, AIM Global Telecommunications and Technology Fund, AIM Global Trends Fund, AIM High Income Municipal Fund, AIM High Yield Fund, AIM High Yield Fund II, AIM Income Fund, AIM Intermediate Government Fund, AIM Latin American Growth Fund, AIM Municipal Bond Fund, AIM Strategic Income Fund and AIM Tax-Exempt Bond Fund of Connecticut.
Dealer Concession Investor's Sales Charge ---------- ------------------------------- As a As a As a Percentage Percentage Percentage of the of the Public of the Net Public Amount of Investment in Offering Amount Offering Single Transaction Price Invested Price ------------------------ ------------- ---------- ---------- Less than $ 50,000 4.75% 4.99% 4.00% $ 50,000 but less than $ 100,000 4.00 4.17 3.25 $100,000 but less than $ 250,000 3.75 3.90 3.00 $250,000 but less than $ 500,000 2.50 2.56 2.00 $500,000 but less than $1,000,000 2.00 2.04 1.60
CATEGORY III. Certain AIM Funds are currently sold with a sales charge ranging from 1.00% to 0.50% of the offering price on purchases of less than $1,000,000. These AIM Funds are the Class A shares of each of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund. 53 164
Dealer Concession Investor's Sales Charge ----------- ------------------------------- As a As a As a Percentage Percentage Percentage of the of the Public of the Net Public Amount of Investment In Offering Amount Offering Single Transaction Price Invested Price ----------------------- ------------- ---------- ----------- Less than $ 100,000 1.00% 1.01% 0.75% $100,000 but less than $ 250,000 0.75 0.76 0.50 $250,000 but less than $ 1,000,000 0.50 0.50 0.40
There is no sales charge on purchases of $1,000,000 or more of Category I, II or III funds; however, AIM Distributors may pay a dealer concession and/or advance a service fee on such transactions as set forth below. ALL GROUPS OF AIM FUNDS. AIM Distributors may elect to re-allow the entire initial sales charge to dealers for all sales with respect to which orders are placed with AIM Distributors during a particular period. Dealers to whom substantially the entire sales charge is re-allowed may be deemed to be "underwriters" as that term is defined under the Securities Act of 1933. In addition to amounts paid to dealers as a dealer concession out of the initial sales charge paid by investors, AIM Distributors may, from time to time, at its expense or as an expense for which it may be compensated under a distribution plan, if applicable, pay a bonus or other consideration or incentive to dealers who sell a minimum dollar amount of the shares of the AIM Funds during a specified period of time. At the option of the dealer, such incentives may take the form of payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives and their families to places within or outside the United States. The total amount of such additional bonus payments or other consideration shall not exceed 0.25% of the public offering price of the shares sold. Any such bonus or incentive programs will not change the price paid by investors for the purchase of the applicable AIM Fund's shares or the amount that any particular AIM Fund will receive as proceeds from such sales. Dealers may not use sales of the AIM Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state. AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), which are sold at net asset value and are subject to a contingent deferred sales charge, for all AIM Funds other than Class A shares of each of AIM Limited Maturity Treasury Fund and AIM Tax-Free Intermediate Fund as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases. AIM Distributors may make payments to dealers and institutions who are dealers of record for purchases of $1 million or more of Class A shares (or shares which normally involve payment of initial sales charges), and which are sold at net asset value and are not subject to a contingent deferred sales charge, in an amount up to 0.10% of such purchases of Class A shares of AIM Limited Maturity Treasury Fund, and in an amount up to 0.25% of such purchases of Class A shares of AIM Tax-Free Intermediate Fund. AIM Distributors may pay sales commissions to dealers and institutions who sell Class B shares of the AIM Funds at the time of such sales. Payments with respect to Class B shares will equal 4.00% of the purchase price of the Class B shares sold by the dealer or institution, and will consist of a sales commission equal to 3.75% of the purchase price of the Class B shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. The portion of the payments to AIM Distributors under the Class B Plan which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of such sales commissions plus financing costs. AIM Distributors may pay sales commissions to dealers and institutions who sell Class C shares of the AIM Funds at the time of such sales. Payments with respect to Class C shares will equal 1.00% of the 54 165 purchase price of the Class C shares sold by the dealer or institution, and will consist of a sales commission of 0.75% of the purchase price of the Class C shares sold plus an advance of the first year service fee of 0.25% with respect to such shares. AIM Distributors will retain all payments received by it relating to Class C shares for the first year after they are purchased. The portion of the payments to AIM Distributors under the Class A and C Plan attributable to Class C shares which constitutes an asset-based sales charge (0.75%) is intended in part to permit AIM Distributors to recoup a portion of on-going sales commissions to dealers plus financing costs, if any. After the first full year, AIM Distributors will make such payments quarterly to dealers and institutions based on the average net asset value of Class C shares which are attributable to shareholders for whom the dealers and institutions are designated as dealers of record. These commissions are not paid on sales to investors exempt from the CDSC, including shareholders of record of AIM Advisor Funds, Inc. on April 30, 1995, who purchase additional shares in any of the Funds on or after May 1, 1995, and in circumstances where AIM Distributors grants an exemption on particular transactions. Exchanges of AIM Cash Reserve Shares of AIM Money Market Fund for Class B shares or Class C shares are considered sales of such Class B or Class C shares for purposes of the sales charges and dealer concessions discussed above. AIM Distributors may pay investment dealers or other financial service firms for share purchases (measured on an annual basis) of Class A Shares of all AIM Funds except AIM Limited Maturity Treasury Fund, AIM Tax-Free Intermediate Fund and AIM Tax-Exempt Cash Fund sold at net asset value to an employee benefit plan as follows: 1% of the first $2 million of such purchases, plus 0.80% of the next $1 million of such purchases, plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in excess of $20 million of such purchases and up to 0.10% of the net asset value of any Class A shares of AIM Limited Maturity Treasury Fund sold at net asset value to an employee benefit plan in accordance with this paragraph. REDUCTIONS IN INITIAL SALES CHARGES Reductions in the initial sales charges shown in the sales charge tables (quantity discounts) apply to purchases of shares of the AIM Funds that are otherwise subject to an initial sales charge, provided that such purchases are made by a "purchaser" as hereinafter defined. Purchases of Class A shares of AIM Tax-Exempt Cash Fund, AIM Cash Reserve Shares of AIM Money Market Fund and Class B and Class C shares of the AIM Funds will not be taken into account in determining whether a purchase qualifies for a reduction in initial sales charges. The term "purchaser" means: o an individual and his or her spouse and children, including any trust established exclusively for the benefit of any such person; or a pension, profit-sharing, or other benefit plan established exclusively for the benefit of any such person, such as an IRA, Roth IRA, a single-participant money-purchase/profit-sharing plan or an individual participant in a 403(b) plan (unless such 403(b) plan qualifies as the purchaser as defined below); o a 403(b) plan, the employer/sponsor of which is an organization described under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), if: a. the employer/sponsor must submit contributions for all participating employees in a single contribution transmittal (i.e., the Funds will not accept contributions submitted with respect to individual participants); b. each transmittal must be accompanied by a single check or wire transfer; and c. all new participants must be added to the 403(b) plan by submitting an application on behalf of each new participant with the contribution transmittal; 55 166 o a trustee or fiduciary purchasing for a single trust, estate or single fiduciary account (including a pension, profit-sharing or other employee benefit trust created pursuant to a plan qualified under Section 401 of the Code) and 457 plans, although more than one beneficiary or participant is involved; o a Simplified Employee Pension (SEP), Salary Reduction and other Elective Simplified Employee Pension account (SAR-SEP) or a Savings Incentive Match Plans for Employees IRA (SIMPLE IRA), where the employer has notified the distributor in writing that all of its related employee SEP, SAR-SEP or SIMPLE IRA accounts should be linked; or o any other organized group of persons, whether incorporated or not, provided the organization has been in existence for at least six months and has some purpose other than the purchase at a discount of redeemable securities of a registered investment company. Investors or dealers seeking to qualify orders for a reduced initial sales charge must identify such orders and, if necessary, support their qualification for the reduced charge. AIM Distributors reserves the right to determine whether any purchaser is entitled, by virtue of the foregoing definition, to the reduced sales charge. No person or entity may distribute shares of the AIM Funds without payment of the applicable sales charge other than to persons or entities who qualify for a reduction in the sales charge as provided herein. 1. LETTERS OF INTENT. A purchaser, as previously defined, may pay reduced initial sales charges by completing the appropriate section of the account application and by fulfilling a Letter of Intent ("LOI"). The LOI privilege is also available to holders of the Connecticut General Guaranteed Account, established for tax qualified group annuities, for contracts purchased on or before June 30, 1992. The LOI confirms such purchaser's intention as to the total investment to be made in shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash Fund, and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund) within the following 13 consecutive months. By marking the LOI section on the account application and by signing the account application, the purchaser indicates that he understands and agrees to the terms of the LOI and is bound by the provisions described below. Each purchase of fund shares normally subject to an initial sales charge made during the 13-month period will be made at the public offering price applicable to a single transaction of the total dollar amount indicated by the LOI, as described under "Sales Charges and Dealer Concessions." It is the purchaser's responsibility at the time of purchase to specify the account numbers that should be considered in determining the appropriate sales charge. The offering price may be further reduced as described under "Rights of Accumulation" if the Transfer Agent is advised of all other accounts at the time of the investment. Shares acquired through reinvestment of dividends and capital gains distributions will not be applied to the LOI. At any time during the 13-month period after meeting the original obligation, a purchaser may revise his intended investment amount upward by submitting a written and signed request. Such a revision will not change the original expiration date. By signing an LOI, a purchaser is not making a binding commitment to purchase additional shares, but if purchases made within the 13-month period do not total the amount specified, the investor will pay the increased amount of sales charge as described below. Purchases made within 90 days before signing an LOI will be applied toward completion of the LOI. The LOI effective date will be the date of the first purchase within the 90-day period. The Transfer Agent will process necessary adjustments upon the expiration or completion date of the LOI. Purchases made more than 90 days before signing an LOI will be applied toward completion of the LOI based on the value of the shares purchased calculated at the public offering price on the effective date of the LOI. To assure compliance with the provisions of the 1940 Act, out of the initial purchase (or subsequent purchases if necessary) the Transfer Agent will escrow in the form of shares an appropriate dollar amount (computed to the nearest full share). All dividends and any capital gain distributions on the escrowed shares will be credited to the purchaser. All shares purchased, including those escrowed, will be registered in the purchaser's name. If the total investment specified under this LOI is completed within the 13-month period, the escrowed shares will be promptly released. If the intended investment is not completed, the purchaser will pay 56 167 the Transfer Agent the difference between the sales charge on the specified amount and the amount actually purchased. If the purchaser does not pay such difference within 20 days of the expiration date, he irrevocably constitutes and appoints the Transfer Agent as his attorney to surrender for redemption any or all shares, to make up such difference within 60 days of the expiration date. If at any time before completing the LOI Program, the purchaser wishes to cancel the agreement, he must give written notice to AIM Distributors. If at any time before completing the LOI Program the purchaser requests the Transfer Agent to liquidate or transfer beneficial ownership of his total shares, a cancellation of the LOI will automatically be effected. If the total amount purchased is less than the amount specified in the LOI, the Transfer Agent will redeem an appropriate number of escrowed shares equal to the difference between the sales charge actually paid and the sales charge that would have been paid if the total purchases had been made at a single time. 2. RIGHTS OF ACCUMULATION. A "purchaser," as previously defined, may also qualify for reduced initial sales charges based upon such purchaser's existing investment in shares of any of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund) at the time of the proposed purchase. Rights of Accumulation are also available to holders of the Connecticut General Guaranteed Account, established for tax-qualified group annuities, for contracts purchased on or before June 30, 1992. To determine whether or not a reduced initial sales charge applies to a proposed purchase, AIM Distributors takes into account not only the money which is invested upon such proposed purchase, but also the value of all shares of the AIM Funds (except for (i) Class A shares of AIM Tax-Exempt Cash Fund and AIM Cash Reserve Shares of AIM Money Market Fund, (ii) Class B and Class C shares of the AIM Funds and (iii) shares of AIM Floating Rate Fund) owned by such purchaser, calculated at their then current public offering price. If a purchaser so qualifies for a reduced sales charge, the reduced sales charge applies to the total amount of money then being invested by such purchaser and not just to the portion that exceeds the breakpoint above which a reduced sales charge applies. For example, if a purchaser already owns qualifying shares of any AIM Fund with a value of $20,000 and wishes to invest an additional $20,000 in a fund, with a maximum initial sales charge of 5.50%, the reduced initial sales charge of 5.25% will apply to the full $20,000 purchase and not just to the $15,000 in excess of the $25,000 breakpoint. To qualify for obtaining the discount applicable to a particular purchase, the purchaser or his dealer must furnish AFS with a list of the account numbers and the names in which such accounts of the purchaser are registered at the time the purchase is made. PURCHASES AT NET ASSET VALUE. Purchases of shares of any of the AIM Funds at net asset value (without payment of an initial sales charge) may be made in connection with: (a) the reinvestment of dividends and distributions from a fund; (b) exchanges of shares of certain funds; (c) use of the reinstatement privilege; or (d) a merger, consolidation or acquisition of assets of a fund. The following purchasers will not pay initial sales charges on purchases of Class A shares because there is a reduced sales effort involved in sales to these purchasers: o AIM Management and its affiliates, or their clients; o Any current or retired officer, director or employee (and members of their immediate family) of AIM Management, its affiliates or The AIM Family of Funds--Registered Trademark--; and any foundation, trust or employee benefit plan established exclusively for the benefit of, or by, such persons; o Any current or retired officer, director, or employee (and members of their immediate family), of CIGNA Corporation or its affiliates, or of First Data Investor Services Group; and any deferred compensation plan for directors of investment companies sponsored by CIGNA Investments, Inc. or its affiliates; o Sales representatives and employees (and members of their immediate family) of selling group members or financial institutions that have arrangements with such selling group members; 57 168 o Purchases through approved fee-based programs; o Employee benefit plans designated as purchasers as defined above, and non-qualified plans offered in conjunction therewith, provided the initial investment in the plan(s) is at least $1 million; the sponsor signs a $1 million LOI; the employer-sponsored plan(s) has at least 100 eligible employees; or all plan transactions are executed through a single omnibus account per Fund and the financial institution or service organization has entered into the appropriate agreements with the distributor. Section 403(b) plans sponsored by public educational institutions are not eligible for a sales charge exception based on the aggregate investment made by the plan or the number of eligible employees. Purchases of AIM Small Cap Opportunities Fund by such plans are subject to initial sales charges; o Shareholders of record or discretionary advised clients of any investment advisor holding shares of AIM Weingarten Fund or AIM Constellation Fund on September 8, 1986, or of AIM Charter Fund on November 17, 1986, who have continuously owned shares having a market value of at least $500 and who purchase additional shares of the same Fund; o Shareholders of record of Advisor Class shares of AIM International Growth Fund or AIM Worldwide Growth Fund on February 12, 1999 who have continuously owned shares of the AIM Funds; o Unitholders of G/SET series unit investment trusts investing proceeds from such trusts in shares of AIM Weingarten Fund or AIM Constellation Fund; provided, however, prior to the termination date of the trusts, a unitholder may invest proceeds from the redemption or repurchase of his units only when the investment in shares of AIM Weingarten Fund and AIM Constellation Fund is effected within 30 days of the redemption or repurchase; o A shareholder of a fund that merges or consolidates with an AIM Fund or that sells its assets to an AIM Fund in exchange for shares of an AIM Fund; o Shareholders of the GT Global funds as of April 30, 1987 who since that date continually have owned shares of one or more of these funds; and o Certain former AMA Investment Advisers' shareholders who became shareholders of the AIM Global Health Care Fund in October 1989, and who have continuously held shares in the GT Global funds since that time. o Shareholders of record of Advisor Class shares of an AIM Fund on February 11, 2000 who have continuously owned shares of that AIM Fund, and who purchase additional shares of that AIM Fund. As used above, immediate family includes an individual and his or her spouse, children, parents and parents of spouse. CONTINGENT DEFERRED SALES CHARGE EXCEPTIONS Former GT Global funds Class A shares that are subject to a contingent deferred sales charge and that were purchased before June 1, 1998 are entitled to the following waivers from the contingent deferred sales charge otherwise due upon redemption: (1) minimum required distributions made in connection with an IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other retirement plan following attainment of age 70 1/2; (2) total or partial redemptions resulting from a distribution following retirement in the case of a tax-qualified employer-sponsored retirement plan; (3) when a redemption results from a tax-free return of an excess contribution pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability of the employee; (4) redemptions pursuant to a Fund's right to liquidate a shareholder's account involuntarily; 58 169 (5) redemptions pursuant to distributions from a tax-qualified employer-sponsored retirement plan, which is invested in the former GT Global funds, which are permitted to be made without penalty pursuant to the Code, other than tax-free rollovers or transfers of assets, and the proceeds of which are reinvested in the former GT Global funds; (6) redemptions made in connection with participant-directed exchanges between options in an employer-sponsored benefit plan; (7) redemptions made for the purpose of providing cash to fund a loan to a participant in a tax-qualified retirement plan; (8) redemptions made in connection with a distribution from any retirement plan or account that is permitted in accordance with the provisions of Section 72(t)(2) of the Code, and the regulations promulgated thereunder; (9) redemptions made in connection with a distribution from any retirement plan or account that involves the return of an excess deferral amount pursuant to Section 401(k)(8) or Section 402(g)(2) of the Code; (10) redemptions made in connection with a distribution from a qualified profit-sharing or stock bonus plan described in Section 401(k) of the Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon hardship of the covered employee (determined pursuant to Treasury Regulation Section 1.401(k)-1(d)(2)); and (11) redemptions made by or for the benefit of certain states, counties or cities, or any instrumentalities, departments or authorities thereof where such entities are prohibited or limited by applicable law from paying a sales charge or commission. Former GT Global funds Class B shares purchased before June 1, 1998 are subject to the following waivers from the contingent deferred sales charge otherwise due upon redemption in addition to the waivers provided for redemptions of currently issued Class B shares as described in a Prospectus: (1) total or partial redemptions resulting from a distribution following retirement in the case of a tax-qualified employer-sponsored retirement; (2) minimum required distributions made in connection with an IRA, Keogh Plan or custodial account under Section 403(b) of the Code or other retirement plan following attainment of age 70 1/2; (3) redemptions pursuant to distributions from a tax-qualified employer-sponsored retirement plan, which is invested in the former GT Global funds, which are permitted to be made without penalty pursuant to the Code, other than tax-free rollovers or transfers of assets, and the proceeds of which are reinvested in the former GT Global funds; (4) redemptions made in connection with participant-directed exchanges between options in an employer-sponsored benefit plan; (5) redemptions made for the purpose of providing cash to fund a loan to a participant in a tax-qualified retirement plan; (6) redemptions made in connection with a distribution from any retirement plan or account that is permitted in accordance with the provisions of Section 72(t)(2) of the Code, and the regulations promulgated thereunder; (7) redemptions made in connection with a distribution from a qualified profit-sharing or stock bonus plan described in Section 401(k) of the Code to a participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon hardship of the covered employee (determined pursuant to Treasury Regulation Section 1.401(k)-1(d)(2)); and (8) redemptions made by or for the benefit of certain states, counties or cities, or any instrumentalities, departments or authorities thereof where such entities are prohibited or limited by applicable law from paying a sales charge or commission. CDSCs will not apply to the following: o Additional purchases of Class C shares of AIM Advisor Flex Fund, AIM Advisor International Value Fund, AIM Advisor Large Cap Value Fund and AIM Advisor Real Estate Fund by shareholders of record on April 30, 1995, of these Funds, except that shareholders whose broker-dealers maintain a single omnibus account with AFS on behalf of those shareholders, perform sub-accounting functions with respect to those shareholders, and are unable to segregate shareholders of record prior to April 30, 1995, from shareholders whose accounts were opened after that date will be subject to a CDSC on all purchases made after March 1, 1996; o Redemptions following the death or post-purchase disability of (1) any registered shareholders on an account or (2) a settlor of a living trust, of shares held in the account at the time of death or initial determination of post-purchase disability; o Certain distributions from individual retirement accounts, Section 403(b) retirement plans, Section 457 deferred compensation plans and Section 401 qualified plans, where redemptions result from (i) required minimum distributions to plan participants or beneficiaries who are age 70-1/2 or older, and only with respect to that portion of such distributions that does not exceed 12% annually of the participant's or beneficiary's account value in a particular AIM Fund; (ii) in kind transfers of assets 59 170 where the participant or beneficiary notifies the distributor of the transfer no later than the time the transfer occurs; (iii) tax-free rollovers or transfers of assets to another plan of the type described above invested in Class B or Class C shares of one or more of the AIM Funds; (iv) tax-free returns of excess contributions or returns of excess deferral amounts; and (v) distributions on the death or disability (as defined in the Internal Revenue Code of 1986, as amended) of the participant or beneficiary; o Amounts from a Systematic Withdrawal Plan of up to an annual amount of 12% of the account value on a per fund basis, at the time the withdrawal plan is established, provided the investor reinvests his dividends; o Liquidation by the Fund when the account value falls below the minimum required account size of $500; o Investment account(s) of AIM; and o Class C shares where the investor's dealer of record notifies the distributor prior to the time of investment that the dealer waives the payment otherwise payable to him. Upon the redemption of shares of funds in sales charge Categories I and II (see "Sales Charges and Dealer Concessions") purchased in amounts of $1 million or more, no CDSC will be applied in the following situations: o Shares held more than 18 months; o Redemptions from employee benefit plans designated as qualified purchasers, as defined above, where the redemptions are in connection with employee terminations or withdrawals, provided the total amount invested in the plan is at least $1,000,000; the sponsor signs a $1 million LOI; or the employer-sponsored plan has at least 100 eligible employees; provided, however, that 403(b) plans sponsored by public educational institutions shall qualify for the CDSC waiver on the basis of the value of each plan participant's aggregate investment in the AIM Funds, and not on the aggregate investment made by the plan or on the number of eligible employees; o Private foundations or endowment funds; o Redemption of shares by the investor where the investor's dealer waives the amounts otherwise payable to it by the distributor and notifies the distributor prior to the time of investment; and o Shares acquired by exchange from Class A shares of funds in sales charge Categories I and II unless the shares acquired by exchange are redeemed within 18 months of the original purchase of the Class A shares. HOW TO PURCHASE AND REDEEM SHARES A complete description of the manner by which shares of each Fund may be purchased appears in the Prospectus under the heading "Purchasing Shares." The sales charge normally deducted on purchases of Class A shares of each Fund is used to compensate AIM Distributors and participating dealers for their expenses incurred in connection with the distribution of the Fund's Class A shares. Since there is little expense associated with unsolicited orders placed directly with AIM Distributors by persons who, because of their relationship with the Funds or with AIM and its affiliates, are familiar with the Funds, or whose programs for purchase involve little expense (e.g., because of the size of the transaction and shareholder records required), AIM Distributors believes that it is appropriate and in the Funds' best interest that such persons, and certain other persons whose purchases result in relatively 60 171 low expenses of distribution, be permitted to purchase Class A shares of the Funds through AIM Distributors without payment of a sales charge. The persons who may purchase Class A shares of the Funds without a sales charge are under the caption "Reduction in Initial Sales Charges - Purchases at Net Asset Value." Complete information concerning the method of exchanging shares of the Funds for shares of the other AIM Funds is set forth in each Prospectus under the heading "Exchanging Shares." Information concerning redemption of the Funds' shares is set forth in the Prospectus under the heading "Redeeming Shares - How to Redeem Shares." Shares of the AIM Funds may be redeemed directly through AIM Distributors or through any dealer who has entered into an agreement with AIM Distributors. In addition to the Funds' obligation to redeem shares, AIM Distributors may also repurchase shares as an accommodation to shareholders. To effect a repurchase, those dealers who have executed Selected Dealer Agreements with AIM Distributors must phone orders to the order desk of the Fund (Telephone: (800) 959-4246) and guarantee delivery of all required documents in good order. A repurchase is effected at the net asset value per share of a Fund next determined after the repurchase order is received. Such arrangement is subject to timely receipt by AFS, the Funds' transfer agent, of all required documents in good order. If such documents are not received within a reasonable time after the order is placed, the order is subject to cancellation. While there is no charge imposed by the Funds or by AIM Distributors (other than any applicable CDSC) when shares are redeemed or repurchased, dealers may charge a fair service fee for handling the transaction. AIM may redeem all shares of Aggressive Growth Fund, Asian Fund, European Fund, Equity Fund and Growth Fund in cash. The right of redemption may be suspended or the date of payment postponed when (a) trading on the New York Stock Exchange ("the NYSE ") is restricted, as determined by applicable rules and regulations of the SEC, (b) the NYSE is closed for other than customary weekend and holiday closings, (c) the SEC has by order permitted such suspension, or (d) an emergency as determined by the SEC exists making disposition of portfolio securities or the valuation of the net assets of a Fund not reasonably practicable. BACKUP WITHHOLDING Accounts submitted without a correct, certified taxpayer identification number or, alternatively, a completed Internal Revenue Service ("IRS") Form W-8 (for non-resident aliens) or Form W-9 (certifying exempt status) accompanying the registration information will generally be subject to backup withholding. Each AIM Fund, and other payers, must, according to IRS regulations, withhold 31% of redemption payments and reportable dividends (whether paid or accrued) in the case of any shareholder who fails to provide the Fund with a taxpayer identification number ("TIN") and a certification that he is not subject to backup withholding. An investor is subject to backup withholding if: (1) the investor fails to furnish a correct TIN to the Fund, or (2) the IRS notifies the Fund that the investor furnished an incorrect TIN, or (3) the investor or the Fund is notified by the IRS that the investor is subject to backup withholding because the investor failed to report all of the interest and dividends on such investor's tax return (for reportable interest and dividends only), or (4) the investor fails to certify to the Fund that the investor is not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or (5) the investor does not certify his TIN. This applies only to non-exempt mutual fund accounts opened after 1983. Interest and dividend payments are subject to backup withholding in all five situations discussed above. Redemption proceeds and long-term distributions are subject to backup withholding only if (1) (2) or (5) above applies. 61 172 Certain payees and payments are exempt from backup withholding and information reporting. A complete listing of such exempt entities appears in the Instructions for the Requester of Form W-9 (which can be obtained from the IRS) and includes, among others, the following: o a corporation o an organization exempt from tax under Section 501(a), an individual retirement plan (IRA), or a custodial account under Section 403(b)(7) o the United States or any of its agencies or instrumentalities o a state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities o a foreign government or any of its political subdivisions, agencies or instrumentalities o an international organization or any of its agencies or instrumentalities o a foreign central bank of issue o a dealer in securities or commodities required to register in the U.S. or a possession of the U.S. o a futures commission merchant registered with the Commodity Futures Trading Commission o a real estate investment trust o an entity registered at all times during the tax year under the 1940 Act o a common trust fund operated by a bank under Section 584(a) o a financial institution o a middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List o a trust exempt from tax under Section 664 or described in Section 4947 Investors should contact the IRS if they have any questions concerning entitlement to an exemption from backup withholding. NOTE: Section references are to sections of the Code. IRS PENALTIES - Investors who do not supply the AIM Funds with a correct TIN will be subject to a $50 penalty imposed by the IRS unless such failure is due to reasonable cause and not willful neglect. If an investor falsifies information on this form or makes any other false statement resulting in no backup withholding on an account which should be subject to backup withholding, such investor may be subject to a $500 penalty imposed by the IRS and to certain criminal penalties including fines and/or imprisonment. NONRESIDENT ALIENS - Nonresident alien individuals and foreign entities are not subject to the backup withholding previously discussed, but must certify their foreign status by attaching IRS Form W-8 to their application. Form W-8 remains in effect for three calendar years beginning with the calendar year in which it is received by the Fund. Such shareholders may, however, be subject to federal income tax withholding at a 30% rate on ordinary income dividends and distributions and return of capital distributions. Under applicable treaty law, residents of treaty countries may qualify for a reduced rate of withholding or a withholding exemption. 62 173 NET ASSET VALUE DETERMINATION In accordance with the current rules and regulations of the SEC, the net asset value of a share of each Fund is determined once daily as of the close of the customary trading session of the NYSE (generally 4:00 p.m. Eastern Time), on each business day of the Fund. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern Time) on a particular day, the net asset value of a Fund share is determined as of the close of trading on the NYSE on such day. For purposes of determining net asset value per share, futures and options contract closing prices which are available fifteen (15) minutes after the close of the customary trading session of the NYSE will generally be used. The net asset values per share of the Classes will differ because different expenses are attributable to each class. The income or loss and the expenses (except those listed below) of a Fund are allocated to each class on the basis of the net assets of the Fund allocable to each such class, calculated as of the close of business on the previous business day, as adjusted for the current day's shareholder activity of each class. Distribution and service fees and transfer agency fees (to the extent different rates are charged to different classes) are allocated only to the class to which such expenses relate. The net asset value per share of a class is determined by subtracting the liabilities (e.g., the expenses) of the Fund allocated to the class from the assets of the Fund allocated to the class and dividing the result by the total number of shares outstanding of such class. Determination of each Fund's net asset value per share is made in accordance with generally accepted accounting principles. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price on the exchange where the security is principally traded or, lacking any sales on a particular day, the security is valued at the closing bid price on that day, prior to the determination of net asset value. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market system) is valued on the basis of prices provided by independent pricing services. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date, or lacking a last sale, at the closing bid price on that day; option contracts are valued at the mean between the closing bid and asked prices on the exchange where the contracts are principally traded; futures contracts are valued at final settlement price quotations from the primary exchange on which they are traded. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by an independent pricing service may be determined without exclusive reliance on quoted prices and may reflect appropriate factors such as dividend rate, yield, type of issue, coupon rate and maturity date. Securities for which market quotations are not readily available or for which market quotations are not reflective of fair value are valued at fair value as determined in good faith by or under the supervision of the Trust's officers in a manner specifically authorized by the Board of Trustees of the Trust. Short-term obligations having sixty (60) days or less to maturity are valued at amortized cost, which approximates market value. (See also "Purchasing Shares? How to Purchase Shares," and "Redeeming Shares ? How to Redeem Shares" and "Pricing of Shares" in each Prospectus.) Generally, trading in foreign securities, as well as corporate bonds, U.S. Government securities and money market instruments, is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of a Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the customary trading session of the NYSE which will not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Trustees. Fund securities primarily traded in foreign markets may be traded in such markets on days which are not business days of the Fund. Because the net asset value per share of each Fund is determined only on business days of the Fund, the net asset value per share of a Fund may be significantly affected on days when an investor can not exchange or redeem shares of the Fund. 63 174 DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS Income dividends and capital gains distributions are automatically reinvested in additional shares of the same class of each Fund unless the shareholder has requested in writing to receive such dividends and distributions in cash or that they be invested in shares of another AIM Fund, subject to the terms and conditions set forth in each Prospectus under the caption "Special Plans - Automatic Investment Plan," and "Special Plans-Automatic Dividend Investment." If a shareholder's account does not have any shares in it on a dividend or capital gains distribution payment date, the dividend or distribution will be paid in cash whether or not the shareholder has elected to have such dividends or distributions reinvested. TAX MATTERS The following is only a summary of certain additional tax considerations generally affecting each Fund and its shareholders that are not described in each Fund's Prospectus. No attempt is made to present a detailed explanation of the tax treatment of each Fund or its shareholders, and the discussion here and in each Fund's Prospectus is not intended as a substitute for careful tax planning. QUALIFICATION AS A REGULATED INVESTMENT COMPANY Each Fund intends to qualify each year as a regulated investment company under Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In order to qualify for tax treatment as a regulated investment company under the Code, each Fund is required, among other things, to derive at least 90% of its gross income in each taxable year from dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock or securities or foreign currencies and other income (including but not limited to gains from options, futures or forward contracts derived with respect to the Fund's business of investing in such stock, securities or currencies) (the "Income Requirement"). Foreign currency gains (including gains from options, futures or forward contracts on foreign currencies) that are not "directly related" to a Fund's principal business may, under regulations not yet issued, not be qualifying income for purposes of the Income Requirement. At the close of each quarter of its taxable year, at least 50% of the value of each Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Fund has not invested more than 5% of the value of its total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses (the "Asset Diversification Test"). For purposes of the Asset Diversification Test, it is unclear under present law who should be treated as the issuer of forward foreign currency exchange contracts, of options on foreign currencies, or of foreign currency futures and related options. It has been suggested that the issuer in each case may be the foreign central bank or foreign government backing the particular currency. Consequently, a Fund may find it necessary to seek a ruling from the Internal Revenue Service on this issue or to curtail its trading in forward foreign currency exchange contracts in order to stay within the limits of the Asset Diversification Test. If for any taxable year a Fund does not qualify as a regulated investment company, all of its taxable income will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and such distributions will be taxable as ordinary dividends to the extent of the Fund's current and accumulated earnings and profits. Such distributions will be eligible for the dividends received deduction in the case of corporate shareholders. 64 175 FUND DISTRIBUTIONS Under the Code, each Fund is exempt from U.S. federal income tax on its net investment income and realized capital gains which it distributes to shareholders, provided that it distributes at least 90% of its investment company taxable income (net investment income, net foreign currency ordinary gain or loss and the excess of net short-term capital gain over net long-term capital loss) and its net exempt-interest income for the year. Distributions of investment company taxable income will be taxable to shareholders as ordinary income, regardless of whether such distributions are paid in cash or are reinvested in shares. Each Fund also intends to distribute to shareholders substantially all of the excess of its net long-term capital gain over net short-term capital loss as a capital gain dividend. Capital gain dividends are taxable to shareholders as a long-term capital gain, regardless of the length of time a shareholder has held his shares. Treasury regulations permit a regulated investment company, in determining its investment company taxable income and undistributed net capital gain for any taxable year, to elect to treat all or part of any net capital loss, any net long-term capital loss, or any net foreign currency loss incurred after October 31 as if it had been incurred in the succeeding year. A 4% non-deductible excise tax is imposed on regulated investment companies that fail to distribute in each calendar year an amount equal to 98% of their ordinary taxable income for the calendar year plus 98% of their "capital gain net income" (excess of capital gains over capital losses) for the one-year period ending on October 31 of such calendar year. The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a regulated investment company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year. For purposes of the excise tax, a regulated investment company shall (1) offset a net ordinary loss (but not below the net capital gain) for any calendar year in determining its capital gain net income for the one-year period ending on October 31 of such calendar year and (2) exclude foreign currency gains and losses incurred after October 31 of any year in determining the amount of ordinary taxable income for the current calendar year (and, instead, to include such gains and losses in determining ordinary taxable income for the succeeding calendar year). Each Fund intends to make sufficient distributions or deemed distributions of its ordinary taxable income and capital gain net income prior to the end of each calendar year to avoid liability for the excise tax. INVESTMENT IN FOREIGN FINANCIAL INSTRUMENTS Under Code Section 988, gains or losses from certain foreign currency forward contracts or fluctuations in exchange rates will generally be treated as ordinary income or loss. Such Code Section 988 gains or losses will increase or decrease the amount of a Fund's investment company taxable income available to be distributed to shareholders as ordinary income, rather than increasing or decreasing the amount of the Fund's net capital gain. Additionally, if Code Section 988 losses exceed other investment company taxable income during a taxable year, the Fund would not be able to pay any ordinary income dividends, and any such dividends paid before the losses were realized, but in the same taxable year, would be recharacterized as a return of capital to shareholders, thereby reducing the tax basis of Fund shares. HEDGING TRANSACTIONS Some of the forward foreign currency exchange contracts, options and futures contracts that the Funds may enter into will be subject to special tax treatment as "Section 1256 contracts." Section 1256 contracts are treated as if they are sold for their fair market value on the last business day of the taxable year, regardless of whether a taxpayer's obligations (or rights) under such contracts have terminated (by delivery, exercise, entering into a closing transaction or otherwise) as of such date. Any gain or loss recognized as a consequence of the year-end 65 176 deemed disposition of Section 1256 contracts is combined with any other gain or loss that was previously recognized upon the termination of Section 1256 contracts during that taxable year. The net amount of such gain or loss for the entire taxable year (including gain or loss arising as a consequence of the year-end deemed sale of such contracts) is deemed to be 60% long-term (taxable at a maximum 20% to non-corporate shareholders) and 40% short-term gain or loss. However, in the case of Section 1256 contracts that are forward foreign currency exchange contracts, the net gain or loss is separately determined and (as discussed above) can be treated as ordinary income or loss. The Funds may engage in certain hedging transactions (such as short sales "against the box") that may be subject to special tax treatment as "constructive sales" under Section 1259 of the Code if a Fund holds certain "appreciated financial positions" (defined generally as any interest (including a future or forward contract, short sale or option) with respect to stock, certain debt instruments, or partnership interest if there would be a gain were such interest sold, assigned, or otherwise terminated at its fair market value.) Upon entering into a constructive sales transaction with respect to an appreciated financial position, a Fund will be deemed to have constructively sold such appreciated financial position and will recognize gain as if such position were sold, assigned or otherwise terminated at its fair market value on the date of such constructive sale (and will generally take into account any gain in the taxable year which includes such date). Other hedging transactions in which the Funds may engage may result in "straddles" or "conversion transactions" for U.S. federal income tax purposes. The straddle and conversion transaction rules may affect the character of gains (or in the case of the straddle rules, losses) realized by the Funds. In addition, losses realized by the Funds on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the taxable income for the taxable year in which the losses are realized. Because only a few regulations implementing the straddle rules and the conversion transaction rules have been promulgated, the tax consequences to the Funds of hedging transactions are not entirely clear. The hedging transactions may increase the amount of short-term capital gain realized by the Funds (and, if they are conversion transactions, the amount of ordinary income) which is taxed as ordinary income when distributed to shareholders. Each Fund may make one or more of the elections available under the Code which are applicable to straddles. If a Fund makes any of the elections, the amount, character, and timing of the recognition of gains or losses from the affected straddle positions will be determined under rules that vary according to the election(s) made. The rules applicable under certain of the elections may operate to accelerate the recognition of gains or losses from the affected straddle positions. Because application of any of the foregoing rules governing Section 1256 contracts, constructive sales, straddle and conversion transactions may affect the character of gains or losses, defer losses and/or accelerate the recognition of gains or losses from the affected investment or straddle positions, the amount which must be distributed to shareholders and which will be taxed to shareholders as ordinary income or long-term capital gain may be increased or decreased as compared to a fund that did not engage in such transactions. PFIC INVESTMENTS Each Fund may invest in stocks of foreign companies that are classified under the Code as passive foreign investment companies ("PFICs"). In general, a foreign company is classified as a PFIC if at least one-half of its assets constitute investment-type assets or 75% or more of its gross income is investment-type income. Under the PFIC rules, an "excess distribution" received with respect to PFIC stock is treated as having been realized ratably over the period during which the Fund held the PFIC stock. The Fund itself will be subject to tax on the portion, if any, of the excess distribution that is allocated to the Fund's holding period in prior taxable years (and an interest factor will be added to the tax, as if the tax had actually been payable in such prior taxable years) even though the Fund distributes the corresponding income to shareholders. Excess distributions include any gain from the sale of PFIC stock as well as certain distributions from a PFIC. All excess distributions are taxable as ordinary income. Each Fund may elect alternative tax treatment with respect to PFIC stock. Under one such election (the "QEF Election"), a Fund generally would be required to include in its gross income its share of the earnings of a PFIC on a current basis, regardless of whether any distributions are received from the PFIC. Because the 66 177 QEF Election imposes substantial requirements on the PFIC, it is unlikely that a fund will be able to make the QEF Election. Alternatively, each Fund may make an election to mark any shares of PFIC stock that it holds to market (the "Section 1296 Election"). If the Section 1296 election is made with respect to any PFIC stock, a Fund will recognize ordinary income to the extent that the fair market value of such PFIC stock at the close of any taxable year exceeds its adjusted basis and will also recognize ordinary income in the event that it disposes of any shares of such PFIC stock at a gain. In each case, such ordinary income will be treated as dividend income for purposes of the Income Requirement. A Fund making the Section 1296 Election with respect to any PFIC stock will similarly recognize a deductible ordinary loss to the extent that the adjusted basis of such PFIC stock exceeds its fair market value at the close of any taxable year and will also recognize a deductible ordinary loss in the event that it disposes of such PFIC stock at a loss. However, the amount of any ordinary loss recognized by a Fund making a Section 1296 Election with respect to any PFIC stock may not exceed the amount of ordinary income previously recognized by such Fund by reason of marking such PFIC stock to market. If either the QEF Election or the Section 1296 Election is made, the special rules, discussed above, relating to the taxation of excess distributions, would not apply. The Funds' intentions to qualify annually as regulated investment companies may limit their ability to invest and hold PFIC stock. Because the application of the PFIC rules may affect, among other things, the character of gains, the amount of gain or loss and the timing of the recognition of income with respect to PFIC stock, as well as subject the Funds themselves to tax on certain income from PFIC stock, the amount that must be distributed to shareholders, and which will be taxed to shareholders as ordinary income or long-term capital gains, may be increased or decreased substantially as compared to a fund that did not invest in PFIC stock. REDEMPTION OR EXCHANGE OF SHARES Upon a redemption or exchange of shares, a shareholder will recognize a taxable gain or loss depending upon his or her basis in the shares. Unless the shares are disposed of as part of a conversion transaction, such gain or loss will be treated as capital gain or loss if the shares are capital assets in the shareholder's hands and will be long-term or short-term, depending upon the shareholder's holding period for the shares. Except to the extent otherwise provided in future Treasury regulations any long-term capital gain recognized by a non-corporate shareholder will be subject to tax at a maximum rate of 20%. Any loss recognized by a shareholder on the sale of Fund shares held six months or less will be treated as a long-term capital loss to the extent of any distributions of net capital gains received by the shareholder with respect to such shares. If a shareholder exercises the exchange privilege within 90 days of acquiring Class A shares, then the loss such shareholder recognizes on the exchange will be reduced (or the gain increased) to the extent the sales charge paid upon the purchase of Class A shares reduces any charge such shareholder would have owed upon purchase of the new Class A shares in the absence of the exchange privilege. Instead, such sales charge will be treated as an amount paid for the new Class A shares. In addition, any loss recognized on a sale or exchange will be disallowed to the extent that disposed Class A shares, Class B shares or Class C shares are replaced within the 61-day period beginning 30 days before and ending 30 days after the disposition of such shares. In such a case, the basis of the shares acquired will be increased to reflect the disallowed loss. Shareholders should particularly note that this loss disallowance rule applies even where shares are automatically replaced under the dividend reinvestment plan. FOREIGN INCOME TAXES Investment income received by each Fund from sources within foreign countries may be subject to foreign income taxes withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle the Funds to a reduced rate of, or exemption from, taxes on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of a Fund's assets to be invested in various countries is not known. If more than 50% of the value of a Fund's total assets at the close of each taxable year consists of the stock or securities of foreign corporations, the Fund may elect to "pass through" to the Fund's shareholders the 67 178 amount of foreign income taxes paid by the Fund (the "Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will be required (i) to include in gross income, even though not actually received, their respective pro-rata shares of the foreign income taxes paid by the Fund that are attributable to any distributions they receive; and (ii) either to deduct their pro-rata share of foreign taxes in computing their taxable income, or to use it (subject to various Code limitations) as a foreign tax credit against Federal income tax (but not both). No deduction for foreign taxes may be claimed by a non-corporate shareholder who does not itemize deductions or who is subject to alternative minimum tax. Unless certain requirements are met, a credit for foreign taxes is subject to the limitation that it may not exceed the shareholder's U.S. tax (determined without regard to the availability of the credit) attributable to the shareholder's foreign source taxable income. In determining the source and character of distributions received from a Fund for this purpose, shareholders will be required to allocate Fund distributions according to the source of the income realized by the Fund. Each Fund's gains from the sale of stock and securities and certain currency fluctuation gains and losses will generally be treated as derived from U.S. sources. In addition, the limitation on the foreign tax credit is applied separately to foreign source "passive" income, such as dividend income. Moreover, no foreign tax credits will be allowable to any shareholder who has not held his shares of the Fund for at least 16 days during the 30-day period beginning 15 days before the day such shares become ex-dividend with respect to any Fund distribution to which foreign income taxes are attributed (taking into account certain holding period reduction requirements of the Code). Because of these limitations, shareholders may be unable to claim a credit for the full amount of their proportionate shares of the foreign income taxes paid by a Fund. BACKUP WITHHOLDING Under certain provisions of the Code, the Funds may be required to withhold 31% of reportable dividends, capital gains distributions and redemption payments ("backup withholding"). Generally, shareholders subject to backup withholding will be those for whom a certified taxpayer identification number is not on file with the Fund or who, to the Fund's knowledge, have furnished an incorrect number, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. When establishing an account, an investor must provide his or her taxpayer identification number and certify under penalty of perjury that such number is correct and that he or she is not otherwise subject to backup withholding. Corporate shareholders and other shareholders specified in the Code are exempt from backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against a shareholder's U.S. federal income tax liability. REINSTATEMENT PRIVILEGE For federal income tax purposes, exercise of your reinstatement privilege may increase the amount of gain or reduce the amount of loss recognized in the original redemption transaction, if the initial sales charge is not taken into account in determining such gain or loss to the extent there has been a reduction in the initial sales charge payable upon reinvestment. Wash sale rules may also limit the amount of loss recognized. FOREIGN SHAREHOLDERS Dividends from a Fund's investment company taxable income and distributions constituting returns of capital paid to a nonresident alien individual, a foreign trust or estate, foreign corporation, or foreign partnership (a "foreign shareholder") generally will be subject to U.S. withholding tax at a rate of 30% (or lower treaty rate) upon the gross amount of the dividend. Foreign shareholders may be subject to U.S. withholding tax at a rate of 30% on the income resulting from the Fund's election to treat any foreign income taxes paid by it as paid by its shareholders, but may not be able to claim a credit or deduction with respect to the withholding tax for the foreign taxes treated as having been paid by them. A foreign shareholder generally will not be subject to U.S. taxation on gain realized upon the redemption or exchange of shares of a Fund or on capital gain dividends. In the case of a foreign shareholder who is a nonresident alien individual, however, gain realized upon the sale or redemption of shares of a Fund 68 179 and capital gain dividends ordinarily will be subject to U.S. income tax if such individual is physically present in the U.S. for 183 days or more during the taxable year and certain other conditions are met. In the case of a foreign shareholder who is a nonresident alien individual, the Funds may be required to withhold U.S. federal income tax at a rate of 31% unless proper notification of such shareholder's foreign status is provided. Notwithstanding the foregoing, if distributions by the Funds are effectively connected with a U.S. trade or business of a foreign shareholder, then dividends from such Fund's investment company taxable income, capital gains, and any gains realized upon the sale of shares of the Fund will be subject to U.S. income tax at the graduated rates applicable to U.S. citizens or domestic corporations. Transfers by gift of shares of a Fund by a foreign shareholder who is a nonresident alien individual will not be subject to U.S. federal gift tax. An individual who, at the time of death, is a foreign shareholder will nevertheless be subject to U.S. federal estate tax with respect to shares at the graduated rates applicable to U.S. citizens and residents, unless a treaty exception applies. In the absence of a treaty, there is a $13,000 statutory estate tax credit. The tax consequences to a foreign shareholder entitled to claim the benefits of an applicable tax treaty may be different from those described herein. Foreign shareholders are urged to consult their own tax advisors with respect to the particular tax consequences to them of an investment in any of the Funds. MISCELLANEOUS CONSIDERATIONS; EFFECT OF FUTURE LEGISLATION The foregoing general discussion of federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on March 15, 2000. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. Rules of state and local taxation of dividend and capital gain distributions from regulated investment companies often differ from the rules for U.S. federal income taxation described above. Shareholders are urged to consult their tax advisors as to the consequences of these and other U.S. state and local tax rules affecting investments in the Funds. SHAREHOLDER INFORMATION This information supplements the discussion in each Fund's Prospectus under the title "Shareholder Information." TIMING OF PURCHASE ORDERS. It is the responsibility of the dealer to ensure that all orders are transmitted on a timely basis to the Transfer Agent. Any loss resulting from the dealer's failure to submit an order within the prescribed time frame will be borne by that dealer. If a check used to purchase shares does not clear, or if any investment order must be canceled due to nonpayment, the investor will be responsible for any resulting loss to an AIM Fund or to AIM Distributors. SHARES CERTIFICATES. Shareholders of the Funds do not have the right to demand or require the Trust to issue share certificates, although the Trust in its sole discretion may issue them. SYSTEMATIC WITHDRAWAL PLAN. Under a Systematic Withdrawal Plan, all shares are to be held by the Transfer Agent and all dividends and distributions are reinvested in shares of the applicable AIM Fund by the Transfer Agent. To provide funds for payments made under the Systematic Withdrawal Plan, the Transfer Agent redeems sufficient full and fractional shares at their net asset value in effect at the time of each such redemption. Payments under a Systematic Withdrawal Plan constitute taxable events. Since such payments are funded by the redemption of shares, they may result in a return of capital and in capital gains or losses, rather 69 180 than in ordinary income. Because sales charges are imposed on additional purchases of shares (other than Class B or Class C Shares of the AIM Funds and AIM Cash Reserve Shares of AIM Money Market Fund), it is disadvantageous to effect such purchases while a Systematic Withdrawal Plan is in effect. Each AIM Fund bears its share of the cost of operating the Systematic Withdrawal Plan. TERMS AND CONDITIONS OF EXCHANGES. Normally, shares of an AIM Fund to be acquired by exchange are purchased at their net asset value or applicable offering price, as the case may be, determined on the date that such request is received, but under unusual market conditions such purchases may be delayed for up to five business days if it is determined that a fund would be materially disadvantaged by an immediate transfer of the proceeds of the exchange. If a shareholder is exchanging into a fund paying daily dividends, and the release of the exchange proceeds is delayed for the foregoing five-day period, such shareholder will not begin to accrue dividends until the sixth business day after the exchange. EXCHANGES BY TELEPHONE. AIM Distributors has made arrangements with certain dealers and investment advisory firms to accept telephone instructions to exchange shares between any of the AIM Funds. AIM Distributors reserves the right to impose conditions on dealers or investment advisors who make telephone exchanges of shares of the funds, including the condition that any such dealer or investment advisor enter into an agreement (which contains additional conditions with respect to exchanges of shares) with AIM Distributors. To exchange shares by telephone, a shareholder, dealer or investment advisor who has satisfied the foregoing conditions must call AFS at (800) 959-4246. If a shareholder is unable to reach AFS by telephone, he may also request exchanges by telegraph or use overnight courier services to expedite exchanges by mail, which will be effective on the business day received by the Transfer Agent as long as such request is received prior to the close of the customary trading session of the NYSE. The Transfer Agent and AIM Distributors may in certain cases be liable for losses due to unauthorized or fraudulent transactions if they do not follow reasonable procedures for verification of telephone transactions. Such reasonable procedures may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transaction. By signing an account application form, an investor appoints the Transfer Agent as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), or in any other account with any of the AIM Funds, present or future, which has the identical registration as the designated account(s), with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption proceeds to be applied to purchase shares in any one or more of the AIM Funds, provided that such fund is available for sale and provided that the registration and mailing address of the shares to be purchased are identical to the registration of the shares being redeemed. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone exchange requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. The Transfer Agent reserves the right to modify or terminate the telephone exchange privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any exchanges must be effected in writing by the investor. REDEMPTIONS BY TELEPHONE. By signing an account application form, an investor appoints the Transfer Agent as his true and lawful attorney-in-fact to surrender for redemption any and all unissued shares held by the Transfer Agent in the designated account(s), present or future, with full power of substitution in the premises. The Transfer Agent and AIM Distributors are thereby authorized and directed to accept and act upon any telephone redemptions of shares held in any of the account(s) listed, from any person who requests the redemption. An investor acknowledges by signing the form that he understands and agrees that the Transfer Agent and AIM Distributors may not be liable for any loss, expense or cost arising out of any telephone 70 181 redemption requests effected in accordance with the authorization set forth in these instructions if they reasonably believe such request to be genuine, but may in certain cases be liable for losses due to unauthorized or fraudulent transactions. Procedures for verification of telephone transactions may include recordings of telephone transactions (maintained for six months), requests for confirmation of the shareholder's Social Security Number and current address, and mailings of confirmations promptly after the transactions. The Transfer Agent reserves the right to cease to act as attorney-in-fact subject to this appointment, and AIM Distributors reserves the right to modify or terminate the telephone redemption privilege at any time without notice. An investor may elect not to have this privilege by marking the appropriate box on the application. Then any redemptions must be effected in writing by the investor. SIGNATURE GUARANTEES. In addition to those circumstances listed in the "Shareholder Information" section of each Fund's Prospectus, signature guarantees are required in the following situations: (1) requests to transfer the registration of shares to another owner; (2) telephone exchange and telephone redemption authorization forms; (3) changes in previously designated wiring or electronic funds transfer instructions; and (4) written redemptions or exchanges of shares previously reported as lost, whether or not the redemption amount is under $50,000 or the proceeds are to be sent to the address of record. The AIM Funds may waive or modify any signature guarantee requirements at any time. Acceptable guarantors include banks, broker-dealers, credit unions, national securities exchanges, savings associations and any other organization, provided that such institution or organization qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the SEC, and further provided that such guarantor institution is listed in one of the reference guides contained in the Transfer Agent's current Signature Guarantee Standards and Procedures, such as certain domestic banks, credit unions, securities dealers, or securities exchanges. The Transfer Agent will also accept signatures with either: (1) a signature guaranteed with a medallion stamp of the STAMP Program, or (2) a signature guaranteed with a medallion stamp of the NYSE Medallion Signature Program, provided that in either event, the amount of the transaction involved does not exceed the surety coverage amount indicated on the medallion. For information regarding whether a particular institution or organization qualifies as an "eligible guarantor institution," an investor should contact the Client Services Department of AFS. TRANSACTIONS BY INTERNET. An investor may effect transactions in his account through the Internet by selecting the AIM Internet Connect option on his completed account application form or completing an AIM Internet Connect Authorization Form. By signing either form the investor acknowledges and agrees that the Transfer Agent and AIM Distributors will not be liable for any loss, expense or cost arising out of any internet transaction effected in accordance with the instructions set forth in the forms if they reasonably believe such request to be genuine. Procedures for verification of internet transactions include requests for confirmation of the shareholder's personal identification number and mailing of confirmations promptly after the transactions. The investor also acknowledges that (1) if he no longer wants the AIM Internet Contract option, he will notify the Transfer Agent in writing, and (2) the AIM Internet Connect option may be terminated at any time by the AIM Funds. DIVIDENDS AND DISTRIBUTIONS. In determining the amount of capital gains, if any, available for distribution, net capital gains are offset against available net capital losses, if any, carried forward from previous fiscal periods. For funds that do not declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date. For funds that declare a dividend daily, such dividends and distributions will be reinvested at the net asset value per share determined on the payable date. Dividends on Class B and Class C shares are expected to be lower than those for Class A shares or AIM Cash Reserve Shares because of higher distribution fees paid by Class B and Class C shares. Dividends on all shares may also be affected by other class-specific expenses. Changes in the form of dividend and distribution payments may be made by the shareholder at any time by notice to the Transfer Agent and are effective as to any subsequent payment if such notice is received 71 182 by the Transfer Agent prior to the record date of such payment. Any dividend and distribution election remains in effect until the Transfer Agent receives a revised written election by the shareholder. Any dividend or distribution paid by a fund which does not declare dividends daily has the effect of reducing the net asset value per share on the ex-dividend date by the amount of the dividend or distribution. Therefore, a dividend or distribution declared shortly after a purchase of shares by an investor would represent, in substance, a return of capital to the shareholder with respect to such shares even though it would be subject to income taxes. MISCELLANEOUS INFORMATION CHANGES FOR CERTAIN ACCOUNT INFORMATION The Transfer Agent may impose certain copying changes for requests for copies of shareholder account statements and other historical account information older than the current year and the immediately preceding year. AUDIT REPORTS The Board of Trustees will issue to shareholders semi-annually the Funds' financial statements. Financial statements, audited by independent auditors, will be issued annually. The firm of KPMG LLP, 700 Louisiana, Houston, Texas 77002, currently serves as the auditors of each Fund. LEGAL MATTERS Legal matters for the Trust are passed upon by Ballard Spahr Andrews & Ingersoll, LLP, 1735 Market Street, Philadelphia, Pennsylvania 19103. CUSTODIAN AND TRANSFER AGENT State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Funds. Under its contract with the Trust relating to each Fund, the Custodian is authorized to establish separate accounts in foreign currencies and to cause foreign securities owned by each Fund to be held in its offices outside the United States and with certain foreign banks and securities depositories. The Custodian attends to the collection of principal and income, pays and collects all monies for securities bought and sold by each Fund, and performs certain other ministerial duties. AFS, a wholly owned subsidiary of AIM, P.O. Box 4739, Houston, Texas 77210-4739, is the transfer and dividend disbursing agent for the Class A, Class B and Class C shares of each of the Funds. Each Fund pays the Custodian and the Transfer Agent such compensation as may be agreed upon from time to time. Chase Bank of Texas, N.A. (formerly, Texas Commerce Bank National Association), 712 Main, Houston, Texas 77002, serves as Sub-Custodian for retail purchases of the AIM Funds. PRINCIPAL HOLDERS OF SECURITIES To the best knowledge of the Trust, the names and addresses of the holders of 5% or more of the outstanding shares of each class of each of the Trust's portfolios as of March 1, 2000, and the amount of outstanding shares held by such holders, are set forth below: 72 183
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- ---------------- ------------ ------------- AIM International Merrill Lynch, Pierce, 35.57%** -0- Equity Fund - Fenner & Smith Class A shares FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class B shares Merrill Lynch, Pierce, 33.16%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch, Pierce, 55.21%** -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 AIM Global Aggressive Merrill Lynch, Pierce 11.78% -0- Growth Fund - Fenner & Smith Class A shares FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246
- ----------------- * The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. ** A shareholder who holds 25% or more of the outstanding shares of a Fund may be presumed to be in "control" of such Fund, as defined in the 1940 Act. 73 184
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- ---------------- ------------ ------------- Class B shares Merrill Lynch, Pierce, 22.81% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch, Pierce, 33.78% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 AIM Global Growth Merrill Lynch, Pierce, 9.13% -0- Fund - Fenner & Smith Class A shares FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class B shares Merrill Lynch, Pierce, 16.99% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch, Pierce 27.29% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246
- ----------------------- * The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. 74 185
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- ---------------- ------------ ------------- AIM Global Income Fund - Class B shares Merrill Lynch Pierce 5.69% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class C shares Lewco Securities Corp. 7.84% -0- FBO a/c # WB5-800453-0-01 34 Exchange Place, 4th Floor Jersey City, New Jersey 07311 Merrill Lynch Pierce 7.55% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 AIM European Merrill Lynch, Pierce, 7.39% -0- Development Fund - Fenner & Smith Class A shares FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class B shares Merrill Lynch Pierce 9.88% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch, Pierce, 13.26% -0- Fenner & Smith FBO The Sole Benefit of Customers Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246
- ----------------------- * The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. 75 186
Percent Percent Owned Name and Address Owned of of Record and Fund of Record Owner Record Only* Beneficially - ---- ---------------- ------------ ------------- AIM Asian Growth Fund - Merrill Lynch Pierce 7.85% -0- Class A shares Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class B shares Merrill Lynch Pierce 7.85% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Class C shares Merrill Lynch Pierce 20.38% -0- Fenner & Smith FBO The Sole Benefit of Customers Attn: Fund Administration 4800 Deer Lake Dr. East 3rd Floor Jacksonville, FL 32246 Robert A. Merkel and -0- 6.21% Margaret M. Merkel Ttees Robert A. Merkel and Margaret M. Merkel Trust Dtd. 05/27/94 5118 S. 288th Pl. Auburn, WA 98001
As of March 1, 2000, the trustees and officers of the Trust as a group owned less than 1% of the outstanding shares of each class of the Funds. OTHER INFORMATION Each Prospectus and this Statement of Additional Information omit certain information contained in the Registration Statement which the portfolios of the Trust have filed with the SEC under the 1933 Act and the 1940 Act, and reference is hereby made to the Registration Statement for further information with respect to each portfolio of the Trust and the securities offered hereby. The Registration Statement is available for inspection by the public at the Securities and Exchange Commission in Washington, D.C. - -------------- * The Trust has no knowledge as to whether all or any portion of the shares owned of record only are also owned beneficially. 76 187 APPENDIX A DESCRIPTION OF MONEY MARKET OBLIGATIONS The following list does not purport to be an exhaustive list of all Money Market Obligations, and the Funds reserve the right to invest in Money Market Obligations other than those listed below: 1. GOVERNMENT OBLIGATIONS. U.S. GOVERNMENT DIRECT OBLIGATIONS-- Bills, notes, and bonds issued by the U.S. Treasury. U.S. GOVERNMENT AGENCIES SECURITIES-- Certain federal agencies such as the Government National Mortgage Association have been established as instrumentalities of the U. S. Government to supervise and finance certain types of activities. Issues of these agencies, while not direct obligations of the U. S. Government, are either backed by the full faith and credit of the United States or are guaranteed by the Treasury or supported by the issuing agencies' right to borrow from the Treasury. FOREIGN GOVERNMENT OBLIGATIONS -- These are U.S. dollar denominated obligations issued or guaranteed by one or more foreign governments or any of their political subdivisions, agencies or instrumentalities that are determined by the Fund's investment advisor to be of comparable quality to the other obligations in which the Fund may invest. Such securities also include debt obligations of supranational entities. Supranational entities include international organizations designated or supported by governmental entities to promote economic reconstruction or development and international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the World Bank), the European Coal and Steel Community, the Asian Development Bank and the InterAmerican Development Bank. The percentage of the Fund's assets invested in securities issued by foreign governments will vary depending on the relative yields of such securities, the economic and financial markets of the countries in which the investments are made and the interest rate climate of such countries. 2. BANK INSTRUMENTS. BANKERS' ACCEPTANCES -- A bill of exchange or time draft drawn on and accepted by a commercial bank. It is used by corporations to finance the shipment and storage of goods and to furnish dollar exchange. Maturities are generally six months or less. CERTIFICATES OF DEPOSIT -- A negotiable interest-bearing instrument with a specific maturity. Certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of funds and normally can be traded in the secondary market, prior to maturity. TIME DEPOSITS -- A non-negotiable receipt issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time; however, it cannot be traded in the secondary market. EURODOLLAR OBLIGATIONS -- A Eurodollar obligation is a U.S. dollar-denominated obligation issued by a foreign branch of a domestic bank. YANKEE DOLLAR OBLIGATIONS -- A Yankee dollar obligation is a U.S. dollar-denominated obligation issued by a domestic branch of a foreign bank. 3. COMMERCIAL INSTRUMENTS. COMMERCIAL PAPER -- The term used to designate unsecured short-term promissory notes issued by corporations and other entities. Maturities on these issues vary from a few days to nine months. A-1 188 MASTER DEMAND NOTES -- Master demand notes are demand notes that permit investment of fluctuating amounts of money at variable rates of interest pursuant to arrangements with the issuers. The interest rate on a master demand note is periodically redetermined according to a prescribed formula. Although there is no secondary market in master demand notes, the payee may demand payment of the principal amount of the note on relatively short notice. Master demand notes may be secured or unsecured. 4. REPURCHASE AGREEMENTS -- A repurchase agreement is a contractual undertaking whereby the seller of securities (limited to U.S. Government securities, including securities issued or guaranteed by the U.S. Treasury or the various agencies and instrumentalities of the U.S. Government) agrees to repurchase the securities at a specified price on a future date determined by negotiations. A-2 189 APPENDIX B DESCRIPTION OF CORPORATE BOND RATINGS Investment grade debt securities are those rating categories indicated by an asterisk ( * ). MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS ARE AS FOLLOWS: *Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. *Aa Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high grade bonds. These are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities. *A Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future. *Baa Bonds which are rated Baa are considered as medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. B-1 190 Caa Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Note: Moody's applies numerical modifiers 1, 2, and 3 in the Aa and A groups when assigning ratings to industrial development bonds and bonds secured by either a letter of credit or bond insurance. The modifier 1 indicates that the security ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic rating category. STANDARD AND POOR'S RATINGS SERVICES CLASSIFICATIONS ARE AS FOLLOWS: *AAA Debt rated `AAA' has the highest rating assigned by Standard & Poor's ("S&P"). Capacity to pay interest and repay principal is extremely strong. *AA Debt rated `AA' has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in a small degree. *A Debt rated `A' has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. *BBB Debt rated `BBB' regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher categories. BB, B, CCC, CC, C Debt rated `BB', `B', `CCC', `CC' and `C' is regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. `BB' indicates the lowest degree of speculation and `C' the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. B-2 191 BB Debt rated `BB' has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The `BB' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied `BBB-' rating. B Debt rated `B' has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The `B' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied `BB' or `BB-' rating. CCC Debt rated `CCC' has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The `CCC' rating category is also used for debt subordinated to senior debt that is assigned an actual or implied `B' or `B-' rating. CC The rating `CC' is typically applied to debt subordinated to senior debt that is assigned an actual or implied `CCC' rating. C The rating `C' is typically applied to debt subordinated to senior debt which is assigned an actual or implied `CCC-' debt rating. The `C' rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued. C1 The rating `C1' is reserved for income bonds on which no interest is being paid. D Debt rated `D' is in payment default. The `D' rating category is used when interest payments or principal or principal payments are not made on the date due even if the applicable grace period has not expired, unless S&P believes that such payments will be made during such grace period. The `D' rating also will be used upon the filing of a bankruptcy petition if debt service payments are jeopardized. PLUS (+) OR MINUS (-) The rating from `AA' to `CCC' may be modified by the addition of a plus or minus sign to show relative standing within the major categories. B-3 192 DUFF & PHELPS FIXED-INCOME RATINGS ARE AS FOLLOWS: *AAA Highest credit quality. The risk factors are negligible, being only slightly more than for risk-free U.S. Treasury debt. *AA+, AA AND AA- High credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. *A+, A AND A- Protection factors are average but adequate. However, risk factors are more variable and greater in periods of economic stress. *BBB+, BBB AND BBB- Below average protection factors but still considered sufficient for prudent investment. Considerable variability in risk during economic cycles. BB+, BB AND BB- Below investment grade but deemed likely to meet obligations when due. Present or prospective financial protection factors fluctuate according to industry conditions or company fortunes. Overall quality may move up or down frequently within this category. B+, B AND B- Below investment grade and possessing risk that obligations will not be met when due. Financial protection factors will fluctuate widely according to economic cycles, industry conditions and/or company fortunes. Potential exists for frequent changes in quality rating within this category or into a higher or lower quality rating grade. CCC Well below investment grade securities. May be in default or have considerable uncertainty as to timely payment of interest, preferred dividends and/or principal. Protection factors are narrow and risk can be substantial with unfavorable economic/industry conditions, and/or with unfavorable company developments. DD Defaulted debt obligations. Issuer failed to meet scheduled principal and/or interest payments. DP Preferred stock with dividend arrearages. FITCH IBCA, INC.'S BOND RATINGS ARE AS FOLLOWS: *AAA Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events. B-4 193 *AA Bonds considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated `AAA.' Because bonds rated in the `AAA' and `AA' categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated `F-1+.' *A Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings. *BBB Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these bonds, and therefore impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings. BB Bonds are considered speculative. The obligor's ability to pay interest and repay principal may be affected over time by adverse economic changes. However, business and financial alternatives can be identified which could assist the obligor in satisfying its debt service requirements. B Bonds are considered highly speculative. While bonds in this class are currently meeting debt service requirements, the probability of continued timely payment of principal and interest reflects the obligor's limited margin of safety and the need for reasonable business and economic activity throughout the life of the issue. CCC Bonds have certain identifiable characteristics which, if not remedied, may lead to default. The ability to meet obligations requires an advantageous business and economic environment. CC Bonds are minimally protected. Default in payment of interest and/or principal seems probable over time. C Bonds are in imminent default in payment of interest or principal. DDD, DD, AND D Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and should be valued on the basis of their ultimate recovery value in liquidation or reorganization of the obligor. `DDD' represents the highest potential for recovery on these bonds, and `D' represents the lowest potential for recovery. B-5 194 PLUS (+) MINUS (-) Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the `AAA', `DDD', `DD', or `D' categories. B-6 195 APPENDIX C DESCRIPTION OF OBLIGATIONS ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES OR INSTRUMENTALITIES The following list includes certain common securities, issued or guaranteed by U.S. Government Agencies or Instrumentalities and does not purport to be exhaustive. EXPORT-IMPORT BANK CERTIFICATES--are certificates of beneficial interest and participation certificates issued and guaranteed by the Export-Import Bank of the United States. FEDERAL FARM CREDIT SYSTEM NOTES AND BONDS--are bonds issued by a cooperatively owned, nationwide system of banks and associations supervised by the Farm Credit Administration, an independent agency of the U.S. Government. FEDERAL HOME LOAN BANK NOTES AND BONDS--are notes and bonds issued by the Federal Home Loan Bank System. FHA DEBENTURES--are debentures issued by the Federal Housing Authority of the U.S. Government. FHA INSURED NOTES--are bonds issued by the Farmers Home Administration of the U.S. Government. FEDERAL HOME LOAN MORTGAGE CORPORATION ("FHLMC") BONDS--are bonds issued and guaranteed by FHLMC, a corporate instrumentality of the U.S. Government. The Federal Home Loan Banks own all the capital stock of FHLMC, which obtains its funds by selling mortgages (as well as participation interests in the mortgages) and by borrowing funds through the issuance of debentures and otherwise. FHLMC PARTICIPATION CERTIFICATES OR "FREDDIE MACS"--represent undivided interests in specified groups of conventional mortgage loans (and/or participation interests in those loans) underwritten and owned by FHLMC. At least 95% of the aggregate principal balance of the whole mortgage loans and/or participations in a group formed by FHLMC typically consists of single-family mortgage loans, and not more than 5% consists of multi-family loans. FHLMC Participation Certificates are not guaranteed by, and do not constitute a debt or obligation of, the U.S. Government or any Federal Home Loan Bank. FHLMC Participation Certificates are issued in fully registered form only, in original unpaid principal balances of $25,000, $100,000, $200,00, $500,000, $1 million and $5 million. FHLMC guarantees to each registered holder of a Participation Certificate, to the extent of such holder's pro rata share (i) the timely payment of interest accruing at the applicable certificate rate on the unpaid principal balance outstanding on the mortgage loans, and (ii) collection of all principal on the mortgage loans without any offset or deductions. Pursuant to these guaranties, FHLMC indemnifies holders of Participation Certificates against any reduction in principal by reason of charges for property repairs, maintenance, and foreclosure. FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA") BONDS--are bonds issued and guaranteed by FNMA, a federally chartered and privately-owned corporation. FNMA PASS-THROUGH CERTIFICATES OR "FANNIE-MAES"--are mortgage pass-through certificates issued and guaranteed by FNMA. FNMA Certificates represent a fractional undivided ownership interest in a pool of mortgage loans either provided from FNMA's own portfolio or purchased from primary lenders. The mortgage loans included in the pool are conventional, insured by the Federal Housing Administration or guaranteed by the Veterans Administration. FNMA Certificates are not backed by, nor entitled to, the full faith and credit of the U.S. Government. Loans not provided from FNMA's own portfolio are purchased only from primary lenders that satisfy certain criteria developed by FNMA, including depth of mortgage origination experience, servicing experience C-1 196 and financial capacity. FNMA may purchase an entire loan pool from a single lender, and issue Certificates backed by that loan pool alone, or may package a pool made up of loans purchased from various lenders. Various types of mortgage loans, and loans with varying interest rates, may be included in a single pool, although each pool will consist of mortgage loans related to one-family or two-to-four family residential properties. Substantially all FNMA mortgage pools currently consist of fixed interest rate and growing equity mortgage loans, although FNMA mortgage pools may also consist of adjustable interest rate mortgage loans or other types of mortgage loans. Each mortgage loan must conform to FNMA's published requirements or guidelines with respect to maximum principal amount, loan-to-loan value ratio, loan term, underwriting standards and insurance coverage. All mortgage loans are held by FNMA as trustee pursuant to a trust indenture for the benefit of Certificate holders. The trust indenture gives FNMA responsibility for servicing and administering the loans in a pool. FNMA contracts with the lenders or other servicing institutions to perform all services and duties customary to the servicing of mortgages, as well as duties specifically prescribed by FNMA, all under FNMA supervision. FMNA may remove service providers for cause. The pass-through rate on FNMA Certificates is the lowest annual interest rate borne y an underlying mortgage loan in the pool, less a fee to FNMA as compensation for servicing and for FNMA's guarantee. Lenders servicing the underlying mortgage loans receive as compensation a portion of the fee paid to FNMA, the excess yields on pooled loans with coupon rates above the lowest rate borne by any mortgage loan and certain other amounts collected, such as late charges. The minimum size of a FNMA pool is $1 million of mortgage loans. Registered holders purchase Certificates in amounts not less than $25,000. FNMA Certificates are marketed by the servicing lender banks, usually through securities dealers. The lender of a single lender pool typically markets all Certificates based on that pool, and lenders of multiple lender pools market Certificates based on a pro rata interest in the aggregate pool. The amount of FNMA Certificates currently outstanding is limited. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES OR "GINNIE MAES"--are mortgage-backed securities which represent a partial ownership interest in a pool of mortgage loans issued by lenders such as mortgage bankers, commercial banks and savings and loan associations. Each mortgage loan included in the pool is either insured by the Federal Housing Administration or guaranteed by the Veterans Administration. A "pool" or group of such mortgages is assembled, and, after being approved by GNMA, is offered to investors through securities dealers. GNMA is a U.S. Government corporation within the Department of Housing and Urban Development. GNMA Certificates differ from bonds in that the principal is paid back monthly by the borrower over the term of the loan rather than returned in a lump sum at maturity. GNMA Certificates are called "modified pass-through" securities because they entitle the holder to receive its proportionate share of all interest and principal payments owed on the mortgage pool, net of fees paid to the issuer and GNMA, regardless of whether or not the mortgagor actually makes the payment. Payment of principal of and interest on GNMA Certificates of the "modified pass-through" type is guaranteed by GNMA and backed by the full faith and credit of the U.S. Government. The average life of a GNMA Certificate is likely to be substantially less than the original maturity of the mortgage pools underlying the securities. Prepayments of principal by mortgagors and mortgage foreclosures will usually result in the return on the greater part of principal invested far in advance of the maturity of the mortgages in the pool. Foreclosures impose little risk to principal investment because of the GNMA guarantee. As the prepayment rates of individual mortgage pools will vary widely, it is not possible to accurately predict the average life of a particular issue of GNMA Certificates. However, statistics published by the Federal Housing Authority indicate that the average life of a single-family dwelling mortgage with 25- to 30-year maturity, C-2 197 the type of mortgage which backs the vast majority of GNMA Certificates, is approximately 12 years. It is therefore customary practice to treat GNMA Certificates as 30-year mortgage-backed securities which prepay fully in the twelfth year. As a consequence of the fees paid to GNMA and the issuer of GNMA Certificates, the coupon rate of interest rate of interest of GNMA Certificates is lower than the interest paid on the VA-guaranteed or FHA-insured mortgages underlying the Certificates. The yield which will be earned on GNMA Certificates may vary from their coupon rates for the following reasons: (i) Certificates may be issued at a premium or discount, rather than at par; (ii) Certificates may trade in the secondary market at a premium or discount after issuance; (iii) interest is earned and compounded monthly which has the effect of raising the effective yield earned on the Certificates; and (iv) the actual yield of each Certificate is affected by prepayment of mortgages included in the mortgage pool underlying the Certificates and the rate at which principal so prepaid is reinvested. In addition, prepayment of mortgages included in the mortgage pool underlying a GNMA Certificate purchased at a premium may result in a loss to the Fund. Due to the large amount of GNMA Certificates outstanding and active participation in the secondary market by securities dealers and investors, GNMA Certificates are highly liquid instruments. Prices of GNMA Certificates are readily available from securities dealers and depend on, among other things, the level of market rates, the Certificate's coupon rate and the prepayment experience of the pool of mortgages backing each Certificate. GENERAL SERVICES ADMINISTRATION ("GSA") PARTICIPATION CERTIFICATES--are participation certificates issued by the General Services Administration of the U.S. Government. MARITIME ADMINISTRATION BONDS--are bonds issued and provided by the Department of Transportation of the U.S. Government. NEW COMMUNITIES DEBENTURES--are debentures issued in accordance with the provisions of Title IV of the Housing and Urban Development Act of 1968, as supplemented and extended by Title VII of the Housing and Urban Development Act of 1970, the payment of which guaranteed by the U.S. Government. PUBLIC HOUSING NOTES AND BONDS--are short-term project notes and long-term bonds issued by public housing and urban renewal agencies in connection with programs administered by the Department of Housing and Urban Development of the U.S. Government, the payment of which is secured by the U.S. Government. SBA DEBENTURES--are debentures fully guaranteed as to principal and interest by the Small Business Administration of the U.S. Government. SLMA DEBENTURES--are debentures backed by the Student Loan Marketing Association. TITLE XI BONDS--are bonds issued in accordance with the provisions of Title XI of the Merchant Marine Act of 1936, as amended, the payment of which is guaranteed by the U.S. Government. WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY BOND--are bonds issued by Washington Metropolitan Area Transit Authority and are guaranteed by the Secretary of Transportation of the U.S. Government. C-3 198 FINANCIAL STATEMENTS FS 199 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of the AIM Asian Growth Fund (a portfolio of AIM International Funds, Inc.) including the schedule of investments, as of October 31, 1999, the related statement of operations for the year then ended, the statement of changes in net assets and financial highlights for the year then ended and the period November 3, 1997 (date operations commenced) through October 31, 1998. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the AIM Asian Growth Fund as of October 31, 1999, the results of its operations for the year then ended, changes in its net assets and financial highlights for the year then ended and the period November 3, 1997 (date operations commenced) through October 31, 1998, in conformity with generally accepted accounting principles. /s/ KPMG LLP KPMG LLP December 3, 1999 Houston, Texas FS-1 200 SCHEDULE OF INVESTMENTS October 31, 1999
MARKET SHARES VALUE FOREIGN STOCKS & OTHER EQUITY INTERESTS-90.31% AUSTRALIA-13.85% Austar United Communications Ltd. (Broadcasting-Television, Radio & Cable)(a) 51,700 $ 168,195 - -------------------------------------------------------------- Brambles Industries Ltd. (Air Freight) 25,800 725,790 - -------------------------------------------------------------- BRL Hardy Ltd. (Beverages-Alcoholic) 167,000 729,726 - -------------------------------------------------------------- Computershare Ltd. (Computers-Software & Services) 196,800 715,571 - -------------------------------------------------------------- ERG Ltd. (Electrical Equipment) 325,000 1,281,222 - -------------------------------------------------------------- Foster's Brewing Group Ltd. (Beverages-Alcoholic) 255,000 677,986 - -------------------------------------------------------------- James Hardie Industries Ltd. (Building Materials) 212,000 513,892 - -------------------------------------------------------------- TABCORP Holdings Ltd. (Leisure Time Products) 87,058 552,011 - -------------------------------------------------------------- Telstra Corp. Ltd. (Telephone) 162,700 522,045 - -------------------------------------------------------------- 5,886,438 - -------------------------------------------------------------- HONG KONG-26.33% ASM Pacific Technology Ltd. (Machinery-Diversified) 600,000 706,737 - -------------------------------------------------------------- China Telecom Ltd. (Telecommunications- Cellular/Wireless)(a) 204,000 697,236 - -------------------------------------------------------------- Cosco Pacific Ltd. (Financial-Diversified) 630,000 446,055 - -------------------------------------------------------------- Dah Sing Financial Group (Banks-Regional) 182,800 729,496 - -------------------------------------------------------------- Dao Heng Bank Group Ltd. (Banks-Regional) 148,500 674,817 - -------------------------------------------------------------- Esprit Asia Holdings Ltd. (Retail-Stores) 820,000 770,587 - -------------------------------------------------------------- Giordano International Ltd. (Retail-Specialty-Apparel) 839,500 891,579 - -------------------------------------------------------------- Guangdong Kelon Electrical Holdings Co. Ltd. (Household Furniture & Appliances) 446,000 396,159 - -------------------------------------------------------------- HKR International Ltd. (Land Development) 516,600 392,366 - -------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 74,000 743,039 - -------------------------------------------------------------- Johnson Electric Holdings Ltd. (Electrical Equipment) 137,000 740,722 - -------------------------------------------------------------- Kerry Properties Ltd. (Land Development) 441,000 437,134 - -------------------------------------------------------------- Li & Fung Ltd. (Distributors-Food & Health) 482,000 837,657 - -------------------------------------------------------------- Shenzhen Expressway Co. Ltd. (Services-Commercial & Consumer) 2,402,000 358,687 - -------------------------------------------------------------- Shui On Construction and Materials Ltd. (Construction-Cement & Aggregates) 486,000 675,686 - -------------------------------------------------------------- Television Broadcasts Ltd. (Broadcasting-Television, Radio & Cable) 133,000 710,534 - -------------------------------------------------------------- Wing Hang Bank Ltd. (Banks-Major Regional) 190,500 621,667 - -------------------------------------------------------------- Zhejiang Expressway Co. Ltd. (Services-Commercial & Consumer) 2,356,000 357,884 - -------------------------------------------------------------- 11,188,042 - -------------------------------------------------------------- INDIA-3.76% ITC Ltd. (Tobacco) 19,600 371,420 - --------------------------------------------------------------
MARKET SHARES VALUE INDIA-(CONTINUED) Satyam Infoway Ltd.-ADR (Computers-Software & Services)(a) 12,000 $ 465,000 - -------------------------------------------------------------- Videsh Sanchar Nigam Ltd.-GDR (Telecommunications-Cellular/Wireless) 47,600 760,410 - -------------------------------------------------------------- 1,596,830 - -------------------------------------------------------------- INDONESIA-2.42% Gulf Indonesia Resources Ltd. (Oil-International Integrated)(a) 49,700 394,494 - -------------------------------------------------------------- PT Indofood Sukses Makmur Tbk (Foods)(a) 536,000 633,348 - -------------------------------------------------------------- 1,027,842 - -------------------------------------------------------------- NEW ZEALAND-1.21% Sky Network Television Ltd. (Broadcasting-Television, Radio, Cable)(a) 283,000 430,698 - -------------------------------------------------------------- Sky Network Television Ltd.-ADR (Broadcasting-Television, Radio & Cable)(a) 5,400 81,675 - -------------------------------------------------------------- 512,373 - -------------------------------------------------------------- PHILIPPINES-6.48% Bank of the Philippine Islands (Banks-Major Regional) 209,110 552,760 - -------------------------------------------------------------- Equitable PCI Bank (Banks-Major Regional) 131,350 232,565 - -------------------------------------------------------------- International Container Terminal Services, Inc. (Air Freight)(a) 2,873,000 275,837 - -------------------------------------------------------------- Jollibee Foods Corp. (Restaurants), Wts., expiring 03/24/03(b) 1,605,000 610,380 - -------------------------------------------------------------- Manila Electric Co. (Electric Power) 181,300 497,332 - -------------------------------------------------------------- SM Prime Holdings, Inc. (Land Development) 3,304,900 585,157 - -------------------------------------------------------------- 2,754,031 - -------------------------------------------------------------- SINGAPORE-15.43% Allgreen Properties Ltd. (Homebuilding)(a) 690,000 585,133 - -------------------------------------------------------------- Datacraft Asia Ltd. (Communications Equipment) 155,600 715,760 - -------------------------------------------------------------- DBS Group Holdings Ltd. (Banks-Money Center) 63,127 713,771 - -------------------------------------------------------------- Keppel Corp. Ltd. (Engineering & Construction) 231,000 627,967 - -------------------------------------------------------------- Keppel Land Ltd. (Land Development) 419,000 592,199 - -------------------------------------------------------------- Natsteel Electronics Ltd. (Computers-Hardware) 105,500 412,432 - -------------------------------------------------------------- NatSteel Ltd. (Iron & Steel) 396,000 662,104 - -------------------------------------------------------------- OMNI Industries Ltd. (Electronics-Component Distributors) 625,000 593,913 - -------------------------------------------------------------- Singapore Airlines Ltd. (Airlines) 57,000 603,356 - -------------------------------------------------------------- Singapore Press Holdings Ltd. (Publishing-Newspapers) 38,000 651,350 - -------------------------------------------------------------- Venture Manufacturing Ltd. (Electronics-Component Distributors) 45,000 400,553 - -------------------------------------------------------------- 6,558,538 - --------------------------------------------------------------
FS-2 201
MARKET SHARES VALUE SOUTH KOREA-10.20% Kookmin Bank (Banks-Major Regional) 52,000 $ 810,671 - -------------------------------------------------------------- Kookmin Bank (Banks-Major Regional), Rts., expiring 11/04/99 5,223 31,787 - -------------------------------------------------------------- Korea Electric Power Corp.-ADR (Electric Companies) 37,400 589,050 - -------------------------------------------------------------- Korea Telecom Corp.-ADR (Telephone)(a) 21,904 772,116 - -------------------------------------------------------------- L.G. Chemical Ltd. (Chemicals-Specialty) 23,800 720,250 - -------------------------------------------------------------- Pohang Iron & Steel Co. Ltd.-ADR (Iron & Steel) 19,800 660,825 - -------------------------------------------------------------- Samsung Electronics (Electronics-Component Distributors) 4,500 750,313 - -------------------------------------------------------------- 4,335,012 - -------------------------------------------------------------- TAIWAN-6.16% Compal Electronics, Inc. (Computers-Hardware) 193,550 649,845 - -------------------------------------------------------------- Far Eastern Textile Ltd. (Chemicals-Diversified) 581,010 794,951 - -------------------------------------------------------------- Hon Hai Precision Industry Co. Ltd. (Electronics-Component Distributors)(a) 112,000 766,204 - -------------------------------------------------------------- Ritek Inc. (Consumer-Jewelry, Novelties & Gifts)(a) 62,000 406,557 - -------------------------------------------------------------- 2,617,557 - --------------------------------------------------------------
MARKET SHARES VALUE THAILAND-4.47% Advanced Info Service Public Co. Ltd. (Telephone)(a) 56,000 $ 652,765 - -------------------------------------------------------------- PTT Exploration and Production Public Co. Ltd. (Oil & Gas-Exploration & Production) 77,000 562,466 - -------------------------------------------------------------- Siam Commercial Bank PLC, 5.25% Pfd. (Banks-Regional)(a) 605,000 685,630 - -------------------------------------------------------------- 1,900,861 - -------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests (Cost $31,193,627) 38,377,524 - -------------------------------------------------------------- MONEY MARKET FUNDS-7.33% STIC Liquid Assets Portfolio(c) 1,557,615 1,557,615 - -------------------------------------------------------------- STIC Prime Portfolio(c) 1,557,615 1,557,615 - -------------------------------------------------------------- Total Money Market Funds (Cost $3,115,230) 3,115,230 - -------------------------------------------------------------- TOTAL INVESTMENTS-97.64% 41,492,754 - -------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-2.36% 1,004,345 - -------------------------------------------------------------- NET ASSETS-100.00% $42,497,099 - --------------------------------------------------------------
Investment Abbreviations: ADR - American Depositary Receipt GDR - Global Depositary Receipt Pfd. - Preferred Rts. - Rights Wts. - Warrants Notes to Schedule of Investments: (a)Non-income producing security. (b)Non-income producing security acquired as part of a unit with or in exchange for other securities. (c)The security shares the same investment advisor as the Fund. See Notes to Financial Statements. FS-3 202 STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 ASSETS: Investments, at market value (cost $34,308,857) $41,492,754 - ----------------------------------------------------------- Foreign currencies, at value (cost $1,066,940) 1,062,360 - ----------------------------------------------------------- Receivables for: Investments sold 451,237 - ----------------------------------------------------------- Capital stock sold 434,594 - ----------------------------------------------------------- Dividends and interest 10,643 - ----------------------------------------------------------- Investment for deferred compensation plan 7,658 - ----------------------------------------------------------- Other assets 26,195 - ----------------------------------------------------------- Total assets 43,485,441 - ----------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 754,485 - ----------------------------------------------------------- Capital stock reacquired 101,659 - ----------------------------------------------------------- Deferred compensation 7,658 - ----------------------------------------------------------- Accrued advisory fees 48,172 - ----------------------------------------------------------- Accrued administrative services fees 4,247 - ----------------------------------------------------------- Accrued directors' fees 716 - ----------------------------------------------------------- Accrued distribution fees 22,071 - ----------------------------------------------------------- Accrued transfer agent fees 15,101 - ----------------------------------------------------------- Accrued operating expenses 34,233 - ----------------------------------------------------------- Total liabilities 988,342 - ----------------------------------------------------------- Net assets applicable to shares outstanding $42,497,099 - ----------------------------------------------------------- NET ASSETS: Class A $25,419,567 - ----------------------------------------------------------- Class B $12,069,543 - ----------------------------------------------------------- Class C $ 5,007,989 - ----------------------------------------------------------- CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 2,361,340 - ----------------------------------------------------------- Class B: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 1,133,253 - ----------------------------------------------------------- Class C: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 471,104 - ----------------------------------------------------------- Class A: Net asset value and redemption price per share $ 10.76 - ----------------------------------------------------------- Offering price per share: (Net asset value of $10.76 divided by 94.50%) $ 11.39 - ----------------------------------------------------------- Class B: Net asset value and offering price per share $ 10.65 - ----------------------------------------------------------- Class C: Net asset value and offering price per share $ 10.63 - -----------------------------------------------------------
STATEMENT OF OPERATIONS For the year ended October 31, 1999 INVESTMENT INCOME: Dividends (net of $99,541 foreign withholding tax) $ 302,917 - ----------------------------------------------------------- Interest 65,008 - ----------------------------------------------------------- Total investment income 367,925 - ----------------------------------------------------------- EXPENSES: Advisory fees 246,413 - ----------------------------------------------------------- Administrative services fees 74,007 - ----------------------------------------------------------- Custodian fees 62,478 - ----------------------------------------------------------- Directors' fees 7,780 - ----------------------------------------------------------- Distribution fees-Class A 61,006 - ----------------------------------------------------------- Distribution fees-Class B 64,087 - ----------------------------------------------------------- Distribution fees-Class C 20,619 - ----------------------------------------------------------- Transfer agent fees-Class A 61,457 - ----------------------------------------------------------- Transfer agent fees-Class B 36,637 - ----------------------------------------------------------- Transfer agent fees-Class C 11,787 - ----------------------------------------------------------- Registration and filing fees 61,091 - ----------------------------------------------------------- Other 71,023 - ----------------------------------------------------------- Total expenses 778,385 - ----------------------------------------------------------- Less: Fees waived and reimbursed by advisor (207,130) - ----------------------------------------------------------- Expenses paid indirectly (853) - ----------------------------------------------------------- Net expenses 570,402 - ----------------------------------------------------------- Net investment income (loss) (202,477) - ----------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities 935,968 - ----------------------------------------------------------- Foreign currencies (9,786) - ----------------------------------------------------------- 926,182 - ----------------------------------------------------------- Change in net unrealized appreciation of: Investment securities 6,895,666 - ----------------------------------------------------------- Foreign currencies 1,173 - ----------------------------------------------------------- 6,896,839 - ----------------------------------------------------------- Net gain from investment securities and foreign currencies 7,823,021 - ----------------------------------------------------------- Net increase in net assets resulting from operations $7,620,544 - -----------------------------------------------------------
See Notes to Financial Statements. FS-4 203 STATEMENT OF CHANGES IN NET ASSETS For the year ended October 31, 1999 and the period November 3, 1997 (date operations commenced) through October 31, 1998
1999 1998 ----------- ----------- OPERATIONS: Net investment income (loss) $ (202,477) $ 30,244 - ----------------------------------------------------------------------------------------- Net realized gain (loss) from investment securities and foreign currencies 926,182 (1,687,076) - ----------------------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities and foreign currencies 6,896,839 288,673 - ----------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 7,620,544 (1,368,159) - ----------------------------------------------------------------------------------------- Distributions to shareholders from net investment income: Class A (43,024) -- - ----------------------------------------------------------------------------------------- Class B (3,910) -- - ----------------------------------------------------------------------------------------- Class C (898) -- - ----------------------------------------------------------------------------------------- Share transactions-net: Class A 12,107,278 8,755,042 - ----------------------------------------------------------------------------------------- Class B 7,604,535 3,340,169 - ----------------------------------------------------------------------------------------- Class C 3,780,454 705,068 - ----------------------------------------------------------------------------------------- Net increase in net assets 31,064,979 11,432,120 - ----------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 11,432,120 -- - ----------------------------------------------------------------------------------------- End of period $42,497,099 $11,432,120 - ----------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $36,066,914 $12,781,818 - ----------------------------------------------------------------------------------------- Undistributed net investment income (loss) (7,889) 45,035 - ----------------------------------------------------------------------------------------- Undistributed net realized (loss) from investment securities and foreign currencies (747,438) (1,683,406) - ----------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 7,185,512 288,673 - ----------------------------------------------------------------------------------------- $42,497,099 $11,432,120 - -----------------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS October 31, 1999 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Asian Growth Fund (the "Fund") is a series portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is long-term growth of capital. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are FS-5 204 valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of trading of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions, Investment Income and Distributions -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. The Fund may elect to use a portion of the proceeds of capital stock redemptions as distributions for Federal income tax purposes. Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. On October 31, 1999, undistributed net investment income was increased by $197,385, undistributed net realized gains increased by $9,786 and paid-in capital decreased $207,171 as a result of differing book/tax treatment of foreign currency transactions and net operating loss reclassifications in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassification discussed above. C. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund has a capital loss carryforward of $350,698 as of October 31, 1999 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2006. D. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for that portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. E. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. F. Expenses -- Distribution expenses and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first $500 million of the Fund's average daily net assets, plus 0.90% of the Fund's average daily net assets in excess of $500 million. Under the terms of a sub-advisory agreement between AIM and INVESCO Global Asset Management Limited ("IGAM"), AIM pays IGAM a fee at an annual rate of 0.20% of the first $500 million of the Fund's average daily net assets, plus 0.175% of the Fund's average daily net assets in excess of $500 million. During the year ended October 31, 1999, AIM waived fees of $207,130. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1999, AIM was paid $74,007 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended October 31, 1999, AFS was paid $64,165 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted a plan pursuant to Rule 12b-1 under FS-6 205 the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class A, Class B or Class C shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own the appropriate class of shares of the Fund. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. The Plans also impose a cap on the total sales charges, including asset-based sales charges that may be paid by the respective classes. During the year ended October 31, 1999, the Class A, Class B and Class C shares paid AIM Distributors $61,006, $64,087 and $20,619, respectively, as compensation under the Plans. AIM Distributors received commissions of $43,007 from sales of the Class A shares of the Fund during the year ended October 31, 1999. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 1999, AIM Distributors received $240,319 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 1999, the Fund paid legal fees of $3,540 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES During the year ended October 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $339 and $514, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $853 during the year ended October 31, 1999. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid to directors who are not an "interested person" of AIM. The Company invests directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 1999, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. Prior to May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1999 was $53,369,215 and $31,161,990, respectively. The amount of unrealized appreciation (depreciation) of investment securities as of October 31, 1999 is as follows: Aggregate unrealized appreciation of investment securities $ 7,981,120 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (1,193,961) - --------------------------------------------------------- Net unrealized appreciation of investment securities $ 6,787,159 - --------------------------------------------------------- Cost of investments for tax purposes is $34,705,595.
FS-7 206 NOTE 7-CAPITAL STOCK Changes in capital stock outstanding during the years ended October 31, 1999 and 1998 were as follows:
1999 1998 ------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sold: Class A 7,418,728 $ 73,010,343 2,150,231 $ 17,226,640 - ------------------------------------------------------------------------------------------------------------------- Class B 1,590,485 15,858,499 516,509 4,177,886 - ------------------------------------------------------------------------------------------------------------------- Class C 1,155,486 11,034,900 268,694 2,084,897 - ------------------------------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A 5,228 39,837 -- -- - ------------------------------------------------------------------------------------------------------------------- Class B 494 3,756 -- -- - ------------------------------------------------------------------------------------------------------------------- Class C 118 897 -- -- - ------------------------------------------------------------------------------------------------------------------- Reacquired: Class A (6,066,544) (60,942,902) (1,146,303) (8,471,598) - ------------------------------------------------------------------------------------------------------------------- Class B (854,740) (8,257,720) (119,495) (837,717) - ------------------------------------------------------------------------------------------------------------------- Class C (774,549) (7,255,343) (178,645) (1,379,829) - ------------------------------------------------------------------------------------------------------------------- 2,474,706 $ 23,492,267 1,490,991 $ 12,800,279 - -------------------------------------------------------------------------------------------------------------------
NOTE 8-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of Class A, Class B and Class C capital stock outstanding for the year ended October 31, 1999 and the period November 3, 1997 (date operations commenced) through October 31, 1998.
CLASS A CLASS B CLASS C ------------------- ------------------- ------------------- 1999(A) 1998 1999(A) 1998 1999(A) 1998 ------- ------- ------- ------- ------- ------- Net asset value, beginning of period $ 7.69 $ 10.00 $ 7.63 $ 10.00 $ 7.61 $ 10.00 - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Income from investment operations: Net investment income (loss) (0.03) 0.05 (0.13) (0.01) (0.13) (0.01) - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Net gains (losses) on securities (both realized and unrealized) 3.14 (2.36) 3.16 (2.36) 3.16 (2.38) - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Total from investment operations 3.11 (2.31) 3.03 (2.37) 3.03 (2.39) - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Less distributions: Dividends from net investment income (0.04) -- (0.01) -- (0.01) -- - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Net asset value, end of period $10.76 $ 7.69 $10.65 $ 7.63 $10.63 $ 7.61 - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Total return(b) 40.66% (23.10)% 39.76% (23.70)% 39.86% (23.90)% - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Ratios/supplemental data: Net assets, end of period (000s omitted) $25,420 $ 7,716 $12,070 $ 3,030 $5,008 $ 686 - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Ratio of expenses to average net assets(c) 1.92%(d) 1.92%(e) 2.79%(d) 2.80%(e) 2.79%(d) 2.80%(e) - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Ratio of net investment income (loss) to average net assets(f) (0.50)%(d) 0.70%(e) (1.37)%(d) (0.18)%(e) (1.37)%(d) (0.18)%(e) - ---------------------------------------------------------- ------- ------- ------- ------- ------ ------- Portfolio turnover rate 142% 79% 142% 79% 142% 79% - ---------------------------------------------------------- ------- ------- ------- ------- ------ -------
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and is not annualized for periods less than one year. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.72% and 4.88% (annualized) for Class A for 1999-1998, 3.59% (annualized) and 5.75% (annualized) for Class B for 1999-1998; and 3.59% (annualized) and 5.75% (annualized) for Class C for 1999-1998. (d) Ratios are based on average net assets of $17,430,236, $6,408,688 and $2,061,860 for Class A, Class B and Class C, respectively. (e) Annualized. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (1.30)% and (2.27)% (annualized) for Class A for 1999-1998, (2.17)% and (3.15)% (annualized) for Class B for 1999-1998, (2.17)% and (3.15)% (annualized) for Class C for 1999-1998. FS-8 207 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of AIM International Funds, Inc. We have audited the accompanying statement of assets and liabilities of the AIM European Development Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1999, and the related statement of operations for the year then ended, and the statement of changes in net assets and financial highlights for the year then ended and the period November 3, 1997 (date operations commenced) through October 31, 1998. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the AIM European Development Fund as of October 31, 1999, the results of its operations for the year then ended, changes in its net assets and financial highlights for the year then ended and the period November 3, 1997 (date operations commenced) through October 31, 1998, in conformity with generally accepted accounting principles. /s/ KPMG LLP KPMG LLP December 3, 1999 Houston, Texas FS-9 208 SCHEDULE OF INVESTMENTS October 31, 1999
MARKET SHARES VALUE STOCKS & OTHER EQUITY INTERESTS-93.25% DENMARK-2.36% Damgaard A/S (Computers-Software & Services)(a) 15,000 $ 795,964 - -------------------------------------------------------------- De Sammensluttede Vognmaend A/S (Truckers) 9,400 904,498 - -------------------------------------------------------------- Vestas Wind Systems A/S (Manufacturing- Specialized)(a) 19,090 2,498,726 - -------------------------------------------------------------- 4,199,188 - -------------------------------------------------------------- FINLAND-5.57% JOT Automation Group Oyj (Manufacturing- Specialized)(a) 627,000 3,232,213 - -------------------------------------------------------------- Nokia Oyj (Communications Equipment) 38,680 4,427,837 - -------------------------------------------------------------- Perlos Oyj (Electronics-Semiconductors)(a) 81,400 1,335,935 - -------------------------------------------------------------- Sonera Oyj (Telecommunications-Cellular/ Wireless) 30,850 926,611 - -------------------------------------------------------------- 9,922,596 - -------------------------------------------------------------- FRANCE-21.34% Accor S.A. (Lodging-Hotels) 4,200 945,583 - -------------------------------------------------------------- Alstom (Engineering & Construction) 8,350 252,997 - -------------------------------------------------------------- ALTEN (Computers-Software & Services)(a) 20,000 2,186,160 - -------------------------------------------------------------- Altran Technologies, S.A. (Services-Commercial & Consumer) 7,300 2,502,901 - -------------------------------------------------------------- AXA (Insurance-Multi-Line) 16,750 2,363,088 - -------------------------------------------------------------- Banque Nationale de Paris (Banks-Major Regional) 20,100 1,765,708 - -------------------------------------------------------------- Bertrand Faure S.A. (Auto Parts & Equipment)(a) 13,000 785,040 - -------------------------------------------------------------- BRICE (Retail-Specialty-Apparel) 12,200 798,338 - -------------------------------------------------------------- Carrefour Supermarche S.A. (Retail-Food Chains) 25,900 4,795,665 - -------------------------------------------------------------- Galeries Lafayette (Retail-Department Stores) 9,600 1,413,955 - -------------------------------------------------------------- GFI Informatique (Computers-Software & Services) 24,400 2,181,952 - -------------------------------------------------------------- Havas Advertising S.A. (Services-Advertising/ Marketing) 9,900 2,775,676 - -------------------------------------------------------------- M6 Metropole Television (Broadcasting- Television, Radio & Cable) 9,400 2,571,210 - -------------------------------------------------------------- NRJ S.A. (Broadcasting-Television, Radio & Cable)(a) 6,600 2,055,285 - -------------------------------------------------------------- Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 9,600 1,831,072 - -------------------------------------------------------------- PSA Peugeot Citreon (Automobiles) 4,400 844,796 - -------------------------------------------------------------- Renault S.A. (Automobiles) 15,000 776,413 - --------------------------------------------------------------
MARKET SHARES VALUE FRANCE-(CONTINUED) Societe Television Francaise 1 (Broadcasting- Television, Radio & Cable) 7,900 $ 2,476,736 - -------------------------------------------------------------- Total Fina S.A.-Class B (Oil & Gas-Refining & Marketing) 23,438 3,168,609 - -------------------------------------------------------------- Unilog S.A. (Services-Commercial & Consumer)(a) 22,200 1,522,779 - -------------------------------------------------------------- 38,013,963 - -------------------------------------------------------------- GERMANY-9.26% Beate Uhse A.G. (Entertainment)(a) 79,650 1,441,287 - -------------------------------------------------------------- Deutsche Bank A.G. (Banks-Major Regional)(a) 24,000 1,721,995 - -------------------------------------------------------------- EM.TV & Merchandising A.G. (Broadcasting- Television, Radio & Cable) 17,500 865,311 - -------------------------------------------------------------- EM.TV & Merchandising A.G.-Rts., expiring 11/12/99 (Broadcasting-Television, Radio & Cable) 17,500 184 - -------------------------------------------------------------- GPK A.G. (Services-Commercial & Consumer)(a) 50,000 1,412,377 - -------------------------------------------------------------- Kamps A.G. (Retail-Food Chains) 46,000 2,574,577 - -------------------------------------------------------------- Mannesmann A.G. (Machinery-Diversified) 17,400 2,736,698 - -------------------------------------------------------------- Porsche A.G.-Pfd. (Automobiles) 925 2,520,449 - -------------------------------------------------------------- PrimaCom A.G. (Broadcasting-Television, Radio, & Cable)(a) 23,500 1,169,406 - -------------------------------------------------------------- Steag Hamatech A.G. (Manufacturing- Specialized)(a) 48,200 1,196,728 - -------------------------------------------------------------- Zapf Creation A.G. (Leisure Time-Products)(a) 25,000 861,366 - -------------------------------------------------------------- 16,500,378 - -------------------------------------------------------------- GREECE-1.87% M.J. Maillis S.A. (Containers & Packaging-Paper) 64,500 2,437,219 - -------------------------------------------------------------- Panafon Hellenic Telecom S.A.-GDR (Telecommunications-Cellular/Wireless) (Acquired 11/20/98-04/23/99; Cost $765,458)(a)(b) 71,200 890,000 - -------------------------------------------------------------- 3,327,219 - -------------------------------------------------------------- IRELAND-2.59% Bank of Ireland (Banks-Major Regional) 106,000 828,574 - -------------------------------------------------------------- CRH PLC (Construction-Cement & Aggregates) 79,500 1,501,302 - -------------------------------------------------------------- Esat Telecom Group PLC-ADR (Telecommunications-Long Distance)(a) 35,000 1,566,250 - -------------------------------------------------------------- Ryanair Holdings PLC-ADR (Airlines)(a) 17,600 726,000 - -------------------------------------------------------------- 4,622,126 - --------------------------------------------------------------
FS-10 209
MARKET SHARES VALUE ISRAEL-0.45% Partner Communications Co. Ltd.-ADR (Telecommunications-Cellular/Wireless)(a) 51,500 $ 811,125 - -------------------------------------------------------------- ITALY-0.43% Credito Italiano S.p.A. (Banks-Major Regional) 163,600 765,913 - -------------------------------------------------------------- NETHERLANDS-6.92% Aegon N.V. (Insurance Brokers) 18,400 1,698,640 - -------------------------------------------------------------- CMG PLC (Computers-Software & Services) 27,000 1,042,476 - -------------------------------------------------------------- Detron Group N.V. (Communications Equipment)(a) 56,000 706,978 - -------------------------------------------------------------- Draka Holding N.V. (Metal Fabricators)(a) 7,065 254,571 - -------------------------------------------------------------- Equant N.V. (Computers-Networking)(a) 10,200 992,609 - -------------------------------------------------------------- Exact Holding N.V. (Computers-Software & Services)(a) 30,000 1,129,902 - -------------------------------------------------------------- GTI Holding N.V. (Engineering & Construction) 68,200 1,381,184 - -------------------------------------------------------------- Gucci Group N.V.-ADR-New York Shares (Textiles) 20,900 1,687,675 - -------------------------------------------------------------- Koninklijke (Royal) Philips Electronics N.V. (Electrical Equipment) 18,020 1,848,399 - -------------------------------------------------------------- Koninklijke Ahold N.V. (Retail-Food Chains) 51,600 1,585,145 - -------------------------------------------------------------- 12,327,579 - -------------------------------------------------------------- NORWAY-0.53% Tomra Systems A.S.A. (Manufacturing- Specialized) 24,500 936,365 - -------------------------------------------------------------- SPAIN-4.30% Banco Popular Espanol S.A. (Banks-Major Regional) 12,400 834,907 - -------------------------------------------------------------- Cortefiel S.A. (Retail-Department Stores) 77,000 2,011,425 - -------------------------------------------------------------- NH Hoteles, S.A. (Investment Management)(a) 206,600 2,336,550 - -------------------------------------------------------------- Telefonica S.A. (Telephone)(a) 150,900 2,482,918 - -------------------------------------------------------------- 7,665,800 - -------------------------------------------------------------- SWEDEN-4.67% Europolitan Holdings A.B. (Telecommunications- Cellular/Wireless) 97,800 1,123,796 - -------------------------------------------------------------- Framtidsfabriken A.B. (Computers-Software & Services)(a) 21,000 845,209 - -------------------------------------------------------------- Hennes & Mauritz A.B.-Class B (Retail- Specialty-Apparel) 56,000 1,487,841 - -------------------------------------------------------------- Modern Times Group MTG A.B.-Class B (Broadcasting-Television, Radio & Cable)(a) 99,000 3,202,091 - -------------------------------------------------------------- NetCom A.B. (Telecommunications-Cellular/ Wireless)(a) 20,800 863,716 - -------------------------------------------------------------- Teligent A.B. (Communications Equipment)(a) 82,000 792,680 - -------------------------------------------------------------- 8,315,333 - -------------------------------------------------------------- SWITZERLAND-5.57% Compagnie Financiere Richemont A.G. (Tobacco) 905 1,728,445 - --------------------------------------------------------------
MARKET SHARES VALUE SWITZERLAND-(CONTINUED) Fantastic Corp.-Ctfs. (Computers-Software & Services)(a) 20,000 $ 1,409,747 - -------------------------------------------------------------- Kudelski S.A. (Electronics-Component Distributors)(a) 310 1,289,041 - -------------------------------------------------------------- PubliGroupe S.A. (Services-Advertising/ Marketing) 2,800 2,053,125 - -------------------------------------------------------------- Straumann A.G. (Health Care-Specialized Services)(a) 4,210 1,863,809 - -------------------------------------------------------------- Zurich Allied A.G. (Insurance-Multi-Line) 2,800 1,584,836 - -------------------------------------------------------------- 9,929,003 - -------------------------------------------------------------- UNITED STATES-0.88% UnitedGlobalCom Inc.-Class A (Broadcasting- Television, Radio & Cable)(a) 18,000 1,566,000 - -------------------------------------------------------------- UNITED KINGDOM-26.51% Aggreko PLC (Services-Facilities & Environmental) 292,000 1,466,636 - -------------------------------------------------------------- AMEC PLC (Construction-Cement & Aggregates) 250,000 881,649 - -------------------------------------------------------------- ARM Holdings PLC (Electronics- Semiconductors)(a) 28,000 795,481 - -------------------------------------------------------------- Barclays PLC (Banks-Major Regional) 75,200 2,303,345 - -------------------------------------------------------------- BP Amoco PLC (Oil & Gas-Refining & Marketing) 165,600 1,607,713 - -------------------------------------------------------------- British Sky Broadcasting Group PLC (Broadcasting-Television, Radio & Cable) 172,000 1,848,001 - -------------------------------------------------------------- British Telecommunications PLC (Communications Equipment) 107,000 1,941,263 - -------------------------------------------------------------- Eidos PLC-ADR (Computers Software/Services)(a) 43,500 3,036,844 - -------------------------------------------------------------- eircom PLC (Telecommunication-Long Distance)(a) 353,000 1,472,497 - -------------------------------------------------------------- Granada Group PLC (Leisure Time-Products) 115,800 915,760 - -------------------------------------------------------------- Hays PLC (Services-Commercial & Consumer) 186,000 2,129,915 - -------------------------------------------------------------- Iceland Group PLC (Retail-Food Chains) 171,000 813,904 - -------------------------------------------------------------- J.D. Wetherspoon PLC (Leisure Time-Products) 150,000 843,423 - -------------------------------------------------------------- JJB Sports PLC (Retail-General Merchandise) 125,000 939,192 - -------------------------------------------------------------- Kewill Systems PLC (Computers-Software & Services)(a) 195,000 2,180,077 - -------------------------------------------------------------- Kingston Communication (Hull) PLC (Telecommunications-Long Distance)(a) 647,300 4,746,448 - -------------------------------------------------------------- Logica PLC (Computer Software & Services) 95,500 1,460,993 - -------------------------------------------------------------- Matalan PLC (Retail-Discounters) 157,000 3,536,295 - -------------------------------------------------------------- Nestor Healthcare Group PLC (Services- Commercial & Consumer) 177,000 1,732,211 - -------------------------------------------------------------- Orange PLC (Telephone)(a) 142,000 3,541,622 - -------------------------------------------------------------- Pace Micro Technology PLC (Communications Equipment) 524,000 2,354,072 - --------------------------------------------------------------
FS-11 210
MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) Sage Group PLC (The) (Computers-Software & Services) 43,850 $ 2,250,047 - -------------------------------------------------------------- Shell Transport & Trading Co. (Oil-International Integrated) 218,000 1,672,000 - -------------------------------------------------------------- Vodafone AirTouch PLC (Telecommunications- Cellular/Wireless) 595,000 2,768,418 - -------------------------------------------------------------- 47,237,806 - -------------------------------------------------------------- Total Stocks & Other Equity Interests (Cost $128,083,371) 166,140,394 - --------------------------------------------------------------
MARKET SHARES VALUE MONEY MARKET FUNDS-6.01% STIC Liquid Assets Portfolio(c) 5,351,762 $ 5,351,762 - -------------------------------------------------------------- STIC Prime Portfolio(c) 5,351,762 5,351,762 - -------------------------------------------------------------- Total Money Market Funds (Cost $10,703,524) 10,703,524 - -------------------------------------------------------------- TOTAL INVESTMENTS-99.26% 176,843,918 - -------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-0.74% 1,316,649 - -------------------------------------------------------------- NET ASSETS-100.00% $178,160,567 ==============================================================
Investment Abbreviations: ADR - American Depositary Receipt Ctfs. - Certificates Pfd. - Preferred Rts. - Rights Notes to Schedule of Investments: (a) Non-income producing security. (b) Restricted security. May be resold to qualified institutional buyers in accordance with provisions of Rule 144A under the Securities Act of 1933 as amended. The valuation of this security has been determined in accordance with procedures established by the Board of Directors. The market value of this security at 10/31/99 was $890,000 which represented 0.50% of the Fund's net assets. (c) The security shares the same investment advisor as the Fund. See Notes to Financial Statements. FS-12 211 STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 ASSETS: Investments, at market value (cost $138,786,895) $176,843,918 - ----------------------------------------------------------- Foreign currencies, at value (cost $1,645,977) 1,648,250 - ----------------------------------------------------------- Receivables for: Investments sold 1,975,354 - ----------------------------------------------------------- Capital stock sold 550,867 - ----------------------------------------------------------- Dividends and interest 304,844 - ----------------------------------------------------------- Investment for deferred compensation plan 8,111 - ----------------------------------------------------------- Other assets 54,409 - ----------------------------------------------------------- Total assets 181,385,753 - ----------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 2,425,603 - ----------------------------------------------------------- Capital stock reacquired 431,336 - ----------------------------------------------------------- Deferred compensation 8,111 - ----------------------------------------------------------- Accrued advisory fees 138,587 - ----------------------------------------------------------- Accrued administrative services fees 4,110 - ----------------------------------------------------------- Accrued directors' fees 2,852 - ----------------------------------------------------------- Accrued distribution fees 101,932 - ----------------------------------------------------------- Accrued transfer agent fees 45,941 - ----------------------------------------------------------- Accrued operating expenses 66,714 - ----------------------------------------------------------- Total liabilities 3,225,186 - ----------------------------------------------------------- Net assets applicable to shares outstanding $178,160,567 - ----------------------------------------------------------- NET ASSETS: Class A $ 99,148,218 - ----------------------------------------------------------- Class B $ 67,074,079 - ----------------------------------------------------------- Class C $ 11,938,270 - ----------------------------------------------------------- CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 6,039,960 - ----------------------------------------------------------- Class B: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 4,140,854 - ----------------------------------------------------------- Class C: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 736,702 - ----------------------------------------------------------- Class A: Net asset value and redemption price per share $ 16.42 - ----------------------------------------------------------- Offering price per share: (Net asset value of $16.42 divided by 94.50%) $ 17.38 - ----------------------------------------------------------- Class B: Net asset value and offering price per share $ 16.20 - ----------------------------------------------------------- Class C: Net asset value and offering price per share $ 16.21 - -----------------------------------------------------------
STATEMENT OF OPERATIONS For the year ended October 31, 1999 INVESTMENT INCOME: Dividends (net of $260,349 foreign withholding tax) $ 1,625,502 - ------------------------------------------------------------ Interest 396,652 - ------------------------------------------------------------ Total investment income 2,022,154 - ------------------------------------------------------------ EXPENSES: Advisory fees 1,607,698 - ------------------------------------------------------------ Administrative services fees 75,332 - ------------------------------------------------------------ Custodian fees 237,707 - ------------------------------------------------------------ Directors' fees 10,764 - ------------------------------------------------------------ Distribution fees-Class A 332,066 - ------------------------------------------------------------ Distribution fees-Class B 625,126 - ------------------------------------------------------------ Distribution fees-Class C 118,428 - ------------------------------------------------------------ Transfer agent fees-Class A 261,250 - ------------------------------------------------------------ Transfer agent fees-Class B 230,660 - ------------------------------------------------------------ Transfer agent fees-Class C 43,698 - ------------------------------------------------------------ Other 201,279 - ------------------------------------------------------------ Total expenses 3,744,008 - ------------------------------------------------------------ Less: Expenses paid indirectly (2,843) - ------------------------------------------------------------ Net expenses 3,741,165 - ------------------------------------------------------------ Net investment income (loss) (1,719,011) - ------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities (5,917,105) - ------------------------------------------------------------ Foreign currencies 122,677 - ------------------------------------------------------------ (5,794,428) - ------------------------------------------------------------ Change in net unrealized appreciation of: Investment securities 43,122,813 - ------------------------------------------------------------ Foreign currencies 3,938 - ------------------------------------------------------------ 43,126,751 - ------------------------------------------------------------ Net gain from investment securities and foreign currencies 37,332,323 - ------------------------------------------------------------ Net increase in net assets resulting from operations $ 35,613,312 - ------------------------------------------------------------
See Notes to Financial Statements. FS-13 212 STATEMENT OF CHANGES IN NET ASSETS For the year ended October 31, 1999 and the period November 3, 1997 (date operations commenced) through October 31, 1998
APRIL 30, OCTOBER 31, 1997 1996 OPERATIONS: Net investment income (loss) $ (1,719,011) $ (481,507) - ---------------------------------------------------------------------------------------------- Net realized gain (loss) from investment securities and foreign currencies (5,794,428) (6,005,211) - ---------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) of investment securities and foreign currencies 43,126,751 (5,080,217) - ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 35,613,312 (11,566,935) - ---------------------------------------------------------------------------------------------- Distribution from investment income -- Class A (80,229) -- - ---------------------------------------------------------------------------------------------- Share transactions -- net: Class A 2,449,615 82,027,769 - ---------------------------------------------------------------------------------------------- Class B 3,977,973 55,436,905 - ---------------------------------------------------------------------------------------------- Class C (246,455) 10,548,612 - ---------------------------------------------------------------------------------------------- Net increase in net assets 41,714,216 136,446,351 - ---------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 136,446,351 -- - ---------------------------------------------------------------------------------------------- End of period $ 178,160,567 $ 136,446,351 ============================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $ 152,753,815 $ 147,994,681 - ---------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (9,989) 19,453 - ---------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) from investment securities and foreign currencies (12,629,793) (6,487,566) - ---------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) of investment securities and foreign currencies 38,046,534 (5,080,217) - ---------------------------------------------------------------------------------------------- $ 178,160,567 $ 136,446,351 ==============================================================================================
See Notes to Financial Statements. FS-14 213 NOTES TO FINANCIAL STATEMENTS October 31, 1999 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM European Development Fund (the "Fund") is a series portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is long-term growth of capital. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of trading of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions, Investment Income and Distributions -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. The Fund may elect to use a portion of the proceeds of capital stock redemptions as distributions for Federal income tax purposes. Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. On October 31, 1999, undistributed net investment income was increased by $1,769,798, undistributed net realized gains decreased by $347,799 and paid-in capital decreased by $1,421,999 as a result of differing book/tax treatment of foreign currency transactions and net operating reclassifications in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassification discussed above. C. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund has a capital loss carryforward of $12,347,306 as of October 31, 1999 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2007. D. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such FS-15 214 transactions. The Fund does not separately account for that portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. E. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. F. Expenses -- Distribution expenses and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first $500 million of the Fund's average daily net assets, plus 0.90% of the Fund's average daily net assets in excess of $500 million. Under the terms of a sub-advisory agreement between AIM and INVESCO Global Asset Management Limited ("IGAM"), AIM pays IGAM a fee at an annual rate of 0.20% of the first $500 million of the Fund's average daily net assets, plus 0.175% of the Fund's average daily net assets in excess of $500 million. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1999, AIM was paid $75,332 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended October 31, 1999, AFS was paid $336,086 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund , pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.35% of the Fund's average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class A, Class B or Class C shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own the appropriate class of shares of the Fund. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. The Plans also impose a cap on the total sales charges, including asset-based sales charges that may be paid by the respective classes. During the year ended October 31, 1999, the Class A, Class B and Class C shares paid AIM Distributors $332,066, $625,126 and $118,428, respectively, as compensation under the Plans. AIM Distributors received commissions of $143,067 from sales of the Class A shares of the Fund during the year ended October 31, 1999. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 1999, AIM Distributors received $50,219 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 1999, the Fund paid legal fees of $3,014 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES During the year ended October 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $1,989 and $854, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $2,843 during the year ended October 31, 1999. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid to directors who are not an "interested person" of AIM. The Company invests directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 1999, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. Prior to May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated among the funds based on their respective average net assets for the period. FS-16 215 NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1999 was $201,019,098 and $192,916,235, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 1999 is as follows: Aggregate unrealized appreciation of investment securities $40,275,044 - ------------------------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (2,500,509) - ------------------------------------------------------------------------- Net unrealized appreciation of investment securities $37,774,535 =========================================================================
Cost of investments for tax purposes is $139,069,383. NOTE 7-CAPITAL STOCK Changes in capital stock outstanding during the years ended October 31, 1999 and 1998 were as follows:
1999 1998 ------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sold: Class A 7,243,646 $103,416,688 11,368,616 $156,555,432 - ------------------------------------------------------------------------------------------------------------------- Class B 3,045,028 43,081,822 4,734,982 66,433,513 - ------------------------------------------------------------------------------------------------------------------- Class C 2,148,542 29,835,245 1,685,991 25,251,599 - ------------------------------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A 5,672 76,739 -- -- - ------------------------------------------------------------------------------------------------------------------- Reacquired: Class A (7,125,444) (101,043,812) (5,452,530) (74,527,663) - ------------------------------------------------------------------------------------------------------------------- Class B (2,797,703) (39,103,849) (841,453) (10,996,608) - ------------------------------------------------------------------------------------------------------------------- Class C (2,160,106) (30,081,700) (937,724) (12,702,987) - ------------------------------------------------------------------------------------------------------------------- 359,635 $ 6,181,133 10,557,882 $150,013,286 ===================================================================================================================
NOTE 8-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of Class A, Class B and Class C capital stock outstanding during the year ended October 31, 1999 and the period November 3, 1997 (date operations commenced) through October 31, 1998.
CLASS A CLASS B CLASS C ----------------------- ----------------------- ----------------------- 1999 1998 1999 1998 1999 1998 --------- --------- --------- --------- --------- --------- Net asset value, beginning of period $ 12.96 $ 10.00 $ 12.87 $ 10.00 $ 12.88 $10.00 - ------------------------------------------------ ------- ------- ------- ------- ------- ------ Income from investment operations: Net investment income (loss) (0.11) (0.08)(a) (0.22) (0.18)(a) (0.23) (0.18)(a) - ------------------------------------------------ ------- ------- ------- ------- ------- ------ Net gains on securities (both realized and unrealized) 3.58 3.04 3.55 3.05 3.56 3.06 - ------------------------------------------------ ------- ------- ------- ------- ------- ------ Total from investment operations 3.47 2.96 3.33 2.87 3.33 2.88 - ------------------------------------------------ ------- ------- ------- ------- ------- ------ Less distributions: Dividends from net investment income (0.01) -- -- -- -- -- - ------------------------------------------------ ------- ------- ------- ------- ------- ------ Net asset value, end of period $ 16.42 $ 12.96 $ 16.20 $ 12.87 $ 16.21 $12.88 ================================================ ======= ======= ======= ======= ======= ====== Total return(b) 26.81% 29.60% 25.87% 28.70% 25.85% 28.80% ================================================ ======= ======= ======= ======= ======= ====== Ratios/supplemental data: Net assets, end of period (000s omitted) $99,148 $76,686 $67,074 $50,121 $11,938 $9,639 ================================================ ======= ======= ======= ======= ======= ====== Ratio of expenses to average net assets 1.88%(c) 1.98%(d) 2.63%(c) 2.72%(d) 2.63%(c) 2.72%(d) ================================================ ======= ======= ======= ======= ======= ====== Ratio of net investment income (loss) to average net assets (0.69)%(c) (0.58)%(e) (1.44)%(c) (1.32)%(e) (1.44)%(c) (1.32)%(e) ================================================ ======= ======= ======= ======= ======= ====== Portfolio turnover rate 122% 93% 122% 93% 122% 93% ================================================ ======= ======= ======= ======= ======= ======
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and is not annualized for periods less than one year. (c) Ratios are based on average net assets of $94,875,922, $62,512,593 and $11,842,849, for Class A, Class B and Class C shares, respectively. (d) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.15% (annualized), 2.89% (annualized) and 2.89% (annualized) for Class A, Class B and Class C, respectively, for 1998. (e) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.75)% (annualized), (1.49)% (annualized) and (1.49)% (annualized) for Class A, Class B and Class C, respectively, for 1998. FS-17 216 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of the AIM Global Aggressive Growth Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1999, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Aggressive Growth Fund as of October 31, 1999, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended in conformity with generally accepted accounting principles. /s/ KPMG LLP KPMG LLP December 3, 1999 Houston, Texas FS-18 217 SCHEDULE OF INVESTMENTS October 31, 1999
MARKET SHARES VALUE DOMESTIC COMMON STOCKS-33.56% BROADCASTING (TELEVISION, RADIO & CABLE)-1.41% Hispanic Broadcasting Corp.(a) 144,100 $ 11,672,100 - --------------------------------------------------------------- UnitedGlobalCom Inc.-Class A(a) 157,100 13,667,700 - --------------------------------------------------------------- 25,339,800 - --------------------------------------------------------------- COMMUNICATIONS EQUIPMENT-10.15% ANTEC Corp.(a) 125,000 6,062,500 - --------------------------------------------------------------- Comverse Technology, Inc.(a) 150,000 17,025,000 - --------------------------------------------------------------- Dycom Industries, Inc.(a) 210,800 6,864,175 - --------------------------------------------------------------- Harmonic, Inc.(a) 500,000 29,687,500 - --------------------------------------------------------------- JDS Uniphase Corp.(a) 734,994 122,652,124 - --------------------------------------------------------------- 182,291,299 - --------------------------------------------------------------- COMPUTERS (NETWORKING)-1.49% Emulex Corp.(a) 171,200 26,696,500 - --------------------------------------------------------------- COMPUTERS (PERIPHERALS)-0.92% Network Appliance, Inc.(a) 82,300 6,090,200 - --------------------------------------------------------------- QLogic Corp.(a) 100,000 10,412,500 - --------------------------------------------------------------- 16,502,700 - --------------------------------------------------------------- COMPUTERS (SOFTWARE & SERVICES)-1.86% Citrix Systems, Inc.(a) 231,600 14,851,350 - --------------------------------------------------------------- Concord Communications, Inc.(a) 88,400 4,591,275 - --------------------------------------------------------------- VERITAS Software Corp.(a) 129,100 13,926,662 - --------------------------------------------------------------- 33,369,287 - --------------------------------------------------------------- DISTRIBUTORS (FOOD & HEALTH)-0.34% Patterson Dental Co.(a) 133,550 6,018,097 - --------------------------------------------------------------- ELECTRICAL EQUIPMENT-1.39% Cree Research, Inc.(a) 150,000 6,403,125 - --------------------------------------------------------------- Sanmina Corp.(a) 136,700 12,311,544 - --------------------------------------------------------------- Sawtek, Inc.(a) 150,000 6,150,000 - --------------------------------------------------------------- 24,864,669 - --------------------------------------------------------------- ELECTRONICS (COMPONENT DISTRIBUTORS)-0.22% Power-One, Inc.(a) 200,000 4,000,000 - --------------------------------------------------------------- ELECTRONICS (INSTRUMENTATION)-0.38% Alpha Industries, Inc.(a) 125,000 6,906,250 - --------------------------------------------------------------- ELECTRONICS (SEMICONDUCTORS)-4.68% ANADIGICS, Inc.(a) 200,000 7,700,000 - --------------------------------------------------------------- Dallas Semiconductor Corp. 115,000 6,770,625 - --------------------------------------------------------------- Micrel, Inc.(a) 195,800 10,646,625 - --------------------------------------------------------------- Microchip Technology, Inc.(a) 225,000 14,990,625 - --------------------------------------------------------------- PMC-Sierra, Inc.(a) 154,700 14,580,475 - ---------------------------------------------------------------
MARKET SHARES VALUE ELECTRONICS (SEMICONDUCTORS)-(CONTINUED) SDL, Inc.(a) 130,000 $ 16,030,625 - --------------------------------------------------------------- Semtech Corp.(a) 200,000 7,662,500 - --------------------------------------------------------------- Vitesse Semiconductor Corp.(a) 122,000 5,596,750 - --------------------------------------------------------------- 83,978,225 - --------------------------------------------------------------- HEALTH CARE (DRUGS-GENERIC & OTHER)-0.76% Alpharma, Inc.-Class A 250,000 8,796,875 - --------------------------------------------------------------- Medicis Pharmaceutical Corp.-Class A(a) 160,100 4,883,050 - --------------------------------------------------------------- 13,679,925 - --------------------------------------------------------------- HEALTH CARE (HOSPITAL MANAGEMENT)-0.18% Province Healthcare Co.(a) 201,800 3,254,025 - --------------------------------------------------------------- HEALTH CARE (MANAGED CARE)-0.22% Express Scripts, Inc.-Class A(a) 80,000 3,930,000 - --------------------------------------------------------------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.13% ResMed, Inc.(a) 80,000 2,770,000 - --------------------------------------------------------------- Sybron International Corp.(a) 344,300 8,198,644 - --------------------------------------------------------------- VISX, Inc.(a) 150,000 9,384,375 - --------------------------------------------------------------- 20,353,019 - --------------------------------------------------------------- HEALTH CARE (SPECIALIZED SERVICES)-0.18% Advance Paradigm, Inc.(a) 75,000 3,196,875 - --------------------------------------------------------------- RESTAURANTS-0.95% CEC Entertainment, Inc.(a) 450,000 14,428,125 - --------------------------------------------------------------- Papa John's International, Inc.(a) 68,200 2,548,975 - --------------------------------------------------------------- 16,977,100 - --------------------------------------------------------------- RETAIL (COMPUTERS & ELECTRONICS)-1.18% CDW Computer Centers, Inc.(a) 343,000 21,180,250 - --------------------------------------------------------------- RETAIL (SPECIALTY)-0.82% Footstar, Inc.(a) 94,500 3,307,500 - --------------------------------------------------------------- O'Reilly Automotive, Inc.(a) 217,300 9,479,712 - --------------------------------------------------------------- Tuesday Morning Corp.(a) 86,300 1,984,900 - --------------------------------------------------------------- 14,772,112 - --------------------------------------------------------------- RETAIL (SPECIALTY-APPAREL)-2.26% American Eagle Outfitters, Inc.(a) 130,000 5,565,625 - --------------------------------------------------------------- AnnTaylor Stores Corp.(a) 128,900 5,486,306 - --------------------------------------------------------------- Men's Wearhouse, Inc. (The)(a) 410,000 8,994,375 - --------------------------------------------------------------- Pacific Sunwear of California(a) 414,750 12,520,266 - ---------------------------------------------------------------
FS-19 218
MARKET SHARES VALUE RETAIL (SPECIALTY-APPAREL)-(CONTINUED) Too Inc.(a) 500,000 $ 8,000,000 - --------------------------------------------------------------- 40,566,572 - --------------------------------------------------------------- SERVICES (COMPUTER SYSTEMS)-0.83% Insight Enterprises, Inc.(a) 400,000 14,950,000 - --------------------------------------------------------------- SERVICES (DATA PROCESSING)-1.54% Affiliated Computer Services, Inc.-Class A(a) 149,100 5,665,800 - --------------------------------------------------------------- Concord EFS, Inc.(a) 599,407 16,221,452 - --------------------------------------------------------------- NOVA Corp.(a) 221,500 5,759,000 - --------------------------------------------------------------- 27,646,252 - --------------------------------------------------------------- TELECOMMUNICATIONS (CELLULAR/ WIRELESS)-0.36% Powerwave Technologies, Inc.(a) 100,000 6,506,250 - --------------------------------------------------------------- TEXTILES (APPAREL)-0.31% Quicksilver, Inc.(a) 400,000 5,650,000 - --------------------------------------------------------------- Total Domestic Common Stocks (Cost $240,178,870) 602,629,207 - --------------------------------------------------------------- FOREIGN STOCKS & OTHER EQUITY INTERESTS-62.47% AUSTRALIA-1.34% Brambles Industries Ltd. (Air Freight) 235,000 6,610,877 - --------------------------------------------------------------- ERG Ltd. (Electrical Equipment) 3,098,000 12,213,004 - --------------------------------------------------------------- TABCORP Holdings Ltd. (Leisure Time Products) 828,000 5,250,121 - --------------------------------------------------------------- 24,074,002 - --------------------------------------------------------------- BELGIUM-0.34% UCB S.A. (Manufacturing-Diversified) 165,000 6,153,703 - --------------------------------------------------------------- BRAZIL-1.53% Companhia Brasileira de Distribuicao Grupo Pao de Acucar-Pfd. GDR (Retail-Food Chains) 277,419 6,068,541 - --------------------------------------------------------------- Embratel Participacoes S.A.-ADR (Telephone) 285,200 3,671,950 - --------------------------------------------------------------- Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 70,200 11,166,547 - --------------------------------------------------------------- Tele Centro Sul Participacoes S.A.-ADR (Telephone) 63,700 3,806,075 - --------------------------------------------------------------- Telesp Participacoes S.A.-ADR (Telephone) 170,800 2,764,825 - --------------------------------------------------------------- 27,477,938 - --------------------------------------------------------------- CANADA-4.10% Biovail Corp. International (Health Care- Drugs-Generic & Other)(a) 114,300 6,307,931 - --------------------------------------------------------------- Celestica Inc. (Electronics- Semiconductors)(a) 134,000 7,453,750 - --------------------------------------------------------------- Cinar Films, Inc.-Class B (Entertainment)(a) 126,000 2,189,250 - --------------------------------------------------------------- C-MAC Industries, Inc. (Electronics- Component Distributors)(a) 309,200 9,807,539 - ---------------------------------------------------------------
MARKET SHARES VALUE CANADA-(CONTINUED) Dorel Industries Inc. (Household Furniture & Appliances)(a) 151,400 $ 2,699,348 - --------------------------------------------------------------- Four Seasons Hotels, Inc. (Lodging-Hotels) 185,900 7,749,706 - --------------------------------------------------------------- Intertape Polymer Group, Inc. (Chemicals- Specialty) 100,000 2,699,857 - --------------------------------------------------------------- Onex Corp. (Investments) 138,000 2,601,032 - --------------------------------------------------------------- Research in Motion Ltd. (Communications Equipment) 500,000 15,502,955 - --------------------------------------------------------------- Rogers Cantel Mobile Communications Inc. (Telecommunications- Cellular/Wireless)(a) 95,200 2,715,751 - --------------------------------------------------------------- Sears Canada, Inc. (Retail-Department Stores) 323,000 7,130,001 - --------------------------------------------------------------- Shaw Communications, Inc. (Broadcasting- Television, Radio & Cable) 223,000 6,778,000 - --------------------------------------------------------------- 73,635,120 - --------------------------------------------------------------- CHILE-0.07% Madeco S.A.-ADR (Metal Fabricators) 129,000 1,273,875 - --------------------------------------------------------------- DENMARK-0.67% Vestas Wind Systems A/S (Manufacturing- Specialized)(a) 92,500 12,107,501 - --------------------------------------------------------------- FINLAND-0.98% JOT Automation Group Oyj (Manufacturing- Specialized)(a) 1,553,000 8,005,785 - --------------------------------------------------------------- Sonera Oyj (Telecommunications-Cellular/ Wireless) 320,000 9,611,529 - --------------------------------------------------------------- 17,617,314 - --------------------------------------------------------------- FRANCE-4.89% Altran Technologies, S.A. (Services- Commercial & Consumer) 54,900 18,823,184 - --------------------------------------------------------------- Bertrand Faure S.A. (Auto Parts & Equipment)(a) 100,000 6,038,767 - --------------------------------------------------------------- Business Objects S.A.-ADR (Computers- Software & Services)(a) 100,000 7,200,000 - --------------------------------------------------------------- Galeries Lafayette (Retail-Department Stores) 70,000 10,310,090 - --------------------------------------------------------------- GFI Informatique (Computers-Software & Services) 67,000 5,991,425 - --------------------------------------------------------------- Havas Advertising S.A. (Services-Advertising/ Marketing) 44,000 12,336,338 - --------------------------------------------------------------- M6 Metropole Television (Broadcasting- Television, Radio & Cable) 22,000 6,017,726 - --------------------------------------------------------------- NRJ S.A. (Broadcasting-Television, Radio & Cable)(a) 11,000 3,425,475 - --------------------------------------------------------------- Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable) 56,500 17,713,366 - --------------------------------------------------------------- 87,856,371 - --------------------------------------------------------------- GERMANY-2.18% EM.TV & Merchandising A.G. (Broadcasting- Television, Radio & Cable) 170,000 8,405,879 - ---------------------------------------------------------------
FS-20 219
MARKET SHARES VALUE GERMANY-(CONTINUED) EM.TV & Merchandising A.G.-Rts., expiring 11/12/99 (Broadcasting-Television, Radio & Cable) 170,000 $ 1,788 - --------------------------------------------------------------- Kamps A.G. (Retail-Food Chains) 70,000 3,917,834 - --------------------------------------------------------------- Marschollek, Lautenschlaeger and Partner A.G. (Services-Commercial & Consumer) 30,000 6,328,081 - --------------------------------------------------------------- Porsche A.G.-Pfd. (Automobiles) 6,270 17,084,556 - --------------------------------------------------------------- PrimaCom A.G. (Broadcasting-Television, Radio, & Cable)(a) 67,000 3,334,052 - --------------------------------------------------------------- 39,072,190 - --------------------------------------------------------------- GREECE-1.05% M.J. Maillis S.A. (Containers & Packaging- Paper) 210,000 7,935,132 - --------------------------------------------------------------- Panafon Hellenic Telecom S.A.-GDR (Telecommunications-Cellular/Wireless) (Acquired 11/20/98-04/23/99; Cost $3,591,542)(a)(b) 341,200 4,265,000 - --------------------------------------------------------------- Titan Cement (Construction-Cement & Aggregates) 60,000 6,652,436 - --------------------------------------------------------------- 18,852,568 - --------------------------------------------------------------- HONG KONG-2.99% China Telecom Ltd. (Telecommunications- Cellular/Wireless)(a) 3,428,000 11,716,301 - --------------------------------------------------------------- Cosco Pacific Ltd. (Financial-Diversified) 12,224,000 8,654,883 - --------------------------------------------------------------- Dao Heng Bank Group Ltd. (Banks- Regional)(a) 3,047,000 13,846,256 - --------------------------------------------------------------- Esprit Holdings Ltd. (Retail-Stores) 3,506,000 3,294,731 - --------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 1,615,000 16,216,321 - --------------------------------------------------------------- 53,728,492 - --------------------------------------------------------------- HUNGARY-0.51% Magyar Tavkozlesi Rt-ADR (Telecommunications-Long Distance) 320,000 9,220,000 - --------------------------------------------------------------- INDONESIA-0.55% Gulf Indonesia Resources Ltd. (Oil- International Integrated)(a) 606,600 4,814,887 - --------------------------------------------------------------- PT Indofood Sukses Makmur Tbk (Foods)(a) 4,247,000 5,018,337 - --------------------------------------------------------------- 9,833,224 - --------------------------------------------------------------- IRELAND-0.96% CRH PLC (Construction-Cement & Aggregates) 490,000 9,253,306 - --------------------------------------------------------------- Esat Telecom Group PLC-ADR (Telecommunications-Long Distance)(a) 110,500 4,944,875 - --------------------------------------------------------------- Ryanair Holdings PLC-ADR (Airlines)(a) 72,200 2,978,250 - --------------------------------------------------------------- 17,176,431 - --------------------------------------------------------------- ISRAEL-0.79% Orbotech, Ltd. (Computers-Software & Services)(a) 138,000 10,781,250 - ---------------------------------------------------------------
MARKET SHARES VALUE ISRAEL-(CONTINUED) Partner Communications Co. Ltd.-ADR (Telecommunications- Cellular/Wireless)(a) 215,000 $ 3,386,250 - --------------------------------------------------------------- 14,167,500 - --------------------------------------------------------------- ITALY-1.47% Banca Popolare di Brescia (Banks- Regional) 314,000 13,296,334 - --------------------------------------------------------------- Gruppo Editoriale L'Espresso (Publishing) 600,000 13,034,899 - --------------------------------------------------------------- 26,331,233 - --------------------------------------------------------------- JAPAN-9.55% Bellsystem 24, Inc. (Services-Commercial & Consumer) 42,000 40,285,838 - --------------------------------------------------------------- Circle K Japan Co. Ltd. (Retail-Food Chains) 244,200 9,790,955 - --------------------------------------------------------------- Hokuto Corp. (Agricultural Products) 240,750 14,201,837 - --------------------------------------------------------------- Orix Corp. (Financial-Diversified) 27,600 3,706,297 - --------------------------------------------------------------- Sanix Inc. (Services-Commercial & Consumer) 108,600 10,104,264 - --------------------------------------------------------------- Shohkoh Fund & Co. Ltd. (Financial- Diversified) 20,600 12,606,398 - --------------------------------------------------------------- Softbank Corp. (Computers-Software & Services)(a) 68,000 28,242,291 - --------------------------------------------------------------- Trend Micro Inc. (Computers-Software & Services)(a) 115,650 22,962,496 - --------------------------------------------------------------- Yahoo Japan Corp. (Computers-Software & Services)(a) 5,600 29,542,948 - --------------------------------------------------------------- 171,443,324 - --------------------------------------------------------------- MEXICO-6.02% Cemex S.A. de C.V.-ADR (Construction- Cement & Aggregates)(a) 259,400 5,836,500 - --------------------------------------------------------------- Cifra S.A. de C.V. (Retail-General Merchandise)(a) 5,300,000 8,102,964 - --------------------------------------------------------------- Coca-Cola Femsa S.A.-ADR (Beverages- Non-Alcoholic) 566,300 7,857,412 - --------------------------------------------------------------- Controladora Comercial Mexicana S.A. de C.V. (Retail-Department Stores)(c) 5,079,000 4,204,768 - --------------------------------------------------------------- Corporacion Interamericana de Entretenimiento S.A. (Entertainment)(a) 3,288,144 8,891,497 - --------------------------------------------------------------- Fomento Economico Mexicano, S.A. de C.V.-ADR (Beverages-Non-Alcoholic) 446,880 14,663,250 - --------------------------------------------------------------- Grupo Financiero Banamex Accival, S.A. de C.V. (Banacci) (Financial-Diversified)(a) 2,368,000 5,923,079 - --------------------------------------------------------------- Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic) 3,161,000 7,725,793 - --------------------------------------------------------------- Grupo Televisa S.A.-GDR (Entertainment)(a) 323,000 13,727,500 - --------------------------------------------------------------- Kimberly-Clark de Mexico, S.A. de C.V.- Class A (Paper & Forest Products) 2,014,000 6,451,503 - --------------------------------------------------------------- Organizacion Soriana S.A. de C.V. (Retail- Department Stores) 1,776,000 6,575,725 - --------------------------------------------------------------- Telefonos de Mexico S.A.-ADR (Telephone) 142,000 12,141,000 - ---------------------------------------------------------------
FS-21 220
MARKET SHARES VALUE MEXICO-(CONTINUED) Tubos de Acero de Mexico S.A.-ADR (Oil & Gas-Drilling & Equipment) 541,800 $ 5,925,937 - --------------------------------------------------------------- 108,026,928 - --------------------------------------------------------------- NETHERLANDS-2.43% CMG PLC (Computers-Software & Services) 267,000 10,308,933 - --------------------------------------------------------------- Draka Holding N.V. (Metal Fabricators)(a) 21,573 777,334 - --------------------------------------------------------------- Getronics N.V. (Computers-Software & Services) 300,000 14,960,151 - --------------------------------------------------------------- Gucci Group N.V.-New York Shares (Textiles) 118,000 9,528,500 - --------------------------------------------------------------- Nutreco Holding N.V. (Agricultural Products) 235,000 8,035,032 - --------------------------------------------------------------- 43,609,950 - --------------------------------------------------------------- NORWAY-1.45% Merkantildata A.S.A (Services-Commercial & Consumer) 872,000 7,387,477 - --------------------------------------------------------------- Tomra Systems A.S.A. (Manufacturing- Specialized) 486,000 18,574,431 - --------------------------------------------------------------- 25,961,908 - --------------------------------------------------------------- PHILIPPINES-0.35% International Container Terminal Services, Inc. (Air Freight)(a) 6,112,500 586,861 - --------------------------------------------------------------- SM Prime Holdings, Inc. (Land Development) 32,000,000 5,665,835 - --------------------------------------------------------------- 6,252,696 - --------------------------------------------------------------- SINGAPORE-1.98% Datacraft Asia Ltd. (Communications Equipment) 834,500 3,838,700 - --------------------------------------------------------------- DBS Group Holdings Ltd. (Banks-Money Center)(a) 640,813 7,245,615 - --------------------------------------------------------------- Keppel Corp. Ltd. (Engineering & Construction) 1,939,000 5,271,113 - --------------------------------------------------------------- Keppel Land Ltd. (Land Development) 3,413,000 4,823,811 - --------------------------------------------------------------- NatSteel Ltd. (Iron & Steel) 3,946,000 6,597,630 - --------------------------------------------------------------- Singapore Press Holdings Ltd. (Publishing- Newspapers) 459,000 7,867,625 - --------------------------------------------------------------- 35,644,494 - --------------------------------------------------------------- SOUTH AFRICA-0.41% Dimension Data Holdings Ltd. (Computers- Software & Services)(a) 1,519,563 7,372,076 - --------------------------------------------------------------- SOUTH KOREA-2.80% Hyundai Motor Co. Ltd. (Automobiles)(a) 213,000 3,746,811 - --------------------------------------------------------------- Korea Electric Power Corp.-ADR (Electric Companies) 486,600 7,663,950 - --------------------------------------------------------------- Korea Telecom Corp.-ADR (Telephone)(a) 274,500 9,676,125 - --------------------------------------------------------------- L.G. Chemical Ltd. (Chemicals-Specialty) 357,000 10,803,752 - --------------------------------------------------------------- Pohang Iron & Steel Co. Ltd.-ADR (Iron & Steel) 301,900 10,075,913 - ---------------------------------------------------------------
MARKET SHARES VALUE SOUTH KOREA-(CONTINUED) Samsung Electronics (Electronics-Component Distributors) 50,000 $ 8,336,807 - --------------------------------------------------------------- 50,303,358 - --------------------------------------------------------------- SPAIN-1.27% Cortefiel S.A. (Retail-Department Stores) 155,000 4,048,972 - --------------------------------------------------------------- Mapfre Vida S.A. (Insurance-Life/Health) 158,000 4,125,677 - --------------------------------------------------------------- NH Hotels S.A. (Investment Management)(a) 1,287,000 14,555,375 - --------------------------------------------------------------- 22,730,024 - --------------------------------------------------------------- SWEDEN-2.15% Assa Abloy A.B.-Class B (Metal Fabricators) 920,000 10,235,895 - --------------------------------------------------------------- Europolitan Holdings A.B. (Telecommunications- Cellular/Wireless) 484,200 5,563,825 - --------------------------------------------------------------- Framtidsfabriken A.B. (Computers-Software & Services)(a) 86,000 3,461,333 - --------------------------------------------------------------- Modern Times Group A.B.-Class B (Broadcasting-Television, Radio & Cable)(a) 469,000 15,169,504 - --------------------------------------------------------------- NetCom A.B. (Telecommunications-Cellular/ Wireless)(a) 102,600 4,260,445 - --------------------------------------------------------------- 38,691,002 - --------------------------------------------------------------- SWITZERLAND-0.73% Kudelski S.A. (Electronics-Component Distributors)(a) 1,220 5,072,998 - --------------------------------------------------------------- PubliGroupe S.A. (Services-Advertising/ Marketing) 11,000 8,065,849 - --------------------------------------------------------------- 13,138,847 - --------------------------------------------------------------- TAIWAN-1.45% Compal Electronics, Inc. (Computers- Hardware) 2,801,000 9,404,366 - --------------------------------------------------------------- Far Eastern Textile Ltd. (Chemicals- Diversified) 5,641,040 7,718,195 - --------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co. (Electronics-Semiconductors)(a) 2,021,000 8,983,638 - --------------------------------------------------------------- 26,106,199 - --------------------------------------------------------------- THAILAND-0.70% Advanced Info Service Public Co. Ltd. (Telephone)(a) 569,000 6,632,561 - --------------------------------------------------------------- Siam Commercial Bank PLC, 5.25% Pfd. (Banks-Regional)(a) 5,189,000 5,880,553 - --------------------------------------------------------------- 12,513,114 - --------------------------------------------------------------- UNITED KINGDOM-6.76% Aggreko PLC (Services-Facilities & Environmental) 1,000,000 5,022,726 - --------------------------------------------------------------- AMEC PLC (Construction-Cement & Aggregates) 678,000 2,391,031 - --------------------------------------------------------------- ARM Holdings PLC (Electronics- Semiconductors)(a) 112,000 3,181,925 - ---------------------------------------------------------------
FS-22 221
MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) Avis Europe PLC (Services-Commercial & Consumer)(c) 1,484,550 $ 6,345,947 - --------------------------------------------------------------- Cattles PLC (Consumer Finance) 1,020,000 4,779,399 - --------------------------------------------------------------- Compass Group PLC (Services-Commercial & Consumer) 670,000 7,182,086 - --------------------------------------------------------------- Eidos PLC-ADR (Computer Software/ Services)(a) 216,000 15,079,500 - --------------------------------------------------------------- Iceland Group PLC (Retail-Food Chains) 862,000 4,102,835 - --------------------------------------------------------------- J.D. Wetherspoon PLC (Leisure Time- Products) 1,000,000 5,622,822 - --------------------------------------------------------------- Logica PLC (Computer Software & Services) 775,000 11,856,222 - --------------------------------------------------------------- Matalan PLC (Retail-Discounters) 160,000 3,603,867 - --------------------------------------------------------------- Mayflower Corp. PLC (The) (Auto Parts & Equipment) 2,240,000 7,733,846 - --------------------------------------------------------------- Nestor Healthcare Group PLC (Services- Commercial & Consumer) 300,000 2,935,952 - --------------------------------------------------------------- Pace Micro Technology PLC (Communications Equipment) 1,360,000 6,109,804 - --------------------------------------------------------------- Provident Financial PLC (Consumer Finance) 964,912 10,779,668 - --------------------------------------------------------------- Sage Group PLC (The) (Computers-Software & Services) 369,150 18,941,958 - --------------------------------------------------------------- Stagecoach Holdings PLC (Shipping) 1,980,000 5,631,700 - --------------------------------------------------------------- 121,301,288 - --------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests (Cost $778,989,784) 1,121,672,670 - ---------------------------------------------------------------
PRINCIPAL MARKET AMOUNT VALUE U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES-0.27% MANUFACTURING (DIVERSIFIED)-0.27% Shanghai Industrial Investment Trust Co. (United Kingdom), Conv. Gtd. Bonds, 1.00%, 02/24/03 (Acquired 03/05/98- 03/09/98; Cost $5,218,750)(b) $ 5,000,000 $ 4,762,500 - ---------------------------------------------------------------
SHARES MONEY MARKET FUNDS-4.34% STIC Liquid Assets Portfolio(d) 38,938,805 38,938,805 - --------------------------------------------------------------- STIC Prime Portfolio(d) 38,938,805 38,938,805 - --------------------------------------------------------------- Total Money Market Funds (Cost $77,877,610) 77,877,610 - --------------------------------------------------------------- TOTAL INVESTMENTS-100.64% 1,806,941,987 - --------------------------------------------------------------- LIABILITIES LESS OTHER ASSETS-(0.64%) (11,446,930) - --------------------------------------------------------------- NET ASSETS-100.00% $1,795,495,057 ===============================================================
Investment Abbreviations: ADR - American Depositary Receipt Conv. - Convertible GDR - Global Depositary Receipt Gtd. - Guaranteed Pfd. - Preferred Rts. - Rights Notes to Schedule of Investments: (a) Non-income producing security. (b) Restricted security. May be resold to qualified institutional buyers in accordance with the provisions of Rule 144A under the Securities Act of 1933, as amended. The valuation of this security has been determined in accordance with procedures established by the Board of Directors. The aggregate market value of these securities at 10/31/99 was $9,027,500, which represented 0.50% of the Fund's net assets. (c) Represents a security sold under Rule 144A, which is exempt from registration and may be resold to qualified institutional buyers in accordance with the provisions of Rule 144A under the Securities Act of 1933, as amended. (d) The security shares the same investment advisor as the Fund. See Notes to Financial Statements. FS-23 222 STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 ASSETS: Investments, at market value (cost $1,102,265,014)) $ 1,806,941,987 - ------------------------------------------------------------ Foreign currencies, at value (cost $12,540,812)) 12,603,459 - ------------------------------------------------------------ Receivables for: Investments sold 2,533,659 - ------------------------------------------------------------ Capital stock sold 1,489,698 - ------------------------------------------------------------ Dividends and interest 1,340,732 - ------------------------------------------------------------ Foreign exchange contracts 11,893 - ------------------------------------------------------------ Investment for deferred compensation plan 36,447 - ------------------------------------------------------------ Other assets 46,712 - ------------------------------------------------------------ Total assets 1,825,004,587 - ------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 22,853,421 - ------------------------------------------------------------ Capital stock reacquired 2,845,059 - ------------------------------------------------------------ Deferred compensation 36,447 - ------------------------------------------------------------ Foreign exchange contracts 1,869 - ------------------------------------------------------------ Accrued advisory fees 1,282,152 - ------------------------------------------------------------ Accrued administrative services fees 12,779 - ------------------------------------------------------------ Accrued directors' fees 4,950 - ------------------------------------------------------------ Accrued distribution fees 1,364,737 - ------------------------------------------------------------ Accrued transfer agent fees 671,017 - ------------------------------------------------------------ Accrued operating expenses 437,099 - ------------------------------------------------------------ Total liabilities 29,509,530 - ------------------------------------------------------------ Net assets applicable to shares outstanding $ 1,795,495,057 ============================================================ NET ASSETS: Class A $ 852,198,373 ============================================================ Class B $ 926,971,942 ============================================================ Class C $ 16,324,742 ============================================================ CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 38,827,789 ============================================================ Class B: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 43,427,805 ============================================================ Class C: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 764,714 ============================================================ Class A: Net asset value and redemption price per share $ 21.95 - ------------------------------------------------------------ Offering price per share: (Net asset value $21.95 / 95.25%) $ 23.04 ============================================================ Class B: Net asset value and offering price per share $ 21.35 ============================================================ Class C: Net asset value and offering price per share $ 21.35 ============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 1999 INVESTMENT INCOME: Dividends (net of $1,233,796 foreign withholding tax) $ 9,907,460 - ------------------------------------------------------------- Interest 5,073,170 - ------------------------------------------------------------- Total investment income 14,980,630 - ------------------------------------------------------------- EXPENSES: Advisory fees 15,416,368 - ------------------------------------------------------------- Administrative services fees 127,117 - ------------------------------------------------------------- Custodian fees 1,206,826 - ------------------------------------------------------------- Directors' fees 25,466 - ------------------------------------------------------------- Distribution fees-Class A 4,209,929 - ------------------------------------------------------------- Distribution fees-Class B 8,987,826 - ------------------------------------------------------------- Distribution fees-Class C 140,985 - ------------------------------------------------------------- Transfer agent fees-Class A 2,565,991 - ------------------------------------------------------------- Transfer agent fees-Class B 3,267,402 - ------------------------------------------------------------- Transfer agent fees-Class C 64,107 - ------------------------------------------------------------- Other 830,046 - ------------------------------------------------------------- Total expenses 36,842,063 - ------------------------------------------------------------- Less: Expenses paid indirectly (61,092) - ------------------------------------------------------------- Net expenses 36,780,971 - ------------------------------------------------------------- Net investment income (loss) (21,800,341) - ------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities 197,468,014 - ------------------------------------------------------------- Foreign currencies (1,896,989) - ------------------------------------------------------------- 195,571,025 - ------------------------------------------------------------- Change in net unrealized appreciation of: Investment securities 394,282,624 - ------------------------------------------------------------- Foreign currencies 8,398 - ------------------------------------------------------------- 394,291,022 - ------------------------------------------------------------- Net gain from investment securities and foreign currencies 589,862,047 - ------------------------------------------------------------- Net increase in net assets resulting from operations $ 568,061,706 =============================================================
See Notes to Financial Statements. FS-24 223 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 1999 and 1998
1999 1998 -------------- -------------- OPERATIONS: Net investment income (loss) $ (21,800,341) $ (19,250,738) - ---------------------------------------------------------------------------------------------- Net realized gain from investment securities and foreign currencies 195,571,025 8,287,562 - ---------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) of investment securities and foreign currencies 394,291,022 (163,765,028) - ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 568,061,706 (174,728,204) - ---------------------------------------------------------------------------------------------- Share transactions-net: Class A (361,902,444) (230,924,075) - ---------------------------------------------------------------------------------------------- Class B (307,272,112) (195,608,768) - ---------------------------------------------------------------------------------------------- Class C (1,457,883) 10,146,858 - ---------------------------------------------------------------------------------------------- Net increase (decrease) in net assets (102,570,733) (591,114,189) - ---------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 1,898,065,790 2,489,179,979 - ---------------------------------------------------------------------------------------------- End of period $1,795,495,057 $1,898,065,790 ============================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $ 992,683,210 $1,684,292,210 - ---------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (13,357,764) (10,598,077) - ---------------------------------------------------------------------------------------------- Undistributed net realized gain (loss) from investment securities and foreign currencies 111,551,104 (85,955,828) - ---------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 704,618,507 310,327,485 - ---------------------------------------------------------------------------------------------- $1,795,495,057 $1,898,065,790 ==============================================================================================
See Notes to Financial Statements. FS-25 224 NOTES TO FINANCIAL STATEMENTS October 31, 1999 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Global Aggressive Growth Fund (the "Fund") is a series portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is above-average long-term growth of capital. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of trading of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions, Investment Income and Distributions -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. The Fund may elect to use a portion of the proceeds of capital stock redemptions as distributions for Federal income tax purposes. Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. On October 31, 1999, undistributed net investment income was increased by $19,040,654, undistributed net realized gains increased by $1,935,907 and paid-in capital decreased by $20,976,561 as a result of differing book/tax treatment of foreign currency transactions and net operating loss reclassifications in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassification discussed above. C. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for that portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such FS-26 225 fluctuations are included with the net realized and unrealized gain or loss from investments. E. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. F. Bond Premiums -- It is the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. G. Expenses -- Distribution expenses and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.90% of the first $1 billion of the Fund's average daily net assets, plus 0.85% of the Fund's average daily net assets in excess of $1 billion. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1999, AIM was paid $127,117 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended October 31, 1999, AFS was paid $3,367,288 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class A, Class B or Class C shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own the appropriate class of shares of the Fund. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. The Plans also impose a cap on the total sales charges, including asset-based sales charges that may be paid by the respective classes. During the year ended October 31, 1999, the Class A, Class B and Class C shares paid AIM Distributors $4,209,929, $8,987,826 and $140,985, respectively, as compensation under the Plans. AIM Distributors received commissions of $267,534 from sales of the Class A shares of the Fund during the year ended October 31, 1999. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 1999, AIM Distributors received $101,594 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 1999, the Fund paid legal fees of $6,959 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES During the year ended October 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $21,196 and $39,896, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $61,092 during the year ended October 31, 1999. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid to directors who are not an "interested person" of AIM. The Company invests directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 1999, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. Prior to May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated among the funds based on their respective average net assets for the period. FS-27 226 NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1999 was $980,253,634 and $1,451,494,862, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 1999 is as follows: Aggregate unrealized appreciation of investment securities $727,202,713 - -------------------------------------------------------------------------- Aggregate unrealized appreciation (depreciation) of investment securities (35,792,955) - -------------------------------------------------------------------------- Net unrealized appreciation of investment securities $691,409,758 ==========================================================================
Cost of investments for tax purposes is $1,115,532,229. NOTE 7-CAPITAL STOCK Changes in capital stock outstanding during the years ended October 31, 1999 and 1998 were as follows:
1999 1998 ----------------------------- ------------------------------ SHARES AMOUNT SHARES AMOUNT ----------- --------------- ------------ --------------- Sold: Class A 44,392,973 $ 788,784,876 98,887,924 $ 1,735,509,689 - --------------------------------------------------------------------------------------------------------------------- Class B 2,884,425 50,807,802 8,273,209 143,682,325 - --------------------------------------------------------------------------------------------------------------------- Class C 812,924 14,207,396 839,541 14,593,832 - --------------------------------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Reacquired: Class A (64,640,003) (1,150,687,320) (111,697,312) (1,966,433,764) - --------------------------------------------------------------------------------------------------------------------- Class B (20,494,580) (358,079,914) (20,304,373) (339,291,093) - --------------------------------------------------------------------------------------------------------------------- Class C (897,630) (15,665,279) (265,144) (4,446,974) - --------------------------------------------------------------------------------------------------------------------- (37,941,891) $ (670,632,439) (24,266,155) $ (416,385,985) =====================================================================================================================
FS-28 227 NOTE 8-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of Class A and Class B capital stock outstanding during each of the years in the five-year period ended October 31, 1999 and for a share of Class C capital stock outstanding during each of the years in the two-year period ended October 31, 1999 and the period August 4, 1997 (date sales commenced) through October 31, 1997.
CLASS A ---------------------------------------------------------- 1999 1998 1997 1996 1995 -------- -------- ---------- -------- -------- Net asset value, beginning of period $ 15.87 $ 17.28 $ 15.76 $ 13.09 $ 10.22 - ------------------------------------------------------------ -------- -------- ---------- -------- -------- Income from investment operations: Net investment income (loss) (0.17)(a) (0.10)(a) (0.15)(a) (0.09)(a) (0.09)(a) - ------------------------------------------------------------ -------- -------- ---------- -------- -------- Net gains (losses) on securities (both realized and unrealized) 6.25 (1.31) 1.67 2.81 2.96 - ------------------------------------------------------------ -------- -------- ---------- -------- -------- Total from investment operations 6.08 (1.41) 1.52 2.72 2.87 - ------------------------------------------------------------ -------- -------- ---------- -------- -------- Less distributions: Distributions from net realized gains -- -- -- (0.05) -- - ------------------------------------------------------------ -------- -------- ---------- -------- -------- Net asset value, end of period $ 21.95 $ 15.87 $ 17.28 $ 15.76 $ 13.09 ============================================================ ======== ======== ========== ======== ======== Total return(b) 38.31% (8.16)% 9.65% 20.83% 28.08% ============================================================ ======== ======== ========== ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted) $852,198 $937,587 $1,242,505 $919,319 $186,029 ============================================================ ======== ======== ========== ======== ======== Ratio of expenses to average net assets 1.80%(c) 1.75% 1.75% 1.83% 2.11% ============================================================ ======== ======== ========== ======== ======== Ratio of net investment income (loss) to average net assets (0.95)%(c) (0.55)% (0.88)% (0.62)% (0.68)% ============================================================ ======== ======== ========== ======== ======== Portfolio turnover rate 60% 50% 57% 44% 64% ============================================================ ======== ======== ========== ======== ========
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and is not annualized for periods less than one year. (c) Ratios are based on average net assets of $841,985,823.
CLASS B CLASS C ------------------------------------------------------- ----------------------------- 1999 1998 1997 1996 1995 1999 1998 1997 -------- -------- ---------- -------- -------- ------- ------- ------- Net asset value, beginning of period $ 15.52 $ 17.00 $ 15.58 $ 13.02 $ 10.21 $ 15.52 $ 17.00 $ 18.39 - ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- ------- Income from investment operations: Net investment income (loss) (0.27)(a) (0.19)(a) (0.24)(a) (0.17)(a) (0.14)(a) (0.27)(a) (0.19)(a) (0.04)(a) - ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- ------- Net gains (losses) on securities (both realized and unrealized) 6.10 (1.29) 1.66 2.78 2.95 6.10 (1.29) (1.35) - ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- ------- Total from investment operations 5.83 (1.48) 1.42 2.61 2.81 5.83 (1.48) (1.39) - ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- ------- Less distributions: Distributions from net realized gains -- -- -- (0.05) -- -- -- -- - ------------------------------------- -------- -------- ---------- -------- -------- ------- ------- ------- Net asset value, end of period $ 21.35 $ 15.52 $ 17.00 $ 15.58 $ 13.02 $ 21.35 $ 15.52 $ 17.00 ===================================== ======== ======== ========== ======== ======== ======= ======= ======= Total return(b) 37.56% (8.71)% 9.11% 20.09% 27.52% 37.56% (8.71)% (7.56)% ===================================== ======== ======== ========== ======== ======== ======= ======= ======= Ratios/supplemental data: Net assets, end of period (000s omitted) $926,972 $947,293 $1,241,999 $807,215 $118,199 $16,325 $13,186 $ 4,676 ===================================== ======== ======== ========== ======== ======== ======= ======= ======= Ratio of expenses to average net assets 2.37%(c) 2.32% 2.30% 2.37% 2.62% 2.37%(c) 2.34% 2.36%(d) ===================================== ======== ======== ========== ======== ======== ======= ======= ======= Ratio of net investment income (loss) to average net assets (1.52)%(c) (1.11)% (1.44)% (1.16)% (1.19)% (1.52)%(c) (1.13)% (1.50)%(d) ===================================== ======== ======== ========== ======== ======== ======= ======= ======= Portfolio turnover rate 60% 50% 57% 44% 64% 60% 50% 57% ===================================== ======== ======== ========== ======== ======== ======= ======= =======
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average net assets of $898,782,589 and $14,098,451 for Class B and Class C, respectively. (d) Annualized. FS-29 228 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of AIM Global Growth Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1999, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Growth Fund as of October 31, 1999, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended in conformity with generally accepted accounting principles. /s/ KPMG LLP KPMG LLP December 3, 1999 Houston, Texas FS-30 229 SCHEDULE OF INVESTMENTS October 31, 1999
MARKET SHARES VALUE DOMESTIC COMMON STOCKS-37.74% BANKS (MONEY CENTER)-0.54% Chase Manhattan Corp. (The) 52,500 $ 4,587,187 - -------------------------------------------------------------- BROADCASTING (TELEVISION, RADIO & CABLE)-2.63% Adelphia Communications Corp.(a) 64,500 3,523,312 - -------------------------------------------------------------- AT&T Corp. - Liberty Media Group-Class A(a) 107,300 4,258,469 - -------------------------------------------------------------- Clear Channel Communications, Inc.(a) 57,000 4,581,375 - -------------------------------------------------------------- Comcast Corp.-Class A 115,700 4,873,862 - -------------------------------------------------------------- Infinity Broadcasting Corp.-Class A(a) 145,000 5,011,562 - -------------------------------------------------------------- 22,248,580 - -------------------------------------------------------------- COMMUNICATIONS EQUIPMENT-2.85% Comverse Technology, Inc.(a) 61,800 7,014,300 - -------------------------------------------------------------- General Instrument Corp.(a) 91,500 4,923,844 - -------------------------------------------------------------- JDS Uniphase Corp.(a) 47,192 7,875,165 - -------------------------------------------------------------- Motorola, Inc. 43,600 4,248,275 - -------------------------------------------------------------- 24,061,584 - -------------------------------------------------------------- COMPUTERS (HARDWARE)-1.48% Dell Computer Corp.(a) 93,500 3,751,687 - -------------------------------------------------------------- Sun Microsystems, Inc.(a) 83,000 8,782,437 - -------------------------------------------------------------- 12,534,124 - -------------------------------------------------------------- COMPUTERS (NETWORKING)-1.11% Cisco Systems, Inc.(a) 126,900 9,390,600 - -------------------------------------------------------------- COMPUTERS (PERIPHERALS)-1.71% EMC Corp.(a) 131,400 9,592,200 - -------------------------------------------------------------- Lexmark International Group, Inc.-Class A(a) 62,000 4,839,875 - -------------------------------------------------------------- 14,432,075 - -------------------------------------------------------------- COMPUTERS (SOFTWARE & SERVICES)-4.82% America Online, Inc.(a)(b) 64,000 8,300,000 - -------------------------------------------------------------- Intuit, Inc.(a) 127,500 3,713,437 - -------------------------------------------------------------- Microsoft Corp.(a) 87,600 8,108,475 - -------------------------------------------------------------- Novell, Inc.(a) 188,500 3,781,781 - -------------------------------------------------------------- Unisys Corp.(a) 108,000 2,619,000 - -------------------------------------------------------------- VERITAS Software Corp.(a) 91,000 9,816,625 - -------------------------------------------------------------- Yahoo! Inc.(a) 24,500 4,387,031 - -------------------------------------------------------------- 40,726,349 - -------------------------------------------------------------- ELECTRICAL EQUIPMENT-1.17% Conexant Systems, Inc.(a) 53,000 4,948,875 - -------------------------------------------------------------- Sanmina Corp.(a) 55,000 4,953,438 - -------------------------------------------------------------- 9,902,313 - -------------------------------------------------------------- ELECTRONICS (SEMICONDUCTORS)-2.94% Intel Corp. 116,000 8,982,750 - --------------------------------------------------------------
MARKET SHARES VALUE ELECTRONICS (SEMICONDUCTORS)-(CONTINUED) LSI Logic Corp.(a) 71,000 $ 3,776,313 - -------------------------------------------------------------- Texas Instruments, Inc. 62,000 5,564,500 - -------------------------------------------------------------- Xilinx, Inc.(a) 82,500 6,486,563 - -------------------------------------------------------------- 24,810,126 - -------------------------------------------------------------- ENTERTAINMENT-0.63% Time Warner Inc. 76,500 5,331,094 - -------------------------------------------------------------- FINANCIAL (DIVERSIFIED)-1.57% Fannie Mae 100,000 7,075,000 - -------------------------------------------------------------- Freddie Mac 115,000 6,217,188 - -------------------------------------------------------------- 13,292,188 - -------------------------------------------------------------- HEALTH CARE (DIVERSIFIED)-3.43% American Home Products Corp. 125,500 6,557,375 - -------------------------------------------------------------- Bristol-Myers Squibb Co. 113,600 8,725,900 - -------------------------------------------------------------- Johnson & Johnson 84,000 8,799,000 - -------------------------------------------------------------- Warner-Lambert Co. 62,000 4,948,375 - -------------------------------------------------------------- 29,030,650 - -------------------------------------------------------------- HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-1.04% Pfizer, Inc. 222,900 8,804,550 - -------------------------------------------------------------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-0.90% Guidant Corp. 154,400 7,623,500 - -------------------------------------------------------------- INSURANCE (MULTI-LINE)-1.08% American International Group, Inc. 88,750 9,135,703 - -------------------------------------------------------------- INVESTMENT BANKING/BROKERAGE-0.57% Morgan Stanley, Dean Witter, Discover & Co. 44,000 4,853,750 - -------------------------------------------------------------- LODGING-HOTELS-0.48% Carnival Corp. 90,600 4,031,700 - -------------------------------------------------------------- MANUFACTURING (DIVERSIFIED)-0.80% Tyco International Ltd. 170,000 6,789,375 - -------------------------------------------------------------- RETAIL (BUILDING SUPPLIES)-1.56% Home Depot, Inc. (The) 114,000 8,607,000 - -------------------------------------------------------------- Lowe's Companies, Inc. 82,900 4,559,500 - -------------------------------------------------------------- 13,166,500 - -------------------------------------------------------------- RETAIL (COMPUTERS & ELECTRONICS)-0.49% Best Buy Co., Inc.(a) 75,200 4,178,300 - -------------------------------------------------------------- RETAIL (FOOD CHAINS)-0.31% Kroger Co. (The)(a) 125,000 2,601,563 - --------------------------------------------------------------
FS-31 230
MARKET SHARES VALUE RETAIL (GENERAL MERCHANDISE)-2.15% Costco Wholesale Corp.(a) 54,000 $ 4,336,875 - -------------------------------------------------------------- Dayton Hudson Corp. 68,900 4,452,663 - -------------------------------------------------------------- Wal-Mart Stores, Inc. 164,900 9,347,769 - -------------------------------------------------------------- 18,137,307 - -------------------------------------------------------------- RETAIL (SPECIALTY-APPAREL)-0.72% Gap, Inc. (The) 75,750 2,812,219 - -------------------------------------------------------------- Intimate Brands, Inc. 79,170 3,245,970 - -------------------------------------------------------------- 6,058,189 - -------------------------------------------------------------- SERVICES (ADVERTISING/MARKETING)-0.63% Outdoor Systems, Inc.(a) 125,000 5,296,875 - -------------------------------------------------------------- SERVICES (DATA PROCESSING)-0.74% Fiserv, Inc.(a) 195,000 6,240,000 - -------------------------------------------------------------- TELECOMMUNICATIONS (CELLULAR/ WIRELESS)-0.57% Nextel Communications, Inc.-Class A(a) 55,600 4,792,025 - -------------------------------------------------------------- TELECOMMUNICATIONS (LONG DISTANCE)-0.82% MCI WorldCom, Inc.(a)(b) 80,400 6,899,325 - -------------------------------------------------------------- Total Domestic Common Stocks (Cost $227,333,243) 318,955,532 - -------------------------------------------------------------- FOREIGN STOCKS & OTHER EQUITY INTERESTS-54.81% AUSTRALIA-2.04% AMP Ltd. (Insurance-Life/Health) 201,840 2,053,107 - -------------------------------------------------------------- Austar United Communications Ltd. (Broadcasting-Television, Radio, & Cable)(a) 514,100 1,672,516 - -------------------------------------------------------------- Brambles Industries Ltd. (Air Freight) 102,000 2,869,402 - -------------------------------------------------------------- Cable & Wireless Optus Ltd. (Telephone)(a) 701,800 1,607,165 - -------------------------------------------------------------- Foster's Brewing Group Ltd. (Beverages- Alcoholic) 950,000 2,525,829 - -------------------------------------------------------------- TABCORP Holdings Ltd. (Leisure Time Products) 361,000 2,289,002 - -------------------------------------------------------------- Telstra Corp. Ltd. (Telephone)(a) 1,315,900 4,222,245 - -------------------------------------------------------------- 17,239,266 - -------------------------------------------------------------- BELGIUM-0.27% UCB S.A. (Manufacturing-Diversified) 60,300 2,248,899 - -------------------------------------------------------------- BRAZIL-0.96% Embratel Participacoes S.A.-ADR (Telephone) 134,100 1,726,538 - -------------------------------------------------------------- Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 21,286 3,385,834 - -------------------------------------------------------------- Tele Centro Sul Participacoes S.A.-ADR (Telephone) 28,900 1,726,775 - -------------------------------------------------------------- Telesp Participacoes S.A.-ADR (Telephone) 79,200 1,282,050 - -------------------------------------------------------------- 8,121,197 - -------------------------------------------------------------- CANADA-3.08% BCE, Inc. (Telephone) 110,330 6,639,434 - -------------------------------------------------------------- Bombardier Inc. (Aerospace/Defense) 111,360 1,962,774 - --------------------------------------------------------------
MARKET SHARES VALUE CANADA-(CONTINUED) Loblaw Co. Ltd. (Retail-Food Chains) 43,000 $ 1,001,766 - -------------------------------------------------------------- Nortel Networks Corp. (Communications Equipment) 218,092 13,508,073 - -------------------------------------------------------------- Toronto-Dominion Bank (The) (Banks-Regional) 126,440 2,898,424 - -------------------------------------------------------------- 26,010,471 - -------------------------------------------------------------- FINLAND-1.34% Nokia Oyj (Communications Equipment) 99,200 11,355,777 - -------------------------------------------------------------- FRANCE-6.33% Accor S.A. (Lodging-Hotels) 13,000 2,926,803 - -------------------------------------------------------------- Alstom (Engineering & Construction) 23,650 716,572 - -------------------------------------------------------------- AXA (Insurance-Multi-Line) 63,080 8,899,320 - -------------------------------------------------------------- Banque Nationale de Paris (Banks-Major Regional) 69,560 6,110,580 - -------------------------------------------------------------- Carrefour Supermarche S.A. (Retail-Food Chains) 70,020 12,964,959 - -------------------------------------------------------------- Pinault-Printemps-Redoute S.A. (Retail-General Merchandise) 25,320 4,829,452 - -------------------------------------------------------------- PSA Peugeot Citreon (Automobiles) 10,000 1,919,991 - -------------------------------------------------------------- Renault S.A. (Automobiles) 35,000 1,811,630 - -------------------------------------------------------------- Societe Television Francaise 1 (Broadcasting- Television, Radio & Cable) 17,170 5,382,982 - -------------------------------------------------------------- Total Fina S.A.-Class B (Oil & Gas-Refining & Marketing) 58,469 7,904,363 - -------------------------------------------------------------- 53,466,652 - -------------------------------------------------------------- GERMANY-1.62% Deutsche Bank A.G. (Banks-Major Regional)(a) 22,000 1,578,496 - -------------------------------------------------------------- EM.TV & Merchandising A.G. (Broadcasting- Television, Radio & Cable) 50,000 2,472,318 - -------------------------------------------------------------- EM.TV & Merchandising A.G.-Rts., expiring 11/12/99 (Broadcasting-Television, Radio & Cable) 50,000 526 - -------------------------------------------------------------- Mannesmann A.G. (Machinery-Diversified) 61,060 9,603,607 - -------------------------------------------------------------- 13,654,947 - -------------------------------------------------------------- HONG KONG-1.95% China Telecom Ltd. (Telecommunications- Cellular/Wireless)(a) 1,496,000 5,113,065 - -------------------------------------------------------------- Cosco Pacific Ltd. (Financial-Diversified) 5,219,000 3,695,176 - -------------------------------------------------------------- Dao Heng Bank Group Ltd. (Banks-Regional)(a) 828,000 3,762,619 - -------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 392,000 3,936,098 - -------------------------------------------------------------- 16,506,958 - -------------------------------------------------------------- INDONESIA-0.11% Gulf Indonesia Resources Ltd. (Oil- International Integrated)(a) 122,200 969,963 - -------------------------------------------------------------- IRELAND-0.58% Bank of Ireland (Banks-Major Regional) 180,484 1,410,795 - --------------------------------------------------------------
FS-32 231
MARKET SHARES VALUE IRELAND-(CONTINUED) CRH PLC (Construction-Cement & Aggregates) 186,000 $ 3,512,479 - -------------------------------------------------------------- 4,923,274 - -------------------------------------------------------------- ITALY-0.91% Banca Popolare di Brescia (Banks-Regional) 143,000 6,055,337 - -------------------------------------------------------------- Credito Italiano S.p.A. (Banks-Major Regional) 345,200 1,616,096 - -------------------------------------------------------------- 7,671,433 - -------------------------------------------------------------- JAPAN-17.16% Advantest Corp. (Electronics-Instrumentation) 46,900 7,062,779 - -------------------------------------------------------------- Alps Electric Co., Ltd. (Electronics-Component Distributors) 207,000 4,010,743 - -------------------------------------------------------------- DDI Corp. (Telecommunications) 6,300 6,888,878 - -------------------------------------------------------------- Hirose Electric Co. Ltd. (Electronics- Component Distributors) 36,800 6,420,718 - -------------------------------------------------------------- Hoya Corp. (Manufacturing-Specialized) 50,000 3,596,950 - -------------------------------------------------------------- Ibiden Co., Ltd. (Electronics-Component Distributors) 153,000 2,568,222 - -------------------------------------------------------------- Kirin Brewery Co., Ltd. (Beverages-Alcoholic) 361,000 4,134,420 - -------------------------------------------------------------- Kyocera Corp. (Electronics-Component Distributors) 57,300 5,496,139 - -------------------------------------------------------------- Matsushita Communication Industrial Co., Ltd. (Telephone) 63,000 10,587,118 - -------------------------------------------------------------- Murata Manufacturing Co., Ltd. (Electronics- Component Distributors) 65,000 8,354,515 - -------------------------------------------------------------- NEC Corp. (Computers-Hardware) 358,000 7,245,504 - -------------------------------------------------------------- Nippon Telegraph & Telephone Corp. (Telecommunications-Long Distance) 6,080 9,330,967 - -------------------------------------------------------------- NTT Data Corp. (Computers-Software & Services) 3,180 5,032,852 - -------------------------------------------------------------- NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) 4,250 11,292,024 - -------------------------------------------------------------- Okuma Corp. (Hardware & Tools) 582,000 2,372,548 - -------------------------------------------------------------- Omron Corp. (Electronics-Component Distributors) 13,000 271,833 - -------------------------------------------------------------- Orix Corp. (Financial-Diversified) 12,600 1,692,005 - -------------------------------------------------------------- Ricoh Co., Ltd. (Office Equipment & Supplies) 328,000 5,351,571 - -------------------------------------------------------------- Rohm Co. Ltd. (Electronics-Component Distributors) 15,000 3,366,745 - -------------------------------------------------------------- Sanix Inc. (Services-Commercial & Consumer) 51,100 4,754,400 - -------------------------------------------------------------- Sharp Corp. (Electrical Equipment) 185,000 2,945,662 - -------------------------------------------------------------- Sony Corp. (Electronics-Component Distributors) 63,300 9,872,505 - -------------------------------------------------------------- Takeda Chemical Industries Ltd. (Health Care- Drugs-Generic & Other) 94,000 5,400,796 - -------------------------------------------------------------- Tokyo Electron Ltd. (Electronics- Semiconductors) 44,000 3,654,885 - -------------------------------------------------------------- Trend Micro Inc. (Computers-Software & Services)(a) 52,650 10,453,743 - --------------------------------------------------------------
MARKET SHARES VALUE JAPAN-(CONTINUED) Ushio, Inc. (Electronics-Component Distributors) 235,000 $ 2,891,996 - -------------------------------------------------------------- 145,050,518 - -------------------------------------------------------------- MEXICO-2.42% Cifra S.A. de C.V. (Retail-General Merchandise)(a) 2,327,000 3,557,660 - -------------------------------------------------------------- Coca-Cola Femsa S.A.-ADR (Beverages- Non-Alcoholic) 174,900 2,426,738 - -------------------------------------------------------------- Fomento Economico Mexicano, S.A. de C.V.-ADR (Beverages-Non-Alcoholic) 111,590 3,661,547 - -------------------------------------------------------------- Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic) 445,440 1,088,699 - -------------------------------------------------------------- Grupo Televisa S.A.-GDR (Entertainment)(a) 105,200 4,471,000 - -------------------------------------------------------------- Kimberly-Clark de Mexico, S.A. de C.V.-Class A (Paper & Forest Products) 518,000 1,659,324 - -------------------------------------------------------------- Telefonos de Mexico S.A.-ADR (Telephone) 42,500 3,633,750 - -------------------------------------------------------------- 20,498,718 - -------------------------------------------------------------- NETHERLANDS-2.47% Aegon N.V. (Insurance Brokers) 52,200 4,818,968 - -------------------------------------------------------------- Equant N.V. (Computers-Networking)(a) 8,500 827,174 - -------------------------------------------------------------- Getronics N.V. (Computers-Software & Services) 47,560 2,371,683 - -------------------------------------------------------------- Koninklijke (Royal) Philips Electronics N.V. (Electrical Equipment) 46,560 4,775,886 - -------------------------------------------------------------- Koninklijke Ahold N.V. (Retail-Food Chains) 152,200 4,675,563 - -------------------------------------------------------------- Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing) 101,830 3,444,238 - -------------------------------------------------------------- 20,913,512 - -------------------------------------------------------------- NEW ZEALAND-0.30% Auckland International Airport Ltd. (Airlines) 1,800,000 2,502,004 - -------------------------------------------------------------- SINGAPORE-1.44% Allgreen Properties Ltd. (Homebuilding)(a) 1,020,000 864,979 - -------------------------------------------------------------- DBS Group Holdings Ltd. (Banks-Money Center)(a) 280,283 3,169,135 - -------------------------------------------------------------- Keppel Corp. Ltd. (Engineering & Construction) 782,600 2,127,475 - -------------------------------------------------------------- NatSteel Ltd. (Iron & Steel) 1,553,000 2,596,584 - -------------------------------------------------------------- Singapore Press Holdings Ltd. (Publishing- Newspapers) 200,000 3,428,159 - -------------------------------------------------------------- 12,186,332 - -------------------------------------------------------------- SOUTH KOREA-1.35% Korea Electric Power Corp.-ADR (Electric Companies) 131,000 2,063,250 - -------------------------------------------------------------- Korea Telecom Corp.-ADR (Telephone)(a) 122,200 4,307,550 - -------------------------------------------------------------- L.G. Chemical Ltd. (Chemicals-Specialty) 167,000 5,053,856 - -------------------------------------------------------------- 11,424,656 - --------------------------------------------------------------
FS-33 232
MARKET SHARES VALUE SPAIN-1.04% Banco Popular Espanol S.A. (Banks-Major Regional) 26,000 $ 1,750,611 - -------------------------------------------------------------- Telefonica S.A. (Telephone)(a) 430,380 7,081,499 - -------------------------------------------------------------- 8,832,110 - -------------------------------------------------------------- SWEDEN-0.66% Hennes & Mauritz A.B.-Class B (Retail- Specialty-Apparel) 210,640 5,596,406 - -------------------------------------------------------------- SWITZERLAND-1.78% ABB Ltd. (Electrical Equipment)(a) 32,420 3,263,901 - -------------------------------------------------------------- Adecco S.A. (Services-Commercial & Consumer) 6,600 3,999,738 - -------------------------------------------------------------- Compagnie Financiere Richemont A.G. (Tobacco) 2,000 3,819,768 - -------------------------------------------------------------- Zurich Allied A.G. (Insurance-Multi-Line) 6,960 3,939,517 - -------------------------------------------------------------- 15,022,924 - -------------------------------------------------------------- UNITED KINGDOM-7.00% Barclays PLC (Banks-Major Regional) 225,500 6,906,971 - -------------------------------------------------------------- BP Amoco PLC (Oil & Gas-Refining & Marketing) 220,000 2,135,850 - -------------------------------------------------------------- British Sky Broadcasting Group PLC (Broadcasting-Television, Radio & Cable) 440,000 4,727,445 - -------------------------------------------------------------- British Telecommunications PLC (Communications Equipment) 116,000 2,104,547 - -------------------------------------------------------------- Compass Group PLC (Services-Commercial & Consumer) 288,800 3,095,801 - -------------------------------------------------------------- General Electric Co. PLC (Manufacturing- Diversified) 367,100 3,992,477 - --------------------------------------------------------------
MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) Granada Group PLC (Leisure Time-Products) 270,000 $ 2,135,193 - -------------------------------------------------------------- Hays PLC (Services-Commercial & Consumer) 461,300 5,282,419 - -------------------------------------------------------------- Invensys PLC (Electronics-Component Distributors) 290,000 1,425,599 - -------------------------------------------------------------- Orange PLC (Telephone)(a) 450,300 11,230,931 - -------------------------------------------------------------- Provident Financial PLC (Consumer Finance) 202,478 2,262,015 - -------------------------------------------------------------- Shell Transport & Trading Co. (Oil- International Integrated) 458,000 3,512,735 - -------------------------------------------------------------- Vodafone AirTouch PLC (Telecommunications- Cellular/Wireless) 1,361,500 6,334,791 - -------------------------------------------------------------- WPP Group PLC (Services-Advertising/ Marketing) 366,600 3,981,012 - -------------------------------------------------------------- 59,127,786 - -------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests (Cost $332,274,553) 463,323,803 - -------------------------------------------------------------- MONEY MARKET FUNDS-6.14% STIC Liquid Assets Portfolio(c) 25,959,462 25,959,462 - -------------------------------------------------------------- STIC Prime Portfolio(c) 25,959,462 25,959,462 - -------------------------------------------------------------- Total Money Market Funds (Cost $51,918,924) 51,918,924 - -------------------------------------------------------------- TOTAL INVESTMENTS-98.69% 834,198,259 - -------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-1.31% 11,052,814 - -------------------------------------------------------------- NET ASSETS-100.00% $845,251,073 ==============================================================
Investment Abbreviations: ADR - American Depositary Receipt Pfd. - Preferred Rts. - Rights Notes to Schedule of Investments: (a) Non-Income producing security. (b) A portion of this security is subject to call options written. See Note 7. (c) The security shares the same investment advisor as the Fund. See Notes to Financial Statements. FS-34 233 STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 ASSETS: Investments, at market value (cost $611,526,720) $834,198,259 - ------------------------------------------------------- Foreign currencies, at value (cost $13,236,307) 13,245,860 - ------------------------------------------------------- Receivables for: Investments sold 8,377,903 - ------------------------------------------------------- Capital stock sold 1,986,057 - ------------------------------------------------------- Dividends and interest 1,081,214 - ------------------------------------------------------- Investment for deferred compensation plan 23,205 - ------------------------------------------------------- Other assets 38,824 - ------------------------------------------------------- Total assets 858,951,322 - ------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 8,594,115 - ------------------------------------------------------- Capital stock reacquired 1,016,512 - ------------------------------------------------------- Deferred compensation 23,205 - ------------------------------------------------------- Options written (premiums received $1,753,505) 2,674,700 - ------------------------------------------------------- Accrued advisory fees 581,419 - ------------------------------------------------------- Accrued administrative services fees 10,970 - ------------------------------------------------------- Accrued directors' fees 2,400 - ------------------------------------------------------- Accrued distribution fees 612,902 - ------------------------------------------------------- Accrued transfer agent fees 223,736 - ------------------------------------------------------- Accrued operating expenses (39,710) - ------------------------------------------------------- Total liabilities 13,700,249 - ------------------------------------------------------- Net assets applicable to shares outstanding $845,251,073 ======================================================= NET ASSETS: Class A $388,549,182 ======================================================= Class B $425,345,431 ======================================================= Class C $ 31,356,460 ======================================================= CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 200,000,000 - ------------------------------------------------------- Outstanding 16,580,603 ======================================================= Class B: Authorized 200,000,000 - ------------------------------------------------------- Outstanding 18,669,410 ======================================================= Class C: Authorized 200,000,000 - ------------------------------------------------------- Outstanding 1,375,854 ======================================================= Class A: Net asset value and redemption price per share $ 23.43 - ------------------------------------------------------- Offering price per share: (Net asset value $23.43 divided by 95.25%) $ 24.60 ======================================================= Class B: Net asset value and offering price per share $ 22.78 ======================================================= Class C: Net asset value and offering price per share $ 22.79 =======================================================
STATEMENT OF OPERATIONS For the year ended October 31, 1999 INVESTMENT INCOME: Dividends (net of $677,229 foreign withholding tax) $ 5,811,440 - -------------------------------------------------------- Interest 1,816,133 - -------------------------------------------------------- Total investment income 7,627,573 - -------------------------------------------------------- EXPENSES: Advisory fees 5,898,665 - -------------------------------------------------------- Administrative services fees 97,142 - -------------------------------------------------------- Custodian fees 341,569 - -------------------------------------------------------- Directors' fees 12,734 - -------------------------------------------------------- Distribution fees -- Class A 1,585,224 - -------------------------------------------------------- Distribution fees -- Class B 3,564,027 - -------------------------------------------------------- Distribution fees -- Class C 205,127 - -------------------------------------------------------- Transfer agent fees -- Class A 708,552 - -------------------------------------------------------- Transfer agent fees -- Class B 982,114 - -------------------------------------------------------- Transfer agent fees -- Class C 66,129 - -------------------------------------------------------- Other 237,509 - -------------------------------------------------------- Total expenses 13,698,792 - -------------------------------------------------------- Less: Expenses paid indirectly (12,008) - -------------------------------------------------------- Net expenses 13,686,784 - -------------------------------------------------------- Net investment income (loss) (6,059,211) - -------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN CURRENCIES, FUTURES AND OPTION CONTRACTS: Net realized gain (loss) from: Investment securities 63,517,124 - -------------------------------------------------------- Foreign currencies 162,721 - -------------------------------------------------------- Forward currency contacts 81,453 - -------------------------------------------------------- Futures contracts 2,042,833 - -------------------------------------------------------- Options contracts written (1,820,509) - -------------------------------------------------------- 63,983,622 - -------------------------------------------------------- Change in net unrealized appreciation (depreciation) of: Investment securities 142,665,744 - -------------------------------------------------------- Foreign currencies (114,912) - -------------------------------------------------------- Futures contracts (797,175) - -------------------------------------------------------- Options contracts written (921,195) - -------------------------------------------------------- 140,832,462 - -------------------------------------------------------- Net gain from investment securities, foreign currencies, futures and option contracts 204,816,084 - -------------------------------------------------------- Net increase in net assets resulting from operations $198,756,873 ========================================================
See Notes to Financial Statements. FS-35 234 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 1999 and 1998
1999 1998 ------------ ------------- OPERATIONS: Net investment income (loss) $ (6,059,211) $ (2,809,816) - ------------------------------------------------------------------------------------------- Net realized gain from investment securities, foreign currencies, futures and option contracts 63,983,622 18,919,692 - ------------------------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities, foreign currencies, futures and option contracts 140,832,462 20,734,353 - ------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 198,756,873 36,844,229 - ------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains: Class A (6,185,053) (4,566,706) - ------------------------------------------------------------------------------------------- Class B (7,892,012) (5,964,749) - ------------------------------------------------------------------------------------------- Class C (358,333) (47,034) - ------------------------------------------------------------------------------------------- Share transactions-net: Class A 84,229,840 27,194,800 - ------------------------------------------------------------------------------------------- Class B 49,286,118 44,408,521 - ------------------------------------------------------------------------------------------- Class C 14,141,472 11,162,365 - ------------------------------------------------------------------------------------------- Net increase in net assets 331,978,905 109,031,426 - ------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 513,272,168 404,240,742 - ------------------------------------------------------------------------------------------- End of period $845,251,073 $ 513,272,168 =========================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $568,723,576 $ 416,466,146 - ------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (806,662) (1,238,947) - ------------------------------------------------------------------------------------------- Undistributed net realized gain from investment securities, foreign currencies, futures and option contracts 55,673,261 17,216,533 - ------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities, foreign currencies, futures and option contracts 221,660,898 80,828,436 - ------------------------------------------------------------------------------------------- $845,251,073 $ 513,272,168 ===========================================================================================
NOTES TO FINANCIAL STATEMENTS October 31, 1999 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Global Growth Fund (the "Fund") is a series portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is to provide long-term growth of capital. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued FS-36 235 based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of trading of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions, Investment Income and Distributions -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. The Fund may elect to use a portion of the proceeds of capital stock redemptions as distributions for Federal income tax purposes. Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. On October 31, 1999, undistributed net investment income was increased by $6,491,496, undistributed net realized gains decreased by $11,091,496 and paid-in capital increased by $4,600,000 as a result of differing book/tax treatment of foreign currency transactions, equalization credits and net operating loss reclassifications in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassification discussed above. C. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Futures Contracts -- The Fund may purchase or sell futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in value of the contracts may not correlate with changes in the value of the securities being hedged. E. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for that portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. F. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. G. Covered Call Options -- The Fund may write call options, but only on a covered basis; that is, the Fund will own the underlying security. Options written by the Fund normally will have expiration dates between three and nine months from the date written. The exercise price of a call option may be below, equal to, or above the current market value of the underlying security at the time the option is written. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded as an asset and an equivalent liability. The amount of the liability is subsequently "marked-to-market" to reflect the current market value of the option written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction FS-37 236 exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. A call option gives the purchaser of such option the right to buy, and the writer (the Fund) the obligation to sell, the underlying security at the stated exercise price during the option period. The purchaser of a call option has the right to acquire the security which is the subject of the call option at any time during the option period. During the option period, in return for the premium paid by the purchaser of the option, the Fund has given up the opportunity for capital appreciation above the exercise price should the market price of the underlying security increase, but has retained the risk of loss should the price of the underlying security decline. During the option period, the Fund may be required at any time to deliver the underlying security against payment of the exercise price. This obligation is terminated upon the expiration of the option period or at such earlier time at which the Fund effects a closing purchase transaction by purchasing (at a price which may be higher than that received when the call option was written) a call option identical to the one originally written. H. Put Options -- The Fund may purchase put options. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option's underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option's underlying instrument may be a security or a futures contract. Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund's resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the securities hedged. I. Bond Premiums -- It is the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. J. Expenses -- Distribution expenses and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.85% of the first $1 billion of the Fund's average daily net assets, plus 0.80% of the Fund's average daily net assets in excess of $1 billion. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1999, AIM was paid $97,142 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended October 31, 1999, AFS was paid $931,153 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund , pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class A, Class B or Class C shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own the appropriate class of shares of the Fund. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. The Plans also impose a cap on the total sales charges, including asset-based sales charges that may be paid by the respective classes. During the year ended October 31, 1999, the Class A, Class B and Class C shares paid AIM Distributors $1,585,224, $3,564,027 and $205,127, respectively, as compensation under the Plans. AIM Distributors received commissions of $195,571 from sales of the Class A shares of the Fund during the year ended October 31, 1999. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 1999, AIM Distributors received $24,812 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 1999, the Fund paid legal fees of $3,064 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES During the year ended October 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $8,262 and $3,746, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $12,008 during the year ended October 31, 1999. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid to directors who are not an "interested person" of AIM. The Company invests directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. FS-38 237 NOTE 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 1999, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. Prior to May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1999 was $723,201,067 and $601,838,894, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 1999 is as follows: Aggregate unrealized appreciation of investment securities $233,438,852 - --------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (11,796,546) - --------------------------------------------------------- Net unrealized appreciation of investment securities $221,642,306 =========================================================
Cost of investments for tax purposes is $612,555,953. NOTE 7-OPTION CONTRACTS WRITTEN Transactions in call options written during the year ended October 31, 1999 are summarized as follows:
CALL OPTION CONTRACTS ----------------------- NUMBER OF PREMIUMS CONTRACTS RECEIVED --------- --------- Beginning of period -- -- - --------------------------------------------------------- ---------- ---------- Written 2,084 $2,630,916 - --------------------------------------------------------- ---------- ---------- Closed (640) (877,411) - --------------------------------------------------------- ---------- ---------- End of period 1,444 $1,753,505 ========================================================= ========== ==========
Open call option contracts written at October 31, 1999 were as follows:
OCTOBER 31, UNREALIZED CONTRACT STRIKE NUMBER OF PREMIUMS 1999 APPRECIATION ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION) - -------------------------------------------------- -------- ------ --------- -------- ------------ -------------- American Online, Inc. Apr-00 $130 640 $1,214,039 $1,328,000 $(113,961) - -------------------------------------------------- -------- ------ --------- ---------- ------------ -------------- MCI Worldcom, Inc. Dec-99 70 804 539,466 1,346,700 (807,234) - -------------------------------------------------- -------- ------ --------- ---------- ------------ -------------- 1,444 $1,753,505 $2,674,700 $(921,195) ================================================== ======== ====== ========= ========== ============ ==============
NOTE 8-CAPITAL STOCK Changes in capital stock outstanding during the years ended October 31, 1999 and 1998 were as follows:
1999 1998 ---------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ----------------------------------------------------------- Sold Class A 10,512,070 $ 211,966,029 14,601,141 $ 264,657,310 - ------------------------------------------------------------------------------------------------------------------------- Class B 4,204,829 83,820,436 4,603,864 82,487,081 - ------------------------------------------------------------------------------------------------------------------------- Class C 944,252 18,989,474 731,595 13,444,846 - ------------------------------------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A 314,736 5,777,296 265,883 4,315,756 - ------------------------------------------------------------------------------------------------------------------------- Class B 411,104 7,371,231 348,564 5,562,820 - ------------------------------------------------------------------------------------------------------------------------- Class C 37,653 676,846 2,787 44,837 - ------------------------------------------------------------------------------------------------------------------------- Issued in connection with acquisition*: Class A 3,763,754 73,826,199 -- -- - ------------------------------------------------------------------------------------------------------------------------- Class B 1,833,252 35,102,320 -- -- - ------------------------------------------------------------------------------------------------------------------------- Reacquired: Class A (10,242,303) (207,339,684) (13,382,242) (241,778,266) - ------------------------------------------------------------------------------------------------------------------------- Class B (3,903,318) (77,007,869) (2,513,498) (43,641,380) - ------------------------------------------------------------------------------------------------------------------------- Class C (277,476) (5,524,848) (130,050) (2,327,318) - ------------------------------------------------------------------------------------------------------------------------- 7,598,553 $ 147,657,430 4,528,044 $ 82,765,686 =========================================================================================================================
* The Fund acquired AIM Worldwide Growth Fund on February 12, 1999. The acquired fund's net assets as of the closing date were $109,306,659. The net assets of the Fund immediately prior to acquisition were $581,902,071. FS-39 238 NOTE 9-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of Class A and Class B capital stock outstanding during each of the years in the five year period ended October 31, 1999 and for a share of Class C capital stock outstanding during each of the years in the two-year period October 31, 1999 and the period August 4, 1997 (date sales commenced) through October 31, 1997.
CLASS A ------------------------------------------------------- 1999 1998 1997 1996 1995 --------- -------- -------- -------- ------- Net asset value, beginning of period $ 17.91 $ 16.65 $ 14.20 $ 12.32 $ 10.23 - ------------------------------------------------------------ -------- -------- -------- -------- ------- Income from investment operations: Net investment income (loss) (0.10) (0.05) (0.04) (0.01) (0.02) - ------------------------------------------------------------ -------- -------- -------- -------- ------- Net gains on securities (both realized and unrealized) 6.12 1.74 2.49 2.11 2.11 - ------------------------------------------------------------ -------- -------- -------- -------- ------- Total from investment operations 6.02 1.69 2.45 2.10 2.09 - ------------------------------------------------------------ -------- -------- -------- -------- ------- Less distributions: Dividends from net investment income - - - - (0.004) - ------------------------------------------------------------ -------- -------- -------- -------- ------- Distributions from net realized gains (0.50) (0.43) - (0.22) - - ------------------------------------------------------------ -------- -------- -------- -------- ------- Total distributions (0.50) (0.43) - (0.22) (0.004) - ------------------------------------------------------------ -------- -------- -------- -------- ------- Net asset value, end of period $ 23.43 $ 17.91 $ 16.65 $ 14.20 $ 12.32 ============================================================ ======== ======== ======== ======== ======= Total return(a) 34.43% 10.43% 17.25% 17.26% 20.48% ============================================================ ======== ======== ======== ======== ======= Ratios/supplemental data: Net assets, end of period (000s omitted) $388,549 $219,050 $178,917 $114,971 $23,754 ============================================================ ======== ======== ======== ======== ======= Ratio of expenses to average net assets(b) 1.67%(c) 1.70% 1.76% 1.93% 2.12% ============================================================ ======== ======== ======== ======== ======= Ratio of net investment income (loss) to average net assets(d) (0.57)%(c) (0.27)% (0.30)% (0.13)% (0.28)% ============================================================ ======== ======== ======== ======== ======= Portfolio turnover rate 93% 97% 96% 82% 79% ============================================================ ======== ======== ======== ======== =======
(a) Does not deduct sales charges. (b) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.94% and 2.98% for 1996-1995. (c) Ratios are based on average net assets of $317,044,851. (d) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.14)% and (1.14)% for 1996-1995.
CLASS B CLASS C ----------------------------------------------------- --------------------------- 1999 1998 1997 1996 1995 1999 1998 1997 -------- -------- -------- -------- ------- ------- ------- ------ Net asset value, beginning of period $ 17.52 $ 16.39 $ 14.05 $ 12.26 $ 10.22 $ 17.52 $ 16.39 $17.39 - ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------ Income from investment operations: Net investment income (loss) (0.23)(a) (0.15)(a) (0.11) (0.05) (0.04) (0.23)(a) (0.15)(a)(0.03) - ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------ Net gains (losses) on securities (both realized and unrealized) 5.99 1.71 2.45 2.06 2.08 6.00 1.71 (0.97) - ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------ Total from investment operations 5.76 1.56 2.34 2.01 2.04 5.77 1.56 (1.00) - ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------ Less distributions: Distributions from net realized gains (0.50) (0.43) - (0.22) - (0.50) (0.43) - - ----------------------------------------- -------- -------- -------- -------- ------- ------- ------- ------ Net asset value, end of period $ 22.78 $ 17.52 $ 16.39 $ 14.05 $ 12.26 $ 22.79 $ 17.52 $16.39 ========================================= ======== ======== ======== ======== ======= ======= ======= ====== Total return(b) 33.69% 9.78% 16.65% 16.60% 19.96% 33.69% 9.78% (5.75)% ========================================= ======== ======== ======== ======== ======= ======= ======= ====== Ratios/supplemental data: Net assets, end of period (000s omitted) $425,345 $282,456 $224,225 $121,848 $17,157 $31,356 $11,765 $1,100 ========================================= ======== ======== ======== ======== ======= ======= ======= ====== Ratio of expenses to average net assets 2.23%(c) 2.26% 2.29% 2.48%(d) 2.64%(d) 2.23%(c) 2.26% 2.29%(e) ========================================= ======== ======== ======== ======== ======= ======= ======= ====== Ratio of net investment income (loss) to average net assets (1.13)%(c) (0.83)% (0.83)% (0.69)%(f) (0.79)%(f) (1.13)%(c) (0.83)% (0.83)%(e) ========================================= ======== ======== ======== ======== ======= ======= ======= ====== Portfolio turnover rate 93% 97% 96% 82% 79% 93% 97% 96% ========================================= ======== ======== ======== ======== ======= ======= ======= ======
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) Ratios are based on average net assets of $356,402,709 and $20,512,721 for Class B and Class C, respectively. (d) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.49% and 3.38% for 1996-1995. (e) Annualized. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.69)% and (1.54)% for 1996-1995. FS-40 239 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of the AIM Global Income Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1999, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM Global Income Fund as of October 31, 1999, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended, in conformity with generally accepted accounting principles. /s/ KPMG LLP KPMG LLP December 3, 1999 Houston, Texas FS-41 240 SCHEDULE OF INVESTMENTS October 31, 1999
PRINCIPAL MARKET AMOUNT(a) VALUE U.S. DOLLAR DENOMINATED BONDS & NOTES-62.27% AIR FREIGHT-0.40% Atlas Air, Inc., Sr. Unsec. Notes, 10.75%, 08/01/05 $ 350,000 $ 350,000 - -------------------------------------------------------------- AIRLINES-3.80% Air 2 US, Series C, Equipment Trust, 10.127%, 10/01/20 (Acquired 10/28/99; Cost $450,000)(b) 450,000 457,920 - -------------------------------------------------------------- Airplanes Pass Through Trust, Series D Gtd. Sub. Bonds, 10.875%, 03/15/19 230,000 204,845 - -------------------------------------------------------------- Delta Air Lines, Inc., Deb., 9.00%, 05/15/16 550,000 583,297 - -------------------------------------------------------------- 10.375%, 12/15/22 1,000,000 1,208,370 - -------------------------------------------------------------- Dunlop Standard Aero Holdings (United Kingdom), Sr. Notes, 11.875%, 05/15/09(c) 530,000 537,950 - -------------------------------------------------------------- United Air Lines, Inc., Pass Through Ctfs., 9.56%, 10/19/18 300,000 329,784 - -------------------------------------------------------------- 3,322,166 - -------------------------------------------------------------- AUTO PARTS & EQUIPMENT-0.75% Advance Stores Co., Inc., Series B, Sr. Unsec. Gtd. Sub. Notes, 10.25%, 04/15/08 270,000 249,750 - -------------------------------------------------------------- Exide Corp., Sr. Notes, 10.00%, 04/15/05 430,000 402,050 - -------------------------------------------------------------- 651,800 - -------------------------------------------------------------- AUTOMOBILES-0.34% DaimlerChrysler N.A. Holdings (Germany), Gtd. Notes, 7.20%, 09/01/09 300,000 301,065 - -------------------------------------------------------------- BANKS (MAJOR REGIONAL)-2.55% Midland Bank PLC (United Kingdom), Sub. Notes, 7.65%, 05/01/25 280,000 283,480 - -------------------------------------------------------------- Regions Financial Corp., Sub. Notes, 7.75%, 09/15/24 500,000 497,940 - -------------------------------------------------------------- Republic New York Corp., Sub. Notes, 9.70%, 02/01/09 400,000 455,340 - -------------------------------------------------------------- Sub. Deb., 9.50%, 04/15/14 370,000 412,546 - -------------------------------------------------------------- Deutsche Bank Finance B.V. (Netherlands), Conv. Bonds, 4.50%, 02/12/17(e) 1,200,000 579,060 - -------------------------------------------------------------- 2,228,366 - -------------------------------------------------------------- BANKS (MONEY CENTER)-1.26% Capital One Financial Corp., Unsec. Notes, 7.25%, 05/01/06 600,000 570,000 - -------------------------------------------------------------- Riggs Capital Trust II, Series C Gtd. Bonds, 8.875%, 03/15/27 570,000 533,722 - -------------------------------------------------------------- 1,103,722 - -------------------------------------------------------------- BANKS (REGIONAL)-0.75% Mercantile Bancorp, Inc., Unsec. Sub. Notes, 7.30%, 06/15/07 660,000 654,562 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(a) VALUE BROADCASTING (TELEVISION, RADIO & CABLE)-5.94% British Sky Broadcasting (United Kingdom), Unsec. Gtd. Notes, 8.20%, 07/15/09 (Acquired 07/01/99-08/10/99; Cost $890,547)(b) $ 900,000 $ 877,254 - -------------------------------------------------------------- Comcast Cable Communications, Unsec. Notes, 8.50%, 05/01/27 500,000 540,710 - -------------------------------------------------------------- Cox Communications, Inc., Unsec. Notes, 7.75%, 08/15/06 400,000 409,744 - -------------------------------------------------------------- CSC Holdings, Inc., Sr. Unsec. Deb., 7.875%, 02/15/18 400,000 381,784 - -------------------------------------------------------------- 7.625%, 07/15/18 1,600,000 1,489,024 - -------------------------------------------------------------- Fox Family Worldwide, Inc., Sr. Unsec. Disc. Notes, 10.25%, 11/01/07(f) 940,000 618,050 - -------------------------------------------------------------- Knology Holdings, Inc., Sr. Disc. Notes, 11.875%, 10/15/07(f) 700,000 393,750 - -------------------------------------------------------------- USA Networks, Inc., Sr. Unsec. Gtd. Notes, 6.75%, 11/15/05 500,000 477,914 - -------------------------------------------------------------- 5,188,230 - -------------------------------------------------------------- CHEMICALS-1.63% Agrium, Inc. (Canada), Unsec. Notes, 7.00%, 02/01/04 350,000 337,536 - -------------------------------------------------------------- Airgas, Inc., Medium Term Notes, 7.14%, 03/08/04 500,000 474,010 - -------------------------------------------------------------- Nova Gas Transmission Ltd. (Canada), Yankee Deb., 8.50%, 12/15/12 450,000 482,634 - -------------------------------------------------------------- Sterling Chemicals, Inc., Sr. Unsec. Sub. Notes, 11.75%, 08/15/06 200,000 127,000 - -------------------------------------------------------------- 1,421,180 - -------------------------------------------------------------- COMMUNICATIONS EQUIPMENT-0.93% Dialog Corp. PLC (United Kingdom), Series A, Sr. Sub. Yankee Notes, 11.00%, 11/15/07 750,000 637,500 - -------------------------------------------------------------- ProNet, Inc., Sr. Sub. Notes, 11.875%, 06/15/05 250,000 171,250 - -------------------------------------------------------------- 808,750 - -------------------------------------------------------------- COMPUTERS (NETWORKING)-0.33% Exodus Communications, Sr. Unsec. Notes, 11.25%, 07/01/08 280,000 290,500 - -------------------------------------------------------------- CONSTRUCTION (CEMENT & AGGREGATES)-0.34% Schuff Steel Co., Sr. Unsec. Gtd. Sub. Notes, 10.50%, 06/01/08 350,000 299,250 - -------------------------------------------------------------- CONSUMER FINANCE-1.25% Countrywide Capital, Gtd. Notes, 8.05%, 06/15/27 350,000 332,052 - -------------------------------------------------------------- MBNA Capital I, Series A Bonds, 8.278%, 12/01/26 835,000 757,161 - -------------------------------------------------------------- 1,089,213 - --------------------------------------------------------------
FS-42 241
PRINCIPAL MARKET AMOUNT(a) VALUE DISTRIBUTORS (FOOD & HEALTH)-0.26% Fleming Companies, Inc., Sr. Unsec. Gtd. Sub. Notes, 10.625%, 07/31/07 $ 255,000 $ 229,500 - -------------------------------------------------------------- ELECTRIC COMPANIES-2.30% Cleveland Electric Illumination, Series D, Sr. Sec. Notes, 7.88%, 11/01/17 500,000 482,969 - -------------------------------------------------------------- CMS Energy Corp., Sr. Unsec. Notes, 7.50%, 01/15/09 750,000 690,172 - -------------------------------------------------------------- El Paso Electric Co., Series D, Sec. First Mortgage Bonds, 8.90%, 02/01/06 250,000 265,052 - -------------------------------------------------------------- Series E, Sec. First Mortgage Bonds, 9.40%, 05/01/11 250,000 273,007 - -------------------------------------------------------------- Niagara Mohawk Power, Series H, Sr. Unsec. Disc. Notes, 8.50%, 07/01/10 (Acquired 08/11/99; Cost $291,000)(b) 400,000 302,664 - -------------------------------------------------------------- 2,013,864 - -------------------------------------------------------------- ELECTRONICS (SEMICONDUCTORS)-0.23% Panda Funding Corp., Series A-1, Pooled Project Bonds, 11.625%, 08/20/12 198,404 199,396 - -------------------------------------------------------------- ENTERTAINMENT-1.88% News America Holdings, Inc., Notes, 8.45%, 08/01/34 500,000 512,615 - -------------------------------------------------------------- Time Warner Inc., Deb., 9.125%, 01/15/13 1,000,000 1,127,140 - -------------------------------------------------------------- 1,639,755 - -------------------------------------------------------------- FINANCIAL (DIVERSIFIED)-1.07% Finova Capital Corp., Unsec. Sr. Notes, 7.625%, 09/21/09 210,000 210,244 - -------------------------------------------------------------- Sumitomo Bank International Finance N.V. (Japan), Gtd. Sub. Notes, 8.50%, 06/15/09 700,000 724,511 - -------------------------------------------------------------- 934,755 - -------------------------------------------------------------- FOODS-1.02% ConAgra, Inc., Sr. Unsec. Notes, 7.125%, 10/01/26 900,000 889,443 - -------------------------------------------------------------- HEALTH CARE (LONG TERM CARE)-0.09% Harborside Healthcare, Sr. Unsec. Gtd. Disc. Sub. Notes, 11.00%, 08/01/08(e) 300,000 78,000 - -------------------------------------------------------------- HEALTH CARE (SPECIALIZED SERVICES)-0.54% Team Health, Inc., Sr. Sub. Notes, 12.00%, 03/15/09(c) 470,000 472,350 - -------------------------------------------------------------- HOMEBUILDING-0.06% D.R. Horton, Inc., Unsec. Gtd. Notes, 10.00%, 04/15/06 55,000 55,275 - -------------------------------------------------------------- HOUSEHOLD PRODUCTS (NON-DURABLES)-0.50% Procter & Gamble Co. (The), Putable Deb., 8.00%, 09/01/24 400,000 434,548 - -------------------------------------------------------------- HOUSEWARES-0.35% Decora Industries, Inc., Series B, Sr. Sec. Gtd. Notes, 11.00%, 05/01/05 350,000 306,250 - -------------------------------------------------------------- INSURANCE (LIFE/HEALTH)-0.79% Torchmark Corp., Notes, 7.875%, 05/15/23 750,000 693,143 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(a) VALUE INSURANCE (PROPERTY-CASUALTY)-1.09% Terra Nova Holdings, Co. (United Kingdom), Sr. Unsec. Gtd. Notes, 7.20%, 08/15/07 $ 500,000 $ 479,330 - -------------------------------------------------------------- 7.00%, 05/15/08 500,000 471,800 - -------------------------------------------------------------- 951,130 - -------------------------------------------------------------- INVESTMENT BANKING/BROKERAGE-1.61% HSBC America Capital Trust II, Gtd. Bonds, 8.38%, 05/15/27 (Acquired 08/12/99; Cost $479,210)(b) 500,000 479,120 - -------------------------------------------------------------- Lehman Brothers, Inc., Sr. Sub. Notes, 7.375%, 01/15/07 530,000 523,667 - -------------------------------------------------------------- Notes, 8.50%, 08/01/15 390,000 404,305 - -------------------------------------------------------------- 1,407,092 - -------------------------------------------------------------- IRON & STEEL-0.47% Acme Metal, Inc., Sr. Unsec. Gtd. Deb., 10.875%, 12/15/07(d)(g) 438,000 94,170 - -------------------------------------------------------------- GS Technologies, Inc., Sr. Gtd. Notes, 12.00%, 09/01/04 200,000 111,000 - -------------------------------------------------------------- Sheffield Steel Corp., Series B, First Mortgage Notes, 11.50%, 12/01/05 250,000 208,750 - -------------------------------------------------------------- 413,920 - -------------------------------------------------------------- LEISURE TIME (PRODUCTS)-0.46% Marvel Enterprises, Inc., Sr. Unsec. Gtd. Sub. Notes, 12.00%, 06/15/09 440,000 402,600 - -------------------------------------------------------------- LODGING-HOTELS-0.35% John Q. Hammons Hotels, Inc., Sec. First Mortgage Notes, 9.75%, 10/01/05 100,000 90,500 - -------------------------------------------------------------- Stena Line A.B. (Sweden), Sr. Unsec. Yankee Notes, 10.625%, 06/01/08 310,000 217,775 - -------------------------------------------------------------- 308,275 - -------------------------------------------------------------- MANUFACTURING (DIVERSIFIED)-0.24% Glenoit Corp., Sr. Unsec. Gtd. Sub. Notes, 11.00%, 04/15/07 380,000 210,900 - -------------------------------------------------------------- MANUFACTURING (SPECIALIZED)-0.52% First Wave Marine, Inc., Sr. Unsec. Gtd. Sub. Notes, 11.00%, 02/01/08 250,000 188,750 - -------------------------------------------------------------- MMI Products, Inc., Sr. Unsec. Sub. Notes, 11.25%, 04/15/07 260,000 265,200 - -------------------------------------------------------------- 453,950 - -------------------------------------------------------------- METALS MINING-0.27% Rio Algom Ltd. (Canada), Yankee Unsec. Deb., 7.05%, 11/01/05 250,000 238,455 - -------------------------------------------------------------- NATURAL GAS-1.80% Dynegy, Inc., Sr. Unsec. Deb., 7.125%, 05/15/18 500,000 459,975 - -------------------------------------------------------------- Enron Corp., Sr. Sub. Deb., 8.25%, 09/15/12 500,000 515,220 - --------------------------------------------------------------
FS-43 242
PRINCIPAL MARKET AMOUNT(a) VALUE NATURAL GAS-(CONTINUED) Sonat, Inc., Unsec. Notes, 7.625%, 07/15/11 $ 600,000 $ 600,828 - -------------------------------------------------------------- 1,576,023 - -------------------------------------------------------------- OIL & GAS (EXPLORATION & PRODUCTION)-1.43% Oneok, Inc., Unsec. Notes, 7.75%, 08/15/06 400,000 401,224 - -------------------------------------------------------------- Pogo Producing Co., Series B, Sr. Unsec. Sub. Notes, 10.375%, 02/15/09 500,000 520,000 - -------------------------------------------------------------- Queen Sand Resources, Inc., Sr. Unsec. Gtd. Sub. Notes, 12.50%, 07/01/08 160,000 92,000 - -------------------------------------------------------------- Talisman Energy, Inc. (Canada), Yankee Deb., 7.125%, 06/01/07 250,000 240,210 - -------------------------------------------------------------- 1,253,434 - -------------------------------------------------------------- OIL & GAS (REFINING & MARKETING)-0.70% Texas Petrochemical Corp., Sr. Unsec. Sub. Notes, 11.125%, 07/01/06 750,000 611,250 - -------------------------------------------------------------- PHOTOGRAPHY/IMAGING-0.54% Polaroid Corp., Sr. Unsec. Notes, 11.50%, 02/15/06 470,000 472,350 - -------------------------------------------------------------- POWER PRODUCERS (INDEPENDENT)-1.30% AES Corp., Sr. Notes, 8.00%, 12/31/08 750,000 686,250 - -------------------------------------------------------------- Kincaid Generation LLC, Sec. Bonds, 7.33%, 06/15/20 (Acquired 04/30/98; Cost $501,235)(b) 500,000 453,630 - -------------------------------------------------------------- 1,139,880 - -------------------------------------------------------------- PUBLISHING (NEWSPAPERS)-0.65% News America Holdings, Inc., Sr. Gtd. Deb., 9.25%, 02/01/13 250,000 274,755 - -------------------------------------------------------------- United News & Media PLC (United Kingdom), Sr. Unsec. Yankee Notes, 7.75%, 07/01/09 300,000 292,905 - -------------------------------------------------------------- 567,660 - -------------------------------------------------------------- RAILROADS-1.48% CSX Corp., Sr. Unsec. Putable Deb., 7.25%, 05/01/27 750,000 747,173 - -------------------------------------------------------------- Norfolk Southern Corp., Putable Bonds, 7.05%, 05/01/37 550,000 546,816 - -------------------------------------------------------------- 1,293,989 - -------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS-1.22% Glenborough Properties, Series B, Sr. Unsec. Notes, 7.625%, 03/15/05 500,000 445,514 - -------------------------------------------------------------- Health Care REIT, Inc., Sr. Unsec. Notes, 7.625%, 03/15/08 200,000 169,320 - -------------------------------------------------------------- Spieker Properties LP, Unsec. Deb., 7.35%, 12/01/17 500,000 446,705 - -------------------------------------------------------------- 1,061,539 - -------------------------------------------------------------- RETAIL (GENERAL MERCHANDISE)-0.19% Plainwell, Inc., Series B, Sr. Unsec. Sub. Notes, 11.00%, 03/01/08 230,000 166,750 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(a) VALUE RETAIL (SPECIALTY)-2.31% Amazon.com, Inc., Conv. Deb., 4.75%, 02/01/09 (Acquired 01/29/99; Cost $501,875)(b) $ 500,000 $ 532,500 - -------------------------------------------------------------- CEX Holdings, Inc., Series B Sr. Unsec. Gtd. Sub. Notes, 9.625%, 06/01/08 170,000 184,450 - -------------------------------------------------------------- CSK Auto Inc., Series A, Sr. Gtd. Sub. Deb, 11.00%, 11/01/06 130,000 134,550 - -------------------------------------------------------------- Neff Corp., Sr. Unsec. Gtd. Sub. Notes, 10.25%, 06/01/08 840,000 814,800 - -------------------------------------------------------------- Rent-A-Center, Inc., Sr. Unsec. Gtd. Sub. Notes, 11.00%, 08/15/08 350,000 350,000 - -------------------------------------------------------------- 2,016,300 - -------------------------------------------------------------- RETAIL (SPECIALTY-APPAREL)-0.15% J Crew Operating Corp., Sr. Sub. Notes, 10.375%, 10/15/07 150,000 126,750 - -------------------------------------------------------------- SAVINGS & LOAN COMPANIES-1.02% Sovereign Bancorp, Inc., Medium Term Sub. Notes, 8.00%, 03/15/03 600,000 595,242 - -------------------------------------------------------------- Washington Mutual, Inc., Notes, 7.50%, 08/15/06 290,000 293,622 - -------------------------------------------------------------- 888,864 - -------------------------------------------------------------- SERVICES (ADVERTISING/MARKETING)-0.22% MDC Communications Corp. (Canada), Sr. Unsec. Sub. Yankee Notes, 10.50%, 12/01/06 200,000 195,000 - -------------------------------------------------------------- SERVICES (COMMERCIAL & CONSUMER)-0.65% Hydrochem Industrial Service Co., Series B, Sr. Sec. Gtd. Sub. Notes, 10.375%, 08/01/07 150,000 131,250 - -------------------------------------------------------------- Laidlaw, Inc. (Canada), Unsec. Yankee Deb., 6.70%, 05/01/08 500,000 436,010 - -------------------------------------------------------------- 567,260 - -------------------------------------------------------------- SERVICES (EMPLOYMENT)-0.28% MSX International, Inc., Sr. Unsec. Sub. Notes, 11.375%, 01/15/08 260,000 245,700 - -------------------------------------------------------------- SOVEREIGN DEBT-2.38% Province of Manitoba (Canada), Yankee Deb., 7.75%, 07/17/16 550,000 585,629 - -------------------------------------------------------------- Province of Quebec (Canada), Series A, Medium Term Putable Yankee Notes, 5.735%, 03/02/26 500,000 497,670 - -------------------------------------------------------------- Series A, Medium Term Yankee Notes, 6.29%, 03/06/26 1,000,000 993,710 - -------------------------------------------------------------- 2,077,009 - -------------------------------------------------------------- TELECOMMUNICATIONS (CELLULAR/ WIRELESS)-0.64% PageMart Wireless, Inc., Sr. Sub. Disc. Notes, 11.25%, 02/01/08(f) 600,000 189,000 - -------------------------------------------------------------- US Unwired Inc., Sr. Disc. Notes, 13.375%, 11/01/09 (Acquired 10/26/99; Cost $366,142)(b)(f) 700,000 369,250 - -------------------------------------------------------------- 558,250 - --------------------------------------------------------------
FS-44 243
PRINCIPAL MARKET AMOUNT(a) VALUE TELECOMMUNICATIONS (LONG DISTANCE)-4.14% Call-Net Enterprises, Inc. (Canada), Sr. Unsec. Disc. Yankee Notes, 8.94%, 08/15/08(e) $ 330,000 $ 196,350 - -------------------------------------------------------------- Centel Capital, Deb., 9.00%, 10/15/19 300,000 342,225 - -------------------------------------------------------------- Econophone, Inc., Sr. Unsec. Notes, 13.50%, 07/15/07 750,000 781,875 - -------------------------------------------------------------- Esprit Telecom Group PLC (United Kingdom), Sr. Unsec. Yankee Notes, 11.50%, 12/15/07 250,000 256,250 - -------------------------------------------------------------- MCI Communications Corp., Putable Sr. Unsec. Deb., 7.125%, 06/15/27 650,000 655,025 - -------------------------------------------------------------- Primus Telecommunications Group, Inc., Sr. Notes, 11.25%, 01/15/09 750,000 693,750 - -------------------------------------------------------------- Tele1 Europe B.V. (Netherlands), Sr. Unsec. Notes, 13.00%, 05/15/09(c) 500,000 497,500 - -------------------------------------------------------------- Versatel Telecom B.V. (Netherlands), Sr. Notes, 13.25%, 05/15/08 190,000 191,900 - -------------------------------------------------------------- 3,614,875 - -------------------------------------------------------------- TELEPHONE-4.42% AT&T Canada Inc., Notes, 7.65%, 09/15/06 (Acquired 09/15/99) Cost $369,123)(b) 370,000 370,758 - -------------------------------------------------------------- Bell Atlantic Financial Services, Inc., Conv. Bonds, 4.25%, 09/15/05 500,000 528,806 - -------------------------------------------------------------- Esat Holdings Ltd. (Ireland), Sr. Yankee Notes, 12.50%, 02/01/07(f) 350,000 255,500 - -------------------------------------------------------------- ICG Services, Inc., Sr. Unsec. Disc. Notes, 10.00%, 02/15/08(f) 600,000 321,096 - -------------------------------------------------------------- Liberty Media Group, Bonds, 7.875%, 07/15/09 (Acquired 06/30/99; Cost $397,616)(b) 400,000 398,910 - -------------------------------------------------------------- Logix Communications, Sr. Unsec. Notes, 12.25%, 06/15/08 350,000 280,875 - -------------------------------------------------------------- SBC Communications, Inc., Deb., 7.375%, 07/15/43 500,000 466,490 - -------------------------------------------------------------- Williams Communications Group, Inc., Sr. Unsec. Notes, 10.70%, 10/01/07 450,000 469,125 - -------------------------------------------------------------- Worldwide Fiber, Inc. (Canada), Sr. Notes, 12.50%, 12/15/05 230,000 235,750 - -------------------------------------------------------------- 12.00%, 08/01/09(c) 530,000 532,650 - -------------------------------------------------------------- 3,859,960 - -------------------------------------------------------------- TRUCKERS-0.33% Travelcenters of America, Inc., Sr. Unsec. Gtd. Sub. Deb., 10.25%, 04/01/07 290,000 286,375 - -------------------------------------------------------------- WASTE MANAGEMENT-2.05% Browning-Ferris, Deb., 9.25%, 05/01/21 350,000 302,750 - -------------------------------------------------------------- Waste Management Inc., Sr. Unsec. Notes, 7.125%, 10/01/09 525,000 447,258 - -------------------------------------------------------------- 7.125%, 12/15/17 190,000 145,263 - -------------------------------------------------------------- WMX Technologies, Inc., Unsec. Putable Notes, 7.10%, 08/01/26 980,000 897,327 - -------------------------------------------------------------- 1,792,598 - -------------------------------------------------------------- Total U.S. Dollar Denominated Bonds & Notes (Cost $58,071,172) 54,413,221 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(h) VALUE NON-U.S. DOLLAR DENOMINATED BONDS & NOTES-33.28% AUSTRALIA-1.97% New South Wales Treasury Corp. (Sovereign Debt), Gtd. Notes, 7.00%, 04/01/04 AUD 1,320,000 $ 856,995 - -------------------------------------------------------------- State Bank New South Wales (Banks-Major Regional), Series E Medium Term Sr. Unsec. Gtd. Notes, 8.625%, 08/20/01 AUD 1,300,000 862,743 - -------------------------------------------------------------- 1,719,738 - -------------------------------------------------------------- CANADA-9.47% B.C. Generic Residual (Sovereign Debt), Deb.,13.88%, 06/21/04(e) CAD 150,000 76,004 - -------------------------------------------------------------- Bank of Montreal (Banks-Money Center), Sub. Deb., 7.92%, 07/31/12 CAD 300,000 216,435 - -------------------------------------------------------------- Bell Mobility Cellular (Telecommunications- Cellular/Wireless), Deb., 6.55%, 06/02/08 CAD 750,000 492,805 - -------------------------------------------------------------- British Columbia Municipal Finance Authority (Sovereign Debt), Bonds, 7.75%, 12/01/05 CAD 500,000 362,997 - -------------------------------------------------------------- Canadian Oil Debco Inc. (Oil & Gas- Exploration & Production), Deb., 11.00%, 10/31/00 CAD 450,000 317,870 - -------------------------------------------------------------- Canadian Pacific Ltd., (Railroads), Unsec. Medium Term Disc. Notes, 5.85%, 03/30/09 (Acquired 03/24/99; Cost $661,416)(b)(f) CAD 1,000,000 634,015 - -------------------------------------------------------------- Clearnet Communications Inc. (Telecommunications-Cellular/Wireless), Sr. Disc. Notes, 11.75%, 08/13/07(f) CAD 1,100,000 524,859 - -------------------------------------------------------------- 10.40%, 05/15/08(f) CAD 1,200,000 507,369 - -------------------------------------------------------------- Sr. Unsec. Disc. Notes, 10.75%, 02/15/09(f) CAD 1,300,000 509,916 - -------------------------------------------------------------- GMAC Canada Ltd. (Financial Diversified), Sr. Unsec. Gtd. Unsub. Notes, 6.50%, 03/23/04GBP 450,000 718,447 - -------------------------------------------------------------- Loblaw Co. Ltd. (Retail-Food Chains), Unsec. Medium Term Disc. Notes, 6.45%, 03/01/39 CAD 750,000 460,896 - -------------------------------------------------------------- Molson Breweries Co. Ltd. (Beverages- Alcoholic), Unsec. Unsub. Notes, 6.00%, 06/02/08CAD 700,000 453,605 - -------------------------------------------------------------- NAV Canada (Services-Commercial & Consumer), Bonds, 7.40%, 06/01/27 CAD 1,000,000 730,551 - -------------------------------------------------------------- Poco Petroleums Ltd. (Oil & Gas-Exploration & Production), Unsec. Deb., 6.60%, 09/11/07 CAD 750,000 484,961 - -------------------------------------------------------------- Province of Ontario (Sovereign Debt), Sr. Unsec. Unsub. Notes, 6.25%, 12/03/08 NZD 1,500,000 672,945 - -------------------------------------------------------------- Telegobe Canada, Inc. (Telephone), Unsec. Deb., 8.35%, 06/20/03 CAD 650,000 453,958 - -------------------------------------------------------------- TransCanada Pipelines (Natural Gas), Series Q, Deb., 10.625%, 10/20/09 CAD 375,000 318,211 - --------------------------------------------------------------
FS-45 244
PRINCIPAL MARKET AMOUNT(h) VALUE CANADA-(CONTINUED) Westcoast Energy, Inc. (Natural Gas), Series V, Unsec. Deb., 6.45%, 12/18/06 CAD $ 500,000 $ 335,635 - -------------------------------------------------------------- 8,271,479 - -------------------------------------------------------------- DENMARK-1.08% Kingdom of Denmark (Sovereign Debt), Bonds, 7.00%, 12/15/04DKK 6,150,000 940,928 - -------------------------------------------------------------- GERMANY-2.86% Bundesrepublik Deutschland (Sovereign Debt), Series 92 Bonds, 7.25%, 10/21/02 EUR 810,000 921,185 - -------------------------------------------------------------- Hypovereins Finance N.V. (Banks-Major Regional), Gtd. Series E Medium Term Notes, 6.00%, 03/12/07 DEM 250,000 134,974 - -------------------------------------------------------------- International Bank for Reconstruction & Development (Banks-Money Center), Unsec. Deb., 7.125%, 04/12/05 DEM 1,400,000 826,494 - -------------------------------------------------------------- Treuhandanstalt (Sovereign Debt), Gtd. Notes, 6.00%, 11/12/03 EUR 560,000 618,697 - -------------------------------------------------------------- 2,501,350 - -------------------------------------------------------------- GREECE-1.18% Hellenic Republic (Sovereign Debt), Bonds, 6.60%, 01/15/04GRD 333,000,000 1,032,847 - -------------------------------------------------------------- NETHERLANDS-4.70% Dresdner Finance B.V. (Banks-Major Regional), Series 11 Floating Rate Gtd. Notes, 3.532%, 07/30/03 EUR 1,000,000 1,047,839 - -------------------------------------------------------------- KPNQWest B.V. (Telecommunications-Long Distance), Sr. Unsec. Notes, 7.125%, 06/01/09 (Acquired 05/25/99; Cost $1,051,124)(b)EUR 1,000,000 1,019,104 - -------------------------------------------------------------- Mannesmann Finance B.V. (Machinery Diversified), Gtd. Unsec. Unsub. Notes, 4.75%, 05/27/09 EUR 900,000 843,286 - -------------------------------------------------------------- Prudential Financial B.V. (Investment Banking/ Brokerage), Sr. Unsec. Gtd. Bonds, 9.375%, 06/04/07 GBP 400,000 749,353 - -------------------------------------------------------------- SPT Telecom A.S. (Telecommunications-Long Distance), Gtd. Unsec. Unsub. Notes, 5.125%, 05/07/03 DEM 275,000 147,120 - -------------------------------------------------------------- Tecnost International Finance N.V. (Financial- Diversified), Series E Medium Term Gtd. Notes, 6.125%, 07/30/09 EUR 290,000 297,125 - -------------------------------------------------------------- 4,103,827 - -------------------------------------------------------------- NEW ZEALAND-2.59% Inter-American Development Bank, (Banks- Money Center), Unsec. Bonds, 5.75%, 04/15/04 NZD 2,000,000 951,163 - -------------------------------------------------------------- International Bank for Reconstruction & Development (Banks-Money Center), Unsec. Notes, 5.50%, 04/15/04NZD 800,000 378,406 - -------------------------------------------------------------- Sr. Unsec. Notes, 6.77%, 08/20/07(e) NZD 750,000 209,131 - --------------------------------------------------------------
PRINCIPAL MARKET AMOUNT(h) VALUE NEW ZEALAND-(CONTINUED) New Zealand Government (Sovereign Debt), Bonds, 10.00%, 03/15/02 NZD $ 675,000 $ 369,771 - -------------------------------------------------------------- 8.00%, 04/15/04 NZD 675,000 357,696 - -------------------------------------------------------------- 2,266,167 - -------------------------------------------------------------- SWEDEN-2.23% AB Spintab (Banks-Regional), Series 161, Unsec. Deb., 7.50%, 06/15/04 SEK 6,700,000 861,443 - -------------------------------------------------------------- Stadshypotek A.B. (Banks-Regional), Series 1562, Notes, 3.50%, 09/15/04 SEK 10,000,000 1,086,187 - -------------------------------------------------------------- 1,947,630 - -------------------------------------------------------------- U.S.A.-0.61% AT&T Canada, Inc. (Telephone), Sr. Unsec. Notes, 7.15%, 09/23/04CAD 800,000 537,070 - -------------------------------------------------------------- UNITED KINGDOM-6.59% Airtours PLC (Services-Commercial & Consumer), Conv. Sub. Notes, 5.75%, 01/05/04 (Acquired 12/09/98; Cost $494,636)(b) GBP 299,000 452,874 - -------------------------------------------------------------- Lloyds Bank PLC (Banks-Major Regional), Sub. Notes, 5.25%, 07/14/08 DEM 1,500,000 771,334 - -------------------------------------------------------------- Merrill Lynch & Co. (Investment Banking/ Brokerage), Sr. Unsec. Unsub. Notes, 7.375%, 12/17/07 GBP 245,000 408,554 - -------------------------------------------------------------- National Power PLC (Electric Companies), Sr. Unsec. Unsub. Bonds, 8.00%, 02/21/07 AUD 800,000 512,359 - -------------------------------------------------------------- National Westminster Bank PLC (Banks-Money Center), Series E, Medium Term Unsec. Unsub. Notes, 5.125%, 06/30/11 EUR 210,000 200,584 - -------------------------------------------------------------- Scotia Holdings PLC (Health Care-Drugs- Generic & Other), Conv. Unsec. Unsub. Notes, 8.50%, 03/26/02 GBP 650,000 917,237 - -------------------------------------------------------------- Sutton Bridge Financial Ltd. (Financial- Diversified), Gtd. Eurobonds, 8.625%, 06/30/22 GBP 450,000 845,032 - -------------------------------------------------------------- TeleWest Communications PLC (Broadcasting- Television, Radio & Cable), Sr. Unsec. Notes, 5.25%, 02/19/07 GBP 400,000 651,844 - -------------------------------------------------------------- Union Bank Switzerland London, (Banks-Major Regional), Unsec. Sub. Notes, 7.375%, 11/26/04 GBP 600,000 1,000,628 - -------------------------------------------------------------- 5,760,446 - -------------------------------------------------------------- Total Non-U.S. Dollar Denominated Bonds & Notes (Cost $30,661,602) 29,081,482 - --------------------------------------------------------------
MARKET SHARES VALUE COMMON STOCKS & OTHER EQUITY INTERESTS-1.71% BANKS (MAJOR REGIONAL)-0.09% Societe Generale (France) 350 76,221 - -------------------------------------------------------------- BANKS (REGIONAL)-1.40% First Republic Capital Corp., Series A-Pfd. (Acquired 05/26/99; Cost $750,000)(b) 750 746,250 - --------------------------------------------------------------
FS-46 245
MARKET SHARES VALUE BANKS (REGIONAL)-(CONTINUED) Westpac Banking Corp. STRYPES Trust-$3.135 Conv. Pfd. 16,000 $ 480,000 - -------------------------------------------------------------- 1,226,250 - -------------------------------------------------------------- BROADCASTING (TELEVISION, RADIO & CABLE)-0.00% Knology Holdings, Inc.-Wts., expiring 10/15/07(i) 700 1,575 - -------------------------------------------------------------- Wireless One, Inc.-Wts., expiring 10/19/00(i) 150 0 - -------------------------------------------------------------- 1,575 - -------------------------------------------------------------- ELECTRICAL EQUIPMENT-0.00% Electronic Retailing Systems International, Inc.-Wts., expiring 02/01/04(i) 290 290 - -------------------------------------------------------------- HEALTH CARE (DRUGS-GENERIC & OTHER)-0.09% Glaxo Wellcome PLC (United Kingdom) 2,607 76,980 - -------------------------------------------------------------- PERSONAL CARE-0.00% IHF Capital, Inc., Series I-Wts., expiring 11/14/99(i) 70 35 - -------------------------------------------------------------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.01% Clearnet Communications Inc.-Wts. (Canada), expiring 09/15/05(i) 330 4,290 - -------------------------------------------------------------- Loral Space & Communications, Ltd.-Wts., expiring 01/15/07(i) 420 4,095 - -------------------------------------------------------------- 8,385 - --------------------------------------------------------------
MARKET SHARES VALUE TELECOMMUNICATIONS (LONG DISTANCE)-0.08% Tele1 Europe B.V.-Wts. (Netherlands), expiring 05/15/09(i) 500 $ 40,125 - -------------------------------------------------------------- Versatel Telecom B.V.-Wts. (Netherlands), expiring 05/15/08(i) 190 27,597 - -------------------------------------------------------------- 67,722 - -------------------------------------------------------------- TELEPHONE-0.04% Esat Holdings Ltd.-Wts. (Ireland), expiring 02/01/07(i) 350 25,375 - -------------------------------------------------------------- Intermedia Communications, Inc.-Wts., expiring 06/01/00(i) 150 13,763 - -------------------------------------------------------------- 39,138 - -------------------------------------------------------------- Total Common Stocks & Other Equity Interests (Cost $1,339,360) 1,496,596 - -------------------------------------------------------------- MONEY MARKET FUNDS-1.35% STIC Liquid Assets Portfolio(j) 588,479 588,479 - -------------------------------------------------------------- STIC Prime Portfolio(j) 588,479 588,479 - -------------------------------------------------------------- Total Money Market Funds (Cost $1,176,958) 1,176,958 - -------------------------------------------------------------- TOTAL INVESTMENTS-98.61% 86,168,257 - -------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-1.39% 1,214,655 - -------------------------------------------------------------- NET ASSETS-100.00% $87,382,912 ==============================================================
Investment Abbreviations: AUD - Australian Dollar CAD - Canadian Dollars Conv. - Convertible Ctfs. - Certificates Deb. - Debentures DEM - German Deutsche Mark Disc. - Discounted DKK - Danish Krone FRF - French Franc GBP - British Pound Sterling GRD - Greek Drachma Gtd. - Guaranteed NZD - New Zealand Dollar Pfd. - Preferred PRIDES - Preferred Redemption Increase Dividend Equity Security Sec. - Secured Sr. - Senior STRYPES - Structured Yield Product Exchangeable for Stock SEK - Swedish Krona Sub. - Subordinated Unsec. - Unsecured Unsub. - Unsubordinated Wts. - Warrants Notes to Schedule of Investments: (a) Principal amount is in U.S. Dollars, except as indicated by note (h). (b) Restricted securities. May be resold to qualified institutional buyers in accordance with the provisions of Rule 144A under the Securities Act of 1933, as amended. The valuation of these securities has been determined in accordance with procedures established by the Board of Directors. The aggregate market value of these securities at 10/31/99 was $7,094,249 which represented 8.14% of the Fund's net assets. (c) Represents a security sold under Rule 144A, which is exempt from registration and may be resold to qualified institutional buyers in accordance with the provisions of Rule 144A under the Securities Act of 1933, as amended. (d) Non-income producing security. (e) Zero coupon bond issued at a discount. The interest rate shown represents the rate of original issue discount. (f) Discounted bond at purchase. Interest rate shown represent the coupon rate at which the bond will accrue at a specified future date. (g) Defaulted security. Currently, the issue is in default with respect to interest payments. (h) Foreign denominated security. Par value and coupon are denominated in currency indicated. (i) Non-income producing security acquired as part of a unit with or in exchange for other securities. (j) The security shares the same investment advisor as the Fund. See Notes to Financial Statements. FS-47 246 STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 ASSETS: Investments, at market value (cost $91,252,953) $ 86,168,257 - ----------------------------------------------------------- Foreign currencies (cost $18,242) 18,464 - ----------------------------------------------------------- Receivables for: Investments sold 764,818 - ----------------------------------------------------------- Forward currency contracts 4,248 - ----------------------------------------------------------- Capital stock sold 85,861 - ----------------------------------------------------------- Dividends and interest 2,088,500 - ----------------------------------------------------------- Investment for deferred compensation plan 20,023 - ----------------------------------------------------------- Other assets 13,214 - ----------------------------------------------------------- Total assets 89,163,385 - ----------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 1,059,968 - ----------------------------------------------------------- Capital stock reacquired 478,062 - ----------------------------------------------------------- Dividends 101,464 - ----------------------------------------------------------- Deferred compensation plan 20,023 - ----------------------------------------------------------- Accrued administrative services fees 4,247 - ----------------------------------------------------------- Accrued directors' fees 617 - ----------------------------------------------------------- Accrued distribution fees 55,603 - ----------------------------------------------------------- Accrued transfer agent fees 26,401 - ----------------------------------------------------------- Accrued operating expenses 34,088 - ----------------------------------------------------------- Total liabilities 1,780,473 - ----------------------------------------------------------- NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 87,382,912 =========================================================== NET ASSETS: Class A $ 51,076,640 =========================================================== Class B $ 34,422,767 =========================================================== Class C $ 1,883,505 =========================================================== Capital stock, $0.001 par value per share: Class A: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 5,255,715 =========================================================== Class B: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 3,543,063 =========================================================== Class C: Authorized 200,000,000 - ----------------------------------------------------------- Outstanding 193,937 =========================================================== Class A: Net asset value and redemption price per share $ 9.72 - ----------------------------------------------------------- Offering price per share: (Net asset value of $9.72 divided by 95.25%) $ 10.20 =========================================================== Class B: Net asset value and offering price per share $ 9.72 =========================================================== Class C: Net asset value and offering price per share $ 9.71 ===========================================================
STATEMENT OF OPERATIONS For the year ended October 31, 1999 INVESTMENT INCOME: Interest $ 7,761,097 - ----------------------------------------------------------- Dividends (net of $476 foreign withholding tax) 64,902 - ----------------------------------------------------------- Total investment income 7,825,999 - ----------------------------------------------------------- EXPENSES: Advisory fees 703,524 - ----------------------------------------------------------- Administrative services fees 66,799 - ----------------------------------------------------------- Custodian fees 48,756 - ----------------------------------------------------------- Directors' fees 8,112 - ----------------------------------------------------------- Distribution fees-Class A 300,260 - ----------------------------------------------------------- Distribution fees-Class B 385,265 - ----------------------------------------------------------- Distribution fees-Class C 19,247 - ----------------------------------------------------------- Transfer agent fees-Class A 114,393 - ----------------------------------------------------------- Transfer agent fees-Class B 73,389 - ----------------------------------------------------------- Transfer agent fees-Class C 3,666 - ----------------------------------------------------------- Other 160,098 - ----------------------------------------------------------- Total expenses 1,883,509 - ----------------------------------------------------------- Less: Fees waived by advisor (423,180) - ----------------------------------------------------------- Expenses paid indirectly (2,351) - ----------------------------------------------------------- Net expenses 1,457,978 - ----------------------------------------------------------- Net investment income 6,368,021 - ----------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FOREIGN CURRENCIES AND FORWARD CURRENCY CONTRACTS: Net realized gain (loss) from: Investment securities (3,425,545) - ----------------------------------------------------------- Foreign currencies (699,509) - ----------------------------------------------------------- Forward currency contracts 117,048 - ----------------------------------------------------------- (4,008,006) - ----------------------------------------------------------- Change in net unrealized appreciation (depreciation) of: Investment securities (4,733,538) - ----------------------------------------------------------- Foreign currencies (5,039) - ----------------------------------------------------------- Forward currency contracts 267,350 - ----------------------------------------------------------- (4,471,227) - ----------------------------------------------------------- Net gain (loss) from investment securities, foreign currencies and forward currency contracts (8,479,233) - ----------------------------------------------------------- Net increase (decrease) in net assets resulting from operations $(2,111,212) ===========================================================
See Notes to Financial Statements. FS-48 247 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 1999 and 1998
1999 1998 ----------- ----------- OPERATIONS: Net investment income $ 6,368,021 $ 4,564,973 - ---------------------------------------------------------------------------------------- Net realized gain (loss) from investment securities, foreign currencies and forward currency contracts (4,008,006) (293,145) - ---------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) of investment securities, foreign currencies and forward currency contracts (4,471,227) (2,380,155) - ---------------------------------------------------------------------------------------- Net increase in net assets resulting from operations (2,111,212) 1,891,673 - ---------------------------------------------------------------------------------------- Distributions to shareholders from net investment income: Class A (3,538,334) (2,295,926) - ---------------------------------------------------------------------------------------- Class B (2,065,556) (1,495,827) - ---------------------------------------------------------------------------------------- Class C (102,985) (42,707) - ---------------------------------------------------------------------------------------- Return of capital distribution: Class A (483,962) (354,717) - ---------------------------------------------------------------------------------------- Class B (310,211) (250,576) - ---------------------------------------------------------------------------------------- Class C (15,757) (8,211) - ---------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains: Class A -- (258,088) - ---------------------------------------------------------------------------------------- Class B -- (181,448) - ---------------------------------------------------------------------------------------- Class C -- (5,682) - ---------------------------------------------------------------------------------------- Share transactions-net: Class A (1,856,726) 29,014,691 - ---------------------------------------------------------------------------------------- Class B 1,178,036 12,527,487 - ---------------------------------------------------------------------------------------- Class C 263,914 1,597,917 - ---------------------------------------------------------------------------------------- Net increase (decrease) in net assets (9,042,793) 40,138,586 - ---------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 96,425,705 56,287,119 - ---------------------------------------------------------------------------------------- End of period $87,382,912 $96,425,705 ======================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $95,576,239 $96,795,220 - ---------------------------------------------------------------------------------------- Undistributed net investment income (45,192) 222,498 - ---------------------------------------------------------------------------------------- Undistributed net realized gain (loss) from investment securities, foreign currencies and forward currency contracts (3,069,640) 15,255 - ---------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) of investment securities, foreign currencies and forward currency contracts (5,078,495) (607,268) - ---------------------------------------------------------------------------------------- $87,382,912 $96,425,705 ========================================================================================
See Notes to Financial Statements. NOTES TO FINANCIAL STATEMENTS October 31, 1999 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Global Income Fund (the "Fund") is a series portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is high current income. Its secondary objective is protection of principal and growth of capital. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at FS-49 248 the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of trading of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions, Investment Income and Distributions -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on the accrual basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Such distributions are declared and paid monthly. The Fund may elect to use a portion of the proceeds of capital stock redemptions as distributions for Federal income tax purposes. Distributions from net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. On October 31, 1999, undistributed net investment income was decreased by $118,906, undistributed net realized gains increased by $923,111 and paid-in-capital decreased by $804,205 as a result of a tax return of capital in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassification discussed above. C. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund has a capital loss carryforward of $3,052,967 as of October 31, 1999 which may be carried forward to offset future taxable gains, if any, which expires, if not previously utilized, in the year 2007. D. Foreign Currency Translations -- Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for that portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments. E. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. Outstanding forward currency contracts at October 31, 1999 were as follows:
CONTRACT UNREALIZED SETTLEMENT TO CONTRACT TO APPRECIATION DATE DELIVER RECEIVE VALUE (DEPRECIATION) - ---------- --------- ------------ ----------- -------------- 11/10/99 AUD 650,000 424,775 414,696 10,079 - ------------------------------------------------------------------------------------ 11/04/99 CAD 5,000,000 3,344,705 3,396,451 (51,745) - ------------------------------------------------------------------------------------ 11/26/99 GBP 800,000 1,279,104 1,315,326 (36,222) - ------------------------------------------------------------------------------------ 11/26/99 GBP 2,600,000 4,305,600 4,274,808 30,792 - ------------------------------------------------------------------------------------ 11/26/99 NZD 2,300,000 1,218,885 1,167,541 51,344 - ------------------------------------------------------------------------------------ $10,573,069 $10,568,822 $ 4,248 ====================================================================================
F. Bond Premiums -- It is the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. G. Expenses -- Distribution expenses and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.70% of the first $1 billion of the Fund's average daily net assets, plus 0.65% of the Fund's average daily net assets in excess of $1 billion. During the year ended October 31, 1999, AIM waived fees of $423,180. FS-50 249 The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1999, AIM was paid $66,799 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended October 31, 1999, AFS was paid $148,724 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.50% of the Fund's average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class A, Class B or Class C shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own the appropriate class of shares of the Fund. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. The Plans also impose a cap on the total sales charges, including asset-based sales charges that may be paid by the respective classes. During the year ended October 31, 1999, the Class A, Class B and Class C shares paid AIM Distributors $300,260, $385,265 and $19,247, respectively, as compensation under the Plans. AIM Distributors received commissions of $28,250 from sales of the Class A shares of the Fund during the year ended October 31, 1999. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 1999, AIM Distributors received $3,743 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 1999, the Fund paid legal fees of $3,672 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES During the year ended October 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $1,167 and $1,184, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $2,351 during the year ended October 31, 1999. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid to directors who are not an "interested person" of AIM. The Company invests directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 1999, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. Prior to May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated among the funds based on their respective average net assets for the period. NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1999 was $90,400,242 and $90,308,631, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 1999 is as follows: Aggregate unrealized appreciation of investment securities $ 815,437 - ------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (5,913,598) - ------------------------------------------------------------ Net unrealized depreciation of investment securities $(5,098,161) ============================================================
Cost of investments for tax purposes is $91,266,418. NOTE 7-CAPITAL STOCK Changes in capital stock outstanding during the years ended October 31, 1999 and 1998 were as follows:
1999 1998 ------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sold: Class A 2,496,536 $ 26,051,117 3,840,125 $ 41,970,650 - ---------------------------------------------------------------------------- Class B 1,275,307 13,306,447 1,818,456 19,865,377 - ---------------------------------------------------------------------------- Class C 101,598 1,053,223 155,501 1,696,174 - ---------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A 315,101 3,238,097 221,486 2,412,254 - ---------------------------------------------------------------------------- Class B 188,786 1,938,556 144,487 1,573,639 - ---------------------------------------------------------------------------- Class C 9,111 93,556 4,387 47,595 - ---------------------------------------------------------------------------- Reacquired: Class A (3,041,035) (31,145,940) (1,406,526) (15,368,213) - ---------------------------------------------------------------------------- Class B (1,370,398) (14,066,967) (814,522) (8,911,529) - ---------------------------------------------------------------------------- Class C (85,444) (882,865) (13,394) (145,852) - ---------------------------------------------------------------------------- (110,438) $ (414,776) 3,950,000 $ 43,140,095 ============================================================================
FS-51 250 NOTE 8-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of Class A and Class B capital stock outstanding during each of the years in the five-year period ended October 31, 1999 and for a share of Class C capital stock outstanding during each of the years in the two-year period ended October 31, 1999 and the period August 4, 1997 (date sales commenced) through October 31, 1997.
CLASS A ------------------------------------------------------- 1999 1998 1997 1996 1995 ------- ------- ------- ------- ------- Net asset value, beginning of period $ 10.60 $ 10.93 $ 10.85 $10.74 $10.02 - ------------------------------------------------------ ------- ------- ------- ------ ------ Income from investment operations: Net investment income 0.67 0.71 0.72 0.79(a) 0.79 - ------------------------------------------------------ ------- ------- ------- ------ ------ Net gains (losses) on securities (both realized and unrealized) (0.86) (0.27) 0.21 0.25 0.75 - ------------------------------------------------------ ------- ------- ------- ------ ------ Total from investment operations (0.19) 0.44 0.93 1.04 1.54 - ------------------------------------------------------ ------- ------- ------- ------ ------ Less distributions: Dividends from investment income (0.61) (0.61) (0.72) (0.81) (0.82) - ------------------------------------------------------ ------- ------- ------- ------ ------ Distributions from net realized gains -- (0.07) (0.13) (0.12) -- - ------------------------------------------------------ ------- ------- ------- ------ ------ Return of capital (0.08) (0.09) -- -- -- - ------------------------------------------------------ ------- ------- ------- ------ ------ Total distributions (0.69) (0.77) (0.85) (0.93) (0.82) - ------------------------------------------------------ ------- ------- ------- ------ ------ Net asset value, end of period $ 9.72 $ 10.60 $ 10.93 $10.85 $10.74 ====================================================== ======= ======= ======= ====== ====== Total return(b) (1.94)% 3.95% 9.05% 10.22% 16.07% ====================================================== ======= ======= ======= ====== ====== Ratios/supplemental data: Net assets, end of period (000s omitted) $51,077 $58,115 $30,924 $21,926 $10,004 ====================================================== ======= ======= ======= ====== ====== Ratio of expenses to average net assets(c) 1.25%(d) 1.23% 1.25% 1.25% 1.25% ====================================================== ======= ======= ======= ====== ====== Ratio of net investment income to average net assets(e) 6.54%(d) 6.38% 6.54% 7.27% 7.38% ====================================================== ======= ======= ======= ====== ====== Portfolio turnover rate 93% 47% 61% 83% 128% ====================================================== ======= ======= ======= ====== ======
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and is not annualized for periods less than one year. (c) After fee waivers and/or expense reimbursements. The ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.67%, 1.73%, 1.86%, 2.02% and 3.03% for the periods 1999-1995. (d) Ratios are based on average net assets of $60,052,093. (e) After fee waivers and/or expense reimbursements. The ratios of net investment income to average net assets prior to fee waivers and/or expense reimbursements were 6.12%, 5.89%, 5.93%, 6.51% and 5.59% for the periods 1999-1995.
CLASS B CLASS C ----------------------------------------------------- -------------------------- 1999 1998 1997 1996 1995 1999 1998 1997 ------- ------- ------- ------- ------ ------ ------ ------ Net asset value, beginning of period $ 10.59 $ 10.92 $ 10.84 $ 10.73 $10.01 $10.59 $10.92 $10.76 - ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------ Income from investment operations: Net investment income 0.62 0.65 0.67 0.74(a) 0.74 0.62 0.66 0.15(a) - ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------ Net gains (losses) on securities (both realized and unrealized) (0.85) (0.27) 0.21 0.24 0.75 (0.86) (0.28) 0.17 - ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------ Total from investment operations (0.23) 0.38 0.88 0.98 1.49 (0.24) 0.38 0.32 - ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------ Less distributions: Dividends from investment income (0.56) (0.55) (0.67) (0.75) (0.77) (0.56) (0.55) (0.13) - ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------ Distributions from net realized gains -- (0.07) (0.13) (0.12) -- -- (0.07) (0.03) - ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------ Return of capital (0.08) (0.09) -- -- -- (0.08) (0.09) -- - ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------ Total distributions (0.64) (0.71) (0.80) (0.87) (0.77) (0.64) (0.71) (0.16) - ------------------------------------------ ------- ------- ------- ------- ------ ------ ------ ------ Net asset value, end of period $ 9.72 $ 10.59 $ 10.92 $ 10.84 $10.73 $ 9.71 $10.59 $10.92 ========================================== ======= ======= ======= ======= ====== ====== ====== ====== Total return(b) (2.37)% 3.38% 8.48% 9.66% 15.56% (2.47)% 3.39% 2.99% ========================================== ======= ======= ======= ======= ====== ====== ====== ====== Ratios/supplemental data: Net assets, end of period (000s omitted) $34,423 $36,525 $25,121 $16,787 $4,207 $1,884 $1,785 $ 242 ========================================== ======= ======= ======= ======= ====== ====== ====== ====== Ratio of expenses to average net assets(c) 1.75%(d) 1.75% 1.76% 1.75% 1.73% 1.75%(d) 1.73% 1.76%(e) ========================================== ======= ======= ======= ======= ====== ====== ====== ====== Ratio of net investment income to average net assets(f) 6.04%(d) 5.87% 6.03% 6.77% 6.88% 6.04%(d) 5.88% 6.03%(e) ========================================== ======= ======= ======= ======= ====== ====== ====== ====== Portfolio turnover rate 93% 47% 61% 83% 128% 93% 47% 61% ========================================== ======= ======= ======= ======= ====== ====== ====== ======
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.17%, 2.25%, 2.37%, 2.53% and 3.57% for 1999-1995 for Class B and 2.17%, 2.22% and 2.37% (annualized) for 1999-1997 for Class C. (d) Ratios are based on average net assets of $38,526,539 and $1,924,739 for Class B and Class C, respectively. (e) Annualized. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were 5.62%, 5.37%, 5.42%, 6.00% and 5.05% for 1999-1995 for Class B and 5.62%, 5.40% and 5.42% (annualized) for 1999-1997 for Class C. FS-52 251 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of AIM International Funds, Inc.: We have audited the accompanying statement of assets and liabilities of AIM International Equity Fund (a portfolio of AIM International Funds, Inc.), including the schedule of investments, as of October 31, 1999, the related statement of operations for the year then ended, the statement of changes in net assets for each of the years in the two-year period then ended and financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1999, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of AIM International Equity Fund as of October 31, 1999, the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with generally accepted accounting principles. /s/ KPMG LLP KPMG LLP December 3, 1999 Houston, Texas FS-53 252 SCHEDULE OF INVESTMENTS October 31, 1999
MARKET SHARES VALUE FOREIGN STOCKS & OTHER EQUITY INTERESTS-94.17% AUSTRALIA-1.53% AMP Ltd. (Insurance-Life/Health) 1,352,000 $ 13,752,481 - --------------------------------------------------------------- Brambles Industries Ltd. (Air Freight) 383,000 10,774,322 - --------------------------------------------------------------- Cable & Wireless Optus Ltd. (Telephone)(a) 3,103,700 7,107,662 - --------------------------------------------------------------- Telstra Corp. Ltd. (Telephone)(a) 4,774,700 15,320,279 - --------------------------------------------------------------- 46,954,744 - --------------------------------------------------------------- BELGIUM-0.40% UCB S.A. (Manufacturing-Diversified) 328,600 12,255,194 - --------------------------------------------------------------- BRAZIL-0.97% Embratel Participacoes S.A.-ADR (Telephone) 492,800 6,344,800 - --------------------------------------------------------------- Petroleo Brasileiro S.A.-Petrobras-Pfd. (Oil & Gas-Exploration & Production) 78,071 12,418,632 - --------------------------------------------------------------- Tele Centro Sul Participacoes S.A.-ADR (Telephone) 105,840 6,323,940 - --------------------------------------------------------------- Telesp Participacoes S.A.-ADR (Telephone) 286,300 4,634,481 - --------------------------------------------------------------- 29,721,853 - --------------------------------------------------------------- CANADA-6.33% BCE, Inc. (Telephone) 672,500 40,469,673 - --------------------------------------------------------------- Bombardier Inc. (Aerospace/Defense) 1,403,100 24,730,317 - --------------------------------------------------------------- Imasco Ltd. (Manufacturing-Diversified) 351,100 9,419,582 - --------------------------------------------------------------- Loblaw Co. Ltd. (Retail-Food Chains) 275,000 6,406,643 - --------------------------------------------------------------- Nortel Networks Corp. (Communications Equipment) 1,000,714 61,981,723 - --------------------------------------------------------------- Research in Motion Ltd. (Communications Equipment)(a) 460,000 14,262,462 - --------------------------------------------------------------- Rogers Communications, Inc. (Telecommunications-Cellular/Wireless)(a) 675,000 13,662,297 - --------------------------------------------------------------- Shaw Communications, Inc. (Broadcasting- Television, Radio & Cable) 376,000 11,428,377 - --------------------------------------------------------------- Toronto-Dominion Bank (The) (Banks- Regional) 510,200 11,695,476 - --------------------------------------------------------------- 194,056,550 - --------------------------------------------------------------- FINLAND-2.98% Nokia Oyj (Communications Equipment) 654,342 74,904,859 - --------------------------------------------------------------- Sonera Oyj (Telecommunications-Cellular/ Wireless) 546,900 16,426,703 - --------------------------------------------------------------- 91,331,562 - --------------------------------------------------------------- FRANCE-12.32% Accor S.A. (Lodging-Hotels) 96,500 21,725,885 - --------------------------------------------------------------- Altran Technologies, S.A. (Services- Commercial & Consumer) 93,200 31,954,840 - --------------------------------------------------------------- AXA (Insurance-Multi-Line) 288,614 40,717,636 - --------------------------------------------------------------- Banque Nationale de Paris (Banks-Major Regional) 432,900 38,028,609 - ---------------------------------------------------------------
MARKET SHARES VALUE FRANCE-(CONTINUED) Carrefour Supermarche S.A. (Retail-Food Chains) 477,200 $ 88,358,734 - --------------------------------------------------------------- Pinault-Printemps-Redoute S.A. (Retail- General Merchandise) 221,750 42,295,855 - --------------------------------------------------------------- PSA Peugeot Citroen (Automobiles) 75,000 14,399,934 - --------------------------------------------------------------- Renault S.A. (Automobiles) 254,000 13,147,258 - --------------------------------------------------------------- Societe Television Francaise 1 (Broadcasting-Television, Radio & Cable) 113,075 35,450,245 - --------------------------------------------------------------- Total Fina S.A.-Class B (Oil & Gas-Refining & Marketing) 379,262 51,271,770 - --------------------------------------------------------------- 377,350,766 - --------------------------------------------------------------- GERMANY-4.16% Deutsche Bank A.G. (Banks-Major Regional)(a) 415,000 29,776,171 - --------------------------------------------------------------- EM.TV & Merchandising A.G. (Broadcasting- Television, Radio & Cable) 187,500 9,271,191 - --------------------------------------------------------------- EM.TV & Merchandising A.G.-Rts., expiring 11/12/99 (Broadcasting-Television, Radio & Cable) 187,500 1,973 - --------------------------------------------------------------- Mannesmann A.G. (Machinery-Diversified) 380,200 59,798,417 - --------------------------------------------------------------- Porsche A.G.-Pfd. (Automobiles) 10,500 28,610,500 - --------------------------------------------------------------- 127,458,252 - --------------------------------------------------------------- HONG KONG-3.19% China Telecom Ltd. (Telecommunications- Cellular/Wireless)(a) 9,104,000 31,115,871 - --------------------------------------------------------------- Cosco Pacific Ltd. (Financial-Diversified) 30,166,000 21,358,247 - --------------------------------------------------------------- Dao Heng Bank Group Ltd. (Banks- Regional)(a) 3,880,000 17,631,596 - --------------------------------------------------------------- Hutchison Whampoa Ltd. (Retail-Food Chains) 2,744,000 27,552,683 - --------------------------------------------------------------- 97,658,397 - --------------------------------------------------------------- INDONESIA-0.30% Gulf Indonesia Resources Ltd. (Oil- International Integrated)(a) 1,172,000 9,302,750 - --------------------------------------------------------------- IRELAND-1.44% Bank of Ireland (Banks-Major Regional) 2,344,400 18,325,545 - --------------------------------------------------------------- CRH PLC (Construction-Cement & Aggregates) 1,360,000 25,682,645 - --------------------------------------------------------------- 44,008,190 - --------------------------------------------------------------- ITALY-1.63% Banca Popolare di Brescia (Banks- Regional) 887,000 37,560,026 - --------------------------------------------------------------- Credito Italiano S.p.A. (Banks-Major Regional) 2,620,100 12,266,319 - --------------------------------------------------------------- 49,826,345 - ---------------------------------------------------------------
FS-54 253
MARKET SHARES VALUE JAPAN-25.23% Advantest Corp. (Electronics- Instrumentation) 235,900 $ 35,524,723 - --------------------------------------------------------------- Alps Electric Co., Ltd. (Electronics- Component Distributors) 1,197,000 23,192,557 - --------------------------------------------------------------- DDI Corp. (Telecommunications) 34,750 37,998,178 - --------------------------------------------------------------- Hirose Electric Co. Ltd. (Electronics- Component Distributors) 206,800 36,081,646 - --------------------------------------------------------------- Hoya Corp. (Manufacturing-Specialized) 270,000 19,423,529 - --------------------------------------------------------------- Ibiden Co., Ltd. (Electronics-Component Distributors) 820,000 13,764,328 - --------------------------------------------------------------- Kirin Brewery Co., Ltd. (Beverages- Alcoholic) 1,732,000 19,836,059 - --------------------------------------------------------------- Kyocera Corp. (Electronics-Component Distributors) 314,000 30,118,460 - --------------------------------------------------------------- Matsushita Communication Industrial Co., Ltd. (Telephone) 363,000 61,001,966 - --------------------------------------------------------------- Murata Manufacturing Co., Ltd. (Electronics- Component Distributors) 367,000 47,170,879 - --------------------------------------------------------------- NEC Corp. (Computers-Hardware) 2,088,000 42,258,693 - --------------------------------------------------------------- Nippon Telegraph & Telephone Corp. (Telecommunications-Long Distance) 3,338 51,228,238 - --------------------------------------------------------------- NTT Data Corp. (Computers-Software & Services) 1,984 31,399,933 - --------------------------------------------------------------- NTT Mobile Communications Network, Inc. (Telecommunications-Cellular/Wireless) 2,379 63,208,767 - --------------------------------------------------------------- Okuma Corp. (Hardware & Tools) 3,251,000 13,252,842 - --------------------------------------------------------------- Orix Corp. (Financial-Diversified) 46,600 6,257,733 - --------------------------------------------------------------- Ricoh Co., Ltd. (Office Equipment & Supplies) 1,735,000 28,307,851 - --------------------------------------------------------------- Rohm Co. Ltd. (Electronics-Component Distributors) 74,000 16,609,275 - --------------------------------------------------------------- Sanix Inc. (Services-Commercial & Consumer) 185,600 17,268,428 - --------------------------------------------------------------- Sharp Corp. (Electrical Equipment) 918,000 14,616,853 - --------------------------------------------------------------- Sony Corp. (Electronics-Component Distributors) 345,900 53,947,859 - --------------------------------------------------------------- Takeda Chemical Industries Ltd. (Health Care-Drugs-Generic & Other) 642,000 36,886,288 - --------------------------------------------------------------- Tokyo Electron Ltd. (Electronics- Semiconductors) 229,000 19,022,013 - --------------------------------------------------------------- Trend Micro Inc. (Computers-Software & Services)(a) 197,100 39,134,526 - --------------------------------------------------------------- Ushio, Inc. (Electronics-Component Distributors) 1,261,000 15,518,325 - --------------------------------------------------------------- 773,029,949 - --------------------------------------------------------------- MEXICO-3.27% Cifra S.A. de C.V. (Retail-General Merchandise)(a) 8,782,000 13,426,459 - --------------------------------------------------------------- Coca-Cola Femsa S.A.-ADR (Beverages- Non-Alcoholic) 796,800 11,055,600 - --------------------------------------------------------------- Fomento Economico Mexicano, S.A. de C.V.-ADR (Beverages-Non-Alcoholic) 669,970 21,983,391 - --------------------------------------------------------------- Grupo Modelo S.A. de C.V.-Series C (Beverages-Alcoholic) 4,538,900 11,093,515 - ---------------------------------------------------------------
MARKET SHARES VALUE MEXICO-(CONTINUED) Grupo Televisa S.A.-GDR (Entertainment)(a) 536,200 $ 22,788,500 - --------------------------------------------------------------- Kimberly-Clark de Mexico, S.A. de C.V.- Class A (Paper & Forest Products) 1,979,000 6,339,386 - --------------------------------------------------------------- Telefonos de Mexico S.A.-ADR (Telephone) 156,000 13,338,000 - --------------------------------------------------------------- 100,024,851 - --------------------------------------------------------------- NETHERLANDS-4.68% Aegon N.V. (Insurance Brokers) 195,000 18,001,891 - --------------------------------------------------------------- CMG PLC (Computers-Software & Services) 274,000 10,579,204 - --------------------------------------------------------------- Equant N.V. (Computers-Networking)(a) 100,000 9,731,462 - --------------------------------------------------------------- Getronics N.V. (Computers-Software & Services) 442,000 22,041,289 - --------------------------------------------------------------- Koninklijke (Royal) Philips Electronics N.V. (Electrical Equipment) 306,000 31,387,912 - --------------------------------------------------------------- Koninklijke Ahold N.V. (Retail-Food Chains) 957,514 29,414,696 - --------------------------------------------------------------- Verenigde Nederlandse Uitgeversbedrijven Verenigd Bezit (Publishing) 654,600 22,140,803 - --------------------------------------------------------------- 143,297,257 - --------------------------------------------------------------- SINGAPORE-1.49% Datacraft Asia Ltd. (Communications Equipment) 1,418,400 6,524,640 - --------------------------------------------------------------- DBS Group Holdings Ltd. (Banks-Money Center)(a) 1,393,274 15,753,624 - --------------------------------------------------------------- Keppel Corp. Ltd. (Engineering & Construction) 3,901,900 10,607,198 - --------------------------------------------------------------- Singapore Press Holdings Ltd. (Publishing- Newspapers) 749,000 12,838,456 - --------------------------------------------------------------- 45,723,918 - --------------------------------------------------------------- SOUTH KOREA-2.06% Korea Electric Power Corp.-ADR (Electric Companies) 659,900 10,393,425 - --------------------------------------------------------------- Korea Telecom Corp.-ADR (Telephone)(a) 464,000 16,356,000 - --------------------------------------------------------------- L.G. Chemical Ltd. (Chemicals-Specialty) 597,000 18,066,778 - --------------------------------------------------------------- Pohang Iron & Steel Co. Ltd.-ADR (Iron & Steel) 548,300 18,299,512 - --------------------------------------------------------------- 63,115,715 - --------------------------------------------------------------- SPAIN-2.07% Banco Popular Espanol S.A. (Banks-Major Regional) 197,000 13,264,246 - --------------------------------------------------------------- NH Hoteles, S.A. (Investment Management)(a) 556,500 6,293,758 - --------------------------------------------------------------- Telefonica S.A. (Telephone)(a) 2,668,827 43,913,045 - --------------------------------------------------------------- 63,471,049 - --------------------------------------------------------------- SWEDEN-1.51% Hennes & Mauritz A.B.-Class B (Retail- Specialty-Apparel) 1,466,768 38,969,943 - --------------------------------------------------------------- NetCom A.B. (Telecommunications-Cellular/ Wireless)(a) 176,400 7,324,976 - --------------------------------------------------------------- 46,294,919 - ---------------------------------------------------------------
FS-55 254
MARKET SHARES VALUE SWITZERLAND-3.11% ABB Ltd. (Electrical Equipment)(a) 151,150 $ 15,217,108 - --------------------------------------------------------------- Adecco S.A. (Services-Commercial & Consumer) 29,191 17,690,355 - --------------------------------------------------------------- Compagnie Financiere Richemont A.G. (Tobacco) 16,100 30,749,131 - --------------------------------------------------------------- Zurich Allied A.G. (Insurance-Multi-Line) 56,106 31,756,725 - --------------------------------------------------------------- 95,413,319 - --------------------------------------------------------------- TAIWAN-0.92% Far Eastern Textile Ltd. (Chemicals- Diversified) 9,331,470 12,767,522 - --------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co. (Electronics-Semiconductors)(a) 3,472,000 15,433,544 - --------------------------------------------------------------- 28,201,066 - --------------------------------------------------------------- THAILAND-0.46% Siam Commercial Bank PLC Wts., expiring 05/10/02 (Banks-Regional)(b) 9,404,000 3,288,538 - --------------------------------------------------------------- Siam Commercial Bank PLC, 5.25% Pfd. (Banks-Regional)(a) 9,404,000 10,657,298 - --------------------------------------------------------------- 13,945,836 - --------------------------------------------------------------- UNITED KINGDOM-14.12% Barclays PLC (Banks-Major Regional) 1,392,000 42,636,380 - --------------------------------------------------------------- BP Amoco PLC (Oil & Gas-Refining & Marketing) 2,930,000 28,445,643 - --------------------------------------------------------------- British Sky Broadcasting Group PLC (Broadcasting-Television, Radio & Cable) 2,810,000 30,191,184 - --------------------------------------------------------------- British Telecommunications PLC (Communications Equipment) 1,598,875 29,007,819 - --------------------------------------------------------------- Compass Group PLC (Services-Commercial & Consumer) 1,996,500 21,401,546 - --------------------------------------------------------------- General Electric Co. PLC (Manufacturing- Diversified) 2,139,000 23,263,168 - --------------------------------------------------------------- Granada Group PLC (Leisure Time- Products) 1,861,950 14,724,527 - ---------------------------------------------------------------
MARKET SHARES VALUE UNITED KINGDOM-(CONTINUED) Hays PLC (Services-Commercial & Consumer) 3,280,700 $ 37,567,809 - --------------------------------------------------------------- Invensys PLC (Electronics-Component- Distributors) 2,500,000 12,289,648 - --------------------------------------------------------------- Logica PLC (Computer Software & Services) 1,033,500 15,810,845 - --------------------------------------------------------------- Orange PLC (Telephone)(a) 2,902,300 72,386,256 - --------------------------------------------------------------- Provident Financial PLC (Consumer Finance) 963,933 10,768,731 - --------------------------------------------------------------- Shell Transport & Trading Co. (Oil- International Integrated) 2,840,000 21,782,023 - --------------------------------------------------------------- Vodafone Airtouch PLC (Telecommunications-Cellular/ Wireless) 9,171,500 42,673,183 - --------------------------------------------------------------- WPP Group PLC (Services-Advertising/ Marketing) 2,729,500 29,640,406 - --------------------------------------------------------------- 432,589,168 - --------------------------------------------------------------- Total Foreign Stocks & Other Equity Interests (Cost $1,993,503,584) 2,885,031,650 - ---------------------------------------------------------------
PRINCIPAL AMOUNT U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES-0.08% SHIPPING-0.08% Cosco Treasury Co. Ltd. (Hong Kong), Conv. Gtd. Bonds, 1.00%, 03/13/03 (Cost $2,038,832) $ 2,754,000 2,569,534 - ---------------------------------------------------------------
SHARES MONEY MARKET FUNDS-3.68% STIC Liquid Assets Portfolio(c) 56,392,364 56,392,364 - --------------------------------------------------------------- STIC Prime Portfolio(c) 56,392,364 56,392,364 - --------------------------------------------------------------- Total Money Market Funds (Cost $112,784,728) 112,784,728 - --------------------------------------------------------------- TOTAL INVESTMENTS-97.93% 3,000,385,912 - --------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-2.07% 63,347,198 - --------------------------------------------------------------- NET ASSETS-100.00% $3,063,733,110 ===============================================================
Investment Abbreviations: ADR - American Depositary Receipt Conv. - Convertible GDR - Global Depositary Receipt Gtd. - Guaranteed Pfd. - Preferred Rts. - Rights Wts. - Warrants Notes to Schedule of Investments: (a) Non-income producing security. (b) Non-income producing security acquired as part of a unit with or in exchange for other securities. (c) The security shares the same investment advisor as the Fund. See Notes to Financial Statements. FS-56 255 STATEMENT OF ASSETS AND LIABILITIES October 31, 1999 ASSETS: Investments, at market value (cost $2,108,327,144) $3,000,385,912 - ------------------------------------------------------------ Foreign currencies, at value (cost $74,813,071) 74,702,387 - ------------------------------------------------------------ Receivables for: Investments sold 56,015,112 - ------------------------------------------------------------ Capital stock sold 18,461,482 - ------------------------------------------------------------ Dividends and interest 6,337,504 - ------------------------------------------------------------ Foreign exchange contracts 14,794 - ------------------------------------------------------------ Investment for deferred compensation plan 49,495 - ------------------------------------------------------------ Other assets 64,941 - ------------------------------------------------------------ Total assets 3,156,031,627 - ------------------------------------------------------------ LIABILITIES: Payables for: Investments purchased 80,677,634 - ------------------------------------------------------------ Capital stock reacquired 6,310,879 - ------------------------------------------------------------ Deferred compensation 49,495 - ------------------------------------------------------------ Accrued advisory fees 2,182,463 - ------------------------------------------------------------ Accrued administrative services fees 15,624 - ------------------------------------------------------------ Accrued custodian fees 308,014 - ------------------------------------------------------------ Accrued directors' fees 1,989 - ------------------------------------------------------------ Accrued distribution fees 1,957,696 - ------------------------------------------------------------ Accrued transfer agent fees 474,904 - ------------------------------------------------------------ Accrued operating expenses 319,819 - ------------------------------------------------------------ Total liabilities 92,298,517 - ------------------------------------------------------------ Net assets applicable to shares outstanding $3,063,733,110 ============================================================ NET ASSETS: Class A $2,058,418,998 ============================================================ Class B $ 887,106,232 ============================================================ Class C $ 118,207,880 ============================================================ CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Class A: Authorized 400,000,000 - ------------------------------------------------------------ Outstanding 94,727,616 ============================================================ Class B: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 42,019,748 ============================================================ Class C: Authorized 200,000,000 - ------------------------------------------------------------ Outstanding 5,595,038 ============================================================ Class A: Net asset value and redemption price per share $ 21.73 - ------------------------------------------------------------ Offering price per share: (Net asset value of $21.73 / 94.50%) $ 22.99 ============================================================ Class B: Net asset value and offering price per share $ 21.11 ============================================================ Class C: Net asset value and offering price per share $ 21.13 ============================================================
STATEMENT OF OPERATIONS For the year ended October 31, 1999 INVESTMENT INCOME: Dividends (net of $4,188,410 foreign withholding tax) $ 30,386,931 - ----------------------------------------------------------- Interest 6,418,977 - ----------------------------------------------------------- Total investment income 36,805,908 - ----------------------------------------------------------- EXPENSES: Advisory fees 25,205,776 - ----------------------------------------------------------- Administrative services fees 150,312 - ----------------------------------------------------------- Custodian fees 2,096,887 - ----------------------------------------------------------- Directors' fees 30,233 - ----------------------------------------------------------- Distribution fees-Class A 5,566,448 - ----------------------------------------------------------- Distribution fees-Class B 8,024,805 - ----------------------------------------------------------- Distribution fees-Class C 871,229 - ----------------------------------------------------------- Transfer agent fees-Class A 3,503,290 - ----------------------------------------------------------- Transfer agent fees-Class B 2,144,697 - ----------------------------------------------------------- Transfer agent fees-Class C 275,741 - ----------------------------------------------------------- Other 1,047,772 - ----------------------------------------------------------- Total expenses 48,917,190 - ----------------------------------------------------------- Less: Fees waived by advisor (1,122,543) - ----------------------------------------------------------- Expenses paid indirectly (38,898) - ----------------------------------------------------------- Net expenses 47,755,749 - ----------------------------------------------------------- Net investment income (loss) (10,949,841) - ----------------------------------------------------------- REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES AND FOREIGN CURRENCIES: Net realized gain (loss) from: Investment securities 182,981,531 - ----------------------------------------------------------- Foreign currencies (190,675) - ----------------------------------------------------------- 182,790,856 - ----------------------------------------------------------- Change in net unrealized appreciation (depreciation) of: Investment securities 476,714,401 - ----------------------------------------------------------- Foreign currencies (900,290) - ----------------------------------------------------------- 475,814,111 - ----------------------------------------------------------- Net gain from investment securities and foreign currencies 658,604,967 - ----------------------------------------------------------- Net increase in net assets resulting from operations $647,655,126 ===========================================================
See Notes to Financial Statements. FS-57 256 STATEMENT OF CHANGES IN NET ASSETS For the years ended October 31, 1999 and 1998
1999 1998 -------------- -------------- OPERATIONS: Net investment income (loss) $ (10,949,841) $ 796,378 - ----------------------------------------------------------------------------------------------- Net realized gain from investment securities and foreign currencies 182,790,856 132,726,915 - ----------------------------------------------------------------------------------------------- Change in net unrealized appreciation of investment securities and foreign currencies 475,814,111 28,100,960 - ----------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 647,655,126 161,624,253 - ----------------------------------------------------------------------------------------------- Distributions to shareholders from net investment income: Class A (10,410,630) (5,803,939) - ----------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains: Class A (20,381,375) -- - ----------------------------------------------------------------------------------------------- Class B (9,045,542) -- - ----------------------------------------------------------------------------------------------- Class C (756,877) -- - ----------------------------------------------------------------------------------------------- Share transactions-net: Class A (81,882,865) 22,585,920 - ----------------------------------------------------------------------------------------------- Class B (28,939,533) 35,370,772 - ----------------------------------------------------------------------------------------------- Class C 39,293,753 45,396,283 - ----------------------------------------------------------------------------------------------- Net increase in net assets 535,532,057 259,173,289 - ----------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 2,528,201,053 2,269,027,764 - ----------------------------------------------------------------------------------------------- End of period $3,063,733,110 $2,528,201,053 =============================================================================================== NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $2,002,598,882 $2,001,298,592 - ----------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (8,098,861) (315,829) - ----------------------------------------------------------------------------------------------- Undistributed net realized gain from investment securities and foreign currencies 177,562,192 111,361,504 - ----------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and foreign currencies 891,670,897 415,856,786 - ----------------------------------------------------------------------------------------------- $3,063,733,110 $2,528,201,053 ===============================================================================================
See Notes to Financial Statements. FS-58 257 NOTES TO FINANCIAL STATEMENTS October 31, 1999 NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM International Equity Fund (the "Fund") is a series portfolio of AIM International Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios. The Fund currently offers three different classes of shares: Class A shares, Class B shares and Class C shares. Class A shares are sold with a front-end sales charge. Class B shares and Class C shares are sold with a contingent deferred sales charge. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. The Fund's investment objective is long-term growth of capital by investing in a diversified portfolio of international equity securities whose issuers are considered by the Fund's portfolio managers to have strong earnings momentum. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations -- A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the closing bid price on that day. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the closing bid price. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market prices are not provided by any of the above methods are valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. For purposes of determining net asset value per share, futures and options contracts generally will be valued 15 minutes after the close of trading of the New York Stock Exchange ("NYSE"). Generally, trading in foreign securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined as of such times. Foreign currency exchange rates are also generally determined prior to the close of the NYSE. Occasionally, events affecting the values of such securities and such exchange rates may occur between the times at which they are determined and the close of the NYSE which would not be reflected in the computation of the Fund's net asset value. If events materially affecting the value of such securities occur during such period, then these securities will be valued at their fair value as determined in good faith by or under the supervision of the Board of Directors. B. Securities Transactions, Investment Income and Distributions -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. The Fund may elect to use a portion of the proceeds of capital stock redemptions as distributions for Federal income tax purposes. Distributions from income and net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. On October 31, 1999, $13,577,439 was reclassified from undistributed net investment income (loss), undistributed net realized gains was decreased by $86,406,374 and paid in capital was increased by $72,828,935 as a result of differing book/tax treatment of foreign currency transactions and net operating loss reclassifications in order to comply with the requirements of the American Institute of Certified Public Accountants Statement of Position 93-2. Net assets of the Fund were unaffected by the reclassification discussed above. C. Federal Income Taxes -- The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Foreign Currency Translations -- Portfolio, securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for that portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such FS-59 258 fluctuations are included with the net realized and unrealized gain or loss from investments. E. Foreign Currency Contracts -- A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. The Fund may also enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably. F. Bond Premiums -- It is the policy of the Fund not to amortize market premiums on bonds for financial reporting purposes. G. Expenses -- Distribution expenses and transfer agency expenses directly attributable to a class of shares are charged to that class' operations. All other expenses which are attributable to more than one class are allocated among the classes. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.95% of the first $1 billion of the Fund's average daily net assets, plus 0.90% of the Fund's average daily net assets in excess of $1 billion. AIM has contractually agreed to waive a portion of its advisory fees paid to the Fund by AIM to the extent necessary to reduce the fees paid by the Fund at the net asset levels higher than those currently incorporated in the present advisory fee schedule. Under the contractual waiver, AIM will receive a fee calculated at the annual rate of 0.95% of the first $500 million of the Fund's average daily net assets, plus 0.90% of the Fund's average daily net assets in excess of $500 million to and including $1 billion, plus 0.85% of the Fund's average daily net assets in excess of $1 billion. The waiver of fees is contractual and may not be terminated without approval of the Board of Directors of the Company. During the year ended October 31, 1999, AIM waived fees of $1,122,543. The Fund, pursuant to a master administrative services agreement with AIM, has agreed to pay AIM for certain administrative costs incurred in providing accounting services to the Fund. During the year ended October 31, 1999, AIM was paid $150,312 for such services. The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and shareholder services to the Fund. During the year ended October 31, 1999, AFS was paid $2,547,913 for such services. The Company has entered into master distribution agreements with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Class A, Class B and Class C shares of the Fund. The Company has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A shares, Class B shares and Class C shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays AIM Distributors compensation at the annual rate of 0.30% of the Fund's average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and C shares. Of these amounts, the Fund may pay a service fee of 0.25% of the average daily net assets of the Class A, Class B or Class C shares to selected dealers and financial institutions who furnish continuing personal shareholder services to their customers who purchase and own the appropriate class of shares of the Fund. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. The Plans also impose a cap on the total sales charges, including asset-based sales charges that may be paid by the respective classes. During the year ended October 31, 1999, the Class A, Class B and Class C shares paid AIM Distributors $5,566,448, $8,024,805 and $871,229, respectively, as compensation under the Plans. AIM Distributors received commissions of $446,482 from sales of the Class A shares of the Fund during the year ended October 31, 1999. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of Class A shares. During the year ended October 31, 1999, AIM Distributors received $157,129 in contingent deferred sales charges imposed on redemptions of Fund shares. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the year ended October 31, 1999, the Fund paid legal fees of $8,665 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES During the year ended October 31, 1999, the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $32,748 and $6,150, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $38,898 during the year ended October 31, 1999. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid to directors who are not an "interested person" of AIM. The Company invests directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. During the year ended October 31, 1999, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.09% on the unused balance of the committed line. Prior to May 28, 1999, the commitment fee rate was 0.05%. The commitment fee is allocated among the funds based on their respective average net assets for the period. FS-60 259 NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold by the Fund during the year ended October 31, 1999 was $2,215,214,374 and $2,387,679,858, respectively. The amount of unrealized appreciation (depreciation) of investment securities, for tax purposes, as of October 31, 1999 is as follows: Aggregate unrealized appreciation of investment securities $915,052,506 - -------------------------------------------------------------------------- Aggregate unrealized appreciation (depreciation) of investment securities (34,222,893) - -------------------------------------------------------------------------- Net unrealized appreciation of investment securities $880,829,613 ========================================================================== Cost of investments for tax purposes is $2,119,556,299
NOTE 7-CAPITAL STOCK Changes in capital stock outstanding during the years ended October 31, 1999 and 1998 were as follows:
1999 1998 ------------------------------ ------------------------------ SHARES AMOUNT SHARES AMOUNT ------------ --------------- ------------ --------------- Sold: Class A 144,897,083 $ 2,695,101,630 255,642,183 $ 4,635,171,469 - ----------------------------------------------------------------------------------------------------------------------------- Class B 11,600,846 212,065,890 12,193,983 217,550,365 - ----------------------------------------------------------------------------------------------------------------------------- Class C 9,254,771 168,733,197 25,679,581 472,331,833 - ----------------------------------------------------------------------------------------------------------------------------- Issued as reinvestment of dividends: Class A 1,596,985 28,282,611 332,423 5,441,633 - ----------------------------------------------------------------------------------------------------------------------------- Class B 482,230 8,356,948 -- -- - ----------------------------------------------------------------------------------------------------------------------------- Class C 39,786 689,883 -- -- - ----------------------------------------------------------------------------------------------------------------------------- Issued in connection with acquisition*: Class A 5,974,789 106,921,489 -- -- - ----------------------------------------------------------------------------------------------------------------------------- Class B 2,061,255 35,971,364 -- -- - ----------------------------------------------------------------------------------------------------------------------------- Reacquired: Class A (155,781,747) (2,912,188,595) (252,737,021) (4,618,027,182) - ----------------------------------------------------------------------------------------------------------------------------- Class B (15,614,562) (285,333,735) (10,435,828) (182,179,593) - ----------------------------------------------------------------------------------------------------------------------------- Class C (7,117,246) (130,129,327) (23,050,474) (426,935,550) - ----------------------------------------------------------------------------------------------------------------------------- (2,605,810) $ (71,528,645) 7,624,847 $ 103,352,975 =============================================================================================================================
* The Fund acquired AIM International Growth Fund on February 12, 1999. The acquired fund's net assets as of the closing date were $125,802,235. The net assets of the Fund immediately prior to acquisition were $2,655,808,540. FS-61 260 NOTE 8-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of Class A capital stock outstanding during each of the years in the five-year period ended October 31, 1999, for a share of Class B capital stock outstanding during each of the years in the five-year period ended October 31, 1999 and for a share of Class C capital stock outstanding during each of the years in the two-year period ended October 31, 1999 and the period August 4, 1997 (date sales commenced) through October 31, 1997.
CLASS A ----------------------------------------------------------------- 1999 1998 1997 1996 1995 ---------- ---------- ---------- ---------- -------- Net asset value, beginning of period $ 17.59 $ 16.64 $ 15.37 $ 13.65 $ 13.50 - ------------------------------------------------------------ ---------- ---------- ---------- ---------- -------- Income from investment operations: Net investment income (loss) (0.03) 0.05(a) 0.04(a) 0.04(a) 0.01 - ------------------------------------------------------------ ---------- ---------- ---------- ---------- -------- Net gains on securities (both realized and unrealized) 4.49 0.96 1.68 2.07 0.62 - ------------------------------------------------------------ ---------- ---------- ---------- ---------- -------- Total from investment operations 4.46 1.01 1.72 2.11 0.63 - ------------------------------------------------------------ ---------- ---------- ---------- ---------- -------- Less distributions: Dividends from net investment income (0.11) (0.06) (0.02) (0.01) (0.04) - ------------------------------------------------------------ ---------- ---------- ---------- ---------- -------- Distributions from net realized gains (0.21) -- (0.43) (0.38) (0.44) - ------------------------------------------------------------ ---------- ---------- ---------- ---------- -------- Total distributions (0.32) (0.06) (0.45) (0.39) (0.48) - ------------------------------------------------------------ ---------- ---------- ---------- ---------- -------- Net asset value, end of period $ 21.73 $ 17.59 $ 16.64 $ 15.37 $ 13.65 ============================================================ ========== ========== ========== ========== ======== Total return(b) 25.73% 6.11% 11.43% 15.79% 5.24% ============================================================ ========== ========== ========== ========== ======== Ratios/supplemental data: Net assets, end of period (000s omitted) $2,058,419 $1,724,635 $1,577,390 $1,108,395 $654,764 ============================================================ ========== ========== ========== ========== ======== Ratio of expenses to average net assets(c) 1.48%(d) 1.45% 1.47% 1.58% 1.67% ============================================================ ========== ========== ========== ========== ======== Ratio of net investment income (loss) to average net assets(e) (0.14)%(d) 0.28% 0.24% 0.25% 0.10% ============================================================ ========== ========== ========== ========== ======== Portfolio turnover rate 86% 78% 50% 66% 68% ============================================================ ========== ========== ========== ========== ========
(a) Calculated using average shares outstanding. (b) Does not deduct sales charges and is not annualized for periods less than one year. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.52%, 1.49%, 1.51%, 1.60% and 1.68% for 1999-1995. (d) Ratios are based on average net assets of $1,855,482,758. (e) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.18)%, 0.24%, 0.20%, 0.22% and 0.09% for 1999-1995.
CLASS B CLASS C ----------------------------------------------------------------- -------- 1999 1998 1997 1996 1995 1999 ---------- ---------- ---------- ---------- -------- -------- Net asset value, beginning of period $ 17.13 $ 16.27 $ 15.13 $ 13.54 $ 13.49 $ 17.14 - ------------------------------------------------ ---------- ---------- ---------- ---------- -------- -------- Income from investment operations: Net investment income (loss) (0.17)(a) (0.09)(a) (0.09)(a) (0.07)(a) (0.09) (0.17)(a) - ------------------------------------------------ ---------- ---------- ---------- ---------- -------- -------- Net gains (losses) on securities (both realized and unrealized) 4.36 0.95 1.66 2.04 0.61 4.37 - ------------------------------------------------ ---------- ---------- ---------- ---------- -------- --------- Total from investment operations 4.19 0.86 1.57 1.97 0.52 4.20 - ------------------------------------------------ ---------- ---------- ---------- ---------- -------- --------- Less distributions: Dividends from net investment income -- -- -- -- (0.03) -- - ------------------------------------------------ ---------- ---------- ---------- ---------- -------- -------- Distributions from net realized gains (0.21) -- (0.43) (0.38) (0.44) (0.21) - ------------------------------------------------ ---------- ---------- ---------- ---------- -------- -------- Total distributions (0.21) -- (0.43) (0.38) (0.47) (0.21) - ------------------------------------------------ ---------- ---------- ---------- ---------- -------- -------- Net asset value, end of period $ 21.11 $ 17.13 $ 16.27 $ 15.13 $ 13.54 $ 21.13 ================================================ ========== ========== ========== ========== ======== ======== Total return(b) 24.72% 5.29% 10.61% 14.88% 4.35% 24.76% ================================================ ========== ========== ========== ========== ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 887,106 $ 744,987 $ 678,809 $ 368,355 $ 51,964 $118,208 ================================================ ========== ========== ========== ========== ======== ======== Ratio of expenses to average net assets(c) 2.27%(d) 2.22% 2.25% 2.35% 2.55% 2.27%(d) ================================================ ========== ========== ========== ========== ======== ======== Ratio of net investment income (loss) to average net assets(f) (0.93)%(d) (0.49)% (0.53)% (0.53)% (0.78)% (0.93)%(d) ================================================ ========== ========== ========== ========== ======== ======== Portfolio turnover rate 86% 78% 50% 66% 68% 86% ================================================ ========== ========== ========== ========== ======== ======== CLASS C -------------------- 1998 1997 -------- -------- Net asset value, beginning of period $ 16.27 $ 17.64 - ------------------------------------------------ -------- -------- Income from investment operations: Net investment income (loss) (0.09)(a) (0.02)(a) - ------------------------------------------------ -------- -------- Net gains (losses) on securities (both realized and unrealized) 0.96 (1.35) - ------------------------------------------------ -------- -------- Total from investment operations 0.87 (1.37) - ------------------------------------------------ -------- -------- Less distributions: Dividends from net investment income -- -- - ------------------------------------------------ -------- -------- Distributions from net realized gains -- -- - ------------------------------------------------ -------- -------- Total distributions -- -- - ------------------------------------------------ -------- -------- Net asset value, end of period $ 17.14 $ 16.27 ================================================ ======== ======== Total return(b) 5.35% (7.77)% ================================================ ======== ======== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 58,579 $ 12,829 ================================================ ======== ======== Ratio of expenses to average net assets(c) 2.22%() 2.27%(e) ================================================ ======== ======== Ratio of net investment income (loss) to average net assets(f) (0.49)%() (0.55)%(e) ================================================ ======== ======== Portfolio turnover rate 78% 50% ================================================ ======== ========
(a) Calculated using average shares outstanding. (b) Does not deduct contingent deferred sales charges and is not annualized for periods less than one year. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 2.31%, 2.26%, 2.28%, 2.37% and 2.56% for 1999-1995 for Class B and 2.31%, 2.26% and 2.30% (annualized) for 1999-1997 for Class C. (d) Ratios are based on average net assets of $802,480,523 and $87,122,931 for Class B and Class C, respectively. (e) Annualized. (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.97)%, (0.53)%, (0.57)%, (0.55)% and (0.79)%, for 1999-1995 for Class B and (0.97)%, (0.53)% and (0.57)% (annualized) for 1999-1997 for Class C. FS-62 261 PART C: OTHER INFORMATION Item 23. Exhibits a (1) - (a) Articles of Incorporation of Registrant were filed as an Exhibit to Registrant's Registration Statement on December 19, 1991. - (b) Articles of Amendment, dated May 21, 1992, were filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. - (c) Articles of Amendment, dated May 21, 1992, were filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. - (d) Articles Supplementary, dated June 29, 1994, to Articles of Incorporation of Registrant were filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on August 17, 1994. - (e) Articles Supplementary, dated August 4, 1994, to Articles of Incorporation of Registrant were filed as an Exhibit to Registrant's Post-Effective Amendment No. 5 on August 17, 1994. - (f) Articles of Amendment, dated November 14, 1994, were filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (2) - (a) Articles of Restatement, dated November 14, 1994, were filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. - (b) Articles Supplementary to Articles of Incorporation of Registrant, dated June 12, 1997, were filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 4, 1997. - (c) Articles of Amendment to Articles of Incorporation of Registrant, dated October 14, 1997, were filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997. - (d) Articles Supplementary, dated June 9, 1999, to Articles of Incorporation were filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000. - (e) Articles Supplementary, dated December 23, 1999, to Articles of Incorporation were filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000. (3) - Agreement and Declaration of Trust of AIM International Mutual Funds, dated December 6, 1999 is filed herewith electronically. b (1) - (a) By-Laws of Registrant were filed as an Exhibit to Registrant's Registration Statement on December 19, 1991, and were filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. - (b) First Amendment, dated March 14, 1995, to By-Laws of Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. C-1 262 (2) - (a) Amended and Restated By-Laws, dated effective December 11, 1996, were filed electronically as an Exhibit to Post-Effective Amendment No. 10 on February 24, 1997. - (b) First Amendment, dated June 9, 1999, to Amended and Restated Bylaws were filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000. (3) - Bylaws of AIM International Mutual Funds, dated effective December 8, 1999, are filed herewith electronically. c - Instruments Defining Rights of Security Holders - None. d (1) - Investment Advisory Agreement, dated as of November 8, 1991, between Registrant and A I M Advisors, Inc. was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991. (2) - Investment Advisory Agreement, dated as of October 18, 1993, between Registrant on behalf of its AIM International Equity Fund and A I M Advisors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 3 on February 24, 1994, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (3) - Master Investment Advisory Agreement, dated as of July 1, 1994, between A I M Advisors, Inc. and Registrant on behalf of its AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (4) - (a) Master Investment Advisory Agreement, dated February 28, 1997, between A I M Advisors, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 11 on May 16, 1997, and is hereby incorporated by reference. - (b) Amendment No. 1, dated as of November 1, 1997, to Master Investment Advisory Agreement, dated February 28, 1997, between A I M Advisors, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (5) - Form of Master Investment Advisory Agreement between A I M Advisors, Inc. and AIM International Mutual Funds is filed herewith electronically. (6) - (a) Copy of Foreign Country Selection and Mandatory Securities Depository Delegation Agreement, dated September 9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit in Post-Effective Amendment No. 15 on December 23, 1998 and is hereby incorporated by reference. - (b) Amendment No. 1, dated September 28, 1998, to Foreign Country Selection and Mandatory Securities Depository Responsibilities Delegation Agreement, dated September 9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit in Post-Effective Amendment No. 15 on December 23, 1998 and is hereby incorporated by reference. - (c) Amendment No. 2, dated December 14, 1998, to Foreign Country Selection and Mandatory Securities Depositary Responsibilities Delegation Agreement, dated September 9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999 and is hereby incorporated by reference. C-2 263 - (d) Amendment No. 3, dated December 22, 1998, to Foreign Country Selection and Mandatory Securities Depositary Responsibilities Delegation Agreement, dated September 9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999 and is hereby incorporated by reference. - (e) Amendment No. 4, dated January 26, 1999, to Foreign Country Selection and Mandatory Securities Depositary Responsibilities Delegation Agreement, dated September 9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999 and is hereby incorporated by reference. - (f) Amendment No. 5, dated March 1, 1999, to Foreign Country Selection and Mandatory Securities Depositary Responsibilities Delegation Agreement, dated September 9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999 and is hereby incorporated by reference. - (g) Amendment No. 6, dated as of March 18, 1999, to Foreign Country Selection and Mandatory Securities Depositary Responsibilities Delegation Agreement, dated September 9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. - (h) Amendment No. 7, dated November 15, 1999, to Foreign Country Selection and Mandatory Securities Depositary Responsibilities Delegation Agreement, dated September 9, 1998, between Registrant and A I M Advisors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. (7) - Master Sub-Advisory Agreement, dated as of November 1, 1997, between A I M Advisors, Inc. and INVESCO Global Asset Management Limited was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997. (8) - Sub-Sub-Advisory Agreement, dated as of November 1, 1997, between INVESCO Global Asset Management Limited and INVESCO Asset Management Limited was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997. (9) - Sub-Sub-Advisory Agreement, dated as of November 1, 1997, between INVESCO Global Asset Management Limited and INVESCO Asia Limited was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997. e (1) - Distribution Agreement, dated December 11, 1991, between Registrant and A I M Distributors, Inc. was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991. (2) - Distribution Agreement, dated October 18, 1993, between Registrant and A I M Distributors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 3 on February 24, 1994. (3) - Master Distribution Agreement, dated September 10, 1994, between Registrant (on behalf of the portfolios' Class A shares) and A I M Distributors, Inc. was filed as an Exhibit to C-3 264 Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (4) - Master Distribution Agreement, dated September 10, 1994, between the Registrant (on behalf of the portfolios' Class B shares) and A I M Distributors, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 23, 1995. (5) - Amended and Restated Master Distribution Agreement, dated May 2, 1995, between the Registrant (on behalf of the portfolios' Class B shares) and A I M Distributors, Inc. was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995. (6) - Master Distribution Agreement, dated February 28, 1997, between Registrant (on behalf of the portfolios" Class A shares) and A I M Distributors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 11 on May 16, 1997. (7) - (a) Master Distribution Agreement, dated February 28, 1997, between Registrant (on behalf of the portfolios" Class B shares) and A I M Distributors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 11 on May 16, 1997, and is hereby incorporated by reference. - (b) Amendment No. 1, dated November 1, 1997, to Master Distribution Agreement between Registrant (on behalf of the portfolios" Class B shares) and A I M Distributors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (8) - (a) Amended and Restated Master Distribution Agreement, dated as of August 4, 1997, between Registrant (on behalf of the portfolios' Class A and Class C shares) and A I M Distributors, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (b) Amendment No. 1, dated November 1, 1997, to Amended and Restated Master Distribution Agreement, dated as of August 4, 1997, (on behalf of the portfolios" Class A and Class C shares) was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (9) - Form of Selected Dealer Agreement between A I M Distributors, Inc. and selected dealers was filed electronically as an Exhibit to Post-Effective Amendment No. 15 on December 23, 1998 and is hereby incorporated by reference. (10) - Form of Bank Selling Group Agreement between A I M Distributors, Inc. and banks was filed electronically as an Exhibit to Post-Effective Amendment No. 15 on December 23, 1998 and is hereby incorporated by reference. f (1) - Retirement Plan for Registrant's Non-Affiliated Directors was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on June 29, 1994. (2) - Retirement Plan for Registrant"s Non-Affiliated Directors effective as of March 8, 1994, as restated September 18, 1995, was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996 and is hereby incorporated by reference. (3) - Form of Deferred Compensation Agreement for Registrant's Non-Affiliated Directors was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on June 29, 1994. C-4 265 (4) - Form of Deferred Compensation Agreement for Registrant"s Non-Affiliated Directors as approved December 5, 1995, was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. (5) - Form of Deferred Compensation Agreement for Registrant"s Non-Affiliated Directors as approved March 12, 1997, was filed as an Exhibit to Post-Effective Amendment No. 14 on February 20, 1998, and is hereby incorporated by reference. g (1) - (a) Custodian Agreement between Registrant and State Street Bank and Trust Company, dated as of November 8, 1991, was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (b) Amendment, dated July 1, 1994, to Custodian Agreement between Registrant and State Street Bank and Trust Company dated November 8, 1991 was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (c) Amendment No. 2, dated September 19, 1995, to the Custodian Contract, dated November 8, 1991, was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (d) Amendment No. 3, dated November 1, 1997, to the Custodian Contract, dated November 8, 1991, between Registrant and State Street Bank and Trust Company was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (e) Amendment, dated September 9, 1998, to the Custodian Contract, dated November 8, 1991, between Registrant and State Street Bank and Trust Company was filed electronically as an Exhibit in Post-Effective Amendment No. 15 on December 23, 1998 and is hereby incorporated by reference. (2) - (a) Subcustodian Agreement with Texas Commerce Bank, dated September 9, 1994, among Texas Commerce Bank National Association, State Street Bank and Trust Company, A I M Fund Services, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (b) Amendment No. 1, dated October 2, 1998, to Subcustodian Agreement with Chase Bank of Texas, N.A. (formerly, Texas Commerce Bank) among Chase Bank of Texas, N.A. (formerly, Texas Commerce Bank), State Street Bank and Trust Company, A I M Fund Services, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. h (1) - (a) Transfer Agency Agreement between Registrant and The Shareholder Services Group, Inc., dated May 15, 1992, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. - (b) Amendment, dated May 15, 1992, to Transfer Agency Agreement between Registrant and The Shareholder Services Group, Inc., dated May 15, 1992, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. C-5 266 - (c) Form of Amendment No. 2 to Transfer Agency Agreement between Registrant and The Shareholder Services Group, Inc., dated May 15, 1992, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994. - (d) Amendment No. 3, dated July 1, 1994, to Transfer Agency Agreement between Registrant and The Shareholder Services Group, Inc., dated May 15, 1992, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994. (2) - (a) Transfer Agency and Service Agreement, dated as of November 1, 1994, between the Registrant and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (b) Amendment No. 1, dated August 4, 1997, to the Transfer Agency and Service Agreement, dated as of November 1, 1994, between the Registrant and A I M Fund Services, Inc., was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (c) Amendment No. 2, dated January 1, 1999, to the Transfer Agency and Service Agreement, dated November 1, 1994, between Registrant and A I M Fund Services, Inc., was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. (3) - (a) Remote Access and Related Services Agreement, dated as December 23, 1994, between the Registrant and The Shareholder Services Group, Inc. was filed as an Exhibit to Post-Effective Amendment No. 7 on February 23, 1995, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (b) Amendment No. 1, dated October 4, 1995, to the Remote Access and Related Services Agreement, dated December 23, 1994, between the Registrant and First Data Investor Services Group, Inc. (formerly The Shareholder Services Group, Inc.) was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (c) Addendum No. 2, dated October 12, 1995, to the Remote Access and Related Services Agreement, dated December 23, 1994, between the Registrant and First Data Investor Services Group, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (d) Amendment No. 3, dated as of February 1, 1997, to the Remote Access and Related Services Agreement, dated December 23, 1994, between the Registrant and First Data Investor Services Group, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 4, 1997, and is hereby incorporated by reference. - (e) Amendment No. 4, dated June 30, 1998, to the Remote Access and Related Services Agreement, dated December 23, 1994, between the Registrant and First Data Investor Services Group, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 15 on December 23, 1998 and is hereby incorporated by reference. C-6 267 - (f) Amendment No. 5, dated July 1, 1998, to the Remote Access and Related Services Agreement, dated December 23, 1994, between the Registrant and First Data Investor Services Group, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 15 on December 23, 1998 and is hereby incorporated by reference. - (g) Exhibit 1, effective as of August 4, 1997, to the Remote Access and Related Services Agreement, dated December 23, 1994, between the Registrant and First Data Investor Services Group, Inc. was filed electronically as an Exhibit to Post-Effective Amendment No. 14 on February 20, 1998, and is hereby incorporated by reference. - (h) Amendment No. 6, dated August 30, 1999, to the Remote Access and Related Services Agreement, dated December 23, 1994, between the Registrant and First Data Investor Services Group, Inc., was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. (4) - Preferred Registration Technology Escrow Agreement, dated September 10, 1997, between Registrant and First Data Investor Services Group, Inc.,was filed electronically as an Exhibit to Post-Effective Amendment No. 14 on February 20, 1998, and is hereby incorporated by reference (5) - Agreement and Plan of Reorganization, dated December 7, 1999, between AIM International Funds, Inc., a Maryland corporation, and AIM International Mutual Funds, a Delaware business trust, was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. (6) - Administrative Services Agreement, dated December 10, 1991, between the Registrant and A I M Advisors, Inc. was filed as an Exhibit to Registrant's Registration Statement on December 19, 1991. (7) - Administrative Services Agreement, dated as of October 18, 1993, between A I M Advisors, Inc. and Registrant, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 3 on February 24, 1994, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (8) - Master Administrative Services Agreement, dated as of July 1, 1994, between A I M Advisors, Inc. and Registrant on behalf of its AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (9) - (a) Administrative Services Agreement, dated as of October 18, 1993, between A I M Advisors, Inc. on behalf of Registrant's portfolios, and A I M Fund Services, Inc., was filed as an Exhibit to Registrant's Post-Effective Amendment No. 3 on February 24, 1994. - (b) Amendment No. 1, dated May 11, 1994, to Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios, and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 4 on June 29, 1994. - (c) Amendment No. 2, dated July 1, 1994, to Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios and classes, and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994. C-7 268 - (d) Amendment No. 3, dated September 16, 1994, to the Administrative Services Agreement, dated October 18, 1993, between A I M Advisors, Inc., on behalf of Registrant's portfolios and classes, and A I M Fund Services, Inc. was filed as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 23, 1995. (10) - (a) Administrative Services Agreement, dated as of February 28, 1997, between A I M Advisors, Inc. and Registrant was filed as an Exhibit to Post-Effective Amendment No. 11 on May 16, 1997, and is hereby incorporated by reference. - (b) Amendment No. 1, dated November 1, 1997, to Master Administrative Services Agreement, dated February 28, 1997, between A I M Advisors, Inc. and Registrant was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (11) - (a) Accounting Services Agreement, dated as of November 5, 1991, between the Registrant and State Street Bank and Trust Company was filed as an Exhibit to Registrant's Pre-Effective Amendment No. 2 on April 2, 1992, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. - (b) Amendment No. 1, dated July 1, 1994, to Accounting Services Agreement, dated as of November 5, 1991, between the Registrant and State Street Bank and Trust Company was filed as an Exhibit to Registrant's Post-Effective Amendment No. 6 on September 2, 1994, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (12) - (a) Shareholder Sub-Accounting Services Agreement among the Registrant, First Data Investor Services Group (formerly The Shareholder Services Group, Inc.), Financial Data Services, Inc. and Merrill Lynch, Pierce, Fenner & Smith, Inc., was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (b) Notice of Addition of Funds to Shareholder Sub-Accounting Services Agreement, dated February 1, 1993, was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993, and was filed electronically as an Exhibit to Post-Effective Amendment No. 10 on February 24, 1997, and is hereby incorporated by reference. - (c) Notice of Addition of Funds to Shareholder Sub-Accounting Services Agreement, dated as of November 1, 1997, among the Registrant, First Data Investor Services Group, Inc., Financial Data Services, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (d) Notice of Addition of Funds to Shareholder Sub-Accounting Services Agreement, dated as of September 28, 1998, among the Registrant, First Data Investor Services Group, Inc., Financial Data Services, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999 and is hereby incorporated by reference. - (e) Notice of Addition of Funds to Shareholder Sub-Accounting Services Agreement, dated March 1, 1999, among Registrant, First Data Investor Services Group, Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated was filed electronically as an Exhibit to Post C-8 269 -Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. - (f) Notice of Addition of Funds to Shareholder Sub-Accounting Services Agreement, dated May 12, 1999, among Registrant, First Data Investor Services Group, Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. - (g) Notice of Addition of Funds to Shareholder Sub-Accounting Services Agreement, dated November 1, 1999, among Registrant, First Data Investor Services Group, Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. - (h) Notice of Addition of Funds to Shareholder Sub-Accounting Services Agreement, dated December 31, 1999, among Registrant, First Data Investor Services Group, Inc., and Merrill Lynch, Pierce, Fenner & Smith Incorporated was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. i (1) - (a) Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP relating to AIM Asian Growth Fund and AIM European Development Fund was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. - (b) Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP is filed herewith electronically. j - Consent of KPMG LLP is filed herewith electronically. k - Financial Statements - None. l (1) - (a) Agreement Concerning Initial Capitalization of the Registrant's AIM Global Aggressive Growth Fund, AIM Global Growth Fund and AIM Global Income Fund, dated as of July 1, 1994, was filed electronically as an Exhibit to Registrant's Post-Effective Amendment No. 7 on February 23, 1995, and was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996, and is hereby incorporated by reference. - (b) Agreement concerning Initial Capitalization of the Registrant"s AIM Asian Growth Fund and AIM European Development Fund, dated November 3, 1997, was filed electronically as an Exhibit to Post-Effective Amendment No. 14 on February 20, 1998, and is hereby incorporated by reference. m (1) - Registrant's Distribution Plan was filed as an Exhibit to Registrant's Post-Effective Amendment No. 1 on February 23, 1993. (2) - Distribution Plan, and related forms of agreements, on behalf of the Registrant's AIM International Equity Fund, dated September 27, 1993, were filed as an Exhibit to Registrant's Post-Effective Amendment No. 3 on February 24, 1994. C-9 270 (3) - Master Distribution Plan, and related forms of agreements, for Registrant's Class A shares were filed as Exhibits to Registrant's Post-Effective Amendment No. 7 on February 23, 1995. (4) - Master Distribution Plan, and related forms of agreements, for Registrant's Class B shares were filed as Exhibits to Registrant's Post-Effective Amendment No. 7 on February 23, 1995. (5) - Amended Master Distribution Plan, dated September 10, 1994, for Registrant's Class A shares was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995. (6) - Amended Master Distribution Plan, dated September 10, 1994, for Registrant's Class B shares was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995. (7) - Amended and Restated Master Distribution Plan, dated as of September 10, 1994, as amended as of September 10, 1994, and as amended and restated as of May 2, 1995, for Registrant's Class B shares was electronically filed as an Exhibit to Post-Effective Amendment No. 8 on December 1, 1995. (8) - Amended and Restated Master Distribution Plan, dated as of September 10, 1994, as amended as of September 10, 1994, and amended and restated as of June 30, 1997, for Registrant's Class A shares was filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 4, 1997. (9) - (a) Second Amended and Restated Master Distribution Plan, dated as of September 10, 1994, as amended September 10, 1994, and as amended and restated as of May 2, 1995, and amended and restated as of June 30, 1997, for Registrant's Class B shares was filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 4, 1997, and is hereby incorporated by reference. - (b) Amendment No. 1, dated November 1, 1997, to Second Amended and Restated Master Distribution Plan for Registrant"s Class B shares was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (10) - (a) Second Amended and Restated Master Distribution Plan, dated as of September 10, 1994, as amended as of September 10, 1994, as amended and restated as of June 30, 1997, and as amended and restated as of August 4, 1997, for Registrant's Class A and Class C shares was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997. - (b) Amendment No. 1, dated November 1, 1997, to Second Amended and Restated Master Distribution Plan for Registrant"s Class A and Class C shares was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997. (11) - Third Amended and Restated Master Distribution Plan for Registrant"s Class A and Class C shares was filed electronically as an Exhibit to Post-Effective Amendment No. 15 on December 23, 1998 and is hereby incorporated by reference. (12) - Form of Shareholder Service Agreement to be used in connection with Registrant's Master Distribution Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999, and is hereby incorporated by reference. C-10 271 (13) - Form of Bank Shareholder Service Agreement to be used in connection with Registrant's Master Distribution Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999, and is hereby incorporated by reference. (14) - Form of Agency Pricing Agreement (for Class A Shares) to be used in connection with Registrant's Master Distribution Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999, and is hereby incorporated by reference. (15) - Form of Service Agreement for Certain Retirement Plans (for the Institutional Classes) to be used in connection with Registrant"s Master Distribution Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 9 on February 28, 1996. (16) - Forms of Service Agreement for Brokers for Bank Trust Departments and for Bank Trust Departments to be used in connection with Registrant's Master Distribution Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999, and is hereby incorporated by reference. (17) - Form of Variable Group Annuity Contractholder Service Agreement to be used in connection with Registrant's Master Distribution Plan was filed electronically as an Exhibit to Post-Effective Amendment No. 16 on February 19, 1999, and is hereby incorporated by reference. n (1) - Amended and Restated Multiple Class Plan (Rule 18f-3 Plan), effective as of July 1, 1997, was filed electronically as an Exhibit to Post-Effective Amendment No. 12 on August 12, 1997. (2) - Second Amended and Restated Multiple Class Plan (Rule 18f-3 Plan), effective September 1, 1997, was filed electronically as an Exhibit to Post-Effective Amendment No. 13 on October 17, 1997, and is hereby incorporated by reference. (3) - Third Amended and Restated Multiple Class Plan (Rule 18f-3 Plan) was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. o (1) - The AIM Management Group Code of Ethics, as amended August 17, 1999, relating to A I M Management Group Inc. and A I M Advisors, Inc., was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incoporated by reference. (2) - The AIM Management Group Inc. Code of Ethics, as amended February 24, 2000, relating to A I M Management Group Inc. and A I M Advisors, Inc., is filed herewith electronically. (3) - Code of Ethics of AIM International Funds, Inc., effective November 1, 1991, was filed electronically as an Exhibit to Post-Effective Amendment No. 17 on February 23, 2000, and is hereby incorporated by reference. Item 24. Persons Controlled by or Under Common Control with Registrant Provide a list or diagram of all persons directly or indirectly controlled by or under common control with the Registrant. For any person controlled by another person, disclose the percentage of voting securities owned by the immediately controlling person or other basis of that person"s control. For each company, also provide the state or other sovereign power under the laws of which the company is organized. Not Applicable C-11 272 Item 25. Indemnification State the general effect of any contract, arrangements or statute under which any director, officer, underwriter or affiliated person of the Registrant is insured or indemnified against any liability incurred in their official capacity, other than insurance provided by any director, officer, affiliated person, or underwriter for their own protection. The Registrant's Agreement and Declaration of Trust, dated December 6, 1999, provides, among other things (i) that trustees and officers of the Registrant, when acting as such, shall not be personally liable for any act, omission or obligation of the Registrant or any trustee or officer (except for liabilities to the Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of duty); (ii) for the indemnification by the Registrant of the trustees, officers, employees and agents of the Registrant to the fullest extent permitted by the Delaware Business Trust Act and Bylaws and other applicable law; (iii) that shareholders of the Registrant shall not be personally liable for the debts, liabilities, obligations or expenses of the Registrant or any portfolio or class; and (iv) for the indemnification by the Registrant, out of the assets belonging to the applicable portfolio, of shareholders and former shareholders of the Registrant in case they are held personally liable solely by reason of being or having been shareholders of the Registrant or any portfolio or class and not because of their acts or omissions or for some other reason. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy and will be governed by the final adjudication of such issue. Insurance coverage is provided under a joint Mutual Fund and Investment Advisory Professional Directors and Officers Liability Policy, issued by ICI Mutual Insurance Company, with a $35,000,000 limit of liability. Item 26. Business and Other Connections of Investment Advisor Describe any other business, profession, vocation or employment of a substantial nature that each investment advisor of the Registrant, and each director, officer or partner of the advisor, is or has been engaged within the last two fiscal years for his or her own account or in the capacity of director, officer, employee, partner, or trustee. The only employment of a substantial nature of the Advisor's directors and officers is with the Advisor and its affiliated companies. Reference is also made to the caption "Management--Investment Advisor" of the Prospectus which comprises Part A of the Registration Statement, and to the caption "Management" of the Statement of Additional Information which comprises Part B of the Registration Statement, and to Item 27(b) of this Part C. Item 27. Principal Underwriters (a) State the name of each investment company (other than the Registrant) for which each principal underwriter currently distributing the Registrant"s securities also act as a principal underwriter, depositor, or investment advisor. C-12 273 A I M Distributors, Inc., the Registrant's principal underwriter, also acts as a principal underwriter to the following investment companies: AIM Advisor Funds, Inc. AIM Equity Funds (Retail Classes) AIM Floating Rate Fund AIM Funds Group AIM Growth Series AIM Investment Funds AIM Investment Securities Funds (Retail Classes) AIM Series Trust AIM Special Opportunities Funds AIM Summit Fund AIM Tax-Exempt Funds AIM Variable Insurance Funds (b) Provide the information required by the following table for each director, officer, or partner of each principal underwriter named in the response to Item 20:
Name and Principal Position and Offices Positions and Offices Business Address* with Underwriter with Registrant - ---------------- ---------------- --------------- Charles T. Bauer Chairman & Director Chairman & Trustee Michael J. Cemo President & Director None Gary T. Crum Director Senior Vice President Robert H. Graham Senior Vice President President & Trustee & Director W. Gary Littlepage Senior Vice President None & Director James L. Salners Executive Vice President None John Caldwell Senior Vice President None Marilyn M. Miller Senior Vice President None Gene L. Needles Senior Vice President None Gordon J. Sprague Senior Vice President None Michael C. Vessels Senior Vice President None
- ----------------- * 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 C-13 274
Name and Principal Position and Offices Positions and Offices Business Address* with Underwriter with Registrant - ---------------- ---------------- --------------- B. J. Thompson First Vice President None Kathleen J. Pflueger Secretary Assistant Secretary Dawn M. Hawley Vice President & Treasurer None Ofelia M. Mayo Vice President, Assistant Assistant Secretary Secretary & General Counsel Melville B. Cox Vice President & Vice President Chief Compliance Officer James R. Anderson Vice President None Mary K. Coleman Vice President None Mary A. Corcoran Vice President None Glenda A. Dayton Vice President None Sidney M. Dilgren Vice President None Tony D. Green Vice President None Charles H. McLaughlin Vice President None Ivy B. McLemore Vice President None Terri L. Ransdell Vice President None Carol F. Relihan Vice President Senior Vice President & Secretary Kamala C. Sachidanandan Vice President None Frank V. Serebrin Vice President None Christopher T. Simutis Vice President None Gary K. Wendler Vice President None Norman W. Woodson Vice President None David E. Hessel Assistant Vice President, None Controller & Assistant Treasurer
- -------------- * 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 C-14 275
Name and Principal Position and Offices Positions and Offices Business Address* with Underwriter with Registrant - ---------------- ---------------- --------------- Luke P. Beausoleil Assistant Vice President None Sheila R. Brown Assistant Vice President None Scott E. Burman Assistant Vice President None Tisha B. Christopher Assistant Vice President None Mary E. Gentempo Assistant Vice President None Simon R. Hoyle Assistant Vice President None Kathryn A. Jordan Assistant Vice President None Kim T. McAuliffe Assistant Vice President None David B. O'Neil Assistant Vice President None Rebecca Starling-Klatt Assistant Vice President None Nicholas D. White Assistant Vice President None Nancy L. Martin Assistant General Counsel & Assistant Secretary Assistant Secretary Samuel D. Sirko Assistant General Counsel & Assistant Secretary Assistant Secretary P. Michelle Grace Assistant Secretary Assistant Secretary Lisa A. Moss Assistant Secretary Assistant Secretary Stephen I. Winer Assistant Secretary Assistant Secretary
(c) Provide information required by the following table for all commissions and other compensation received, directly or indirectly, from the Registrant during the last fiscal year by each principal underwriter who is not an affiliated person of the Registrant or any affiliated person of an affiliated person: Not Applicable - ---------------- * 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173 C-15 276 Item 28. Location of Accounts and Records State the name and address of each person maintaining physical possession of each account, book, or other document required to be maintained by section 31(a) [15 U.S.C. 80a-30(a)] and the rules under that section. A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, maintains physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those maintained by the Registrant's Custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, and the Registrant's Transfer Agent and Dividend Paying Agent, A I M Fund Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739. Item 29. Management Services Provide a summary of the substantive provisions of any management-related service contract not discussed in Part A or B, disclosing the parties to the contract and the total amount paid and by whom for the Registrant"s last three fiscal years. Not Applicable Item 30. Undertakings In initial registration statements filed under the Securities Act, provide an undertaking to file an amendment to the registration statement with certified financial statements showing the initial capital received before accepting subscriptions from more than 25 persons if the Registrant intends to raise its initial capital under section 14(a)(3) [15 U.S.C. 80a-14(a)(3)]. Not Applicable C-16 277 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, Texas on the 23rd day of March, 2000. REGISTRANT: AIM INTERNATIONAL MUTUAL FUNDS By: /s/ ROBERT H. GRAHAM ---------------------------------- Robert H. Graham, President Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated: SIGNATURES TITLE DATE ---------- ----- ---- /s/ CHARLES T. BAUER Chairman & Trustee March 23, 2000 - --------------------------- (Charles T. Bauer) /s/ ROBERT H. GRAHAM Trustee & President March 23, 2000 - --------------------------- (Principal Executive Officer) (Robert H. Graham) /s/ BRUCE L. CROCKETT Trustee March 23, 2000 - --------------------------- (Bruce L. Crockett) /s/ OWEN DALY II Trustee March 23, 2000 - --------------------------- (Owen Daly II) /s/ EDWARD K. DUNN, JR. Trustee March 23, 2000 - --------------------------- (Edward K. Dunn, Jr.) /s/ JACK FIELDS Trustee March 23, 2000 - --------------------------- (Jack Fields) /s/ CARL FRISCHLING Trustee March 23, 2000 - --------------------------- (Carl Frischling) /s/ PREMA MATHAI-DAVIS Trustee March 23, 2000 - --------------------------- (Prema Mathai-Davis) /s/ LEWIS F. PENNOCK Trustee March 23, 2000 - --------------------------- (Lewis F. Pennock) /s/ LOUIS S. SKLAR Trustee March 23, 2000 - --------------------------- (Louis S. Sklar) /s/ DANA R. SUTTON Vice President & March 23, 2000 - --------------------------- Treasurer (Principal Financial (Dana R. Sutton) and Accounting Officer) 278 INDEX TO EXHIBITS
Exhibit Number Description - ------- ----------- a(3) Agreement and Declaration of Trust of AIM International Mutual Funds, dated December 6, 1999 b(3) Bylaws of AIM International Mutual Funds d(5) Form of Master Investment Advisory Agreement between A I M Advisors, Inc. and AIM International Mutual Funds i(1)(b) Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP j Consent of KPMG LLP o(2) AIM Management Group Code of Ethics, as amended February 24, 2000, relating to A I M Management Group Inc. and A I M Advisors, Inc.
EX-99.A3 2 AGREEMENT AND DECLARATION OF TRUST 1 EXHIBIT a(3) AGREEMENT AND DECLARATION OF TRUST OF AIM INTERNATIONAL MUTUAL FUNDS THIS AGREEMENT AND DECLARATION OF TRUST of AIM International Mutual Funds, dated December 6, 1999, is among Charles T. Bauer and Robert H. Graham as Trustees, and each person who becomes a Shareholder in accordance with the terms hereinafter set forth. NOW, THEREFORE, the Trustees do hereby declare that all money and property contributed to the trust hereunder shall be held and managed in trust under this Agreement for the benefit of the Shareholders as herein set forth below. ARTICLE I --------- NAME, DEFINITIONS, PURPOSE AND CERTIFICATE OF TRUST --------------------------------------------------- Section 1.1. Name. The name of the business trust established hereby is AIM International Mutual Funds, and the Trustees may transact the Trust's affairs in that name. The Trust shall constitute a Delaware business trust in accordance with the Delaware Act. Section 1.2. Definitions. Whenever used herein, unless otherwise required by the context or specifically provided: (a) "Affiliated Person," "Company," "Person," and "Principal Underwriter" shall have the meanings given them in the 1940 Act, as modified by or interpreted by any applicable order or orders of the Commission or any rules or regulations adopted or interpretive releases of the Commission thereunder. The term "Commission" shall have the meaning given it in the 1940 Act; (b) "Agreement" means this Agreement and Declaration of Trust, as it may be amended from time to time; (c) "allocable" has the meaning specified in Section 2.5(d); (d) "allocated" has the meaning specified in Section 2.5(d); (e) "Bylaws" means the Bylaws referred to in Section 4.1(e), as from time to time amended; (f) "Class" means a portion of Shares of a Portfolio of the Trust established in accordance with the provisions of Section 2.3(b); (g) "Class Expenses" means expenses incurred by a particular Class in connection with a shareholder services arrangement or a distribution plan that is specific to such Class or any other differing share of expenses or differing fees, in each case pursuant to or to the extent permitted by Rule 18f-3 under the 1940 Act. 2 (h) "Covered Persons" means a person who is or was a Trustee, officer, employee or agent of the Trust, or is or was serving at the request of the Trustees as a director, trustee, partner, officer, employee or agent of a corporation, trust, partnership, joint venture or other enterprise. (i) The "Delaware Act" refers to the Delaware Business Trust Act, 12 Del. C. Section 3801 et seq., as such Act may be amended from time to time; (j) "Governing Instrument" means collectively this Agreement, the Bylaws, all amendments to this Agreement and the Bylaws and every resolution of the Trustees or any committee of the Trustees that by its terms is incorporated by reference into this Agreement or stated to constitute part of the Trust's Governing Instrument or that is incorporated herein by Section 2.3 of this Agreement; (k) "Majority Shareholder Vote" means "the vote of a majority of the outstanding voting securities" (as defined in the 1940 Act) of the Trust, Portfolio, or Class, as applicable; (l) "Majority Trustee Vote" means the vote of a majority of the Trustees. (m) "New Class A Shares" has the meaning specified in Section 2.6(c); (n) "New Class B Shares" has the meaning specified in Section 2.6(c); (o) The "1940 Act" means the Investment Company Act of 1940, as amended from time to time; (p) "Outstanding Shares" means Shares shown on the books of the Trust or its transfer agent as then issued and outstanding, and includes Shares of one Portfolio that the Trust has purchased on behalf of another Portfolio, but excludes Shares of a Portfolio that the Trust has redeemed or repurchased; (q) "Portfolio" means a series of Shares of the Trust established in accordance with the provisions of Section 2.3(a); (r) "Proportionate Interest" has the meaning specified in Section 2.5(d); (s) "Purchasing Portfolio" has the meaning specified in Section 2.10; (t) "Schedule A" has the meaning specified in Section 2.3(a); (u) "Selling Portfolio" has the meaning specified in Section 2.10; (v) "Shareholder" means a record owner of Outstanding Shares of the Trust; 2 3 (w) "Shares" means, as to a Portfolio or any Class thereof, the equal proportionate transferable units of beneficial interest into which the beneficial interest of such Portfolio of the Trust or such Class thereof shall be divided and may include fractions of Shares as well as whole Shares; (x) The "Trust" means AIM International Mutual Funds, the Delaware business trust established hereby, and reference to the Trust, when applicable to one or more Portfolios, shall refer to each such Portfolio; (y) The "Trustees" means the Persons who have signed this Agreement as trustees so long as they shall continue to serve as trustees of the Trust in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed as Trustee in accordance with the provisions of Section 3.4, or elected as Trustee by the Shareholders, and reference herein to a Trustee or to the Trustees shall refer to such Persons in their capacity as Trustees hereunder; and (z) "Trust Property" means any and all property, real or personal, tangible or intangible, which is owned or held by or for the account of the Trust or any Portfolio, or by the Trustees on behalf of the Trust. Section 1.3. Purpose. The purpose of the Trust is to conduct, operate and carry on the business of an open-end management investment company registered under the 1940 Act through one or more Portfolios investing primarily in securities and to carry on such other business as the Trustees may from time to time determine pursuant to their authority under this Agreement. Section 1.4. Certificate of Trust. Immediately upon the execution of this Agreement, the Trustees shall file a Certificate of Trust with respect to the Trust in the Office of the Secretary of State of the State of Delaware pursuant to the Delaware Act. ARTICLE II ---------- BENEFICIAL INTEREST ------------------- Section 2.1. Shares of Beneficial Interest. The beneficial interest in the Trust shall be divided into an unlimited number of Shares, with par value of $0.001 per Share. The Trustees may, from time to time, (a) authorize the division of the Shares into one or more series, each of which constitutes a Portfolio, and (b) may further authorize the division of the Shares of any Portfolio into one or more separate and distinct Classes. All Shares issued hereunder, including without limitation, Shares issued in connection with a dividend or other distribution in Shares or a split or reverse split of Shares, shall be fully paid and nonassessable. Section 2.2. Issuance of Shares. The Trustees in their discretion may, from time to time, without vote of the Shareholders, issue Shares, in addition to the then issued and Outstanding Shares, to such party or parties and for such amount and type of consideration, subject to applicable law, including cash or securities, at such time or times and on such terms as the Trustees may deem appropriate, and may in such manner acquire other assets (including the 3 4 acquisition of assets subject to, and in connection with, the assumption of liabilities) and businesses. In connection with any issuance of Shares, the Trustees may issue fractional Shares. The Trustees may from time to time divide or combine the Shares into a greater or lesser number without thereby changing the proportionate beneficial interests in the Trust. Contributions to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or integral multiples thereof. Section 2.3. Establishment of Portfolios and Classes. - ------------ ---------------------------------------- (a) The Trust shall consist of one or more separate and distinct Portfolios, each with an unlimited number of Shares unless otherwise specified. The Trustees hereby establish and designate the Portfolios listed on Schedule A attached hereto and made a part hereof ("Schedule A"). Each additional Portfolio shall be established by the adoption of a resolution by the Trustees. Each such resolution is hereby incorporated herein by this reference and made a part of the Trust's Governing Instrument whether or not expressly stated in such resolution, and shall be effective upon the occurrence of both (i) the date stated therein (or, if no such date is stated, upon the date of such adoption) and (ii) the execution of an amendment either to this Agreement or to Schedule A hereto establishing and designating such additional Portfolio or Portfolios. The Shares of each Portfolio shall have the relative rights and preferences provided for herein and such rights and preferences as may be designated by the Trustees in any amendment or modification to the Trust's Governing Instrument. The Trust shall maintain separate and distinct records of each Portfolio and shall hold and account for the assets belonging thereto separately from the other Trust Property and the assets belonging to any other Portfolio. Each Share of a Portfolio shall represent an equal beneficial interest in the net assets belonging to that Portfolio, except to the extent of Class Expenses and other expenses separately allocated to Classes thereof (if any Classes have been established) as permitted herein. (b) The Trustees may establish one or more Classes of Shares of any Portfolio, each with an unlimited number of Shares unless otherwise specified. Each Class so established and designated shall represent a Proportionate Interest (as defined in Section 2.5(d)) in the net assets belonging to that Portfolio and shall have identical voting, dividend, liquidation, and other rights and be subject to the same terms and conditions, except that (1) Class Expenses allocated to a Class for which such expenses were incurred shall be borne solely by that Class, (2) other expenses, costs, charges, and reserves allocated to a Class in accordance with Section 2.5(e) may be borne solely by that Class, (3) dividends declared and payable to a Class pursuant to Section 7.1 shall reflect the items separately allocated thereto pursuant to the preceding clauses, (4) each Class may have separate rights to convert to another Class, exchange rights, and similar rights, each as determined by the Trustees, and (5) subject to Section 2.6(c), each Class may have exclusive voting rights with respect to matters affecting only that Class. The Trustees hereby establish for each Portfolio listed on Schedule A the Classes listed thereon. Each additional Class for any or all Portfolios shall be established 4 5 by the adoption of a resolution by the Trustees, each of which is hereby incorporated herein by this reference and made a Governing Instrument whether or not expressly stated in such resolution, and shall be effective upon the occurrence of both (i) the date stated therein (or, if no such date is stated, upon the date of such adoption) and (ii) the execution of an amendment to this Agreement establishing and designating such additional Class or Classes. Section 2.4. Actions Affecting Portfolios and Classes. Subject to the right of Shareholders, if any, to vote pursuant to Section 6.1, the Trustees shall have full power and authority, in their sole discretion without obtaining any prior authorization or vote of the Shareholders of any Portfolio, or Class thereof, to establish and designate and to change in any manner any Portfolio of Shares, or any Class or Classes thereof; to fix or change such preferences, voting powers, rights, and privileges of any Portfolio, or Classes thereof, as the Trustees may from time to time determine, including any change that may adversely affect a Shareholder; to divide or combine the Shares of any Portfolio, or Classes thereof, into a greater or lesser number; to classify or reclassify or convert any issued Shares of any Portfolio, or Classes thereof, into one or more Portfolios or Classes of Shares of a Portfolio; and to take such other action with respect to the Shares as the Trustees may deem desirable. A Portfolio and any Class thereof may issue any number of Shares but need not issue any Shares. At any time that there are no Outstanding Shares of any particular Portfolio or Class previously established and designated, the Trustees may abolish that Portfolio or Class and the establishment and designation thereof. Section 2.5. Relative Rights and Preferences. Unless the establishing resolution or any other resolution adopted pursuant to Section 2.3 otherwise provides, Shares of each Portfolio or Class thereof established hereunder shall have the following relative rights and preferences: (a) Except as set forth in paragraph (e) of this Section 2.5, each Share of a Portfolio, regardless of Class, shall represent an equal pro rata interest in the assets belonging to such Portfolio and shall have identical voting, dividend, liquidation and other rights, preferences, powers, restrictions, limitations, qualifications and designations and terms and conditions with each other Share of such Portfolio. (b) Shareholders shall have no preemptive or other right to subscribe to any additional Shares or other securities issued by the Trust or the Trustees, whether of the same or other Portfolio (or Class). (c) All consideration received by the Trust for the issue or sale of Shares of a particular Portfolio, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange, or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, shall be held and accounted for separately from the other assets of the Trust and of every other Portfolio and may be referred to herein as "assets belonging to" that Portfolio. The assets belonging to a particular Portfolio shall belong to that Portfolio for all purposes, and to no 5 6 other Portfolio, subject only to the rights of creditors of that Portfolio. In addition, any assets, income, earnings, profits or funds, or payments and proceeds with respect thereto, which are not readily identifiable as belonging to any particular Portfolio shall be allocated by the Trustees between and among one or more of the Portfolios in such manner as the Trustees, in their sole discretion, deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Portfolios thereof for all purposes, and such assets, income, earnings, profits, or funds, or payments and proceeds with respect thereto shall be assets belonging to that Portfolio. (d) Each Class of a Portfolio shall have a proportionate undivided interest (as determined by or at the direction of, or pursuant to authority granted by, the Trustees, consistent with industry practice) ("Proportionate Interest") in the net assets belonging to that Portfolio. References herein to assets, expenses, charges, costs, and reserves "allocable" or "allocated" to a particular Class of a Portfolio shall mean the aggregate amount of such item(s) of the Portfolio multiplied by the Class's Proportionate Interest. (e) A particular Portfolio shall be charged with the liabilities of that Portfolio, and all expenses, costs, charges and reserves attributable to any particular Portfolio shall be borne by such Portfolio; provided that the Trustees may, in their sole discretion, allocate or authorize the allocation of particular expenses, costs, charges, and/or reserves of a Portfolio to fewer than all the Classes thereof. Class Expenses shall, in all cases, be allocated to the Class for which such Class Expenses were incurred. Any general liabilities, expenses, costs, charges or reserves of the Trust (or any Portfolio) that are not readily identifiable as chargeable to or bearable by any particular Portfolio (or any particular Class) shall be allocated and charged by the Trustees between or among any one or more of the Portfolios (or Classes) in such manner as the Trustees in their sole discretion deem fair and equitable. Each such allocation shall be conclusive and binding upon the Shareholders of all Portfolios (or Classes) for all purposes. Without limitation of the foregoing provisions of this Section 2.5(e), (i) the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Portfolio shall be enforceable against the assets of such Portfolio only, and not against the assets of the Trust generally or assets belonging to any other Portfolio, and (ii) none of the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the Trust generally that have not been allocated to a specified Portfolio, or with respect to any other Portfolio, shall be enforceable against the assets of such specified Portfolio. Notice of this contractual limitation on inter-Portfolio liabilities shall be set forth in the Trust's Certificate of Trust described to Section 1.4, and upon the giving of such notice in the Certificate of Trust, the statutory provisions of Section 3804 of the Delaware Act relating to limitations on inter-Portfolio liabilities (and the statutory effect under Section 3804 of setting forth such notice in the Certificate of Trust) shall become applicable to the Trust and each Portfolio. 6 7 All references to Shares in this Agreement shall be deemed to be shares of any or all Portfolios, or Classes thereof, as the context may require. All provisions herein relating to the Trust shall apply equally to each Portfolio of the Trust, and each Class thereof, except as the context otherwise requires. Section 2.6. Additional Rights and Preferences of Class B Shares. In addition to the relative rights and preferences set forth in Section 2.5 and all other provisions of this Agreement relating to Shares of the Trust generally, any Class of any Portfolio designated as Class B Shares shall have the following rights and preferences: (a) Subject to the provisions of paragraph (c) below, all Class B Shares other than those purchased through the reinvestment of dividends and distributions shall automatically convert to Class A Shares eight (8) years after the end of the calendar month in which a Shareholder's order to purchase such shares was accepted. (b) Subject to the provisions of paragraph (c) below, Class B Shares purchased through the reinvestment of dividends and distributions paid in respect of Class B Shares will be considered held in a separate sub-account, and will automatically convert to Class A Shares in the same proportion as any Class B Shares (other than those in the sub-account) convert to Class A Shares. Other than this conversion feature, the Class B Shares purchased through the reinvestment of dividends and distributions paid in respect of Class B Shares shall have all the rights and preferences, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of Class B Shares generally. (c) If a Portfolio of the Trust implements any amendment to a Plan of Distribution adopted under Rule 12b-1 promulgated under the 1940 Act (or adopts or implements a non-Rule 12b-1 shareholder services plan that the Trustees have caused to be submitted to the Shareholders for their approval) that the Trustees determine would materially increase the charges that may be borne by the Class A Shareholders under such plan, the Class B Shares will stop converting to the Class A Shares unless the Class B Shares, voting separately, approve the amendment or adoption. The Trustees shall have sole discretion in determining whether such amendment or adoption is submitted to a vote of the Class B Shareholders. Should such amendment or adoption not be submitted to a vote of the Class B Shareholders or, if submitted, should the Class B Shareholders fail to approve such amendment or adoption, the Trustees shall take such action as is necessary to: (1) create a new class (the "New Class A Shares") which shall be identical in all material respects to the Class A Shares as they existed prior to the implementation of the amendment or adoption; and (2) ensure that the existing Class B Shares will be exchanged or converted into New Class A Shares no later than the date such Class B Shares were scheduled to convert to Class A Shares. If deemed advisable by the Trustees to implement the foregoing, and at the sole discretion of the Trustees, such action may include the exchange of all Class B 7 8 Shares for a new class (the "New Class B Shares"), identical in all material respects to the Class B Shares except that the New Class B Shares will automatically convert into the New Class A Shares. Such exchanges or conversions shall be effected in a manner that the Trustees reasonably believe will not be subject to federal taxation. Section 2.7. Investment in the Trust. Investments may be accepted by the Trust from such Persons, at such times, on such terms, and for such consideration, which may consist of cash or tangible or intangible property or a combination thereof, as the Trustees from time to time may authorize. At the Trustees' sole discretion, such investments, subject to applicable law, may be in the form of cash or securities in which the affected Portfolio is authorized to invest, valued as provided in applicable law. Each such investment shall be credited to the individual Shareholder's account in the form of full and fractional Shares of the Trust, in such Portfolio (or Class) as the Shareholder shall select. Section 2.8. Personal Liability of Shareholders. As provided by applicable law, no Shareholder of the Trust shall be personally liable for the debts, liabilities, obligations and expenses incurred by, contracted for, or otherwise existing with respect to, the Trust or any Portfolio (or Class) thereof. Neither the Trust nor the Trustees, nor any officer, employee, or agent of the Trust shall have any power to bind personally any Shareholder or, except as provided herein or by applicable law, to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay by way of subscription for any Shares or otherwise. The Shareholders shall be entitled, to the fullest extent permitted by applicable law, to the same limitation of personal liability as is extended under the Delaware General Corporation Law to stockholders of private corporations for profit. Every note, bond, contract or other undertaking issued by or on behalf of the Trust or the Trustees relating to the Trust or to any Portfolio shall include a recitation limiting the obligation represented thereby to the Trust and its assets or to one or more Portfolios and the assets belonging thereto (but the omission of such a recitation shall not operate to bind any Shareholder or Trustee of the Trust). Section 2.9. Assent to Agreement. Every Shareholder, by virtue of having purchased a Share, shall be held to have expressly assented to, and agreed to be bound by, the terms hereof. The death of a Shareholder during the continuance of the Trust shall not operate to terminate the same nor entitle the representative of any deceased Shareholder to an accounting or to take any action in court or elsewhere against the Trust or the Trustees, but only to rights of said decedent under this Trust. 8 9 Section 2.10. Purchases of Shares Among Portfolios. The Trust may purchase, on behalf of any Portfolio (the "Purchasing Portfolio"), Shares of another Portfolio (the "Selling Portfolio") or any Class thereof. Shares of the Selling Portfolio so purchased on behalf of the Purchasing Portfolio shall be Outstanding Shares, and shall have all preferences, voting powers, rights and privileges established for such Shares. ARTICLE III ----------- THE TRUSTEES ------------ Section 3.1. Management of the Trust. The Trustees shall have exclusive and absolute control over the Trust Property and over the business of the Trust to the same extent as if the Trustees were the sole owners of the Trust Property and business in their own right, but with such powers of delegation as may be permitted by this Agreement. The Trustees shall have power to conduct the business of the Trust and carry on its operations in any and all of its branches and maintain offices both within and without the State of Delaware, in any and all states of the United States of America, in the District of Columbia, in any and all commonwealths, territories, dependencies, colonies, or possessions of the United States of America, and in any and all foreign jurisdictions and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust although such things are not herein specifically mentioned. Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this Agreement, the presumption shall be in favor of a grant of power to the Trustees. The enumeration of any specific power in this Agreement shall not be construed as limiting the aforesaid power. The powers of the Trustees may be exercised without order of or resort to any court or other authority. Section 3.2. Trustees. The number of Trustees shall be such number as shall be fixed from time to time by a majority of the Trustees; provided, however, that the number of Trustees shall in no event be less than two (2) nor more than fifteen (15). The initial Trustees are those first identified above. Section 3.3. Terms of Office of Trustees. The Trustees shall hold office during the lifetime of this Trust, and until its termination as herein provided; except that (a) any Trustee may resign his trusteeship or may retire by written instrument signed by him and delivered to the other Trustees, which shall take effect upon such delivery or upon such later date as is specified therein; (b) any Trustee may be removed at any time by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal, specifying the date when such removal shall become effective; (c) any Trustee who has died, become physically or mentally incapacitated by reason of disease or otherwise, or is otherwise unable to serve, may be retired by written instrument signed by a majority of the other Trustees, specifying the date of his retirement; and (d) a Trustee may be removed at any meeting of the Shareholders by a vote of the Shareholders owning at least two-thirds of the Outstanding Shares. 9 10 Section 3.4. Vacancies and Appointment of Trustees. In case of the declination to serve, death, resignation, retirement or removal of a Trustee, or a Trustee is otherwise unable to serve, or an increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is filled, the other Trustees shall have all the powers hereunder and the certification of the other Trustees of such vacancy shall be conclusive. In the case of an existing vacancy, the remaining Trustees may fill such vacancy by appointing such other person as they in their discretion shall see fit, or may leave such vacancy unfilled or may reduce the number of Trustees to not less than two (2) Trustees. Such appointment shall be evidenced by a written instrument signed by a majority of the Trustees in office or by resolution of the Trustees, duly adopted, which shall be recorded in the minutes of a meeting of the Trustees, whereupon the appointment shall take effect. An appointment of a Trustee may be made by the Trustees then in office in anticipation of a vacancy to occur by reason of retirement, resignation, or removal of a Trustee, or an increase in number of Trustees effective at a later date, provided that said appointment shall become effective only at the time or after the expected vacancy occurs. As soon as any Trustee appointed pursuant to this Section 3.4 or elected by the Shareholders shall have accepted the Trust and agreed in writing to be bound by the terms of the Agreement, the Trust estate shall vest in the new Trustee or Trustees, together with the continuing Trustees, without any further act or conveyance, and he shall be deemed a Trustee hereunder. Section 3.5. Temporary Absence of Trustee. Any Trustee may, by power of attorney, delegate his power for a period not exceeding six months at any one time to any other Trustee or Trustees, provided that in no case shall less than two Trustees personally exercise the other powers hereunder except as herein otherwise expressly provided. Section 3.6. Effect of Death, Resignation, etc. of a Trustee. The declination to serve, death, resignation, retirement, removal, incapacity, or inability of the Trustees, or any one of them, shall not operate to terminate the Trust or to revoke any existing agency created pursuant to the terms of this Trust Agreement. Section 3.7. Ownership of Assets of the Trust. The assets of the Trust and of each Portfolio thereof shall be held separate and apart from any assets now or hereafter held in any capacity other than as Trustee hereunder by the Trustees or any successor Trustees. Legal title in all of the assets of the Trust and the right to conduct any business shall at all times be considered as vested in the Trustees on behalf of the Trust, except that the Trustees may cause legal title to any Trust Property to be held by, or in the name of the Trust, or in the name of any Person as nominee. No Shareholder shall be deemed to have a severable ownership in any individual asset of the Trust, or belonging to any Portfolio, or allocable to any Class thereof, or any right of partition or possession thereof, but each Shareholder shall have, except as otherwise provided for herein, a proportionate undivided beneficial interest in the Trust or in assets belonging to the Portfolio (or allocable to the Class) in which the Shareholder holds Shares. The Shares shall be personal property giving only the rights specifically set forth in this Agreement or the Delaware Act. 10 11 ARTICLE IV ---------- POWERS OF THE TRUSTEES ---------------------- Section 4.1. Powers. The Trustees in all instances shall act as principals, and are and shall be free from the control of the Shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute any and all contracts and instruments that they may consider necessary or appropriate in connection with the management of the Trust. Without limiting the foregoing and subject to any applicable limitation in this Agreement or the Bylaws of the Trust, the Trustees shall have power and authority: (a) To invest and reinvest cash and other property, and to hold cash or other property uninvested, without in any event being bound or limited by any present or future law or custom in regard to investments by Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the assets of the Trust; (b) To operate as, and to carry on the business of, an investment company, and to exercise all the powers necessary and appropriate to the conduct of such operations; (c) To borrow money and in this connection issue notes or other evidence of indebtedness; to secure borrowings by mortgaging, pledging or otherwise subjecting as security the Trust Property; to endorse, guarantee, or undertake the performance of an obligation or engagement of any other Person and to lend Trust Property; (d) To provide for the distribution of interests of the Trust either through a principal underwriter in the manner hereafter provided for or by the Trust itself, or both, or otherwise pursuant to a plan of distribution of any kind; (e) To adopt Bylaws not inconsistent with this Trust Agreement providing for the conduct of the business of the Trust and to amend and repeal them to the extent that they do not reserve such right to the Shareholders; such Bylaws shall be deemed incorporated and included in this Trust Agreement; (f) To elect and remove such officers and appoint and terminate such agents as they consider appropriate; (g) To employ one or more banks, trust companies or companies that are members of a national securities exchange or such other domestic or foreign entities as custodians of any assets of the Trust subject to any conditions set forth in this Agreement or in the Bylaws; (h) To retain one or more transfer agents and shareholder servicing agents; (i) To set record dates in the manner provided herein or in the Bylaws; 11 12 (j) To delegate such authority as they consider desirable to any officers of the Trust and to any investment adviser, manager, administrator, custodian, underwriter or other agent or independent contractor; (k) To sell or exchange any or all of the assets of the Trust, subject to the right of Shareholders, if any, to vote on such transaction pursuant to Section 6.1; (1) To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies and powers of attorney to such person or persons as the Trustees shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as the Trustee shall deem proper; (m) To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities; (n) To hold any security or property in a form not indicating any trust, whether in bearer, book entry, unregistered or other negotiable form; or either in the name of the Trust or of a Portfolio or a custodian or a nominee or nominees, subject in either case to proper safeguards according to the usual practice of Delaware business trusts or investment companies; (o) To establish separate and distinct Portfolios with separately defined investment objectives and policies and distinct investment purposes in accordance with the provisions of Article 11 hereof and to establish Classes of such Portfolios having relative rights, powers and duties as they may provide consistent with applicable law; (p) Subject to the provisions of Section 3804 of the Delaware Act, to allocate assets, liabilities and expenses of the Trust to a particular Portfolio or to apportion the same between or among two or more Portfolios, provided that any liabilities or expenses incurred by a particular Portfolio shall be payable solely out of the assets belonging to that Portfolio as provided for in Article II hereof; (q) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern, any security of which is held in the Trust; to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern, and to pay calls or subscriptions with respect to any security held in the Trust; (r) To compromise, arbitrate, or otherwise adjust claims in favor of or against the Trust or any matter in controversy including, but not limited to, claims for taxes; (s) To declare and pay dividends and make distributions of income and of capital gains and capital to Shareholders in the manner hereinafter provided; 12 13 (t) To establish, from time to time, a minimum investment for Shareholders in the Trust or in one or more Portfolios or Classes, and to require the redemption of the Shares of any Shareholder whose investment is less than such minimum upon giving notice to such Shareholder; (u) To establish one or more committees, to delegate any of the powers of the Trustees to said committees and to adopt a committee charter providing for such responsibilities, membership (including Trustees, officers or other agents of the Trust therein) and any other characteristics of said committees as the Trustees may deem proper, each of which committees may consist of less than the whole number of Trustees then in office, and may be empowered to act for and bind the Trustees and the Trust, as if the acts of such committee were the acts of all the Trustees then in office; (v) To interpret the investment policies, practices or limitations of any Portfolios; (w) To establish a registered office and have a registered agent in the State of Delaware; and (x) In general, to carry on any other business in connection with or incidental to any of the foregoing powers, to do everything necessary, suitable or proper for the accomplishment of any purpose or the attainment of any object or the furtherance of any power hereinbefore set forth, either alone or in association with others, and to do every other act or thing incidental or appurtenant to or growing out of or connected with the aforesaid business or purposes, objects or powers. The foregoing clauses shall be construed both as objects and powers, and the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the general powers of the Trustees. Any action by one or more of the Trustees in their capacity as such hereunder shall be deemed an action on behalf of the Trust or the applicable Portfolio, and not an action in an individual capacity. The Trustees shall not be limited to investing in obligations maturing before the possible termination. of the Trust. No one dealing with the Trustees shall be under any obligation to make any inquiry concerning the authority of the Trustees, or to see to the application of any payments made or property transferred to the Trustees or upon their order. Section 4.2. Issuance and Repurchase of Shares. The Trustees shall have the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, and otherwise deal in Shares and, subject to the provisions set forth in Articles II and VII hereof, to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares any funds or property of the Trust, or any assets belonging to the particular Portfolio or any assets allocable to the particular Class, with respect to which such Shares are issued. 13 14 Section 4.3. Action by the Trustees. The Board of Trustees or any committee thereof shall act by majority vote of those present at a meeting duly called (including a meeting by telephonic or other electronic means, unless the 1940 Act requires that a particular action be taken only at a meeting of the Trustees in person) at which a quorum required by the Bylaws is present or by unanimous written consent of the Trustees or committee, as the case may be, without a meeting, provided that the writing or writings are filed with the minutes of proceedings of the Board or committee. Written consents or waivers of the Trustees may be executed in one or more counterparts. Any written consent or waiver may be provided and delivered to the Trust by any means by which notice may be given to a Trustee. Subject to the requirements of the 1940 Act, the Trustees by Majority Trustee Vote may delegate to any Trustee or Trustees authority to approve particular matters or take particular actions on behalf of the Trust. Section 4.4. Principal Transactions. The Trustees may, on behalf of the Trust, buy any securities from or sell any securities to, or lend any assets of the Trust to, any Trustee or officer of the Trust or any firm of which any such Trustee or officer is a member acting as principal, or have any such dealings with any investment adviser, distributor, or transfer agent for the Trust or with any Affiliated Person of such Person; and the Trust may employ any such Person, or firm or Company in which such Person is an Affiliated Person, as broker, legal counsel, registrar, investment adviser, distributor, administrator, transfer agent, dividend disbursing agent, custodian, or in any capacity upon customary terms, subject in all cases to applicable laws, rules, and regulations and orders of regulatory authorities. Section 4.5. Payment of Expenses by the Trust. The Trustees are authorized to pay or cause to be paid out of the principal or income of the Trust or any Portfolio, or partly out of the principal and partly out of income, and to charge or allocate to, between or among such one or more of the Portfolios (or Classes), as they deem fair, all expenses, fees, charges, taxes and liabilities incurred or arising in connection with the Trust or Portfolio (or Class), or in connection with the management thereof, including, but not limited to, the Trustees' compensation and such expenses and charges for the services of the Trust's officers, employees, investment adviser and manager, administrator, principal underwriter, auditors, counsel, custodian, transfer agent, Shareholder servicing agent, and such other agents or independent contractors and such other expenses and charges as the Trustees may deem necessary or proper to incur. Section 4.6. Trustee Compensation. The Trustees as such shall be entitled to reasonable compensation from the Trust. They may fix the amount of their compensation. Nothing herein shall in any way prevent the employment of any Trustee for advisory, management, administrative, legal, accounting, investment banking, underwriting, brokerage, or investment dealer or other services and the payment for the same by the Trust. 14 15 ARTICLE V --------- INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND --------------------------------------------- TRANSFER AGENT -------------- Section 5. 1. Investment Adviser. The Trustees may in their discretion, from time to time, enter into an investment advisory or management contract or contracts with respect to the Trust or any Portfolio whereby the other party or parties to such contract or contracts shall undertake to furnish the Trustees with such management, investment advisory, statistical and research facilities and services and such other facilities and services, if any, and all upon such terms and conditions, as the Trustees may in their discretion determine. The Trustees may authorize the investment adviser to employ, from time to time, one or more sub-advisers to perform such of the acts and services of the investment adviser, and upon such terms and conditions, as may be agreed upon among the Trustees, the investment adviser and sub-adviser. Any references in this Agreement to the investment adviser shall be deemed to include such sub-advisers, unless the context otherwise requires. Section 5.2. Other Service Contracts. The Trustees may authorize the engagement of a principal underwriter, transfer agent, administrator, custodian, and similar service providers. Section 5.3. Parties to Contract. Any contract of the character described in Sections 5.1 and 5.2 may be entered into with any corporation, firm, partnership, trust or association, although one or more of the Trustees or officers of the Trust may be an officer, director, trustee, shareholder, or member of such other party to the contract. 15 16 Section 5.4. Miscellaneous. The fact that (i) any of the Shareholders, Trustees or officers of the Trust is a shareholder, director, officer, partner, trustee, employee, manager, adviser, principal underwriter or distributor or agent of or for any Company or of or for any parent or affiliate of any Company, with which an advisory or administration contract, or principal underwriter's or distributor's contract, or transfer, shareholder servicing, custodian or other agency contract may have been or may hereafter be made, or that any such Company, or any parent or affiliate thereof, is a Shareholder or has an interest in the Trust, or that (ii) any Company with which an advisory or administration contract or principal underwriter's or distributor's contract, or transfer, shareholder servicing, custodian, or other agency contract may have been or may hereafter be made also has an advisory or administration contract, or principal underwriter's or distributor's contract, or transfer, shareholder servicing, custodian or other agency contract with one or more other companies, or has other business or interests shall not affect the validity of any such contract or disqualify any Shareholder, Trustee or officer of the Trust from voting upon or executing the same or create any liability or accountability to the Trust or its Shareholders. ARTICLE VI ---------- SHAREHOLDERS' VOTING POWERS AND MEETING --------------------------------------- Section 6.1. Voting Powers. The Shareholders shall have power to vote only to: (i) elect Trustees, provided that a meeting of Shareholders has been called for that purpose; (ii) remove Trustees, provided that a meeting of Shareholders has been called for that purpose; (iii) approve the termination of the Trust or any Portfolio or Class, provided that the Trustees have called a meeting of the Shareholders for the purpose of approving any such termination, unless, as of the date on which the Trustees have determined to so terminate the Trust or such Portfolio or Class, there are fewer than 100 holders of record of the Trust or of such terminating Portfolio or Class; (iv) approve the sale of all or substantially all the assets of the Trust or any Portfolio or Class, unless the primary purpose of such sale is to change the Trust's domicile or form of organization or form of business trust; (v) approve the merger or consolidation of the Trust or any Portfolio or Class with and into another Company or with and into any Portfolio or Class of the Trust, unless (A) the primary purpose of such merger or consolidation is to change the Trust's domicile or form of organization or form of business trust, or (B) after giving effect to such merger or consolidation, based on the number of Shares outstanding as of a date selected by the Trustees, the Shareholders of the Trust or such Portfolio or Class will have a majority of the outstanding shares of the surviving Company or Portfolio or Class thereof, as the case may be; (vi) approve any amendment to this Article VI, Section 6.1; and (vii) approve such additional matters as may be required by law or as the Trustees, in their sole discretion, shall determine. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required or permitted by law, this Trust Agreement or any of the Bylaws of the Trust to be taken by Shareholders. On any matter submitted to a vote of the Shareholders, all Shares shall be voted together, except when required by applicable law or when the Trustees have determined that the matter affects the interests of one or more Portfolios (or Classes), then only the Shareholders of all such affected Portfolios (or Classes) shall be entitled to vote thereon. Each whole Share shall 16 17 be entitled to one vote as to any matter on which it is entitled to vote, and each fractional Share shall be entitled to a proportionate fractional vote. The vote necessary to approve any such matter shall be set forth in the Bylaws. ARTICLE VII ----------- DISTRIBUTIONS AND REDEMPTIONS ----------------------------- Section 7.1. Distributions. The Trustees may from time to time declare and pay dividends and make other distributions with respect to any Portfolio, or Class thereof, which may be from income, capital gains or capital. The amount of such dividends or distributions and the payment of them and whether they are in cash or any other Trust Property shall be wholly in the discretion of the Trustees. Dividends and other distributions may be paid pursuant to a standing resolution adopted once or more often as the Trustees determine. All dividends and other distributions on Shares of a particular Portfolio or Class shall be distributed pro rata to the Shareholders of that Portfolio or Class, as the case may be, in proportion to the number of Shares of that Portfolio or Class they held on the record date established for such payment, provided that such dividends and other distributions on Shares of a Class shall appropriately reflect Class Expenses and other expenses allocated to that Class. The Trustees may adopt and offer to Shareholders such dividend reinvestment plans, cash distribution payment plans, or similar plans as the Trustees deem appropriate. Section 7.2. Redemptions. Any holder of record of Shares of a particular Portfolio, or Class thereof, shall have the right to require the Trust to redeem his Shares, or any portion thereof, subject to such terms and conditions as are set forth in the registration statement of the Trust in effect from time to time. The redemption price may in any case or cases be paid wholly or partly in kind if the Trustees determine that such payment is advisable in the interest of the remaining Shareholders of the Portfolio or Class thereof for which the Shares are being redeemed. Subject to the foregoing, the fair value, selection and quantity of securities or other property so paid or delivered as all or part of the redemption price may be determined by or under authority of the Trustees. In no case shall the Trust be liable for any delay of any Person in transferring securities selected for delivery as all or part of any payment in kind. Section 7.3. Redemption of Shares by Trustees. The Trustees may, at their option, call for the redemption of the Shares of any Person or may refuse to transfer or issue Shares to any Person to the extent that the same is necessary to comply with applicable law or advisable to further the purposes for which the Trust is formed. To the extent permitted by law, the Trustees may retain the proceeds of any redemption of Shares required by them for payments of amounts due and owing by a Shareholder to the Trust or any Portfolio. Section 7.4. Redemption of De Minimis Accounts. If, at any time when a request for transfer or redemption of Shares of any Portfolio is received by the Trust or its agent, the value of the Shares of such Portfolio in a Shareholder's account is less than Five Hundred Dollars ($500.00), or such greater amount as the Trustees in their discretion shall have determined in accordance with Section 4.1(t), after giving effect to such transfer or redemption and upon giving thirty (30) days' notice to the Shareholder, the Trust may cause the remaining Shares of such 17 18 Portfolio in such Shareholder's account to be redeemed, subject to such terms and conditions as are set forth in the registration statement of the Trust in effect from time to time. ARTICLE VIII ------------ LIMITATION OF LIABILITY AND INDEMNIFICATION ------------------------------------------- Section 8.1. Limitation of Liability. A Trustee or officer, when acting in such capacity, shall not be personally liable to any person for any act, omission or obligation of the Trust or any Trustee or officer; provided, however, that nothing contained herein or in the Delaware Act shall protect any Trustee or officer against any liability to the Trust or to Shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office with the Trust. Section 8.2. Indemnification of Covered Persons. Every Covered Person shall be indemnified by the Trust to the fullest extent permitted by the Delaware Act, the Bylaws and other applicable law. Section 8.3. Indemnification of Shareholders. In case any Shareholder or former Shareholder of the Trust shall be held to be personally liable solely by reason of his being or having been a Shareholder of the Trust or any Portfolio or Class and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his heirs, executors, administrators or other legal representatives, or, in the case of a corporation or other entity, its corporate or general successor) shall be entitled, out of the assets belonging to the applicable Portfolio, to be held harmless from and indemnified against all loss and expense arising from such liability in accordance with the Bylaws and applicable law. The Trust, on behalf of the affected Portfolio, shall upon request by the Shareholder, assume the defense of any such claim made against the Shareholder for any act or obligation of that Portfolio. ARTICLE IX ---------- MISCELLANEOUS ------------- Section 9.1. Trust Not a Partnership; Taxation. It is hereby expressly declared that a trust and not a partnership is created hereby. No Trustee hereunder shall have any power to bind personally either the Trust's officers or any Shareholder. All persons extending credit to, contracting with or having any claim against the Trust or the Trustees shall look only to the assets of the appropriate Portfolio or, until the Trustees shall have established any separate Portfolio, of the Trust for payment under such credit, contract or claim; and neither the Shareholders, the Trustees, nor the Trust's officers nor any of the agents of the Trustees whether past, present or future, shall be personally liable therefor. It is intended that the Trust, or each Portfolio if there is more than one Portfolio, be classified for income tax purposes as an association taxable as a corporation, and the Trustees shall do all things that they, in their sole discretion, determine are necessary to achieve that objective, including (if they so determine), electing such classifications on Internal Revenue 18 19 Form 8832. The Trustees, in their sole discretion and without the vote or consent of the Shareholders, may amend this Agreement to ensure that this objective is achieved. Section 9.2. Trustee's Good Faith Action, Expert Advice, No Bond or Surety. The exercise by the Trustees of their powers and discretion hereunder in good faith and with reasonable care under the circumstances then prevailing shall be binding upon everyone interested. Subject to the provisions of Article VIII and to Section 9.1, the Trustees shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Agreement, and subject to the provisions of Article VIII and Section 9.1, shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Trustees shall not be required to give any bond as such, nor any surety if a bond is obtained. Section 9.3. Termination of Trust or Portfolio or Class. (a) Unless terminated as provided herein, the Trust shall continue without limitation of time. The Trust may be terminated at any time by the Trustees by written notice to the Shareholders, subject to the right of Shareholders, if any, to vote pursuant to Section 6.1. Any Portfolio or Class may be terminated at any time by the Trustees by written notice to the Shareholders of that Portfolio or Class, subject to the right of Shareholders, if any, to vote pursuant to Section 6.I. (b) On termination of the Trust or any Portfolio pursuant to paragraph (a) above, (1) the Trust or that Portfolio thereafter shall carry on no business except for the purpose of winding up its affairs, (2) the Trustees shall (i) proceed to wind up the affairs of the Trust or that Portfolio, and all powers of the Trustees under this Agreement with respect thereto shall continue until such affairs have been wound up, including the powers to fulfill or discharge the contracts of the Trust or that Portfolio, (ii) collect its assets or the assets belonging thereto, (iii) sell, convey, assign, exchange, or otherwise dispose of all or any part of those assets to one or more persons at public or private sale for consideration that may consist in whole or in part of cash, securities, or other property of any kind, (iv) discharge or pay its liabilities, and (v) do all other acts appropriate to liquidate its business, and (3) after paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities, and refunding agreements as they deem necessary for their protection, the Trustees shall distribute the remaining assets ratably among the Shareholders of the Trust or that Portfolio. (c) On termination of any Class pursuant to paragraph (a) above, 19 20 (1) the Trust thereafter shall no longer issue Shares of that Class, (2) the Trustees shall do all other acts appropriate to terminate the Class, and (3) the Trustees shall distribute ratably among the Shareholders of that Class, in cash or in kind, an amount equal to the Proportionate Interest of that Class in the net assets of the Portfolio (after taking into account any Class Expenses or other fees, expenses, or charges allocable thereto), and in connection with any such distribution in cash the Trustees are authorized to sell, convey, assign, exchange or otherwise dispose of such assets of the Portfolio of which that Class is a part as they deem necessary. (d) On completion of distribution of the remaining assets pursuant to paragraph (b)(3) above, the Trust or the affected Portfolio shall terminate and the Trustees and the Trust shall be discharged from all further liabilities and duties hereunder with respect thereto and the rights and interests of all parties therein shall be cancelled and discharged. On termination of the Trust, following completion of winding up of its business, the Trustees shall cause a Certificate of Cancellation of the Trust's Certificate of Trust to be FILED in accordance with the Delaware Act, which Certificate may be signed by any one Trustee. Section 9.4. Sale of Assets; Merger and Consolidation. Subject to right of Shareholders, if any, to vote pursuant to Section 6. 1, the Trustees may cause (i) the Trust or one or more of its Portfolios to the extent consistent with applicable law to sell all or substantially all of its assets to, or be merged into or consolidated with, another Portfolio, business trust (or series thereof) or Company (or series thereof), (ii) the Shares of the Trust or any Portfolio (or Class) to be converted into beneficial interests in another business trust (or series thereof) created pursuant to this Section 9.4, (iii) the Shares of any Class to be converted into another Class of the same Portfolio, or (iv) the Shares to be exchanged under or pursuant to any state or federal statute to the extent permitted by law. In all respects not governed by statute or applicable law, the Trustees shall have power to prescribe the procedure necessary or appropriate to accomplish a sale of assets, merger or consolidation including the power to create one or more separate business trusts to which all or any part of the assets, liabilities, profits or losses of the Trust may be transferred and to provide for the conversion of Shares of the Trust or any Portfolio (or Class) into beneficial interests in such separate business trust or trusts (or series or class thereof). Section 9.5. Filing of Copies, References, Headings. The original or a copy of this Agreement or any amendment hereto or any supplemental agreement shall be kept at the office of the Trust where it may be inspected by any Shareholder. In this Agreement or in any such amendment or supplemental agreement, references to this Agreement, and all expressions like "herein," "hereof," and "hereunder," shall be deemed to refer to this Agreement as amended or affected by any such supplemental agreement. All expressions like "his," "he," and "him," shall be deemed to include the feminine and neuter, as well as masculine, genders. Headings are placed herein for convenience of reference only and in case of any conflict, the text of this Agreement, rather than the headings, shall control. This Agreement may be executed in any number of counterparts each of which shall be deemed an original. 20 21 Section 9.6. Governing Law. The Trust and this Agreement, and the rights, obligations and remedies of the Trustees and Shareholders hereunder, are to be governed by and construed and administered according to the Delaware Act and the other laws of the State of Delaware; provided, however, that there shall not be applicable to the Trust, the Trustees, the Shareholders or this Trust Agreement (a) the provisions of Section 3540 of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or common) of the State of Delaware (other than the Delaware Act) pertaining to trusts which relate to or regulate (i) the filing with any court or governmental body or agency of trustee accounts or schedules of trustee fees and charges, (ii) affirmative requirements to post bonds for trustees, officers, agents or employees of a trust, (iii) the necessity for obtaining court or other governmental approval concerning the acquisition, holding or disposition of real or personal property, (iv) fees or other sums payable to trustees, officers, agents or employees of a trust, (v) the allocation of receipts and expenditures to income or principal, (vi) restrictions or limitations on the permissible nature, amount or concentration of trust investments or requirements relating to the titling, storage or other manner of holding of trust assets, or (vii) the establishment of fiduciary or other standards or responsibilities or limitations on the indemnification, acts or powers of trustees or other Persons, which are inconsistent with the limitations or liabilities or authorities and powers of the Trustees or officers of the Trust set forth or referenced in this Agreement. The Trust shall be of the type commonly called a "business trust," and without limiting the provisions hereof, the Trust may exercise all powers which are ordinarily exercised by such a trust under Delaware law. The Trust specifically reserves the right to exercise any of the powers or privileges afforded to trusts or actions that may be engaged in by trusts under the Delaware Act, and the absence of a specific reference herein to any such power, privilege or action shall not imply that the Trust may not exercise such power or privilege or take such actions; provided, however, that the exercise of any such power, privilege or action shall not otherwise violate applicable law. Section 9.7. Amendments. Except as specifically provided in Section 6.1, the Trustees may, without any Shareholder vote, amend this Agreement by making an amendment to this Agreement or to Schedule A, an agreement supplemental hereto, or an amended and restated trust instrument. Any such amendment, having been approved by a Majority Trustee Vote, shall become effective, unless otherwise provided by such Trustees, upon being executed by a duly authorized officer of the Trust. Any amendment submitted to Shareholders that the Trustees determine would affect the Shareholders of fewer than all Portfolios (or fewer than all Classes thereof) shall be authorized by a vote of only the Shareholders of the affected Portfolio(s) (or Class(es)), and no vote shall be required of Shareholders of any Portfolio (or Class) that is not affected. Notwithstanding anything else herein to the contrary, any amendment to Article VIII that would have the effect of reducing the indemnification provided thereby to Covered Persons or to Shareholders or former Shareholders, and any repeal or amendment of this sentence shall each require the affirmative vote of Shareholders owning at least two-thirds of the Outstanding Shares entitled to vote thereon. A certification signed by a duly authorized officer of the Trust setting forth an amendment to this Agreement and reciting that it was duly adopted by the Shareholders or by the Trustees as aforesaid, or a copy of this Agreement, as amended, executed 21 22 by a majority of the Trustees, or a duly authorized officer of the Trust, shall be conclusive evidence of such amendment when lodged among the records of the Trust. Section 9.8. Provisions in Conflict with Law. The provisions of this Agreement are severable, and if the Trustees shall determine, with the advice of counsel, that any of such provisions is in conflict with applicable law the conflicting provision shall be deemed never to have constituted a part of this Agreement; provided, however, that such determination shall not affect any of the remaining provisions of this Agreement or render invalid or improper any action taken or omitted prior to such determination. If any provision of this Agreement shall be held invalid or enforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect such provisions in any other jurisdiction or any other provision of this Agreement in any jurisdiction. Section 9.9. Shareholders' Right to Inspect Shareholder List. One or more Persons who together and for at least six months have been Shareholders of at least FIVE percent (5%) of the Outstanding Shares of any Class may present to any officer or resident agent of the Trust a written request for a list of its Shareholders. Within twenty (20) days after such request is made, the Trust shall prepare and have available on file at its principal office a list verified under oath by one of its officers or its transfer agent or registrar which sets forth the name and address of each Shareholder and the number of Shares of each Portfolio and Class which the Shareholder holds. The rights provided for herein shall not extend to any Person who is a beneficial owner but not also a record owner of Shares of the Trust. 22 23 IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the Trust, have executed this instrument this 6th day of December, 1999. /s/ CHARLES T. BAUER ------------------------------- Charles T. Bauer /s/ ROBERT H. GRAHAM ------------------------------- Robert H. Graham 23 24 SCHEDULE A AIM INTERNATIONAL MUTUAL FUNDS PORTFOLIOS AND CLASSES THEREOF
PORTFOLIO CLASSES OF EACH PORTFOLIO - --------- ------------------------- AIM Asian Growth Fund Class A Shares Class B Shares Class C Shares AIM European Development Fund Class A Shares Class B Shares Class C Shares AIM Global Aggressive Growth Fund Class A Shares Class B Shares Class C Shares AIM Global Growth Fund Class A Shares Class B Shares Class C Shares AIM Global Income Fund Class A Shares Class B Shares Class C Shares AIM International Equity Fund Class A Shares Class B Shares Class C Shares
EX-99.B3 3 BYLAWS OF AIM INTERNATIONAL MUTUAL FUNDS 1 EXHIBIT b(3) BYLAWS OF AIM INTERNATIONAL MUTUAL FUNDS, A DELAWARE BUSINESS TRUST Adopted effective December 8, 1999. Capitalized terms not specifically defined herein shall have the meanings ascribed to them in the Trust's Agreement and Declaration of Trust (the "Agreement"). ARTICLE I OFFICES Section 1. Registered Office. The registered office of AIM International Mutual Funds (the "Trust") shall be at the offices of The Corporation Trust Company in the County of New Castle, State of Delaware. Section 2. Other Offices. The Trust may also have offices at such other places both within and without the State of Delaware as the Trustees may from time to time determine or the business of the Trust may require. ARTICLE II TRUSTEES Section 1. Meetings of the Trustees. The Trustees of the Trust may hold meetings, both regular and special, either within or without the State of Delaware. Meetings of the Trustees may be called orally or in writing by the President of the Trust or by any two Trustees. Section 2. Regular Meetings. Regular meetings of the Board of Trustees shall be held each year, at such time and place as the Board of Trustees may determine. Section 3. Notice of Meetings. Notice of the time, date, and place of all meetings of the Trustees shall be given to each Trustee (i) by telephone, telex, telegram, facsimile, electronic-mail, or other electronic mechanism sent to his or her home or business address at least twenty-four hours in advance of the meeting or (ii) in person at another meeting of the Trustees or (iii) by written notice mailed or sent via overnight courier to his or her home or business address at least seventy-two hours in advance of the meeting. Notice need not be given to any Trustee who attends the meeting without objecting to the lack of notice or who signs a waiver of notice either before or after the meeting. Section 4. Quorum. At all meetings of the Trustees, one-third of the Trustees then in office (but in no event less than two Trustees) shall constitute a quorum for the transaction of business and the act of a majority of the Trustees present at any meeting at which there is a quorum shall be the act of the Board of Trustees, except as may be otherwise specifically 2 provided by applicable law or by the Agreement or these Bylaws. If a quorum shall not be present at any meeting of the Board of Trustees, the Trustees present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 5. Designation, Powers, and Names of Committees. (a) The Board of Trustees shall initially have the following three committees: (1) an Audit Committee; (2) a Nominating and Compensation Committee; and (3) an Investments Committee. Each such Committee shall consist of two or more of the Trustees of the Trust and the Board may designate one or more Trustees as alternate members of any Committee, who may replace any absent or disqualified member at any meeting of such Committee; provided, however, that under no circumstances shall a member of the Audit Committee or the Nominating and Compensation Committee be an "interested person," as such term is defined in the 1940 Act, of the Trust. The Board shall designate the powers and duties of each such Committee and may terminate any such Committee by an amendment to these Bylaws. (b) The Board of Trustees may, by resolution passed by a majority of the whole Board, designate one or more additional committees, each committee to consist of two or more of the Trustees of the Trust. The Board may designate one or more Trustees as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. Each committee, to the extent provided in the resolution, shall have and may exercise the powers of the Board of Trustees in the management of the business and affairs of the Trust; provided, however, that in the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the Board of Trustees to act at the meeting in the place of any such absent or disqualified member. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Trustees. Section 6. Minutes of Committee. Each committee shall keep regular minutes of its meetings and report the same to the Board of Trustees when required. ARTICLE III OFFICERS Section 1. Executive Officers. The initial executive officers of the Trust shall be elected by the Board of Trustees as soon as practicable after the organization of the Trust. The executive officers may include a Chairman of the Board, and shall include a President, one or more Vice Presidents (the number thereof to be determined by the Board of Trustees), a Secretary and a Treasurer. The Chairman of the Board, if any, shall be selected from among the Trustees. The Board of Trustees may also in its discretion appoint Assistant Vice Presidents, 2 3 Assistant Secretaries, Assistant Treasurers, and other officers, agents and employees, who shall have such authority and perform such duties as the Board may determine. The Board of Trustees may fill any vacancy which may occur in any office. Any two offices, except for those of President and Vice President, may be held by the same person, but no officer shall execute, acknowledge or verify any instrument on behalf of the Trust in more than one capacity, if such instrument is required by law or by these Bylaws to be executed, acknowledged or verified by two or more officers. Section 2. Term of Office. Unless otherwise specifically determined by the Board of Trustees, the officers shall serve at the pleasure of the Board of Trustees. If the Board of Trustees in its judgment finds that the best interests of the Trust will be served, the Board of Trustees may remove any officer of the Trust at any time with or without cause. The Trustees may delegate this power to the President (without supervision by the Trustees) with respect to any other officer. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer may resign from office at any time by delivering a written resignation to the Trustees or the President. Unless otherwise specified therein, such resignation shall take effect upon delivery. Section 3. President. The President shall be the chief executive officer of the Trust and, subject to the Board of Trustees, shall generally manage the business and affairs of the Trust. If there is no Chairman of the Board, or if the Chairman of the Board has been appointed but is absent, the President shall, if present, preside at all meetings of the Shareholders and the Board of Trustees. Section 4. Chairman of the Board. The Chairman of the Board, if any, shall preside at all meetings of the Shareholders and the Board of Trustees, if the Chairman of the Board is present. The Chairman of the Board shall have such other powers and duties as shall be determined by the Board of Trustees, and shall undertake such other assignments as may be requested by the President. Section 5. Chairman, Vice Presidents. The Chairman of the Board or one or more Vice Presidents shall have and exercise such powers and duties of the President in the absence or inability to act of the President, as may be assigned to them, respectively, by the Board of Trustees or, to the extent not so assigned, by the President. In the absence or inability to act of the President, the powers and duties of the President not otherwise assigned by the Board of Trustees or the President shall devolve upon the Chairman of the Board, or in the Chairman's absence, the Vice Presidents in the order of their election. Section 6. Secretary. The Secretary shall (a) have custody of the seal of the Trust; (b) attend meetings of the Shareholders, the Board of Trustees, and any committees of Trustees and keep the minutes of such meetings of Shareholders, the Board of Trustees and any committees thereof, and (c) issue all notices of the Trust. The Secretary shall have charge of the Shareholder records and such other books and papers as the Board may direct, and shall perform such other duties as may be incidental to the office or which are assigned by the Board of Trustees. The Secretary shall also keep or cause to be kept a Shareholder book, which may 3 4 be maintained by means of computer systems, containing the names, alphabetically arranged, of all persons who are Shareholders of the Trust, showing their places of residence, the number and series and class of any Shares held by them, respectively, and the dates when they became the record owners thereof. Section 7. Treasurer. The Treasurer shall have the care and custody of the funds and securities of the Trust and shall deposit the same in the name of the Trust in such bank or banks or other depositories, subject to withdrawal in such manner as these Bylaws or the Board of Trustees may determine. The Treasurer shall, if required by the Board of Trustees, give such bond for the faithful discharge of duties in such form as the Board of Trustees may require. Section 8. Assistant Officers. Assistant officers, which may include one or more Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, shall perform such functions and have such responsibilities as the Board of Trustees may determine. Section 9. Surety Bond. The Trustees may require any officer or agent of the Trust to execute a bond (including, without limitation, any bond required by the 1940 Act and the rules and regulations of the Securities and Exchange Commission (the "Commission") to the Trust in such sum and with such surety or sureties as the Trustees may determine, conditioned upon the faithful performance of his or her duties to the Trust, including responsibility for negligence and for the accounting of any of the Trust's property, funds, or securities that may come into his or her hands. Section 10. Authorized Signatories. Unless a specific officer is otherwise designated in a resolution adopted by the Board of Trustees, the proper officers of the Trust for executing agreements, documents and instruments other than Internal Revenue Service forms shall be the President, any Vice President, the Secretary or any Assistant Secretary. Unless a specific officer is otherwise designated in a resolution adopted by the Board of Trustees, the proper officers of the Trust for executing any and all Internal Revenue Service forms shall be the President, any Vice President, the Secretary, any Assistant Secretary, or the Treasurer. ARTICLE IV MEETINGS OF SHAREHOLDERS Section 1. Purpose. All meetings of the Shareholders for the election of Trustees shall be held at such place as may be fixed from time to time by the Trustees, or at such other place either within or without the State of Delaware as shall be designated from time to time by the Trustees and stated in the notice indicating that a meeting has been called for such purpose. Meetings of Shareholders may be held for any purpose determined by the Trustees and may be held at such time and place, within or without the State of Delaware as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. At all meetings of the Shareholders, every shareholder of record entitled to vote thereat shall be entitled to vote at such meeting either in person or by written proxy signed by the Shareholder or by his duly 4 5 authorized attorney in fact. A Shareholder may duly authorize such attorney in fact through written, electronic, telephonic, computerized, facsimile, telecommunication, telex or oral communication or by any other form of communication. Unless a proxy provides otherwise, such proxy is not valid more than eleven months after its date. A proxy with respect to shares held in the name of two or more persons shall be valid if executed by any one of them unless at or prior to exercise of the proxy the Trust receives a specific written notice to the contrary from any one of them. A proxy purporting to be executed by or on behalf of a Shareholder shall be deemed valid unless challenged at or prior to its exercise and the burden of proving invalidity shall rest on the challenger. Section 2. Nomination of Trustees. So long as the Trust has adopted and maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act (a "Rule 12b-1 Plan"), the nomination of Trustees who are not "interested persons," as defined in the 1940 Act, of the Trust shall be made by the Nominating and Compensation Committee. In addition, so long as the Trust maintains a Nominating and Compensation Committee, the nomination of all other Trustees shall also be made by the Nominating and Compensation Committee. If the Trust no longer maintains a Rule 12b-1 Plan and no longer maintains a Nominating and Compensation Committee, the nomination of all Trustees shall be made by the Board of Trustees. Any Shareholder may submit names of individuals to be considered by the Nominating and Compensation Committee or the Board of Trustees, as applicable, provided, however, (i) that such person was a shareholder of record at the time of submission of such names and is entitled to vote at the meeting, and (ii) that the Nominating and Compensation Committee or the Board of Trustees, as applicable, shall make the final determination of persons to be nominated. Section 3. Election of Trustees. All meetings of Shareholders for the purpose of electing Trustees shall be held on such date and at such time as shall be designated from time to time by the Trustees and stated in the notice of the meeting, at which the Shareholders shall elect by a plurality vote any number of Trustees as the notice for such meeting shall state are to be elected, and transact such other business as may properly be brought before the meeting in accordance with Section 1 of this Article IV. Section 4. Notice of Meetings. Written notice of any meeting stating the place, date, and hour of the meeting shall be given to each Shareholder entitled to vote at such meeting not less than ten days before the date of the meeting in accordance with Article V hereof. Section 5. Special Meetings. Special meetings of the Shareholders, for any purpose or purposes, unless otherwise prescribed by applicable law or by the Agreement, may be called by any Trustee; provided, however, that the Trustees shall promptly call a meeting of the Shareholders solely for the purpose of removing one or more Trustees, when requested in writing to do so by the record holders of not less than ten percent of the Outstanding Shares of the Trust. Section 6. Notice of Special Meeting. Written notice of a special meeting stating the place, date, and hour of the meeting and the purpose or purposes for which the meeting is 5 6 called, shall be given not less than ten days before the date of the meeting, to each Shareholder entitled to vote at such meeting. Section 7. Conduct of Special Meeting. Business transacted at any special meeting of Shareholders shall be limited to the purpose stated in the notice. Section 8. Quorum. The holders of one-third of the Outstanding Shares entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the Shareholders for the transaction of business except as otherwise provided by applicable law or by the Agreement. If, however, such quorum shall not be present or represented at any meeting of the Shareholders, the vote of the holders of a majority of Shares cast shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting, at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Section 9. Organization of Meetings. (a) The meetings of the Shareholders shall be presided over by the Chairman of the Board, or if the Chairman shall not be present or if there is no Chairman, by the President, or if the President shall not be present, by a Vice President, or if no Vice President is present, by a chairman appointed for such purpose by the Board of Trustees or, if not so appointed, by a chairman appointed for such purpose by the officers and Trustees present at the meeting. The Secretary of the Trust, if present, shall act as Secretary of such meetings, or if the Secretary is not present, an Assistant Secretary of the Trust shall so act, and if no Assistant Secretary is present, then a person designated by the Secretary of the Trust shall so act, and if the Secretary has not designated a person, then the meeting shall elect a secretary for the meeting. (b) The Board of Trustees of the Trust shall be entitled to make such rules and regulations for the conduct of meetings of Shareholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Trustees, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing: an agenda or order of business for the meeting; rules and procedures for maintaining order at the meeting and the safety of those present; limitations on participation in such meeting to shareholders of record of the Trust and their duly authorized and constituted proxies, and such other persons as the chairman shall permit; restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants; and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot, unless and to the extent the Board of Trustees or the chairman of the meeting determines that meetings of Shareholders shall not be required to be held in accordance with the rules of parliamentary procedure. 6 7 Section 10. Voting Standard. When a quorum is present at any meeting, the vote of the holders of a majority of the Shares cast shall decide any question brought before such meeting, unless the question is one on which, by express provision of applicable law, the Agreement, these Bylaws, or applicable contract, a different vote is required, in which case such express provision shall govern and control the decision of such question. Section 11. Voting Procedure. Each whole Share shall be entitled to one vote, and each fractional Share shall be entitled to a proportionate fractional vote. On any matter submitted to a vote of the Shareholders, all Shares shall be voted together, except when required by applicable law or when the Trustees have determined that the matter affects the interests of one or more Portfolios (or Classes), then only the Shareholders of such Portfolios (or Classes) shall be entitled to vote thereon. Section 12. Action Without Meeting. Unless otherwise provided in the Agreement or applicable law, any action required to be taken at any meeting of the Shareholders, or any action which may be taken at any meeting of the Shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of Outstanding Shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Shares entitled to vote thereon were present and voted. Prompt notice of the taking of any such action without a meeting by less than unanimous written consent shall be given to those Shareholders who have not consented in writing. Section 13. Broker Non-Votes. At any meeting of Shareholders the Trust will consider broker non-votes as present for purposes of determining whether a quorum is present at the meeting. Broker non-votes will not count as votes cast. ARTICLE V NOTICES Section 1. Methods of Giving Notice. Whenever, under the provisions of applicable law or of the Agreement or of these Bylaws, notice is required to be given to any Trustee or Shareholder, it shall not, unless otherwise provided herein, be construed to mean personal notice, but such notice may be given orally in person, or by telephone (promptly confirmed in writing) or in writing, by mail addressed to such Trustee at his or her last given address or to such Shareholder at his address as it appears on the records of the Trust, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to Trustees or members of a committee may also be 7 8 given by telex, telegram, facsimile, electronic-mail or via overnight courier. If sent by telex or facsimile, notice to a Trustee or member of a committee shall be deemed to be given upon transmittal; if sent by telegram, notice to a Trustee or member of a committee shall be deemed to be given when the telegram, so addressed, is delivered to the telegraph company; if sent by electronic-mail, notice to a Trustee or member of a committee shall be deemed to be given and shall be presumed valid when the Trust's electronic-mail server reflects the electronic-mail message as having been sent; and if sent via overnight courier, notice to a Trustee or member of a committee shall be deemed to be given when delivered against a receipt therefor. Section 2. Written Waiver. Whenever any notice is required to be given under the provisions of applicable law or of the Agreement or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VI CERTIFICATES OF SHARES Section 1. Issuance. The Trust may, in its sole discretion, issue a certificate to any Shareholder, signed by, or in the name of the Trust by, the President, certifying the number of Shares owned by him, her or it in a Class or Portfolio of the Trust. No Shareholder shall have the right to demand or require that a certificate be issued to him, her or it. Section 2. Countersignature. Where a certificate is countersigned (1) by a transfer agent other than the Trust or its employee, or (2) by a registrar other than the Trust or its employee, the signature of the President may be a facsimile. Section 3. Lost Certificates. The Board of Trustees may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Trust alleged to have been lost, stolen or destroyed, upon the making of an affidavit of the fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Trustees may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Trust a bond in such sum as it may direct as indemnity against any claim that may be made against the Trust with respect to the certificate alleged to have been lost, stolen or destroyed. Section 4. Transfer of Shares. The Trustees shall make such rules as they consider appropriate for the transfer of Shares and similar matters. To the extent certificates are issued in accordance with Section 1 of this Article VI, upon surrender to the Trust or the transfer agent of the Trust of such certificate for Shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Trust to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. 8 9 Section 5. Fixing Record Date. In order that the Trustees may determine the Shareholders entitled to notice of or to vote at any meeting of Shareholders or any adjournment thereof, or to express consent to action in writing without a meeting, or entitled to receive payment of any dividend or other distribution of allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of beneficial interests or for the purpose of any other lawful action, the Board of Trustees may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Trustees, and which record date shall not be more than ninety nor less than ten days before the date of such meeting, nor more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Trustees for action by Shareholder consent in writing without a meeting, nor more than ninety days prior to any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of Shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Trustees may fix a new record date for the adjourned meeting. Section 6. Registered Shareholders. The Trust shall be entitled to recognize the exclusive right of a person registered on its books as the owner of Shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim of interest in such Share or Shares on the part of any other person, whether or not it shall have express or other notice hereof. ARTICLE VII GENERAL PROVISIONS Section 1. Seal. The business seal shall have inscribed thereon the name of the business trust, the year of its organization and the word "Business Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. Any officer or Trustee of the Trust shall have authority to affix the seal of the Trust to any document requiring the same. Section 2. Severability. The provisions of these Bylaws are severable. If any provision hereof shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision only in such jurisdiction and shall not affect any other provision of these Bylaws. Section 3. Headings. Headings are placed in these Bylaws for convenience of reference only and in case of any conflict, the text of these Bylaws rather than the headings shall control. 9 10 ARTICLE VIII INDEMNIFICATION Section 1. Indemnification. For the purpose of this Section 1, "Trust" includes any domestic or foreign predecessor entity of this Trust in a merger, consolidation, or other transaction in which the predecessor's existence ceased upon consummation of the transaction; "proceeding" means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative; and "expenses" includes without limitation attorney's fees and any expenses of establishing a right to indemnification under this Section 1. (a) The Trust shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the Trust) by reason of the fact that such person is or was a Covered Person, against expenses, judgments, fines and amounts paid in settlements actually and reasonably incurred by such person in connection with such proceeding, if it is determined that person acted in good faith and reasonably believed: (a) in the case of conduct in his official capacity as a Covered Person, that his conduct was in the Trust's best interests and (b) in all other cases, that his conduct was at least not opposed to the Trust's best interests and (c) in the case of a criminal proceeding, that he had no reasonable cause to believe that his conduct was unlawful. The termination of any proceeding by judgment, order or settlement shall not, of itself, create a presumption that the person did not meet the requisite standard of conduct set forth in this Section 1. The termination of any proceeding by conviction, or a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, creates a rebuttable presumption that the person did not meet the requisite standard of conduct set forth in this Section 1. (b) The Trust shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding by or in the right of the Trust to procure a judgment in its favor by reason of the fact that person is or was a Covered Person, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of such action or suit if that person acted in good faith, in a manner that person believed to be in the best interests of the Trust and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. (c) Notwithstanding any provision to the contrary contained herein, there shall be no right to indemnification for any liability arising by reason of willful misfeasance, bad faith, gross negligence, or the reckless disregard of the duties involved in the conduct of the Covered Person's office with the Trust. Section 2. Advance Payments of Indemnifiable Expenses. To the maximum extent permitted by law, the Trust or applicable Portfolio may advance to a Covered Person, in connection with the preparation and presentation of a defense to any claim, action, suit, or proceeding, expenses for which the Covered Person would ultimately be entitled to indemnification; provided that the Trust or applicable Portfolio has received an undertaking by 10 11 or on behalf of such Covered Person that such amount will be paid over by him to the Trust or applicable Portfolio if it is ultimately determined that he is not entitled to indemnification for such expenses, and further provided that (i) such Covered Person shall have provided appropriate security for such undertaking, (ii) the Trust is insured against losses arising out of any such advance payments, or (iii) either a majority of the Trustees who are not interested persons (as defined in the 1940 Act) of the Trust nor parties to the matter, or independent legal counsel in a written opinion shall have determined, based upon a review of readily available facts (as opposed to a full trial-type inquiry) that there is reason to believe that such Covered Person will not be disqualified from indemnification for such expenses. ARTICLE IX AMENDMENTS Section 1. Amendments. These Bylaws may be altered or repealed at any regular or special meeting of the Board of Trustees without prior notice. These Bylaws may also be altered or repealed at any special meeting of the Shareholders, but only if the Board of Trustees resolves to put a proposed alteration or repealer to the vote of the Shareholders and notice of such alteration or repealer is contained in a notice of the special meeting being held for such purpose. 11 EX-99.D5 4 FORM OF MASTER INVESTMENT ADVISORY AGREEMENT 1 EXHIBIT d(5) AIM INTERNATIONAL MUTUAL FUNDS MASTER INVESTMENT ADVISORY AGREEMENT THIS AGREEMENT is made this ____ day of ____________________, ______________, by and between AIM International Mutual Funds, a Delaware business trust (the "Trust") with respect to its series of shares shown on the Appendix A attached hereto, as the same may be amended from time to time, and A I M Advisors, Inc., a Delaware corporation (the "Advisor"). RECITALS WHEREAS, the Trust is registered under the Investment Company Act of 1940, as amended (the "l940 Act"), as an open-end, diversified management investment company; WHEREAS, the Advisor is registered under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), as an investment advisor and engages in the business of acting as an investment advisor; WHEREAS, the Trust's Agreement and Declaration of Trust (the "Declaration of Trust") authorizes the Board of Trustees of the Trust (the "Board of Trustees") to create separate series of shares of beneficial interest in the Trust, and as of the date of this Agreement, the Board of Trustees has created six separate series portfolios (such portfolios and any other portfolios hereafter added to the Trust being referred to collectively herein as the "Funds"); and WHEREAS, the Trust and the Advisor desire to enter into an agreement to provide for investment advisory services to the Funds upon the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. Advisory Services. The Advisor shall act as investment advisor for the Funds and shall, in such capacity, supervise all aspects of the Funds' operations, including the investment and reinvestment of cash, securities or other properties comprising the Funds' assets, subject at all times to the policies and control of the Board of Trustees. The Advisor shall give the Trust and the Funds the benefit of its best judgment, efforts and facilities in rendering its services as investment advisor. 2. Investment Analysis and Implementation. In carrying out its obligations under Section 1 hereof, the Advisor shall: (a) supervise all aspects of the operations of the Funds; (b) obtain and evaluate pertinent information about significant developments and economic, statistical and financial data, domestic, foreign or otherwise, whether affecting the economy generally or the Funds, and whether concerning the individual issuers whose securities are included in the assets of the Funds or the activities in which 2 such issuers engage, or with respect to securities which the Advisor considers desirable for inclusion in the Funds' assets; (c) determine which issuers and securities shall be represented in the Funds' investment portfolios and regularly report thereon to the Board of Trustees; (d) formulate and implement continuing programs for the purchases and sales of the securities of such issuers and regularly report thereon to the Board of Trustees; and (e) take, on behalf of the Trust and the Funds, all actions which appear to the Trust and the Funds necessary to carry into effect such purchase and sale programs and supervisory functions as aforesaid, including but not limited to the placing of orders for the purchase and sale of securities for the Funds. 3. Securities Lending Duties and Fees. The Advisor agrees to provide the following services in connection with the securities lending activities of each Fund: (a) oversee participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assist the securities lending agent or principal (the "Agent") in determining which specific securities are available for loan; (c) monitor the Agent to ensure that securities loans are effected in accordance with the Advisor's instructions and with procedures adopted by the Board of Trustees; (d) prepare appropriate periodic reports for, and seek appropriate approvals from, the Board of Trustees with respect to securities lending activities; (e) respond to Agent inquiries; and (f) perform such other duties as necessary. As compensation for such services provided by the Advisor in connection with securities lending activities of each Fund, a lending Fund shall pay the Advisor a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. 4. Delegation of Responsibilities. The Advisor is authorized to delegate any or all of its rights, duties and obligations under this Agreement to one or more sub-advisors, and may enter into agreements with sub-advisors, and may replace any such sub-advisors from time to time in its discretion, in accordance with the 1940 Act, the Advisers Act, and rules and regulations thereunder, as such statutes, rules and regulations are amended from time to time or are interpreted from time to time by the staff of the Securities and Exchange Commission ("SEC"), and if applicable, exemptive orders or similar relief granted by the SEC and upon receipt of approval of such sub-advisors by the Board of Trustees and by shareholders (unless any such approval is not required by such statutes, rules, regulations, interpretations, orders or similar relief). 5. Independent Contractors. The Advisor and any sub-advisors shall for all purposes herein be deemed to be independent contractors and shall, unless otherwise expressly provided or authorized, have no authority to act for or represent the Trust in any way or otherwise be deemed to be an agent of the Trust. 6. Control by Board of Trustees. Any investment program undertaken by the Advisor pursuant to this Agreement, as well as any other activities undertaken by the Advisor on behalf of the Funds, shall at all times be subject to any directives of the Board of Trustees. 7. Compliance with Applicable Requirements. In carrying out its obligations under this Agreement, the Advisor shall at all times conform to: 2 3 (a) all applicable provisions of the 1940 Act and the Advisers Act and any rules and regulations adopted thereunder; (b) the provisions of the registration statement of the Trust, as the same may be amended from time to time under the Securities Act of 1933 and the 1940 Act; (c) the provisions of the Declaration of Trust, as the same may be amended from time to time; (d) the provisions of the by-laws of the Trust, as the same may be amended from time to time; and (e) any other applicable provisions of state, federal or foreign law. 8. Broker-Dealer Relationships. The Advisor is responsible for decisions to buy and sell securities for the Funds, broker-dealer selection, and negotiation of brokerage commission rates. (a) The Advisor's primary consideration in effecting a security transaction will be to obtain the best execution. (b) In selecting a broker-dealer to execute each particular transaction, the Advisor will take the following into consideration: the best net price available; the reliability, integrity and financial condition of the broker-dealer; the size of and the difficulty in executing the order; and the value of the expected contribution of the broker-dealer to the investment performance of the Funds on a continuing basis. Accordingly, the price to the Funds in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the fund execution services offered. (c) Subject to such policies as the Board of Trustees may from time to time determine, the Advisor shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of its having caused the Funds to pay a broker or dealer that provides brokerage and research services to the Advisor an amount of commission for effecting a fund investment transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction, if the Advisor determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Advisor's overall responsibilities with respect to a particular Fund, other Funds of the Trust, and to other clients of the Advisor as to which the Advisor exercises investment discretion. The Advisor is further authorized to allocate the orders placed by it on behalf of the Funds to such brokers and dealers who also provide research or statistical material, or other services to the Funds, to the Advisor, or to any sub-advisor. Such allocation shall be in such amounts and proportions as the Advisor shall determine and the Advisor will report on said allocations regularly to the Board of Trustees indicating the brokers to whom such allocations have been made and the basis therefor. 3 4 (d) With respect to one or more Funds, to the extent the Advisor does not delegate trading responsibility to one or more sub-advisors, in making decisions regarding broker-dealer relationships, the Advisor may take into consideration the recommendations of any sub-advisor appointed to provide investment research or advisory services in connection with the Funds, and may take into consideration any research services provided to such sub-advisor by broker-dealers. (e) Subject to the other provisions of this Section 8, the 1940 Act, the Securities Exchange Act of 1934, and rules and regulations thereunder, as such statutes, rules and regulations are amended from time to time or are interpreted from time to time by the staff of the SEC, any exemptive orders issued by the SEC, and any other applicable provisions of law, the Advisor may select brokers or dealers with which it or the Funds are affiliated. 9. Compensation. The compensation that each Fund shall pay the Advisor is set forth in Appendix B attached hereto. 10. Expenses of the Funds. All of the ordinary business expenses incurred in the operations of the Funds and the offering of their shares shall be borne by the Funds unless specifically provided otherwise in this Agreement. These expenses borne by the Funds include but are not limited to brokerage commissions, taxes, legal, accounting, auditing, or governmental fees, the cost of preparing share certificates, custodian, transfer and shareholder service agent costs, expenses of issue, sale, redemption and repurchase of shares, expenses of registering and qualifying shares for sale, expenses relating to directors and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of the Funds in connection with membership in investment company organizations and the cost of printing copies of prospectuses and statements of additional information distributed to the Funds' shareholders. 11. Services to Other Companies or Accounts. The Trust understands that the Advisor now acts, will continue to act and may act in the future as investment manager or advisor to fiduciary and other managed accounts, and as investment manager or advisor to other investment companies, including any offshore entities, or accounts, and the Trust has no objection to the Advisor so acting, provided that whenever the Trust and one or more other investment companies or accounts managed or advised by the Advisor have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with a formula believed to be equitable to each company and account. The Trust recognizes that in some cases this procedure may adversely affect the size of the positions obtainable and the prices realized for the Funds. 12. Non-Exclusivity. The Trust understands that the persons employed by the Advisor to assist in the performance of the Advisor's duties under this Agreement will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or restrict the right of the Advisor or any affiliate of the Advisor to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. The Trust further understands and agrees that officers or directors of the Advisor may serve as officers or directors of the Trust, and that officers or directors of the Trust may serve as officers or directors of the Advisor to the extent permitted by law; and that the officers and directors of the Advisor are not prohibited from engaging in any other business activity or from rendering services to any other person, or from serving as partners, officers, directors or trustees of any other firm or trust, including other investment advisory companies. 4 5 13. Effective Date, Term and Approval. This Agreement shall become effective with respect to a Fund, if approved by the shareholders of such Fund, on the Effective Date for such Fund, as set forth in Appendix A attached hereto. If so approved, this Agreement shall thereafter continue in force and effect until June 30, 2001, and may be continued from year to year thereafter, provided that the continuation of the Agreement is specifically approved at least annually: (a) (i) by the Board of Trustees or (ii) by the vote of "a majority of the outstanding voting securities" of such Fund (as defined in Section 2(a)(42) of the 1940 Act); and (b) by the affirmative vote of a majority of the trustees who are not parties to this Agreement or "interested persons" (as defined in the 1940 Act) of a party to this Agreement (other than as Trust trustees), by votes cast in person at a meeting specifically called for such purpose. 14. Termination. This Agreement may be terminated as to the Trust or as to any one or more of the Funds at any time, without the payment of any penalty, by vote of the Board of Trustees or by vote of a majority of the outstanding voting securities of the applicable Fund, or by the Advisor, on sixty (60) days' written notice to the other party. The notice provided for herein may be waived by the party entitled to receipt thereof. This Agreement shall automatically terminate in the event of its assignment, the term "assignment" for purposes of this paragraph having the meaning defined in Section 2(a)(4) of the 1940 Act. 15. Amendment. No amendment of this Agreement shall be effective unless it is in writing and signed by the party against which enforcement of the amendment is sought. 16. Liability of Advisor and Fund. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of the Advisor or any of its officers, directors or employees, the Advisor shall not be subject to liability to the Trust or to the Funds or to any shareholder of the Funds for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. Any liability of the Advisor to one Fund shall not automatically impart liability on the part of the Advisor to any other Fund. No Fund shall be liable for the obligations of any other Fund. 17. Liability of Shareholders. Notice is hereby given that, as provided by applicable law, the obligations of or arising out of this Agreement are not binding upon any of the shareholders of the Trust individually but are binding only upon the assets and property of the Trust and that the shareholders shall be entitled, to the fullest extent permitted by applicable law, to the same limitation on personal liability as shareholders of private corporations for profit. 18. Notices. Any notices under this Agreement shall be in writing, addressed and delivered, telecopied or mailed postage paid, to the other party entitled to receipt thereof at such address as such party may designate for the receipt of such notice. Until further notice to the other party, it is agreed that the address of the Trust and that of the Advisor shall be 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. 19. Questions of Interpretation. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or 5 6 provision of the 1940 Act or the Advisers Act shall be resolved by reference to such term or provision of the 1940 Act or the Advisers Act and to interpretations thereof, if any, by the United States Courts or in the absence of any controlling decision of any such court, by rules, regulations or orders of the SEC issued pursuant to said Acts. In addition, where the effect of a requirement of the 1940 Act or the Advisers Act reflected in any provision of the Agreement is revised by rule, regulation or order of the SEC, such provision shall be deemed to incorporate the effect of such rule, regulation or order. Subject to the foregoing, this Agreement shall be governed by and construed in accordance with the laws (without reference to conflicts of law provisions) of the State of Texas. 20. License Agreement. The Trust shall have the non-exclusive right to use the name "AIM" to designate any current or future series of shares only so long as A I M Advisors, Inc. serves as investment manager or advisor to the Trust with respect to such series of shares. 6 7 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in duplicate by their respective officers on the day and year first written above. AIM INTERNATIONAL MUTUAL FUNDS (a Delaware business trust) Attest: By: - ------------------------------- --------------------------------- Assistant Secretary President (SEAL) Attest: A I M Advisors, Inc. By: - ------------------------------ --------------------------------- Assistant Secretary President (SEAL) 7 8 APPENDIX A FUNDS AND EFFECTIVE DATES
NAME OF FUND EFFECTIVE DATE OF ADVISORY AGREEMENT - ------------ ------------------------------------ AIM Asian Growth Fund May 22, 2000 AIM European Development Fund May 22, 2000 AIM Global Aggressive Growth Fund May 22, 2000 AIM Global Growth Fund May 22, 2000 AIM Global Income Fund May 22, 2000 AIM International Equity Fund May 22, 2000
A-1 9 APPENDIX B COMPENSATION TO THE ADVISOR The Trust shall pay the Advisor, out of the assets of a Fund, as full compensation for all services rendered, an advisory fee for such Fund set forth below. Such fee shall be calculated by applying the following annual rates to the average daily net assets of such Fund for the calendar year computed in the manner used for the determination of the net asset value of shares of such Fund. AIM ASIAN GROWTH FUND AIM EUROPEAN DEVELOPMENT FUND
NET ASSETS ANNUAL RATE - ---------- ----------- First $500 million............................................... 0.95% Over $500 million................................................ 0.90%
AIM GLOBAL AGGRESSIVE GROWTH FUND
NET ASSETS ANNUAL RATE - ---------- ----------- First $1 billion................................................. 0.90% Over $1 billion.................................................. 0.85%
AIM GLOBAL GROWTH FUND
NET ASSETS ANNUAL RATE - ---------- ----------- First $1 billion................................................. 0.85% Over $1 billion.................................................. 0.80%
AIM GLOBAL INCOME FUND
NET ASSETS ANNUAL RATE - ---------- ----------- First $1 billion................................................. 0.70% Over $1 billion.................................................. 0.65%
B-1 10 AIM INTERNATIONAL EQUITY FUND
NET ASSETS ANNUAL RATE - ---------- ----------- First $1 billion................................................. 0.95% Over $1 billion.................................................. 0.90%
B-2 EX-99.I1.B 5 OPINION OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP 1 EXHIBIT i(1)(b) [LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL] March 20, 2000 AIM International Mutual Funds 11 Greenway Plaza, Suite 100 Houston, TX 77046-1173 Re: AIM International Mutual Funds Registration Statement on Form N-1A Gentlemen: We have acted as counsel to AIM International Mutual Funds, a business trust organized under the laws of the State of Delaware (the "Trust") and registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, series management investment company. The Board of Trustees of the Trust has deemed it advisable for the Trust to acquire all of the assets and assume all of the liabilities of each of the six series portfolios (each, a "Predecessor Fund") of AIM International Funds Inc., a Maryland corporation (the Company"), pursuant to an Agreement and Plan of Reorganization (the "Reorganization"). Upon consummation of the Reorganization, the Trust will be the successor issuer to the Company. Pursuant to Rule 414 under the Securities Act of 1933, as amended (the "1933 Act"), the Trust is adopting the Registration Statement of the Company as its own for all purposes of the 1933 Act and the Securities Exchange Act of 1934, as amended, and is filing Post-Effective Amendment No. 18 under the 1933 Act and Amendment No. 20 under the 1940 Act to the Company's currently effective Registration Statement on Form N-1A (collectively, the "Registration Statement"). The Registration Statement registers an indefinite number of Class A, Class B and Class C shares of beneficial interest, par value $0.001 per share (the "Shares"), representing interests in each of the six series portfolios of the Trust (each, a "New Fund"). In connection with our giving this opinion, we have examined copies of the Trust's Certificate of Trust, Agreement and Declaration of Trust (the "Trust Agreement") and resolutions of the Board of Trustees adopted December 8, 1999, and originals or copies, certified or otherwise identified to our satisfaction, of such other documents, records and other instruments as we have deemed necessary or advisable for purposes of this opinion. We have also examined the prospectuses for the New Funds, which are included in the Registration Statement, substantially in the form in which they are to become effective (the "Prospectuses"). As to various questions of fact material to our opinion, we have relied upon information provided by officers of the Trust. 2 AIM International Mutual Funds March 20, 2000 Page 2 Based on the foregoing and provided that the shareholders of the Company approve the Reorganization and that the Registration Statement becomes effective, we are of the opinion that the Shares of each New Fund to be issued to shareholders of the corresponding Predecessor Fund in the Reorganization, upon receipt of the consideration set forth in the Agreement and Plan of Reorganization, will be legally issued, fully paid and nonassessable. In addition, based on the foregoing, we are of the opinion that the Shares of each New Fund to be offered for sale from time to time pursuant to the Prospectuses are duly authorized and, when sold, issued and paid for as described in the Prospectuses, will be legally issued, fully paid and nonassessable. We express no opinion concerning the laws of any jurisdiction other than the federal law of the United States of America and the Delaware Business Trust Act. Both the Delaware Business Trust Act and the Trust Agreement provide that shareholders of the Trust shall be entitled to the same limitation on personal liability as is extended under the Delaware General Corporation Law to stockholders of private corporations for profit. There is a remote possibility, however, that, under certain circumstances, shareholders of a Delaware business trust may be held personally liable for that trust's obligations to the extent that the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. The Trust Agreement also provides for indemnification out of property of a New Fund for all loss and expense of any shareholder held personally liable for the obligations of the New Fund. Therefore, the risk of any shareholder incurring financial loss beyond his investment due to shareholder liability is limited to circumstances in which a New Fund is unable to meet its obligations and the express limitation of shareholder liabilities is determined not to be effective. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name and to the reference to our firm under the caption "Miscellaneous Information - Legal Matters" in the Statement of Additional Information for the Funds, which is included in the Registration Statement. Very truly yours, /s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP EX-99.J 6 CONSENT OF KPMG LLP 1 EXHIBIT j INDEPENDENT AUDITORS' CONSENT The Board of Directors and Shareholders AIM International Mutual Funds We consent to the use of our reports on the AIM Asian Growth Fund, AIM European Development Fund, AIM Global Aggressive Growth Fund, AIM Global Growth, AIM Global Income Fund and AIM International Equity Fund (series portfolios of AIM International Mutual Funds) dated December 3, 1999 included herein and the references to our firm under the headings "Financial Highlights" in the Prospectuses and "Audit Reports" in the Statement of Additional Information. /s/ KPMG LLP KPMG LLP Houston, Texas March 23, 2000 EX-99.O2 7 AIM MANAGEMENT GROUP CODE OF ETHICS 1 EXHIBIT o(2) A I M MANAGEMENT GROUP INC. CODE OF ETHICS (ADOPTED MAY 1, 1981) (AS LAST AMENDED FEBRUARY 24, 2000) WHEREAS, the members of the AIM Management Group are A I M Management Group Inc. ("AIM Management") and A I M Advisors, Inc. ("AIM Advisors") and its wholly owned and indirect subsidiaries (individually and collectively referred to as "AIM"); and WHEREAS, certain members of AIM provide investment advisory services to AIM's investment companies and other clients; and WHEREAS, certain members of AIM provide distribution services as principal underwriters for AIM's investment company clients; and WHEREAS, certain members of AIM provide shareholder services as the transfer agent, dividend disbursing agent and shareholder processing agent for AIM's investment company clients; and WHEREAS, the investment advisory business involves decisions and information which may have at least a temporary impact on the market price of securities, thus creating a potential for conflicts of interest between the persons engaged in such business and their clients; and WHEREAS, the members of AIM have a fiduciary relationship with respect to each portfolio under management and the interests of the client accounts and of the shareholders of AIM's investment company clients must take precedence over the personal interests of the employees of AIM, thus requiring a rigid adherence to the highest standards of conduct by such employees; and WHEREAS, every practical step must be taken to ensure that no intentional or inadvertent action is taken by an employee of AIM which is, or appears to be, adverse to the interests of AIM or any of its client accounts, including the defining of standards of behavior for such employees, while at the same time avoiding unnecessary interference with the privacy or personal freedom of such employees; and WHEREAS, the members of AIM originally adopted a Code of Ethics ("the Code") on May 1, 1981, and adopted amendments thereto in January 1989, October 1989, April 1991, December 6, 1994 and December 5, 1995, December 10, 1996, and now deem it advisable to update and revise said Code in light of new investment company products developed by AIM and changing circumstances in the securities markets in which AIM conducts business; and NOW, THEREFORE, the Boards of Directors of AIM Management and AIM Advisors hereby adopt the following revised Code pursuant to the provisions of Rule 17j-1 under the Investment Company Act of 1940 ("1940 Act"), with the intention that certain provisions of the Code shall become applicable to the officers, directors and employees of AIM. I. APPLICABILITY A. The provisions of AIM's Code shall apply to certain officers, directors and employees (as hereinafter designated) of AIM. Unless otherwise indicated, the term "employee" as used herein means: (i) all officers, directors and employees of AIM Advisors and its wholly owned and indirect subsidiaries and (ii) officers, directors and employees of AIM Management who -1- 2 have an active part in the management, portfolio selection, underwriting or shareholder functions with respect to AIM's investment company clients or provide one or more similar services for AIM's non-investment company clients. The term "employee" does not include directors of AIM Management who do not maintain an office at the home office of AIM Management and who do not regularly obtain information concerning the investment recommendations or decisions made by AIM on behalf of client accounts ("independent directors"). B. The Code shall also apply to any person or entity appointed as a sub-advisor for an AIM investment company client account unless such person or entity has adopted a code of ethics in compliance with Section 17(j) of the 1940 Act; or, in the event that such person or entity is domiciled outside of the United States, has adopted employee standards of conduct that provide equivalent protections to AIM's client accounts. In performing sub-advisory services, such person or entity will be subject to the direction and supervision of AIM, and subject to the policies and control of the Boards of Directors/Trustees of the respective AIM investment company client(s). II. INTERPRETATION AND ENFORCEMENT A. The Chief Executive Officer of AIM Management shall appoint a Code of Ethics Committee ("Committee"). The Committee shall have the responsibility for interpreting the provisions of the Code, for adopting and implementing Procedures for the enforcement of the provisions of the Code, and for determining whether a violation of the provisions of the Code, or of any such related Procedures has occurred. The Committee will appoint an officer to monitor personal investment activity by "Covered Persons" (as defined in the Procedures adopted hereunder), both before and after any trade occurs and to prepare periodic and annual reports, conduct education seminars and obtain employee certifications as deemed appropriate. In the event of a finding that a violation has occurred requiring significant remedial action, the Committee shall take such action as it deems appropriate on the imposition of sanctions or initiation of disgorgement proceedings. The Committee shall also make recommendations and submit reports to the Boards of Directors/Trustees of AIM's investment company clients. B. If a sub-advisor has adopted a code of ethics in accordance with Section 17(j) of the 1940 Act, then pursuant to a sub-advisory agreement with AIM, it shall be the duty of such sub-advisor to furnish AIM with a copy of the following: o code of ethics and related procedures of the sub-advisor, and a statement as to its employees' compliance therewith; o any statement or policy on insider trading adopted pursuant to Section 204A under the 1940 Act; and the procedures designed to prevent the misuse of material non-public information by any person associated with such sub-advisor; and o such other information as may reasonably be necessary for AIM to report to the Boards of Directors/Trustees of its investment company client account(s) as to such sub-advisor's adherence to the Boards' policies and controls referenced in Section I.B. above. III. PROCEDURES ADOPTED UNDER THE CODE From time to time, AIM's Committee shall adopt Procedures to carry out the intent of the Code. Among other things, the Procedures require certain new employees to complete an Asset Disclosure Form, a Brokerage Accounts Listing Form and such other forms as deemed appropriate by the Committee. Such Procedures are hereby incorporated into the Code and are made a part of the Code. Therefore, a violation of the Procedures shall be deemed a violation of the Code itself. -2- 3 IV. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES A. Each employee shall have and maintain knowledge of and shall comply strictly with all applicable federal and state laws and all rules and regulations of any governmental agency or self-regulatory organization governing his/her actions as an employee. B. Each employee shall comply with all laws and regulations, and AIM's prohibition against insider trading. Trading on or communicating material non-public information, or "inside information", of any sort, whether obtained in the course of research activities, through a client relationship or otherwise, is strictly prohibited. C. Each employee shall comply with the procedures and guidelines established by AIM to ensure compliance with applicable federal and state laws and regulations of governmental agencies and self-regulatory organizations. No employee shall knowingly participate in, assist, or condone any act in violation of any statute or regulation governing AIM or any act that would violate any provision of this Code, or of the Procedures adopted hereunder. D. Each employee shall have and maintain knowledge of and shall comply with the provisions of this Code and any Procedures adopted hereunder. E. Each employee having supervisory responsibility shall exercise reasonable supervision over employees subject to his/her control, with a view to preventing any violation by such persons of applicable statutes or regulations, AIM's corporate procedures, or the provisions of the Code, or the Procedures adopted hereunder. F. Any employee obtaining evidence that an act in violation of applicable statutes, regulations or provisions of the Code or of any Procedures adopted hereunder has occurred shall immediately report such evidence to the Chief Compliance Officer of AIM. Such action by the employee will remain confidential, unless the employee waives confidentiality or federal or state authorities compel disclosure. Failure to report such evidence may result in disciplinary proceedings and may include sanctions as set forth in Section VI hereof. V. ETHICAL STANDARDS A. Employees shall conduct themselves in a manner consistent with the highest ethical and fiduciary standards. They shall avoid any action, whether for personal profit or otherwise, that results in an actual or potential conflict of interest with AIM or its client accounts, or which may be otherwise detrimental to the interests of the members of AIM or its client accounts.(1) B. Employees shall act in a manner consistent with their fiduciary obligation to clients of AIM, and shall not deprive any client account of an investment opportunity in order to personally benefit from that opportunity. - ----------------- (1)Conflicts of interest generally result from a situation in which an individual has a personal interest in a matter that is or may be competitive with his or her responsibilities to other persons or entities (such as AIM or its client accounts) or where an individual has or may have competing obligations or responsibilities to two or more persons or entities. In the case of the relationship between a client account on the one hand, and AIM, its officers, directors and employees, on the other hand, such conflict may result from the purchase or sale of securities for a client account and for the personal account of the individual involved or the account of any "affiliate" of such individual, as such term is defined in the 1940 Act. Such conflict may also arise from the purchase or sale for a client account of securities in which an officer, director or employee of AIM has an economic interest. Moreover, such conflict may arise in connection with vendor relationships in which such employee has any direct or indirect financial interest, family interests or other personal interest. To the extent of conflicts of interest between AIM and a vendor, such conflicts must be resolved in a manner that is not disadvantageous to AIM. In any such case, potential or actual conflicts must be disclosed to AIM and the first preference and priority must be to avoid such conflicts of interest wherever possible and, where they unavoidably occur, to resolve them in a manner that is not disadvantageous to a client. -3- 4 C. Without the knowledge and approval of the Chief Executive Officer of AIM Management, employees shall not engage in a business activity or practice for compensation in competition with the members of AIM. Each employee, who is deemed to be a "Covered Person" as defined in the Procedures adopted hereunder, shall obtain the written approval of AIM Management's Chief Executive Officer to participate on a board of directors/trustees of any of the following organizations: o publicly traded company, partnership or trust; o hospital or philanthropic institution;* o local or state municipal authority;* and/or o charitable organization.* * These restrictions relate to organizations that have or intend to raise proceeds in a public securities offering. In the relatively small number of instances in which board approval is authorized, investment personnel serving as directors shall be isolated from those making investment decisions through AIM's "Chinese Wall" Procedures. D. Each employee, in making an investment recommendation or taking any investment action, shall exercise diligence and thoroughness, and shall have a reasonable and adequate basis for any such recommendation or action. E. Each employee shall not attempt to improperly influence for such person's personal benefit any investment strategy to be followed or investment action to be taken by the members of AIM for its client accounts. F. Each employee shall not improperly use for such person's personal benefit any knowledge, whether obtained through such person's relationship with AIM or otherwise, of any investment recommendation made or to be made, or of any investment action taken or to be taken by AIM for its client accounts. G. Employees shall not disclose any non-public information relating to a client account's portfolio or transactions or to the investment recommendations of AIM, nor shall any employee disclose any non-public information relating to the business or operations of the members of AIM, unless properly authorized to do so. H. Employees shall not accept, directly or indirectly, from a broker/dealer or other vendor who transacts business with AIM or its client accounts, any gifts, gratuities or other things of more than de minimis value or significance that their acceptance might reasonably be expected to interfere with or influence the exercise of independent and objective judgment in carrying out such person's duties or otherwise gives the appearance of a possible impropriety. For this purpose, gifts, gratuities and other things of value shall not include unsolicited entertainment so long as such unsolicited entertainment is not so frequent or extensive as to raise any question of impropriety. I. Employees who are registered representatives and/or principals of AIM shall not acquire securities for an account for which he/she has a direct or indirect beneficial interest in an initial public offering ("IPO") or on behalf of any person, entity or organization that is not an AIM client. All other employees shall not acquire securities for an account for which he/she has a direct or indirect beneficial interest offered in an IPO or on behalf of any person, entity or organization that is not an AIM client account except in those circumstances where different amounts of such offerings are specified for different investor types (e.g., private investors and institutional investors) and such transaction has been pre-cleared by the Compliance Office. -4- 5 J. All personal securities transactions by employees must be conducted consistent with this Code and the Procedures adopted hereunder, and in such a manner as to avoid any actual or potential conflicts of interest or any abuse of such employee's position of trust and responsibility. Unless an exemption is available, employees who are deemed to be "Covered Persons" as defined in the Procedures adopted hereunder, shall pre-clear all personal securities transactions in securities in accordance with the Procedures adopted hereunder. K. Each employee, who is deemed to be a "Covered Person" as defined in the Procedures adopted hereunder, (or registered representative and/or principal of AIM), shall refrain from engaging in personal securities transactions in connection with a security that is not registered under Section 12 of the Securities Act of 1933 (i.e., a private placement security) unless such transaction has been pre-approved by the Chief Compliance Officer or the Director of Investments (or their designees). L. Employees, who are deemed to be "Covered Persons" as defined in the Procedures adopted hereunder, may not engage in a transaction in connection with the purchase or sale of a security within seven calendar days before and after an AIM investment company client trades in that same (or equivalent) security unless the de minimis exemption is available. M. Each employee, who is deemed to be a "Covered Person" as defined in the Procedures adopted hereunder, may not purchase and voluntarily sell, or sell and voluntarily purchase the same (or equivalent) securities of the same issuer within 60 calendar days unless such employee complies with the disgorgement procedures adopted by the Code of Ethics Committee. Subject to certain limited exceptions set forth in the related Procedures, any transaction under this provision may result in disgorgement proceedings for any profits received in connection with such transaction by such employee. VI. SANCTIONS Employees violating the provisions of AIM's Code or any Procedures adopted hereunder may be subject to sanctions, which may include, among other things, restrictions on such person's personal securities transactions; a letter of admonition, education or formal censure; fines, suspension, re-assignment, demotion or termination of employment; or other significant remedial action. Employees may also be subject to disgorgement proceedings for transactions in securities that are inconsistent with Sections V.L. and V.M. above. VII. ADDITIONAL DISCLOSURE This Code and the related Procedures cannot, and do not, cover every situation in which choices and decisions must be made, because other company policies, practices and procedures (as well as good common sense) and good business judgment also apply. Every person subject to this Code should read and understand these documents thoroughly. They present important rules of conduct and operating controls for all employees. Employees are also expected to present questions to the attention of their supervisors and to the Chief Compliance Officer (or designee) and to report suspected violations as specified in these documents. For the Boards of Directors: The AIM Management Group by: /s/ CHARLES T. BAUER ------------------------------------ Charles T. Bauer February 24, 2000 ------------------------------------ Date -5- -----END PRIVACY-ENHANCED MESSAGE-----